issue-1996-01-25•Federal Register final rules — 1996-01-25
Federal Register final rules — 1996-01-25
issue-1996-01-25Federal Register final rules — 1996-01-25Regulation
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FR Doc. 96-293 Revisions to the Export Administration Regulations: Reform of Computer Export Controls; Establishment of General License G-CTP
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2099-2111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-293]
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DEPARTMENT OF COMMERCE
Bureau of Export Administration
15 CFR Parts 770, 771, 772, 773, 774, 775, 776, 785, 786, 787 and
799
[Docket No. 960103001-6001-01]
RIN 0694-AB36
Revisions to the Export Administration Regulations: Reform of
Computer Export Controls; Establishment of General License G-CTP
AGENCY: Bureau of Export Administration, Commerce.
ACTION: Interim rule.
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SUMMARY: The Bureau of Export Administration (BXA) is amending the
Export Administration Regulations (EAR), to implement the President's
October 6, 1995, announcement on major reform of computer export
controls.
The President announced a liberalization of export controls on all
computers to countries in North America, most of Western Europe, and
parts of Asia. For certain other countries, including many in Latin
America and Central and Eastern Europe, this rule also liberalizes
export controls on computers. For the former Soviet Union, China and
certain other countries, U.S. export controls will focus on computers
intended for military and proliferation end-uses or users, and ease
controls on exports of computers to civilian customers. Finally, there
will be no change in current policy for computer shipments to terrorist
countries, with the exception of the addition of Sudan to ECCNs 4A94F,
4D94F, 4E94F, and Computer Tier 4 (a grouping of terrorist countries,
for the purpose of computer controls).
This decision will streamline validated license requirements for
U.S. computer manufacturers of computers that are, or will be in the
next two years, widely available in the international market place.
DATES: Effective Date: This rule is effective January 22, 1996.
Comment Date: Comments must be received by February 26, 1996.
ADDRESSES: Written comments (six copies) should be sent to Sharron
Cook, Office of Exporter Services, Bureau of Export Administration,
Department of Commerce, P.O. Box 273, Washington, DC 20044.
FOR FURTHER INFORMATION CONTACT: For general information contact
Sharron Cook, Regulatory Policy Division, Bureau of Export
Administration, Telephone: (202) 482-2440.
For technical information contact Joseph Young, Strategic Trade
Division, Bureau of Export Administration, Telephone: (202) 482-4197.
SUPPLEMENTARY INFORMATION:
Background
When controls were last revised in 1993, the Administration
recognized that computer technology would continue to change rapidly--
and that it would need to review control levels within 18 to 24 months.
Accordingly, for the past several months, the Administration has
conducted a review of computer export controls that took into account
(1) the rapid advance of computing technology since 1993, (2) our
security and nonproliferation interests, and (3) the need for a policy
that would remain effective over the next 18 to 24 months.
This review found that enormous advances in the power and
capabilities of computing systems coming into widespread commercial use
have occurred and will continue to occur over the next two years. The
commercial computer market is being transformed by the emergence of
workstations containing multiple high-speed microprocessors, the ready
availability of high-speed communications links, and the continuing
rapid progress in software to permit difficult problems to run in
parallel and on networks.
Based on these developments, the Administration has determined that
computers capable of up to 7,000 million theoretical operations per
second (MTOPS) will become widely available in open international
markets within the next two years. The Administration has also
determined that computers with performance capabilities at and above
10,000 MTOPS have a significant number of strategic applications.
The new computer export controls found in this rule are to
implement the following goals, as stated by the President:
To permit the government to calibrate control levels and
licensing conditions depending upon the national security or
proliferation risk posed by exports to a specific destination;
To enhance U.S. national security and preserve the U.S. computer
industrial base by ensuring controls on computer exports are
effective and do not unnecessarily impede legitimate computer
exports; and
To permit the government to track global sales, thereby
illuminating how high performance computing may be used to pursue
critical military applications.
In this interim rule, the term ``supercomputer'' and the separate
supercomputer section in Sec. 776.11 have been removed. The majority of
the new computer controls can now be found in Sec. 776.10 that
generally pertains to computers. Because the term supercomputer was
removed from the EAR, all such references have been removed.
Within General License GCG, Sec. 771.14, the supercomputer
restriction is removed, with the exception that, ``no computers with a
CTP greater than 10,000 MTOPS may be exported to Argentina, Hong Kong,
South Korea, Singapore, and Taiwan without a validated license.'' This
is consistent with the President's announcement of October 6, 1995,
which provides a ceiling for the CTP level for which general licenses
can be used for these countries, except Taiwan and Hong Kong. Hong Kong
and Taiwan have a CTP limitation for computers of 10,000 MTOPS and are
in Computer Tier 2, established by this rule.
In this rule, the supercomputer restriction is also removed from
General Licenses G-TEMP and SAFEGUARDS. All computers are now eligible
for temporary export under the provisions of General License G-TEMP.
Also, all computers are now eligible for export to the International
Atomic Energy Agency (IAEA) under the provisions of General License
SAFEGUARDS.
A new General License G-CTP is established by this rule under
Sec. 771.28. This general license authorizes the export of computers
and specially
[[Page 2100]]
designed components therefor, exported separately or as part of a
system, and related equipment therefor when exported with these
computers as part of a system. These items will be eligible for export
to Computer Tier 1, 2 and 3 countries, for consumption therein. CTP
restrictions will correspond to the different Computer Tiers under the
provisions of Sec. 771.28.
Other areas significantly revised are those dealing with support
documentation for computer export and reexport applications, and
amendment requests. Currently, exporters must submit certain supporting
documents to BXA. This rule authorizes exporters of computers of
unlimited CTP to retain the required support documentation, i.e., BXA-
629P (Statement by Ultimate Consignee and Purchaser), International
Import Certificate (IC), People's Republic of China End-User
Certificate, Indian IC, Bulgarian IC, Czech IC, Hungarian IC, Polish
IC, Romanian IC, or Slovak IC, when submitting an application for
export, reexport or amendment.
Another area of liberalization is Special Licenses. Supplement No.
1 to part 773 (Commodities Excluded from the Special License
Procedures) has been revised to make all computers eligible for export
under special licenses. Exporters may now submit requests for computers
of unlimited CTP to be considered for special licenses.
This rule also makes changes to permissive reexport authority
(Sec. 774.2). Computers of unlimited CTP are eligible for permissive
reexport to and among the former COCOM participating and cooperating
countries, with the exception of Hong Kong and South Korea. Hong Kong
and South Korea will be limited to a CTP of 10,000 MTOPS, because these
countries fall within Computer Tier 2.
Section 776.10, ``Electronic Computers and Related Equipment'', has
been revised by adding paragraphs to implement the new computer reform.
The newly added paragraphs provide safeguard conditions, list
recordkeeping requirements, indicate general license availability, and
establish four Computer Country Tiers with corresponding license
requirements and policy.
Each country of the world is included in one of the Computer Tiers,
including those countries not specifically specified in the President's
announcement of October 6, 1995. Computer Tier 1 consists of Western
Europe, Turkey, Japan, Canada, Mexico, Australia, and New Zealand.
Persons may export computers of unlimited CTP and specially designed
components therefor, exported separately or as part of a system, and
related equipment therefor when exported with these computers as part
of a system to these countries using General License G-DEST or G-CTP
(depending on the CTP of the computer). The rule provides for
permissive reexports to and among these countries under
Sec. 774.2(a)(1).
Examples of the countries that can be found in Computer Tier 2 are
all the countries within Country Group T (except Mexico), South Korea,
ASEAN countries, Hungary, Poland, the Czech Republic, the Slovak
Republic, Slovenia, and South Africa. A complete listing of all the
countries included in Computer Tier 2 can be found in this rule under
Sec. 776.10. For these countries, exports of computers with a CTP less
than or equal to 10,000 MTOPS and specially designed components
therefor, exported separately or as part of a system, and related
equipment therefor when exported with these computers as part of a
system are authorized under General License G-DEST or G-CTP (depending
on the CTP of the computer). Validated licenses are required for
computers with a CTP greater than 10,000 MTOPS.
Examples of countries that are in Computer Tier 3 are India, China,
Vietnam, Pakistan, and countries of the Middle East, Maghreb, the
former Soviet Union, and the balance of Eastern Europe, i.e., those
Eastern European countries not included in Computer Tier 2. For a list
of countries that fall into Computer Tier 3, see Sec. 776.10. Exports
to Computer Tier 3 countries are authorized under General License G-
DEST for computers less than or equal to 2,000 MTOPS and specially
designed components therefor, exported separately or as part of a
system, and related equipment therefor when exported with these
computers as part of a system. Exports to permitted end-users and end-
uses located in countries in Computer Tier 3 are authorized under
General License G-CTP for computers greater than 2,000 MTOPS but less
than or equal to 7,000 MTOPS and specially designed components
therefor, exported separately or as part of a system, and related
equipment therefor when exported with these computers as part of a
system. General License G-CTP is not authorized for exports and
reexports to Computer Tier 3 for military end-users and end-uses and
nuclear, chemical, biological, or missile end-users and end-uses
defined in part 778. A validated license is required for all consignees
for computers with a CTP greater than 7,000 MTOPS.
As provided in the President's announcement, the U.S. will
``continue to deny computer technology to terrorist countries around
the world''. The countries identified by the Secretary of State as
terrorist supporting are included in Computer Tier 4. They include
Cuba, Iran, Iraq, Libya, North Korea, Sudan and Syria. Different
licensing requirements apply to each country in this Computer Country
Tier.
The President's announcement included a decision to continue to
deny computer technology to terrorist countries. This rule adds Sudan
to the list of countries requiring a validated license under ECCN
4A94F, 4D94F, and 4E94F. Another rule will be published in the near
future that will completely revise the Export Administration
Regulations pertaining to Sudan.
Safeguard conditions may be applied at the discretion of the U.S.
Government. A list of safeguard conditions that may appear on validated
licenses are listed in Sec. 776.10(h).
Exporters should be aware of the special recordkeeping requirements
for computers. This rule requires exporters to keep records relating to
each export of a computer with a CTP equal to or greater than 2,000
MTOPS. These records must include the date of shipment, name and
address of the end-user and each intermediate consignee, CTP of each
computer in shipment, volume of computers in shipment, end-use, and
dollar value of shipment.
General Licenses GCT and GFW have been revised to conform with the
revisions of this rule. However, you are informed that the CTP
eligibility levels of General License G-DEST and the new General
License G-CTP far exceed the historic CTP eligibility levels of General
Licenses GCT and GFW and that it may be to your benefit to use G-DEST
or G-CTP instead of GCT and GFW. The authorities of General Licenses
GCT and G-CTP overlap for computers but not for all transactions
involving peripherals exported separately from computer systems. At the
urging of some exporters, this rule maintains General License GCT
because it will remain useful to authorize the export of certain
peripherals when not exported with a computer system eligible for
General License G-CTP.
Specially designed components, exported separately or as part of a
system, and related equipment therefore when exported with computer
systems meeting the eligibility requirements for a general license will
also be eligible under the same general license as the computer.
General licenses are not available for exports of items the exporter
knows will be used to enhance the CTP of a computer beyond the
[[Page 2101]]
technical parameters of the general license.
When evaluating your computer to determine general license
eligibility, use the CTP parameter to the exclusion of other technical
parameters for computers classified under ECCN 4A03A; with the
exception of parameters specified as controlled for Missile Technology
(MT) concerns and 4A03A.e (Equipment performing analog-to-digital or
digital-to-analog conversions exceeding the limits in ECCN 3A01A.a.5).
For example, if you have a graphic workstation with a CTP of 5,000
MTOPS, that includes a graphic accelerator with a 3D vector rate of 10
million vectors/second, destined for a civil end-user and end-use in
India--you may export the graphic workstation to India using General
License G-CTP.
This rule imposes an immediate recordkeeping requirement and alerts
exporters to a future reporting requirement for computer exports. These
requirements are included in part in light of the information sharing
commitments the United States expects to announce in the near future in
connection with the new multilateral regime that will replace the
Coordinating Committee on Export Controls (COCOM) to control the export
of arms and sensitive dual-use goods and technologies. The
recordkeeping requirement takes effect immediately upon filing of the
rule. It is expected that exports of computers above 2,000 MTOPS to
certain destinations will become subject to the reporting requirement
once the initial elements of the new multilateral regime are adopted.
The date on which the reporting requirement is triggered, and the date
on which the first report will be due, will be included in a future
Federal Register notice.
This rule liberalizes the parts and components rule found in
Sec. 776.12 of the EAR. It makes the de minimis exclusions available to
computers that were previously supercomputers.
All the changes to the Commerce Control List (CCL) pertain to
Category 4. This rule revises Foreign Policy controls for computers.
The computer-related FP controls of this rule apply to all destinations
except Japan and to items that require a license depending upon the
destinations specified in the Computer Country Tiers. For example,
Computer Tier 1 does not require a validated license for exports of
computers, so there are no computer-related FP controls for exports of
computers to these countries.
Saving Clause
Shipments of items removed from general license authorizations as a
result of this regulatory action that were on dock for loading, on
lighter, laden aboard an exporting carrier, or en route aboard carrier
to a port of export pursuant to actual orders for export before
February 8, 1996 may be exported under the previous general license
provisions up to and including February 22, 1996. Any such items not
actually exported before midnight February 22, 1996, require a
validated export license in accordance with this regulation.
Although the Export Administration Act (EAA) expired on August 20,
1994, the President invoked the International Emergency Economic Powers
Act and continued in effect, to the extent permitted by law, the
provisions of the EAA and the EAR in Executive Order 12924 of August
19, 1994, as extended by the President's notice of August 15, 1995 (60
Fed. Reg. 42767).
Rulemaking Requirements
1. This interim rule has been determined to be significant for
purposes of Executive Order 12866.
2. This rule involves collections of information subject to the
Paperwork Reduction Act of 1995. These collections have been approved
by the Office of Management and Budget (OMB) under control numbers
0694-0002, 0694-0005, 0694-0006, 0694-0010, 0694-0013, 0694-0015, 0694-
0017, 0694-0021, 0694-0029, and 0694-0064. The rule also contains
information requirements that have been approved by OMB under 0694-
0073. The usage and computer authorization logs are estimated to
average 5 minutes each, monthly reports are estimated at 30 minutes,
and recordkeeping requirements on export transactions are estimated at
2 minutes. Each of the reporting burden estimates include the time for
reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the
collection of information. Send comments regarding these estimates to
the Office of Information and Regulatory Affairs, Office of Management
and Budget, Washington, DC 20503 and to the Bureau of Export
Administration, Director of Administration, Room 3889, Department of
Commerce, Washington, DC 20230. Notwithstanding any other provision of
law, no person is required to respond to nor shall a person be subject
to a penalty for failure to comply with a collection of information
subject to the requirements of the Paperwork Reduction Act unless that
collection of information displays a currently valid OMB Control
Number.
3. This rule does not contain policies with Federalism implications
sufficient to warrant preparation of a Federalism assessment under
Executive Order 12612.
4. Because a notice of proposed rulemaking and an opportunity for
public comment are not required to be given for this rule by section
553 of the Administrative Procedure Act (5 U.S.C. 553) or by any other
law, under section 3(a) of the Regulatory Flexibility Act (5 U.S.C.
603(a) and 604(a)) no initial or final Regulatory Flexibility Analysis
has to be or will be prepared.
5. The provisions of the Administrative Procedure Act, (5 U.S.C.
553), requiring notice of proposed rulemaking, the opportunity for
public participation, and a delay in effective date, are inapplicable
because this regulation involves a military or foreign affairs function
of the United States. No other law requires that a notice of proposed
rulemaking and an opportunity for public comment be given for this
rule.
However, because of the importance of the issues raised by these
regulations, this rule is issued in interim form and comments will be
considered in the development of final regulations.
Accordingly, the Department encourages interested persons who wish
to comment to do so at the earliest possible time to permit the fullest
consideration of their views.
The period for submission of comments will close February 26, 1996.
The Department will consider all comments received before the close of
the comment period in developing final regulations. Comments received
after the end of the comment period will be considered if possible, but
their consideration cannot be assured. The Department will not accept
public comments accompanied by a request that a part or all of the
material be treated confidentially because of its business proprietary
nature or for any other reason. The Department will return such
comments and materials to the person submitting the comments and will
not consider them in the development of final regulations. All public
comments on these regulations will be a matter of public record and
will be available for public inspection and copying. In the interest of
accuracy and completeness, the Department requires comments in written
form.
Oral comments must be followed by written memoranda, which will
also be a matter of public record and will be available for public
review and copying.
[[Page 2102]]
Communications from agencies of the United States Government or foreign
governments will not be made available for public inspection.
The public record concerning these regulations will be maintained
in the Bureau of Export Administration Freedom of Information Records
Inspection Facility, Room 4525, Department of Commerce, 14th Street and
Pennsylvania Avenue, NW., Washington, DC 20230. Records in this
facility, including written public comments and memoranda summarizing
the substance of oral communications, may be inspected and copied in
accordance with regulations published in Part 4 of Title 15 of the Code
of Federal Regulations. Information about the inspection and copying of
records at the facility may be obtained from Theodore Zois, Bureau of
Export Administration Freedom of Information Officer, at the above
address or by calling (202) 482-1525.
List of Subjects
15 CFR Part 770
Administrative practice and procedure, Exports.
15 CFR Parts 771, 772, 773, 774, 775, 776, 786 and 799
Exports, Reporting and recordkeeping requirements.
15 CFR Part 785
Communist countries, Exports.
15 CFR Part 787
Boycotts, Exports, Law enforcement, Penalties, Reporting and
recordkeeping requirements.
Accordingly, parts 770, 771, 772, 773, 774, 775, 776, 785, 786, 787
and 799 of the Export Administration Regulations (15 CFR parts 730-799)
are amended as follows:
1. The authority citation for 15 CFR parts 770, 771, 774, 786, 787
and 799 is revised to read as follows:
Authority: Pub. L. 90-351, 82 Stat. 197 (18 U.S.C. 2510 et
seq.), as amended; Pub. L. 95-223, 91 Stat. 1626 (50 U.S.C. 1701 et
seq.); Pub. L. 95-242, 92 Stat. 120 (22 U.S.C. 3201 et seq. and 42
U.S.C. 2139a); Pub. L. 96-72, 93 Stat. 503 (50 U.S.C. App. 2401 et
seq.), as amended [(extended by Pub. L. 103-10, 107 Stat. 40 and by
Pub. L. 103-277, 108 Stat. 1407)]; Pub. L. 102-484, 106 Stat. 2575
(22 U.S.C. 6004); E.O. 12002 of July 7, 1977 (42 FR 35623, July 7,
1977), as amended; E.O. 12058 of May 11, 1978 (43 FR 20947, May 16,
1978); E.O. 12214 of May 2, 1980 (45 FR 29783, May 6, 1980); E.O.
12735 of November 16, 1990 (55 FR 48587, November 20, 1990), as
continued by Notice of November 12, 1993 (58 FR 60361, November 15,
1993); E.O. 12851 of June 11, 1993 (58 FR 33181, June 15, 1993);
E.O. 12867 of September 30, 1993 (58 FR 51747, October 4, 1993);
E.O. 12930 of September 29, 1994 (59 FR 50475, October 3, 1994);
E.O. 12924 of August 19, 1994 (59 FR 43437 of August 23, 1994); E.O.
12930 (59 FR 50475 of October 3, 1994); and Notice of August 15,
1995 (60 FR 42767).
2. The authority citation for 15 CFR parts 773, 775, 778, and 785
continues to read as follows:
Authority: Pub. L. 90-351, 82 Stat. 197 (18 U.S.C. 2510 et
seq.), as amended; Pub. L. 95-223, 91 Stat. 1626 (50 U.S.C. 1701 et
seq.); Pub. L. 95-242, 92 Stat. 120 (22 U.S.C. 3201 et seq. and 42
U.S.C. 2139a); Pub. L. 96-72, 93 Stat. 503 (50 U.S.C. App. 2401 et
seq.), as amended [(extended by Pub. L. 103-10, 107 Stat. 40 and by
Pub. L. 103-277, 108 Stat. 1407)]; Pub. L. 102-484, 106 Stat. 2575
(22 U.S.C. 6004); E.O. 12002 of July 7, 1977 (42 FR 35623, July 7,
1977), as amended; E.O. 12058 of May 11, 1978 (43 FR 20947, May 16,
1978); E.O. 12214 of May 2, 1980 (45 FR 29783, May 6, 1980); E.O.
12851 of June 11, 1993 (58 FR 33181, June 15, 1993); E.O. 12867 of
September 30, 1993 (58 FR 51747, October 4, 1993); E.O. 12924 of
August 19, 1994 (59 FR 43437 of August 23, 1994); E.O. 12938 of
November 14, 1994 (59 FR 59099 of November 16, 1994); and Notice of
August 15, 1995 (60 FR 42767).
3. The authority citation for 15 CFR part 776 continues to read as
follows:
Authority: Pub. L. 90-351, 82 Stat. 197 (18 U.S.C. 2510 et
seq.), as amended; Pub. L. 95-223, 91 Stat. 1626 (50 U.S.C. 1701 et
seq.); Pub. L. 95-242, 92 Stat. 120 (22 U.S.C. 3201 et seq. and 42
U.S.C. 2139a); Pub. L. 96-72, 93 Stat. 503 (50 U.S.C. App. 2401 et
seq.), as amended; sec. 125, Pub. L. 99-64, 99 Stat. 156 (46 U.S.C.
466c); E.O. 12002 of July 7, 1977 (42 FR 35623, July 7, 1977), as
amended; E.O. 12058 of May 11, 1978 (43 FR 20947, May 16, 1978);
E.O. 12214 of May 2, 1980 (45 FR 29783, May 6, 1980); E.O. 12867 of
September 30, 1993 (58 FR 51747 of October 4, 1993); E.O. 12924 of
August 19, 1994 (59 FR 43437, August 23, 1994); E.O. 12938 of
November 14, 1994 (59 FR 59099 of November 16, 1994); and Notice of
August 15, 1995 (60 FR 42767).
PART 770--[AMENDED]
Sec. 770.2 [Amended]
4. In Sec. 770.2 the definition for ``Supercomputer'' is removed.
PART 771--[AMENDED]
Sec. 771.14 [Amended]
5. Section 771.14 is amended by revising the phrase ``No
supercomputers may be exported under this general license.'' to read
``No computers with a CTP greater than 10,000 MTOPS may be exported to
Argentina, Hong Kong, South Korea, Singapore, and Taiwan under this
general license.'', in paragraph (d)(2).
Sec. 771.22 [Amended]
6. Section 771.22 is amended by removing and reserving paragraph
(c)(2)(i).
7. Section 771.26 is amended by revising paragraph (b), to read as
follows:
Sec. 771.26 General license SAFEGUARDS; international safeguards.
* * * * *
(b) Exclusions. No computers with a CTP greater than 7,000 MTOPS to
countries listed in Computer Tiers 3 and 4 (see Sec. 776.10 of this
subchapter for a complete list of the countries within Computer Tiers 3
and 4).
5. Part 771 is amended by adding a new Sec. 771.28 to read as
follows:
Sec. 771.28 General License G-CTP; exports of computers.
(a) Scope. General License G-CTP is established subject to the
provisions of this section authorizing exports of computers and
specially designed components therefor, exported separately or as part
of a system, and related equipment therefor when exported with these
computers as part of a system, for consumption in Computer Tier
countries as provided by this section. When evaluating your computer to
determine General License G-CTP eligibility, use the CTP parameter to
the exclusion of other technical parameters for computers classified
under ECCN 4A03A; with the exception of parameters specified as Missile
Technology (MT) concerns, 4A03A.e (equipment performing analog-to-
digital or digital-to-analog conversions exceeding the limits in ECCN
3A01A.a.5), and graphic accelerators or graphic coprocessors exceeding
a ``3-D vector rate'' of 10,000,000.
(b) Computer Tier 1. (1) Eligible countries. The countries that are
eligible to receive exports under this general license are Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Greece, the Holy
See, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Mexico,
Monaco, Netherlands, New Zealand, Norway, Portugal, San Marino, Spain,
Sweden, Switzerland, Turkey, and the United Kingdom.
(2) Eligible Computers. The computers eligible for General License
G-CTP, are those with a CTP greater than 2,000 MTOPS.
(c) Computer Tier 2. (1) Eligible countries. The countries that are
eligible to receive exports under this general license include all
countries in Country
[[Page 2103]]
Group T 11 (except Mexico), Antigua and Barbuda, Bangladesh,
Benin, Bhutan, Botswana, Brunei, Burkina Faso, Burma (Myanmar),
Burundi, Cambodia, Cameroon, Cape Verde, Central Africa, Chad, Congo,
Cote d'Ivoire, Cyprus, Czech Republic, Dominica, Equatorial Guinea,
Eritrea, Ethiopia, Fiji, Gabon, Gambia (The), Ghana, Grenada, Guinea,
Guinea-Bissau, Hong Kong, Hungary, Indonesia, Kenya, Kiribati, Korea
(Republic of), Laos, Lesotho, Liberia, Madagascar, Malawi, Malaysia,
Maldives, Mali, Malta, Marshall Islands, Mauritius, Micronesia
(Federated States of), Mozambique, Namibia, Nauru, Nepal, Niger,
Nigeria, Palau, Papua New Guinea, Philippines, Poland, Rwanda, St.
Kitts & Nevis, St. Lucia, St. Vincent and Grenadines, Sao Tome &
Principe, Senegal, Seychelles, Sierra Leone, Singapore, Slovak
Republic, Slovenia, Solomon Islands, Somalia, South Africa, Sri Lanka,
Swaziland, Taiwan, Tanzania, Togo, Tonga, Thailand, Tuvalu, Uganda,
Western Sahara, Western Samoa, Zaire, Zambia, and Zimbabwe.
\11\ Countries included in Country Group T may be found in
Supplement No. 1 topPart 770 of this subchapter.
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(2) Eligible computers. The computers eligible for General License
G-CTP, are those having a Composite Theoretical Performance (CTP)
greater than 2000, but equal to or less than 10,000 Millions of
Theoretical Operations Per Second (MTOPS).
(d) Computer Tier 3. (1) Eligible countries. The countries that are
eligible to receive exports under this general license are Afghanistan,
Albania, Algeria, Andorra, Angola, Armenia, Azerbaijan, Bahrain,
Belarus, Bosnia & Herzegovina,12 Bulgaria, China (People's
Republic of), Comoros, Croatia,13 Djibouti, Egypt, Estonia,
Georgia, India, Israel, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Laos,
Latvia, Lebanon, Lithuania, Macedonia (The Former Yugoslav Republic
of), Mauritania, Moldova, Mongolia, Morocco, Oman, Pakistan, Qatar,
Romania, Russia, Saudi Arabia, Serbia & Montenegro,14 Tajikistan,
Tunisia, Turkmenistan, Ukraine, United Arab Emirates, Uzbekistan,
Vanuatu, Vietnam, and Yemen.
\12\ Except as provided in 31 CFR part 585.
\13\ Except as provided in 31 CFR part 585.
\14\ Except as provided in 31 CFR part 585.
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(2) Eligible computers. The computers eligible for General License
G-CTP, are those having a Composite Theoretical Performance (CTP)
greater than 2,000 Millions of Theoretical Operations Per Second
(MTOPS), but less than or equal to 7,000 MTOPS.
(3) Eligible exports. Only exports to permitted end-users and end-
uses located in countries in Computer Tier 3. General License G-CTP is
not authorized for exports and reexports to Computer Tier 3 for
military end-users and end-uses and nuclear, chemical, biological, or
missile end-users and end-uses defined in part 778 of this subchapter.
Exports under this general license may not be made to known military
end-users or to known military end-uses or known proliferation end-uses
or end-users defined in part 778 of this subchapter. Such exports will
continue to require a validated license and will be considered on a
case-by-case basis. Retransfers to military end-users or end-uses and
defined proliferation end-users and end-uses in eligible countries are
strictly prohibited without prior authorization.
(e) Restrictions. (1) Computers eligible for General License G-CTP
may not be accessed either physically or computationally by nationals
of Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria; except that
commercial consignees described in Sec. 776.10(j) of this subchapter
are prohibited only from giving such nationals user-accessible
programmability.
(2) Computers, software and specially designed technology eligible
for General License G-CTP may not be reexported/retransferred without
prior authorization from the Bureau of Export Administration, i.e.,
validated license, permissive reexport, or another general license.
This restriction will be conveyed to the consignee, via the Destination
Control Statement, see Sec. 786.6 of this subchapter.
PART 772--[AMENDED]
Sec. 772.11 [Amended]
8. Section 772.11 is amended by revising the phrase ``amendment
request, if the commodity described on the license is a supercomputer
or if the country'' to ``amendment request, if the country'' in
paragraph (k)(1)(i).
9. Section 772.11 is amended by revising the phrase ``(excluding
the People's Republic of China) and the commodity described on the
license is not a supercomputer.'' to ``(excluding the People's Republic
of China).'' in paragraph (k)(1)(ii).
10. Section 772.11 is amended by revising the phrase ``amendment
request, if the commodity described on the license is a supercomputer
or if the country'' to ``amendment request, if the country'' in
paragraph (l)(1)(i).
11. Section 772.11 is amended by revising the phrase ``(excluding
the People's Republic of China) and the commodity described on the
license is not a supercomputer.'' to ``(excluding the People's Republic
of China).'' in paragraph (l)(1)(ii).
PART 773--[AMENDED]
Supplement No. 1 to part 773, Commodities Excluded from the Special
License Procedure is amended:
a. By removing and reserving paragraph (a); and
b. By revising paragraph (l), to read as follows:
Supplement No. 1 to Part 773--Commodities Excluded From the Special
License Procedures
* * * * *
(l) Commodities subject to nuclear nonproliferation controls (see
Sec. 778.2 of this subchapter).
* * * * *
PART 774--[AMENDED]
13. In Sec. 774.2, paragraphs (a)(1), (k)(1)(i) and (m) are revised
to read as follows:
Sec. 774.2 Permissive reexports.2
\2\ See Sec. 774.9 of this subchapter for effect on foreign
laws.
---------------------------------------------------------------------------
* * * * *
(a) * * *
(1) May be exported directly from the United States to the new
country of destination under General License G-DEST, G-TEMP,\4\ GFW,
GCG, G-NNR, GATS, GUS, BAGGAGE, or G-CTP.
\4\ Commodities legally exported from the United States may be
reexported to a new country(ies) of destination under General
License G-TEMP provided the restrictions described in Sec. 771.22
are met and the commodities and software are returned to the country
from which the reexport occurred.
---------------------------------------------------------------------------
* * * * *
(k) * * *
(1) Except:
(i) Computers with a CTP greater than 10,000 MTOPS to Hong Kong and
South Korea.
* * * * *
(m) Reexports of computers from Japan, provided that the reexport
is authorized in accordance with the licensing requirements of Japan,
computers destined to Computer Tier 3 countries (See part 776.10(f) of
this subchapter) that have a CTP greater than 7,000 MTOPS and computers
destined to Computer Tier 2 countries (See part 776.10(e) of this
subchapter) that have a CTP greater than 10,000 MTOPS.
* * * * *
Sec. 774.3 [Amended]
14. Section 774.3 is amended by revising the phrase ``identified in
Sec. 774.3(c)(1)(i)(A) (1) or (2) or the
[[Page 2104]]
commodity described on the application is a supercomputer; or'' to read
``identified in Sec. 774.3(c)(1)(i)(A) (1) or (2), or'' in paragraph
(b)(3)(i).
15. Section 774.3 is amended by revising the phrase ``listed in
Sec. 774.3(c)(1)(i)(B), except that a supporting document must be
submitted when the commodity described on the application is a
supercomputer.'' to read ``listed in Sec. 774.3(c)(1)(i)(B).'' in
paragraph (b)(3)(ii).
16. Section 774.3 is amended by removing the last sentence in
paragraph (c)(1)(i)(B), which reads ``However, if the commodity
described on the application is a supercomputer, the supporting
document must be submitted with the request for reexport
authorization--not retained in the applicant's records.''
Sec. 775.1 [Amended]
17. Section 775.1 is amended by removing the fourth sentence of
paragraph (a) that reads ``However, if the commodity described on the
application is a supercomputer, the supporting document shall be
submitted to the Office of Export Licensing along with the
application.''
Sec. 775.2 [Amended]
18. Section 775.2 is amended by revising the phrase ``each
individual export license application where the commodity described on
the application is a supercomputer or when the country'' to read ``each
individual export license application where the country'' in paragraph
(a)(1).
19. Section 775.2 is amended by revising the phrase ``(except for
the People's Republic of China) and the commodity described on the
application is not a supercomputer, a Form BXA-629P shall be retained''
to read ``(except for the People's Republic of China), a Form BXA-629P
shall be retained'' in paragraph (a)(2).
Sec. 775.3 [Amended]
20. Section 775.3 is amended by removing the fifth sentence in
paragraph (a)(1), that reads ``If the commodity described on the
application is a supercomputer, the IC must be submitted to the Office
of Export Licensing along with the application--not retained in the
applicant's files.''
Sec. 775.7 [Amended]
21. Section 775.7 is amended by removing paragraph (a)(2)(iii).
Sec. 775.10 [Amended]
22. Section 775.10 is amended by removing and reserving paragraph
(f)(1).
23. Section 775.10 is amended by revising paragraphs (g)(1) (i) and
(ii), (g)(2)(i)(A) and (g)(2)(i)(B), to read as follows:
Sec. 775.10 Special provisions.
* * * * *
(g) * * *
(1) * * *
(i) Submitted to the Bureau of Export Administration, along with
the amendment request, if the country of ultimate destination is the
People's Republic of China or a country in Country Group Q, W, Y, or Z;
or
(ii) Retained in the applicant's files in accordance with the
provisions of this part 775 if the country of ultimate destination is a
country in Country Group S or V (except for the People's Republic of
China).
(2) * * *
(i) * * *
(A) Submitted to the Bureau of Export Administration, along with
the amendment request, if the country of ultimate destination is the
People's Republic of China or a country in Country Group Q, W, Y, or Z;
or
(B) Retained in the applicant's files in accordance with the
provisions of this part 775 if the country of ultimate destination is a
country in Country Group S or V (except for the People's Republic of
China).
* * * * *
PART 776--[AMENDED]
24. Section 776.10 is amended by removing the parenthetical
sentence at the end of paragraph (a)(1) and by adding paragraphs (d)
through (m), to read as follows:
Sec. 776.10 Electronic computers and related equipment.
* * * * *
(d) Computer Tier 1.--(1) Applicable countries. The countries
subject to the requirements of this paragraph (d) include: Australia,
Austria, Belgium, Denmark, Finland, France, Germany, Greece, the Holy
See, Iceland, Ireland, Italy, Japan, Liechtenstein, Luxembourg, Mexico,
Monaco, Netherlands, New Zealand, Norway, Portugal, San Marino, Spain,
Sweden, Switzerland, Turkey, and the United Kingdom.
(2) Validated license requirement. Except as provided in part
771.2(c) of this subchapter, no validated license is required for
exports of computers to and among countries listed in paragraph (d)(1)
of this section, for consumption in such countries or other disposition
in accordance with the EAR.
(e) Computer Tier 2.--(1) Applicable countries. The countries
subject to the requirements of this paragraph (e) include all countries
in Country Group T 2 (except Mexico), Antigua and Barbuda,
Bangladesh, Benin, Bhutan, Botswana, Brunei, Burkina Faso, Burma
(Myanmar), Burundi, Cambodia, Cameroon, Cape Verde, Central Africa,
Chad, Congo, Cote d'Ivoire, Cyprus, Czech Republic, Dominica,
Equatorial Guinea, Eritrea, Ethiopia, Fiji, Gabon, Gambia (The), Ghana,
Grenada, Guinea, Guinea-Bissau, Hong Kong, Hungary, Indonesia, Kenya,
Kiribati, Korea (Republic of), Laos, Lesotho, Liberia, Madagascar,
Malawi, Malaysia, Maldives, Mali, Malta, Marshall Islands, Mauritius,
Micronesia (Federated States of), Mozambique, Namibia, Nauru, Nepal,
Niger, Nigeria, Palau, Papua New Guinea, Philippines, Poland, Rwanda,
St. Kitts and Nevis, St. Lucia, St. Vincent and Grenadines, Sao Tome
and Principe, Senegal, Seychelles, Sierra Leone, Singapore, Slovak
Republic, Slovenia, Solomon Islands, Somalia, South Africa, Sri Lanka,
Swaziland, Taiwan, Tanzania, Togo, Tonga, Thailand, Tuvalu, Uganda,
Western Sahara, Western Samoa, Zaire, Zambia, and Zimbabwe.
\2\. Countries included in Country Group T may be found in
Supplement No. 1 to part 770 of this subchapter.
---------------------------------------------------------------------------
(2) Validated license requirement. A validated license or reexport
authorization is required to export or reexport a computer having a
Composite Theoretical Performance (CTP) greater than 10,000 Millions of
Theoretical Operations Per Second (MTOPS) to a country in Computer Tier
2.
(3) Licensing policy. License applications for the countries listed
in paragraph (e)(1) of this section will generally be approved.
(f) Computer Tier 3.--(1) Applicable countries. The countries
subject to the requirements of this paragraph (f) include Afghanistan,
Albania, Algeria, Andorra, Angola, Armenia, Azerbaijan, Bahrain,
Belarus, Bosnia and Herzegovina,3 Bulgaria, China (People's
Republic of), Comoros, Croatia,4 Djibouti, Egypt, Estonia,
Georgia, India, Israel, Jordan, Kazakhstan, Kuwait, Kyrgyzstan, Laos,
Latvia, Lebanon, Lithuania, Macedonia (The Former Yugoslav Republic
of), Mauritania, Moldova, Mongolia, Morocco, Oman, Pakistan, Qatar,
Romania, Russia, Saudi Arabia, Serbia and Montenegro,5,
Tajikistan, Tunisia, Turkmenistan, Ukraine, United Arab Emirates,
Uzbekistan, Vanuatu, Vietnam, and Yemen.
\3\ Except as provided in 31 CFR part 585.
\4\ Except as provided in 31 CFR part 585.
\5\ Except as provided in 31 CFR part 585.
---------------------------------------------------------------------------
(2) Validated license requirement.
(i) A validated license or reexport authorization is required to
export or
[[Page 2105]]
reexport computers with a CTP greater than 2,000 MTOPS to countries in
Computer Tier 3 to military end-users and end-uses and to nuclear,
chemical, biological, or missile end-users and end-uses defined in part
778 of this subchapter located in Computer Tier 3 countries.
(ii) A validated license or reexport authorization is required to
export or reexport computers with a CTP greater than 7,000 MTOPS to all
end-users and end-uses located in countries in Computer Tier 3.
(3) Licensing policy. License applications for exports and
reexports to military end-users and end-uses and nuclear, chemical,
biological, or missile end-users and end-uses defined in part 778 of
this subchapter located in countries in Computer Tier 3 will be
reviewed on a case-by-case basis using the following criteria:
(i) The presence and activities of countries and end-users of
national security and proliferation concern and the relationships that
exist between the government of the importing country and such
countries and end-users;
(ii) The ultimate consignee's participation in, or support of, any
of the following:
(A) Activities that involve national security concerns; or
(B) Nuclear, chemical, biological or missile proliferation
activities described in part 778 of this subchapter;
(iii) The extent to which the importing country is involved in
nuclear, chemical, biological, or missile proliferation activities
described in part 778 of this subchapter;
(iv) The end-user, whether the end-use is single-purpose or
multiple-purpose.
(4) Licensing policy for other end-uses and end-users. Licenses
applications for exports and reexports to other end-users and end-uses
located in countries in Computer Tier 3 will generally be approved.
(g) Computer Tier 4. (1) Applicable countries. The countries
subject to the requirements of this paragraph (g) include Cuba, Iran,
Iraq, Libya, North Korea, Sudan and Syria.
(2) Validated license requirement. A validated license or reexport
authorization is required to export or reexport to any end-user in
Syria or Sudan computers with a CTP equal to or greater than 6 MTOPS.
For validated license requirements for export or reexport of all
computers, regardless of CTP, to Cuba, Iran, Iraq, Libya, and North
Korea, see the following paragraphs:
(i) Cuba. You will need a license to export or reexport all
computers to Cuba, unless your transaction meets all the applicable
terms and conditions of any BXA General License, see part 771 of this
subchapter. Examples of General Licenses that may be considered for use
to export or reexport computers include G-TEMP (by the news media),
BAGGAGE, GUS, GIFT, SAFEGUARDS, and GLR. Also see the Office of Foreign
Assets Control's Regulations for Cuba (31 CFR part 515).
(ii) Iran. The Office of Foreign Assets Control (OFAC), within the
Department of the Treasury, administers an embargo against Iran under
the authority of the International Emergency Economic Powers Act (see
31 CFR part 560), which prohibits certain transactions with Iran,
including imports, exports, and certain reexports. The export and
reexport controls apply to transfers not only to Iran, but also to the
Government of Iran or any entity owned or controlled by the Government
of Iran. If you are a U.S. person, you should consult with OFAC for
authorization to export or reexport items subject to U.S. jurisdiction
to Iran, or to any entity owned or controlled by, or specially
designated as acting for or on behalf of, the Government of Iran. An
authorization from OFAC constitutes authorization under the EAR, and no
license from BXA is necessary.
(iii) Iraq. The Office of Foreign Assets Control (OFAC), within the
Department of the Treasury, administers an embargo against Iraq under
the authority of the International Emergency Economic Powers Act of
1977 and in conformance with United Nations Security Council
Resolutions. The applicable OFAC regulations, the Iraqi Sanctions
Regulations, are found at 31 CFR part 575. You should consult with OFAC
for authorization to export or reexport items subject to U.S.
jurisdiction to Iraq, or to any entity owned or controlled by, or
specially designated as acting for or on behalf of, the Government of
Iraq. An authorization from OFAC constitutes authorization under the
EAR, and no license from BXA is necessary. You may not use any BXA
general licenses or other BXA authorization to export or reexport to
Iraq, except for General Licenses BAGGAGE and GUS, as recognized in
OFAC's Iraqi Sanctions Regulations (31 CFR 575.507).
(iv) Libya. The Department of the Treasury and the Department of
Commerce maintain comprehensive controls on exports and reexports to
Libya. The Department of the Treasury, Office of Foreign Assets control
(OFAC) maintains comprehensive controls on export and transshipments to
Libya under the Libyan Sanctions Regulations (31 CFR part 550). To
avoid duplicate licensing procedures, OFAC and BXA have allocated
licensing responsibility as follows: OFAC licenses direct exports and
transshipments to Libya; BXA licenses reexports, exports of foreign
manufactured items containing U.S.-origin parts, components or
materials, and exports of foreign-produced direct product of U.S.
technology or software. Issuance of an OFAC license constitutes
authorization under the EAR, and no license from BXA is necessary.
Exports and reexports subject to the EAR that are not subject to the
Libyan Sanctions Regulations continue to require authorization from
BXA.
(v) North Korea. You will need a license to export or reexport all
computers to North Korea, unless your transaction meets all the
applicable terms and conditions of a general license, see part 771 of
this subchapter. Examples of general licenses that may used to export
or reexport computers include General License G-TEMP (by the news
media), BAGGAGE, GUS, GIFT, SAFEGUARDS, and GLR. Also see the Office of
Foreign Assets Control's Regulations for Cuba (31 CFR part 500).
(3) Licensing policy. Applications to export or reexport computers
to terrorist countries will generally be denied. See also part 785 of
this subchapter for greater detail concerning the licensing policy for
most of these countries.
(h) Safeguard conditions. Following interagency review of the
application, the Bureau of Export Administration will instruct the
exporter to submit a safeguard plan signed by the ultimate consignee
and certified by the export control authorities of the importing
country (see paragraph (i) of this section for certification by
government of importing country). The safeguard plan must indicate that
the ultimate consignee agrees to implement those safeguards required by
the Bureau of Export Administration as a condition of issuing the
license. The Bureau of Export Administration will inform exporters
concerning which of the following safeguards will be required as
license conditions:
(1) The applicant will assume responsibility for providing adequate
security against physical diversion of the computer during shipment
(e.g., delivery by either attended or monitored shipment, using the
most secure route possible--this precludes using the services or
facilities of any country listed in paragraph (g) of this section, i.e,
Computer Tier 4 countries).
(2) There will be no reexport or intra-country transfer of the
computer without prior written authorization from the Bureau of Export
Administration.
[[Page 2106]]
(3) The computer systems will be used only for those activities
approved on the license or reexport authorization.
(4) There will be no changes either in the end-users or the end-
uses indicated on the license without prior written authorization by
the Bureau of Export Administration.
(5) Only software that supports the approved end-uses will be
shipped with the computer system.
(6) The end-user will station security personnel at the computer
using facility to ensure that the appropriate security measures are
implemented.
(7) The exporter will station representatives at the computer using
facility, or make such individuals readily available, to guide the
security personnel in the implementation and operation of the security
measures.
(8) The security personnel will undertake the following measures
under the guidance of the exporter's representatives:
(i) The physical security of the computer using facility;
(ii) The establishment of a system to ensure the round-the-clock
supervision of computer security;
(iii) The inspection, if necessary, of any program or software to
be run on the computer system in order to ensure that all usage
conforms to the conditions of the license;
(iv) The suspension, if necessary, of any run in progress and the
inspection of any output generated by the computer to determine whether
the program runs or output conform with the conditions of the license;
(v) The inspection of usage logs daily to ensure conformity with
the conditions of the license and the retention of records of these
logs for at least a year;
(vi) The determination of the acceptability of computer users to
ensure conformity with the conditions of the license;
(vii) The immediate reporting of any security breaches or suspected
security breaches to the government of the importing country and to the
exporter's representatives;
(viii) The execution of the following key tasks:
(A) Establishment of new accounts;
(B) Assignment of passwords;
(C) Random sampling of data;
(D) Generation of daily logs;
(ix) The maintenance of the integrity and security of tapes and
data files containing archived user files, log data, or system backups.
(9) The exporter's representatives will be present when certain key
functions are being carried out (e.g., the establishment of new
accounts, the assignment of passwords, the random sampling of data, the
generating of daily logs, the setting of limits to computer resources
available to users in the development mode, the certification of
programs for conformity to the approved end-uses before they are
allowed to run in the production mode, and the modification to
previously certified production programs).
(10) The security personnel and the exporter's representatives will
provide monthly reports on the usage of the computer system and on the
implementation of the safeguards.
(11) The computer system will be housed in one secure building and
protected against theft and unauthorized entry at all times.
(12) Restricted nationals, i.e., nationals of Computer Tier 4
countries, will not be allowed access to computers:
(i) No physical or computational access to computers may be granted
to restricted nationals without prior written authorization from the
Bureau of Export Administration, except that commercial consignees
described in paragraph (j) of this section are prohibited only from
giving such nationals user-accessible programmability without prior
written authorization;
(ii) No passwords or IDs may be issued to restricted nationals;
(iii) No work may be performed on the computer on behalf of
restricted nationals; and
(iv) No conscious or direct ties may be established to networks
(including their subscribers) operated by restricted nationals.
(13) Physical access to the computer, the operator consoles, and
sensitive storage areas of the computer using facility will be
controlled by the security personnel, under the guidance and monitoring
of the exporter's representatives, and will be limited to the fewest
number of people needed to maintain and run the computer system.
(14) The computer will be equipped with the necessary software to:
permit access to authorized persons only, detect attempts to gain
unauthorized access, set and maintain limits on usage, establish
accountability for usage, and generate logs and other records of usage.
This software will also maintain the integrity of data and program
files, the accounting and audit system, the password or computational
access control system, and the operating system itself.
(i) The operating system will be configured so that all jobs can be
designated and tracked as either program development jobs or as
production jobs.
(ii) In the program development mode, users will be free, following
verification that their application conforms to the agreed end-use, to
create, edit, or modify programs, to use utilities such as editors,
debuggers, or compilers and to verify program operation. Programs in
the development mode will be subject to inspection as provided by
paragraph (h)(8)(iii) of this section.
(iii) In the production mode, users will have access to the full
range of computer resources, but will be prohibited from modifying any
program or using utilities that could modify any program. Before being
allowed to run in the production mode, a program will have to be
certified for conformity to approved end-uses by the security personnel
and the exporter's representatives.
(iv) Programs certified for execution in the production mode will
be protected from unauthorized modification by appropriate software and
physical security measures. Any modifications to previously certified
production programs will be approved by the security personnel under
the guidance and monitoring of the exporter's representatives.
(v) The computer will be provided with accounting and audit
software to ensure that detailed logs are maintained to record all
computer usage. A separate log of security-related events will also be
kept.
(vi) For each job executed in the production mode, the operating
system will record execution characteristics in order to permit
generation of a statistical profile of the program executed.
(15) The source code of the operating system will be accessible
only to the exporter's representatives. Only those individuals will
make changes in this source code.
(16) The security personnel, under the guidance of the exporter's
representatives, will change passwords for individuals frequently and
at unpredictable intervals.
(17) The security personnel, under the guidance of the exporter's
representatives, will have the right to deny passwords to anyone.
Passwords will be denied to anyone whose activity does not conform to
the conditions of the license.
(18) Misuse of passwords by users will result in denial of further
access to the computer.
(19) The exporter's representatives will install a strict password
system and provide guidance on its implementation.
(20) Only the exporter's representatives will be trained in
[[Page 2107]]
making changes in the password system and only they will make such
changes.
(21) No computer will be networked to other computers outside the
computer center without prior authorization from the Bureau of Export
Administration.
(22) Generally, remote terminals will not be allowed outside the
computer using facility without prior authorization by the Bureau of
Export Administration. If remote terminals are specifically authorized
by the license:
(i) The terminals will have physical security equivalent to the
safeguards at the computer using facility;
(ii) The terminals will be constrained to minimal amounts of
computer resources (CPU time, memory access, number of input-output
operations, and other resources);
(iii) The terminals will not be allowed direct computational access
to the computer (i.e., the security personnel, under the guidance of
the exporter's representatives, will validate the password and identity
of the user of any remote terminals before any such user is permitted
to access the computer)--all terminals will be connected to the
computer system by a dedicated access line and a network access
controller.
(23) There will be no direct input to the computer from remote
terminals. Any data originating from outside the computer using
facility, except for direct input from terminals within the same
compound as the computer using facility, will first be processed by a
separate processor or network access controller in order to permit
examination of the data prior to its entry into the computer.
(24) The exporter will perform all maintenance of the computer
system.
(25) Spare parts kept on site will be limited to the minimum
amount. Spares will be kept in an area accessible only to the
exporter's representatives. These representatives will maintain a
strict audit system to account for all spare parts.
(26) No development or production technology on the computer system
will be sent with the computer to the ultimate consignee.
(27) The end-user must immediately report any suspicions or facts
concerning possible violations of the safeguards to the exporter and to
the export control authorities of the importing country.
(28) The exporter must immediately report any information
concerning possible violations of the safeguards to the Bureau of
Export Administration. A violation of the safeguards might constitute
grounds for suspension or termination of the license, preventing the
shipment of unshipped spare parts, or the denial of additional licenses
for spare parts, etc.
(29) The end-user will be audited quarterly by an independent
consultant who has been approved by the export control authorities of
the importing and exporting countries, but is employed at the expense
of the end-user. The consultant will audit the computer usage and the
implementation of the safeguards.
(30) The installation and operation of the computer will be
coordinated and controlled by the following management structure:
(i) Steering Committee. The Steering Committee will comprise
nationals of the importing country who will oversee the management and
operation of the computer.
(ii) Security Staff. The Security Staff will be selected by the
end-user or the government of the importing country to ensure that the
required safeguards are implemented. This staff will be responsible for
conducting an annual audit to evaluate physical security,
administrative procedures, and technical controls.
(iii) Technical Consultative Committee. This committee will
comprise technical experts from the importing country and the exporting
company who will provide guidance in operating and maintaining the
computer. At least one member of the committee will be an employee of
the exporter. The committee will approve all accounts and maintain an
accurate list of all users. In addition, the committee will advise the
Steering Committee and the Security Staff concerning the security
measures needed to ensure compliance with the safeguards required by
the license.
(31) An ultimate consignee who is a multiple-purpose end-user, such
as a university, will establish a peer review group comprising experts
who represent each department or application area authorized for use on
the computer under the conditions of the license. This group shall have
the following responsibilities:
(i) Review all requests for computer usage and make recommendations
concerning the acceptability of all projects and users;
(ii) Submit these recommendations to the Security Staff and
Technical Consultative Committee for review and approval (see paragraph
(h)(28) of this section);
(iii) Establish acceptable computer resource parameters for each
project and review the results to verify their conformity with the
authorized end-uses, restrictions, and parameters; and
(iv) Prepare monthly reports that would include a description of
any runs exceeding the established parameters and submit them to the
security staff.
(32) The end-user will also cooperate with any post-shipment
inquiries or inspections by the U.S. Government or exporting company
officials to verify the disposition and/or use of the computer,
including access to the following:
(i) Usage logs, which should include, at a minimum, computer users,
dates, times of use, and amount of system time used;
(ii) Computer access authorization logs, which should include, at a
minimum, computer users, project names, and purpose of projects.
(33) The end-user will also cooperate with the U.S. Government or
exporting company officials concerning the physical inspection of the
computer using facility, on short notice, at least once a year and will
provide access to all data relevant to computer usage. This inspection
will include:
(i) Analyzing any programs or software run on the computer to
ensure that all usage complies with the authorized end-uses on the
license. This will be done by examining user files (e.g., source codes,
machine codes, input/output data) that are either on-line at the time
of the inspection or that have been previously sampled and securely
stored.
(ii) Checking current and archived usage logs for conformity with
the authorized end-uses and the restrictions imposed by the license.
(iii) Verifying the acceptability of all computer users in
conformity with the authorized end-uses and the restrictions imposed by
the license.
(34) Usage requests that exceed the quantity of monthly CPU time
specified on the license shall not be approved without prior written
authorization from the Bureau of Export Administration. Requests for
computational access approval shall include a description of the
intended purpose for which access is sought.
(35) (i) In addition to, or in lieu of, the normal access by on-
site exporting company staff or its representatives, the company, when
required by the exporting government, will provide a separate remote
electronic access capability to the computer for the purposes of
maintenance, troubleshooting, inspection of work in progress, and
auditing of all work performed on the computer. On-site and central
exporting company hardware and software maintenance facilities, at the
direction of the exporting company staff or its representatives, to
gather information such as:
[[Page 2108]]
(A) Statistical profiles of production jobs;
(B) Logs of jobs run in both production and development mode;
(C) Logs and reports of security related events.
(ii) If such method is used, the remote maintenance facilities will
be considered part of the operating system and protected accordingly,
and will be available only to exporting company operational staff or
its representatives. The maintenance hardware and software and
associated communication links will be protected to ensure the
integrity and authenticity of data and programs and to prevent
tampering with hardware.
(36) The export company staff or its representatives will be
required to provide personnel for a specified period of time at the
computer facility for management, operation, and safeguarding of the
computer.
(i) Certification by export control authorities of importing
country.
(1) The following importing government certification is required by
paragraph (h) of this section:
This is to certify that (name of ultimate consignee) has
declared to (name of appropriate foreign government agency) that the
computer (model name) will be used only for the purposes specified
in the end-use statement and that the ultimate consignee will
establish and adhere to all the safeguard conditions and perform all
other undertakings described in the end-use statement.
The (name of appropriate foreign government agency) will advise
the United States Government of any evidence that might reasonably
indicate the existence of circumstances (e.g., transfer of
ownership) that could affect the objectives of the security
safeguard conditions.
(2) Other importing government assurances regarding prohibited
activities may also be required on a case-by-case basis.
(j) Commercial consignees. Exports or reexports of computers that
are solely dedicated to the following non-scientific and non-technical
commercial business uses will usually be eligible for a reduced set of
security safeguard conditions:
(1) Financial services (e.g., banking, securities and commodity
exchanges);
(2) Insurance;
(3) Reservation systems;
(4) Point-of-sales systems;
(5) Mailing list maintenance for marketing purposes;
(6) Inventory control for retail/wholesale distribution.
(k) Special recordkeeping requirements. Exporters must keep
accurate records of each export of a computer with a CTP equal to or
greater than 2,000 MTOPS. These records will be made available to the
U.S. Government upon request. The records will include the following
information:
(1) Date of shipment;
(2) Name and address of the end-user and each intermediate
consignee;
(3) CTP of each computer in shipment;
(4) Volume of computers in shipment;
(5) Dollar value of shipment; and
(6) End-Use.
(l) Reporting requirements. Exporters are hereby notified that
consistent with the commitments reached with the new multilateral
regime that will replace the Coordinating Committee (COCOM), exporters
will be required to submit to BXA consolidated reports on exports to
certain destinations every six months of computers with a CTP equal to
or greater than 2,000 MTOPS. These reports will include for each such
export all the information required to be kept pursuant to paragraph
(k) of this section. Exports of computers above 2,000 MTOPS to certain
destinations will be subject to the reporting requirement once the
initial elements of the new multilateral regime are adopted, and the
first report will be due thereafter.
(m) General license availability. When evaluating your computer to
determine General License eligibility, use the CTP parameter to the
exclusion of other technical parameters for computers classified under
ECCN 4A03A; with the exception of parameters specified as Missile
Technology (MT) concerns, 4A03A.e (equipment performing analog-to-
digital conversions exceeding the limits in ECCN 3A01A.a.5.a), and
graphic accelerators or graphic coprocessors exceeding a ``3-D vector
rate'' of 10,000,000.
(1) General License G-DEST. General License G-DEST may be used for
exports of computers and specially designed components therefor,
exported separately or as part of a system, and related equipment
therefor when exported with these computers as part of a system, as
described in this section.
(i) Computer Tiers 1, 2 and 3. Exports of computers with a CTP
equal to or less 2,000 MTOPS and specially designed components
therefor, exported separately or as part of a system, and related
equipment therefor when exported with these computers as part of a
system, are eligible for General License G-DEST to countries in the
respective Computer Tiers.
(ii) Sudan and Syria. Exports of computers with a CTP less than 6
MTOPS and specially designed components therefor, exported separately
or as part of a system, and related equipment therefor when exported
with these computers as part of a system are eligible for General
License G-DEST to Sudan and Syria.
(2) General License G-CTP.
(i) Computer Tier 1. General License G-CTP is available for exports
of computers with a CTP greater than 2,000 MTOPS and specially designed
components therefor, exported separately or as part of a system, and
related equipment when exported with these computers as part of a
system therefor, to countries in Computer Tier 1.
(ii) Computer Tier 2. General License G-CTP is available for
exports of computers with a CTP greater than 2,000 MTOPS, but equal to
or less than 10,000 MTOPS and specially designed components therefor,
exported separately or as part of a system, and related equipment when
exported with these computers as part of a system therefor, to
countries in Computer Tier 2.
(iii) Computer Tier 3. General License G-CTP is available for
exports of computers with a CTP greater than 2,000 MTOPS, but less than
or equal to 7,000 MTOPS and specially designed components therefor,
exported separately or as part of a system, and related equipment when
exported with these computers as part of a system to permitted end-
users and end-uses located in countries in Computer Tier 3. General
License G-CTP is not authorized for exports or reexports to countries
in Computer Tier 3 for military end-users and end-uses and nuclear,
chemical, biological, or missile end-users and end-uses defined in part
778. (See Sec. 771.28 of this subchapter for more details of General
License G-CTP.)
(3) Other general licenses. Computers are eligible for many other
general licenses found in part 771 of this subchapter. Examples of
general licenses you may consider for exports of computers are: GLV,
BAGGAGE, GIT, GUS, GCG, GTF-U.S., GLR, GIFT, GLX, G-TEMP, and
SAFEGUARDS.
Sec. 776.11 [Removed and reserved]
25. Section 776.11 is removed and reserved.
26. Section 776.12 is amended by revising paragraph (b)
introductory text to read as follows:
Sec. 776.12 Parts, components, and materials incorporated abroad into
foreign-made products.
* * * * *
(b) Determining approval requirements. Prior written approval of
the Department of Commerce is required for the export from a foreign
country of
[[Page 2109]]
a foreign-made computer with a performance level exceeding 7,000 MTOPS
containing U.S.-origin controlled semiconductors (other than memory
circuits) classified under ECCN 3A01A or high speed interconnect
devices (ECCN 4A03A.d) to Computer Tier 3 and 4 countries, without
exception. Prior written approval also is required for any other
foreign-made product incorporating U.S. origin parts, components, or
materials, unless:
* * * * *
PART 785--[AMENDED]
Sec. 785.4 [Amended]
27. Section 785.4 is amended by revising the phrase ``Fluorocarbon
compounds for cooling fluids for radar and supercomputers described in
ECCN 1C94'' to read ``fluorocarbon compounds for cooling fluids for
radar and computers described in ECCN 1C94'' in the first and last
sentences in paragraph (d)(1)(xxxiii).
PART 786--[AMENDED]
28. Section 786.6 is amended by revising (a)(2) and (c)(2) to read
as follows:
Sec. 786.6 Destination control statements.
(a) * * *
(2) General License GLV, GTF-US, G-TEMP, GLR, GFW, GNSG, GCT, or G-
CTP.
* * * * *
(c) * * *
(2) General license shipments. For a shipment under any general
license, except General License GCT, GNSG, and G-CTP, any of the three
destination control statements in paragraph (d) of this section may be
used. For shipments under General License GCT, GNSG, and G-CTP,
exporters must use Statement No. 1 or 2.
* * * * *
PART 787--[AMENDED]
Sec. 787.13 [Amended]
29. Section 787.13 is amended by removing the reference ``776.11''
from the second sentence of paragraph (c).
PART 799--[AMENDED]
Supplement No. 1 to Sec. 799.1 [Amended]
30. In Category 4, the following amendments are made:
a. The Requirements sections of the following ECCNs are revised:
4A01A, 4A02A, 4A94F, 4D01A, 4D02A, 4D94F, 4E01A, and 4E94F; and
b. ECCN 4A03A, is revised to read as follows:
4A01A Electronic computers and related equipment, as follows, and
``assemblies'' and specially designed components therefor.
Requirements
Validated License Required: QSTVWYZ, (see Notes).
Unit: Computers and peripherals in number; parts and accessories in
$ value.
Reason For Control: NS, MT, NP, FP (see Notes).
GLV: $5000 for 4A01.a only; $0 for 4A01.b.
GCT: Yes, except MT and except Hong Kong and South Korea for
computers with a CTP greater than 10,000 MTOPS. (See Notes).
GCTP: No.
GFW: No.
Notes: 1. MT controls apply to 4A01.a.
2. FP and NP controls apply to all destinations, except:
a. Countries listed in Sec. 776.10(d) of this
FR Doc. 96-293 Revisions to the Export Administration Regulations: Reform of Computer Export Controls; Establishment of General License G-CTP
subchapter
(Computer Tier 1),
b. Countries listed in Sec. 776.10(e) of this subchapter
(Computer Tier 2), for computers with a CTP equal to or less than
10,000 MTOPS; and
c. Countries listed in Sec. 776.10(f) of this subchapter
(Computer Tier 3), for computers with a CTP equal to or less than
2,000 MTOPS to all end-users/uses or a CTP equal to or less than
7,000 MTOPS to end-users/uses that are not military end-users and
end-uses and are not nuclear, chemical, biological, or missile end-
users and end-uses defined in part 778 of this subchapter.
* * * * *
4A02A ``Hybrid computers'', as follows, and ``assemblies'' and
specially designed components therefor.
Requirements
Validated License Required: QSTVWYZ, (see Notes).
Unit: Computers and peripherals in number; parts and accessories in
$ value.
Reason For Control: NS, MT, NP, FP (see Notes).
GLV: $5000.
GCT: Yes, except MT and except Hong Kong and South Korea for
computers with a CTP greater than 10,000 MTOPS. (see Notes).
GCTP: No.
GFW: No.
Notes: 1. MT controls apply to hybrid computers combined with
specially designed ``software'', for modeling, simulation, or design
integration of complete rocket systems and unmanned air vehicle
systems described in Sec. 787.7 of this subchapter.
2. FP and NP controls apply to all destinations, except:
a. Countries listed in Sec. 776.10(d) of this subchapter
(Computer Tier 1),
b. Countries listed in Sec. 776.10(e) of this subchapter
(Computer Tier 2), for computers with a CTP equal to or less than
10,000 MTOPS; and
c. Countries listed in Sec. 776.10(f) of this subchapter
(Computer Tier 3), for computers with a CTP equal to or less than
2,000 MTOPS to all end-users/uses or a CTP equal to or less than
7,000 MTOPS to end-users/uses that are not military end-users and
end-uses and are not nuclear, chemical, biological, or missile end-
users and end-uses defined in part 778 of this subchapter.
* * * * *
4A03A ``Digital computers'', ``assemblies'', and related
equipment therefor, as described in this entry, and specially
designed components therefor.
Requirements
Validated License Required: QSTVWYZ, (see Note 5).
Unit: Computers and peripherals in number; parts and accessories in
Sec. value.
Reason for Control: NS, MT, NP, FP (see Notes).
GLV: $5,000.
GCT: Yes, except MT and FP, and except Hong Kong and South Korea
for computers with a CTP greater than 10,000 MTOPS. (See Notes).
GCTP: Yes, and specially designed components therefor, exported
separately or as part of a system, and related equipment therefor when
exported with these computers as part of a system. (See N.B.)
GFW: Yes, except MT and FP (see Notes), for computers with a CTP
not exceeding 1,000 MTOPS (500 MTOPS for eligible countries listed in
Supp. 4 to part 778 of this subchapter) and specially designed
components therefor, exported separately or as part of a system, and
related equipment therefor when exported with these computers as part
of a system.
N.B. 1: General License GFW is not available for the export of
commodities that the exporter knows will be used to:
a. Enhance the CTP to 2000 MTOPS or greater; or
b. Enhance the performance capability of a computer with a CTP
equal to or greater than 2000 MTOPS.
N.B. 2: To determine whether General License GFW may be used to
export related equipment controlled under another entry in the CCL,
consult the GFW paragraph under the Requirements heading of the
appropriate entry.
N.B. 3: General License G-CTP is not available for the export of
items that the exporter knows will be used to enhance the CTP beyond
the limits of General License G-CTP.
N.B. 4: When evaluating your computer to determine general license
eligibility, use the CTP parameter to the exclusion of other technical
parameters for computers classified under ECCN
[[Page 2110]]
4A03; with the exception of parameters specified as Missile Technology
(MT) concerns, 4A03A.e (Equipment performing analog-to-digital
conversions exceeding the limits in ECCN 3A01.a.5.a), and graphics
accelerators or graphics coprocessors exceeding a ``3-D vector rate''
of 10,000,000.
Notes: 1. MT controls apply to digital computers used as
ancillary equipment for test facilities and equipment that are
controlled by 9B05 or 9B06.
2. FP controls apply to computers for computerized fingerprint
equipment to all destinations except Australia, Japan, New Zealand
and members of NATO.
3. FP and NP controls apply to all destinations, except:
a. Countries listed in Sec. 776.10(d) of this subchapter
(Computer Tier 1),
b. Countries listed in Sec. 776.10(e) of this subchapter
(Computer Tier 2), for computers with a CTP equal to or less than
10,000 MTOPS; and
c. Countries listed in Sec. 776.10(f) of this subchapter
(Computer Tier 3), for computers with a CTP equal to or less than
2,000 MTOPS to all end-users/uses or a CTP equal to or less than
7,000 MTOPS to end-users/uses that are not military end-users and
end-uses and are not nuclear, chemical, biological, or missile end-
users and end-uses defined in part 778 of this subchapter.
4. FP controls apply to Iran, Sudan and Syria for computers
controlled by 4A03A or 4A94F (i.e., computers with a CTP of 6 MTOPS
or greater). See Sec. 785.4(d)(1) of this subchapter.
5. Exceptions to the validated license requirement may be found
in Sec. 776.10 of this subchapter.
List of Items Controlled
Note 1: 4A03 includes vector processors, array processors,
digital signal processors, logic processors, and equipment for
``image enhancement'' or signal processing''.
Note 2: The control status of the ``digital computers'' or
related equipment described in 4A03 is governed by the control
status of other equipment or systems provided:
a. The ``digital computers'' or related equipment are essential
for the operation of the other equipment or systems;
b. The ``digital computers'' or related equipment are not a
``principal element'' of the other equipment or systems; and
N.B. 1: The control status of ``signal processing'' or ``image
enhancement'' equipment specially designed for other equipment with
functions limited to those required for the other equipment is
determined by the control status of the other equipment even if it
exceeds the ``principal element'' criterion.
N.B. 2: For the control status of ``digital computers'' or related
equipment for telecommunications equipment, see the telecommunications
entries in Category 5.
c. The technology for the ``digital computers'' and related
equipment is governed by 4E.
``Digital computers'', ``assemblies'', and related equipment
therefor, as follows, and specially designed components therefor:
a. Designed or modified for ``fault tolerance'';
Note: For the purposes of 4A03.a, ``digital computers'' and
related equipment are not considered to be designed or modified for
``fault tolerance'', if they use:
1. Error detection or correction algorithms in ``main storage'';
2. The interconnection of two ``digital computers'' so that, if
the active central processing unit fails, an idling but mirroring
central processing unit can continue the system's functioning;
3. The interconnection of two central processing units by data
channels or by use of shared storage to permit one central
processing unit to perform other work until the second central
processing unit fails, at which time the first central processing
unit takes over in order to continue the system's functioning; or
4. The synchronization of two central processing units by
``software'' so that one central processing unit recognizes when the
other central processing unit fails and recovers tasks from the
failing unit.
b. ``Digital computers'' having a ``composite theoretical
performance'' (``CTP'') exceeding 260 million theoretical operations
per second (MTOPS), except as described in Sec. 776.10 of this
subchapter;
c. ``Assemblies'' specially designed or modified to be capable of
enhancing performance by aggregation of ``computing elements''
(``CEs'') so that the ``CTP'' of the aggregation exceeds the limit in
4A03.b.
Note 1: 4A03.c applies only to ``assemblies'' and programmable
interconnections not exceeding the limits in 4A03.b, when shipped as
unintegrated ``assemblies''. It does not apply to ``assemblies''
inherently limited by nature of their design for use as related
equipment controlled by 4A03.d to 4A03.f.
Note 2: 4A03.c does not control ``assemblies'' specially
designed for a product or family of products whose maximum
configuration does not exceed the limits of 4A03.b.
d. Graphics accelerators or graphics coprocessors exceeding a ``3-D
Vector Rate'' of 1,600,000;
e. Equipment performing analog-to-digital conversions exceeding the
limits in 3A01.a.5.a;
f. Equipment containing ``terminal interface equipment'' exceeding
the limits in 5A02.c;
Note: For the purposes of 4A03.f, ``terminal interface
equipment'' includes ``local area network'' interfaces, modems and
other communications interfaces. ``Local area network'' interfaces
are evaluated as ``network access controllers''.
g. Equipment, specially designed to provide for the external
interconnection of ``digital computers'' or associated equipment, that
allows communications at data rates exceeding 80 Mbytes/s.
Note: 4A03.g does not control internal interconnection equipment
(e.g., backplanes, buses) or passive interconnection equipment.
4A94F Computers, ``assemblies'' and related equipment not
controlled by 4A01, 4A02, or 4A03, and specially designed components
therefor.
Requirements:
Validated License Required: SZ, Iran, Sudan, Syria (see Note).
Unit: Computers and peripherals in number; parts and accessories in
$ value.
Reason For Control: FP.
GLV: $0.
GCT: No.
GFW: No.
Note: Exceptions to the validated license requirement may be
found in Sec. 776.10 of this subchapter.
* * * * *
4D01A ``Software'' specially designed or modified for the
``development'', ``production'' or ``use'' of equipment controlled by
4A01, 4A02, 4A03, or 4A04, or ``software'' controlled by 4D01, 4D02, or
4D03.
Requirements:
Validated License Required: QSTVWYZ.
Unit: $ value.
Reason For Control: NS, MT, FP, NP (see Notes).
GTDR: Yes, except MT, FP, and software for computers requiring a
validated license, see Notes.
GTDU: No.
Notes: 1. MT controls apply to ``software'' specially designed
or modified for the ``development,'' ``production'' or ``use'' of
equipment controlled for MT by 4A01, 4A02, and 4A03.
2. FP and NP controls apply to all destinations, except:
a. Countries listed in Sec. 776.10(d) of this subchapter
(Computer Tier 1),
b. Countries listed in Sec. 776.10(e) of this subchapter
(Computer Tier 2), for ``software'' for computers with a CTP equal
to or less than 10,000 MTOPS; and
c. Countries listed in Sec. 776.10(f) of this subchapter
(Computer Tier 3), for computers with a CTP equal to or less than
2,000 MTOPS to all end-users/uses or a CTP equal to or less than
7,000 MTOPS to end-users/uses that are not military end-users and
end-uses and are not nuclear, chemical, biological, and missile end-
users and end-uses defined in part 778 of this subchapter.
3. FP controls apply to all destinations except Australia,
Japan, New Zealand and members of NATO, for ``software'' specially
designed or modified for the ``development'', ``production'', or
``use'' of computers for computerized fingerprint equipment.
[[Page 2111]]
4D02A ``Software'' specially designed or modified to support
``technology'' controlled by 4E01 or 4E02.
Requirements
Validated License Required: QSTVWYZ.
Unit: $ value.
Reason For Control: NS, MT, NP, FP (see Notes).
GTDR: Yes, except MT, FP, and for ``software'' for computers that
require a validated license, see Notes.
GTDU: No.
Notes: 1. MT controls apply to ``software'' specially designed
or modified to support technology for the ``development,''
``production'' or ``use'' of equipment controlled for MT by 4A01,
4A02 and 4A03.
2. FP and NP controls apply to all destinations, except:
a. Countries listed in Sec. 776.10(d) of this subchapter
(Computer Tier 1),
b. Countries listed in Sec. 776.10(e) of this subchapter
(Computer Tier 2), for software for computers with a CTP equal to
or less than 10,000 MTOPS; and
c. Countries listed in Sec. 776.10(f) of this subchapter
(Computer Tier 3), for computers with a CTP equal to or less than
2,000 MTOPS to all end-users/uses or a CTP equal to or less than
7,000 MTOPS to end-users/uses that are not military end-users and
end-uses and are not nuclear, chemical, biological, and missile end-
users and end-uses defined in part 778 of this subchapter.
3. FP controls apply to all destinations except Australia,
Japan, New Zealand and members of NATO, for ``software'' specially
designed or modified for the ``development'', ``production'', or
``use'' of computers for computerized fingerprint equipment.
4D94F ``Software'' specially designed for the ``development'',
``production'', or ``use'' of ``digital computers'', ``assemblies'' and
related equipment therefor controlled by 4A94F.
Requirements
Validated License Required: SZ, Iran, Sudan, Syria.
Unit: $ value.
Reason For Control: FP.
GTDR: No.
GTDU: No.
4E01A Technology, according the General Technology Note, for the
``development'', ``production'' or ``use'' of equipment controlled by
4A01, 4A02, 4A03, or 4A04, or ``software'' controlled by 4D01, 4D02, or
4D03.
Requirements
Validated License Required: QSTVWYZ.
Reason for Control: NS, MT, NP, FP (see Notes).
GTDR: Yes, except MT, FP, and ``technology'' required for computers
with a CTP greater than 2,000 MTOPs.
GTDU: No.
Notes: 1. MT controls apply to certain items controlled by 4A01,
4A02, 4A03, 4D01, or 4D02. See Reason for Control paragraphs in
these entries to determine which items are subject to MT controls.
2. FP and NP controls apply to all destinations.
3. FP controls apply, for all destinations except Australia,
Japan, New Zealand, and members of NATO, to technology for the
``development'', ``production'', or ``use'' of computers controlled
by 4A03 for computerized fingerprint equipment.
4E94F Technology for the ``development'', ``production'', or
``use'' of ``digital computers'', ``assemblies'' and related equipment
therefor controlled by 4A94F.
Requirements
Validated License Required: SZ, Iran, Sudan, and Syria.
Reason for Control: FP.
GTDR: No.
GTDU: No.
Dated: January 4, 1996.
Sue E. Eckert,
Assistant Secretary for Export Administration.
[FR Doc. 96-293 Filed 1-22-96; 2:52 pm]
BILLING CODE 3510-DT-P
Complete official Federal Register PDF
FR Doc. 96-1337 Sinclair Inlet, Puget Sound, Bremerton, WA; Naval Restricted Areas
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2117-2120]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1337]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF DEFENSE
Corps of Engineers
33 CFR Part 334
Sinclair Inlet, Puget Sound, Bremerton, WA; Naval Restricted
Areas
AGENCY: U.S. Army Corps of Engineers, DoD.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Corps is adopting as a final rule without modification, an
interim final rule which amends the regulations reestablishing two
restricted areas in the waters of Sinclair Inlet adjacent to the Puget
Sound Naval Shipyard (PSNS), Bremerton, Washington. The amendments made
by the interim final rule are essential to safeguard U.S. Navy vessels
and Government facilities from sabotage and other subversive acts,
accidents, or other incidents of a similar nature. The promulgation of
this final rule is also necessary to protect vessels and individuals
from the dangers associated with the industrial waterfront facilities
at the shipyard.
DATES: Effective January 25, 1996.
ADDRESSES: HQUSACE, CECW-OR, Washington, DC 20314-1000.
FOR FURTHER INFORMATION CONTACT:
Mr. Jonathan Freedman, Regulatory Branch, Seattle District at (206)
764-3495, or Mr. Ralph Eppard, Regulatory Branch, CECW-OR at (202) 761-
1783.
SUPPLEMENTARY INFORMATION: Pursuant to its authorities in Section 7 of
the
[[Page 2118]]
Rivers and Harbors Act of 1917 (40 Stat. 226; 33 U.S.C. 1) and Chapter
XIX of the Army Appropriations Act of 1919 (40 Stat. 892; 33 U.S.C. 3),
the Corps published an interim final rule in the Federal Register
amending 33 CFR 334.1240, on August 21, 1995 (60 FR 43378-43379),
effective on that date. Public comment on the changes to the restricted
area rules was invited with the comment period ending on October 20,
1995. The Army Corps of Engineers, Seattle District also published a
public notice on the same date as the interim final rule with a
concurrent comment period. The public notice was sent to all known
interested parties, including Federal agencies, State agencies, local
governments, affected Indian tribes, and affected individuals on the
Corps, Seattle district mailing lists for the central and southern
Puget Sound, Washington region. Subsequent to the publication of the
interim final rule and the District public notice, it was found that an
omission was made in the interim final rule and on November 24, 1995, a
correction was published in the Federal Register (60 FR 57934-57935).
The correction clarified that Area number 2 is for the exclusive use of
the U.S. Navy by adding the words ``Area No. 2.'' to subparagraph
(a)(3)(ii).
Comment on the Interim Final Rule and Responses
Sixteen comments were received in response to the interim final
rule. This number also includes the comments received in response to
the local public notice published by the Seattle District. The
commentors included the Suquamish Tribe, environmental organizations,
and individuals. The comments received are addressed below:
Comment: Restricted Area No. 2 should not be exclusive and
shouldn't be expanded to accommodate Mooring Area ``A''. This change to
the restricted area is also inconsistent with the SEPA checklist
regarding Mooring Area A filed with the City of Bremerton in October,
1993 (Suquamish Tribe).
Navy's Response: The Tribe's objection is based on the belief that
the exclusivity of the restricted area conflicts with their tribal
treaty rights pertaining to usual and accustomed fishing grounds. Such
treaty rights are not absolute. The Navy believes that its need to
maintain security in the restricted area is more compelling than the
minimal impact this restriction may have on the interests of the
Suquamish Tribe in gathering fish in that small part of their fishing
area. Regarding the Tribe's objection to the expansion of the
restricted area, the objection appears based on an assertion that it is
unnecessary. That is, there already exists the requisite 100 yards of
space between the end of Mooring Area ``A'' and the boundary of the
restricted zone. The Tribe is incorrect. The adjustments to the
restricted area are required to maintain the 100 yards of space. With
regard to inconsistencies with the October 1993 SEPA checklist, the
Navy stated that it had no further plans for expansion of Mooring
facilities at Bremerton. The Navy made no mention of a security zone or
restricted area.
District Engineer's position: The Suquamish Tribe has provided no
evidence of treaty fishing in the proposed restricted area. Further,
the proposed rule does allow for exceptions with the Naval Base Seattle
Commander's approval. Therefore, the proposed restricted area is not
believed to conflict with tribal treaty rights. The proposed adjustment
of the existing restricted area to accommodate the expansion of Mooring
Area ``A'' is a minuscule geographical change over present conditions.
The proposed adjustment does not include any alteration of Navy
operations that affects the present exclusivity of the restricted area.
This proposed adjustment does not constitute a substantive change to
existing conditions. Regarding the question of need for the geographic
adjustment to accommodate the extension of Mooring Area ``A'', the
District Engineer has found that the proposed adjustment to the
restricted area acknowledges this extension and the need to provide a
100-yard buffer by adjusting the boundary of the restricted area
accordingly. Regarding the alleged inconsistency between this proposal
and the referenced 1993 SEPA checklist, this checklist did not and
could not discuss any expansion of the existing restricted area.
Expansion of the restricted area can only be proposed by the Navy and
the Corps of Engineers through public notice and advertisement in the
Federal Register. The SEPA checklist stated that the Navy had no plans
for additions to Mooring Areas at PSNS. This proposal represents no
inconsistency with this or any other previous environmental document.
Comment: Why are exemptions granted to Washington State Ferries and
Horluck Transportation Company for unintentional entry into the
restricted area when docking at the adjacent Bremerton terminal? If an
exception is made for one mode of transportation, why can't an
exception be made for another, associated with independent citizen
monitoring (Union River Basin Protection Association; the Suquamish
Tribe).
Navy Response: Occasionally ferries enter Restricted Area 2 due to
wind or tidal conditions, especially if there are docking delays at the
terminal. The PSNS maintains direct contact with the State ferry
operations office and can quickly determine why a ferry has drifted
into the restricted area. PSNS makes an exception for the ferries
because they are large and easy to observe. They do not approach Navy
ships, disrupt shipyard operations, endanger Navy facilities or
individuals, or provide cover for individuals who might want to engage
in sabotage or espionage.
District Engineer's position: The previous restricted area
regulation allowed for entrance into the area with approval by the
Commander, Naval Base Seattle, or his/her authorized representative, as
does this final rule. To restrict entry by the State ferries would
arbitrarily hinder an essential public service. An independent citizen,
in accordance with this final rule, would be able to request access to
the restricted area from the Navy.
Comment: The ban on public access prevents the collection of
information from the restricted area and infringes on the rights of the
public to free speech and right to travel (Government Accountability
Project; SEARCH).
Navy's Response: There is no constitutional right for a citizen to
enter the restricted area. The Navy is unaware of the authority that
supports the assertion that this rule would affect a citizen's exercise
of free speech. There is no constitutionally protected right to gather
information. The Supreme Court has stated that ``the right of free
speech does not carry with it the unrestrained right to gather
information''. There is also no constitutional ``right to travel'' in
the sense of unrestricted right to go wherever one wants. The Supreme
Court has upheld restrictions on entry to military installations where
compelling considerations of national security and public safety are at
stake.
District Engineer's position: I concur with the Navy that there is
a compelling interest in safety and security in Restricted Area No. 2.
Therefore, it follows that the restricted area does not violate ones
constitutional right to travel. The Constitution allows for regulation
of navigation, as does 33 U.S.C. 1. With respect to the right to free
speech, this restricted area can be likened to a Coast Guard security
zone. It has been held that such security zones are part of military
installations, and military installations are not considered a public
forum. The District Engineer finds that this amendment does not
constitute a violation of constitutionally
[[Page 2119]]
protected right to free speech. With respect to the restriction on
gathering information that this amendment may cause to the public,
there is no protected right. Furthermore, the restricted area is
justified in light of the safety and security concerns.
Comment: Several commentors (Union River Protection Association;
People for Puget Sound; Government Accountability Project;
International Marine Association Protecting Aquatic Life; SEARCH)
stated that the Navy could allow independent environmental monitoring
of the restricted area, or permit independent monitors to accompany
Federal and State regulators who collect samples without risking
national security. Present monitoring by government agencies do not
pose a threat to national security or to the safety of those person(s)
performing the monitoring.
Navy's Response: Security and safety concerns require the PSNS to
limit access to Restricted Area No. 2. The Navy does provide escorts
for agencies who conduct monitoring, but has chosen not to provide
escorts for private citizens for the following reasons:
(1) The Navy can be held liable for any injury to a private
individual, even if accompanied by an escort. This risk naturally
increases when Scuba diving is involved;
(2) Providing safety and security escorts for private individuals
would place an undue burden on Navy staff and resources;
(3) Outside agencies presently perform independent monitoring;
(4) The Navy is not legally required to expend public funds to
accommodate private citizens' desires to enter the restricted area.
District Engineer's position: With the proposed update to the
restricted area, the wording still allows access to the area if granted
by the Commander, Naval Base Seattle. The wording to this restricted
area has never absolutely prohibited access by citizens for monitoring
or any other purpose. Under this revision to the restricted area, the
Navy has not changed this portion of the wording. The Navy still has
discretion to permit or deny access to PSNS restricted areas, requiring
that those wishing to gain access must first be granted permission from
the Base Commander. This wording is fair and appropriate. The
objections raised during public comment periods are a matter that the
Navy must handle directly with objecting parties.
Comment: The proposed rule should include standards that would be
used to evaluate requests for access. The Navy provides no information
on what circumstances would enable one to enter the waters. The lack of
standards violates the Administrative Procedure Act and impacts freedom
of speech (Government Accountability Project; Seattle Chapter, NOW:
People for Puget Sound; SEARCH).
Navy's Response: Restricted Area No. 2 is for the exclusive use of
the Navy and is considered part of the PSNS military installation.
Based on concerns for security and safety, the Navy does not intend to
open this area to the general public. Government Agencies, in the
legitimate exercise of their authority, have been and will continue to
be granted access to the restricted area, when access is determined to
be safe and consistent with national security standards. Requests by
Agencies such as the U.S. Coast Guard, the Environmental Protection
Agency and the Washington State Departments of Ecology and Health have
been routinely granted.
District Engineer's Response: See response to comment above.
Decisions regarding the granting of permission for public access to
PSNS are a matter for the Navy to determine.
Comment: Independent testing and verification of the Navy's testing
program should continue and civilian access should be allowed for
monitoring environmental contaminants (Union River Basin Protection
Association; Government Accountability Project; Seattle Chapter, NOW;
International Marine Association Protecting Aquatic Life; Western
Environmental Law Center; John S. Mulvey; People for Puget Sound).
Navy's Response: Independent monitoring has been conducted by the
Washington State Department of Health, the Environmental Protection
Agency, and joint monitoring has been conducted by the Navy with both
of these agencies.
District Engineer's Position: Operations at PSNS must be in
compliance with all applicable environmental laws and regulations,
regardless of the disposition of the restricted area, or any changes to
wording for Restricted Area No. 2, Sinclair Inlet. These changes to the
wording in the restricted area regulations will have not effect on the
continuation of environmental monitoring at PSNS.
Comment: The Navy's request may be motivated by a desire to limit
public knowledge about sediment and water column contamination from
nuclear programs (Union River Basin Protection Association; Seattle
chapter, NOW; International Marine Association Protecting Aquatic Life;
Western Environmental Law Center; John Mulvey; People for Puget Sound;
SEARCH).
Navy's Response: The Navy has made environmental monitoring
information available to the public and invited independent monitoring
by State and Federal agencies. The Navy's information relating to its
Nuclear Propulsion Program and radioactivity has been reliable and
technically sound.
District Engineer's position: (see district engineer's position for
previous response)
Comment: Limited monitoring by SEARCH has found levels of
radioactivity, specifically of Cadmium-109 and Iodine-131, in marine
life in Restricted Area No. 2. The levels far exceed allowable safety
standards, and far exceed levels acknowledged by the Navy.
Navy's Response: The Navy's response to the assertions of elevated
levels of Cadmium and Iodine was to complete a thorough evaluation
which included independent review by credible non-Navy organizations
(Washington State Department of Health; Environmental Protection
Agency). A sampling and analysis plan was developed based on SEARCH's
information. A report publishing the findings concluded that no
Cadmium-109 was detected. Low levels of Iodine-131 were found in
subsequent sampling. It is believed that the source may be the
Bremerton wastewater treatment plant. Sewage systems commonly discharge
low levels of Iodine from medical diagnosis and treatment. There is no
indication that the PSNS is the source of Iodine-131. The presence of
radioactive Iodine-131 is not near levels to be of concern as a hazard
to public health or the environment.
District Engineer's position: Again, operations at PSNS must be in
compliance with all applicable environmental laws and regulations,
regardless of the disposition of the restricted area. The changes to
the wording in these regulations will have no effect on the
continuation of environmental monitoring at PSNS.
Agency Decision to Adopt the Amendments
The Corps has determined that implementation of final rulemaking
for Restricted Area No. 1 and No. 2, is not contrary to the general
public interest.
Copies of the comments are available for inspection at the Seattle
District Office located at 4735 East Marginal Way South, Seattle,
Washington, 98134.
[[Page 2120]]
Economic Assessment and Certification
This final rule is issued with respect to a military function of
the Defense Department and the provisions of Executive Order 12866 do
not apply. These final rules have been reviewed under the Regulatory
Flexibility Act (Pub. L. 96-354), which requires the preparation of a
regulatory flexibility analysis for any regulation that will have a
significant economic impact on a substantial number of small entities
(i.e., small businesses and small governments). The Corps has
determined that the economic impact of the changes to the restricted
area will have practically no impact on the public, no anticipated
navigational hazard or interference with existing waterway traffic and
accordingly, no significant economic impact on small entities.
National Environmental Policy Act Certification
An environmental assessment has been prepared which concludes that
the proposed action will not have a significant impact to the human
environment, and preparation of an environmental impact statement is
not required. Copies of the environmental assessment may be reviewed at
the Seattle District Office located at 4735 East Marginal Way South,
Seattle, Washington, 98134.
List of Subjects in 33 CFR Part 334
Navigation (water), Transportation, Danger zones.
In consideration of the above, the Corps is adopting without
change, the amendments to Part 334 of Title 33, published as an interim
final rule on August 21, 1995, at 60 FR 43378 and corrected on November
24, 1995 at 60 FR 57934.
Dated: January 23, 1996.
Approved:
Stanley G. Genega,
Major General, USA, Director of Civil Works.
[FR Doc. 96-1337 Filed 1-23-96; 11:44 am]
BILLING CODE 3710-92-M
Complete official Federal Register PDF
FR Doc. 96-1232 Office of Labor-Management Programs; Guidelines, Section 5333(b), Federal Transit Law
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Page 2117]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1232]
=======================================================================
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DEPARTMENT OF LABOR
29 CFR Part 215
RIN 1294-AA14
Office of Labor-Management Programs; Guidelines, Section 5333(b),
Federal Transit Law
AGENCY: Office of Labor-Management Programs, Office of the American
Workplace, Labor.
ACTION: Confirmation of effective date.
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SUMMARY: The Office of Labor-Management Programs published a notice in
the January 5, 1996 Federal Register (61 FR 386) deferring the
effective date of implementation of guidelines for the employee
protection program under Title 49 U.S.C., Chapter 53, Section 5333(b)
of the Federal Transit law. Pursuant to the January 5, notice, the
original effective date, January 8, 1996, was extended for a period
equal to the duration of the furlough caused by the partial government
shutdown that began on December 16, 1995.
This document announces and confirms that the new effective date of
the guidelines will be January 29, 1996. This action was taken because
the temporary closing of government offices and the furlough of
Department of Labor (the Department) employees responsible for the
administration of this program precluded the Office of Labor-Management
Programs from undertaking the necessary staff training and preparation
of materials and documents to allow for implementation of the
guidelines.
EFFECTIVE DATE: The new effective date of the guidelines is January 29,
1996.
FOR FURTHER INFORMATION CONTACT: Kelley Andrews, Director, Statutory
Programs, U.S. Department of Labor, 200 Constitution Avenue, NW., Room
N-5411, Washington, DC 20210, (202) 219-4473.
SUPPLEMENTARY INFORMATION:
I. Rationale
The Office of Labor-Management Programs, Office of the American
Workplace, hereby confirms that January 29, 1996 will be the new
effective date of the guidelines for the administration of the transit
employee protection program pursuant to Section 5333(b) of the Federal
Transit law, commonly referred to as ``Section 13(c)'', (FR Vol. 60,
No. 235, pg. 62964, December 7, 1995).
II. Publication in Final
The Department finds good cause that public comment on the
confirmation of the effective date of these guidelines to be
impracticable and unnecessary because the Department is forced to take
this action due to the temporary closing of Federal offices and the
furlough, caused by the partial government shutdown, affecting the
Department employees who administer this program. 5 U.S.C. 553(b)(B).
List of Subjects in 29 CFR Part 215
Grant administration; Grants--transportation; Labor-management
relations; Labor unions; Mass transportation.
Accordingly, the amendment of 29 CFR Chapter II published at FR
Vol. 60, No. 235, pg. 62964, December 7, 1995, is deferred until
January 29, 1996.
Signed at Washington, DC this 22nd day of January, 1996.
Charles L. Smith,
Deputy Assistant Secretary.
[FR Doc. 96-1232 Filed 1-24-96; 8:45 am]
BILLING CODE 4510-86-M
Complete official Federal Register PDF
FR Doc. 96-1211 Jojoba Oil; Tolerance Exemption
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2120-2121]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1211]
=======================================================================
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ENVIRONMENTAL PROTECTION AGENCY
40 CFR Part 180
[PP 3E4230/R2189; FRL-4987-5]
RIN 2070-AB78
Jojoba Oil; Tolerance Exemption
AGENCY: Environmental Protection Agency (EPA).
ACTION: Final rule.
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SUMMARY: This document establishes an exemption from the requirement of
a tolerance for jojoba oil in or on all raw agricultural commodities
when applied at not more than 1.0% of the final spray as an insecticide
or as a pesticide spray tank adjuvant in accordance with good
agricultural practices. Amvac Chemical Corp. submitted a petition
pursuant to the Federal Food, Drug and Cosmetic Act (FFDCA) requesting
the regulation to establish an exemption from the requirement of a
tolerance.
EFFECTIVE DATE: This regulation becomes effective January 25, 1996.
ADDRESSES: Written objections and hearing requests, identified by the
document control number, [PP 3E4230/R2189], may be submitted to:
Hearing Clerk (1900), Environmental Protection Agency, Rm. M3708, 401 M
St., SW., Washington, DC 20460. Fees accompanying objections and
hearing requests shall be labeled ``Tolerance Petition Fees'' and
forwarded to: EPA Headquarters Accounting Operations Branch, OPP
(Tolerance Fees), P.O. Box 360277M, Pittsburgh, PA 15251. A copy of any
objections and hearing requests filed with the Hearing Clerk should be
identified by the document control number and submitted to: Public
Response and Program Resources Branch, Field Operations Division
(7506C), Office of Pesticide Programs, Environmental Protection Agency,
401 M St. SW., Washington, DC 20460. In person, bring copy of
objections and hearing requests to: Rm. 1132, CM #2, 1921 Jefferson
Davis Hwy., Arlington, VA 22202.
A copy of objections and hearing requests filed with the Hearing
Clerk may also be submitted electronically by sending electronic mail
(e-mail) to: [email protected]. Copies of objections and
hearing requests must be submitted as an ASCII file avoiding the use of
special characters and any form of encryption. Copies of objections and
hearing requests will also be accepted on disks in WordPerfect in 5.1
file format or ASCII file format. All copies of objections and hearing
requests in electronic form must be identified by the docket number [PP
3E4230/R2189]. No Confidential Business Information (CBI) should be
submitted through e-mail. Electronic copies of objections and hearing
requests on this rule may be filed online at many Federal Depository
Libraries. Additional information on electronic submissions can be
found below in this document.
FOR FURTHER INFORMATION CONTACT: By mail: Michael L. Mendelsohn,
Regulatory Action Leader, Biopesticides and Pollution Prevention
Division (7501W), Office of Pesticide Programs, Environmental
Protection Agency, 401 M St. SW., Washington, DC 20460. Office location
and telephone number: 5th Floor, 2800 Crystal Drive, North Tower,
Arlington, VA 22202, (703)-308-8715; e-mail:
[email protected].
SUPPLEMENTARY INFORMATION: In the Federal Register of October 25, 1995
(60 FR 54637), EPA issued a proposed rule that gave notice that Amvac
Chemical Corp., 2110 Davie Ave., City of Commerce, CA 90040, had
submitted pesticide petition (PP) 3E4230 to EPA requesting that the
Administrator, pursuant to section 408(e) of the FFDCA, 21 U.S.C.
346a(e), amend 40 CFR part 180 by establishing an exemption from the
requirement of a tolerance for simmondsia liquid wax (jojoba oil) and
the product Detur for use as an inert ingredient in pesticide
formulations applied to growing crops or to raw agricultural
commodities after harvest. Subsequent to its petition, Amvac informed
EPA that it had transferred all Detur assets to Imperial Jojoba Oils of
El Centro, CA. EPA has, of its own initiative, expanded the original
petition to include pesticidal uses of jojoba oil in this proposed
exemption from the requirement of a tolerance.
There were no comments or requests for referral to an advisory
committee received in response to the proposed rule.
The data submitted with the proposal and other relevant material
have been evaluated and discussed in the proposed rule. Based on the
data and information considered, the Agency concludes that the
tolerance exemption will protect the public health. Therefore, the
tolerance exemption is established as set forth below.
Any person adversely affected by this regulation may, within 30
days after publication of this document in the Federal Register, file
written objections and/or request a hearing with the Hearing Clerk, at
the address given above (40 CFR 178.20). A copy of the objections and/
or hearing requests filed with the Hearing Clerk should be submitted to
the OPP docket for this rulemaking. The objections submitted must
specify the provisions of the regulation deemed objectionable and the
grounds for the objections (40 CFR 178.25). Each objection must be
accompanied by the fee prescribed by 40 CFR 180.33(i). If a hearing is
requested, the objections must include a statement of the factual
issue(s) on which a hearing is requested, the requestor's contentions
on such issues,
[[Page 2121]]
and a summary of any evidence relied upon by the objector (40 CFR
178.27). A request for a hearing will be granted if the Administrator
determines that the material submitted shows the following: There is a
genuine and substantial issue of fact; there is a reasonable
possibility that available evidence identified by the requestor would,
if established, resolve one or more of such issues in favor of the
requestor, taking into account uncontested claims or facts to the
contrary; and resolution of the factual issue(s) in the manner sought
by the requestor would be adequate to justify the action requested (40
CFR 178.32).
A record has been established for this rulemaking under docket
number [PP 3E4230/R2189] (including any objections and hearing requests
submitted electronically as described below). A public version of this
record, including printed, paper versions of electronic comments, which
does not include any information claimed as CBI, is available for
inspection from 8 a.m. to 4:30 p.m., Monday through Friday, excluding
legal holidays. The public record is located in Room 1132 of the Public
Response and Program Resources Branch, Field Operations Division
(7506C), Office of Pesticide Programs, Environmental Protection Agency,
Crystal Mall #2, 1921 Jefferson Davis Highway, Arlington, VA.
Written objections and hearing requests, identified by the document
control number [PP 3E4230/R2189], may be submitted to the Hearing Clerk
(1900), Environmental Protection Agency, Rm. 3708, 401 M St. SW.,
Washington, DC 20460.
A copy of electronic objections and hearing requests filed with the
Hearing Clerk can be sent directly to EPA at:
opp-D[email protected]
A copy of electronic objections and hearing requests filed with the
Hearing Clerk must be submitted as an ASCII file avoiding the use of
special characters and any form of encryption.
The official record for this rulemaking, as well as the public
version, as described above will be kept in paper form. Accordingly,
EPA will transfer any objections and hearing requests received
electronically into printed, paper form as they are received and will
place the paper copies in the official rulemaking record which will
also include all objections and hearing requests submitted directly in
writing. The official rulemaking record is the paper record maintained
at the address in ADDRESSES at the beginning of this document.
Under Executive Order 12866 (58 FR 51735, Oct. 4, 1993), the Agency
must determine whether the regulatory action is ``significant'' and
therefore subject to review by the Office of Management and Budget
(OMB) and the requirements of the Executive Order. Under section 3(f),
the order defines a ``significant regulatory action'' as an action that
is likely to result in a rule (1) having an annual effect on the
economy of $100 million or more, or adversely and materially affecting
a sector of the economy, productivity, competition, jobs, the
environment, public health or safety, or State, local, or tribal
governments or communities (also referred to as ``economically
significant''); (2) creating serious inconsistency or otherwise
interfering with an action taken or planned by another agency; (3)
materially altering the budgetary impacts of entitlement, grants, user
fees, or loan programs or the rights and obligations of recipients
thereof; or (4) raising novel legal or policy issues arising out of
legal mandates, the President's priorities, or the principles set forth
in this Executive Order.
Pursuant to the terms of the Executive Order, EPA has determined
that this rule is not ``significant'' and is therefore not subject to
OMB review.
Pursuant to the requirements of the Regulatory Flexibility Act
(Pub. L. 96-354, 94 Stat. 1164, 5 U.S.C. 601-612), the Administrator
has determined that regulations establishing new tolerances or raising
tolerance levels or establishing exemptions from tolerance requirements
do not have a significant economic impact on a substantial number of
small entities. A certification statement to this effect was published
in the Federal Register of May 4, 1981 (46 FR 24950).
List of Subjects in 40 CFR Part 180
Environmental protection, Administrative practice and procedure,
Agricultural commodities, Pesticides and pests, Reporting and
recordkeeping requirements.
Dated: January 16, 1996.
Daniel M. Barolo,
Director, Office of Pesticide Programs.
Therefore, 40 CFR part 180 is amended as follows:
PART 180--[AMENDED]
1. The authority citation for part 180 continues to read as
follows:
Authority: 21 U.S.C. 346a and 371.
2. In subpart D, by adding new Sec. 180.1160, to read as follows:
Sec. 180.1160 Jojoba oil; exemption from the requirement of a
tolerance.
The insecticide and spray tank adjuvant jojoba oil is exempted from
the requirement of a tolerance in or on all raw agricultural
commodities when applied at the rate of 1.0% or less of the final spray
in accordance with good agricultural practices, provided the jojoba oil
does not contain simmondsin, simmondsin-2-ferulate, and related
conjugated organonitriles including demethyl simmondsin and
didemethylsimmondsin.
[FR Doc. 96-1211 Filed 1-24-96; 8:45 am]
BILLING CODE 6560-50-F
Complete official Federal Register PDF
FR Doc. 96-1191 Privacy Act Regulations; Implementation
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Page 2111]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1191]
=======================================================================
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TENNESSEE VALLEY AUTHORITY
18 CFR Part 1301
Privacy Act Regulations; Implementation
AGENCY: Tennessee Valley Authority.
ACTION: Final rule.
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SUMMARY: The Tennessee Valley Authority (TVA) is amending its
regulations implementing the Privacy Act of 1974 (the Act), 5 U.S.C.
552a. The amendment modifies existing TVA regulations (18 CFR 1301.24)
exempting the system of records known as OIG Investigative Records--TVA
(TVA-31) from certain provisions of the Act and corresponding agency
regulations.
EFFECTIVE DATE: January 25, 1996.
FOR FURTHER INFORMATION CONTACT: Wilma H. McCauley, TVA, 1101 Market
St. (CST 13B), Chattanooga, TN 37402-2801, telephone number: (423) 751-
2523.
SUPPLEMENTARY INFORMATION: On October 28, 1993, (58 FR 57972-57974) TVA
gave notice as required by the Privacy Act of its intention to amend
the system of records known as OIG Investigative Records--TVA (TVA-31)
from certain provisions of the Act and corresponding agency
regulations. No comments were received. TVA is therefore updating its
regulations at 18 CFR part 1301 to reflect this amendment.
List of Subjects in 18 CFR Part 1301
Administrative practice and procedure, Freedom of Information,
Privacy Act, Sunshine Act.
For the reasons set forth in the preamble, TVA is amending 18 CFR,
chapter XIII, part 1301, as follows:
PART 1301--PROCEDURES
1. The authority citation for part 1301 continues to read as
follows:
Authority: 16 U.S.C. 831-831dd, 5 U.S.C. 552a.
2. Section 1301.24(d) is revised to read as follows:
Sec. 1301.24 Specific exemptions.
* * * * *
(d) The TVA system OIG Investigative Records is exempt from
subsections (c)(3), (d), (e)(1), (e)(4), (G), (H), and (I) and (f) of 5
U.S.C. 552a (section 3 of the Privacy Act) and corresponding sections
of these rules pursuant to 5 U.S.C. 552a(k)(2). The TVA system OIG
Investigative Records is exempt from subsections (c)(3), (d), (e)(1),
(e)(2), (e)(3), (e)(4)(G), (H), and (I), (e)(5), (e)(8), and (g)
pursuant to 5 U.S.C. 552a(j)(2). This system is exempt because
application of these provisions might alert investigation subjects to
the existence or scope of investigations, lead to suppression,
alteration, fabrication, or destruction of evidence, disclose
investigative techniques or procedures, reduce the cooperativeness or
safety of witnesses, or otherwise impair investigations.
* * * * *
William S. Moore,
Senior Manager, Administrative Services.
[FR Doc. 96-1191 Filed 1-24-96; 8:45 am]
BILLING CODE 8120-08-W-
Complete official Federal Register PDF
FR Doc. 96-1183 Table of Public Land Orders; Removal
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Page 2137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1183]
=======================================================================
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DEPARTMENT OF THE INTERIOR
Bureau of Land Management
43 CFR Chapter II
[WO-420-1820-00-24 1A]
RIN 1004-AC47
Table of Public Land Orders; Removal
AGENCY: Bureau of Land Management, Interior.
ACTION: Final rule; removal.
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SUMMARY: This administrative final rule removes the Appendix to 43 CFR
chapter II which constitutes a Table of Public Land Orders (PLOs),
1942-Present.
EFFECTIVE DATE: February 26, 1996.
FOR FURTHER INFORMATION CONTACT: Matthew Reed, 202-452-5069.
SUPPLEMENTARY INFORMATION: The Bureau of Land Management (BLM) is not
statutorily required to include this Appendix in the CFR. The material
contained in the Appendix is an unindexed, strictly chronological list
of PLOs from 1942 until 1995. The Table includes only a PLO number, a
signature date, a brief subject heading describing effect, and a
Federal Register citation for each PLO. The Table is organized neither
geographically nor by subject classification. In sum, the Table is of
extremely limited utility as a reference tool for persons attempting to
determine the status of any particular tract of the public lands. The
public may obtain the relevant information contained in the Appendix
more efficiently by contacting the BLM State Office managing the
subject lands. The master title plat for each jurisdiction will reveal
the impact of any and all PLOs affecting the public lands within the
jurisdiction. Additionally, the BLM will maintain the Table
electronically on the Bureau's Internet Homepage.
The 1996 edition of title 43 of the CFR will be the last to include
the Appendix. This edition may be retained for future reference.
Additionally, one may consult the annual Federal Register index to
locate Public Land Orders issued within any subsequent given year. As
the Appendix currently comprises nearly 200 pages of printed text in
Title 43 of the CFR, removal of the Appendix will produce significant
cost and printed space savings for the BLM without depriving the public
of its sole or best source of information concerning the PLOs. In light
of the foregoing analysis, the BLM has determined for good cause that
notice and public procedure on this rule are unnecessary and contrary
to the public interest. The principal author of this final rule is
Matthew Reed, Regulatory Management Team, BLM.
This rule is an administrative action and not a major rule for the
purposes of E.O. 12291. Accordingly, neither an environmental impact
analysis nor a regulatory flexibility analysis is required. This rule
does not contain information collection requirements that require
approval by the Office of Management and Budget under 44 U.S.C. 3501 et
seq.
List of Subjects for 43 CFR Chapter II
Public land orders.
For the reasons stated in the preamble and under the authority of
43 USC 1740, the Appendix to chapter II of subtitle B of title 43 of
the Code of Federal Regulations is removed in its entirety.
Appendix to Chapter II of Subtitle B [Removed]
Removed in its entirety.
Dated: December 18, 1995.
Bob Armstrong,
Assistant Secretary of the Interior.
[FR Doc. 96-1183 Filed 1-24-96; 8:45 am]
BILLING CODE 4310-84-P
Complete official Federal Register PDF
FR Doc. 96-1144 Indirect Food Additives: Adjuvants, Production Aids, and Sanitizers
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2113-2116]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1144]
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
21 CFR Part 178
[Docket No. 93F-0243]
Indirect Food Additives: Adjuvants, Production Aids, and
Sanitizers
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the food
additive regulations to provide for the safe use of 4,5,6,7-
tetrachloro-2-[2-(4,5,6,7-tetrachloro-2,3-dihydro-1,3-dioxo-1H-inden-2-
yl)-8-quinolinyl]-1H-isoindole-1,3(2H)-dione (C. I. Pigment Yellow
138), as a colorant for all food-contact polymers. This action is in
response to a petition filed by BASF Corp.
[[Page 2114]]
DATES: Effective January 25, 1996; written objections and requests for
a hearing February 26, 1996.
ADDRESSES: Submit written objections to the Dockets Management Branch
(HFA-305), Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr.,
Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Vir D. Anand, Center for Food Safety
and Applied Nutrition (HFS-216), Food and Drug Administration, 200 C
St. SW., Washington, DC 20204, 202-418-3081.
SUPPLEMENTARY INFORMATION: In a notice published in the Federal
Register of August 18, 1993 (58 FR 43898), FDA announced that a food
additive petition (FAP 3B4383) had been filed by BASF Corp., 8 Campus
Dr., Parsippany, NJ 07054. The petition proposed to amend the food
additive regulations in Sec. 178.3297 Colorants for polymers (21 CFR
178.3297) to provide for the safe use of 4,5,6,7-tetrachloro-2-[2-
(4,5,6,7-tetrachloro-2,3-dihydro-1,3-dioxo-1H-inden-2-yl)-8-
quinolinyl]-1H-isoindole-1,3(2H)-dione (C.I. Pigment Yellow 138, CAS
Reg. No. 30125-47-4), as a colorant for all food-contact polymers.
In its evaluation of the safety of this additive, FDA has reviewed
the safety of the additive itself and the chemical impurities that may
be present in the additive resulting from its manufacturing process.
Although the additive itself has not been shown to cause cancer, minute
amounts of carcinogenic polychlorinated dibenzo-p-dioxins (PCDD's) have
been detected as impurities in tetrachlorophthalic anhydride, one of
the reactants used to produce the additive (C. I. Pigment Yellow 138).
Residual amounts of reactants and manufacturing aids, such as PCDD's,
are commonly found as contaminants in chemical products, including food
additives.
I. Determination of Safety
Under section 409(c)(3)(A) of the Federal Food, Drug, and Cosmetic
Act (the act) (21 U.S.C. 348(c)(3)(A)), the so-called ``general safety
clause'' of the statute, a food additive cannot be approved for a
particular use unless a fair evaluation of the data available to FDA
establishes that the additive is safe for that use. FDA's food additive
regulations (21 CFR 170.3(i)) define safe as ``a reasonable certainty
in the minds of competent scientists that the substance is not harmful
under the intended conditions of use.''
The food additives anticancer or Delaney clause (section
409(c)(3)(A) of the act) further provides that no food additive shall
be deemed safe if it is found to induce cancer when ingested by man or
animal. Importantly, however, the Delaney clause applies to the
additive itself and not to impurities in the additive. That is, where
an additive itself has not been shown to cause cancer, but contains a
carcinogenic impurity, the additive is properly evaluated under the
general safety clause using risk assessment procedures to determine
whether there is a reasonable certainty that no harm will result from
the proposed use of the additive, Scott v. FDA, 728 F.2d 322 (6th Cir.
1984).
II. Safety of Petitioned Use of The Additive
FDA estimates that the petitioned use of the additive, C. I.
Pigment Yellow 138, will result in exposure to the additive of no
greater than 1.8 parts per billion (ppb), which equates to an estimated
daily intake (EDI) of 5.4 micrograms per person per day (g/p/
d) (Ref. 1). The agency has also calculated the EDI of the migrating
impurities associated with the colorant under the most severe
conditions of the colorant's intended use (phenol, tetrachlorophthalic
anhydride, 8-aminoquinaldine, and the monocondensation product) and the
probable concentrations of these migrants from the colorant's use in
contact with food. The agency estimated the potential daily intakes of
the four impurities to be 13, 10, 5.4, and 10 nanograms/p/d,
respectively (Ref. 1). The additive may also contain small amounts of
carcinogenic impurities (PCDD's).
FDA does not ordinarily consider chronic toxicological testing to
be necessary to determine the safety of an additive whose use will
result in such low exposure levels (Ref. 2), and the agency has not
required such testing here. However, the agency has reviewed the
available toxicological data from acute toxicity studies on the
additive. No adverse effects were reported in these studies.
FDA has evaluated the safety of this additive under the general
safety clause, considering all available data and using risk assessment
procedures to estimate the upper-bound limit of risk presented by the
carcinogenic chemicals (PCDD's) that may be present as impurities in
the additive. This risk evaluation of PCDD's has two aspects: (1)
Assessment of the worst-case exposure to the impurities from the
proposed use of the additive; and (2) extrapolation of the risk
observed in the animal bioassays to the conditions of probable exposure
to humans.
A. PCDD's
FDA has estimated the worst-case exposure to PCDD's from the
petitioned use of the additive as discussed below. Because little is
known about the toxicity of PCDD's except 2,3,7,8-tetrachlorodibenzo-p-
dioxin (TCDD), the agency utilized the toxicity equivalency factor
(TEF) method (Ref. 3) to relate the toxicity of the PCDD's in terms of
an equivalent amount of toxicologically well characterized TCDD, and
used the TEF's adopted by the North Atlantic Treaty Organization (Ref.
4) (see 59 FR 17384, April 12, 1994). Summing the equivalent EDI's for
each PCDD present as an impurity gives the total exposure to PCDD's in
terms of a total equivalent EDI for TCDD of 1.4 x 10-4 picogram
(pg)/p/d (Ref. 1).
Using data from a 2-year chronic toxicity and carcinogenicity study
by Kociba et al. (Ref. 5) on TCDD fed to rats, the agency estimated the
upper-bound level of lifetime human risk from exposure to TCDD toxic
equivalents resulting from the use of C. I. Pigment Yellow 138 as a
food contact colorant for polymers. The results of the bioassay on TCDD
showed that the material was carcinogenic for rats under the conditions
of the study in that the test material caused significantly increased
incidences of hepatocellular carcinomas and adenomas as well as
squamous cell carcinomas of the lung, hard palate, nasal turbinates,
and tongue. FDA further concluded that given the paucity of TCDD
bioassay data, the Kociba et al. bioassay provided the appropriate
basis on which to calculate an estimate of the upper-bound level of
lifetime carcinogenesis risk from exposure to TCDD toxic equivalents
stemming from the use of the subject additive (C. I. Pigment Yellow
138) as a colorant in food-contact polymers.
The agency used a linear-at-low-dose extrapolation method from the
doses used in the Kociba et al. bioassay and the tumor incidence data
based upon the original classification of tumors found in that study to
estimate the upper-bound risk presented by the very low levels of TCDD
toxic equivalents encountered under actual conditions of the use of the
additive as colorant in polymers. This procedure is not likely to
underestimate the actual risk from very low doses and may in fact
exaggerate it because the extrapolation models used are designed to
estimate the maximum risk consistent with the data. In so doing, FDA
estimated a carcinogenic unit risk of 16 x 10-6 for an intake of
1 pg/kilogram (kg) body weight/d of TCDD toxic equivalents (Ref. 6).
[[Page 2115]]
As noted, the carcinogenic unit risk assessed above by FDA was
based on the original tumor incidence data from the Kociba bioassay
(Ref. 5). Following FDA's risk assessment discussed above, however, a
group of pathologists, the Pathology Working Group (PWG), reanalyzed
the slides of the liver tumors observed in the Kociba bioassay using
the National Toxicology Program's 1986 classification system for liver
tumors (Ref. 7). FDA has reviewed the results of this reanalysis and
agrees with the classification of the tumors made by PWG. Using the
results of this revised reading of the Kociba study slides, FDA
estimates a carcinogenic unit risk of 9 x 10-6 for an intake of
1 pg TCDD equivalents/kg body weight/d (Ref. 8). Using this
carcinogenic unit risk and an upper-bound total exposure to PCDD's
present in the additive in terms of a total equivalent EDI for TCDD of
1.4 x 10-4 pg/p/d, FDA estimates that the upper-bound limit of
risk of cancer would be 2.1 x 10-11 from the proposed use of the
subject additive (Ref. 9). Because of the numerous conservative
assumptions used in calculating the exposure estimate, the actual
lifetime averaged individual exposure to PCDD's is expected to be
substantially less than the worst-case exposure, and therefore, the
calculated upper-bound limit of risk would be less. Thus, the agency
concludes that there is a reasonable certainty that no harm from
exposure to PCDD's would result from the proposed use of the additive.
B. Need for Specifications
The agency has also considered whether specifications are necessary
to control the amount of PCDD's as impurities in the additive. The
agency finds that specifications are not necessary for the following
reasons: (1) Because low levels of PCDD's may be expected to remain as
impurities following production of the additive, the agency would not
expect these impurities to become components of food at other than
extremely small levels; and (2) the upper-bound limits of lifetime risk
from exposure to these impurities, even under worst-case assumptions,
are very low, less than 2.1 in 100 billion for PCDD's.
III. Conclusion
FDA has evaluated data in the petition and other relevant material
and concludes that the proposed use of the additive as a colorant in
food-contact polymers is safe. Based on this information, the agency
has also concluded that the additive will have the intended technical
effect. Therefore, Sec. 178.3297 should be amended as set forth below.
In accordance with Sec. 171.1(h) (21 CFR 171.1(h)), the petition
and the documents that FDA considered and relied upon in reaching its
decision to approve the petition are available for inspection at the
Center for Food Safety and Applied Nutrition by appointment with the
information contact person listed above. As provided in 21 CFR
171.1(h), the agency will delete from the documents any materials that
are not available for public disclosure before making the documents
available for inspection.
IV. Environmental Impact
The agency has carefully considered the potential environmental
effects of this action. FDA has concluded that the action will not have
a significant impact on the human environment, and that an
environmental impact statement is not required. The agency's finding of
no significant impact and the evidence supporting that finding,
contained in an environmental assessment, may be seen in the Dockets
Management Branch (address above) between 9 a.m. and 4 p.m., Monday
through Friday.
V. References
The following references have been placed on display in the Dockets
Management Branch (address above) and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday.
1. Memoranda from the Chemistry Review Branch (HFS-247) to the
Indirect Additives Branch (HFS-216) concerning FAP 3B4383--BASF
Corp.--exposure to the food additive and its component
(polychlorinated dibenzo-p-dioxins, PCDD's) dated January 21, 1994,
April 19, 1994, and March 10, 1995.
2. Kokoski, C. J., ``Regulatory Food Additive Toxicology,'' in
Chemical Safety Regulation and Compliance, edited by F. Homburger
and J. K. Marquis, S. Karger, New York, pp. 24-33, 1985.
3. EPA 560/5-90-014, Background Document to the Integrated Risk
Assessment for Dioxins and Furans from Chlorine Bleaching in Pulp
and Papermills, pp. 3-13, July, 1990.
4. Pilot Study on International Information Exchange on Dioxins
and Related Compounds, Report No. 178, December, 1988.
5. Kociba, R. J. et al., ``Results of a Two Year Chronic
Toxicity and Oncogenicity Study of 2,3,7,8-Tetrachlorodibenzo-p-
dioxin in Rats,'' Toxicology and Applied Pharmacology, 46:279-303,
1978.
6. Report of the Quantitative Risk Assessment Committee,
``Carcinogenic Risk Assessment for Dioxins and Furans in Foods
Contacting Bleached Paper Products,'' April 20, 1990.
7. ``2,3,7,8-Tetrachlorodibenzo-p-dioxin in Sprague-Dawley
Rats,'' Pathco, Inc., March 13, 1990.
8. Report of the Quantitative Risk Assessment Committee of the
Center for Food Safety and Applied Nutrition, FDA, ``Upper-Bound
Lifetime Carcinogenic Risk From Exposure to Dioxin Congeners From
Foods Contacting Paper Products With Dioxin Levels Not Exceeding 2
ppt,'' January 27, 1993.
9. Memorandum, Report of the Quantitative Risk Assessment
Committee of the Center for Food Safety and Applied Nutrition, FDA,
``Estimation of upper-bound lifetime risk from polychlorinated
dibenzo-p-dioxins in C. I. Pigment Yellow 138,'' May 24, 1994.
VI. Objections
Any person who will be adversely affected by this regulation may at
any time on or before February 26, 1996, file with the Dockets
Management Branch (address above) written objections thereto. Each
objection shall be separately numbered, and each numbered objection
shall specify with particularity the provisions of the regulation to
which objection is made and the grounds for the objection. Each
numbered objection on which a hearing is requested shall specifically
so state. Failure to request a hearing for any particular objection
shall constitute a waiver of the right to a hearing on that objection.
Each numbered objection for which a hearing is requested shall include
a detailed description and analysis of the specific factual information
intended to be presented in support of the objection in the event that
a hearing is held. Failure to include such a description and analysis
for any particular objection shall constitute a waiver of the right to
a hearing on the objection. Three copies of all documents shall be
submitted and shall be identified with the docket number found in
brackets in the heading of this document. Any objections received in
response to the regulation may be seen in the Dockets Management Branch
between 9 a.m. and 4 p.m., Monday through Friday.
List of Subjects in 21 CFR Part 178
Food additives, Food packaging.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
178 is amended as follows:
PART 178--INDIRECT FOOD ADDITIVES: ADJUVANTS, PRODUCTION AIDS, AND
SANITIZERS
1. The authority citation for 21 CFR part 178 continues to read as
follows:
[[Page 2116]]
Authority: Secs. 201, 402, 409, 721 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 321, 342, 348, 379e).
2. Section 178.3297 is amended in paragraph (e) in the table by
alphabetically adding a new entry under the headings ``Substances'' and
``Limitations'' to read as follows:
Sec. 178.3297 Colorants for polymers.
* * * * *
(e) * * *
------------------------------------------------------------------------
Substances Limitations
------------------------------------------------------------------------
* * * *
* * *
4,5,6,7-Tetrachloro-2-[2-(4,5,6,7- For use only at levels not to exceed
tetrachloro-2,3-dihydro-1,3-dioxo- 1 percent by weight of polymers.
1H-inden-2-yl)-8-quinolinyl]-1H- The finished articles are to
isoindole-1,3(2H)-dione (C. I. contact food only under conditions
Pigment Yellow 138, CAS Reg. of use C through H, as described in
No.30125-47-4).-- Table 2 of Sec. 176.170(c) of this
chapter; provided further that the
finished articles shall not be
filled at temperatures exceeding
158 deg.F (70 deg.C).
* * * *
* * *
------------------------------------------------------------------------
Dated: January 17, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-1144 Filed 1-24-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-1143 Indirect Food Additives: Adhesives and Components of Coatings
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2111-2113]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1143]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Food and Drug Administration
21 CFR Part 175
[Docket No. 94F-0381]
Indirect Food Additives: Adhesives and Components of Coatings
AGENCY: Food and Drug Administration, HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: The Food and Drug Administration (FDA) is amending the
[[Page 2112]]
food additive regulations to provide for the safe use of glyceryl
polyoxypropylene triol;,',''-1,2,3-
propanetriyltris[-hydroxypoly(oxypropylene)], minimum average
molecular weight 250, as a reactant in the preparation of polyester and
polyurethane resins used as components of adhesives for food-contact
articles. This action is in response to a petition filed by the Dow
Chemical Co.
DATES: Effective January 25, 1996; written objections and requests for
a hearing by February 26, 1996.
ADDRESSES: Submit written objections to the Dockets Management Branch
(HFA-305), Food and Drug Administration, rm. 1-23, 12420 Parklawn Dr.,
Rockville, MD 20857.
FOR FURTHER INFORMATION CONTACT: Vir D. Anand, Center for Food Safety
and Applied Nutrition (HFS-216), Food and Drug Administration, 200 C
St. SW., Washington, DC 20204, 202-418-3081.
SUPPLEMENTARY INFORMATION: In a notice published in the Federal
Register of November 23, 1994 (59 FR 60363), FDA announced that a food
additive petition (FAP 4B4435) had been filed by the Dow Chemical Co.,
1803 Bldg., Midland, MI 48674-1803. The petition proposed to amend the
food additive regulations in Sec. 175.105 Adhesives (21 CFR 175.105) to
provide for the safe use of glyceryl polyoxypropylene
triol;,',''-1,2,3-
propanetriyltris[-hydroxypoly(oxypropylene)], minimum average
molecular weight 250, as a reactant in the preparation of polyester and
polyurethane resins used as components of adhesives for food-contact
articles.
The chemical, glyceryl polyoxypropylene
triol;,',''-1,2,3-
propanetriyltris[-hydroxypoly(oxypropylene)] is currently
listed in 21 CFR 175.105 under the synonym, glyceryl polyoxypropylene
triol. Therefore, for consistency, the subject additive is being listed
by its synonym in this final rule.
In its evaluation of the safety of this additive, FDA has reviewed
the safety of the additive itself and the chemical impurities that may
be present in the additive resulting from its manufacturing process.
Although the additive itself has not been shown to cause cancer, it has
been found to contain minute amounts of unreacted propylene oxide, a
carcinogenic impurity, resulting from the manufacture of the additive.
Residual amounts of reactants and manufacturing aids, such as propylene
oxide, are commonly found as contaminants in chemical products,
including food additives.
I. Determination of Safety
Under section 409(c)(3)(A) of the Federal Food, Drug, and Cosmetic
Act (the act) (21 U.S.C. 348(c)(3)(A), the so-called ``general safety
clause'' of the statute, a food additive cannot be approved for a
particular use unless a fair evaluation of the data available to FDA
establishes that the additive is safe for that use. FDA's food additive
regulations (21 CFR 170.3(i)) define safe as ``a reasonable certainty
in the minds of competent scientists that the substance is not harmful
under the intended conditions of use.''
The food additives anticancer or Delaney clause (section
409(c)(3)(A) of the act) further provides that no food additive shall
be deemed safe if it is found to induce cancer when ingested by man or
animal. Importantly, however, the Delaney clause applies to the
additive itself and not to the impurities in the additive. That is,
where an additive itself has not been shown to cause cancer, but
contains a carcinogenic impurity, the additive is properly evaluated
under the general safety clause using risk assessment procedures to
determine whether there is a reasonable certainty that no harm will
result from the proposed use of the additive, Scott v. FDA, 728 F.2d
322 (6th Cir. 1984).
II. Safety of Petitioned Use of the Additive
FDA estimates that the petitioned use of the additive, glyceryl
polyoxypropylene triol (also known as glyceryl polyoxypropylene
triol;,',''-1,2,3-
propanetriyltris[-hydroxypoly(oxypropylene)], minimum average
molecular weight 250, will result in exposure to the additive of no
greater than 7 parts per billion in the daily diet (Ref. 1).
FDA does not ordinarily consider chronic toxicological testing to
be necessary to determine the safety of an additive whose use will
result in such low exposure levels (Ref. 2), and the agency has not
required such testing here. However, the agency has reviewed the
available toxicological data from acute toxicity studies on the
additive. No adverse effects were reported in these studies.
FDA has evaluated the safety of this additive under the general
safety clause, considering all available data and using risk assessment
procedures to estimate the upper-bound limit of risk presented by the
carcinogenic chemical that may be present as an impurity in the
additive, propylene oxide. This risk evaluation of propylene oxide has
two aspects: (1) Assessment of the worst-case exposure to the impurity
from the proposed use of the additive; and (2) extrapolation of the
risk observed in the animal bioassays to the conditions of probable
exposure to humans.
A. Propylene Oxide
FDA has estimated the hypothetical worst-case exposure to propylene
oxide from the petitioned use of the additive in the manufacture of
adhesives to be 7 parts per quadrillion of the daily diet or 21
picogram (pg)/person/day (Ref. 1). The agency used data from a
carcinogenesis bioassay on propylene oxide, conducted for the Institute
of Hygiene, University of Mainz, Germany, to estimate the upper-bound
lifetime human risk from exposure to this chemical stemming from the
proposed use of the additive (Ref. 3). The results of the bioassay on
propylene oxide demonstrated that the material was carcinogenic for
female rats under the conditions of the study. The test material caused
carcinomas and papillomas in the squamous epithelium of the
forestomach.
Based on the estimated worst-case exposure of 21 pg/person/day, FDA
estimates that the upper-bound limit of individual lifetime risk
arising from likely exposure to propylene oxide resulting from the use
of the subject additive is in the range of 3.2 x 10-12 (or 3.2
in 1 trillion) to 1.5 x 10-11 (or 1.5 in 100 billion) (Ref. 4).
The range in FDA's estimate results from the agency's evaluation of
complex tumor data in an oral toxicity study using rats. Because of the
numerous conservative assumptions used in calculating the exposure
estimate, the actual lifetime averaged individual exposure to propylene
oxide is expected to be substantially less than the worst-case
exposure, and therefore, the calculated upper-bound limit of risk would
be less. Thus, the agency concludes that there is a reasonable
certainty that no harm from exposure to propylene oxide would result
from the proposed use of the additive.
B. Need for Specifications
The agency has also considered whether specification are necessary
to control the amount of propylene oxide as an impurity in the
additive. The agency finds that specifications are not necessary for
the following reasons: (1) Because of the low level at which propylene
oxide may be expected to remain as an impurity following production of
the additive, the agency would not expect the impurity to become a
component of food at other than extremely small levels; and (2) the
[[Page 2113]]
upper-bound limits of lifetime risk from exposure to the impurity, even
under worst-case assumptions, is very low, in the range of less than
3.2 in 1 trillion to 1.5 in 100 billion.
III. Conclusion
FDA has evaluated data in the petition and other relevant material
and concludes that the proposed use of the additive in adhesives is
safe. Based on this information, the agency has also concluded that the
additive will have the intended technical effect. Therefore,
Sec. 175.105 should be amended as set forth below.
In accordance with Sec. 171.1(h) (21 CFR 171.1(h)), the petition
and the documents that FDA considered and relied upon in reaching its
decision to approve the petition are available for inspection at the
Center for Food Safety and Applied Nutrition by appointment with the
information contact person listed above. As provided in 21 CFR
171.1(h), the agency will delete from the documents any materials that
are not available for public disclosure before making the documents
available for inspection.
IV. Environmental Impact
The agency has carefully considered the potential environmental
effects of this action. FDA has concluded that the action will not have
a significant impact on the human environment, and that an
environmental impact statement is not required. The agency's finding of
no significant impact and the evidence supporting that finding,
contained in an environmental assessment, may be seen in the Dockets
Management Branch (address above) between 9 a.m. and 4 p.m., Monday
through Friday.
V. References
The following references have been placed on display in the Dockets
Management Branch (address above) and may be seen by interested persons
between 9 a.m. and 4 p.m., Monday through Friday.
1. Memorandum from the Chemistry Review Branch (HFS-247), Center
for Food Safety and Applied Nutrition (CFSAN), FDA, to the Indirect
Additives Branch (HFS-216), CFSAN, FDA, concerning FAP 4B4435--Dow
Chemical Co.--exposure to the food additive and its component,
propylene oxide, dated March 1, 1995.-
2. Kokoski, C. J., ``Regulatory Food Additive Toxicology,'' in
Chemical Safety Regulation and Compliance, edited by F. Homburger
and J. K. Marquis, S. Karger, New York, NY, pp. 24-33, 1985.
3. Dunkelberg, H., ``Carcinogenicity of Ethylene Oxide and 1,2-
Propylene Oxide Upon Intragastric Administration to Rats,'' British
Journal of Cancer, 46: 924, 1982.
4. Memorandum, ``Report of the Quantitative Risk Assessment
Committee,'' CFSAN, FDA, dated April 20, 1995.
VI. Objections
Any person who will be adversely affected by this regulation may at
any time on or before February 26, 1996, file with the Dockets
Management Branch (address above) written objections thereto. Each
objection shall be separately numbered, and each numbered objection
shall specify with particularity the provisions of the regulation to
which objection is made and the grounds for the objection. Each
numbered objection on which a hearing is requested shall specifically
so state. Failure to request a hearing for any particular objection
shall constitute a waiver of the right to a hearing on that objection.
Each numbered objection for which a hearing is requested shall include
a detailed description and analysis of the specific factual information
intended to be presented in support of the objection in the event that
a hearing is held. Failure to include such a description and analysis
for any particular objection shall constitute a waiver of the right to
a hearing on the objection. Three copies of all documents shall be
submitted and shall be identified with the docket number found in
brackets in the heading of this document. Any objections received in
response to the regulation may be seen in the Dockets Management Branch
between 9 a.m. and 4 p.m., Monday through Friday.
List of Subjects in 21 CFR Part 175
Adhesives, Food additives, Food packaging.
Therefore, under the Federal Food, Drug, and Cosmetic Act and under
authority delegated to the Commissioner of Food and Drugs, 21 CFR part
175 is amended as follows:
PART 175--INDIRECT FOOD ADDITIVES: ADHESIVES AND COMPONENTS OF
COATINGS
1. The authority citation for 21 CFR part 175 continues to read as
follows:
-Authority: Secs. 201, 402, 409, 721 of the Federal Food, Drug,
and Cosmetic Act (21 U.S.C. 321, 342, 348, 379e).
2. Section 175.105 is amended in paragraph (c)(5) in the table by
alphabetically adding a new entry under the headings ``Substances'' and
``Limitations'' to read as follows:
Sec. 175.105 Adhesives.
* * * * *
(c) * * *
(5) * * *
------------------------------------------------------------------------
Substances- Limitations
------------------------------------------------------------------------
* * * *
* * *
Glycerol polyoxypropylene triol, For use only in the preparation of
minimum average molecular weight polyester and polyurethane resins
250 (CAS Reg. No. 25791-96-2). in adhesives.
* * * *
* * *
------------------------------------------------------------------------
Dated: January 17, 1996.
William K. Hubbard,
Associate Commissioner for Policy Coordination.
[FR Doc. 96-1143 Filed 1-24-96; 8:45 am]
BILLING CODE 4160-01-F
Complete official Federal Register PDF
FR Doc. 96-1102 Airworthiness Directives; Boeing Models 727, 737, and 747 Series Airplanes; McDonnell Douglas Model DC-8 and DC-9 Series Airplanes, Model MD-88 Airplanes, and Models MD-11 and MD-90-30 Series Airplanes; Lockheed Models L-1011-385 Series Airplanes; Fokker Models F28 Mark 1000, 2000, 3000, 4000, and 0100 Series Airplanes; and British Aerospace Model Avro 146-RJ Series Airplanes
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2095-2099]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1102]
========================================================================
Rules and Regulations
Federal Register
________________________________________________________________________
This section of the FEDERAL REGISTER contains regulatory documents
having general applicability and legal effect, most of which are keyed
to and codified in the Code of Federal Regulations, which is published
under 50 titles pursuant to 44 U.S.C. 1510.
The Code of Federal Regulations is sold by the Superintendent of Documents.
Prices of new books are listed in the first FEDERAL REGISTER issue of each
week.
========================================================================
Federal Register / Vol. 61, No. 17 / Thursday, January 25, 1996 /
Rules and Regulations
[[Page 2095]]
DEPARTMENT OF TRANSPORTATION
Federal Aviation Administration
14 CFR Part 39
[Docket No. 95-NM-55-AD; Amendment 39-9494; AD 96-02-06]
Airworthiness Directives; Boeing Models 727, 737, and 747 Series
Airplanes; McDonnell Douglas Model DC-8 and DC-9 Series Airplanes,
Model MD-88 Airplanes, and Models MD-11 and MD-90-30 Series Airplanes;
Lockheed Models L-1011-385 Series Airplanes; Fokker Models F28 Mark
1000, 2000, 3000, 4000, and 0100 Series Airplanes; and British
Aerospace Model Avro 146-RJ Series Airplanes
AGENCY: Federal Aviation Administration, DOT.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This amendment supersedes two existing airworthiness
directives (AD), applicable to certain transport category airplanes
equipped with certain Honeywell Standard Windshear Detection Systems
(WSS). Those AD's currently require a revision to the FAA-approved
Airplane Flight Manual (AFM) to alert the flightcrew of the potential
for significant delays in the WSS detecting windshear when the flaps of
the airplane are in transition. Those AD's were prompted by a report of
an accident during which an airplane encountered severe windshear
during a missed approach. This amendment requires that the currently-
installed line replaceable unit (LRU) be replaced with a modified LRU
having new software that eliminates delays in the WSS detecting
windshear when the flaps of the airplane are in transition. The actions
specified by this AD are intended to prevent significant delays in the
WSS detecting hazardous windshear, which could lead to the loss of
flight path control.
EFFECTIVE DATE: February 26, 1996.
ADDRESSES: Information concerning this AD may be obtained from or
examined at the Federal Aviation Administration (FAA), Transport
Airplane Directorate, Rules Docket, 1601 Lind Avenue, SW., Renton,
Washington; or at the FAA, Los Angeles Aircraft Certification Office,
Transport Airplane Directorate, 3960 Paramount Boulevard, Lakewood,
California.
FOR FURTHER INFORMATION CONTACT: J. Kirk Baker, Aerospace Engineer,
Systems and Equipment Branch, ANM-130L, FAA, Los Angeles Aircraft
Certification Office, 3960 Paramount Boulevard, Lakewood, California
90712; telephone (310) 627-5345; fax (310) 627-5210.
SUPPLEMENTARY INFORMATION: A proposal to amend part 39 of the Federal
Aviation Regulations (14 CFR part 39) by superseding AD 95-04-01,
amendment 39-9153 (60 FR 9619, February 21, 1995), and AD 95-09-05,
amendment 39-9208 (60 FR 20887, April 28, 1995) that was corrected on
May 12, 1995 (60 FR 26824, May 19, 1995); was published in the Federal
Register on June 13, 1995 (60 FR 31122). The proposed action is
applicable to certain transport category airplanes equipped with
certain Honeywell Standard Windshear Detection Systems (WSS). The
action proposed to require replacement of the currently-installed line
replaceable unit (LRU) with a modified LRU having new software that
eliminates delays in the WSS detecting windshear when the flaps of the
airplane are in transition.
Interested persons have been afforded an opportunity to participate
in the making of this amendment. Due consideration has been given to
the comments received. -
One commenter supports the proposed rule.
One commenter requests that the proposal be withdrawn since
unmodified WSS's provide the necessary level of safety required for
windshear detection. Furthermore, the commenter states that existing
AD's 95-04-01 and 95-09-05, which require that specific operational
procedures be followed, ensure that the flightcrews are properly
trained on the peculiarities of the Honeywell WSS. -
The FAA does not concur. The FAA finds that the unsafe condition
will be positively addressed by installing new software in the LRU that
will eliminate delays in the WSS detecting windshear when the flaps of
the airplane are in transition. Additionally, the FAA has determined
that long term continued operational safety will be better assured by
design changes to remove the source of the problem, rather than by
performing special operating procedures. Performing long-term special
operating procedures may not be providing the degree of safety
assurance necessary for affected airplanes in the fleet. This, coupled
with a better understanding of the human factors associated with
numerous continual special procedures, has led the FAA to consider
placing less emphasis on special procedures and more emphasis on design
improvements. This requirement for modification of the software is in
consonance with these considerations.
One commenter requests a revision to part 121 or part 135 of the
Federal Aviation Regulations (FAR) (14 CFR 121 or 135), since the
proposal does not address the root problem. The commenter states that
the proposal addresses ``reactive'' WSS's but, since ``predictive''
systems are now available, they should be required equipment on all
aircraft. The commenter contends that the ultimate solution to the
problem would be to require airborne predictive windshear detection
equipment, in conjunction with ground-based detection equipment, on all
airplanes operating in accordance with FAR part 121 or 135.
The FAA does not concur. According to section 39.1 (``Airworthiness
directives'') of the FAR (14 CFR 39.1), the issuance of an AD is based
on the finding that an unsafe condition exists or is likely to develop
in a product of a particular type design. This AD is based on such a
finding; it is the result of an investigation into the cause of an
accident involving a transport category airplane equipped with
Honeywell Standard Windshear Detection System. That investigation
revealed that a design feature in the windshear computer delayed
detection of windshear when the airplane's flaps were in transition.
From this investigation, the FAA determined that an unsafe condition
exists with regard to the flightcrew
[[Page 2096]]
being unaware of the potential for significant delays in the WSS
detecting windshear when the flaps of the airplane are in transition.
The issuance of this AD is to correct that unsafe condition. While the
commenter's request to require installation of specific equipment for
operation of air carriers or air taxis in accordance with part 121 or
part 135 has merit, it is clearly beyond the scope of this AD action.
One commenter requests a change in the applicability from the
proposed manufacturers of the airplanes to Honeywell, the manufacturer
of the faulty WSS's. The FAA does not concur in this case. While it is
assumed that an operator will know the models of airplanes it operates,
there is a potential that the operator will not know or be immediately
aware of specific items that are installed on its airplanes. The FAA
reasons that, by calling out all of the manufacturers of the airplane
models on which the subject item is likely to be installed, it will
prevent ``unknowing non-compliance'' with the AD on the part of the
operator.-
One commenter requests a revision to the proposal to include a
requirement to install placards in all airplanes to warn flightcrews of
the potential for significant delays in the WSS detecting windshear.
This commenter states that, since the WSS's on all airplanes within an
operator's fleet will not be modified simultaneously, the flightcrew
may not know whether the airplane has a modified or unmodified WSS.
This commenter contends that these proposed placards would minimize the
possibility for confusion as to the operating characteristics of the
specific WSS on the airplane. -
The FAA does not concur. The FAA finds that safety of the fleet of
affected airplanes will be ensured by the requirements of AD 95-04-01
and AD 95-09-04 [and retained in paragraph (a) of the final rule],
which require a limitation to the FAA-approved Airplane Flight Manual
(AFM) to alert the flightcrew of the potential for significant delays
in the WSS detecting windshear when the flaps of the airplane are in
transition. Typically, placards that are used in the cockpit are brief
and provide pilots with information that highlights significant changes
(i.e., labeling specific equipment inoperative). Longer, more detailed
changes to systems, such as that required by paragraph (a) of the final
rule, are normally detailed in the AFM. Therefore, the FAA finds that
the requiring the installation of a placard in the cockpit to warn
pilots of the potential for significant delays in the WSS detecting
windshear would not significantly enhance safety. Conversely, the FAA
has received comments to other rulemaking actions from operators
indicating that an overabundance of placards in the cockpit tends to
clutter the cockpit, which would make it easy for the flightcrew to
overlook important operational changes that require the pilot to take
necessary action. -
One commenter requests a revision to paragraph (a) of the proposal,
which restates the requirements of AD 95-04-01 and AD 95-09-05.
Proposed paragraph (a) requires a revision to the FAA-approved AFM to
alert the flightcrew of the potential for significant delays in the WSS
detecting windshear when the flaps of the airplane are in transition.
The commenter requests the inclusion of references to the roll rate
desensitizing feature, which the commenter states would increase
flightcrew confidence in the system to detect windshear in all
configurations. -
The FAA does not concur. During certification testing, the FAA
evaluated the effects of bank angles and roll rates, and determined
that roll rates high enough to cause desensitization will produce the
15-degree bank angle that is noted in the AFM limitation required by
paragraph (a) of the final rule. The FAA has reviewed all currently
available data and finds that changes to paragraph (a) of the final
rule to incorporate roll rate compensations are not warranted. However,
paragraph (b) of the final rule has been changed to recommend revising
the AFM limitation [required by paragraph (a) of the final rule]
following installation of a modified LRU. The newly revised AFM
limitation alerts pilots that sustained banks greater than 15 degrees
will desensitize the WSS and that the potential exists for delays in
the WSS detecting windshear. -
Several commenters object to the proposed requirement of paragraph
(b) to replace the currently installed LRU with a modified LRU having
new software that eliminates delays in the WSS detecting windshear when
the flaps of the airplane are in transition. Several commenters state
that the proposed replacement is unnecessary since such replacement
would not enhance safety of the affected airplanes. One of these
commenters notes that the proposed replacement requirement would result
in changes in aircraft configuration that may increase nuisance alerts,
since the sensitivity reduction factor would be totally eliminated
during flap transition. -
The FAA does not concur. The criteria for reactive windshear
systems state that a warning shall be issued once the windshear is
encountered. The criteria also consider the airplane's available
performance and the system's propensity for nuisance alerts due to
turbulence. The FAA evaluates compliance with these criteria based upon
the system's ability to issue timely warnings in all reasonably
expected conditions. The FAA finds that encountering windshear during
flap transition is a reasonably expected condition, vis-a-vis the
accident during which an airplane encountered severe windshear during a
missed approach. -
Further, the FAA has determined that conducting missed approaches,
prior to encountering windshear, is a reasonably probable scenario. In
such a scenario, the pilot would rely on prior knowledge attained in
FAA-required training to recognize and recover from a windshear
encounter, such as that provided in ``Windshear Training Aid,''
Revision 1, dated February 1990. Therefore, the pilot would likely
determine that windshear has been encountered before the detection
system actually detects the phenomena since the WSS is intended to be
strictly an adjunct system, not a sole or primary system. The windshear
training that pilots receive instructs the pilot not to retract the
airplane's flaps in this scenario. However, if the pilot does not
believe that windshear has been encountered, the pilot may execute a
normal go-around and retract the flaps, due to what the pilot perceives
to be an unstable approach. Therefore, the FAA considers any delay in
windshear detection to be unacceptable while the airplane's flaps are
in transition. Consequently, the FAA finds that any improvement in
warning time for the pilot will enhance safety for the affected
airplanes. -
Further, the FAA does not concur that installation of a modified
LRU, and consequently, removal of the windshear warning delay during
flap transition, would result in an increase in nuisance alerts. The
FAA has reviewed all available data and cannot substantiate the
commenter's assertion that elimination of the sensitivity reduction
factor during flap transition would result in an increase in nuisance
alerts. The FAA finds that the flaps are usually extended at altitudes
higher than the altitude at which the system is armed. Furthermore, the
FAA considers conducting a go-around with strong turbulence (excluding
actual windshear conditions) to be a highly unlikely combination of
events. Additionally, the FAA will evaluate the modified Honeywell
windshear computer to determine compliance with the nuisance alert
criteria, discussed above. -
Several commenters request an extension to the proposed compliance
[[Page 2097]]
time of 24 months for the replacement of the LRU. These commenters
suggest that a compliance time of 36 months would be more appropriate
to accommodate the time necessary to amend the supplemental type
certificate (STC) and revise the parts manufacture approval. One of
these commenters states that, since airplanes are prohibited from
flying with a mixture of modified and unmodified units, this extension
is necessary to ensure that Honeywell will be able to provide an
adequate number of modified units to the affected fleet.
The FAA concurs. The FAA has verified with the manufacturer that
the lead time for developing the required LRU will exceed the proposed
compliance time of 24 months. Further, the FAA has determined that
extending the compliance time to the suggested 36 months will
accommodate the time necessary for the manufacturer to develop, test,
and certify these units. The FAA finds that this 12-month extension
will not adversely affect safety significantly. Therefore, paragraph
(b) of the final rule has been revised accordingly.
One commenter requests that the proposed 24-month compliance time
for replacement of the LRU be shortened to 12 months. This commenter
suggests that the proposed compliance time may be too long, in light of
the catastrophic consequences of the identified unsafe condition.
The FAA does not concur that a shorter compliance time is
appropriate. The proposed 24-month compliance time was based on the
time originally estimated as necessary for operators to obtain modified
LRU's, plus the time necessary for operators to install that modified
LRU on the affected fleet. However, in light of the information
received concerning availability of these required parts, as discussed
above, the FAA has determined that a more appropriate time for
accomplishing the replacement of the LRU is 36 months. The FAA
considers that the AFM limitation currently required by AD 95-04-01 and
AD 95-09-05 [and retained in paragraph (a) of the final rule] will
ensure safety in the interim until the LRU's can be replaced.
One commenter requests a revision to paragraph (b) of the proposal
to specify that the modified LRU have software that would eliminate the
horizontal portion of the flap rate compensation feature only. The
commenter contends that removal of the vertical portion of the flap
rate compensation feature will increase nuisance alerts and will
minimally improve the time it takes for the WSS to detect hazardous
windshear when the flaps of the airplane are in transition.
The FAA does not concur. Since paragraph (b) of the final rule
requires that the FAA approve all replacement LRU's, the FAA approval
will include, among other factors, a review of the system's
susceptibility to nuisance warnings caused by both horizontal and
vertical compensations.
Two commenters request an extension to the proposed compliance time
of 12 months required by paragraph (c), which prohibits installation of
unmodified LRU's. One of these commenters states that a 12-month
extension would allow Honeywell, the manufacturer of these WSS's,
sufficient time to develop and manufacture an adequate number of
modified units. The other commenter suggests that an extension of 6
months would allow operators ample time to remove and return the units
to Honeywell to be reprogrammed.
The FAA concurs that a 6-month extension to the compliance time is
appropriate. The FAA has confirmed that the manufacturer will require
18 months to manufacture an adequate number of units. The FAA has
determined that such an extension to the compliance time will not
compromise the safety of the affected airplanes, and that the currently
required operating limitations will provide an acceptable level of
safety in the interim. Therefore, paragraph (c) of the final rule has
been revised to prohibit, installation of unmodified LRU's as of 18
months after the effective date of the AD.
One commenter supports the proposed rule, but recommends that the
proposed 12-month compliance time of paragraph (c), which prohibits
installation of unmodified LRU's, be shortened to 6 months. This
commenter states that, in light of the accident that prompted this AD
action, 12 months may be too long to permit unmodified LRU's to be
installed on the affected airplanes.
The FAA does not concur. Based upon the information received
concerning the new schedule for the availability of required parts,
discussed above, the FAA finds it necessary to extend this compliance
time to 18 months.
After careful review of the available data, including the comments
noted above, the FAA has determined that air safety and the public
interest require the adoption of the rule with the changes previously
described. The FAA has determined that these changes will neither
increase the economic burden on any operator nor increase the scope of
the AD.
There are approximately 2,320 airplanes of the affected design in
the worldwide fleet. The FAA estimates that 1,618 airplanes of U.S.
registry will be affected by this AD.
The actions that are currently required by AD's 95-04-01 and 95-09-
05 take approximately 1 work hour per airplane to accomplish, at an
average labor rate of $60 per work hour. Based on these figures, the
cost impact on U.S. operators of the actions currently required is
estimated to be $97,080, or $60 per airplane.
The new actions that are required by this new AD will take
approximately 10 work hours per airplane to accomplish, at an average
labor rate of $60 per work hour. Required parts will be provided by
Honeywell at not cost to operators. Based on these figures, the cost
impact on U.S. operators of the new requirements of this AD is
estimated to be $970,800, or $600 per airplane.
The cost impact figures discussed above are based on assumptions
that no operator has yet accomplished any of the requirements of this
AD action, and that no operator would accomplish those actions in the
future if this AD were not adopted.
The regulations adopted herein will not have substantial direct
effects on the States, on the relationship between the national
government and the States, or on the distribution of power and
responsibilities among the various levels of government. Therefore, in
accordance with Executive Order 12612, it is determined that this final
rule does not have sufficient federalism implications to warrant the
preparation of a Federalism Assessment.
For the reasons discussed above, I certify that this action (1) is
not a ``significant regulatory action'' under Executive Order 12866;
(2) is not a ``significant rule'' under DOT Regulatory Policies and
Procedures (44 FR 11034, February 26, 1979); and (3) will not have a
significant economic impact, positive or negative, on a substantial
number of small entities under the criteria of the Regulatory
Flexibility Act. A final evaluation has been prepared for this action
and it is contained in the Rules Docket. A copy of it may be obtained
from the Rules Docket at the location provided under the caption
``ADDRESSES.''
List of Subjects in 14 CFR Part 39
Air transportation, Aircraft, Aviation safety, Safety.
[[Page 2098]]
Adoption of the Amendment
Accordingly, pursuant to the authority delegated to me by the
Administrator, the Federal Aviation Administration amends part 39 of
the Federal Aviation Regulations (14 CFR part 39) as follows:
PART 39--AIRWORTHINESS DIRECTIVES
-1. The authority citation for part 39 continues to read as
follows:
Authority: 49 USC 106(g),40113, 44701.
Sec. 39.13 [Amended]
-2. Section 39.13 is amended by removing amendments 39-9153 (60 FR
9619, February 21, 1995) and 39-9208 (60 FR 20887, April 28, 1995), and
by adding a new airworthiness directive (AD), amendment 39-9494, to
read as follows:
96-02-06 Boeing; McDonnell Douglas; Lockheed; Fokker; and British
Aerospace Regional Aircraft Limited, AVRO International Aerospace
Division (Formerly British Aerospace, plc; British Aerospace
Commercial Aircraft, Limited): Amendment 39-9494. Docket 95-NM-55-
AD. Supersedes AD 95-04-01, Amendment 39-9153; and AD 95-09-05,
Amendment 39-9208.
Applicability: The following models and series of airplanes,
certificated in any category, equipped with Honeywell Standard
Windshear Detection Systems (WSS):
----------------------------------------------------------------------------------------------------------------
Manufacturer and model of airplane Type of computer Part Nos.
----------------------------------------------------------------------------------------------------------------
Boeing 727-100 and -200................ Standard Windshear 4061048-902, -903, and -904, 4068054-901,
(Honeywell STC). 4068060-901.
Boeing 737-100 and -200................ Standard Windshear 4061048-903, -904, and -905, 4068058-903.
(Honeywell STC).
Boeing 737-200......................... Performance Management 4050730-904 through -911, 4051819-906.
(Honeywell STC).
Boeing 737-300......................... Standard Windshear 4068060-901.
(Honeywell STC).
Boeing 747-100 and -200................ Standard Windshear 4061048-904.
(Honeywell STC).
McDonnell Douglas DC-8-50, -60, and -70 Standard Windshear 4068046-903.
(Honeywell STC).
McDonnell Douglas DC-9-10, -21, -31, - Standard Windshear 4068046-901, -902, 4068048-901, -902.
41, and -51. (Honeywell STC)-.
McDonnell Douglas DC-9-80 and MD-88.... Windshear (OEM TC)........ 4059845-902.
McDonnell Douglas MD-90-30............. Windshear (OEM TC)........ 4059845-910.
McDonnell Douglas MD-11................ Flight Control (OEM TC)... 4059001-901 through -905 (with windshear
option selected).
Lockheed L-1011-385-1, -385-1-14, -385- Standard Windshear (OEM 4068044-901.
1-15, and -385-3. TC).
Fokker F28 Mark 1000, 2000, 3000, and Standard Windshear 4068052-901.
4000. (Honeywell STC).
Fokker F28 Mark 0100................... Flight Management (OEM TC) 4052502-951 (with windshear option
selected).
British Aerospace Avro 146-RJ70A, - Flight Control (OEM TC)... 4068300-902.
RJ85A, and -RJ100A.
----------------------------------------------------------------------------------------------------------------
Note 1: This AD applies to each airplane identified in the
preceding applicability provision, regardless of whether it has been
modified, altered, or repaired in the area subject to the
requirements of this AD. For airplanes that have been modified,
altered, or repaired so that the performance of the requirements of
this AD is affected, the owner/operator must use the authority
provided in paragraph (d) of this AD to request approval from the
FAA. This approval may address either no action, if the current
configuration eliminates the unsafe condition; or different actions
necessary to address the unsafe condition described in this AD. Such
a request should include an assessment of the effect of the changed
configuration on the unsafe condition addressed by this AD. In no
case does the presence of any modification, alteration, or repair
remove any airplane from the applicability of this AD.
Compliance: Required as indicated, unless accomplished
previously.
To prevent significant delays in the Honeywell Standard
Windshear Detection Systems (WSS) detecting hazardous windshear,
which could lead to the loss of flight path control, accomplish the
following:
(a) Revise the Limitations Section of the FAA-approved Airplane
Flight Manual (AFM) to include the following statement, at the time
specified in either paragraph (a)(1) or (a)(2) of this AD, as
applicable. This may be accomplished by inserting a copy of this AD
in the AFM.
``During sustained banks of greater than 15 degrees or during
flap configuration changes, the Honeywell Windshear Detection and
Recovery Guidance System (WSS) is desensitized and alerts resulting
from encountering windshear conditions will be delayed.''
(1) For all Boeing, McDonnell Douglas, Lockheed, and Fokker
airplanes specified in the applicability statement of this AD:
Within 14 days after March 8, 1995 (the effective date of AD 95-04-
01, amendment 39-9153).
(2) For British Aerospace Model Avro airplanes specified in the
applicability statement of this AD: Within 14 days after May 15,
1995 (the effective date of AD 95-09-05, amendment 39-9208).
(b) Within 36 months after the effective date of this AD,
replace the currently-installed line replaceable unit (LRU) with a
modified LRU having new software that eliminates delays in the WSS
detecting windshear when the flaps of the airplane are in
transition, in accordance with a method approved by the Manager, Los
Angeles Aircraft Certification Office (ACO), FAA, Transport Airplane
Directorate. Accomplishment of this replacement constitutes
terminating action for the requirements of paragraph (a) of this AD;
after the replacement has been accomplished, the AFM limitation
required by paragraph (a) of this AD may be revised to read as
follows:
``During sustained banks of greater than 15 degrees, the
Honeywell Windshear Detection and Recovery Guidance System (WSS) is
desensitized and alerts resulting from encountering windshear
conditions will be delayed.''
(c) As of 18 months after the effective date of this AD, no
person shall install on any airplane an LRU that has not been
modified in accordance with paragraph (b) of this AD. An unmodified
LRU may be installed up to 18 months after the effective date of
this AD, provided that, during that time, the AFM
[[Page 2099]]
limitation required by paragraph (a) of this AD remains in effect.
(d) An alternative method of compliance or adjustment of the
compliance time that provides an acceptable level of safety may be
used if approved by the Manager, Los Angeles ACO. Operators shall
submit their requests through an appropriate FAA Principal
Maintenance Inspector, who may add comments and then send it to the
Manager, Los Angeles ACO.
Note 2: Information concerning the existence of approved
alternative methods of compliance with this AD, if any, may be
obtained from the Los Angeles ACO.
(e) Special flight permits may be issued in accordance with
sections 21.197 and 21.199 of the Federal Aviation Regulations (14
CFR 21.197 and 21.199) to operate the airplane to a location where
the requirements of this AD can be accomplished.
(f) This amendment becomes effective on February 26, 1996.
Issued in Renton, Washington, on January 18, 1996.
Darrell M. Pederson,
Acting Manager, Transport Airplane Directorate, Aircraft Certification
Service.
[FR Doc. 96-1102 Filed 1-24-96; 8:45 am]
BILLING CODE 4910-13-U
Complete official Federal Register PDF
FR Doc. 96-1091 Use and Examination of Materials Submitted Pursuant to the Antitrust Civil Process Act
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2116-2117]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1091]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF JUSTICE
28 CFR Part 49
[AG Order No. 2005-96]
RIN 1105-AA37
Use and Examination of Materials Submitted Pursuant to the
Antitrust Civil Process Act
AGENCY: Department of Justice.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: This rule finalizes changes made by an interim rule published
on August 25, 1995 at 60 FR 44276 to a Department of Justice regulation
concerning the use and examination of materials submitted pursuant to
the Antitrust Civil Process Act (``ACPA'' or ``Act''). The interim rule
added references to ``answers to interrogatories'' and ``transcripts of
oral testimony'' as types of material subject to the provisions of the
ACPA and also added references to ``agents'' of the Department of
Justice having the authority to use and copy such materials. These
changes were necessary to conform the language of the regulation to the
current provisions of the Act. The interim rule also made minor changes
to the spelling and capitalization of certain words used in the
regulation for purposes of conformity with the Act and internal
consistency.
DATES: This Final Rule is effective January 25, 1996.
FOR FURTHER INFORMATION CONTACT: Howard Blumenthal, Assistant Chief,
Legal Policy Section, Antitrust Division, Room 3121, Main Justice
Building, 10th & Pennsylvania Avenue NW., Washington, DC 20530;
telephone (202) 514-2513.
SUPPLEMENTARY INFORMATION: Congress enacted the ACPA, Pub. L. No. 87-
664 (codified at 15 U.S.C. 1311-14, as amended), in 1962 to provide the
Antitrust Division (``Division'') of the Department of Justice with the
authority to issue civil investigative demands (``CIDs''), a type of
pre-complaint compulsory process. CIDs enable the Division to gather
information concerning possible civil violations of the antitrust laws
before filing lawsuits, which often permits the Department of Justice
to determine that no antitrust violation has occurred without resort to
litigation. Thus, the use of CIDs will frequently save the Department
of Justice, the parties being investigated, and the federal court
system time and money through the avoidance of unnecessary litigation
or the streamlining of any litigation that does result from an
investigation.
The CID authority provided to the Division in 1962 was relatively
narrow. The only type of information that the Division could acquire by
CID was documentary material. Without the consent of the person who
produced such material, access to CID information in the possession of
the Division was generally limited to officers, members, or employees
of the Department of Justice.
The Division's CID authority was expanded by the Hart-Scott-Rodino
Antitrust Improvements Act of 1976 (``HSR Act''), Pub. L. No. 94-435.
In addition to producing documentary material, CID recipients could now
be required to answer in writing written interrogatories and to give
oral testimony. In the Antitrust Procedural Improvements Act of 1980
(``APIA''), Pub. L. No. 96-349, Congress clarified that CID information
in the possession of the Division could be disclosed to and used by
agents of the Department of Justice (for example, expert witnesses or
independent contractors) as well as by officers and employees.
The ACPA requires the Attorney General to promulgate regulations
setting forth the manner in which CID materials in the possession of
the Division will be made available for official use by the Department
of Justice, and to prescribe the terms and conditions under which such
materials may be examined by the persons who produced them to the
Division. The Attorney General promulgated 28 CFR part 49 in 1963 to
comply with this requirement. However, this regulation was not amended
to reflect the changes to the Act made by the HSR Act in 1976 or the
APIA in 1980. The purpose of this order is to make final an interim
rule published on August 25, 1995 at 60 FR 44276, which amended the
pre-existing regulation to conform with the current provisions of the
ACPA.
The rule now being finalized differs from the pre-existing
regulation in two main respects. First, references in the pre-existing
regulation to the use and examination of documentary material in the
possession of the Division were expanded, where and as appropriate, to
also refer to answers to interrogatories and transcripts of oral
testimony to take into account the additional types of information that
can be acquired under the ACPA as amended by the HSR Act. Second,
references to the use and copying of CID information by officers and
employees of the Department of Justice were expanded to also include
agents of the Department of Justice to reflect the change to the Act
made by the APIA. The rule now being finalized also differs from the
pre-existing regulation in several technical respects.
[[Page 2117]]
Essentially, the capitalization of certain words (Act, custodian, civil
investigative demand) was made consistent throughout the regulation,
and the term ``civil investigation demand'' was changed to ``civil
investigative demand,'' which is the term used in the statute.
The above-mentioned interim rule included a 60-day public comment
period. The Department received no comments before the comment period
expired on October 24, 1995. The Department has determined to issue the
rule in final form without revision to the interim rule.
Regulatory Flexibility Act
The Attorney General, in accordance with the Regulatory Flexibility
Act (5 U.S.C. 605(b)), has reviewed this regulation and by approving it
certifies that this regulation will not have a significant economic
impact on a substantial number of small entities.
Executive Order 12612
This regulation will not have substantial direct effects on the
states, on the relationship between the national government and the
states, or on the distribution of power and responsibilities among the
various levels of government. Therefore, in accordance with Executive
Order 12612, it is determined that this rule does not have sufficient
federalism implications to warrant the preparation of a Federalism
Assessment.
Executive Order 12866
This regulation has been drafted and reviewed in accordance with
Executive Order 12866, Sec. 1(b), Principles of Regulation. The
Department of Justice has determined that this rule is not a
``significant regulatory action'' under Executive Order 12866,
Sec. 3(f), and accordingly this rule has not been reviewed by the
Office of Management and Budget.
Accordingly, the interim rule amending 28 CFR part 49 that was
published at 60 FR 44276 on August 25, 1995, as corrected at 60 FR
61290 on November 29, 1995, is adopted as a final rule without change.
Dated: January 16, 1996.
Janet Reno,
Attorney General.
FR Doc. 96-1091 Filed 1-24-96; 8:45 am]
BILLING CODE 4410-01-M
Complete official Federal Register PDF
FR Doc. 96-1090 Withdrawal of National Forest System Land for a University of California-Berkeley Seismic Observatory; California
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2137-2138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1090]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
43 CFR Public Land Order 7179
[CA-940-5700-00; CACA 32220]
Withdrawal of National Forest System Land for a University of
California-Berkeley Seismic Observatory; California
AGENCY: Bureau of Land Management, Interior.
ACTION: Public land order.
-----------------------------------------------------------------------
SUMMARY: This order withdraws 45 acres of National Forest System land
from mining for a period of 20 years to protect the seismic integrity
of a University of California-Berkeley seismic observatory. The land
has been and will remain open to mineral leasing.
EFFECTIVE DATE: January 25, 1996.
FOR FURTHER INFORMATION CONTACT: Duane Marti, BLM California State
Office (CA-931), 2800 Cottage Way,
[[Page 2138]]
Sacramento, California 95825, 916-979-2858.
By virtue of the authority vested in the Secretary of the Interior
by Section 204 of the Federal Land Policy and Management Act of 1976,
43 U.S.C. 1714 (1988), it is ordered as follows:
1. Subject to valid existing rights, the following described
National Forest System land is hereby withdrawn from location and entry
under the United States mining laws (30 U.S.C. Ch. 2 (1988)), but not
from leasing under the mineral leasing laws, to protect the seismic
integrity of a University of California-Berkeley seismic observatory:
Mount Diablo Meridian
Klamath National Forest
T. 45 N., R. 8 W.,
Sec. 24, NE\1/4\SE\1/2\ and N\1/2\NW\1/4\SE\1/4\SE\1/4\.
The area described contains 45 acres in Siskiyou County.
2. The withdrawal made by this order does not alter the
applicability of those land laws governing the use of the National
Forest System land under lease, license, or permit, or governing the
disposal of their mineral or vegetative resources other than under the
mining laws.
3. This withdrawal will expire 20 years from the effective date of
this order unless, as a result of a review conducted before the
expiration date pursuant to Section 204(f) of the Federal Land Policy
and Management Act of 1976, 43 U.S.C. 1714(f) (1988), the Secretary
determines that the withdrawal shall be extended.
Dated: December 18, 1995.
Bob Armstrong,
Assistant Secretary of the Interior.
[FR Doc. 96-1090 Filed 1-24-96; 8:45 am]
BILLING CODE 4310-40-P
Complete official Federal Register PDF
FR Doc. 96-1088 Tobacco Vending
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2121-2122]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1088]
=======================================================================
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GENERAL SERVICES ADMINISTRATION
41 CFR Part 101-20
[FPMR Amendment D-94]
RIN 3090-AF90
Tobacco Vending
AGENCY: General Services Administration.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: General Services Administration's Appropriations Act, Public
Law 104-52, Section 636, referred to as the ``Prohibition of Cigarette
Sales to Minors in Federal Buildings and Land Act,'' requires the
Administrator of General Services to promulgate regulations that
prohibit the sale of tobacco products in vending machines and the
distribution of free samples of tobacco products in Government-owned
and leased space under the custody and control of the GSA. GSA intends
to have tobacco-product vending machines removed from Government
property.
EFFECTIVE DATE: January 25, 1996.
FOR FURTHER INFORMATION CONTACT:
Dan Shipley, (202) 501-1968.
SUPPLEMENTARY INFORMATION: The General Services Administration (GSA)
has determined that this rule is not a significant regulatory action
for the purposes of Executive Order 12866.
The Paperwork Reduction Act does not apply because the revisions do
not impose record keeping or information collection requirements, or
collections of information from offerors, contractors, or members of
the public which require the approval of the Office of Management and
Budget under U.S.C. 3501, et seq. This rule is not required to be
published in the Federal Register for notice and comment. Therefore,
the Regulatory Flexibility Act does not apply.
[[Page 2122]]
List of Subjects in 41 CFR Part 101-20
Concessions, Federal buildings and facilities, Government property
management.
For the reasons set forth in the preamble, 41 CFR Part 101-20 is
amended as follows:
PART 101-20--MANAGEMENT OF BUILDINGS AND GROUNDS
1. The authority citation for Part 101-20 continues to read as
follows:
Authority: Sec. 205(c), 63 Stat. 390 (40 U.S.C. 486(c)
Subpart 101-20.2--Vending Facility Program for Blind Persons
2. Section 101-20.109 is amended by adding paragraph (d) to read as
follows:
Sec. 101-20.109 Concessions.
* * * * *
(d) Public Law 104-52, Section 636, prohibits the sale of tobacco
products in vending machines in Government-owned and leased space under
the custody and control of GSA. The Administrator of GSA or the head of
an Agency may designate areas not subject to the prohibition, if the
area prohibits minors and reports are made to the appropriate
committees of Congress.
2. Section 101-20.204 is amended by revising paragraph (c)(3) to
read as follows:
Sec. 101-20.204 Terms of permit.
* * * * *
(c) * * *
(3) Articles sold at vending facilities operated by blind licensees
may consist of newspapers, periodicals, publications, confections,
tobacco products, foods, beverages, chances for any lottery authorized
by State law and conducted by an agency of a State within such State,
and other articles or services as are determined by the State licensing
agency, in consultation with GSA to be suitable for a particular
location. Such articles and services may be dispensed automatically or
manually and may be prepared on or off the premises. Public Law 104-52,
Section 636, prohibits the sale of tobacco products in vending machines
in Government-owned and leased space under the custody and control of
GSA.
3. Section 101-20.309 is revised to read as follows:
Sec. 101-20.309 Posting and distributing materials.
(a) Public Law 104-52, Section 636, prohibits the distribution of
free samples of tobacco products in or around Federal buildings.
(b) Posting or affixing materials, such as pamphlets, handbills, or
flyers, on bulletin boards or elsewhere on GSA-controlled property is
prohibited, except as authorized in Sec. 101-20.308 or when these
displays are conducted as part of authorized Government activities.
Distribution of materials, such as pamphlets, handbills, or flyers is
prohibited, except in the public areas of the property as defined in
Sec. 101-20.003(z), unless conducted as part of authorized Government
activities. Any person or organization proposing to distribute
materials in a public area under this section shall first obtain a
permit from the building manager under Subpart 101-20.4 and shall
conduct distribution in accordance with the provisions of Subpart 101-
20.4. Failure to comply with those provisions is a violation of these
regulations.
Dated: January 5, 1996.
Roger W. Johnson,
Administrator of General Services.
[FR Doc. 96-1088 Filed 1-24-96; 8:45 am]
BILLING CODE 6820-23-M
Complete official Federal Register PDF
FR Doc. 96-1087 Withdrawal of Public Lands for the Horsethief Canyon State Wildlife Area; Colorado
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Page 2138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1087]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
43 CFR Public Land Order 7180
[CO-935-1430-01; COC-28254]
Withdrawal of Public Lands for the Horsethief Canyon State
Wildlife Area; Colorado
AGENCY: Bureau of Land Management, Interior.
ACTION: Public land order.
-----------------------------------------------------------------------
SUMMARY: This order withdraws 496.87 acres of public lands from surface
entry and mining for 50 years for the Bureau of Reclamation to protect
wildlife values and constructed facilities in the Horsethief Canyon
State Wildlife Area.
EFFECTIVE DATE: January 25, 1996.
FOR FURTHER INFORMATION CONTACT: Doris Chelius, BLM Colorado State
Office, 2850 Youngfield Street, Lakewood, Colorado 80215-7076, 303-239-
3706.
By virtue of the authority vested in the Secretary of the Interior
by Section 204 of the Federal Land Policy and Management Act of 1976,
43 U.S.C. 1714 (1988), it is ordered as follows:
1. Subject to valid existing rights, the following described public
lands are hereby withdrawn from settlement, sale, location, or entry
under the general land laws, including United States mining laws (30
U.S.C. Ch. 2 (1988)), for the Bureau of Reclamation to protect wildlife
values and constructed facilities and resources at the Horsethief
Canyon State Wildlife Area:
Ute Principal Meridian
T. 1 N., R. 2 W.,
Sec. 18, lots 7, 9, and 10.
T. 1 N., R. 3 W.,
Sec. 9, lots 11 and 12;
Sec. 10, lots 12 and 13;
Sec. 11, lots 7 and 8;
Sec. 13, lots 8, 9, and 10, and SE\1/4\SE\1/4\;
Sec. 14, lots 5, 6, 7, 8, 11, 12, 13, 14, and a metes and bounds
parcel in the NE\1/4\NE\1/4\SW\1/4\ of sec. 14, described as Parcel
GVU-(MIT) 5, and in sec. 15, parcels GVU-(MIT) 6 and 7. These three
parcels are described on Bureau of Reclamation Map Sheet 1 of 1,
Numbered 1295-417-2385 dated July 15, 1992. (These Maps can be seen
at the Colorado State Office as listed above or the Bureau of
Reclamation Offices in Grand Junction or in Lakewood, Colorado.)
The areas described aggregate 496.87 acres of public lands in
Mesa County.
2. The withdrawal made by this order does not alter the
applicability of those public land laws governing the use of the lands
under lease, license, or permit, or governing the disposal of their
mineral or vegetative resources other than under the mining laws.
3. This withdrawal will expire 50 years from the effective date of
this order unless, as a result of a review conducted before the
expiration date pursuant to Section 204(f) of the Federal Land Policy
and management Act of 1976, 43 U.S.C. 1714(f) (1988), the Secretary
determines that the withdrawal shall be extended.
Dated: December 18, 1995.
Bob Armstrong,
Assistant Secretary of the Interior.
[FR Doc. 96-1087 Filed 1-24-96; 8:45 am]
BILLING CODE 4310-JB-P
Complete official Federal Register PDF
FR Doc. 96-1086 Partial Revocation of Secretarial Order Dated May 18, 1944; Idaho
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Page 2138]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1086]
-----------------------------------------------------------------------
DEPARTMENT OF THE INTERIOR
43 CFR Public Land Order 7181
[ID-943-1430-01; IDI-15697 01]
Partial Revocation of Secretarial Order Dated May 18, 1944; Idaho
AGENCY: Bureau of Land Management, Interior.
ACTION: Public land order.
-----------------------------------------------------------------------
SUMMARY: This order revokes a Secretarial order insofar as it affects
40.43 acres of public land withdrawn by the Bureau of Land Management
for Powersite Classification No. 356. The land is no longer needed for
this purpose and the revocation is needed to transfer the land to the
State of Idaho under Indemnity Selection. This action will open the
land to surface entry. The land has been and will remain open to mining
and mineral leasing.
EFFECTIVE DATE: February 26, 1996.
FOR FURTHER INFORMATION CONTACT: Larry R. Lievsay, BLM Idaho State
Office, 3380 Americana Terrace, Boise, Idaho 83706-2500, 208-384-3166.
By virtue of the authority vested in the Secretary of the Interior
by Section 204 of the Federal Land Policy and Management Act of 1976,
43 U.S.C. 1714 (1988), it is ordered as follows:
1. The Secretarial Order dated May 18, 1944, which withdrew public
land for the Bureau of Land Management's Powersite Classification No.
356, is hereby revoked insofar as it affects the following described
land:
Boise Meridian
T. 62 N., R. 2 E.,
Sec. 23, lot 13.
The area described contains 40.43 acres in Boundary County.
2. At 9 a.m. on February 26, 1996, the land will be opened to the
operation of the public land laws generally, subject to valid existing
rights, the provisions of existing withdrawals, other segregations of
record, and the requirements of applicable law. All valid applications
received at or prior to 9 a.m. on February 26, 1996, shall be
considered as simultaneously filed at that time. Those received
thereafter shall be considered in the order of filing.
Dated: December 18, 1995.
Bob Armstrong,
Assistant Secretary of the Interior.
[FR Doc. 96-1086 Filed 1-24-96; 8:45 am]
BILLING CODE 4310-GG-P
Complete official Federal Register PDF
FR Doc. 96-1073 Medicare and State Health Care Programs: Fraud and Abuse; Safe Harbors for Protecting Health Plans
[Federal Register Volume 61, Number 17 (Thursday, January 25, 1996)]
[Rules and Regulations]
[Pages 2122-2137]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 96-1073]
=======================================================================
-----------------------------------------------------------------------
DEPARTMENT OF HEALTH AND HUMAN SERVICES
Office of Inspector General
42 CFR Part 1001
RIN 0991-AA69
Medicare and State Health Care Programs: Fraud and Abuse; Safe
Harbors for Protecting Health Plans
AGENCY: Office of Inspector General (OIG), HHS.
ACTION: Final rule.
-----------------------------------------------------------------------
SUMMARY: In accordance with section 14 of the Medicare and Medicaid
Patient and Program Protection Act of 1987, this final rule sets forth
various standards and guidelines for safe harbor provisions designed to
protect certain health care plans, such as health maintenance
organizations and preferred provider organizations, under the Medicare
and State health care programs' anti-kickback statute. These safe
harbor provisions were originally published in the Federal Register on
November 5, 1992 in interim final form. In response to the various
public comments received, this final rule revises and clarifies various
aspects of that earlier rulemaking.
Effective date: This rule is effective on January 25, 1996.
FOR FURTHER INFORMATION CONTACT:
Linda Grabel or Tom Hoffman, Office of the General Counsel, (202) 619-
0335
Joel Schaer, Office of Inspector General, (202) 619-3270.
Please send comments regarding the paperwork reduction and
information collection requirements discussed in section IV.B. of this
preamble in writing to: Joel Schaer, Regulations Officer, Office of
Inspector General, Room 5550 Cohen Building, 330 Independence Avenue
SW., Washington, D.C. 20201.
SUPPLEMENTARY INFORMATION:
I. Background
On November 5, 1992, we published an interim final rule with
comment period establishing two new safe harbors, and amending one
existing safe harbor, to provide protection for certain health care
plans, such as health maintenance organizations (HMOs) and preferred
provider organizations (PPOs) (57 FR 52723). The first new safe harbor
provision, set forth in Sec. 1001.952(l), protects certain incentives
to enrollees (including waiver of coinsurance and deductible amounts)
paid by health care plans. The second new provision, set forth in
Sec. 1001.952(m), protects certain negotiated price reduction
agreements between health care plans and contract health care
providers. In addition, the existing safe harbor addressing the waiver
of beneficiary coinsurance and deductible amounts, codified in
Sec. 1001.952(k), was amended to protect certain agreements entered
into between hospitals and Medicare SELECT insurers.
These safe harbors set forth various standards and guidelines that,
if met, allow specific business arrangements and payment practices of
certain health care plans not to be treated as criminal offenses under
section 1128B(b) of the Social Security Act (the Act) and not to serve
as a basis for a program exclusion under section 1128(b)(7) of the Act.
As with the other safe harbor provisions codified in Sec. 1001.95 of
the regulations, these new safe harbors placed no affirmative
obligation on any individual or entity.
Although the regulations were issued in final form and became
effective on their date of publication, we indicated in the preamble of
that November 5, 1992 document that we were allowing a 60-day public
comment period during which time interested parties could submit
comments and concerns regarding these safe harbors. An additional 60-
day extension to the public comment period was published in the Federal
Register on January 7, 1993 (58 FR 2989).
[[Page 2123]]
II. Summary of the Interim Final Rule
A. Section 1001.952(l)--Increased Coverage, Reduced Cost-Sharing
Amounts, or Reduced Premium Amounts Offered by Health Plan
As indicated above, a new safe harbor, set forth in
Sec. 1001.952(l), was created to protect certain incentives to
enrollees (including increased benefits and waiver of deductible and
coinsurance amounts) offered by health plans. This safe harbor
contained two parts designed to protect incentives offered by health
care plans under contract with the Health Care Financing Administration
(HCFA) or a State health care program.
The first part of this safe harbor protected risk-based health
plans, like HMOs, competitive medical plans (CMPs) and prepaid health
plans (PHPs), under contract with HCFA or a State health care program;
and operating (i) in accordance with section 1876(g) or 1903(m) of the
Act, (ii) under a Federal statutory demonstration authority, or (iii)
under other Federal statutory or regulatory authority. Under this part,
the only standard for such health plans was that the health care plan
could not discriminate in the offering of these incentives, but must
offer the same incentives to all enrollees unless otherwise
specifically approved by HCFA or a State health care program.
The second part of this safe harbor protected incentives offered to
enrollees by HMOs, CMPs, PHPs and health care prepaid plans (HCPPs)
that are under contract with HCFA or a State health care program, and
that are paid on a reasonable cost or similar basis. For these plans to
be under the safe harbor, two standards had to be met--(1) the same
incentives must be offered to all enrollees for all covered services,
and (2) the health plan may not claim the cost of these incentives as
bad debts or otherwise shift the burden of these incentives onto
Medicare, the State health care programs, other payers or individuals.
B. Section 1001.952(m)--Price Reductions Offered to Health Plans
The safe harbor in Sec. 1001.952(m) was created to protect certain
negotiated price reduction agreements between health care plans and
contract health care providers, and was set forth in three parts. The
first two parts were designed to protect risk-based and cost-reimbursed
health care plans that operate in accordance with a contract or
agreement with HCFA or a State health care program; the third part
established additional standards to protect health plans that do not
have contracts or agreements with HCFA or State health care programs.
In order to comply with this price reduction safe harbor, three
fundamental prerequisites were to be met in all cases--(1) the
protected remuneration was the contract health care provider's
reduction of its usual charges for the services; (2) the terms of the
agreement between the parties must be in writing; and (3) the agreement
must be for the sole purpose of having the contract health care
provider furnish enrollees items or services that are covered by the
health plan, Medicare or the State health care program.
The first part of this safe harbor (Sec. 1001.952(m)(1)(i))
protected risk-based HMOs, CMPs and PHPs under contract with HCFA or a
State health care program; and operating (i) in accordance with section
1876(g) or 1903(m) of the Act, (ii) under a Federal demonstration
authority, or (iii) under other Federal statutory or regulatory
authority. In addition to the three prerequisites mentioned above, in
order to be covered under the safe harbor risk-based contract health
plans under this part could not separately bill Medicare, Medicaid or
another State health care program for items and services furnished
under the agreement with the health plan (except as specifically
authorized by HCFA or the State health care program), and could not
otherwise shift the burden of the agreement onto Medicare, Medicaid,
other payers or individuals.
The second part (Sec. 1001.952(m)(1)(ii)) protected health care
plans that have executed a contract or agreement with HCFA or a State
health care program to have payment made on a reasonable cost or
similar basis. In addition to the three prerequisites, price reduction
agreements with contract health care providers under this safe harbor
were protected if (1) the term of the agreement was not less than one
year; (2) the agreement specified in advance the covered items and
services that the contract health care provider will furnish to
enrollees and the methodology for computing the payment to the contract
health care provider; (3) the health plan fully and accurately reported
to HCFA or the State health care program the amount it paid the
contract health care provider in accordance with the agreement; and (4)
the contract health care provider could not claim payment in any form
unless specifically authorized by HCFA or the State health care
program.
Lastly, the third part of this safe harbor
(Sec. 1001.952(m)(1)(iii)) protected reductions offered by contract
health care providers to all other health plans when six standards, in
addition to the three prerequisites, were met. The six standards set
forth required (1) the term of the price reduction agreement not be
less than one year; (2) the agreement specify in advance the covered
items and services, which party is to file claims or requests for
payment with Medicare, Medicaid and other State health care programs,
and the schedule of fees that contract provider will be paid; (3) the
schedule remain in effect throughout the term of the agreement (unless
a fee update is specifically authorized by HCFA or a State health care
program); (4) the party submitting claims for items or services under
the agreement not claim or request payment for amounts in excess of the
fee schedule; (5) full and accurate reporting of costs be made by the
health plan or the contract health care provider; and (6) a prohibition
on the party that is not responsible under the agreement for seeking
reimbursement from Medicare, Medicaid and any other State health care
program from claiming payment or otherwise shifting the burden of the
price reduction onto Medicare, Medicaid, other payers or individuals.
C. Section 1001.952(k)--Waiver of Beneficiary Coinsurance and
Deductible Amounts
The existing safe harbor in Sec. 1001.952(k), the waiver of
coinsurance and deductible amounts, was also amended to protect certain
agreements entered into between hospitals and Medicare SELECT insurers.
Medicare SELECT is a type of supplemental policy under which reduced
benefits may be paid for the use of an out-of-network health care
provider. Under this amended safe harbor, waivers or reductions of
inpatient hospital coinsurance and deductibles by a hospital in
accordance with an agreement with a Medicare SELECT insurer were
protected by amending the third of the existing 3 standards set forth
in Sec. 1001.952(k)(1). The prior standard required that the reduction
or waiver not result from an agreement between a hospital and a third-
party payer. The amended standard exempted agreements that are part of
a contract between a hospital and a Medicare SELECT insurer for
furnishing items or services to Medicare SELECT beneficiaries when (1)
the insurer issued a Medicare SELECT insurance policy under the terms
of section 1882(t)(1) of the Act, and (2) the waiver of coinsurance or
deductible amounts provided under the agreement were limited to
beneficiaries covered by the insurer's Medicare SELECT policy. The
other requirements of the existing safe
[[Page 2124]]
harbor still apply to such waivers or reductions.
III. Response to Comments and Summary of Revisions
As a result of our request for comments, we received a total of 42
timely-filed public comments from various health care associations,
health care plans and medical groups, professional and business
organizations, and insurance companies on how best to protect HMOs,
PPOs and other managed care plans. The comments included both general
and broad concerns about the impact of the regulations, and specific
comments on those areas and the safe harbor provisions about which we
invited public input. The following is a summary of the issues raised
through that public comment process, our response to those various
comments, and a summary of the specific revisions and clarifications
being made to these regulations.
A. General Comments
Comment: Commenters generally objected that the safe harbors would
inhibit or ``chill'' existing activities in which managed care plans
engage and thereby jeopardize numerous arrangements. They specifically
asserted that should HMOs and PPOs not receive safe harbor protection,
vast networks of providers would be at risk and would therefore refuse
to enter into discount arrangements with such entities.
Response: The commenters have misconstrued the effect of the safe
harbor provisions. The interim final rule did not expand the zone of
illegal conduct under the anti-kickback statute. Legally and logically,
the safe harbors can only make the zone of illegal conduct smaller. As
indicated above, compliance with the safe harbors is completely
voluntary. If a practice or arrangement does not fall within a safe
harbor, it has precisely the same legal risk that it had before the
safe harbor was promulgated. The safe harbors are designed to provide a
means through which plans and providers can be assured that their
arrangements are immune from potential criminal and administrative
sanctions under the anti-kickback statute.
Comment: Several commenters wrote that the regulations do not
address numerous activities that managed care entities engage in, and
thus imply that such activities could be considered unlawful or would
be subject to heightened scrutiny.
Response: Commenters should not infer that because a safe harbor
provision does not specifically refer to a particular arrangement or
activity, it is unlawful. Nor should they interpret that lack of a safe
harbor to mean that these activities will be subjected to heightened
scrutiny. Moreover, the safe harbors do not create affirmative
obligations on individuals or entities since compliance with these safe
harbors is purely voluntary. The failure to comply with a safe harbor
means only that the practice or arrangement does not have the absolute
assurance of protection from anti-kickback liability.
Comment: Certain commenters argued that the statute does not apply
to particular arrangements. For instance, one commenter claimed that a
hospital's agreement with a managed care plan to forego a deductible or
coinsurance does not violate the statute because ``payment'' is made to
a third party payer. Other commenters contended that since the statute
confers exempt status on health plans for all discounted transactions,
a safe harbor for price reduction agreements is unnecessary. Some
commenters further indicated that the statute does not apply to the
enrollment of persons in a health plan. These commenters opined that
the regulations erroneously indicate that HMOs, especially independent
practitioner association models, are ``providers'' in a position to
refer patients.
Response: We believe that the anti-kickback statute is broad enough
to potentially cover each of these types of arrangements. The statute
prohibits any remuneration which is in return for, or which is designed
to induce, the flow of Medicare and Medicaid program-related business.
Therefore, it could cover a hospital's agreement to forego or reduce
coinsurance or deductibles in exchange for increased program-related
business. It does not matter that the payment is made to a third party
rather than the beneficiary.
The current discount statutory exception and the discount safe
harbor are generally not applicable to the discounts involved in
managed care plans. The statutory exception covers discounts obtained
by buyers which are to be reported to the programs by such buyers with
costs and charges reduced appropriately to reflect the discounts. In
managed care plans, the provider is the ``seller'' who provides a
discount to the plan/patient ``buyer.'' Where the provider/seller
submits a claim to the program, the statutory requirements have not
been met and therefore, the discount is not exempted. The discount safe
harbor (which encompasses all conduct under the statutory discount
exception) also requires that the discount be offered to Medicare and
Medicaid. In the case of managed care contracts with providers, the
discount is offered only to the managed care plan. Since the discounted
fees are not offered to Medicare or Medicaid, the arrangement does not
fall within the parameters of the safe harbor. An additional safe
harbor is therefore necessary to protect discounts between managed care
plans and providers.
Enrollment in a health plan falls within the scope of the anti-
kickback statute where such enrollment involves Medicare or Medicaid
beneficiaries and results from various incentives offered to these
individuals by the managed care plan. The incentives offered to
beneficiaries constitute remuneration with the meaning of the statute.
Once enrolled, the plan is entitled to receive Medicare or Medicaid
reimbursement for the services directly provided to program
beneficiaries. Alternatively, the plan steers enrollees to certain
providers who furnish reimbursable services. The incentives offered to
program beneficiaries can be in return for obtaining reimbursable
program business and, therefore, are covered by the statute.
Moreover, one does not have to be a ``provider'' or make an actual
``referral'' to be covered by the anti-kickback statute. The statute
covers any persons who offer, pay, solicit, or receive any unlawful
remuneration. The scope of prohibited conduct includes not only that
which is intended to induce referrals, but also that which is intended
to induce the purchasing, leasing, ordering or arranging for any good,
facility, service or item paid for by Medicare or Medicaid.
Accordingly, the statute covers recommendations on which providers to
use, and would include the preferred or approved provider lists of HMOs
or PPOs, especially where such providers have agreed to discount their
fees in return for such designations.
Comment: Some commenters wanted the OIG to obtain industry input
before finalizing these safe harbor regulations.
Response: The interim final rule originally provided for a 60-day
public comment period. The OIG subsequently agreed to extend the
comment period an additional 60 days. Consequently, we do not believe
that further public comment is necessary before the regulations are
revised to take into account the public comments received.
Comment: One commenter requested that the OIG provide a mechanism
by which members of the public could seek advance rulings on whether
practices violate the anti-kickback statute or fall within the safe
harbor regulations.
[[Page 2125]]
Response: As we explained in the July 29, 1991 final safe
regulations setting forth the original safe harbor provisions, we
understand and appreciate the desire for legal security in parties'
business relations. However, we are unable to provide a mechanism
responding to individual requests for advisory opinions about the
legality of a particular business arrangement under the statute for
several reasons. The Department of Justice (DOJ) has exclusive
authority to enforce all criminal laws of the United States such as the
anti-kickback statute. (See 28 U.S.C. 516, 519 and 547.) Any advisory
opinions that we would issue would not be binding on DOJ and could
serve to impede the prosecution of a particular case. Moreover, the
statute requires proof of knowing and willful intent, which is
generally impossible to evaluate on the basis of written submissions
from interested requestors.
Comment: Certain commenters wrote that the OIG should publish a new
safe harbor exempting managed care entities from the 60/40 investor and
revenue provisions of the small entity safe harbor on investment
interests.
Response: These issues lie beyond the scope of this rulemaking and
would require separate notice and public comment in order to be
adopted. The OIG will consider whether circumstances warrant the future
revision of that safe harbor for managed care entities.
Comment: Some commenters addressed the issue of independent agents
and brokers in the managed care arena. They asserted that the OIG
should revise the existing safe harbor on personal or management
services or create an additional safe harbor to protect an HMO's or
PPO's use of independent agents and brokers. They believed that
independent broker representatives have been the most effective
marketing tool for Medicare coverage products. These commenters stated
that HMOs or PPOs cannot meet the personal services safe harbor because
they cannot establish the aggregate compensation element in advance of
a transaction.
Response: This issue is beyond the scope of the interim final rule
and would require separate notice and public comment in order to be
adopted. In addition, we disagree that the OIG should protect
independent agents or brokers used by HMOs or PPOs. Widespread abusive
practices have occurred in several States involving independent
contractors who misrepresent the nature of a plan's coverage in
attempting to enroll individuals. As discussed in the preamble to the
July 29, 1991 final safe harbor regulations, we are unpersuaded that
such contractors would be subject to adequate supervision or control
unless they become employees. We recognize that various personal
services arrangements are not covered by these regulations but
reiterate that the OIG must reasonably protect the Medicare and State
health care programs from abuse.
Comment: Some commenters requested that the OIG seek to amend the
anti-kickback statute to clarify its parameters and provide ample scope
to managed care entities for their contracting and pricing practices.
Response: The OIG clearly lacks authority in these regulations to
amend the anti-kickback statute, which only Congress may do. Therefore,
the commenters' suggestion falls outside the scope of this rulemaking.
The OIG will, however, continue to consider from time to time whether
additional safe harbors are appropriate or whether other specific
managed care contracting or pricing practices should be protected.
Comment: One commenter stated that the revised final rule should
clearly prohibit providers from balance billing Medicare patients any
amounts which exceed either Federal or State law. The commenter noted
that currently Federal law permits providers generally to balance bill
their patients up to 115 percent of the Medicare allowable amount and
that some States do not allow any balance billing whatsoever.
Response: The commenter raises an issue which is beyond the purview
of these managed care safe harbor regulations. Neither the new safe
harbors nor the amended Medicare SELECT provision addresses the balance
billing practices of providers. As the commenter indicates, Federal law
precludes providers from charging beneficiaries more than 15 percent
above the fee schedule or other allowable charge. The Medicare statute
includes a specific remedy for violations of the limitations on balance
billing. Moreover, some States like New York absolutely ban balance
billing and have mechanisms to enforce those requirements. Therefore,
we believe that both Federal and State law already adequately regulate
balance billing practices.
B. Comments Applicable to the Two New Safe Harbors
1. The Definition of ``Health Plan''
Comment: The vast majority of commenters objected to the scope of
the definition of health plan used in the regulations as being too
narrow and requested that it be broadened. Commenters specifically
requested that the definition should be expanded to include ERISA
plans, employer self-funded plans, union welfare funds, non-premium or
uninsured HMOs, exclusive provider organizations (EPOs), physician/
hospital organizations (PHOs), and PPOs which serve as intermediaries
between providers and plans or between providers and employers.
Response: We agree that the definition of health plan should be
broadened and have revised the definition to include two additional
categories of entities. We had not intended to exclude ERISA plans or
other company or union sponsored health plans, and we had specifically
mentioned these types of plans as legitimate health plans in the
preamble to the interim final rule. As we discussed in that preamble,
our primary concern in requiring a health plan to charge a premium and
in requiring State regulation of that premium was to exclude phony
insurance plans from protection. We still believe it is necessary for
the definition to exclude such phony insurance plans because if such
plans were not excluded, we would have lost a major tool to combat them
and, if they were immunized from liability under the anti-kickback
statute, we would have only limited ability to take effective action
against these types of abusive arrangements. For example, the
requirement is necessary to prevent entities from establishing
``insurance plans'' that charge only minimal premiums, such as $1.00,
that are unrelated to the cost or level of services provided. Often,
such plans are merely an attempt to legitimize an unlawful waiver of
coinsurance or deductibles. The requirement is also necessary to
prevent the creation and use of ``shell'' entities, which would qualify
as a health plan and would, in turn, subcontract all of its
responsibilities to other entities or insurance companies. We believe
the revisions we have made to the definition of health plan will allow
a wide variety of legitimate managed care health plans to qualify for
protection.
The revised definition maintains the requirement that the entity
furnish or arrange for the furnishing of items or services to enrollees
of the plan through contracts or agreements with health care providers,
or furnish insurance coverage for the provision of such items or
services. However, we have broadened the definition to provide that the
entity must furnish or arrange for the provision of items or services
to enrollees in exchange for either a
[[Page 2126]]
premium or a fee. The fee is designed to cover those situations where a
premium is not charged, such as where an employer negotiates directly
with providers the fees it will pay for the provision of health care
services. It would also cover situations where an entity establishes a
network of providers and markets that network to an employer or an
insurance company, in return for a fee for administering the plan. The
fee must reflect the fair market value of administering the plan or the
network.
Additionally, in order to qualify as a health plan, the entity must
fall within one of four categories. The entity must (1) operate in
accordance with a contract, agreement, or statutory demonstration
authority approved by HCFA or a State health care program; (2) charge a
premium and have its premium structure regulated under a State
insurance statute or a State enabling statute governing HMOs or PPOs;
(3) be an employer or a union welfare fund whose enrollees are current
or retired employees or union members, respectively; or (4) be licensed
in the State, be under contract with an employer, a union welfare fund,
or a health insurance company, which meets the requirements of (2) or
(3), and be paid a fee for the administration of the plan. The first
two categories were included in the original definition of health plan.
The third category is designed to cover ERISA plans, or other employer
or union plans which are self-insured or self-funded and which contract
directly with health care providers or insurance companies. In order to
exclude bogus or sham entities, we have required that the enrollees of
such plans be limited to current or retired employees or current union
members, and their families. By union welfare funds, we mean those
funds which are operated by bona fide labor organizations. The fourth
category is designed to cover entities such as PPOs that act as
intermediaries between contract health care providers and employers,
union welfare funds or insurance companies. Again, to exclude entities
that are not bona fide intermediaries, we have required that the entity
be furnishing or arranging for services under contract with a bona fide
insurance company, employer, or union welfare fund.
We elected to broaden the definition of health plan by referring to
categories of entities based on how they operate or arrange for
services rather than by specifically naming different types of common
managed care entities, such as HMOs, PPOs, EPOs, or PHOs. We believe
this is a preferable approach because there are no single or commonly
recognized definitions of each of these types of entities. Any
definition we might choose to use would likely be viewed as arbitrary
and would likely exclude some otherwise legitimate arrangements. We
believe that the majority of legitimate managed care entities will be
able to fit into one of the four categories contained in the
definition.
We would also point out that the broadening of the definition of
health plan to cover preferred provider organizations which act as
intermediaries does not provide automatic safe harbor protection for
the arrangement between the organization and the insurance company,
employer, or union welfare fund. It only enables such organizations to
qualify as a health plan for purposes of negotiating protected price
reduction agreements with contract health care providers. In order for
the PPO's intermediary arrangement to qualify for safe harbor
protection, it must meet the requirements of the personal services and
management contracts safe harbor in Sec. 1001.952(d).
Comment: A number of commenters argued that legitimate managed care
health plans can be identified through the accreditation process by
AAPI or NCQA or by requiring non-accredited entities to meet the
requirements of those bodies. They believed that the definition of
health plan should be revised to include all managed care plans and
that the safe harbor should require accreditation or that entities meet
the standards for such accreditation.
Response: We do not believe that it is appropriate to require
health plans to seek accreditation from private companies or require
them to comply with the standards developed by such private companies.
We would have no way to determine compliance with those standards if an
entity did not seek accreditation. Moreover, accreditation is not a
widespread practice and the standards used by such companies are not
universally recognized or accepted as minimum standards that should be
required for all managed care plans. Finally, we are not aware of any
evidence that health plans or entities that do not meet these
accreditation standards are abusive or illegitimate, nor do we have any
evidence that accredited plans are less likely than other managed care
plan to engage in practices that may violate the anti-kickback statute.
Therefore, we have declined to require or incorporate accreditation as
a part of the definition of a health plan or as a requirement of a safe
harbor.
Comment: Some commenters believed that the OIG should pursue
``sham'' arrangements via ``selective enforcement'' of Fraud Alert
standards rather than through limiting the definition of a health plan.
Response: We disagree that the OIG should allow any managed care
entity to qualify as a health plan because the OIG can effectively
pursue sham transactions through the selective enforcement of the Fraud
Alert standards. First, the Fraud Alerts issued by the OIG do not
establish standards which can be enforced. The standards that exist are
established by the anti-kickback statute or other federal statutes and
regulations. The Fraud Alerts only set forth practices that have been
identified as abusive or that may be potentially abusive depending on
the circumstances and the intent of the parties. The Fraud Alerts are
intended to provide guidance to the public on how they can avoid
violations of the statute. Second, the purpose of the safe harbor
regulations is both to identify practices or arrangements that fall
within the broad scope of the anti-kickback statute but that are not
abusive, and to immunize those practices or arrangements from criminal
or civil liability. Our intent in establishing these safe harbors is to
include only those practices or arrangements that we are confident are
not abusive. Accordingly, we believe it is appropriate to limit the
definition of health plans to exclude sham managed care plans or phony
insurance plans to ensure that such plans do not qualify for protection
under a safe harbor.
2. Shifting the Burden
Comment: The commenters universally objected to the interim final
rule's prohibition against plans ``shifting the burden'' of increased
coverage, reduced cost-sharing or price reductions onto other payers.
Most commenters asserted that this standard was unclear and imposed a
burdensome requirement on health plans that the government should not
be imposing. They argued that without the ability to shift the revenue
loss from incentives or discounts across their entire customer base,
health plans would be unable to offer incentives and providers would be
unwilling or unable to offer discounts.
Response: We continue to believe that enrollee incentives and
provider price reductions should be economically sensible, i.e., they
should not be driven by a motive to shift costs to the government or
other payers. A health plan should not be offering incentives or
provider discounts unless they believe
[[Page 2127]]
the cost of those incentives or discounts can be recovered through
lower operating costs resulting from increased volume, economies of
scale or other efficiencies. We also believe that practices should be
protected only if they do not cause harm to the Medicare and Medicaid
programs. Accordingly, we are only willing to protect incentives and
price reductions that do not result in increased costs to the programs.
In order to ensure that result, we believe it is necessary to include a
requirement which prohibits cost shifting to the Medicare and Medicaid
programs. We recognize that the prohibition as originally drafted went
beyond what was necessary to protect these Federal programs. We have
therefore narrowed the scope of the prohibition against cost shifting
to the Medicare and State health care programs and have clarified the
circumstances when cost shifting is considered to have occurred, i.e.
when an arrangement or agreement results in increased payments being
claimed from the Medicare or State health care programs.
Comment: Some commenters requested that the OIG set standards
establishing when cost shifting has occurred. They complained that
plans and providers have no way to tell if they are in compliance with
this requirement.
Response: We do not believe it would be possible to provide a
complete or exhaustive list of situations where cost shifting has
occurred. We believe that plans and providers make judgments that they
expect to forego income to maintain market share, or that they expect
to recover lost income resulting from incentives to enrollees or
discounts to plans. These plans and providers make judgments whether
those means involve allocating increased costs to other customers or
payers. Certainly, in any case where a plan or provider raises its
costs or fees to others or reduces the services it provides to others
as a result of an incentive or a discount, prohibited cost shifting has
occurred. Claiming certain costs, such as waivers of coinsurance or
deductibles, as bad debt would also constitute impermissible cost
shifting.
C. Provision-by-Provision Analysis of Safe Harbors
1. Waiver of Part A Deductible and Coinsurance Amounts in Accordance
With an Agreement Between a Hospital and a Medicare SELECT Insurer
Comment: Several commenters objected to the expansion of this safe
harbor provision being limited to Medicare SELECT plans for a variety
of different reasons. These included the fact that Medicare SELECT is
only available in 15 States; that other Medigap plans or preferred
provider plans provide no greater risk of abuse than do Medicare SELECT
plans; that Medicare SELECT was not intended to be the exclusive
mechanism for allowing new and innovative Medigap benefits; and that
preferred provider plans that existed prior to the enactment of
Medicare SELECT and that now have frozen enrollments due to the
standardization of Medigap policies should be allowed to continue to
arrange for waivers through agreements with hospitals.
Response: We believe that it continues to be appropriate to limit
the amendment of the safe harbor on inpatient hospital waivers of
coinsurance and deductibles to Medicare SELECT. As we noted in the
preamble to the interim final rule, the Medicare SELECT program is a
demonstration project, authorized in only 15 States, and scheduled to
operate only from January 1, 1992 until the end of 1994. In order to
provide any protection during the demonstration period, it was
necessary to publish the safe harbor promptly and in final form. Since
we had not previously received comments on this issue from managed care
entities, we did not believe a broad waiver was appropriate without
subjecting the proposal to notice and comment. Therefore, a limited
waiver was included in order to permit the demonstration projects to
enter into agreements with hospitals for the waiver of inpatient
deductibles and coinsurance amounts without fear of prosecution under
the anti-kickback statute. We also believe that the amendment was
appropriately limited to Medicare SELECT because the demonstration
project included an evaluation and report that would enable the OIG to
determine whether the amendment had any undesirable effects. We believe
that such evaluation will also provide a factual basis for the OIG to
decide whether the amendment should be continued or expanded to other
similar types of arrangements.
The demonstration project is still in progress and no final report
has yet been issued evaluating the different Medicare SELECT plans that
are operating in the 15 States participating in the demonstration
project. However, we have reviewed some of the preliminary results of
the evaluation. While the data indicate that most beneficiaries who
purchase a Medicare SELECT policy pay a lower premium than they would
pay for the same package of benefits under a regular supplemental
policy, in most cases the lower premiums are the result of the waiver
of inpatient hospital deductibles and coinsurance by hospitals rather
than the result of reduced utilization or improved management of care.
The amendment to the safe harbor permitting agreements between
hospitals and Medicare SELECT insurers for the waiver of these cost
sharing obligations seems to be the variable that enables Medicare
SELECT insurers to reduce claims and thereby offer lower premiums to
beneficiaries.
The evaluation of service utilization by beneficiaries with
Medicare SELECT policies is expected to take several months to
complete. We expect that this part of the evaluation will provide
information as to whether the amendment has affected costs to the
Medicare program or other payers, or whether it promotes or helps to
control overutilization or inappropriate utilization of inpatient
hospital or other services. Additionally, it will provide information
on whether the Medicare SELECT program is fulfilling the legislative
intent of establishing a ``managed care'' Medicare supplement
alternative. Specifically, the intent of Medicare SELECT was to give
beneficiaries some of the benefits of a managed care plan enrollment,
that is, case management, a primary care physician and cost effective
care; it was not intended to be a mere discounting arrangement between
hospitals and insurers.
Accordingly, we believe it is appropriate to reserve the option of
expanding, revising or rescinding the amendment until we have had an
opportunity to consider the complete results of the Medicare SELECT
evaluation report.
We do not see any basis for providing safe harbor protection to
non-SELECT plans which offer preferred provider provisions merely
because such plans predate the enactment of the Medicare SELECT program
or because their enrollment is frozen as the result of the new
standardized Medigap program rules. The mere existence of a practice or
arrangement is not a sufficient basis to exempt that practice or
arrangement from the reach of the anti-kickback statute. Our position
is that we will not provide safe harbor protection for any practice or
arrangement unless we are confident the practice or arrangement is not
abusive. We do not currently have any evidence to show that the waivers
negotiated by these plans are not abusive or harmful to the programs.
The fact that enrollment in these plans is frozen does not make the
waivers any less potentially abusive or any less risky. The enactment
of Medicare
[[Page 2128]]
SELECT and the standardization of Medigap benefits and policies did
nothing to affect or change the legal status of routine waivers of
coinsurance or deductibles. Consequently, they do not provide any
justification for an extension of the existing safe harbor.
We believe that the Medicare SELECT demonstration project is also
distinguishable from other preferred provider arrangements on other
grounds. First, section 1882(t) of the Social Security Act establishes
certain minimum standards that Medicare SELECT plans must meet. These
standards include a provider network to provide all services with
sufficient access, full benefits for emergency care, an ongoing quality
assurance program, and provisions to ensure that beneficiaries are
fully informed about the benefits and restrictions of the plan.
Medicare SELECT plans are also subject to the imposition of civil
monetary penalties for the failure to meet certain requirements,
including the failure to provide medically necessary services within
the provider network. No other Medigap plans or preferred provider
plans are subject to these standards or penalties. Finally, the
Medicare SELECT program is subject to ongoing evaluation and expires at
the end of 1994. We believe the requirements imposed on Medicare SELECT
plans and the time-limited nature of the demonstration provide
substantially more protection and less risk to both the Medicare
program and Medicare beneficiaries than do other plans.
Contrary to one commenter's belief, we do not view the Medicare
SELECT program to be the exclusive vehicle for providing new or
innovative Medigap benefit packages. Since it is an existing program,
we considered whether it was appropriate to provide any safe harbor
protection. To the extent that a State approves a new or innovative
Medigap benefit package, we would similarly consider whether any
additional safe harbor protection was necessary or appropriate. While
States may have the authority to approve the sale of certain non-
standardized benefit packages, they do not have the authority to exempt
any such benefit packages from the prohibitions of the anti-kickback
statute. As we were unwilling to provide a blanket exemption for the
Medicare SELECT program, we are unwilling to commit in advance to a
blanket exemption for any State-approved innovative benefit package.
The approval of additional benefits as part of a Medigap policy would
not necessarily implicate the anti-kickback statute and therefore no
automatic protection would be necessary. However, the arrangements that
insurers may enter into in order to be able to furnish those benefits
economically or without additional premium costs could be violative of
the anti-kickback statute.
Comment: Some commenters believed that this safe harbor should
allow inpatient waivers for agreements with third party payers for all
managed care entities. Other commenters requested that safe harbor
protection be extended to entities having risk or cost contracts with
HCFA.
Response: We disagree. At the present time, we do not believe there
is sufficient evidence to demonstrate that waivers that result from
agreements between hospitals and third party payers, such as insurers
or health plans, are not abusive. We believe there are significant
differences between waivers of deductibles and coinsurance offered by
hospitals directly to beneficiaries and those negotiated between
hospitals and health plans. When we promulgated the original safe
harbor provision, we noted that there is a limited risk of abuse
because of various factors. First, the Medicare program is not directly
harmed since hospitals receive a predetermined amount under the
prospective payment system for each admission regardless of their costs
or charges. Second, hospital admissions are subject to peer review and
there is a relatively fixed level of patient demand for hospital
services. Third, physicians, rather than patients, make the decision
whether admission is medically indicated and their practice patterns
and admitting privileges also affect the decision as to which hospital
will be selected. Therefore, we believed that a waiver of inpatient
beneficiary fees would not be likely to increase utilization
significantly, especially if hospitals could not discriminate on the
basis of length of stay or type of diagnosis.
These limiting factors do not exist where waivers result from
agreements between hospitals and insurers or plans. In contrast to the
effect of a waiver given to a beneficiary which affects only a single
admission, health plans or insurers have the capacity to direct the
flow of large numbers of admissions to specific hospitals by
designating them as preferred or exclusive providers in return for an
agreement to waive coinsurance and deductibles. Where this flow results
from the hospital's agreement to waive inpatient beneficiary fees or to
reduce its charges, or both, the practice can be abusive and anti-
competitive. Hospital reimbursement rates differ and the designation of
certain hospitals as preferred or exclusive providers in a particular
geographic area could result in a direct increase in the amounts paid
by the Medicare program for inpatient hospital costs. Thus, while the
plan or insurer would save money, the Medicare program would not.
Similarly, a health plan or insurer's designation of certain hospitals
could result in substantial decreases in the number of admissions to
other area hospitals and might eventually result in the closure of some
facilities, thus lessening competition. Reduced competition could lead
to increased charges by the remaining hospitals. Additionally, the
waiver of beneficiary fees or reduced charges that the hospital has
agreed to in order to obtain the health plan or insurer's business may
ultimately be passed along to the Medicare program or other payers.
Finally, we are concerned about the possibility of overutilization or
inappropriate use of services that may result from a waiver of
beneficiary fees. Where Medicare is the primary payer, a hospital's
waiver of inpatient deductible and coinsurance amounts results in the
insurer or health plan having no financial liability. Since the plan or
insurer has no financial stake, it may be less concerned about guarding
against the overutilization or inappropriate utilization of services.
We have made, however, a minor change to the regulation to clarify
the meaning of ``third party payer.'' There has been some question as
to whether that term would include PPOs that serve as intermediaries
between health care providers and insurers or employers, but who are
not responsible for the payment of claims for services provided to
beneficiaries. We have revised the regulation to indicate that a third
party payer includes any entity that meets the definition of a health
plan set forth in Sec. 1001.952(l)(2) of the regulation. With the
limited exception for Medicare SELECT, it is our intent, as discussed
in the preamble to the July 29, 1991 final safe harbor regulations, to
protect only those waivers that are given by hospitals directly to
beneficiaries. We did not intend to protect any waivers that resulted
from contractual agreements entered into by hospitals.
Comment: A number of commenters, including some who are Medicare
SELECT insurers, raised objections to the effect that even where
Medicare SELECT is in place, the safe harbor does not permit waiver of
coinsurance for a large number of services that are essential to cost-
efficient managed care networks (e.g., hospital outpatient services,
ambulatory surgical centers, physician services) because it is limited
to inpatient hospital services. They urged that the safe harbor be
expanded
[[Page 2129]]
to cover services reimbursed under Part B of Medicare.
Response: We do not believe that safe harbor protection is
appropriate for routine waivers of coinsurance and deductibles for
outpatient services covered under the Medicare Part B program. We also
do not believe that such waivers are necessary or essential to the
efficient or cost-effective operation of managed care plans. Managed
care plans are free to seek discounts or price reductions from
providers that lower the costs of providing services, as long as those
reductions are reflected as a lowering of the provider's total charge
for the service. We have expressly provided protection for this type of
discount in the safe harbor on price reductions offered to health
plans.
As we indicated in the preamble to the interim final rule, routine
waivers of coinsurance and deductibles are an area of significant abuse
in the Medicare program. Such waivers result in the submission of false
claims to the Medicare program because providers misstate their charges
on claims submitted to the program. For example, if a provider's usual
charge is $100 and he or she routinely waives the 20 percent
coinsurance, then the provider's actual charge for providing the
service is really only $80, the amount he or she expects to receive as
payment for the service. If the provider submits a claim to the
Medicare program for $100, he or she has misrepresented the actual
charge and the Medicare program will reimburse the provider a higher
than appropriate amount. If the Medicare program reimburses the
provider $80, then the program will have paid for the entire cost of
providing the service, rather than the 80 percent authorized by law. In
this single instance, the program would have overpaid the provider by
$16 (the difference between $80 and $64, which is 80 percent of the
provider's actual fee of $80). Thus, the waiver of coinsurance results
in substantially higher costs to the Medicare program. Similar problems
may arise with cost-based health care providers. We would also note
that the Secretary's authority to grant safe harbor protection extends
only to violations of the anti-kickback statute. The Secretary has no
authority to provide protection from criminal, civil, or administrative
liability arising from the submission of false claims to the Medicare
program.
We also believe that the routine waiver of coinsurance and
deductibles may result in overutilization or inappropriate utilization
of services. Cost sharing is an essential element of the Medicare
program. To the extent that beneficiaries have a financial stake in the
cost of services, they have a direct interest in seeking the most
efficient and economical providers and are deterred from seeking
unnecessary services. As a result, Medicare program expenditures are
lower. Where Medicare beneficiaries have no financial stake because a
provider has waived their coinsurance amount, they are less likely to
be concerned over whether the charge for the service is $10 or $100,
and are less likely to question the medical necessity of the item or
service provided or ordered. Similarly, where a health plan (or
insurer) is responsible for paying a Medicare beneficiary's coinsurance
or deductible amounts, it is concerned about the cost or necessity of
the services provided to their enrollees. However, where a health plan
negotiates a waiver of Medicare coinsurance or deductible amounts with
providers, it no longer has a financial stake because there are no
costs it incurs for the services provided by that provider to Medicare
beneficiaries. Once again, the Medicare program ends up paying for the
full cost of care.
We have no evidence to indicate that Medicare SELECT plans are
significantly different from other Medigap plans or other types of
managed care health plans in this respect, or that they will adequately
protect the Medicare program from higher costs or inappropriate
expenditures. Section 1882(t) of the Act does not provide any specific
safeguards against the abuses that occur from the waiver of Medicare
Part B coinsurance or deductibles. Thus, we continue to decline to
provide any expanded protection for Medicare SELECT plans.
Comment: One commenter indicated that the False Claims Act and
other laws, but not this rule, should address situations where waivers
of coinsurance and deductibles might result in inaccurate charges
billed to Medicare program.
Response: We disagree that abuses arising from the waiver of
coinsurance and deductibles should be addressed through the use of the
False Claims Act and other laws and regulations. One of the primary
purposes of the anti-kickback statute is to protect the Medicare
program from higher costs and overutilization that occur when financial
incentives are offered or given in order to obtain Medicare program
business. Thus, the anti-kickback statute is an appropriate mechanism
to deal with higher program costs resulting from inaccurate charges and
claims submitted to the Medicare program.
Moreover, the purpose of the safe harbor regulations is to exempt
from criminal or civil liability those practices which, although they
violate the anti-kickback statute, are not harmful to the Medicare or
State health care programs. As discussed above, routine waivers of
Medicare Part B coinsurance and deductible amounts are harmful and
abusive because they regularly lead to false claims and increased costs
and because they encourage overutilization or inappropriate utilization
of services. Thus, safe harbor protection is unwarranted and
inappropriate.
Finally, another purpose of the safe harbor regulations is to
provide standards which providers and other persons or entities can
comply with and be assured that they will not be subject to criminal or
civil prosecution or exclusion from program participation. We actively
encourage providers to come into compliance with applicable safe harbor
provisions. It would be unfair and misleading, if not an abuse of
discretion, for us to provide an exception under the anti-kickback
statute for certain behavior when compliance with that exception would
subject providers and plans or insurers to the very same criminal,
civil, and administrative sanctions under the False Claims Act or other
provisions. The mission of the OIG is to prevent fraud and abuse, not
to encourage it.
Comment: One commenter indicated that the OIG should, at a minimum,
publish a new Federal Register notice that lists examples of
coinsurance waiver arrangements that may not qualify for safe harbor
protection, but ``probably would not be pursued criminally or civilly
by the OIG.''
Response: We do not believe that there are any specific types of
situations involving a routine waiver of coinsurance or deductibles
that we would decline to pursue as a general rule. Thus, we believe
that publication of a new Federal Register notice is not necessary. In
the OIG Fraud Alert on this subject, we have indicated that waivers
were only appropriate on a case-by-case basis in consideration of a
patient's financial hardship or where a good faith effort to collect
has been made. We have not changed our position.
2. Incentives to All Enrollees
Comment: Some commenters maintained that a literal reading of the
enrollee incentive safe harbor would necessitate uniformity among all
products, thereby eliminating any incentive. The commenters encouraged
the OIG to eliminate the provision or restrict it to all enrollees of a
particular product.
[[Page 2130]]
Response: The purpose of the requirement that incentives be
provided to all enrollees was to restrict the ability of health plans
to target particular Medicare or Medicaid beneficiaries or groups of
such beneficiaries and induce them to enroll in the plan by providing
incentives. We were concerned that plans would target healthy
beneficiaries by offering them increased services or reductions in cost
sharing and attempt to avoid older or sicker beneficiaries or those
with expensive or chronic health conditions requiring a high
utilization of services by offering only the same services available
through a fee-for-service plan. Accordingly, we are reluctant to
eliminate this requirement from the safe harbor. We are also reluctant
to limit the regulation to a product-specific approach because we are
concerned that the same type of abuses could occur where health plans
offered several different products.
Comment: A number of commenters urged the OIG to restrict the scope
of ``enrollee'' only to members of the Medicare or State health care
programs. They believed that the inclusion of all enrollees was
unwarranted and exceeded the scope of the Medicare and Medicaid Patient
Program Protection Act (MMPPPA) of 1987.
Response: Although we do not agree that the scope of the provision
exceeded our authority under MMPPPA, we believe that these concerns can
be adequately addressed by limiting the provision to all enrollees who
are also beneficiaries of the Medicare and State health care programs.
Accordingly, we have revised the safe harbor on incentives to enrollees
to require that incentives offered by health plans be offered to all
Medicare or State health care program enrollees of the plan. We believe
that this limitation will adequately safeguard against the possibility
that health plans may improperly favor certain healthy beneficiaries or
use incentives to improperly encourage utilization when the item or
service is furnished.
3. Incentives by Non-Contract Health Plans
Comment: Several commenters believed that safe harbor protection
should be given to any managed care plan that offers a higher level of
benefits or services obtained from a contract provider. They believed
that protection should be given for all incentives by managed care
plans, including those providing Medicare supplemental coverage. Other
commenters indicated that coinsurance waivers and other financial
incentives to encourage the use of a preferred provider panel were
historically legitimate managed care incentives that do not cause harm
to Medicare or Medicaid and should therefore be recognized.
Response: We remain unpersuaded at this time that safe harbor
protection is appropriate for health plans that are not under contract
with HCFA or a Medicaid State agency. Unlike contract plans that are
limited to a few types of arrangements, non-contract plans consist of
widely varying arrangements and widely differing scopes of benefits.
These plans are subject to little oversight. Most of the commenters who
requested a broadening of the safe harbor failed to provide any
discussion of precisely how the Medicare and Medicaid programs would or
could be protected against abuses if all managed care plans were
permitted to offer any kind of incentives free of anti-kickback
liability. Nor did they provide any substantive evidence that the
majority of the existing managed care plans have effective mechanisms
and controls that would adequately protect the Medicare and Medicaid
programs against higher costs or overutilization. Finally, the
commenters did not suggest any standards we could impose which would
eliminate plans that do not have in effect adequate mechanisms to
protect the Medicare or Medicaid programs from abuse.
Moreover, we believe that the fact that the Medicare and Medicaid
programs reimburse services provided to enrollees of non-contract plans
on a fee-for-service basis makes these situations subject to the same
potential abuses and risks as exist with incentives offered by non-
managed care plans or providers. Where a health care provider who is
part of a preferred provider network treats a beneficiary and will be
paid for each service that he or she provides on a fee-for-service
basis by Medicare or Medicaid, that provider has no built-in incentive
not to overutilize. To the extent that the provider has agreed to
accept reduced fees for the treatment of plan enrollees, he or she may
have a direct incentive to increase the number of services to make up
for the reduction in fees. Similarly, if the beneficiary has reduced or
no cost sharing obligations, the beneficiary faces no disincentive to
overutilization. The plan does not prevent reimbursement for these
unnecessary services because the claims are directly submitted to and
paid by Medicare or Medicaid. Finally, where managed care providers
agree to accept Medicare payment as payment in full, the burden of the
reduced cost sharing incentives offered to beneficiaries comes at the
expense of the Medicare program, because the program will end up paying
100 percent of the provider's fee. Thus, these incentives can cause
harm to the Medicare and Medicaid programs.
Comment: Some commenters argued that incentives by non-contract
plans should be allowed because most managed care plans adequately
monitor for overutilization, and that many non-contract plans are
monitored either as Federally-qualified HMOs or as a result of
accreditation by independent organizations. They also argued that
Medicare and Medicaid patients cannot be carved out of a managed care
plan's incentive programs, and that a loss of administrative
efficiencies could result if plans need to handle program beneficiaries
differently than others covered under group plans.
Response: We do not believe that existing utilization review
mechanisms are sufficient to protect the Medicare and Medicaid programs
against abuses associated with self-referral. One major problem is that
there are no widely accepted definitions or standards governing
utilization review. This presents a major barrier to drafting a safe
harbor with clear, well-defined standards. Additionally, most
utilization review activity is focused on expensive procedures or on
patterns of care, and therefore does not address individual physician
decisions on diagnostic or other treatment services, where many self-
referral abuses occur. Utilization review is also designed to identify
and address medical care that falls outside of accepted medical
parameters or norms. Most of the problems we have observed in the area
of self-referral involve physician treatment decisions that are within
the range of accepted parameters or norms, but where financial
incentives may improperly influence or affect physician judgments.
Accordingly, we are not at all confident that utilization review will
cure or prevent self-referral problems that the anti-kickback statute
was intended to address. Therefore, it would be unwise to adopt
utilization review mechanisms as an appropriate standard for safe
harbor protection.
Where Medicare or Medicaid are responsible for paying for a portion
of the care rendered to enrollees of a managed care plan, the plan must
already have some procedures that are different from those used where
the plan is solely responsible for the cost of care. For example,
separate claims must be submitted to those programs either before or
after claims are submitted to the managed care health plan. We believe
that managed care plans can handle potential differences between
Medicare's and the plan's coinsurance amounts in ways that are
efficient and
[[Page 2131]]
economical as well as in compliance with the requirements of Federal
law.
Comment: One commenter specifically urged that safe harbor
protection should be limited to plans under contract with HCFA or a
State agency, arguing that if it is broadened it will result in unfair
competitive practices and illegal waivers of coinsurance and
deductibles. A second commenter agreed, but believed an exception
should be made for situations where dual coverage exists and the second
plan adopts a non-duplication of benefits or preservation of
deductibles and coinsurance posture.
Response: We share the concerns of the commenters that expansion of
the safe harbor provision could result in abusive or illegal practices.
As we indicated in an earlier response, we remain concerned that
because services provided to enrollees of non-contract plans are
reimbursed on a fee-for-service basis, the plans would pose the same
risks to the Medicare and Medicaid programs as typical fee-for-service
plans. In the case of contract plans, the reimbursement formulae take
into account the cost sharing obligations of beneficiaries that the
Medicare or Medicaid programs may require, so there is no problem with
illegal waivers of coinsurance or deductibles. We also believe that the
rules applicable to contract plans and the oversight provided by HCFA
or a State Medicaid agency should be sufficient to prevent anti-
competitive or other abusive practices from occurring in contract
plans.
We do not believe that a special safe harbor provision is necessary
or warranted at this time to deal with dual coverage situations. Dual
coverage is where a person is covered by more than one health insurance
policy. An example would be where a husband and wife are both employed
and each is covered by an employer policy that includes family members.
We do not believe that dual coverage (to be distinguished from Medicare
supplemental or Medigap coverage) is a problem that affects significant
numbers of Medicare or Medicaid beneficiaries. Companies are expressly
prohibited by law from selling Medicare beneficiaries health insurance
coverage that duplicates any existing coverage that they may have.
Medicaid is a payer of last resort and will not pay for services
covered by other health insurance or plans.
4. Price Reduction Agreements
Comment: One commenter questioned why the price reduction safe
harbor applicable to plans not under contract with HCFA or a Medicaid
State agency was drafted on a fee-for-service concept.
Response: The safe harbor was drafted in this manner because that
is how the Medicare and Medicaid programs almost exclusively pay for
services furnished to program beneficiaries by non-contract managed
care health plans or by providers who are affiliated with non-contract
plans. Such plans and providers are reimbursed for each separate
covered service provided to Medicare or Medicaid beneficiaries on the
basis of fee schedules or allowable charges. Capitated payment
arrangements and reasonable cost-related reimbursement are only
directly allowed in plans which are under contract. We have dealt with
those types of arrangements in the first two parts of the price
reduction safe harbor dealing with plans under contract with HCFA or a
Medicaid State agency. Therefore, we did not believe it was necessary
or appropriate to provide for safe harbor protection for other types of
payment mechanisms in the price reduction safe harbor for non-contract
plans.
Comment: Many commenters objected to the fact that this safe harbor
exempted only remuneration in the form of a reduction in the provider's
usual charge for the service, thereby not protecting capitation
agreements, bonuses, and withhold arrangements. These commenters
believed that the safe harbor should protect all HMO or PPO
compensation arrangements, including risk incentive pools and volume
rebates, so long as they were not linked to referrals of Medicare or
Medicaid patients.
Response: We have reconsidered our position that we did not need to
address capitated arrangements in the safe harbor for price reductions
in non-contract health plans. Although the Medicare and Medicaid
programs may pay for services on a fee-for-service basis, some health
plans contract with individual health care providers for the provision
of services using a variety of different mechanisms, including
capitation. Since the amount paid to a provider under a capitated
arrangement may represent a reduction in the amount he or she would
otherwise receive for treating a particular patient and the provider
agrees to accept such payment amount in return for an agreed upon or
anticipated flow of patients, the anti-kickback statute may be
implicated. Therefore, we believe that some protection for these
arrangements may be warranted.
Our experience has indicated that the most common risks that the
anti-kickback statute is directed toward preventing are not present in
the case of at-risk, capitated payment mechanisms. Where a provider is
paid a fixed amount for all the services provided to a patient, there
is no incentive for overutilization. If anything, there is an incentive
to underutilize. Accordingly, the Medicare and Medicaid programs face
little risk of overutilization or the increased costs that accompany
such overutilization where services are provided by a provider who is
paid solely on an at-risk or capitated basis. For these reasons, we
believe it would be appropriate for us to provide safe harbor
protection for such arrangements.
Accordingly, we have revised the price reduction safe harbor to add
a new category of price reduction agreement applicable to capitated
payment arrangements to providers. In order to qualify for safe harbor
protection, both the health plan and the contract health care provider
must comply with five standards. First, the term of the agreement must
be for not less than one year. Second, the agreement must specify the
covered items or services that will be furnished to enrollees of the
plan and the total amount per enrollee that the provider will be paid
for such covered items or services, including any copayments to be paid
by enrollees. The amount the provider will be paid per enrollee may be
expressed in a per month or other time period basis. Third, the payment
amount set forth in the agreement must remain in effect throughout the
term of the agreement. Fourth, the health plan and the provider must
fully and accurately report to the Medicare and State health care
programs upon request, the terms of the agreement and the amounts paid
in accordance with the agreement. Finally, the provider must not claim
or request payment in any form from the Department, a State health care
program or an enrollee (other than specified copayment amounts) for
covered items or services. Similarly, the health plan must not pay the
provider in excess of the amounts provided by the agreement for the
provision of covered items or services.
For the most part, the conditions applicable to this new category
of price reduction agreement are the same or comparable to those
applicable to fee-for-service arrangements. We believe these conditions
are necessary to prevent plans or providers from manipulating the terms
of the agreed upon arrangement and adjusting the level of reimbursement
or the scope of covered services for improper or illegal purposes. We
believe that providers and plans should take steps to ensure that they
have sufficient information concerning the costs of providing
[[Page 2132]]
services and the frequency and types of services that will be required
for the plan's enrollees before they enter into these types of
arrangements. We believe that the restrictions on seeking or paying
additional amounts for covered services and the requirements for
disclosure are necessary to ensure that the Medicare and Medicaid
programs are not being charged excessive or inappropriate amounts.
We have declined to provide specific safe harbor protection to
withhold pools, risk incentive pools, or other types of incentive
programs offered by non-contract managed care plans. One problem we
have with these types of arrangements is that there are no uniform
standards or definitions applicable to each of these different types of
mechanisms. Each health plan sets its own standards or risk pools and
determines the amounts that will be paid or withheld. Because these
types of arrangements vary so widely in amounts and scope, and because
there are no commonly accepted minimum standards as to what criteria an
incentive plan should include, we do not believe that it would be
feasible for us to set adequate or appropriate minimum standards for a
safe harbor. Moreover, because these types of payment mechanisms offer
additional remuneration to providers that is related to the volume or
value of services provided, their use is particularly vulnerable to
abuse. They can be used to manipulate provider payment levels and can
be used to inappropriately affect the flow of Medicare and Medicaid
reimbursable business. We are not confident that we could create a safe
harbor where we would be reasonably certain that any individual
incentive plan qualifying for protection would be non-abusive.
We also believe that withhold arrangements present additional
problems. We are concerned that in some cases providers subject to a
withhold may be submitting false claims to the Medicare and Medicaid
programs. If the provider does not ultimately receive the withheld
amount or does not have a reasonable expectation of receiving it, and
includes the full amount of the potential fee on the claim form, he or
she has misrepresented the amount of his or her fee and stands to be
overpaid by the Medicare or Medicaid programs. For example, if a
provider's agreed upon fee is $100 but the health plan has a 20 percent
withhold in place, he or
FR Doc. 96-1073 Medicare and State Health Care Programs: Fraud and Abuse; Safe Harbors for Protecting Health Plans
she is only assured of receiving $80 in
payment for the services provided. If that provider submits a claim to
the Medicare program for $100 and is paid $80, that provider will have
received full payment from the Medicare program unless he or she also
receives the withheld amount. The net effect is the same as an express
waiver of coinsurance.
In some cases involving withholds, there is little likelihood that
the payment amounts withheld will actually be made to providers. We are
unwilling to protect any practice that may result in the submission of
false or improper claims to the programs.
Comment: Some commenters objected to the fact that this safe harbor
provision does not recognize compensation based on reasonable and
customary allowances, such as a discount from usual charges.
Response: We believe that reasonable and customary or usual charges
have no fixed meaning and are subject to change at the provider's
discretion and, therefore, subject to manipulation and abuse. We
believe it is necessary to have a fixed and identifiable list of
charges and services in order to be able to determine compliance with
the terms of the safe harbor. If the provider had a list of his or her
reasonable and customary or usual charges that was incorporated as a
part of the agreement with the health plan, and the agreement specified
that the agreed upon payment rate would be 80 percent of the charges on
the list, we believe that would be acceptable under the terms of the
safe harbor because the price for each service would be a fixed and
readily ascertainable amount. Of course, it would be the reduced amount
that is the provider's charge for services to the plan's enrollees, not
the reasonable and customary or usual charge, and that reduced amount
would be required to be submitted on any claims or requests for payment
to the Medicare or Medicaid programs for services rendered to plan
enrollees.
Comment: Some commenters objected to the prohibition against
submitting a claim in excess of the fee schedule because it prohibits
plans or intermediaries that operate by negotiating discounts with
providers and marking up the fees to the purchaser. This is the PPO's
mechanism for defraying its costs. They indicated that such
arrangements should be allowed because fees are still less than what
the purchaser would otherwise pay. Specifically, commenters stated that
the safe harbor should cover fees to providers that are a percentage of
charges billed by the contracting provider and are attributable to the
PPO's marketing services to third party payers.
Response: We believe any arrangements that set fees based on the
volume or value of services provided to patients are subject to abuse
and therefore, we decline blanket protection for them. We have seen
instances where such payments are really only thinly disguised attempts
to pay for referrals. Moreover, there is also no guarantee that the
marked-up charges submitted to the Medicare and Medicaid programs would
be any lower than the provider's usual charges to the programs. Thus,
there is no guarantee that the programs will benefit from allowing such
arrangements. We believe that there are enough other options a PPO can
employ to cover its administrative or marketing costs. The PPO can
include such costs in the premiums charged to plan enrollees or in fees
charged to insurers or employers where the PPO administers the plan for
such entities. The PPO is also free to enter into separate contracts
with providers for management services. Of course, in order to qualify
for safe harbor protection, such contracts would have to meet the terms
of the safe harbor on management or personal services contracts. We
also wish to emphasize that by not protecting such payment mechanisms
under the safe harbor, we do not prohibit them, as the commenters
believe. The failure to fall within a safe harbor means only that they
are subject to the anti-kickback statute in precisely the same manner
that they were prior to the issuance of the safe harbor.
Comment: Some commenters opposed the regulation's ``sole purpose''
requirement as being inconsistent with the structures of managed care
plans. These commenters argued that providers qualifying for the safe
harbors should be allowed to contribute activities such as pre-
enrollment screening, utilization review and quality assurance
services.
Response: Our intent in creating the safe harbor for price
reduction agreements was to protect only those discounts given by
contract health care providers for the items and services they furnish
to enrollees. In order to ensure that we can determine whether the
discounts given by providers comply with all of the requirements of the
safe harbor, it is necessary to have a separate agreement that covers
only the discounted arrangements that fall within the scope of the safe
harbor. We have not prohibited managed care entities from entering into
separate agreements with providers for other activities such as
utilization review, pre-enrollment screening or even marketing
activities. However, contracts for such activities will be scrutinized
separately
[[Page 2133]]
and will only be afforded safe harbor protection if they meet the
requirements of the existing management and personal services safe
harbor.
We are unwilling to expand the price reduction safe harbor to cover
these activities because, as we noted in the preamble to the interim
final rule, we have observed that some HMOs have abused their
contractual relationships with medical groups where individuals in the
groups have conducted abusive or illegal activities on behalf of the
HMO. For instance, various contract health plans have engaged in pre-
enrollment screening in order to deny or discourage relatively sick
beneficiaries from enrolling. Such activities in at least one case
resulted in a criminal conviction. Additionally, it is easy to
manipulate agreements for the provision of utilization review services
and other activities to make payments to reward providers for certain
actions or to provide additional reimbursement to certain providers in
violation of the anti-kickback statute. For these reasons, we believe
the standards of the management and personal services safe harbor
should continue to be applied to personal services contracts between
managed care entities and contract health care providers.
Comment: A number of commenters wanted the OIG to protect volume-
sensitive fee schedules, subject to ``possible pricing adjustments,''
if the schedule is stated in the contract and not increased during its
term. These commenters would like to render higher payment to providers
who service a greater number of managed care patients to ensure access
to care.
Response: We decline to protect volume-sensitive fee schedules. We
have found that volume-sensitive reimbursement levels are often
extremely abusive. These types of schedules offer increased incentives
for providers to overutilize, since the payments they receive will be
higher if they provide more services to more patients. We are not sure
what one of the commenters meant specifically by the term ``possible
pricing adjustments,'' but we are concerned that any such adjustments
could create a referral-driven mechanism that would not serve the
interests of the programs. We believe that other mechanisms exist
through which health plans may ensure that providers give adequate
coverage to patients or through which plans could reimburse providers
who agree to treat a larger number of plan enrollees. For example,
plans could require that providers agree to treat minimum numbers of
enrollees and set the amount of compensation based on that number.
Alternatively, providers could agree to treat all plan enrollees who
need services up to a certain number, with higher reimbursement levels
for larger numbers of patients.
Comment: Several commenters took exception to the one-year term
minimum requirement, contending that it excludes common contract terms,
such as reciprocal termination clauses and inhibits plans, that may
need to contract with a particular provider for less than one year.
Other commenters argued that the requirement unduly restricts HMOs and
does not allow for alterations based on changed circumstances. These
commenters asserted that a change during the contract year in the
percentage of fee schedule an HMO will pay is not a means of inducing
referrals of patients enrolled in a plan.
Response: We have found that reciprocal termination clauses can
result in parties engaging in ``sham'' contracts whereby they terminate
the contract and renegotiate terms to gain more favorable financial
positions. Alternatively, they may terminate contracts in order to
enter into contracts with more favorable financial terms with other
providers. These renegotiations may affect the flow of Medicare or
Medicaid reimbursable business. We believe it is necessary for the
contracts to have a fixed term of at least one year in order to avoid
such manipulations. We have adopted a one-year term for all of the safe
harbor provisions involving contracts. The commenters have not
demonstrated any reasons why managed care contracts necessitate a
different length. Accordingly, if parties alter contractual terms based
on purportedly changed circumstances, that alteration will not enjoy
safe harbor protection. Termination ``for cause'' clauses drafted in
compliance with Internal Revenue Service or other legal or regulatory
requirements should not jeopardize safe harbor status if the purpose of
the termination clause is to comply with these requirements and not to
facilitate renegotiation of contract terms. If a contract is terminated
in accordance with a legally enforceable termination clause, the
failure to renew the contract would indicate that the termination was
effectuated for a legitimate business purpose. As to other types of
termination clauses, the OIG will examine such conduct on a case-by-
case basis to assess whether it is abusive and harmful.
We acknowledge that health care providers may enter into short-term
service contracts for legitimate business reasons and not because of
referral opportunities. However, we cannot ensure that only legitimate
short-term contracts will be covered if we delete the one-year
requirement. We would also note that the one-year term does not refer
to the length of time that services will be necessarily provided, but
rather to the length of time within which the fees for the services
covered by the agreement may not be changed. So long as the contract
terms are not altered within a one-year period, an agreement that is
performed in less than one year will meet the one-year requirement in
the safe harbor provision.
Comment: Some commenters requested that the price reductions
allowed under the safe harbor should be limited to a specific amount,
e.g., a Medicare-approved rate or a percentage. They claimed that this
restriction is necessary to prevent providers from accepting below-cost
prices and increasing prices for non-managed care Medicare patients and
others.
Response: We understand that providers negotiate discounted prices
with health plans in order to increase the number of patients in their
practices. Providers may expect that they can make up for the
reductions in their charges by providing services to a greater number
of patients. Generally, providers may anticipate a certain number of
new patients as a result of entering into a contract with a managed
care plan. However, the commenters raise a valid concern that the price
reductions given, if great enough, may shift the burden of the price
reduction to others by resulting in increased prices for non-managed
care Medicare patients. We have specifically addressed that concern in
the safe harbor by including a prohibition against cost-shifting onto
the Medicare or State health care programs. Therefore, we are not
convinced that setting limitations on the amount of a discount a
provider may offer is necessary to prevent abuse. We also believe that
the wide variations in providers' rates and costs make identifying a
fixed ``below-cost'' point virtually impossible. We would have to
assess a provider's entire billing practice to determine whether, in a
given case, services were offered at rates below actual cost.
Comment: A number of commenters contended that managed care plans
cannot reasonably ensure that its contract providers are not submitting
claims which violate the contract's terms or claims that exceed the fee
schedule. According to these commenters, Medicare should recoup the
amounts erroneously paid to the provider rather than deprive both the
provider and the plan of safe harbor protection.
[[Page 2134]]
Response: We believe it is appropriate to condition the granting of
safe harbor protection on compliance by both plans and providers.
Managed care health plans have an ongoing relationship with contract
health care providers that includes monitoring and utilization review
of the services provided to plan enrollees. This relationship is
different from the usual relationship between buyers and sellers.
Because of this special, ongoing relationship, health plans have a
greater ability to monitor and ensure compliance with the requirements
of the safe harbor regarding the submission of claims to the Medicare
or Medicaid programs. Unless plans are held accountable in some way for
the propriety of claims submitted to the programs, they will have no
interest in ensuring the accuracy of those claims.
We also believe that health plans have available to them several
ways to monitor or ensure compliance. For example, plans may require
that the plan submit all claims to the Medicare or Medicaid programs.
Alternatively, as part of their contracts with providers, plans have
the ability to require providers to furnish copies of claims submitted
to the programs for plan enrollees or to allow a review of their
billing records. Plans can include as a contract term the requirement
to submit program claims according to the agreed upon fee schedule and
provide for termination of the contract for non-compliance. We would
also expect plans to report to the Medicare or Medicaid programs any
contract-related violations of which they become aware so the programs
can take appropriate steps to deal with the improper billing, including
recovery of any overpayments made to the provider. We would consider
the actions taken by the health plan in deciding whether any action was
warranted under the anti-kickback statute.
Comment: Several commenters wrote that the price reduction safe
harbor imposes unnecessary and impractical standards regarding advance
disclosure of covered fees and services, fee schedules and cost
shifting that will impede negotiations and increase costs. These
commenters urged the OIG to permit other methods of describing covered
items or services, such as incorporation by reference of benefit
summaries.
Response: We are uncertain how the requirement that the agreement
spell out the agreed-upon fees will result in an increase in costs or
will impede negotiations between health plans and providers. This safe
harbor merely requires that the agreement specify in writing what the
parties have already agreed upon, i.e., the items and services that
will be furnished to plan enrollees and the prices that the provider
will charge for them. We have no objections if the parties wish to
reference the covered items and services and the schedule of fees for
those services in an attachment to the contract. However, those
attachments must clearly indicate the specific amounts that will be
paid to the provider for each of the covered items and services he or
she furnishes to plan enrollees in order to comply with the safe
harbor. General summaries of plan benefit coverage and references to
percentages of usual charges will not suffice. We reserve the right to
closely scrutinize these attachments to ensure that the parties have
adequately identified these items or services. We believe it is
important for both the providers and the plans to know what the
contract covers and the amounts they are entitled to bill the plan, the
Medicare and Medicaid programs and the program beneficiaries.
Comment: One commenter objected to the safe harbor requirements on
the grounds that managed care contracts with providers rarely establish
fees for services covered by others nor do they specify billing
procedures for services not billable to the managed care plan.
Response: We believe that the commenter has misconstrued the safe
harbor's requirements. The safe harbor does not broaden the scope of
managed care plans' coverage to services covered by other plans nor
does it require a price reduction agreement between a managed care plan
and a provider to establish fees for services provided by others or for
services not billable to the plan. The agreement need only identify
those services that the provider will be paid for by the plan and only
those services that are covered by the plan and provided to plan
enrollees.
IV. Additional Information
A. Regulatory Impact Statement
The Office of Management and Budget (OMB) has reviewed this revised
final rule in accordance with the provisions of Executive Order 12866.
As indicated in the original safe harbor provisions published on July
29, 1991 and the interim final rule for these safe harbors published on
November 5, 1992, the safe harbor provisions set forth in this
rulemaking are designed to permit individuals and entities to freely
engage in business practices and arrangements that encourage
competition, innovation and economy. In doing so, these regulations
impose no requirements on any party. Health care providers and others
may voluntarily seek to comply with these provisions so that they have
the assurance that their business practices are not subject to any
enforcement action under the anti-kickback statute. As such, we believe
that the economic impact of these regulations is minimal and have no
effect on the economy or on Federal or State expenditures.
In addition, we generally prepare a regulatory flexibility analysis
that is consistent with the Regulatory Flexibility Act (5 U.S.C. 601-
612). We believe that the majority of health care providers and
practitioners do not engage in illegal remuneration schemes, and that
the aggregate economic impact of this provision should, in effect, be
minimal, affecting only those who have chosen to engage in prohibited
payment schemes in violation of the statutory intent. As indicated
above, this revised final rule serves to clarify various aspects of the
safe harbor provisions originally published on November 5, 1992 to
enable entities to more easily immunize themselves from potential
criminal and administrative sanctions, and to eliminate potential
barriers to the provision of coordinated health care under the Medicare
and State health care programs. As a result, we have determined, and
the Secretary certifies, that this final rule will not have a
significant economic impact on a number of small business entities, and
we have, therefore, not prepared a regulatory flexibility analysis.
B. Paperwork Reduction Act
Under the Paperwork Reduction Act of 1995, agencies are required to
provide 60-day notice in the Federal Register and solicit public
comment before a collection of information requirement is submitted to
OMB for review and approval. In order to fairly evaluate whether an
information collection should be approved by OMB, section 3506(c)(2)(A)
of the Paperwork Reduction Act of 1995 requires that we solicit
comments on the following issues:
Whether the information collection is necessary and useful
to carry out the proper functions of the agency;
The accuracy of the agency's estimate of the information
collection burden;
The quality, utility and clarity of the information to be
collected; and
Recommendations to minimize the information collection
burden on the affected public, including automated collection
techniques.
As a result, we are soliciting public comment on the information
collection requirements being set forth in sections
[[Page 2135]]
1001.952(m)(1) (ii), (iii) and (iv) of these regulations.
Under the safe harbor for price reductions offered to health plans,
if a health plan is an HMO, competitive medical plan, health care
prepayment plan, prepaid health plan or other health plan that has
executed a contract or agreement with HCFA or a State health care
program to receive payment for enrollees on a reasonable cost or
similar basis, the health plan and the contract health care provider
must comply with four standards. One of those standards is that the
plan must fully and accurately report the amount it has paid the
contract health care provider under the agreement for the covered items
and services furnished to enrollees on the applicable cost report or
other claim form filed with the Department or the State health care
program (Sec. 1001.952(m)(1)(ii)).
Similarly, if a health plan is not described in section
1001.952(m)(1) (i) and (ii) of the regulations, and the contract health
care provider is not paid on an at-risk, capitated basis, both the plan
and contract provider must, among the six standards set forth, fully
and accurately report any cost report filed with Medicare or a State
health care program the fee schedule amounts charged in accordance with
the agreement (Sec. 1001.952(m)(1)(iii)).
In addition, under sections 1001.952(m)(1) (iii) and (iv), both the
health plan and the provider, upon request, must report to the Medicare
or State health care program the terms of the agreement and amounts
paid in accordance with the agreement.
We estimate that the current burden associated with the submitting
the data would be minimal, i.e., less than one hour per request.
Specifically, we anticipate that any data request will not involve the
creation of any new documents or the calculation of new figures by
entities. Rather, we would be seeking only copies of those agreements
that have already been executed by entities and those amounts paid to
individual providers that are already maintained for general business
and tax purposes. Since most plans maintain such information on
electronic data bases and have these contracts on file, we believe such
requests can be produced and provided in less than one hour's time.
Further, we believe that only a very small number of plans and
providers--less than 3 percent of the nation's health care plans and
contract providers--would be potentially impacted by this request.
Accordingly, we estimate that the total number of requests will be no
more than 10 to 12 per year since they will be made only where there is
a question of whether a specific plan or provider has violated the
statute and claims immunity based on these safe harbor regulations.
Based on an estimate of less than one dozen requests per year, the
estimated total burden on these entities will be under 20 hours.
This information collection and recordkeeping requirement is not
effective until it has been approved by OMB. A notice will be published
in the Federal Register when approval is obtained. As indicated in the
INFORMATION CONTACT section at the beginning of this preamble,
organizations and individuals wishing to submit comments on this
information collection and recordkeeping requirement should direct them
to the Office of Inspector General, Office of Management and Policy,
Room 5550, Cohen Building, Washington, D.C. 20201, Attention: Joel
Schaer, Regulations Officer.
C. Department of Justice Review
In accordance with the provisions of Public Law 100-93, these
regulations have been developed in consultation with the Department of
Justice.
List of Subjects in 42 CFR Part 1001
Administrative practice and procedure, Fraud, Health facilities,
Health professions, Medicare.
TITLE 42--PUBLIC HEALTH
CHAPTER V--OFFICE OF INSPECTOR GENERAL--HEALTH CARE, DEPARTMENT OF
HEALTH AND HUMAN SERVICES
42 CFR Part 1001 is amended as set forth below:
PART 1001--PROGRAM INTEGRITY--MEDICARE AND STATE HEALTH CARE
PROGRAMS
1. The authority citation for part 1001 is revised to read as
follows:
Authority: 42 U.S.C. 1302, 1320a-7, 1320a-7b, 1395u(j),
1395u(k), 1395y(e), and 1395hh.
2. Section 1001.952 is amended by republishing the introductory
text of both paragraph (k) and (k)(1) and revising paragraphs
(k)(1)(iii), (l), and (m) to read as follows:
Sec. 1001.952 Exceptions.
* * * * *
(k) Waiver of beneficiary coinsurance and deductible amounts. As
used in section 1128B of the Act, ``remuneration'' does not include any
reduction or waiver of a Medicare or a State health care program
beneficiary's obligation to pay coinsurance or deductible amounts as
long as all of the standards are met within either of the following two
categories of health care providers:
(1) If the coinsurance or deductible amounts are owed to a hospital
for inpatient hospital services for which Medicare pays under the
prospective payment system, the hospital must comply with all of the
following three standards--
* * * * *
(iii) The hospital's offer to reduce or waive the coinsurance or
deductible amounts must not be made as part of a price reduction
agreement between a hospital and a third-party payer (including a
health plan as defined in paragraph (l)(2) of this section), unless the
agreement is part of a contract for the furnishing of items or services
to a beneficiary of a Medicare supplemental policy issued under the
terms of section 1882(t)(1) of the Act.
* * * * *
(l) Increased coverage, reduced cost-sharing amounts, or reduced
premium amounts offered by health plans. (1) As used in section 1128B
of the Act, ``remuneration'' does not include the additional coverage
of any item or service offered by a health plan to an enrollee or the
reduction of some or all of the enrollee's obligation to pay the health
plan or a contract health care provider for cost-sharing amounts (such
as coinsurance, deductible, or copayment amounts) or for premium
amounts attributable to items or services covered by the health plan,
the Medicare program, or a State health care program, as long as the
health plan complies with all of the standards within one of the
following two categories of health plans:
(i) If the health plan is a risk-based health maintenance
organization, competitive medical plan, prepaid health plan, or other
health plan under contract with HCFA or a State health care program and
operating in accordance with section 1876(g) or 1903(m) of the Act,
under a Federal statutory demonstration authority, or under other
Federal statutory or regulatory authority, it must offer the same
increased coverage or reduced cost-sharing or premium amounts to all
Medicare or State health care program enrollees covered by the contract
unless otherwise approved by HCFA or by a State health care program.
(ii) If the health plan is a health maintenance organization,
competitive medical plan, health care prepayment plan, prepaid health
plan or other health plan that has executed a contract or agreement
with HCFA or with a State health care program to receive payment
[[Page 2136]]
for enrollees on a reasonable cost or similar basis, it must comply
with both of the following two standards--
(A) The health plan must offer the same increased coverage or
reduced cost-sharing or premium amounts to all Medicare or State health
care program enrollees covered by the contract or agreement unless
otherwise approved by HCFA or by a State health care program; and
(B) The health plan must not claim the costs of the increased
coverage or the reduced cost-sharing or premium amounts as a bad debt
for payment purposes under Medicare or a State health care program or
otherwise shift the burden of the increased coverage or reduced cost-
sharing or premium amounts to the extent that increased payments are
claimed from Medicare or a State health care program.
(2) For purposes of paragraph (l) of this section, the terms--
Contract health care provider means an individual or entity under
contract with a health plan to furnish items or services to enrollees
who are covered by the health plan, Medicare, or a State health care
program.
Enrollee means an individual who has entered into a contractual
relationship with a health plan (or on whose behalf an employer, or
other private or governmental entity has entered into such a
relationship) under which the individual is entitled to receive
specified health care items and services, or insurance coverage for
such items and services, in return for payment of a premium or a fee.
Health plan means an entity that furnishes or arranges under
agreement with contract health care providers for the furnishing of
items or services to enrollees, or furnishes insurance coverage for the
provision of such items and services, in exchange for a premium or a
fee, where such entity:
(i) Operates in accordance with a contract, agreement or statutory
demonstration authority approved by HCFA or a State health care
program;
(ii) Charges a premium and its premium structure is regulated under
a State insurance statute or a State enabling statute governing health
maintenance organizations or preferred provider organizations;
(iii) Is an employer, if the enrollees of the plan are current or
retired employees, or is a union welfare fund, if the enrollees of the
plan are union members; or
(iv) Is licensed in the State, is under contract with an employer,
union welfare fund, or a company furnishing health insurance coverage
as described in conditions (ii) and (iii) of this definition, and is
paid a fee for the administration of the plan which reflects the fair
market value of those services.
(m) Price reductions offered to health plans. (1) As used in
section 1128B of the Act, ``remuneration'' does not include a reduction
in price a contract health care provider offers to a health plan in
accordance with the terms of a written agreement between the contract
health care provider and the health plan for the sole purpose of
furnishing to enrollees items or services that are covered by the
health plan, Medicare, or a State health care program, as long as both
the health plan and contract health care provider comply with all of
the applicable standards within one of the following four categories of
health plans:
(i) If the health plan is a risk-based health maintenance
organization, competitive medical plan, or prepaid health plan under
contract with HCFA or a State agency and operating in accordance with
section 1876(g) or 1903(m) of the Act, under a Federal statutory
demonstration authority, or under other Federal statutory or regulatory
authority, the contract health care provider must not claim payment in
any form from the Department or the State agency for items or services
furnished in accordance with the agreement except as approved by HCFA
or the State health care program, or otherwise shift the burden of such
an agreement to the extent that increased payments are claimed from
Medicare or a State health care program.
(ii) If the health plan is a health maintenance organization,
competitive medical plan, health care prepayment plan, prepaid health
plan, or other health plan that has executed a contract or agreement
with HCFA or a State health care program to receive payment for
enrollees on a reasonable cost or similar basis, the health plan and
contract health care provider must comply with all of the following
four standards--
(A) The term of the agreement between the health plan and the
contract health care provider must be for not less than one year;
(B) The agreement between the health plan and the contract health
care provider must specify in advance the covered items and services to
be furnished to enrollees, and the methodology for computing the
payment to the contract health care provider;
(C) The health plan must fully and accurately report, on the
applicable cost report or other claim form filed with the Department or
the State health care program, the amount it has paid the contract
health care provider under the agreement for the covered items and
services furnished to enrollees; and
(D) The contract health care provider must not claim payment in any
form from the Department or the State health care program for items or
services furnished in accordance with the agreement except as approved
by HCFA or the State health care program, or otherwise shift the burden
of such an agreement to the extent that increased payments are claimed
from Medicare or a State health care program.
(iii) If the health plan is not described in paragraphs (m)(1)(i)
or (m)(1)(ii) of this section and the contract health care provider is
not paid on an at-risk, capitated basis, both the health plan and
contract health care provider must comply with all of the following six
standards--
(A) The term of the agreement between the health plan and the
contract health care provider must be for not less than one year;
(B) The agreement between the health plan and the contract health
care provider must specify in advance the covered items and services to
be furnished to enrollees, which party is to file claims or requests
for payment with Medicare or the State health care program for such
items and services, and the schedule of fees the contract health care
provider will charge for furnishing such items and services to
enrollees;
(C) The fee schedule contained in the agreement between the health
plan and the contract health care provider must remain in effect
throughout the term of the agreement, unless a fee increase results
directly from a payment update authorized by Medicare or the State
health care program;
(D) The party submitting claims or requests for payment from
Medicare or the State health care program for items and services
furnished in accordance with the agreement must not claim or request
payment for amounts in excess of the fee schedule;
(E) The contract health care provider and the health plan must
fully and accurately report on any cost report filed with Medicare or a
State health care program the fee schedule amounts charged in
accordance with the agreement and, upon request, will report to the
Medicare or a State health care program the terms of the agreement and
the amounts paid in accordance with the agreement; and
(F) The party to the agreement, which does not have the
responsibility under the agreement for filing claims or requests for
payment, must not claim or
[[Page 2137]]
request payment in any form from the Department or the State health
care program for items or services furnished in accordance with the
agreement, or otherwise shift the burden of such an agreement to the
extent that increased payments are claimed from Medicare or a State
health care program.
(iv) If the health plan is not described in paragraphs (m)(1)(i) or
(m)(1)(ii) of this section, and the contract health care provider is
paid on an at-risk, capitated basis, both the health plan and contract
health care provider must comply with all of the following five
standards--
(A) The term of the agreement between the health plan and the
contract health provider must be for not less than one year;
(B) The agreement between the health plan and the contract health
provider must specify in advance the covered items and services to be
furnished to enrollees and the total amount per enrollee (which may be
expressed in a per month or other time period basis) the contract
health care provider will be paid by the health plan for furnishing
such items and services to enrollees and must set forth any copayments,
if any, to be paid by enrollees to the contract health care provider
for covered services;
(C) The payment amount contained in the agreement between the
health care plan and the contract health care provider must remain in
effect throughout the term of the agreement;
(D) The contract health care provider and the health plan must
fully and accurately report to the Medicare and State health care
program upon request, the terms of the agreement and the amounts paid
in accordance with the agreement; and
(E) The contract health care provider must not claim or request
payment in any form from the Department, a State health care program or
an enrollee (other than copayment amounts described in paragraph
(m)(2)(iv)(B) of this section) and the health plan must not pay the
contract care provider in excess of the amounts described in paragraph
(m)(2)(iv)(B) of this section for items and services covered by the
agreement.
(2) For purposes of this paragraph, the terms contract health care
provider, enrollee, and health plan have the same meaning as in
paragraph (l)(2) of this section.
Dated: June 21, 1995.
June Gibbs Brown,
Inspector General.
Approved: September 12, 1995.
Donna E. Shalala,
Secretary, Department of Health and Human Services.
[FR Doc. 96-1073 Filed 1-24-96; 8:45 am]
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