Section 50.47 of the Commission's regulations establishes requirements for emergency plans for nuclear power reactors to provide reasonable assurance that adequate protective measures can and will be taken in the event of a radiological emergency. Section 50.47(b) contains 16 planning standards, and in particular, § 50.47(b)(10) requires that emergency plans include “a range of protective actions” for the plume exposure pathway emergency planning zone (EPZ) for emergency workers and the public. This provision does not identify specific protective actions that must be included in these emergency plans.

On November 27, 1995 (60 FR 58256), the NRC published a document announcing the receipt of a petition for rulemaking (PRM 50-63) filed by Mr. Peter G. Crane on his own behalf and requested public comment on the suggested action. In the original petition (PRM 50-63), submitted on September 9, 1995, the petitioner requested that 10 CFR part 50 be amended to include language taken from FEMA's Federal Radiological Emergency Response Plan of September 1994. The petitioner requested that the NRC amend its regulations concerning emergency planning to include a requirement that emergency planning protective actions include the prophylactic use of potassium iodide (KI), which the petitioner stated prevents thyroid cancer after nuclear accidents.

The petitioner proposed that section 50.47(b)(10) be amended to read as follows:

In the September 9, 1995, petition (PRM 50-63), the petitioner stated that he believes that if his proposed rule change is adopted, the plan will become an accurate description of emergency preparedness for radiological emergencies; the recommendation of the Kemeny Commission to stockpile KI will at last be implemented; and the United States will be in compliance with the International Basic Safety Standards.

On November 11, 1997, the petitioner submitted a revision to his original petition(PRM 50-63A). In the revised petition, the petitioner requested that 10 CFR 50.47(b) be amended to read: (10) “A range of protective actions have been developed for the plume exposure EPZ for emergency workers and the public. In developing this range of actions, consideration has been given to evacuation, sheltering, and the prophylactic use of potassium iodide (KI), as appropriate. Guidelines for the choice of protective actions during an emergency, consistent with Federal guidelines, are developed and in place, and protective actions for the ingestion exposure pathway EPZ appropriate to the locale have been developed.”

The petitioner also provided a marked-up version of the NRC staff's proposed Federal Radiological Preparedness Coordinating Committee (FRPCC)Federal Registerdocument concerning a revision to the Federal policy relating to the use of KI by the general public. The NRC published a document announcing the receipt of the amended petition on December 17, 1997, (62 FR 66038) and requested public comment on the amended petition.

As part of the petitioner's comments on the proposed rule, the petitioner also stated that his original petition was incorporated by reference and resubmitted because the amended petition was based in part upon the June 30, 1997, Commission decision to fund State supplies for those States that request it.

The petitioner also requested in PRM 50-63 that the NRC, either on its own or jointly with other agencies, issue a policy statement declaring that KI stockpiling is a sensible and prudent measure necessary to assure that the drug will be available in the event of a major accident. The petitioner believes that this statement would clarify that KI can be used in conjunction with evacuation and sheltering to maximize protection to the public.

By staff requirements memorandum (SRM) dated June 26, 1998, to SECY 98-061, “Staff Options for Resolving a Petition for Rulemaking (PRM 50-63 and 50-63A) Relating to Re-evaluation of the Policy Regarding the use of Potassium Iodide (KI) by the General Public after a Severe Accident at a Nuclear Power Plant,” the Commission decided to grant the revised petition for rulemaking (PRM 50-63A). The Commission also directed that thepreamble for the proposed rule include a statement to the effect that State and local decision makers, provided with proper information, may find that the use of KI as a protective supplement is reasonable and prudent for specific local conditions.

By SRM dated April 22, 1999, to SECY 98-264, “Proposed Amendments to 10 CFR 50.47; Granting of Petitions for Rulemaking (PRM 50-63 and 50-63A) Relating to a Re-evaluation of Policy on the Use of Potassium Iodide (KI) After a Severe Accident at a Nuclear Power Plant,” the Commission voted to approve publication in theFederal Registerof a [7590-01-P] proposed rule that would grant in part both the original petition (PRM 50-63) and the revised petition for rulemaking (PRM 50-63A). The proposed rule was published for public comment on June 14, 1999 (64 FR 31737). That notice provides greater detail concerning the basis for the petition and the NRC's rationale for the proposed rule language put forth for comment.

In its decision on June 30, 1997, the Commission endorsed the Federal offer to fund the purchase of KI for States at their request. On June 26, 1998, in a decision on this rulemaking petition, the Commission again noted that the Federal government (most likely the NRC) is prepared to fund the purchase of a stockpile of KI for the States, upon request.1 However, in its April 22, 1999, SRM, the Commission decided: (1) Not to fund State stockpiles of KI; (2) to direct the NRC staff to work with FEMA to establish and maintain regional KI stockpiles; and (3) to support NRC funding of the purchase and resupply of the regional KI stockpiles to the extent that this cannot be covered by FEMA under its initiatives. The Commission determined that notwithstanding the June 30, 1997, and June 26, 1998, intention that “most likely the NRC” would fund the purchase of State stockpiles of KI, NRC was not prepared to fund State stockpiles of KI absent Congressional funding specifically for this purpose.

The Federal Radiological Preparedness Coordinating Committee (FRPCC) is responsible to coordinate all Federal responsibilities for assisting state and local governments in emergency planning and preparedness for peacetime radiological emergencies. Federal agencies which participate in the FRPCC include (among others): the Federal Emergency Management Agency (FEMA), NRC, the Environmental Protection Agency (EPA), and the Department of Health and Human Services (HHS). The 1985 Federal Policy recommends the stockpiling or distribution of KI during emergencies for emergency workers and institutionalized persons, but does not recommend requiring pre-distribution or stockpiling for the general public. In parallel with petitioning the NRC for rulemaking, Mr. Crane requested that the FRPCC policy be reconsidered. In early 1996, the FRPCC convened a subcommittee on Potassium Iodide. The subcommittee recommended the following to the FRPCC regarding the Federal KI policy: (1) Without changing the Federal policy that it is the State's prerogative to make its own decisions on whether to use KI, the Federal Government (NRC through FEMA), should fund the purchase of a stockpile for a State that, hereafter, decides to incorporate KI as a protective measure for the general public; (2) the language in the 1985 policy should be softened to be more flexible and balanced, as for instance, rewording it to state “it [potassium iodide for use by the general public] is not required, but may be selected as a protective measure at the option of the State or, in some cases, local governments;” and (3) local jurisdictions that wish to use KI should consult with the State to determine if the arrangements are appropriate. If local governments have the authority or secure the approval to incorporate KI as a protective measure for the general public, they would need to include such a measure in their emergency plans.

On June 16, 1997, the NRC staff forwarded to the Commission a staff version of the FRPCC-proposed Policy Regarding Use of Potassium Iodide After a Severe Accident at a Nuclear Power Plant. In its SRM of June 30, 1997, the Commission endorsed the Federal offer to fund the purchase of KI for States. On June 26, 1998, the Commission directed that the FRPCC proposed Policy be modified to include a statement to the effect that State and local decision makers, provided with proper information, may find the use of KI as a protective supplement is reasonable and prudent for specific local conditions. As noted above, the Commission also reiterated its endorsement of the Federal offer to fund KI stockpiles for States. Subsequently, on April 22, 1999, the Commission directed the staff to amend the draft FRN on the Federal KI Policy to conform to the Commission decision on the petitions for rulemaking, and the decision not to fund State KI stockpiles.

On April 29, 1999, the Director of FEMA, Mr. James Lee Witt, forwarded a letter to the Commission commenting on the issue of funding of stockpiles of KI for States. The letter objected to the Commission's “unilateral” decision on funding, and also noted “FEMA has always opposed the notion that Federal regional stockpiles of KI would be effective [and believes that] regional stockpiles would complicate, not strengthen radiological emergency preparedness.” FEMA believes that if a State opts to use KI as a supplemental protective measure, the NRC should provide the funds for such a purchase.

The NRC responded to Mr. Witt's letter on June 15, 1999. This letter noted the Commission's decision not to fund state stockpiles of KI as well as the reasons underlying that decision. The letter also referred to the Commission's direction to “the NRC staff to work with FEMA staff to establish and maintain regional KI stockpiles to be used in the event that local stockpiles prove to be insufficient, or when a state without a stockpile elects to use KI on an ad hoc basis in the case of a nuclear emergency.” The letter expressed confidence that the staffs, working together would successfully resolve the KI supply issue. The status of the stockpile and funding issues are discussed later in this notice. NRC is working closely with the other Federal agencies to determine appropriate changes to the 1985 policy. A decision regarding policy changes will be reached after the conclusion of this rulemaking.

In accordance with a Memorandum of Understanding between NRC and FEMA, NRC sent draft versions of thisFederal Registernotice to FEMA for its review and comment. FEMA responded by letter dated January 12, 2000. That letter reiterated their previous comments opposing regional stockpiles and instead favoring NRC funding of State stockpiles. The letter also noted that the development of regional stockpiles of KI had not progressed.

As discussed in the public comment evaluation, the Commission, as part of its decision to grant in full the amended rulemaking petition, has withdrawn its support for the funding of regional KI stockpiles and has reinstated its offer to provide for NRC funding of State or, in some cases, local stockpiles. The Commission agrees to fund a State'sstockpile of KI, subject to various restrictions and limitations (see Staff Requirements Memorandum for the Affirmation Session on December 22, 2000). NRC intends to work closely with FEMA and the other Federal agencies in FRPCC to finalize the draft Federal Policy to replace the 1985 Federal Policy. A decision regarding changes to the draft policy will be reached after the conclusion of this rulemaking. The substance of the specific comments attached to the FEMA letter is addressed by the issues in the public comment evaluation.

On September 30, 1998, the Commission also directed the staff to withdraw its guidance document, NUREG-1633 and substantially revise it, in a number of respects, including an improved discussion on how the practical problems in KI stockpiling, distribution and use are handled by States and other nations who use KI as a supplement. To accomplish this task, the NRC formed a KI Core Group, consisting of representatives from those States that have KI as a supplemental protective action, the Conference of Radiation Control Program Directors, the National Emergency Management Association, the U.S. Food and Drug Administration (FDA), EPA and FEMA. The revised draft guidance document, NUREG-1633, “Assessment of the Use of KI as a Supplemental Protective Action During Severe Reactor Accidents”, Rev. 2 is expected to be issued for comment following receipt of the FDA's draft revised position on exposure action levels and proper dosage of KI which was issued for public comment on January 4, 2001 (66 FR 801).

In addition, the NRC plans to develop a public information brochure concerning the use of KI by the general public following completion of the final NUREG.

On November 27, 1995 (60 FR 58256), the NRC announced the receipt of the original petition for rulemaking (PRM 50-63), and requested public comment on the suggested rule amendment. A total of 65 comment letters were received.2 Letters in favor of granting the petition came from 5 environmental groups, 22 members of the public (including 1 from the petitioner), and the American Thyroid Association. Letters opposed to the petition came from 20 utilities, 9 State governmental agencies, 2 utility interest organizations, a letter signed by 12 health physicists, 2 State university medical centers and 1 member of the public.

On December 17, 1997 (62 FR 66038), the Commission published a request for public comment on the amended petition (PRM 50-63A) in theFederal Register. In response to several requests, the comment period was extended until February 17, 1998, by aFederal Registernotice published on January 21, 1998 (63 FR 3052). A total of 86 comment letters were received. The letters in favor of granting the petition came from 8 public interest groups, 48 members of the public (including 3 from the petitioner), 3 physicians, 2 U.S. Senators, one State Representative, FEMA, the American Thyroid Association, a KI manufacturer, and the US Pharmacopeia Convention. Fourteen utilities, 3 State government agencies, 1 utility interest association, and 2 members of the public opposed the petition for rulemaking. A detailed analysis of the issues raised by the public comments with the response to those issues was published in the June 14, 1999, proposed ruleFederal Registernotice.

On June 14, 1999 (64 FR 31737), the Commission published a proposed rule in theFederal Register, based on the revised petition for rulemaking (PRM 50-63A) and requested public comment by September 14, 1999. A total of 77 comment letters were received.3 The letters in favor of the proposed rulemaking and the revised petition for rulemaking originated from a United States Senator; a member of the U.S. House of Representatives; 3 State agencies; 4 public interest groups; 10 members of the public (including two from the petitioner); and one letter with 529 signatures. Letters that opposed the proposed rulemaking came from 14 utilities; 13 State or local government agencies; 1 utility interest association; one letter from the Conference of Radiation Control Program Directors Standards committee representing 5 committee members; a letter from the National Emergency Management Association representing emergency management directors in 50 states; a law firm representing 15 utilities; and a former Assistant Secretary of Nuclear Energy at DOE. The FEMA letter of April 29, 1999, was submitted before the rule was published and discussed KI stockpiles. Another 24 letters requested the Commission to grant the original petition (PRM 50-63) byrequiringthe use of KI rather than theconsiderationof KI in emergency planning. These letters originated from members of the public as well as public interest groups. As part of the petitioner's comment letter dated August 17, 1999, on the proposed rule the petitioner stated that, in light of the Commission's decision not to fund state stockpiles of KI, the Commission should consider his original petition (PRM 50-63) to be incorporated by reference and resubmitted. He also requested the Commission to grant the petition as originally submitted.

The following discussion addresses the significant comments and issues raised in the three public comment periods for the original and amended petitions for rulemaking and the proposed rule.

Several commenters on the proposed rule state that the rulemaking would not add significant public health and safety benefit beyond the current emergency plans, because evacuation and sheltering are the best means to protect the public in the event of a radiological emergency. According to these commenters, evacuation and sheltering are more effective at dose reduction because they reduce dose to all organs, not just to the thyroid.

Other comments express the view that the Chernobyl experience (including use of KI in Poland) shows that (1) thyroid cancer is a major result of reactor accidents, (2) the exposure can continue for days and thus the institution of KI blocking at any time is beneficial, (3) deployment of KI is safe, and (4) shelf life is extremely long. These commenters note that EPA Manual [Manual of Protective Action Guides and Protective Actions for Nuclear Incidents, EPA-400-R-92-001 (May 1992)] quotes the FDA as stating that potassium iodide “will have substantial benefit even if it is taken 3 or 4 hours after acute exposure.” Thus, these commenters believe that the advantage of having a supply of KI on hand outweighs moderate cost and that KI should be a supplemental protective action. Further, these commenters note that just because there may be other radionuclides to which people are exposed is not a reason to deny them the availability of KI.

Commenters who favor the use of KI as a supplemental protective action conclude that evacuation and sheltering alone may not be sufficient safety actions in the event that evacuation is not feasible. They state that naturaldisasters could occur that would make evacuation difficult and time consuming at best, as for instance, earthquakes, hurricanes, blizzards, and ice storms. According to these commenters, a point against strong reliance upon evacuation is the evacuation routes themselves. As an example, a commenter cites the area around the Seabrook Nuclear Plant, noting that during the summer tourist season especially, it can be predicted that evacuees will be forced to wait in traffic for great lengths of time. This commenter believes that if KI were predistributed, instances of cancer, hypothyroidism and other thyroid disorders might be avoided.

Response.The Commission recognizes evacuation to be the most effective protective measure to be taken in the event of a radiological emergency because it protects the whole body (including the thyroid and other organs) from all radionuclides and all exposure pathways. The Commission recognizes that there may be situations when evacuation is not feasible or is delayed. In-place sheltering is an effective protective action in such a situation. However, it is important to note that the issue is not evacuation or shelteringversusKI. Rather, it is evacuation or shelteringwithKI versus evacuation or shelteringwithoutKI. The use of KI is intended to supplement, not to replace, other protective measures. This amendment represents no change in the NRC's view that the primary and most desirable protective action in a radiological emergency is evacuation of the population before any exposure to radiation occurs. Depending on the circumstances, KI may offer additional protection for one radiation-sensitive organ, the thyroid, if used in conjunction with evacuation and sheltering. In developing the range of public protective actions for severe accidents at commercial nuclear power plants, evacuation and in-place sheltering provide adequate protection for the general public but the use of KI can be a reasonable and prudent supplement. Therefore, it seems reasonable, while continuing to recognize the role of the State and local governments in matters of emergency planning, to require explicitly that emergency planners consider the use of KI.

Commenters in favor of the proposed rule note that a host of countries—France, Germany, Belarus, Russia, Switzerland, Austria, the Czech Republic, Japan, Great Britain, Sweden, Slovakia, and others—protect themselves with stockpiles of KI. These commenters point to soaring rates of thyroid cancer appearing in children in the Soviet Union who were exposed to the Chernobyl nuclear accident and who received too little potassium iodide, and too late. Thus, these commenters support the view that there is new information that suggests the need for consideration by State and local governments. In addition, many of these commenters would go further than the proposed rule language and require the use of KI, not just its consideration.

In contrast to the above, letters from some state and local governments, and from utilities, say that the State and local governments have already considered the use of KI. They believe that the petitioner has not provided any compelling reasons why additional Federal requirements are needed or how they would benefit the health and safety of the public. These State and local government commenters reject the view that the States have not had access to sufficient technical information regarding potassium iodide, and that without accurate and current information on KI—including the Chernobyl experience and the consensus of international experts—States cannot make an informed judgment. They conclude that this assertion is without merit, as there has been no shortage of information related to the use of potassium iodide available to State radiological emergency planners, and oppose the implication that State and local governments, absent Federal actions, are incapable of making informed decisions regarding the protection of their citizens during a radiological emergency. One commenter stated that by issuing this rule, the Commission is ignoring the views of States where KI has been stockpiled or pre-distributed, and where experience shows the system is ineffective.

The commenters opposing the proposed rule on this basis also note that reliance on the Chernobyl experience discounts the vast technical, political, and socio-economic differences between the United States and Eastern European countries at the time of the Chernobyl accident. The efficacy of any protective measure will depend on a large number of factors, including but not limited to: the type of reactor involved; accident sequences and timing; source term; timeliness of notification; the manner in which protective action decisions are made and transmitted to the public; the mobility of the public; and the receptiveness of the general public to official instructions. These commenters believe that the above factors have already been considered by State and local governments in the development of existing emergency response plans.

Response.The Commission did not intend to imply that States are not capable of making informed decisions regarding the protection of their citizens during a radiological emergency. In fact, the final rule calls on offsite authorities to make their own decision on this matter. Additionally, the Commission recognizes that most State and local governments have already considered the use of KI in the event of an emergency as part of their planning. Nevertheless, the Commission believes it appropriate to provide information that may be of aid to offsite authorities in their consideration of this matter. Offsite authorities may, of course, use this information as they see fit.

Several States have welcomed the NRC's efforts in developing information relating to the benefits and risks associated with using KI as a supplemental protective measure for the general public. This information is intended to supplement and update information already available on this subject, including experience from State and foreign governments that have made KI available to the public. As noted earlier, this information will be in a revised NUREG-1633, which is scheduled for publication for comment after the FDA issues its draft guidance and in an information brochure.

The Commission finds that KI is a reasonable, prudent, and inexpensive supplement to evacuation and sheltering for specific local conditions. Through its decision to require that the use of KI be “considered” (rather than being required), the Commission is acknowledging that the efficacy of any protective measure will depend upon a number of factors, including those noted by the commenter, that can vary not only between countries but in individual States. Thus, the Commission concluded that decisions on the use of KI need to be resolved on a State-by-State basis. As part of this consideration, State and local governments can weigh all relevant factors.

In the proposed rule, the Commission noted that NUREG-1633 was being revised to provide information about experience in the United States and abroad with distribution of KI, and that an information brochure was also being prepared. According to some commenters, distribution of information on the benefits and risks associated withthe use of KI should not be limited to people living within nuclear power plant emergency planning zones. Further, commenters note that a comprehensive public information program outlining the potential range of benefits and risks of using KI and how to employ it most effectively in the event of a radiological emergency would be necessary to allow personal decisionmaking. Making the information and the KI itself available directly to members of the public provides them with the ability to decide for themselves how best to take advantage of the benefits associated with the use of KI as supplementary protection. One vehicle currently used for disseminating regular preparedness information which could be used to provide information on KI is the public information brochures and calendars already required to be distributed annually within each emergency planning zone. In this commenter's view, making information and KI available provides the greatest level of protection for the greatest number of people.

Some State government organizations were concerned that making provisions for KI might give the public a false sense of security that they are fully protected, and that the public might not evacuate. Thus, these organizations believe that there is a need for public information concerning the supplemental role that the use of KI could play.

Several of the commenters stated that it is desirable that the NRC would work with other appropriate Federal agencies to develop and promulgate clear and necessary guidance on the subject, similar to the guidance on sheltering and evacuation. These commenters also believe that the final decision should lie at the discretion of the State and local governments. A few commenters expressed the view that the rule puts the burden of assessment on States who have fewer technical resources than the NRC, the EPA or the FDA.

One commenter thought that the decisionmaking about stockpiling KI must include rigorous assessments to ensure sufficient quantities of KI will be available for distribution to members of the public, in both the plume exposure pathway and the ingestion exposure pathway.

Response.The Commission recognizes that once a State decides to include KI as a protective measure for the general public, it would be up to the State to decide how and when to conduct an educational program on the benefits and risks associated with using KI and to supply KI for appropriate distribution to the general public. Additionally, the Commission agrees that more detailed guidance on the use of KI would be useful in assisting States to assess the merits of stockpiling KI for the general public, including logistics, amounts and public information needs. The Commission has formed a KI “Core Group” consisting of representatives of State, local, and Federal agencies whose responsibility is to develop clear guidance relating to the use of KI. This guidance (NUREG-1633, Rev. 2) should be published for comment after FDA issues its draft guidance, which was issued for public comment on January 4, 2001 (66 FR 801). The NRC is continuing to work with other Federal agencies through the FRPCC to coordinate government policies concerning radiation protection and emergency planning. Further, a public information brochure to be published later will assist States and individuals in making an informed decision on KI.

A range of comments were submitted concerning ways by which KI could be made available to the general public in the event of a radiological emergency. Many commenters simply asked NRC to “make KI available” without further detail. In the proposed rule, the NRC discussed Federal stockpiles of KI as part of Federal response to terrorist acts. One commenter indicated that expanding this supply may be the best approach. Another commenter stated that the public is not interested in stockpiles, but instead wants information to make their own decisions. Of those comments related to specific methods of availability, these can be generally grouped into individual availability, State stockpiles in the vicinity of nuclear power plants, or regional stockpiles.

One State submitted, as part of its comments, a report that discussed a plan they have developed that would allow citizens to gain access to KI in advance of an accident. The plan calls for the State to secure agreements with KI manufacturers to sell the medication directly to individuals or retail outlets, and to urge local pharmacies to stock KI as an over-the-counter drug. Information concerning KI availability and use would be included in the annual emergency information mailings prepared by nuclear power plant staffs and distributed to every property owner within the emergency planning zones. The State concluded that this method would allow individuals to make their own decisions about the use of KI. This State noted that one can envision this activity being conducted in conjunction with existing programs designed to remind and encourage family members to periodically check home first aid kits, smoke detectors, spare batteries for flashlights and radios, and other items that they might employ for their comfort and protection in the event of any emergency. In addition, one commenter noted that KI is now available via the Internet from at least two vendors at an affordable price. (See also comments above in issue C about decisionmaking.)

A number of commenters believe that KI should be stockpiled in schools, fire houses or reception centers near nuclear power plants. These commenters state that this is the advice of the experts, for instance the World Health Organization and Dr. Jean Temeck, from FDA. These commenters believe that the young are the most vulnerable; and, in the words of Dr. Temeck, “in an emergency you want to get it to the children as quickly as possible and the teacher is right there on the spot. * * * You do not need to be medically trained to give KI. A permission slip to administer KI can be sent out by the school at the beginning of each year.” Further, it makes sense to these commenters that this time-critical medicine be available nearby, such as in a local school, hospital, or fire-station. Thus, these commenters believe that State stockpiles are appropriate because regional stockpiles will not adequately protect the public since KI must be taken prior to exposure, or very shortly thereafter (within about six hours), to be an effective blocking agent.

A number of commenters, including emergency preparedness and response officials and FEMA, are concerned about the regional stockpiling and distribution process and its potential for reducing the effectiveness of measures which will provide much greater protection to the public. In their view, the complex logistics of storage and distribution of regional stockpiles far outweigh the usefulness of such a stockpile and that regional stockpiles of potassium iodide would complicate, not strengthen radiological emergency preparedness. These commenters believe regional stockpiling has disadvantages as compared to State stockpiling. The administration of KI is time-critical and regional stockpiling means critical time will be spent transporting the drug from a regional stockpile to the area where it is needed. For these reasons, they believe thatregional stockpiles should supplement, not substitute for State stockpiles.

Response.If a State decides to use KI as a supplemental protective measure, the Commission agrees that the State should focus on the early administration of KI to children. A decision to make KI available to the general public will require some planning by the State for its own supplies of KI and methods of distribution. Such planning (for implementation of protective actions) is a normal part of a State's emergency planning activities. As noted earlier, the NRC plans to issue a guidance document (NUREG-1633) to assist the States. The Commission recognizes the logistical challenges associated with the distribution of KI to the general public. For this reason, the staff intends to include a discussion of experience with KI distribution in the United States and abroad in the guidance document NUREG-1633.

There are different approaches that a State can use in incorporating KI as a supplemental protective measure for the general public. One approach is that mentioned by a commenter to distribute information about the over-the-counter availability of KI. Making KI available over the counter would provide members of the public with the opportunity to decide for themselves if they wanted to store and use KI. In fact, some KI manufacturers have indicated that they would make KI available to any person who requests it, at a fee. This approach would minimize the need for State stockpiles or predistribution and would put KI in the hands of the public before an accident occurs, rather than attempting to distribute the KI from stockpiles after an emergency is declared.

The concerns about the effectiveness of regional stockpiles for rapid deployment of KI to the public are also acknowledged. FEMA has stated that in its view, regional stockpiles will not enhance local radiological emergency preparedness because of complex logistics. The Commission agrees. As part of its decision on this final rule, the Commission has decided to provide funding for a supply of KI for States that request such funding through FEMA and to discontinue support of regional stockpiles. The Commission believes that in light of logistic difficulties, it is doubtful that regional stockpiles of KI could be effectively employed in the unlikely event of a radiological emergency at a commercial nuclear power plant.

Several commenters thought that the proposed rule should be modified to require the use of KI, not just the consideration by State and local officials. These commenters believe, for instance, that the tragic comedy of errors surrounding attempts to distribute KI in the wake of the Three Mile Island partial core melt accident only serves to highlight the need for pre-distribution. The health of our children is too important to leave their protection to the consideration of states. These commenters ask that if the U.S. system is adequate, why do other industrialized nations believe that sheltering and evacuation alone are insufficient? Some of these commenters want all commercial reactor licensees to distribute KI to all individuals within the EPZ and to make KI available to anyone within a 50-mile radius of the reactor upon request. These commenters believe that the prophylactic use of KI for the general public should be amandatoryemergency planning requirement and should not be merely an optional consideration, because, if given the choice, many States may not adequately protect their citizens. Another reason cited for wanting NRC to require KI is that “without a federal mandate for stockpiling KI, the nuclear industry will simply shift its fight against the policy to the State and local levels.”

Response.Because the Commission believes that current emergency planning and protective measures—evacuation and sheltering—are adequate and protective of public health and safety, the Commission will notrequireuse of KI by the general public. Rather, the Commission recognizes thesupplementalvalue of KI and the prerogative of the State to decide on the appropriateness of the use of KI by its citizens. The Commission believes the final rule together with the Commission's decision to provide funding for the purchase of a State's supply of KI strikes a proper balance between encouraging (but not requiring) the offsite authorities to take advantage of the benefits of KI and acknowledging the offsite authorities' role in such matters.

The use of KI is intended to supplement, not to replace, other protective measures. This rule change thus represents no alteration in the NRC's view that the primary and most desirable protective action in a radiological emergency is evacuation of the population before any exposure to radiation occurs. The Commission recognizes that there may be situations when evacuation is not feasible or is delayed. In-place sheltering is an effective protective action in such a situation. Depending on the circumstances, KI may offer additional protection to one radiation-sensitive organ, the thyroid, if used in conjunction with evacuation and sheltering. In addition, the Commission notes that issues surrounding the prophylactic use of KI following such accidents do not lend themselves to across-the-board solutions. Therefore, the Commission has chosen to leave this decision to State and local emergency response planners, who may find that KI should be a supplementary protective measure, rather than to mandate its use. Additionally, the Commission's amendment to require explicitly that planners consider the use of KI, rather than require the use of KI, recognizes the important role of the States and local governments in matters of emergency planning and the use of medicinal protective measures by their citizens.

Some commenters, including FEMA, state that the recent decision of the Commissionersnotto fund the purchase of KI is an unfortunate reversal to the goal of providing supplementary protection for the general public. Thus, citing the Chernobyl accident, they urge the Commission to reconsider its position in light of the proven usefulness of KI in preventing childhood thyroid cancer. One State commenter was concerned that after two years of efforts made toward implementing this supplementary protection, the Commission's recent actions undermine that State's effort. While understanding the Commission's financial concerns leading to this decision, this commenter proposed that the Commission could approach Congress for a supplemental appropriation.

Another commenter stated that the Commission's withdrawal of the offer to pay for State KI stockpiles sends a message that KI preparedness is not important, and that States who were considering plans to establish stockpiles have dropped such plans. Further, some commenters believe that the NRC reversal of position regarding funding of KI for States that elect to stockpile it adversely affects the implementation of the policy proposed by the Federal Radiological Preparedness Coordinating Committee (FRPCC). [That draft policy currently provides that if a State chooses to add KI as a supplement to its evacuation and sheltering protectiveactions, the State will inform FEMA, which will forward the request to the NRC for payment.] Another commenter noted that the Kemeny Commission supported stockpiling KI, and that the Commission should fulfill an earlier NRC commitment to do so.

Several States expressed the view that the requirement that use of KI be considered is an unfunded State mandate and is contrary to an Executive Order of 8/5/99.

A number of commenters stated that they thought the utilities should pay for supplies of KI in the vicinity of the power plants. Some utilities expressed concern that the rulemaking might result in requests to the utilities from State and local organizations for such funding.

Response.The Commission decision not to fund State stockpiles has been reversed as the result of public comment on this rulemaking. Promulgation of this final rule underscores the Commission's views on the importance of emergency preparedness, including consideration of the use of KI. The Commission has decided to fund State and, in some cases, local stockpiles of KI, subject to certain restrictions and limitations (see Staff Requirements Memorandum for the Affirmation Session on December 22, 2000). The Commission believes that in light of logistical difficulties, it is doubtful that regional stockpiles of KI could be effectively employed in the unlikely event of a radiological emergency at a commercial nuclear power plant. The Commission's offer to fund the purchase of a supply of KI for a State choosing to use KI prophylaxis as a supplemental protective measure retains the FRPCC's proposal that the State remain responsible for all other funding connected with the incorporation of KI, such as preparing guidelines for its stockpiling, maintenance, distribution and use, and for all other ancillary costs.

The Commission agrees that, in the past, licensees may have found it in their own self interest to assist State and local governments by providing resources for emergency planning needs. The Commission expects that those States who decide to use KI for the general public will make suitable arrangements to fund costs other than the initial purchase of a supply of KI. After funding the initial purchases of KI, the Commission may consider extending the program to fund stockpile replenishment, but has made no commitments in this regard. As with other aspects of offsite emergency planning, the NRC will not require licensees to fund State activities, but the States can, of course, act in cooperation and coordination with licensees.

As to the issues whether the rule constitutes an “unfunded State mandate” or is contrary to an Executive Order of August 5, 1999, the Nuclear Regulatory Commission, as an independent regulatory agency, is not subject to the requirements of Title II of the Unfunded Mandates Reform Act of 1995 or Executive Order 13132, “Federalism,” August 5, 1999.

A commenter representing nuclear utilities raised a concern that if licensees would be required to expend significant resources in considering the use of KI in emergency plans, then the proposed rule is clearly a backfit and a backfitting analysis should be performed. Thus, the commenter requested that the NRC either limit the specific actions which would be required to be taken by licensees to demonstrate that the adequate consideration required by the proposed rule has been implemented, or the required backfitting analysis should be conducted and a suitably revised proposed rule should be published for comment.

Response.This notice contains a “Backfit Analysis” section, which notes that the Commission concludes that the rule imposes no new requirements on licensees, nor does it alter procedures at nuclear facilities. Rather, it is directed to States or local governments, the entities with the responsibility to determine the appropriateness of the use of KI for their citizens, calling upon the governments to consider KI as one of the elements of their offsite emergency planning. The final rule imposes no binding requirement for State or local governments to alter emergency plans and procedures.

Furthermore, the basic standard that emergency planning must include consideration of a range of protective actions is already set forth in the existing § 50.47(b)(10). Once again, the rule does not impose new requirements on nuclear power plant licensees who are the intended beneficiaries of the Backfit Rule provisions. Therefore, no backfit is involved.

State and local government organizations raised concerns about legal implications should a member of the general public be given KI at their directive or recommendation and the individual has an extreme allergic reaction. Commenters note that theFederal Registernotice does not address legal issues for States who decide to adopt KI and for States who do not decide to adopt or administer KI to the public. Further, if the NRC decides to require stockpiling of KI for the general public, the commenters ask whether NRC has considered what liability may arise from any adverse health effects. Another concern was about who would assume liability if the KI was used prior to a Governor ordering its use.

Response.These comments focus principally on concerns that State and local governments involved in distribution and administration of KI may be liable in tort if an individual receiving the KI has a significant adverse medical reaction to the KI. As stated in the proposed rule FR notice, the question of whether a State or locality might be liable for involvement with administration of KI to the general public can only be answered by reference to the laws and precedents of particular States. The NRC presumes that this would be part of the “consideration” that States and localities will undertake as a result of promulgation of this rule. To the extent that commenters are raising the potential for Federal government liability for the promulgation of this proposed rule, the proposed rule FRN notes NRC views that whether the Commission may be subject to tort liability through the implementation of a KI program depends upon a number of factors. However, it would appear that a Commission decision to require State and local emergency planning officials to consider stockpiling KI for public distribution should be subject to the “discretionary function” exception to the Federal Tort Claims Act. 28 USC 2671,et seq., which protects the Federal Government from liability. The Commission's offer to fund State stockpiles would similarly be subject to the “discretionary function” exception. The Commission has directed the staff to ensure that NRC funding for KI is accompanied by appropriate disclaimers to ensure that the NRC and any of its employees are not to be held responsible for any activity connected with transporting, storing, distributing, administering, using, or determining proper doses of KI for adults and children.

A few commenters thought that the dosage and intervention levels should be lowered from the values in the existing FDA guidance. For instance, they conclude that NRC should require using KI prophylaxis at one rem projected dose exposure not at thecurrent 25 rem. It was noted that Poland uses a 5 rem intervention level. The concern of these commenters is that continued use of the old guidance subjects children to greater risk than necessary.

Response.The FDA is the Federal agency responsible for decisions about appropriate thresholds and dosages for use of KI. Existing FDA guidance related to the use of KI on dosage intervention levels is contained in a June 29, 1982 notice (47 FR 28158). As stated therein, “FDA concludes in the final recommendations that risks from the short-term use of relatively low doses of potassium iodide for thyroid blocking in a radiation emergency are outweighed by the risks of radioiodine-induced thyroid nodules or cancer at a projected dose to the thyroid gland of 25 rem.” That notice also provides recommended dosages for adults and children. New FDA guidance was published in theFederal Registerfor public comment on January 4, 2001 (66 FR 801). The Commission will incorporate it into its guidance documents.

A few commenters state that in the proposed rule, the Commission claims to have granted the alternative submitted in the amended petition, but did not actually do so. In their view, the amended petition contained the combination of three elements— the requirement to consider KI stockpiling, the unequivocal recommendation that States establish stockpiles, and the offer of Federally-funded State stockpiles. Since the promise of funding removed a major impediment to States adopting a pro-KI policy, the commenters believe that the petitioner felt that amending his petition to require only “consideration” of the use of KI would likely result in State decisions favorable to using KI. In their view, the amended PRM was premised on the now-withdrawn NRC offer of Federally-funded State stockpiles of KI, and therefore it would be entirely appropriate for the petitioner to rescind his amendment to PRM 50-63 and to insist that the NRC adopt what was requested in his original petition.

Response.The Commission agrees with this comment. Since the Commission has decided to reinstate its offer to fund a supply of KI for State or, in some cases, local governments that choose to incorporate KI prophylaxis in their emergency plans, the Commission believes that it is granting the amended petition (PRM-50-63A) in all respects.

Several commenters stated that the proposed rule is vague in that it did not define “consideration.” They believe that the rule should clarify that the KI “consideration” within the context of radiological emergency planning and preparedness needs to be performed only once by the responsible State agency, which would provide written notice of the consideration to the Commission. Thereafter, no further “consideration” should be required unless the State determines there is reason to reconsider its position and that the “consideration” process is not subject to continuing oversight or recurring evaluation by the NRC, or any other federal agency.

Another commenter questioned whether a State that considered the issue in the early 1980s, and rejected the use of KI, could now claim that the Commission's current proposal has already been fulfilled. Reliance upon the earlier consideration would violate the intent of the petitioner's proposal.

Another commenter questioned whether the following scenario would be considered acceptable and in compliance with the rule: a State considered the use of KI, but found the licensee unwilling to pay for it, so the State decided that although use of KI might be a good idea, it couldn't afford it.

Response.The Commission would expect that a State's “consideration” would involve at least an internal review of this notice and brief deliberation on the State's position on the use of KI by the general public. In NRC's experience, States periodically review their emergency plans and preparedness, typically on an exercise frequency basis, to ensure that plans are up to date and account for local changed circumstances. For those States that conduct such periodic reviews, the Commission would expect the States to undertake their “consideration” of the use of KI during the first periodic review conducted by the State of offsite emergency plans and preparedness following the effective date of this rule amendment and issuance of revised NUREG-1633 guidance. For those States that do not routinely conduct periodic reviews, the Commission would expect the States to undertake their “consideration” of the use of KI on the same frequency as periodic emergency preparedness exercises following the effective date of this rule amendment and issuance of guidance. The rule does not require States to provide written notice of their “consideration.” The Commission expects that States will inform FEMA and the NRC of the results of their consideration.

Additionally, the Commission agrees that the “consideration” process is not subject to continuing oversight or recurring evaluation by the NRC or any other Federal agency.

By issuing this rule, the Commission is stating its conclusion that consideration of the use of KI that might have been performed many years ago, needs to be reexamined in light of new information. Thus reliance upon such earlier evaluations would not be consistent with the rule requirement.

One commenter noted that the Commission's proposed rule would seem to support the same techniques used for forced KI distribution that were dictated by governments in Eastern Europe during the Chernobyl accident. The commenter urged the Commission to consider whether this posture would be endorsed by any government, be it Federal, State, or local. This commenter believes the NRC staff ignores the testimony of those States where KI is stockpiled or pre-distributed for the public and where experience shows the system is ineffective. Additionally, a commenter thought that the proposed rule is predicated on the false assumption that even if States decide not to stockpile KI for the general public, they will have access to Federal reserves of the drug. By the Commission's own admission, such reserves have yet to be established nor has the funding mechanism to support such reserves been identified. The proposal suggests that states “consider” the availability of resources that do not exist.

Likewise, a commenter stated that the proposed rule implies that even when a State decides as a matter of public policy against distribution of KI for the general population, the Federal government will develop plans to override that decision. The purpose of such plans is unclear in the context of the proposed rule. Once a State has given due consideration to the use of KI stockpiling as a supplemental protective action and determined it to be unwarranted, the commenter seeks the basis on which the Commission proposes to develop a contingency plan.

Response.The Commission has never endorsed “forced KI distribution.” Under this final rule the use of KI continues to be a State option. Moreover, revised NUREG-1633 will discuss the benefits and risks associated with using KI and the U.S. and foreign experience with public distribution. While the Commission has alwaysrecognized that distribution at the time of an accident will present difficulties if there has been no advance planning, the Commission believes that the States will take the distribution matters into account when they consider the use of KI for the general public under this rule.

The Commission has decided to withdraw its decision to provide funding for regional Federal KI stockpiles. However, it should be noted that Commission efforts in this regard were not intended to “override” a State decision not to use KI during an emergency; rather, they were intended to make KI available in the event that a particular State changed its views and decided to use KI in an actual emergency, and had nowhere else to go for KI. The Commission believes that in light of logistical difficulties, it is doubtful that regional stockpiles of KI could be effectively employed in the unlikely event of a radiological emergency at a commercial nuclear power plant.

A few commenters feel that safe siting and Design-Engineered features alone do not optimize protection of the public-health and safety and that the Commission should not rely upon probabilistic risk assessments to obviate the need for stockpiling and predistribution of KI. Another commenter is concerned that the premature aging of reactor components, the economics of utility restructuring, and the long-term storage of high-level waste at reactor sites all contribute to the need for KI stockpiling.

Response:The Commission agrees with the importance of emergency planning to complement site and design features and stated so in the August 19, 1980,Federal RegisterNotice (45 FR 55402) which codified the NRC's emergency planning regulations following the Three Mile Island accident: “The Commission's final rules are based on the significance of adequate emergency planning and preparedness to ensure adequate protection of the public health and safety. It is clear * * * that onsite and offsite emergency preparedness as well as proper siting and engineered design features are needed to protect the health and safety of the public. As the Commission reacted to the accident at Three Mile Island, it became clear that the protection provided by siting and engineered design features must be bolstered by the ability to take protective measures during the course of an accident.”

The Commission did not rely upon probabilistic risk assessments in developing this final regulation on consideration of the use of KI.

The Commission interprets the third comment to relate to factors that the commenter believes could increase the likelihood of an accident and which, in the commenter's view, heighten the importance of emergency planning. The Commission's regulations recognize the importance of emergency planning by requiring development of a range of protective actions, which include sheltering and evacuation and, by this rulemaking, consideration of the use of KI for the general public.

One commenter feels that the NRC has exaggerated the estimated cost of KI, ignoring comments that point to the availability of inexpensive and long-lasting KI. This commenter thinks that market forces are likely to bring down the cost of KI and that savings in the NRC budget could be effected without diminishing the safety of America's children.

The U.S. Pharmacopeia wrote in its comment letter that the long-term viability of the drug was tested and it was found that 11 years after manufacture and eight years after the expiration date, the tablets were assayed at 99.1% of the labeled content of KI. The petitioner expressed the view that since the U.S. is currently engaged in a $15 million study of radiation-caused thyroid disease in the Ukraine, it was hard to understand why the government was not willing to spend a fraction of that amount to prevent radiation caused thyroid disease at home.

Response.Cost estimates used in past documents were based upon information available at those times. NRC presently estimates the cost of KI to be about 18 to 20 cents per tablet if purchased in bulk, with a shelf life of 7 to 10 years. As a result, the Commission finds that KI is a reasonable, prudent and inexpensive supplement to evacuation and sheltering for the general public for specific local conditions.

As noted earlier, the Commission has decided to offer to provide funding for a supply of KI for State or, in some cases, local governments that choose to incorporate KI prophylaxis in their emergency plans.

Commenters believe that there is new information available from Poland and Belarus regarding use of KI following a radioactive release. They state that there were no reported serious adverse reactions. Specifically, 18 million individuals received prophylactic KI with overall toxicity of 2.5% (mostly nausea) but with only a fraction of 1% having serious side-effects.4 Commenters state that this experience has been recognized by other countries who are stockpiling KI for use by the general public. This data has led some commenters to say that just because there are other lethal radionuclides to which people may be exposed, why deny them the availability of KI, which can counteract the deadly effects of radioactive iodine. Every drug has contraindications and the potential for allergic reactions. In an emergency as dire as a reactor accident where people risk illness and death, a possible adverse reaction to KI seems relatively minimal, and people absolutely should have the choice of making an informed decision and assuming possible risk.

Response.The Commission did consider the experience with mass distribution of KI during the Chernobyl radiological emergency (although the record on that distribution is not complete). That experience is still being investigated and evaluated by public health authorities worldwide. When the appropriate health agencies have established the applicability of the Polish experience to the United States, the findings will be followed in NRC guidance. The NRC acknowledges that KI is a reasonable, prudent, and inexpensive supplement to evacuation and sheltering for specific local conditions. The Commission guidance on emergency planning has long taken KI into consideration (see NUREG-0654/FEMA-REP-1, “Criteria for Preparation and Evaluation of Radiological Emergency Response Plans and Preparedness in Support of Nuclear Power Plants,” Rev. 1, p. 63, items e and f). The FDA has approved KI as an over-the-counter medication and has found it effective and safe as discussed in the response to issue I.

Based on the foregoing, and as noted herein, the action by the Commission to approve this final rule grants in part and denies in part the original petition (PRM 50-63) and grants in all respects the amended petition (PRM 50-63A). The rule change, which requires “consideration” of the use of KI, is responsive to the amended petition. Further, including in thisFederal Registernotice for the final rule, astatement that “KI is a reasonable, prudent, inexpensive supplement to evacuation and sheltering for specific local conditions,” is also responsive to both petitions. This statement does not use the petitioner's exact language but is responsive to the petitioner's request. The Commission's final position on funding of State stockpiles grants that part of the original and amended petition to include a statement of such support in the Statement of Considerations for the rule. However, the final rulemaking would deny that part of the original petition requesting that the Commission amend 10 CFR 50.47(b)(10) torequirethat the range of protective actions developed for the plume exposure pathway EPZ include sheltering, evacuation, and the prophylactic use of iodine.

The Commission has found that “[I]n developing the range of actions for severe accidents at nuclear power plants, evacuation and sheltering provide adequate protection for the general public.” (Proposed Rule, 64 FR at 31745). In addition, the Commission notes that issues surrounding the prophylactic use of KI following such accidents do not lend themselves to across-the-board solutions. Therefore, the Commission has chosen to leave such decisions to State and local emergency response planners to determine whether their emergency plans should include the use of KI as a supplementary protective measure for the general public. The Commission's decision is implemented through this final rule that changes 10 CFR 50.47(b)(10). This final rule completes NRC action on PRM 50-63 and PRM 50-63A.

The Commission has considered the KI policy question on numerous occasions since 1984. The history of the Commission deliberations shows that reaching consensus on this policy question has been an elusive goal. An important reason for this historical lack of consensus is that this policy question is not a clear-cut one. Individual Commissioners, past and present, have differed in their views with respect to the relative importance to be given to factors bearing on the KI issue. These honest differences have led to divided Commission views on how to resolve the policy question. The Commission agrees that its historical difficulty in reaching consensus on the KI policy question underscores the reality that this policy question is not a simple one, is not one that is easily resolved and, as a result, has been the subject of protracted deliberation.

After considering all public comments received, the information available in the literature, 20 years of experience gained in evaluating licensee emergency preparedness plans, and the arguments presented by the petitioner, the Commission has decided to amend 10 CFR 50.47(b)(10), by adding a sentence similar to the one suggested in the revised petition. Specifically the following sentence is inserted in § 50.47(b)(10), after the first sentence: “In developing this range of actions, consideration has been given to evacuation, sheltering, and, as a supplement to these, the prophylactic use of potassium iodide (KI), as appropriate.”

The Commission finds that KI is a reasonable, prudent and inexpensive supplement to evacuation and sheltering for specific local conditions. The Commission's guidance on emergency planning has long taken KI into consideration (NUREG-0654/FEMA-REP-1, Rev. 1, p. 63, items e and f). However, since the last revision of that guidance, there has been experience with the mass distribution of KI during an international radiological emergency, and though the record on that distribution is not complete, the indications thus far are that mass distribution is effective in preventing thyroid cancer and causes few threatening side effects. Moreover, many nations in Europe and elsewhere—nations as different in their circumstances, politics, and regulatory structures as France, Canada, and Japan—have stockpiled KI and planned for its use. So have some U.S. States. The World Health Organization and the International Atomic Energy Agency recommend its use. Therefore, in order to achieve greater assurance that KI will receive due attention by planners, it is reasonable to take a further small step and, continuing to recognize the important role of the States and local governments in matters of offsite emergency planning, explicitly require that planners consider the use of KI.

The amendment should not be taken to imply that the NRC believes that the present generation of nuclear power plants is any less safe than previously thought. On the contrary, present indications are that nuclear power plant safety has significantly improved since the current emergency planning requirements were put in place after the Three Mile Island-2 accident in 1979.

The use of KI is intended to supplement, not to replace, other protective measures. This amendment does not change the NRC's view that the primary and most desirable protective action in a radiological emergency is evacuation of the population before any exposure to radiation occurs. The Commission recognizes that there may be situations when evacuation is not feasible or is delayed. In-place sheltering is an effective protective action in such a situation. Depending on the circumstances, KI may offer additional protection to one radiation-sensitive organ, the thyroid, if used in conjunction with evacuation and sheltering. In developing the range of public protective actions for severe accidents at commercial nuclear power plants, evacuation and in-place sheltering provide adequate protection for the general public. In appropriate circumstances, KI can provide additional protection. In addition, the Commission notes that issues surrounding the prophylactic use of KI following such accidents do not lend themselves to across-the-board solutions. Therefore, the Commission has chosen to leave such decisions to State and local emergency response planners, who may find that KI should be a supplementary protective measure.

The NRC recognizes that any decision to use KI as a supplemental protective measure for the general public presents issues of how best to position and distribute the medicine, to ensure: (1) That optimal distribution takes place in an emergency, with first priority given to protecting children; (2) that persons with known allergies to iodine not take it; and (3) that members of the public understand that KI is not a substitute for measures that protect the whole body. To date, these issues have been addressed in different ways in the numerous countries that currently use KI as a protective measure for their citizens. The NRC is working with States and other Federal agencies to develop guidance on these and other issues relating to the use of KI. The NRC believes that these implementation issues can be solved, given the level of expertise in the relevant Federal and State agencies, and the experience of numerous nations that have built KI into their emergency plans.

TheFederal Registernotice for the proposed rule (64 FR 31737) stated the Commission's then-held position only to support funding of regional stockpiles or other supplies of KI as opposed to funding of State stockpiling of KI. As described above, in its deliberations on this final rule, the Commission has withdrawn its support for funding of regional KI stockpiles and has reinstated its offer to provide NRC funding of State or, in some cases, local stockpiles,subject to various restrictions and limitations (see Staff Requirements Memorandum for the Affirmation Session on December 22, 2000).

In doing this, the Commission has responded to comments from FEMA and other commenters. The Commission is supporting the 1996 FRPCC's Ad Hoc Subcommittee on Potassium Iodide recommendation that the Federal government (NRC through FEMA) should fund the purchase of State, or in some cases local, KI stockpiles. The Commission recognizes that this policy contradicts the Commission's historical policy that funding for State and local emergency planning is the responsibility of those governments often working with licensees. The Commission is making this exception to the long-standing policy on the basis of the FRPCC's recommendation and recent petitions received. The Commission has determined that for a State that has decided to stockpile KI, NRC funding for purchase of KI for use by that State during a radiological emergency would directly contribute to fulfilling NRC's regulatory mission. The Commission also recognizes that any State choosing to incorporate KI prophylaxis as a supplemental protective action in its emergency planning will face costs, other than the cost of the purchase of KI. Consistent with the long-standing policy, these ancillary costs will remain the responsibility of the State government. Depending on how the State incorporates KI prophylaxis in its emergency plans, the ancillary costs could significantly exceed the cost of the purchase of the KI supply.

On October 7, 1992, the Commission published its final Policy Statement on Metrication. According to that policy, after January 7, 1993, all new regulations and major amendments to existing regulations were to be presented in dual units. The amendment to the regulations contains no units.

The National Technology Transfer and Advancement Act of 1995, Pub. L. 104-113, requires that Federal agencies use technical standards developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this final rule, the NRC is amending its emergency planning regulations to require that consideration be given to including potassium iodide as a protective measure for the general public that would supplement sheltering and evacuation in the event of a severe reactor accident. This action does not constitute the establishment of a consensus standard that contains generally applicable requirements to which the provisions of the Act apply.

On September 9, 1995, a petition for rulemaking (PRM 50-63) was filed with the NRC by Mr. Peter Crane. The petitioner requested that the NRC amend its emergency planning regulations to require that emergency plans specify a range of protective actions to include sheltering, evacuation, and the prophylactic use of KI.

In SECY-97-245, dated October 23, 1997, the NRC staff provided three options for the Commission's consideration in order to resolve PRM 50-63.

On November 5, 1997, the Commission was briefed by the NRC staff, the Federal Emergency Management Agency (FEMA), and the petitioner regarding the options available for resolving the petition for rulemaking. During the meeting, the Commission invited the petitioner to submit a modification to his petition in order to address views he discussed during the meeting.

On November 11, 1997, the petitioner submitted a revision to his petition PRM 50-63A, that requested two things:

1. A statement clearly recommending stockpiling of KI as a “reasonable and prudent” measure, and

2. A proposed rule change to 10 CFR 50.47(b)(10) which would be accomplished by inserting the following sentence after the first sentence: “In developing this range of actions, consideration has been given to evacuation, sheltering, and the prophylactic use of potassium iodide (KI), as appropriate.”

On June 26, 1998, the Commission disagreed with the NRC staff's recommendation in SECY-98-061 dated March 31, 1998, “Staff Options for Resolving a Petition for Rulemaking (PRM 50-63 and 50-63A) Relating to a Re-evaluation of the Policy Regarding the use of Potassium Iodide (KI) by the General Public after a Severe Accident at a Nuclear Power Plant,” to deny the revised petition for rulemaking (PRM 50-63A) and directed the NRC staff to grant the petition by revising 10 CFR 50.47 (b)(10). This final rule responds to this directive.

Alternatives were essentially considered in previous documents. In SECY-97-124 (June 16, 1997), “Proposed Federal Policy Regarding Use of Potassium Iodide after a Severe Accident at a Nuclear Power Plant,” the NRC staff identified three options, one of which contained three sub-options, concerning a proposed change in the Federal policy regarding the use of potassium iodide (KI) as a protective measure for the general public during severe reactor accidents.

On April 22, 1999, the Commission voted to approve publication in theFederal Registerof a proposed rule that would grant the revised petition for rulemaking (PRM 50-63A). The proposed rule was published on June 14, 1999 (64 FR 31737). In the petitioner's comment letter on the proposed rule, he stated that in light of the Commission decision not to fund State stockpiles of KI, the Commission should consider his original petition (PRM 50-63) to be incorporated by reference and resubmitted in his comment letter. He also requested the Commission to grant the petition as originally submitted. The Commission, by undertaking this final rulemaking, is denying in part the original petition for rulemaking (PRM 50-63), which wouldrequirethe use of KI for the general public. In so doing, the Commission has decided to continue to recognize the important role of the State by explicitly requiring that plannersconsider(PRM 50-63A) the use of KI for the general public. The Commission is granting in all respects the amended petition, including reinstating its support for funding State stockpiles of KI.

In SECY-97-245, the NRC staff proposed options for resolving the original petition for rulemaking. In an SRM on SECY-98-061, the Commission directed the NRC staff to proceed with the rulemaking. In so doing, the Commission found that KI is a reasonable, prudent, and inexpensive supplement to evacuation and sheltering for specific local conditions. The Commission's guidance on emergency planning has long taken KI into consideration (NUREG-0654/FEMA-REP-1, Rev. 1, p. 63 items e and f). However, since the last revision of that guidance, there has been experience with the mass distribution of KI during an international radiological emergency. Although the record on that distribution is not complete, the indications thus far are that mass distribution is effective inpreventing thyroid cancer and causes few threatening side effects. Therefore, in order to achieve greater assurance that KI will receive due attention by planners, it seems reasonable, while continuing to recognize the important role of the States in matters of offsite emergency planning, to explicitly require that planners consider the use of KI. The rule is needed to ensure that the States are aware of and take into consideration the costs, risks, and benefits of KI in their decision making process in order to optimize emergency planning for the public health and safety.

The environmental impacts of the final action and its alternative (deny the petitions in their entirety and take no action) are considered negligible by the NRC staff, given that the final action would only add the sentence: “In developing this range of actions, consideration has been given to evacuation, sheltering, and the prophylactic use of potassium iodide (KI), as appropriate.” The NRC staff is not aware of any environmental impacts as a result of this final action.

The alternative to the final action at this time is to deny the petitions and take no action with respect to the use of KI by the public. Should this no-action alternative be pursued, the NRC staff is not aware of any resulting environmental impact.

Cognizant personnel from the States, FEMA, and FDA were consulted, as was the petitioner, as part of this rulemaking activity.

The Commission has determined under the National Environmental Policy Act of 1969, as amended, and the Commission's regulations in Subpart A of 10 CFR Part 51, that the amendment is not a major Federal action significantly affecting the quality of human environment and; therefore, an environmental impact statement is not required. This amendment will require that consideration be given to evacuation, sheltering, and as a supplement to these, the prophylactic use of KI. This action will not have a significant impact upon the environment.

This final rule does not contain a new or amended information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C 3501et seq.). Existing requirements were approved by the Office of Management and Budget (OMB) approval numbers 3150-0009 and 3150-0011.

If a means used to impose an information collection does not display a currently valid OMB control number, the NRC may not conduct or sponsor, and a person is not required to respond to, the information collection.

On September 9, 1995, a petition for rulemaking (PRM 50-63) was filed with the NRC by Mr. Peter Crane. The petitioner requested that the NRC amend its emergency planning regulations to require that emergency plans specify a range of protective actions to include sheltering, evacuation, and the prophylactic use of KI.

In SECY-97-245, dated October 23, 1997, the NRC staff provided three options for the Commission's consideration to resolve PRM 50-63.

On November 5, 1997, the Commission was briefed by the NRC staff, the Federal Emergency Management Agency (FEMA), and the petitioner regarding the options available for resolving the petition for rulemaking. During the meeting, the Commission invited the petitioner to submit a modification to his petition in order to address views he discussed during the meeting.

On November 11, 1997, the petitioner submitted a revision to his petition (PRM 50-63A), which requested two things:

In the petitioner's comment letter on the proposed rule, he stated that in light of the Commission decision not to fund State stockpiles of KI, the Commission should consider his original petition (PRM 50-63) to be incorporated by reference and resubmitted in his comment letter. He also requested the Commission to grant the petition as originally submitted. The Commission, by undertaking this rulemaking, is granting the amended petition and is granting in part and denying in part the original petition. The Commission is denying that portion of the original petition for rulemaking (PRM 50-63), which wouldrequirethe use of KI for the general public. In so doing, the Commission has decided to continue to recognize the important role of the State in matters of emergency planning by explicitly requiring that plannersconsider(PRM 50-63A) the use of KI for the general public.

In SECY-97-245, the NRC staff proposed options for resolving the original petition for rulemaking. By SRM dated June 26, 1998, on SECY-97-245, “Staff Options for Resolving a Petition for Rulemaking (PRM 50-63) Relating to a Re-evaluation of the Policy Regarding use of Potassium Iodide (KI) after a Severe Accident at a Nuclear Power Plant,” the Commission directed the NRC staff to revise 10 CFR 50.47(b)(10). This final rule responds to this directive.

Alternatives were essentially considered in previous documents. In SECY-97-124 dated June 16, 1997, “Proposed Federal Policy Regarding Use of Potassium Iodide after a Severe Accident at a Nuclear Power Plant,” the NRC staff identified three options, one of which contained three sub-options, concerning a proposed change in the Federal policy regarding the use of potassium iodide (KI) as a protective measure for the general public during severe reactor accidents. Given that the Commission considered the options and directed the NRC staff to grant the amended petition, the only alternatives considered here are the Commission-approved option and the baseline, no-action alternative.

The final rule does not “require” any action of licensees. States are to “consider” the use of KI along with evacuation and sheltering as protective actions. It is estimated that no more than 30 States will need to make this consideration. The rule does not impose any substantive requirements on States to actually stockpile or plan for the use of KI. Therefore, States would not accrue the costs associated with such actions. However, the Commission recognizes that consideration of using KI as a supplemental protective measure may result in some State expenditures. The NRC staff estimates that the labor needed by the States could range from a staff-week, to half of a staff-year. The latter would be the case if a State decided to hold hearings on the issue.If one assumes an average hourly salary of $70 (this estimate includes benefits, prorated secretarial and managerial assistance, but not overhead), the range of estimates would be from $2800 to $63,000 per State. Using a base of 30 States, the range of impacts for the States to make the KI consideration is from $84,000 to $1.9 million.

The Commission notes that when it amended its emergency planning regulations on November 3, 1980, the regulatory standards for emergency planning were a restatement of basic joint NRC-FEMA guidance to licensees and to State and local governments incorporated in NUREG-0654; FEMA-REP-1, “Criteria for Preparation and Evaluation of Radiological Emergency Response Plans and Preparedness in Support of Nuclear Power Plants for Interim Use and Comment.” This guidance was cited in the regulation and addresses the use of radioprotective drugs by the general public, including quantities, storage, and means of distribution and State and local plans for decision making with respect to their use. The Commission removed the citations of the guidance from the regulation in 1987, but the guidance has continued in use for planning purposes by States and licensees and by the Federal agencies for evaluating emergency plans. As a result, it is believed that all of the 30 affected States have at some point considered the use of KI. A few of the 30 affected States have made the decision to stockpile KI. Thus, in practical terms, the projected costs will occur only in those States that have not previously elected to stockpile KI and choose stockpiling in light of the Chernobyl accident, recent international practice, and the NRC requirement to consider the use of KI.

It is difficult to estimate the benefit of a State's consideration to use KI for the general public. However, we believe the benefit of such an action by the States is summed up by the petitioner who stated that the decision to use KI for the general public should turn on whether, given the consequences of being without KI in a major accident, the drug is a prudent measure; not on whether it will necessarily pay for itself over time. As the petitioner further noted, “KI represents a kind of catastrophic-coverage insurance policy offering protection for events which, while they occur only rarely, can have such enormous consequences that it is sensible to take special precautions, especially where, as here, the cost of such additional precautions is relatively low.”

Nonetheless, the Commission notes that this rule will introduce another element in the context of emergency planning requirements for which licensees are ultimately responsible. Licensees have the obligation to confirm that offsite authorities have considered the use of KI as a supplemental protective action for the general public. While this ultimate responsibility could have practical implications, with some associated burdens, the extent is considered minimal when viewed in the overall licensee burden of complying with all of the existing emergency planning requirements.

Additionally, the rule does not articulate any implementation date or inspection criteria.

As stated above, this analysis focuses on the rule being codified as the result of petitions for rulemaking and on the Commission direction to grant the amended petition in all respects and to grant in part the original petition.

This constitutes the regulatory analysis for this action.

In accordance with the Regulatory Flexibility Act of 1980, 5 U.S.C. 605(b), the Commission hereby certifies that this rule will not have a significant economic impact on a substantial number of small entities. This final rule would affect only States and indirectly licensees of nuclear power plants. These States and licensees do not fall within the scope of the definition of “small entities” set forth in the Regulatory Flexibility Act, 5 U.S.C. 601, or the size standards adopted by the NRC (10 CFR 2.810).

Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” that was approved by the Commission on June 30, 1997, and published in theFederal Registeron September 3, 1997 (62 FR 46517), Part 50 is classified as compatibility Category “NRC.” The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act or provisions of Title 10 of the Code of Federal Regulations.

The President's Memorandum dated June 1, 1998, entitled “Plain Language in Government Writing,” directed that the government's writing be in plain language. This memorandum was published June 10, 1998 (63 FR 31883). In complying with this directive, editorial changes have been made in the final revisions to improve the organization and readability of the existing language of the paragraphs being revised. These types of changes are not discussed further in this notice.

The definition of backfit, as set forth in 10 CFR 50.109(a)(1), is clearly directed at obligations imposed upon licensees (and applicants) and their facilities and procedures. Section 50.109(a)(1) defines a backfit as:

Section 50.109 is replete with references to “facilities” and “licensees,” which in their totality make clear that the rule is intended to apply to actions taken with respect to nuclear power plant licensees and the facilities they operate.See§ 50.109(a)(7), “If there are two or more ways to achieve compliance with a license or the rules or orders of the Commission, or with writtenlicenseecommitments * * * then ordinarily the applicant orlicenseeis free to choose the way that best suits its purposes [emphasis added].” This focus on licensees and their facilities is further confirmed by the Statement of Considerations accompanying the backfit rule (53 FR 20603; June 6, 1988), where the Commission stated that backfitting “means measures which are intended to improve the safety of nuclear power reactors * * *.” (53 FR at 20604). The nine factors to be considered under 10 CFR 50.109(c) further make clear that the rule is aimed at requirements applicable to licensees and facilities. These include: “(2) General description of the activity that would be required by thelicenseeorapplicantin order to complete the backfit; * * * (5) Installation and continuing costs associated with the backfit, including the cost offacilitydowntime or the cost of construction delay; [and] (6) The potential safety impact of changes in plant or operational complexity. * * * [emphasis added].”

The final rule imposes no new requirements on licensees, nor does it alter procedures at nuclear facilities. Rather, it is directed to State or local governments, the entities with the important role to determine the appropriateness of the use of KI for their citizens, calling on these governments to“consider” KI as one of the elements of their offsite emergency planning. However, the rule imposes no binding requirement to alter plans and procedures on State or local governments. Furthermore, the basic standard that emergency planning must include consideration of a range of protective actions is already set forth in the existing wording of § 50.47(b)(10). On this basis, the final rule does not impose new substantive requirements onanyone. After consideration of these factors, no backfit is involved and no backfit analysis as defined in § 50.109 is required.

Commission precedent also makes clear that the amendment does not constitute a backfit. The Commission's position was stated explicitly in 1987, when the last major change took place in emergency planning regulations (52 FR 42078; November 3, 1987). The Commission's final rule involving the “Evaluation of the Adequacy of Off-Site Emergency Planning for Nuclear Power Plants at the Operating License Review Stage Where State and Local Governments Decline to Participate in Off-Site Emergency Planning” stated that the emergency planning rule change in question “does not impose any new requirements on production or utilization facilities; it only provides an alternative method to meet the Commission's emergency planning regulations. The amendment therefore is not a backfit under 10 CFR 50.109 and a backfit analysis is not required” (52 FR 42084). Likewise, when the Commission altered its emergency planning requirements in 1987 to change the timing for full participation emergency exercises (a change that, as a practical matter, could be expected to result in licensees' modifying emergency preparedness-related procedures to accommodate exercise frequency changes), it stated: “The final rule does not modify or add to systems, structures, components or design of a facility; the design approval or manufacturing license for a facility; or the procedures or organization required to design, construct, or operate a facility. Accordingly, no backfit analysis pursuant to 10 CFR 50.109 is required for this final rule” (52 FR 16828; May 6, 1987). The final emergency planning rule change is of a similar nature and similarly does not involve a backfit.

It has been argued by at least one commenter on the petition for rulemaking that, although licensees are not directly burdened by the final rule, they would be indirectly burdened because they would feel called upon to explain the new policy to their customers. By this logic, almost any Commission action that led an NRC licensee to issue a press release could be considered a backfit. Such a position is unsound law and policy. Here, the burden of public information on licensees or applicants, if any, appearsde minimis. It plainly does not rise to the level of the type of concrete burden contemplated by the Commission when it enacted the backfit rule. It might also be argued that, if a State or local government were to decide to stockpile and use KI for the general public, it would undertake interactions with the affected licensee to coordinate offsite emergency planning. Although this could result in some voluntary action by the licensee to coordinate its planning, the final rule itself does not impose any requirement or burden on the licensee. Accordingly, the Commission concludes that the final rule would not impose any backfits as defined in 10 CFR 50.109.

Nonetheless, the Commission notes that this rule will introduce another element in the context of the emergency planning requirements that licensees are ultimately responsible for, whereby licensees have the obligation to confirm that offsite authorities have considered the use of KI as a supplemental protective action for the general public. That ultimate responsibility could have practical implications, with some associated burdens, the extent of which is considered minimal when viewed in the overall licensee burden of complying with all of the existing emergency planning requirements.

In accordance with the Small Business Regulatory Enforcement Fairness Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs of OMB.

In 1967, the State of Louisiana and the United States Atomic Energy Commission (now the U.S. Nuclear Regulatory Commission) entered into an agreement pursuant to section 274b of the Atomic Energy Act of 1954, as amended, to discontinue the Commission's regulatory responsibilities over the use and possession of certain types of radioactive material in Louisiana. The State of Louisiana, in turn, assumed authority (formerly exercised by the NRC) over these regulatory activities. This agreement was noticed in theFederal Registeron May 3, 1967 (32 FR 6806). The discontinuance of the Commission's authority became effective May 1, 1967 and, at the same time, established Louisiana as an Agreement State. Additionally, on May 3, 1967 (32 FR 6807), the Commission published in theFederal Registera notice of an agreement between the State of Louisiana and the Commission that permitted the State to perform inspections or other functions in offshore waters adjacent to Louisiana on behalf of the Commission. This inspection agreement, entered into pursuant to section 274i of the Act, did not expand the State's regulatory authority but rather specifically authorized the State to conduct inspection activities and other functions on the Commission's behalf.

The NRC received a letter from Louisiana Governor M. J. “Mike” Foster, Jr., dated March 22, 2000, which requested termination of the section 274i agreement. The Governor stated that the termination would become effective 30 days from receipt of the letter. The request was filed in accordance with section 6 of the inspection agreement, which states:“* * * This Agreement shall become effective on May 1, 1967, and shall remain in effect so long as the 274b Agreement remains in effect unless sooner terminated by either party on 30 days' prior written notice.”

Governor Foster noted that difficulties arranging transportation and a lack of financial and personnel resources made it burdensome to conduct field activities for the NRC. The State concluded that the section 274i inspection agreement was no longer needed and should be terminated.

Effective April 26, 2000, the inspection agreement with the State of Louisiana and the NRC was terminated. Beginning April 26, 2000, the NRC, not the State, began conducting inspections of NRC-licensed activities in offshore waters adjacent to Louisiana. In this final rule, the NRC is issuing a conforming amendment to its reciprocity regulations in 10 CFR 150.20 (c) and (d). These sections provide that a licensee is not required to fulfill certain NRC reporting requirements for licensed activities performed in certain offshore waters. Under section 150.20 (c), certain general licensees are not required to file with the NRC if the licensee provides timely notification of its offshore activities to the Agreement State that issued the specific license, and that State is listed in 150.20(d) as agreeing to perform inspections for NRC under a 274i agreement. Louisiana was the only Agreement State listed in the regulation because it was the only State which had entered into such an agreement with the NRC.

In a letter to Governor Foster acknowledging termination of the 274i Agreement, the NRC indicated it would remove from the regulation only the specific reference to the NRC's inspection agreement with Louisiana in section 150.20(d). However, to promote clarity in the regulations, these sections will be removed in their entirety. In the event NRC enters into a 274i inspection agreement with an Agreement State in the future, the provisions of 150.20(c) and (d), which were promulgated following notice and comment rulemaking, will be reinstated via direct final rulemaking. In a separate communication, the NRC will provide guidance to Louisiana licensees on the impacts that the termination of this agreement will have on the notification and fee requirements for activities conducted in offshore waters.

However, termination of the section 274i inspection agreement does not in any way affect the existing agreement between the Commission and the State of Louisiana entered into pursuant to section 274b of the Act. Accordingly, termination of the inspection agreement does not affect Louisiana's status as an Agreement State.

This amendment involves a conforming change to NRC's regulations to reflect the fact that the State of Louisiana has terminated the section 274i inspection agreement. Accordingly, the NRC finds that, pursuant to 5 U.S.C. 553(b)(B), notice and comment is unnecessary. These amendments are effective upon publication in theFederal Register. Good cause exists to dispense with the usual 30-day delay in the effective date, because these amendments are of a minor and administrative nature, conforming the NRC's regulations as a result of the April 26, 2000 termination of the 274i agreement with the State of Louisiana.

Under the “Policy Statement on Adequacy and Compatibility of Agreement State Programs” approved by the Commission on June 30, 1997, andpublished in theFederal Registeron September 3, 1997 (62 FR 46517), this rule is classified as compatibility Category “NRC.” Compatibility is not required for Category “NRC” regulations. The NRC program elements in this category are those that relate directly to areas of regulation reserved to the NRC by the Atomic Energy Act of 1954, as amended (AEA), or the provisions of Title 10 of the Code of Federal Regulations. Although an Agreement State may not adopt program elements reserved to NRC, it may wish to inform its licensees of certain requirements via a mechanism that is consistent with the particular State's administrative procedure laws, but does not confer regulatory authority on the State.

The National Technology Transfer Act of 1995 (Public Law 104-113) requires that Federal agencies use technical standards that are developed or adopted by voluntary consensus standards bodies unless the use of such a standard is inconsistent with applicable law or otherwise impractical. In this final rule, the NRC is revising its regulations to remove the reference to an inspection agreement, referred to as the 274i Agreement, with the State of Louisiana. The inspection agreement entered into pursuant to section 274i of the Atomic Energy Act allowed the State of Louisiana to perform inspections or other functions in offshore waters adjacent to Louisiana on behalf of the NRC. This reference is located in the reciprocity regulations in 10 CFR 150.20. Under section 150.20(c), certain general licensees are not required to file with the NRC if the licensee provides timely notification of its offshore activities to the Agreement State that issued the specific license, and that State is listed in 150.20(d) as agreeing to perform inspections for NRC under a 274i agreement. Louisiana is the only Agreement State listed in the regulation. This action responds to a request from the Governor of Louisiana to terminate the agreement. The NRC agreed that the 274i inspection agreement is no longer needed and should be terminated. Therefore, the NRC is revising the regulations by deleting 150.20 (c) and (d) in their entirety. In the event NRC enters into a 274i inspection agreement with an Agreement State in the future, the provisions of 150.20 (c) and (d), which were promulgated following notice and comment rulemaking, will be reinstated via direct final rulemaking. This action does not constitute the establishment of a standard that establishes generally-applicable requirements.

The NRC has determined that this final rule is the type of action described in categorical exclusion 10 CFR 51.22(c)(2). Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this final rule.

This final rule does not contain a new or amended information collection requirement subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501et seq.). Existing requirements were approved by the Office of Management and Budget, Approval Number 3150-0032.

The NRC may not conduct or sponsor, and a person is not required to respond to, collection of information unless it displays a currently valid OMB control number.

These minor amendments impose no new restrictions or requirements, and therefore, have no significant impact. Accordingly, a regulatory analysis is considered not necessary and has not been prepared.

As required by the Regulatory Flexibility Act (5 U.S.C. 605(b)), the Commission certifies that this rule will not have a significant economic impact on a substantial number of small entities. This administrative rule is being revised to remove the reference to an inspection agreement, referred to as the 274i Agreement, with the State of Louisiana. The inspection agreement entered into pursuant to section 274i of the Atomic Energy Act allowed the State of Louisiana to perform inspections or other functions in offshore waters adjacent to Louisiana on behalf of the NRC. This reference is located in the reciprocity regulations in 10 CFR 150.20. Under section 150.20(c), certain general licensees are not required to file with the NRC if the licensee provides timely notification of its offshore activities to the Agreement State that issued the specific license, and that State is listed in 150.20(d) as agreeing to perform inspections for NRC under a 274i agreement. Louisiana is the only Agreement State listed in the regulation. This action responds to a request from the Governor of Louisiana to terminate the agreement. The NRC agreed that the 274i inspection agreement is no longer needed and should be terminated. Therefore, the NRC is revising the regulations by deleting 150.20(c) and (d) in their entirety. In the event NRC enters into a 274i inspection agreement with an Agreement State in the future, the provisions of 150.20(c) and (d), which were promulgated following notice and comment rulemaking, will be reinstated via direct final rulemaking.

The NRC has determined that the backfit rule does not apply to this final rule because this amendment does not involve any provisions that would impose backfits as defined in 10 CFR Chapter 1. Therefore, a backfit analysis is not required for this final rule.

In accordance with the Small Business Regulatory Enforcement Fairness Act of 1996, the NRC has determined that this action is not a major rule and has verified this determination with the Office of Information and Regulatory Affairs, Office of Management and Budget.

On January 10, 2001, the President announced significant changes to U.S. export control policy for HPCs. The new policy continues the Administration's commitment, as announced on July 1, 1999, to review and update its HPC policy every six months in order to reflect rapid advancements in computer hardware, as well as identify any risk posed by HPC exports to certain end-users and countries. This policy strengthens America's high tech competitiveness, while maintaining export controls to protect U.S. national security.

The Administration, in consultation with the national security community and industry, has determined that additional adjustments are warranted. Effective immediately, all countries in Computer Tier 2 have been moved to Computer Tier 1. Computer Tier 2 has been deleted. Those countries formerly in Computer Tier 2 do not pose proliferation or security threats to the United States.

This rule implements the Administration's decision to increase License Exception CTP eligibility for HPC exports to countries in Computer Tier 3 by raising the CTP level to 85,000 MTOPS, to reflect the widespread availability of computers, including high performance computing capability attained by clustering numerous lower level personal computers together.

Effective March 20, 2001, this rule raises the advance notification requirement level for HPC exports to Computer Tier 3 countries from 28,000 to 85,000 MTOPS. As required by the NDAA, changes in the advance notification level for HPC exports to Tier 3 destinations are only effective 60 days following the President's submission of a report to Congress. In addition, this rule revises the support documentation requirements for computers exported to the People's Republic of China.

This rule removes Lithuania from Computer Tier 3 and places it in Computer Tier 1. However, due to the requirements in the 1998 National Defense Authorization Act (NDAA), removing Lithuania from Computer Tier 3 is not effective until 120 days after the Congress receives a report justifying such a removal.

This rule revises the Export Administration Regulations by modifying computer exports under License Exception CTP, as follows:

1. Moving all Computer Tier 2 countries to Computer Tier 1;

2. Raising the CTP limit for computers eligible for License Exception CTP for exports and reexports to Computer Tier 3 destinations from “28,000 MTOPS” to “85,000 MTOPS”;

3. Moving Lithuania to Tier 1 as of May 19, 2001;

4. Revising the CTP range for which NDAA notification is required for computers exported or reexported to Computer Tier 3 countries;

5. Revising the CTP level of computers for which PRC End-User Certificates are required as support documentation for export under License Exception CTP; and

6. Revising the CTP level of the computers that require post shipment verification reports for exports to Computer Tier 3 countries.

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

2. Notwithstanding any other provision of law, no person is required to respond to nor 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 current valid OMB Control Number. This regulation involves collections previously approved by the Office of Management and Budget under control numbers 0694-0088, “Multi-PurposeApplication,” which carries a burden hour estimate of 45 minutes per manual submission and 40 minutes per electronic submission. Miscellaneous and recordkeeping activities account for 12 minutes per submission. Information is also collected under OMB control number 0694-0107, “National Defense Authorization Act,” Advance Notifications and Post-ShipmentVerification Reports, which carries a burden hour estimate of 15 minutes per report. This rule also involves collections of information under OMB control number 0694-0073, “Export Controls of High Performance Computers” and OMB control number 0694-0093, “Import Certificates and End-User Certificates.”

3. This rule does not contain policies with Federalism implications as thatterm is defined in Executive Order 13132.

4. The provisions of the Administrative Procedure Act requiring notice of proposed rule making, 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 UnitedStates (see 5 U.S.C. 553(a)(1)). Further, no other law requires that a notice of proposed rule making and an opportunity for public comment be given for this rule. Because a notice of proposed rule making and opportunities for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the RegulatoryFlexibility Act, 5 U.S.C. 601et seq., are inapplicable.

Therefore, this regulation is issued in final form. Although there is no formal comment period, public comments on this regulation are welcome on a continuing basis. Comments should be submitted to Office of Exporter Services, Bureau of Export Administration, Department of Commerce, P.O. Box 273, Washington, DC 20044.

(B)Beginning on February 26, 2001 but prior to March 20, 2001, advanced notification is required for export and reexport of computers with a CTP greater than 28,000 MTOPS, but less than or equal to 85,000 MTOPS to Computer Tier 3 destinations. You must also provide a notice using this procedure prior to exporting or reexporting items that you know will be used to enhance the CTP of a previously exported or reexported computer beyond 28,000 MTOPS, but less than or equal to 85,000 MTOPS.

(ii)Action by BXA. Within 24 hours of the registration of the NDAA notice, BXA will refer the notice for interagency review. Registration is defined as the point at which the notice is entered into BXA's electronic system.

(iii)Review by other departments or agencies. The Departments of Defense, Energy, and State have the authority to review the NDAA notice. Objections by any department or agency must be received by the Secretary of Commerce within nine days of the referral. Unlike the provisions described in § 750.4(b) of the EAR, there are no provisions for stopping the processing time of the NDAA notice. If, within 10 days after the date of registration, any reviewing agency provides a written objection to the export or reexport of a computer, License Exception CTP may not be used. In such cases, you will be notified that a license is required for the export or reexport. The NDAA notice will then be processed by BXA as a license application in accordance to the provisions described in § 750.4 of the EAR, and the licensing policies set forth in the Export Administration Regulations. Its NDAA notice number will be changed to a license application number. BXA may at this time request additional information to properly review the license application. If BXA confirms that no objection has been raised within the 10-day period (as described in paragraph (d)(5)(iv) of this section), you may proceed with the transaction on the eleventh day following date of registration. (Note that the fact that you have been advised to proceed with the transaction does not exempt you from other licensing requirements under the EAR, such as those based on knowledge of a prohibited end-use or end-user as referenced in general prohibition five (part 736 of the EAR) and set forth in part 744 of the EAR.)

(iv)Status of pending advance notification requests. You must contact BXA's System for Tracking Export License Applications (“STELA”) at (202) 482-2752. (See § 750.5 of the EAR for procedures to access information on STELA.) STELA will provide the date of registration of the NDAA notice. If no departments or agencies raise objections within the 10-day period, STELA will provide you on the eleventh day following date of registration with confirmation that no objections have been raised and you may proceed with the transaction. BXA will subsequently issue written confirmation to you. If a license is required, STELA will notify you that an objection has been raised and a license is required. The NDAA notice will be processed as a license application. In addition, BXA may provide notice of an objection by telephone, fax, courier service, or other means.

(v)Post-shipment verification. This section outlines special post-shipment reporting requirements for exporters of certain computers to destinations in Computer Tier 3. Post-shipment reports must be submitted in accordance with the provisions of this paragraph (d)(5)(v), and all relevant records of such exports must be kept in accordance with part 762 of the EAR.

(A) Exporters must file post-shipment reports for computer exports, as well as exports of items used to enhance previously exported or reexported computers, according to the following schedule:

(1) For exports occurring prior to February 26, 2001, where the CTP is greater than 12,500 MTOPS; and

(2) For exports on or after February 26, 2001, but prior to March 20, 2001, where the CTP is greater than 28,000 MTOPS.

(B)Information that must be included in each post-shipment report. No later than the last day of the month following the month in which the export takes place, the exporter must submit the following information to BXA at the address listed in paragraph (d)(5)(v)(C) of this section:

(1) Exporter name, address, and telephone number;

(2) NDAA notification number;

(3) Date of export;

(4) End-user name, point of contact, address, telephone number;

(5) Carrier;

(6) Air waybill or bill of lading number;

(7) Commodity description, quantities—listed by model numbers, serial numbers, and CTP level in MTOPS; and

(8) Certification line for exporters to sign and date. The exporter must certify that the information contained in the report is accurate to the best of his or her knowledge.

(C)Mailing address. A copy of the post-shipment report[s] required under paragraph (d)(5)(v) of this section shall be delivered to one of the following addresses. Note that BXA will not accept reports sent C.O.D.

(e)Restrictions. (1)Access by certain foreign nationals. Computers eligible for License Exception CTP may not be accessed either physically or computationally by nationals of Cuba, Iran, Iraq, Libya, North Korea, Sudan or Syria, except commercial consignees described in Supplement No. 3 to part 742 of the EAR are prohibited only from giving such nationals user-accessible programmability.

(2)Reexport and retransfers. Computers eligible for License Exception CTP may not be reexported/retransferred without prior authorization from BXA i.e., a license, a permissive reexport, another License Exception, or “No License Required”. This restriction must be conveyed to the consignee, via the Destination Control Statement, see § 758.6 of the EAR. Additionally, the end-use and end-user restrictions in paragraph (d)(3) of this section must be conveyed to any consignee in Computer Tier 3.

(f)Reporting requirements.In addition to the reporting requirements set forth in paragraph (d) of this section, see § 743.1 of the EAR for additional reporting requirements of certain items under License Exception CTP.

We, FDA, are putting in place a comprehensive new system of regulation for human cells, tissues, and cellular and tissue-based products. The goal of the new approach is to improve protection of the public health without imposing unnecessary restrictions on research, development, or the availability of new products. Under the new system, the regulation of different types of human cells, tissues, and cellular and tissue-based products will be commensurate with the public health risks presented, enabling us to use our resources more effectively. Consolidating the regulation of human cells, tissues, and cellular and tissue-based products into one regulatory program is expected to lead to increased consistency and greater efficiency. Together, these planned improvements will increase the safety of human cells,tissues, and cellular and tissue-based products, and public confidence in their safety, while encouraging the development of new products.

In 1997, we announced our regulatory plans for human cells, tissues, and cellular and tissue-based products in two documents:

• “A Proposed Approach to the Regulation of Cellular and Tissue-Based Products” (62 FR 9721, March 4, 1997) and

• “Reinventing the Regulation of Human Tissue” (Ref. 1).

Since 1997, we have published three proposed rules to implement the proposed approach. In 1998, as a first step toward accomplishing these goals, we published the proposed rule, “Establishment Registration and Listing for Manufacturers of Human Cellular and Tissue-Based Products” (63 FR 26744, May 14, 1998) (the “registration proposed rule”). That rule proposed to require cell and tissue establishments to register with us and submit a list of their human cellular and tissue-based products. We also proposed modifications to current registration and listing requirements for drugs and devices under which cell and tissue establishments already regulated under the Federal Food, Drug, and Cosmetic Act (the act) and/or section 351 of the PHS Act (42 U.S.C 262) would register and list following the new procedures.

In addition to the registration proposed rule, we published two more proposed rules:

• Suitability Determination for Donors of Human Cellular and Tissue-Based Products (64 FR 52696, September 30, 1999) (the “donor-suitability proposed rule”); and

• Current Good Tissue Practice for Manufacturers of Human Cellular and Tissue-Based Products; Inspection and Enforcement (66 FR 1508, January 8, 2000) (the “GTP proposed rule”).

In the three proposed rules, we used the term “human cellular and tissue-based products.” In this final rule, we have changed the term to “human cells, tissues, and cellular and tissue-based products” (abbreviated “HCT/P's”). This change in terminology is a clarification and does not affect the scope of the definition, which continues to encompass an array of articles containing or consisting of human cells or tissues, and intended for implantation, transplantation, infusion, or transfer into human recipients, including investigational products. The definition of “human cells, tissues, or cellular or tissue-based product” is intended to cover HCT/P's at all stages of their manufacture, from recovery through distribution. Some examples of HCT/P's include skin, tendons, bone, heart valves, corneas, hematopoietic stem cells, manipulated autologous chondrocytes, epithelial cells on a synthetic matrix, and semen or other reproductive tissue.

We had intended to finalize the registration proposed rule with the two other rules that would make up part 1271 in its entirety, and to implement all three rules together. However, we are now making the registration rule final, with staggered effective dates, before finalizing the two remaining portions of part 1271. We are taking this action because of recent concerns raised about the safety of tissue, which have led us to believe that accelerating the collection of basic information about the rapidly growing tissue industry is vital. This medical sector has grown rapidly, with a need for clearer standards and improved accountability. The Department of Health and Human Services met in mid-2000 with representatives of key tissue-related organizations, who supported finalization of this regulation as quickly as possible, instead of awaiting simultaneous publication with the other tissue regulations. For these reasons, we are going to begin collecting registration and listing information, while continuing to develop the remainder of the final rules that will complete part 1271, and we have changed the effective date of this rule from the proposed 180 days to 75 days after the date of publication in theFederal Register. As part of completing the rulemaking for part 1271, we would make any necessary conforming amendments to this regulation to make it consistent with any changes made in the remainder of the rulemaking process, and we would revoke part 1270.

Establishments that engage in the recovery, screening, testing, processing, storage, or distribution of human tissue intended for transplantation currently regulated under section 361 of the PHS Act (42 U.S.C. 264) and the regulations in part 1270 (21 CFR part 1270) (“Human Tissue Intended for Transplantation”) will be required to begin registering with the agency and listing their HCT/P's within 30 days after the effective date of this final rule. The effective date for all other human cells, tissues, and cellular and tissue-based products (as described in § 1271.3(d)(2)) is 2 years after publication, by which time we expect to have completed rulemaking for all the subparts of part 1271. (Some establishments that are not required to register and list until the second effective date have expressed a desire to submit registration and listing forms as soon as possible. In response, FDA is prepared to accept registration and listing forms submitted in advance of the second effective date. However, FDA is not soliciting this information.) Once the entire rulemaking is complete, the new regulatory approach would apply to a broad range of human cells, tissues, and cellular and tissue-based products, including reproductive cells and tissue; hematopoietic stem cells; and tissues and cells regulated as devices, drugs, and/or biological products.

Staggering the effective dates of this regulation permits us to begin collecting important registration and listing information soon from those establishments currently regulated under part 1270, while continuing to proceed through rulemaking to develop the remainder of part 1271. We believe that this action may prevent an unintentional gap in the regulation of certain currently regulated HCT/P's, permit an orderly implementation process, and avoid duplicative information collection. If we instead implemented the regulation immediately for all HCT/P's, this action could have the effect of shifting the regulation of certain products (e.g., HCT/P's currently regulated as devicesthat meet the criteria set out in § 1271.10 for regulation solely under section 361 of the PHS Act) into the new regulatory system before standards and enforcement provisions are in place. Staggering the effective dates also helps permit an orderly implementation process. Establishments that manufacture cells and tissues that will be regulated for the first time under new part 1271 may require more time than those currently regulated to implement the provisions of this final rule. However, we also recognize that unanticipated delays in completing the rulemaking for the remainder of part 1271 could occur. Should the rulemaking proceedings be delayed past the 2-year timeframe, we will consider whether to maintain the 2-year effective date for the HCT/P's described in § 1271.3(d)(2) or whether to extend that date for some or all of those HCT/P's.

We are issuing this final rule under the authority of section 361 of the PHS Act. Under section 361 of the PHS Act, we may make and enforce regulations necessary to prevent the introduction, transmission, or spread of communicable diseases between the States or from foreign countries into the States. (See sec. 1, Reorg. Plan No. 3 of 1966 at 42 U.S.C. 202 for delegation of section 361 of the PHS Act authority from the Surgeon General to the Secretary, Health and Human Services; see 21 CFR 5.10(a)(4) for delegation from the Secretary to FDA.) Intrastate transactions may also be regulated under section 361 of the PHS Act. (SeeLouisianav.Mathews,427 F. Supp. 174, 176 (E.D. La. 1977).)

HCT/P's are derivatives of the human body and thus pose a potential risk of transmitting infectious disease. We have determined that some HCT/P's may be effectively regulated solely by controlling the infectious disease risks they present. The regulation now being finalized forms the foundation for a regulatory program that will further the goal of preventing the transmission of communicable disease. To begin implementing this regulatory program, we are publishing the registration final rule, with staggered effective dates so that those HCT/P establishments not currently subject to regulation under section 361 of the PHS Act will have adequate preparation time and FDA can continue working towards finalizing the remainder of the program.

For this regulatory system to be effective in preventing the spread of disease, we must obtain basic information about the human cell and tissue industry and its HCT/P's. The information to be submitted in compliance with the registration and listing requirements in subpart B will provide baseline data on establishments that will be subject to part 1271. This information from the registration rule will assist us in reacting swiftly to newly discovered or understood risks by alerting members of the industry to our concerns and, when appropriate, by conducting establishment inspections. Without this information, we would not be able to effectively monitor compliance with the proposed donor-suitability, GTP, and other regulations that make up the rest of the regulatory program.

Authority for enforcement of section 361 of the PHS Act is provided by section 368 of the PHS Act (42 U.S.C. 271). Under section 368(a) of the PHS Act, any person who violates a regulation prescribed under section 361 of the PHS Act may be punished by imprisonment for up to 1 year. Individuals may also be punished for violating such a regulation by a fine of up to $100,000 if death has not resulted from the violation or up to $250,000 if death has resulted (18 U.S.C. 3559 and 3571(c)). In addition, Federal District Courts have jurisdiction to enjoin individuals and organizations from violating regulations implementing section 361 of the PHS Act. The regulations that we have proposed specific to enforcement appear in the GTP proposed rule.

HCT/P's that do not meet FDA's criteria set forth in part 1271 for regulation solely under section 361 of the PHS Act are regulated as drugs, devices, and/or biological products under the act and/or section 351 of the PHS Act, and their manufacturers are required to register with the agency under section 510 of the act (21 U.S.C. 360). Regulations implementing section 510 of the act are found in parts 207 and 807 (21 CFR parts 207 and 807), among other parts. In order to consolidate our data base on the cell and tissue industry and thus to improve our oversight functions, we are amending parts 207 and 807 to require registering establishments to follow the procedures set out in part 1271; these amendments are effective in 2 years, when we project the remaining two proposed tissue rules will be ready for implementation. Section 510 of the act remains the authority for the substantive registration requirement for products subject to parts 207 and 807. Because harmonizing the registration and listing procedures applicable to the various HCT/P's is intended to further the goal of preventing the spread of communicable disease, we are relying on the additional authority of section 361 of the PHS Act for the proposed amendments to parts 207 and 807.

On June 1, 1998, President Clinton directed Federal agencies to begin using “plain language” in regulations and other documents. The goal of the plain language initiative is to publish government documents that are easier to understand.

In response to this initiative, we have written the registration regulation in plain language. We have

• Written the regulation in question-and-answer format,

• Reorganized some regulatory sections for greater clarity, and

• Followed other plain-language conventions, such as using “must” instead of “shall.”

When final, new part 1271 will be made up of six subparts. This final regulation contains subpart A (general provisions pertaining to the scope and applicability of part 1271; definitions); and subpart B (registration and listing procedures). The donor-suitability proposed rule contains subpart C of part 1271; and the GTP proposed rule contains subparts D, E, and F.

Section 1271.10, in subpart A, sets out the criteria that form the foundation of our tiered, risk-based approach to regulating HCT/P's. HCT/P's that meet these criteria are subject only to regulation under section 361 of the PHS Act. When all the proposed rules that will make up part 1271 become effective, these HCT/P's would be subject to the regulations in part 1271, and no premarket submissions would be required. (We sometimes refer to these HCT/P's as “361 HCT/P's.” This term replaces “section 361 products,” which was used in the registration proposed rule.) HCT/P's that do not meet the criteria for regulation as 361 HCT/P's will be regulated as drugs, devices, and/or biological products.

In September 1999, in the donor-suitability proposed rule, we modified proposed §§ 1271.1, 1271.3(e), 1271.10, and 1271.20 as they appeared in the registration proposed rule, and we added new § 1271.15. We made some of these changes to clarify our meaning.We made other changes so that the provisions on scope and applicability contained in subpart A would apply not only to the registration procedures in subpart B but more generally to the rest of the requirements in part 1271. These changes obviated the need for the addition, in later rulemaking, of new sections dealing with scope and applicability and were consistent with our original regulatory intent, as set out in the proposed approach.

We received comments on the registration proposed rule, and we received additional comments on subparts A and B of part 1271 in response to the donor-suitability proposed rule. To the extent possible we address these comments in this final rule; however, we recognize that additional discussion may be necessary as issues arise in the remaining rules that will makeup part 1271.

In order to accomplish the goal of staggering the effective dates of the registration and listing regulation for different types of HCT/P's, we have divided the definition of “HCT/P” in § 1271.3(d) into two paragraphs. Paragraph (d)(1) of § 1271.3 identifies the subgroup of human tissues defined in part 1270. Paragraph (d)(2) provides the broader definition of HCT/P based on proposed § 1271.3(e). The definition of the subgroup in paragraph (d)(1) incorporates the definition of “human tissue” set out in § 1270.3(j) and thus identifies those tissues that are currently regulated under part 1270, including, for example, such tissues as corneas, bone, and skin. This represents the subgroup of human cells, tissues, and cellular and tissue-based products for which this final rule will first go into effect. Paragraph (d)(2) of § 1271.3 provides the broader definition of HCT/P and includes those HCT/P's described in paragraph (d)(1) as well as such additional HCT/P's as reproductive cells and tissues, hematopoietic stem cells, and cells and tissues currently regulated as drugs, devices, and/or biological products. The definition in paragraph (d)(2) of § 1271.3 will eventually replace paragraph (d)(1), as described below.

The effective date of § 1271.3(d)(1) is 75 days after the publication of this rule. The entire definition of HCT/P in § 1271.3(d)(2) is effective 2 years after the publication of this final rule in theFederal Register. The effect of this action is to make this final regulation applicable first to those HCT/P's currently regulated under part 1270, and later to the complete range of HCT/P's defined in § 1271.3(d)(2). When all of the regulations that make up part 1271 are final and have superseded part 1270, we will revoke § 1271(d)(1) and renumber (d)(2) as a conforming amendment. At that time the new regulatory framework contained in part 1271 will be instituted as a whole.

This final rule contains other changes from the proposed rule. Among these changes are the following:

• We have broadened “family-related allogeneic use,” as used in proposed § 1271.10, to include first-degree and second-degree blood relatives.

• We have modified the definition of “homologous use.”

• We have replaced the phrase “combined with or modified by the addition of a drug or a device” in § 1271.10 with new language.

• We have deleted the phrase “pending scheduled” from the exception in § 1271.15(d) for establishments that only receive or store HCT/P's.

• We have added an exception for establishments that only recovers reproductive cells or tissues for immediate transfer into a sexually intimate partner of the cell or tissue donor. (§ 1271.15(e)).

We received 28 comments on the proposed rule as it was published in 1998. We received over 400 comments on the donor-suitability proposed rule; many of these raised issues related to subparts A and B of part 1271.

(Comment 1) Many comments expressed general approval of the rule. One comment stated that the proposed rule addresses the public health needs for regulation in this area, helping to assure an adequate supply of safe and functional products without imposing unnecessary regulatory burdens or inhibitions to progress. Another comment, in support of registration, noted the importance of establishing a known data base of the industry. Another comment stated that creation of an official inventory of establishments subject to FDA regulation is important to determine the actual level of compliance and to develop reliable estimates of the cost of enforcement.

We acknowledge and appreciate these supportive comments. The new regulation on registration and listing will increase our knowledge and understanding of the HCT/P industry and will enable us to monitor industry developments and communicate with industry members. This final rule will enhance our compliance efforts in protecting the public from the spread of communicable diseases, when the remaining tissue regulations become effective.

(Comment 2) Some comments objected to the development of a comprehensive regulatory system. One of these comments objected that the approach is based on potential, not actual, concerns, is more applicable to new products than to such tissues as corneal tissue offered for transplant, and is unnecessary in light of quality assurance programs established by professional organizations.

We believe that this new regulatory program for HCT/P's, when it is in place, will be superior to the confusing patchwork of requirements that it will replace. We have created a simple registration system with uniform requirements for all HCT/P's and a one-page registration and listing form. The procedures in subpart B of part 1271 will be followed by all HCT/P establishments, along with those in proposed subparts C and D of part 1271. Together, they are intended to establish a communicable disease prevention program necessary to protect the public health.

In developing and issuing the registration rule, we have recognized that, because all HCT/P's are derived from the human body, they share certain common characteristics, among other things the ability to transmit infectious diseases. Thus, basic requirements such as registration, communicable disease screening and testing, and GTP's may reasonably be applied to all HCT/P's. However, we have also recognized that within the larger group of HCT/P's, certain products may present a greater degree of risk, and that these HCT/P's should be subject to additional premarket requirements.

With this tiered, risk-based approach, we will be putting in place a set of baseline requirements for all HCT/P's, while recognizing that different HCT/P's may present different concerns. As the comment points out, some concerns may be more applicable to new products than to such tissues as corneal tissue offered for transplant. We have identified criteria corresponding to the types of reduced risks that certain products may present. HCT/P's that do not meet all of these criteria will be regulated under the act and/or section 351 of the PHS Act (subject to subsequent effective dates). On the other hand, most HCT/P's, including cadaveric corneas, will be regulated solely under the communicable disease authority of section 361 of the PHS Actand the regulations that will make up part 1271.

When implemented, the registration, donor-suitability, and GTP regulations are intended to reduce the risk of transmission of communicable disease by HCT/P's. The donor-suitability proposed rule incorporates and expands upon many of the requirements for human tissue intended for transplantation in part 1270. The part 1270 requirements were put into place to prevent the transmission of human immunodeficiency virus and hepatitis through the transplantation of tissue from domestic and foreign sources, “Human Tissue Intended for Transplantation,” final rule (62 FR 40429, July 29, 1997).

Registration and listing are crucial components of a regulatory program to increase the safety of HCT/P's. Indeed, the United States General Accounting Office (GAO) has urged the agency to put a program in place in response to the potential transmission of infectious diseases from cell and tissue donors to recipients, GAO, “Human Tissue Banks, FDA Taking Steps to Improve Safety, but Some Concerns Remain” (December 1997).

We recognize the importance of voluntary quality assurance programs, and we respect the efforts and accomplishments of professional organizations. We have considered the efforts of professional organizations, and we will continue to do so as we implement the new regulations. However, not all HCT/P establishments belong to or are accredited by such groups, and voluntary programs are not enforceable.

(Comment 3) Another comment stated that we should finalize the registration rule as soon as possible, without waiting for the other rules.

We agree that there are benefits to publishing the registration final rule in advance of the other final rules, and we are doing so. However, as discussed earlier in this document, we are staggering the regulation's effective dates. Under this approach, we will be able to promptly begin receiving registration and listing information for HCT/P's currently subject to part 1270.

(Comment 4) One comment asserted that we should identify those tissues and entities subject to part 1271 that are not currently subject to part 1270, and initiate rulemaking to broaden the coverage of the substantive regulations codified in part 1270.

Rather than broaden the scope of the regulations in part 1270, we have earlier noted that we intend to replace part 1270 with the new regulations in part 1271 (donor-suitability proposed rule, 64 FR 52697). Revocation of part 1270 will occur at the time the GTP final rule becomes effective. We have earlier made clear (64 FR 52697 to 52698) that the new rules in part 1271, when complete, will be broader in scope than those in part 1270, will impose additional testing and screening requirements, and will cover more establishments and HCT/P's (e.g., hematopoietic stem cells, reproductive tissue). Thus, it is not necessary to initiate rulemaking to broaden the coverage of the regulations in part 1270.

(Comment 5) One comment asked the agency to clarify if it intends to require registered organizations to pass along any information the agency disseminates. Another comment counseled against depending on a secondary dissemination system, from those required to register to those with whom they interact who are not required to register, to get educational information to all of the tissue community.

We are not imposing a specific information-dissemination requirement at this time. The only members of the tissue community who would be subject to the rules in part 1271 and who are not required to register are those individuals who recover cells or tissue under contract, agreement, or other arrangement with a registered establishment, but who perform no other manufacturing step (except for sending the cells or tissue to the registered establishment). These individuals would be subject to the other requirements that will be contained in part 1271, when complete, and the establishments for whom they perform their services would be responsible for their work. (This exception is discussed in greater detail below.) Therefore, we believe that if we distribute information to registered establishments, we will be reaching the whole of the affected tissue community.

(Comment 6) One comment expressed concern that the proposed rule failed to identify the party ultimately responsible for the tissue or for the decisions required in the process of determining donor and tissue suitability.

We have addressed the question of responsibility in the GTP proposed rule.

(Comment 7) Several comments raised the issue of dispute resolution, particularly with respect to questions about homologous use and minimal manipulation. One of these comments urged us to develop and follow a process for resolving disputes in a prompt and efficient manner. One comment recommended that the Tissue Reference Group (TRG) serve as the forum for resolving any disagreements that arise with regard to the application of definitions.

We recognize that, as we implement this new regulation, there will be areas in which additional guidance may be desirable or interpretations may differ. To help answer questions about how a particular HCT/P will be regulated, the agency developed the TRG. If an establishment is not sure how its HCT/P may be regulated, it should contact the TRG.

The TRG provides a single reference point and makes recommendations to the Center Directors regarding regulation of specific HCT/P's, e.g., regulation solely under section 361 of the PHS Act or additionally under the act and/or section 351 of PHS Act. The TRG is composed of: (1) Three representatives from the Center for Biologics Evaluation and Research (CBER), including the product jurisdictional officer; (2) three representatives from the Center for Devices and Radiological Health (CDRH), including the product jurisdictional officer; and (3) a liaison from the agency's Office of the Chief Mediator and Ombudsman (OCMO), a nonvoting member. Other FDA staff attend the TRG meetings as needed to discuss issues related to products in their area of expertise. Further information about the TRG can be found on CBER's website at http://www.fda.gov/cber/tissue/trg.htm.

In some cases, a product regulated under the act will fall under the jurisdiction of more than one agency component, e.g., a combination device and biological product. Where the agency component with primary jurisdiction is unclear or in dispute, a sponsor may request designation from the product jurisdiction officer, who is the FDA Ombudsman, as detailed in 21 CFR part 3. In addition, the OCMO can assist in resolving disputes with the agency that may arise from decisions made by the Center Directors regarding the regulation of HCT/P's, after consideration of TRG recommendations, as described above.

In addition, we recognize that further public discussion of how tissue regulation would be applied to certain categories of human cells, tissues, and cellular and tissue-based products may be warranted due to the complexity or sensitivity of the issues. For example, we held a public meeting on August 2, 2000, to discuss how proposed definitions for “minimally manipulated” and “homologous use” should be applied to human bone allograft products (65 FR 44485, July 18, 2000). We intend to provide further opportunities for public discussion ofhow the regulatory approach should be applied to other HCT/P's. We anticipate that there may be additional needs for discussion through public meetings, public hearings, or guidance as we implement the new regulations.

(Comment 8) One comment asserted that we have published no document describing the TRG's current composition, authoritative status, procedures, whether its decisions are or will be made public, or how industry is expected to communicate with the group. The comment also suggested that we should consider making the TRG's policy decisions routinely available to the public.

We appreciate these comments and are committed to working on the issues raised. Among other things, the TRG is looking into mechanisms for increasing the transparency of its functions, while still protecting confidential information. Information about the TRG can be found on CBER's website at http://www.fda.gov/cber/tissue/trg.htm.

(Comment 9) Several comments asserted that we are proposing to regulate the practice of medicine, especially with respect to reproductive tissue and hematopoietic stem cells.

We disagree with this comment. This final rule sets out registration and listing requirements for establishments that recover, process, store, label, package, or distribute HCT/P's, or screen or test cell and tissue donors. HCT/P's, including hematopoietic stem cells and reproductive tissues, fall within our jurisdiction. Some HCT/P's will be regulated under the act and/or the PHS Act, while other HCT/P's will be effectively regulated solely by regulations issued under our authority to prevent the spread of communicable disease. We are not attempting to govern practitioners' use of HCT/P's, but rather to ensure that HCT/P's that would be used by practitioners in their treatment of patients are in compliance with applicable regulations, including regulations designed to prevent the transmission or spread of communicable disease.

(Comment 10) We received several comments on our proposed regulation of hematopoietic stem cells. One comment supported the proposal that all establishments involved with hematopoietic stem cell therapy register with FDA. Two comments asserted that the proposed regulation would jeopardize patient treatment, impede the development of new therapies, and increase the costs of treatment. One comment asserted that we lack the legal authority to regulate intrastate hematopoietic stem cell transplants. Another comment argued that clinical research involving the use of blood or bone marrow transplantation for treatment of human diseases, but not involving an investigational drug or device, should not require an investigational new drug application or investigational device exemption. This comment further requested the development of simplified procedures for evaluating those investigational devices or cellular biologic products that are more than minimally manipulated. Two comments argued that there is no need for FDA regulation as industry standards suffice and FDA requirements would be duplicative.

We believe that it is necessary to bring the regulation of hematopoietic stem cells in line with the regulation of other HCT/P's, and that we possess the legal authority to take this action. Like other HCT/P's, hematopoietic stem cells may transmit communicable diseases; thus, the basic communicable disease prevention requirements that will be contained in part 1271, including these registration and listing requirements, are as relevant to these cells as to any other HCT/P's. Intrastate activities involving hematopoietic stem cells, as well as other HCT/P's, can be regulated to prevent the interstate spread of communicable diseases under section 361 of the PHS Act. (SeeLouisianav.Mathews, 427 F. Supp. 174, 176 (E.D. La. 1977).) The GAO has cited the lack of regulation of hematopoietic stem cells as a significant gap in our oversight, and urged us to proceed with implementing new regulations that would cover hematopoietic stem cells. We are now closing that gap.

Although we applaud the development of industry standards noted by the comments received, such standards are not followed by all HCT/P establishments. Moreover, voluntary standards differ significantly from enforceable regulations. We cannot take enforcement actions to ensure compliance with voluntary industry standards and thus would be limited in our ability to protect the public health if we relied on such standards alone. Establishments that comply with industry standards, however, should have little trouble adapting their practices to the new requirements. Thus, any additional burden should be minimal.

Rather than require data submission from each hematopoietic stem cell establishment, we have considered the development of standards for certain stem cell products. On January 20, 1998 (63 FR 2985), we published a notice in theFederal Registerrequesting the submission of proposed standards and supporting data relating to certain stem cell products by January 20, 2000, entitled “Request for Proposed Standards for Unrelated Allogeneic Peripheral and Placental/Umbilical Cord Blood Hematopoietic Stem/Progenitor Cell Products.” Later, we extended the deadline for submitting data to July 17, 2000 (65 FR 20825, April 18, 2000).

(Comment 11) One comment generally agreed with our proposal to require registration for certain reproductive tissue, but requested several clarifications and exceptions. Several comments questioned the need for the regulation of reproductive cells and tissues, citing current oversight from professional organizations, other Federal agencies, and States. Comments opposed registration for programs involved in egg donation, egg retrieval, semen processing, semen evaluation, or in vitro fertilization (IVF) in assisted reproductive technologies. One comment asserted that a large number of medical practitioners who perform inseminations would not be included in this new regulation, lessening their effectiveness. Another comment asserted that programs that manufacture tissue culture products for the growth of oocytes and sperm for sale should be required to register, but IVF programs making culture medium for their own uses should be exempt.

We stand by our decision to extend regulatory requirements to reproductive cells and tissue. Currently, FDA does not have regulations in place to address the infectious disease risk of donating, processing, and storing reproductive cells and tissue. Because there has been no registration or listing requirement, we have not had accurate information about the industry. We agree with the GAO that extending regulation to reproductive cells and tissues will remedy a significant gap in oversight.

Although we recognize the value of professional efforts to self-regulate, and of regulatory efforts of other agencies and the States, we disagree that these piecemeal, often voluntary, efforts are adequate. Nor will the new regulations in part 1271 be duplicative. State regulation varies from State to State and does not consistently address our concerns about the transmission of communicable disease. The model certification program for embryo laboratories developed by the Centers for Disease Control and Prevention (CDC) is a voluntary program that States may or may not choose to adopt; its primary focus is not on preventing the transmission of communicable disease. No State has yet adopted CDC's model certification program. Membership in professional societies is voluntary.Moreover, many establishments do not report to the Society for Assisted Reproductive Technology. The Clinical Laboratories Improvement Amendment of 1988 (CLIA) covers clinical laboratory testing, including certain procedures performed in embryo laboratories; however, as discussed later in this document, CLIA certification is not equivalent to the requirements we are putting in place.

We disagree that establishments that only deal with egg donation, retrieval, semen processing, or IVF should be exempt from the new regulations. These activities are vital to the handling of reproductive tissues. Performing these activities appropriately in order to prevent cross-contamination and mix-ups requires proper recordkeeping, storage practices, and accountability. Moreover, registration of these establishments is consistent with agency practice in other areas; e.g., establishments where only blood donation or processing occurs are required to register.

As discussed later in this document, however, this final rule contains a new exception for certain reproductive tissue establishments that perform only certain limited activities that raise limited communicable disease concerns. Under the exception, an establishment that only recovers reproductive cells or tissue for immediate transfer into a sexually intimate partner of the cell or tissue donor is not required to comply with the requirements that will be contained in part 1271, including registration and listing.

With respect to the comment about tissue culture media, these products are not considered HCT/P's. Rather, embryo culture media and other such products are regulated as medical devices by FDA, and establishments that manufacture embryo culture media are subject to the device regulations.

(Comment 12) Several comments responded to our discussion of regulating dura mater and human heart valve allografts as 361 HCT/P's rather than as devices, if they meet the criteria in § 1271.10 (63 FR 26744 at 26747). Three comments supported the regulation of heart valves as 361 HCT/P's. One comment suggested that, to prevent a regulatory “open window,” the regulatory change should not take place until GTP requirements are effective or other steps are taken. One comment asked whether the transfer of heart valves would be reflected in a codified regulation. A fourth comment supported regulating dura mater as a 361 HCT/P and strongly suggested that “special controls” be included in the GTP requirements. No comments objected to regulating heart valve allografts and dura mater as 361 HCT/P's.

We agree that we should avoid an “open window” where possible. Therefore, we have staggered effective dates for this rule to prevent such an outcome. We do not intend to begin regulating human heart valve allografts and dura mater that meet the criteria in § 1271.10 as 361 HCT/P's until the donor-suitability and GTP components of part 1271 become effective, or other appropriate steps have been taken. The GTP proposed rule contains special requirements for dura mater intended to address the communicable disease concerns about that product. Because § 1271.10 contains the criteria for regulation of HCT/P's as 361 HCT/P's, and we are now reiterating our view that heart valves meeting those criteria will not be regulated as devices, we do not intend to issue a separate regulation to change regulatory authority on that specific point.

(Comment 13) One comment suggested that we consider voluntary accreditation and inspection programs in implementing our regulatory strategy. The comment further requested that we accord “deemed status” to certain accredited facilities.

We are exploring various options for inspections and compliance actions to enforce the new regulations. Among other ideas, we are looking into those suggested by this comment, including the legal issues raised. At present, we have in place a tiered inspection approach to enforce the regulations in part 1270 that takes into consideration such factors as professional accreditation. We intend to provide a more detailed discussion of our regulatory intentions after consideration of comments to the GTP proposed rule.

(Comment 14) One comment noted that tissue recovery is frequently performed by organ procurement organizations, and that the requirements with regard to the prevention of infectious disease transmission are appropriately much less stringent for organ donation than are comparable requirements for tissues. The comment asserted that exempting these organizations from regulation would immeasurably weaken the public health protection provided by this regulation.

An organ procurement organization that also recovers cells or tissues in addition to organs is not exempt from these regulations, and must register with the agency and follow all other regulations applicable to its actions with respect to HCT/P's. An organ procurement establishment is not required to submit a list of the vascularized human organs for transplantation that it recovers, because these organs are not covered by the definition of HCT/P (see § 1271.3(d)(2)(i)). However, such an organization must list with the agency any HCT/P's that fall within the scope of part 1271 that the organization recovers or otherwise manufactures.

We received comments on many of the proposed definitions in § 1271.3(a) through (h). We did not receive comments on the definitions of “autologous” and “transfer.” We address many of these comments below. Comments on the definitions of “homologous use” and “minimal manipulation” are addressed in section III.C of this document.

(Comment 15) The definition ofestablishmentin proposed § 1271.3(b) reads as follows:

Comments raised issues about the proposed exception in the last sentence of the definition. Some comments asserted that individuals or organizations engaged solely in procurement under contract should be required to register. One comment pointed to the critical role in the suitability assessment of a cell and tissue donor that such organizations play. Another comment asserted that registration and listing should be applied to those who screen donors and that procurement of tissue that is not done in an aseptic manner places tissue recipients at risk. One comment expressed confusion about the exception and suggested that “or under contract” should read “and under contract.” This comment further suggested that individuals and other legal entities engaged solely in procurement or recovery be required to register unless contracted for that activity to a registered establishment.

Three comments argued for an expanded exception. One comment urged us to clarify that the “undercontract to” language can apply to other contracting individuals, not just to contractors engaged in procurement or recovery (e.g., sales representatives who distribute HCT/P's). Two other comments requested clarification that clinical laboratories who perform testing are excluded from the registration and listing requirements.

We have rewritten the exception and moved it to § 1271.15(f). The relevant language now states:

We believe this new language addresses many of the comments' concerns. We have replaced “or under contract” with “and under contract, agreement, or other arrangement.” In addition, because “procurement” and “recovery” refer to the same action—the removal of cells or tissue from a donor—we have decided that it is redundant and possibly confusing to use both words. Instead, the exception now uses the term “recovery,” the same term used in the definition of “manufacture” in § 1271.3(e). Therefore, the exception only applies to those individuals engaged solely in recovery of HCT/P's and who are under contract, agreement, or other arrangement with a registered establishment. We believe this is an appropriate way of easing the regulatory burden on individuals while ensuring the protection of the public health.

This exception does not extend to an individual who does more than recover tissue and send it to the contracting establishment. (Thus, for example, an individual engaged in any aspect of donor screening is not covered by the exception and must register.) Further, an individual who meets the terms of the exception would be excepted only from registration and listing requirements and would be required to comply with all other requirements to be contained in part 1271.

We are not extending the exception to “other legal entities.” Only individuals are covered. Examples of such individuals not required to register might include certain medical examiners, morticians, or physicians who recover hematopoietic stem cells or tissues (e.g., corneas, cord blood). Laboratories that perform donor testing are not excluded from registration, listing, or other requirements in part 1271.

(Comment 16) We proposed to definefamily-related allogeneic usein proposed § 1271.3(c) as “the implantation, transplantation, infusion, or transfer of a human cellular or tissue-based product into a first-degree blood relative of the individual from whom cells or tissue comprising such product were removed.” Under § 1271.10(d), as proposed, HCT/P's with a systemic effect that are for family-related allogeneic use would be regulated under section 361 of the PHS Act (provided that the HCT/P meets all other criteria set out in § 1271.10). This limited exception from the requirement for investigational use exemptions and premarketing submissions was first proposed in the proposed approach (62 FR 9721). In the registration proposed rule, we specifically requested further comments on the issue (63 FR 26744 at 26750).

We received approximately 13 comments on our proposed definition of “family-related allogeneic use,” most from individuals and organizations involved in hematopoietic stem cell transplantation. One comment praised the proposed definition as clearer and more consistent than that used in the proposed approach, but cautioned that our terminology might create confusion. Other comments argued that we should expand the definition to more distantly related family members. Several comments suggested that the term include all ancestral relations, siblings, and collateral relations to the fourth degree by blood, marriage, or adoption. Another comment objected to distinguishing between family-related donors and other donors, stating that the same principles apply in both situations. This comment argued that the clinical use of unrelated versus related allogeneic transplants falls within the practice of medicine and should not be regulated by FDA.

We have decided to change the term from “family-related allogeneic use” to “allogeneic use in a first-degree or second-degree blood relative.” Parents, children, and siblings are considered first-degree relatives. Aunts, uncles, nieces, nephews, first cousins, grandparents, and grandchildren are second-degree relatives. Relations by adoption or marriage are not included. Because we are using the phrase “first-degree or second-degree blood relative” in its ordinary sense, the final regulation does not contain a definition of this phrase.

Our decision to broaden the scope of related donors to include second-degree blood relatives, rather than just first-degree, is based upon several factors. In the absence of a human leukocyte antigen (HLA) identical sibling, the search for donors in extended families is occurring now to a very limited degree, but is likely to increase with the continuing advances in deoxyribonucleic acid technology. The likelihood of finding a donor with a haplotype identical to that of the recipient is greater among blood-related individuals than among unrelated individuals. Indeed, statistical methods have been proposed to measure this probability (Refs. 2 and 3).

In addition, for certain ethnic groups, it is extremely difficult to find an appropriate unrelated donor. Success at finding a match among the extended family can be equal to or even greater than the chance of finding a match using a single sibling search, if the haplotype is a common one within the patient's ethnic population, and the family members are of the same ethnic origin.

Registry outcome data for some hematologic malignancies suggest that peripheral blood and bone marrow transplant recipients may have a better survival rate when transplanted with hematopoietic stem cells from related donors. One possible reason is that a related donor is likely to share identical haplotypes with the patient (the genotypic level), whereas an unrelated donor is matched at the phenotypic level. Also, family donors may be better matched for minor histocompatability loci for which testing is not routinely performed.

We initially proposed a more limited exception. Having reviewed the comments on this issue, we believe there is some scientific merit in expanding the exception to second-degree blood relatives. This change is consistent with our goal of keeping regulatory burden to a minimum. The same scientific justification does not exist for expanding the exception to relatives by marriage or adoption, and is weaker for blood relatives beyond the second degree. In addition, the exception in § 1271.10(a)(4)(ii)(b) for allogeneic use in a first-degree or second-degree blood relative does not extend to those situations where the HCT/P is more than minimally manipulated, is advertised, labeled or otherwise objectively intended by the manufacturer for a nonhomologous use, or is combined with a drug or device (except as described in § 1271.10(a)(3)).

(Comment 17) One of the comments on “family-related allogeneic use” asserted that, in the context of reproductive medicine, the notion of appropriate use of family-related materials must include the close blood relatives of either partner. Thiscomment proposed that those facilities collecting or using reproductive tissues from sexually intimate partners or close relatives should not be required to register.

Later in this document, we address the question of registration for reproductive tissue facilities. The change in terminology from “family-related allogeneic use” to “allogeneic use in first-degree or second-degree blood relatives” does not affect the registration of reproductive tissue establishments.

(Comment 18) Several comments objected to the word “product” in the termhuman cellular or tissue-based product, defined in proposed § 1271.3(e). These comments asserted that human cells and tissues are donations, not goods manufactured for sale. Some comments argued that the use of the word “product” might have legal implications; e.g., subjecting eye banks to inappropriate product liability litigation. Comments also noted that the word “product” is inconsistent with terms used in the tissue and eye banking field. We also received an objection to describing embryos and germ cells as “products.”

In choosing “human cellular or tissue-based product,” we were seeking a term that would describe everything that will be subject to the regulations in part 1271. We needed a term broad enough to cover both cells and tissues, and one that would include within its scope such diverse articles as unprocessed tissue, highly processed cells, and tissues that are combined with certain drugs or devices. Although we have considered removing the word “product” from the definition, we are concerned that another term (e.g., “human cells and tissues”) would not be understood to include many of the highly manufactured products to which the regulations apply, or might be misconstrued to apply only to the cell or tissue component of such a product. Moreover, the term “product” is consistent with the language of the statutes under which we operate; for example, blood (which is also routinely donated) is a “biological product” under section 351 of the PHS Act. We do not believe that the use of the word “product” will affect the manner in which state laws apply to HCT/P's; our experience with the regulation of blood and blood products supports this view.

We recognize, however, that conceptual difficulties may arise in calling certain cells or tissues “products.” Thus, as noted earlier in this document, we have expanded the term to “human cells, tissues, and cellular and tissue-based products,” abbreviated as “HCT/P's.” We have made appropriate substitutions throughout the regulation. The definition itself has not changed, and the scope of the term remains the same.

Proposed § 1271.3(e) has been redesignated as § 1271.3(d)(2).

(Comment 19) One comment stated that the proposed rule leaves vague peripheral blood lymphocytes that are not cultured or manipulated, but are used for their immunological effects for the treatment of disease. According to the comment, the definition in proposed § 1271.3(e)(2) (final§ 1271.3(d)(2)(ii)) implies that these cells are subject to regulation under 21 CFR part 607. The comment recommends that these cells be specifically included in this proposal and not be considered mature blood cells subject to regulation under other sections of title 21 of the CFR.

We believe that the commenter is addressing donor lymphocytes (leukocytes) for infusion (DLI), which are the lymphocyte-rich cellular fractions obtained by leukapheresis of the peripheral blood of donors of bone marrow or peripheral blood hematopoietic stem/progenitor cells. Many DLI products are not further manipulated. These minimally manipulated products are administered to select patients to elicit a graft-versus-leukemia effect and to treat other transplant-associated complications.

DLI, regardless of the level of manipulation, meet the definition of HCT/P in this rule. FDA intends to regulate all DLI as HCT/P's, rather than as traditional blood products.

(Comment 20) One comment on proposed § 1271.3(e) requested clarification that an extract would not fall under the definition of human cellular or tissue-based product. The comment noted that the words “any cell or tissue-based component of such a product” may imply that an extract could fall within the definition.

We do not consider extracts to be HCT/P's. When we revised the definition of human cellular or tissue-based product in the donor-suitability proposed rule (64 FR 52696 at 52719), we deleted the phrase “or any cell or tissue-based component of such a product.” Moreover, we listed “any secreted or extracted human products” as an exception to the definition of HCT/P in proposed § 1271.3(e)(3). These changes are codified in this rule at § 1271.3(d)(2)(iii).

(Comment 21) One comment on proposed § 1271.3(e)(4) objected to the exclusion of bone marrow from the definition of HCT/P, since all three sources of hematopoietic stem cells (cord, peripheral blood, bone marrow) have the same risk of infectious disease transmission.

Minimally manipulated bone marrow falls under the purview of the Health Resources and Services Administration (section 379 of the PHS Act (42 U.S.C. 274(k)). For this reason, we have excepted it from the definition of HCT/P's, and thus from the scope of this regulation issued under section 361 of the PHS Act authority.

The exception for bone marrow in final § 1271.3(d)(2)(iv) extends only to “minimally manipulated bone marrow for homologous use and not combined with a drug or a device (except for a sterilizing, preserving, or storage agent, if the addition of the agent does not raise new clinical safety concerns with respect to the bone marrow).” Bone marrow would meet the definition of an HCT/P if it is: More than minimally manipulated; advertised, labeled, or otherwise objectively intended by the manufacturer for a nonhomologous use, or combined with certain drugs or devices.

(Comment 22) In the proposed rule, we stated in proposed § 1271.3(f) that “manufacturemeans, but is not limited to, any or all steps in the recovery, screening, testing, processing, storage, labeling, packaging, or distribution of any human cellular or tissue-based product” (63 FR 26744 at 26754). Approximately 10 comments objected that the term “manufacture” is inappropriate. Some comments asserted that fertility clinics are not “manufacturers” of human tissue. Comments from the eye banks asserted that it is inaccurate to use the word “manufacture” with respect to corneal tissue; along with “product,” the term could raise legal issues (e.g., subjecting eye banks to inappropriate product liability litigation). Another comment asserted that tissue banks do not manufacture tissue, but rather process it.

We have considered substituting a different term for “manufacture,” but have been unable to find a satisfactory replacement. Most of the terms that we considered (e.g., produce, handle) were too limited in scope. Moreover, comments that objected to the term did not suggest alternatives. For these reasons, we continue to use the word “manufacture” as an umbrella term to capture the many different actions that HCT/P establishments might take in preparing HCT/P's for use. These steps may include, but are not limited to, recovery, screening, testing, processing, storage, labeling, packaging, and distribution. No comments disagreed with or objected to any of the actions listed in the definition of manufacture.Rather than list each of these activities repeatedly throughout this preamble and the regulation, we have decided to maintain the term “manufacture,” as defined in this rule (proposed § 1271.3(f) is codified at § 1271.3(e)).

(Comment 23) One comment onmanufacturequestioned the rationale for requiring testing establishments to register. Three comments asserted that testing laboratories should not be required to register because CLIA certification is sufficient. One comment asked if labs that test for other diseases or that perform bacterial cultures need to register.

The definition of “manufacture” is intended to cover all steps in the process of handling HCT/P's. Testing donors for communicable diseases is a critical step in this process and for that reason is included the definition of manufacture. The registration requirement for testing laboratories enables us to have a list of all parties involved in manufacturing activities.

Having a list of testing laboratories enables us to inspect laboratories to ensure that testing is performed in a correct manner according to test kit instructions. The CLIA certification referred to in the comments is important, and in fact we are requiring CLIA certification. However, because there are differences between inspections under CLIA and inspections carried out by FDA, CLIA certification alone is not adequate for our purposes. CLIA requirements address only a limited spectrum of laboratory testing and personnel requirements and do not focus on donor testing. Moreover, our experience with inspecting testing laboratories indicates that significant violations have been found. To exclude testing laboratories from the scope of this regulation would not be consistent with our goal of preventing the transmission of communicable diseases.

The registration requirement for testing laboratories extends to those laboratories that test donor specimens for communicable disease. Only laboratories that test for relevant communicable diseases as defined in the proposed donor-suitability rule are required to register. We have clarified the definition of “manufacture” to refer to “screening or testing of the cell or tissue donor” rather than to screening or testing of the cell or tissue. In the situation where communicable disease testing to determine donor suitability might be appropriately performed on the cells or tissues, rather than on the donor (as might be the situation with cord blood), such testing would be included within the meaning of donor testing.

(Comment 24) One comment noted that entities engaged only in labeling and packaging are not explicitly within the scope of part 1270, but are covered by this new rule.

Part 1271 covers more activities than part 1270.

(Comment 25) In the preamble to the proposed rule, we noted thatdistribution“includes any conveyance or shipment of human cellular or tissue-based product (including importation and exportation), whether or not such conveyance or shipment is entirely intrastate and whether or not possession of the human cellular or tissue-based product is taken” (63 FR 26750). We have proposed a codified definition of “distribution” in the GTP proposed rule.

For purposes of the regulations in part 1271 only, we have proposed in the GTP rule to define “distribute” to mean the conveyance or shipment of an HCT/P. In other contexts, FDA has defined “distribution” more broadly. Under the act, FDA has interpreted the term “distribute” to include the delivery, transfer, and dispensing of products. Moreover, the ordinary, dictionary meaning of the term “distribute” includes acts such as delivering, dispensing, supplying, and giving out. In this rule, we do not intend the term to include the dispensing or the transfer of an HCT/P to or in a patient.

Two comments on the registration proposed rule disagreed with the phrase “whether or not possession is taken.” They asserted that merely taking orders for a product should not be included within the meaning of “distribution,” and thus should be excluded from “manufacture.” One of these comments described its “service and distribution” agreement with a tissue processor, noting that although it does not ship or take possession of the product, its name appears on the product label along with that of the processor. A third comment recommended that the term “distributes” be clarified to exclude “distributors”; i.e., organizations that receive processed/manufactured allografts and ship them to hospitals. Another comment noted that hospitals and other establishments sometimes provide tissue to other institutions in emergencies or in cases of special need. The comment requested that these limited activities not be considered distribution.

We agree that an entity that does not take possession of HCT/P's is not distributing them for the purposes of this rule. However, we disagree that distributors should be excluded from the terms of the definition of “distribution.” We agree that the occasional provision of HCT/P's to other institutions on an emergency basis does not fall within the meaning of “distribution.”

We will consider any additional comments on the definition of “distribution” when finalizing the other proposed rules that will make up part 1271.

In proposed § 1271.10, we set out the criteria for regulating certain HCT/P's solely under section 361 of the PHS Act and the regulations to be contained in part 1271. An HCT/P would be subject to this level of regulation if it: (1) Was minimally manipulated; (2) was not promoted or labeled for any use other than a homologous use; (3) was not combined with or modified by the addition of any component that is a drug or a device; and (4) either does not have a systemic effect, or has a systemic effect and is for autologous, family-related allogeneic, or reproductive use (64 FR 52720).

Proposed § 1271.15 was intended to describe the HCT/P's that did not meet the criteria set out in § 1271.10 and for which we therefore did not consider regulation solely under section 361 of the PHS Act to be justified (64 FR 52699). The section set out the “mirror images” of the criteria in § 1271.10 to assist readers in understanding which HCT/P's would not be regulated solely under part 1271. However, rather than providing clarification, the proposed section could have been interpreted to create an additional hurdle for regulation of certain HCT/P's as drugs, devices, and/or biological products.

Our ability to regulate an HCT/P as a drug, device, and/or biological product derives from the act and section 351 of the PHS Act, authorities that are distinct from our authority to issue regulations to prevent the transmission of communicable disease under section 361 of the PHS Act. If an HCT/P does not meet the criteria in § 1271.10 for regulation solely under section 361 of the PHS Act, and the establishment does not qualify for any of the exceptions in final § 1271.15, the HCT/P will be regulated under the act and/or the PHS Act and applicable regulations. As part of this rulemaking process, we are amending certain drug and device regulations (e.g., §§ 207.20, 807.20) to require compliance with certain subparts of part 1271.

Therefore, we have modified proposed § 1271.15 and renumbered it § 1271.20. That section now refers to “an HCT/P that does not meet thecriteria set out in § 1271.10(a),” rather than setting out the mirror images of those criteria. As before, the section contains cross-references to those drug and device regulations (e.g., §§ 207.20 and 807.20) that will direct establishments to follow the procedures set out in subparts B, C, and D of part 1271. The section now also clarifies that the referenced drug and device regulations apply if the establishment does not qualify for any of the exceptions in § 1271.15.

We address below the comments received on proposed § 1271.10 and on the proposed definitions of “homologous use” and “minimal manipulation.”

(Comment 26) One comment requested that we schedule a public meeting to discuss the appropriateness, legality, and practicality of using the criteria in § 1271.10 to reach jurisdictional determinations.

We value public input on the criteria in § 1271.10. In February 1997 we made available the proposed approach, which among other things described the factors that we would consider in choosing to regulate certain HCT/P's solely under the authority of section 361 of the PHS Act rather than as drugs, devices, and/or biological products. On March 17, 1997, we held a public meeting to solicit information and views on the proposed approach from the interested public, and we opened a docket for the submission of comments (Docket No. 97N-0068).

We have published three proposed rules in theFederal Register. Two of those rules specifically solicited comments on the criteria for regulating certain HCT/P's solely under section 361 of the PHS Act. On August 2, 2000, we held an open public meeting to solicit information on current practices related to the manipulation and homologous use of human bone allograft in the spine and other orthopedic reconstruction and repair. Many of the comments presented at the meeting indicated that there were misunderstandings about how the criteria set out in § 1271.10 would be applied, and about the meaning of the terms “minimal manipulation” and “homologous use.” This final rule contains clarifications and additional examples that we believe will clear up much of the confusion expressed at the meeting. We will consider issuing a guidance document if establishments need additional help in understanding the terms.

We intend to schedule additional public meetings as necessary. For example, FDA believes that additional public discussion of how the criteria in § 1271.10 would apply to reproductive tissues would be helpful, and further development of policy in this area may be warranted.

(Comment 27) We received numerous comments on the definition ofminimal manipulation. The proposed definition reads as follows:

One comment urged us to state in the preamble of the final rule those activities that FDA presently considers to be minimal manipulation. Two comments recommended that the following procedures be considered minimal manipulation: Selective removal of B-cells, T-cells, or malignant cells; blood or platelet depletion; centrifugation; density gradient separation; and cryopreservation. Two comments supported the use of clinical and scientific data to determine whether a tissue-processing method is appropriately considered to be minimal manipulation or more than minimal manipulation.

Eight comments asserted that “minimal manipulation” is vague and open to subjective interpretation, and should be eliminated. Two comments asserted that it is difficult to draw a meaningful distinction between tissues that are minimally manipulated and those that are more than minimally manipulated. One of these comments suggested that instead of the minimal manipulation criterion, FDA should propose that tissue products labeled or promoted for tissue replacement, reconstruction, or restoration of function be regulated as tissue. Another comment requested the development of guidance and noted that, in light of future technological advances, a broader definition of minimal manipulation may be more appropriate. One comment recommended that the TRG serve as the liaison for communicating with manufacturers concerning FDA's intended application of the definition of minimal manipulation to particular tissues.

We received many comments on the regulation of bone allografts, INCLUDING bone dowels, submitted in response to the donor-suitability proposed rule. (The agency had previously considered regulating certain bone dowels as medical devices.) Many of these comments addressed the concept of minimal manipulation. Several comments supported regulating machined bone allografts as medical devices in order to evaluate their safety and efficacy and protect the public health. However, most comments opposed such regulation, pointing to the long history of safe use of bone allografts and citing concerns about decreased supply, among other issues.

Comments did not suggest changes to the definition of minimal manipulation, and we have not changed the regulation's wording. We disagree that the term should be eliminated, however, as it serves as a valid indicator of those HCT/P's that present fewer risks and that are most appropriately regulated solely under section 361 of the PHS Act and part 1271 (so long as other criteria are also met).

We agree that the TRG will continue to play a role in providing recommendations for certain decisions made by the Center director interpreting the term “minimal manipulation.” At this time, examples of HCT/P's that we consider to be minimally manipulated include those that have been subjected to the following procedures: Density gradient separation; selective removal of B-cells, T-cells, malignant cells, red blood cells, or platelets; centrifugation; cutting, grinding, or shaping; soaking in antibiotic solution; sterilization by ethylene oxide treatment or irradiation; cell separation; lyophilization; cryopreservation; or freezing. We do not agree that the expansion of mesenchymal cells in culture or the use of growth factors to expand umbilical cord blood stem cells are minimal manipulation.

Most of the comments we received on the regulation of bone allografts and bone dowels assumed that we planned to regulate all bone allografts as medical devices. This is a misunderstanding. We are not considering regulating all bone allografts as medical devices. Like all other HCT/P's, the regulation of bone allografts depends on the four factors set out in § 1271.10. If the allograft is minimally manipulated, is not advertised, labeled, or otherwise objectively intended by the manufacturer for a nonhomologous use, and is not combined with a drug or device (except as described in § 1271.10(a)(3)), then it will be regulated as a 361 HCT/P and subject only to the regulations in part 1271. (Bone allografts do not have a systemic effect, so the fourth factor is not at issue.) We consider cutting, shaping and grinding of bone minimal manipulation. Threading and other machining procedures that are performed to create bone dowels, screws, and pins are also considered minimal manipulation.

(Comment 28) We received many comments on the termhomologous use, which we defined in proposed § 1271.3(d) as follows:

One comment praised the definition as reasonable, but urged us to develop a process for resolving differences of opinion between FDA and tissue manufacturers. Another comment supported our preamble statement that the “[b]asic function of a structural tissue is what the tissue does from a biological/physiological point of view, or is capable of doing when in its native state” (63 FR 26744 at 26749). As an example, this comment pointed to surgical use of fascia lata or pericardium allografts to replace or repair damaged dura mater or to construct a bladder support sling from a fascia lata allograft to prevent incontinence. Another comment questioned whether the homologous/nonhomologous criterion is a meaningful indicator of the need for premarket review; this comment cited fascia lata as an example of a tissue that has been used safely and effectively for years in ways that may be considered nonhomologous. One comment in response to our statement (63 FR 26744 at 26749) that the use of hematopoietic stem cells for treatment of adrenal leukodystrophy is an example of nonhomologous use stated that logical application of hematopoietic stem cells for their known hematologic, immunologic or metabolic effects as treatment of human disease should be considered within the practice of medicine and not subject to regulation by FDA.

Approximately 10 comments argued that the term “homologous use” should be eliminated. Many of these comments asserted that the term is vague and open to subjective interpretation. One comment stated that the phrase “fulfills in its native state” implies that tissue must be used in the identical place and for identical purposes, which ignores the realistic use of most tissue products. Many comments questioned the application of the term “homologous use” to bone allografts. One asserted that it is unusual for allograft tissues to be used in a homologous location, especially with regard to the spine.

Below, in comment 29, we discuss our decision to look not at the actual use of an HCT/P, but at the manufactuer's objective intent for a nonhomologous use. Under this approach, a practitioner could use an HCT/P, such as hematopoietic stem cells or fascia lata, for a nonhomologous use in the treatment of the physician's patients. Thus, we would not look at the surgical use of HCT/P's such as fascia lata or pericardium allografts, but instead at whether they were advertised, labeled, or otherwise objectively intended by the manufacturer for a nonhomologous use. In the absence of advertising, labeling, or other indications of the manufacturer's intent for such use, we would not require premarket submissions. Should such review be required for a product that has been used safely and effectively for years in nonhomologous ways, and that is intended for a nonhomologous use, we would expect that data would already exist to facilitate the review process.

We disagree that the term “homologous use” should be eliminated as a criterion for regulation of human cells or tissues under section 361 of the PHS Act. Regulation solely under section 361 and part 1271 is not warranted unless it is clearly demonstrated that the use of an HCT/P in the recipient is homologous to the function the HCT/P would carry out in the donor. We continue to consider nonhomologous use to be a meaningful indicator that regulation solely under section 361 of the PHS Act is not sufficient. For example, promotion of an HCT/P for an unproven therapeutic use, such as curing cancer, would clearly make it inappropriate to regulate the HCT/P solely under section 361 of the PHS Act and the regulations that will be in part 1271.

We have, however, rewritten the definition of homologous use in response to the comments' concerns. The new definition (codified at § 1271.3(c)) reads: “Homologous use means the replacement or supplementation of a recipient's cells or tissues with an HCT/P that performs the same basic function or functions in the recipient as in the donor.” The rewording eliminates the distinction between, on the one hand, structural tissues and, on the other, nonstructural tissues and cells. The new wording does not include the statement that, for structural tissues, homologous use occurs “in a location where such structural function normally occurs.” This language was understood, contrary to our intention, to limit the use of structural tissue to the same location from which is was derived. However, a use of a structural tissue may be homologous even when it does not occur in the same location as it occurred in the donor. For example, the use of bone for repair, replacement, or reconstruction anywhere in the skeleton of the recipient (including the vertebral column) would be considered homologous use. However, it should be understood that, for the use of a structural tissue to be considered homologous, the HCT/P must perform the same basic function or functions in the recipient as it did in the donor; the use of structural tissue in a location where it does not perform the same basic function as it did in the donor would not be homologous.

We intend to interpret “nonhomologous” narrowly. Examples of uses that would be considered nonhomologous include: The use of dermis as a replacement for dura mater, the use of amniotic membrane in the eye, and the use of cartilage in the bladder. As noted above, an HCT/P that is intended by the manufacturer for one of these uses would not be regulated solely under section 361 of the PHS Act and these regulations, but as a drug, device, and/or biological product.

(Comment 29) We received approximately six comments agreeing with our focus in proposed § 1271.10(b) on the promotion or labeling of HCT/P's for nonhomologous uses, rather than on their actual use. One of these comments noted that the use of a product should be determined not by the practice of surgeons but by the promotion, labeling, and objective intent of the manufacturer. Another noted that the manner in which we intend to determine homologous use is consistent with the way we determine the intended use of other products under our jurisdiction. Two comments interpreted proposed § 1271.10(b) as relieving clinicians from restrictions on use of tissue, and one of these comments asserted that the exception should be extended to certain clinical transplant programs.

Another supportive comment questioned how we will regulate the labeling of 361 HCT/P's. Among other things, the comment asked whether we will require 361 HCT/P's to be labeled for their homologous use. The comment also queried whether cutting, shaping, or processing a product in a manner that makes it amenable to nonhomologous use would be considered promotion, in the absence of labeling or advertising.

We appreciate the comments on this issue, and we have decided to maintain the regulation's focus on the objective intent of the HCT/P's manufacturer for a nonhomologous use, rather than onthe intent of the practitioner who uses the HCT/P. We believe this approach will lead to more efficient use of our resources. The focus on labeling, advertising, and other indications of the manufacturer's objective intent does not relieve clinicians from all restrictions on the use of HCT/P's. However, it does mean that clinical use of an HCT/P in a nonhomologous manner, whether by an individual practitioner or a transplant program, can be consistent with regulation of the HCT/P solely under section 361 of the PHS Act and the regulations to be contained in part 1271. In order to clarify this provison, we are revising proposed § 1271.10(b) to read, in new § 1271.10(a)(2), as follows: “The HCT/P is intended for homologous use only, as reflected by the labeling, advertising, or other indications of the manufacturer's objective intent.

By labeling, we refer to the HCT/P label and any written, printed, or graphic materials that supplement, explain, or are textually related to the product, and which are disseminated by or on behalf of its manufacturer. We will address specific labeling requirements after reviewing comments to the GTP proposed rule.

In order to be more consistent with terminology used by the rest of the agency, we have replaced the word “promoted” with “advertised.” The terms “advertised,” “advertisement,” and “advertising” include information, other than labeling, that originates from the same source as the product and that is intended to supplement, explain, or be textually related to the product (e.g., print advertising, broadcast advertising, electronic advertising (including the Internet), statements of company representatives).

(Comment 30) As originally proposed, § 1271.10(c) contained the following criterion for regulation of an HCT/P solely under section 361 of the PHS Act: “Not combined with or modified by the addition of any nontissue or noncellular component that is a drug or a device.” We modified that wording in the donor-suitability proposed rule by deleting the phrase “nontissue or noncellular.”

Two comments questioned the meaning of § 1271.10(c) and requested additional explanation. For example, the comments asked whether we would regard a component as being a drug or device based on its actual function in the product, or based on how the component is already regulated. The comments also questioned whether all products containing a “nontissue or noncellular component that is a drug or device” would automatically be subject to regulation and premarket review as drugs or devices, and expressed concern that application of the criterion might result in unnecessary regulation of HCT/P's as drugs or devices. Another comment asserted that we should not regulate a product containing a drug or device component unless it could affect recipient safety, and that the manufacturer should make the initial determination of whether this threshold has been crossed. One comment stated that hematopoietic stem cell components are routinely processed using centrifuges and other laboratory equipment, combined with dimethylsulfoxide (DMSO) and other reagents for cryopreservation, and separated using devices approved for the processing of hematopoietic stem cells components, and that we have previously classified these steps as minimal manipulation. The comment expressed concern that these steps might be considered to combine the cells with a drug or device component.

In response to the concerns expressed by these comments, we have rewritten the proposed language. Proposed § 1271.10(c) has been renumbered as § 1271.10(a)(3), and now reads: “The manufacture of the HCT/P does not involve the combination of the cell or tissue component with a drug or a device, except for a sterilizing, preserving, or storage agent, if the addition of the agent does not raise new clinical safety concerns with respect to the HCT/P.”

The addition of a drug or a device to the cell or tissue component of an HCT/P may ordinarily be expected to add a therapeutic effect and may also raise safety concerns. For these reasons, the addition of a drug or a device to a cell or tissue makes it no longer appropriate to regulate the HCT/P solely under section 361 of the PHS Act. (As used, the termsdruganddeviceare defined in section 201(g) of the act (21 U.S.C. 321(g)).

However, we recognize that the use of certain sterilizing, preserving, and storage agents do not raise the same concerns. For this reason, we have excepted sterilizing, preserving, and storage agents, but only if the addition of the agent does not raise new clinical safety concerns with respect to the HCT/P. Examples of substances that would generally be acceptable include: (1) Cryoprotectants (e.g., DMSO); (2) chemicals used for sterilization (e.g., ethylene oxide); and (3) storage solutions. We encourage the development of industry standards that describe the safe use of sterilization, preserving, and storage agents.

Some drugs or devices that have as their principal purpose sterilizing, preserving, or storage may also have a therapeutic effect or may be claimed to have such an effect. The addition of such drugs or devices would not fall within the exception for sterilizing, preserving, and storage agents. We agree that the establishment that manufactures the HCT/P should make the initial determination of whether the addition of a drug or device that is a sterilizing, preserving, or storage agent to an HCT/P raises new clinical safety concerns.

(Comment 31) We received one comment in response to our request for comments on whether the term “systemic effect” adequately characterizes those HCT/P's that should be regulated under section 351 of the PHS Act, such as neural-derived tissues and cells used to replace or supplement neurons in the brain (donor suitability proposed rule, 64 FR 52699). This comment expressed concern that the intent of the proposed change is vague and that currently there is little or no evidence that supports such cells or tissues having any systemic effect when implanted in the brain.

After further consideration, we agree that the term “systemic effect” may not cover all of the HCT/P's that we intended to cover. Because the effect of implanted neurons or neural tissue into the brain would likely be restricted to the site where the tissue/cells were placed, this effect might not be included within the meaning of systemic. However, as discussed in the proposed approach, HCT/P's that rely on living cells for their primary function, such as neuronal tissue, raise clinical safety and effectiveness concerns that are not appropriately addressed solely under section 361 of the PHS Act. Such concerns include viability, efficacy, malignant transformation, or rejection after transplantation. Thus, although neuronal cells may not be considered to have a systemic effect, they nonetheless require regulation under the act and/or section 351 of the PHS Act.

Therefore, we have clarified § 1271.10(a)(4) to indicate that an HCT/P that either has systemic effect or depends upon the metabolic activity of living cells for its primary function would not be appropriately regulated solely under section 361 of the PHS Act, and therefore will be regulated as a drug, device, and/or biological product. Cells or tissues such as pancreatic islet cells, which have effects on many different organs throughout the body through the secretion of insulin, are appropriately characterized by the term “systemic effect.” Neurons for implantation in the brain would fall into the category of HCT/P's that depend upon the metabolic activity of livingcells for their primary function. In contrast, some HCT/P's (such as corneas, skin, or osteochondral allografts) may contain living cells, but do not depend on them for their primary function, which is structural.

(Comment 32) Two comments on proposed § 1271.10 suggested that isolated human hepatocytes intended for transplantation be considered to meet the criteria in § 1271.10 and therefore be regulated as 361 HCT/P's.

We do not consider human hepatocytes, isolated in tissue culture medium, infused into the spleen, and intended for temporary treatment of liver failure to be suitable for regulation solely under section 361 of the PHS Act. Human hepatocytes have a systemic effect. Therefore, regardless of the level of manipulation of the hepatocytes, these cells would be regulated under the act and section 351 of the PHS Act.

Proposed § 1271.20, as modified in the donor-suitability proposed rule, set out four specific exceptions from the requirements of part 1271. We address comments on these proposed exceptions below. In this final rule, we have renumbered proposed § 1271.20 as § 1271.15.

(Comment 33) We received one comment on the proposed exception in § 1271.20(b) for establishments that remove human cells or tissues from an individual and implant such cells or tissues into the same individual during the same surgical procedure. The comment assumed that hospitals retaining autologous tissue, not used in a scheduled surgical procedure, to be used in a subsequent application on the same patient, are exempt from registration and listing because the two applications are essentially a single continuous procedure.

We agree that, so long as the hospital does not engage in any other activity encompassed with in the definition of “manufacture,” the hospital would not be required to register or comply with the other provisions to be codified in part 1271. For example, if the hospital expanded the cells or tissues, it would not meet the terms of the exception. In reaching this conclusion, we note that hospitals that store autologous cells or tissues for subsequent application in the same patient must follow the guidelines of the Joint Commission on Accreditation of Healthcare Organizations (JCAHO) for tissue storage, monitoring of storage devices, and tracking in order to obtain or maintain accreditation.

(Comment 34) We received comments questioning the proposed exception in § 1271.20(d) for establishments that “receive or store human cellular or tissue-based products solely for pending scheduled implantation, transplantation, infusion, or transfer within the same facility.” Approximately eight comments asserted that hospitals and other surgical facilities keep tissue allografts on hand for future use and suggested that the phrase “pending scheduled” be deleted from the exception. One comment projected that institutions would discontinue stocking tissue in order to avoid the registration requirement, leading to the denial to patients of appropriate implants. Another comment noted that thousands of hospitals and physician's offices store cells and tissue, and argued that registration could cause an unnecessary burden for facilities and FDA. One comment asserted that hospitals must follow the JCAHO guidelines for storage of tissues, monitoring of storage devices, and tracking of tissue use to provide for the safe storage of tissue. Another comment questioned whether physicians who receive sperm from a sperm bank and examine it for viability would be covered by the exception.

In response to many of these comments, we have deleted the phrase “pending scheduled.” The exception, codified at § 1271.15(d), now reads:

We believe that expanding this exception will ease the regulatory burden without posing public health concerns. To date, we have not become aware of problems with the types of facilities that will fall under the exception. However, should that situation change—e.g., should we encounter problems with tracking systems or learn of storage problems—we will consider narrowing the exception through rulemaking to bring these establishments within the scope of the regulation.

(Comment 35) One comment argued that registration should not be required for facilities collecting or using reproductive tissues from sexually intimate partners or close relatives. The comment strongly urged us to expand proposed § 1271.20(d) to include establishments that collect reproductive materials for use between sexually intimate partners or close relatives.

We agree with this comment, in part, and have added new paragraph (e) to the exceptions in § 1271.15. This exception is limited to establishments that recover reproductive materials for immediate use between sexually intimate partners. (By “immediate use,” we mean that the reproductive materials are used promptly enough that cryopreservation is not necessary and is not performed.) The exception is intended to cover an establishment that recovers semen for use in the artificial insemination of the donor's sexually intimate partner. We believe that this situation raises few new infectious disease concerns. For this reason, we are excepting these establishments from registering and from the other requirements that will be contained in part 1271. The exception does not extend to the recovery of cells or tissues from close relatives who are not sexually intimate partners, since an increased risk of communicable disease transmission exists in this situation.

Many comments expressed general agreement with the proposed registration and listing procedures. One comment stated that the rule set forth a reasonable structure of requirements to be applied uniformly.

(Comment 36) One comment expressed concern that we might impose a registration fee.

We stated in the preamble to the registration proposed rule that we were evaluating our authority to assess a fee and the impacts of such a fee (63 FR 26744 at 26751). At this time, we have no plans to impose a registration fee.

(Comment 37) Comments opposed the proposed requirement in § 1271.21 for twice yearly reporting as excessive and supported annual listing updates instead. One comment noted that it is unlikely that the components processed by individual laboratories will change greatly over a 12-month period.

We disagree that the requirement for updating HCT/P lists is excessive. Establishments are required to updatetheir listings with information on changes that have occurred since the previously submitted list. These changes include the introduction of new HCT/P's, the discontinuation of HCT/P's, the reintroduction of previously discontinued HCT/P's, and material changes in information previously submitted. However, if no such change has occurred since the previously submitted list, the establishment is not required to submit an update.

Those establishments that must update their lists will likely find the task relatively simple. As discussed in section III.G of this document, Form FDA 3356 was designed with ease of completion in mind. Yet the information to be submitted on those updates is crucial if we are to keep abreast of developments in the cell and tissue industry. Without current information, we will be restricted in our ability to understand the industry and achieve our public health goals.

In setting up a unified registration system for all HCT/P's, we incorporated certain components from current registration and listing regulations for drugs and devices, such as the update requirements. By doing so, we made it possible for establishments that manufacture HCT/P's regulated as devices, drugs, and/or biological drugs to register and list their products with the agency using the same form as manufacturers of 361 HCT/P's. Thus, the requirement for updating is similar to the requirements in §§ 207.30 and 807.30 and is consistent with the requirements of section 510(j)(2) of the act.

We have rewritten the requirement for updates for greater clarity. Section 1271.21(c) now contains timeframes for updating. Section 1271.25(c) lists the changes that must be reported. The listed events to be reported have been corrected to reflect the type of information required to be included in the initial listing. Thus, for example, just as a listing includes the names of HCT/P's that an establishment recovers, processes, stores, labels, packages, distributes, or for which it performs donor screening or testing, so the updated listing would reflect any changes in the HCT/P's for which any of these activities are performed.

We have made an additional change to proposed § 1271.25(c), which would have required that copies of all contract service agreements be available at the time of inspection of the establishment. In order to avoid duplicating a similar requirement proposed in the GTP regulations, we have deleted the requirement from § 1271.25(c).

(Comment 38) We earlier stated that we were developing an electronic version of Form FDA 3356 (registration proposed rule, 63 FR 26750). One comment strongly supported these efforts and asserted that manufacturers should also be able to submit registration and listing information electronically.

We understand that it would be convenient to submit registration and listing information electronically over the Internet. We intend to rely on our experience in developing electronic submission capability in other areas (e.g., biological product deviations in manufacturing reports) to develop an electronic submission process for HCT/P registration and listing. When electronic submissions of Form FDA 3356 are possible, we will make an announcement to that effect.

(Comment 39) Two comments disagreed with the requirement proposed in § 1271.25(a)(4) for a statement affirming the truth and accuracy of all information in the registration and listing form. The comments argued that no similar requirement exists in the registration and listing regulations for drugs and devices, parts 207 and 807. The comments proposed that, if the requirement is maintained, the statement be qualified with a phrase such as “to the best of my knowledge.”

To be of use, information submitted on the registration and listing form must be truthful and accurate. Moreover, the reporting official who completes and signs the form should be aware of the obligation to report truthfully and accurately. Although, as the comment points out, the registration and listing regulations for drugs and devices do not contain a similar statement, the act specifically prohibits the submission of false or misleading reports with respect to any device (section 301(q)(2) of the act (21 U.S.C. 331(q)(2)). Furthermore, a willfully false statement to a Federal agency is a criminal offense, and it is not uncommon for forms submitted to the agency to so note (18 U.S.C. 1001).

For these reasons, we are maintaining the requirement for a statement affirming the truth and accuracy of the information submitted on the registration and listing form. However, the reporting official may reasonably obtain the reported information from reliable sources rather than firsthand. For this reason, we believe it is reasonable to modify the required statement with the language “to the best of my knowledge.” We have made this change to the regulation and to the form.

(Comment 40) Two comments questioned the requirement proposed in § 1271.25(b) for a statement of whether each listed product meets the criteria set out in § 1271.10. One comment queried whether we plan to regard this statement as an admission that a product is or is not a 361 HCT/P. This comment suggested the addition of language consistent with that of other product registration and listing regulations clarifying that registration and listing under part 1271 does not constitute such an admission of product regulatory status. Both comments noted that only the statement is required, not an explanation or summary of why a product does or does not meet the criteria or which criteria are not met.

The categorization of HCT/P's as 361 HCT/P's or as drugs, devices, and/or biological products is a fundamental component of the new tiered, risk-based system. We are requiring this information for each HCT/P type to help us understand the HCT/P industry. Establishments need to know how their products are regulated in order to comply with appropriate requirements; therefore, the information required should be readily available. We understand that there may be instances where an establishment is unsure into which category its HCT/P falls; the establishment should contact the executive secretariat of the TRG in these situations. (For more information on the TRG, see CBER's website at http://www.fda.gov/cber/tissue/trg.htm.)

The requirement in § 1271.25(b) is for a statement only, not an explanation. The statement will inform the agency of the manufacturer's opinion, but will not be an “admission” with respect to how an HCT/P will be regulated. To be regulated solely under section 361 of the PHS Act and part 1271, an HCT/P must meet the criteria set forth under § 1271.10.

(Comment 41) Two comments requested that we clarify whether individual sizes or configurations of tissues should be listed separately, or instead under more general headings. One of these comments questioned whether a “new” product would include a new size of a product.

The information currently required on the registration and listing form is of a more general nature. Because the form does not ask for sizes, a new product would not include a new product size.

(Comment 42) One comment encouraged the use of standard product names for hematopoietic progenitor cell therapies in order to make product listing consistent.

We encourage the development of standard names. However, at this point we are requesting more general information on Form FDA 3356. In thefuture, we may ask for more detailed information.

(Comment 43) One comment recommended that required listing information include, with respect to each listed type of tissue, the specific manufacturing activities conducted at each registered establishment.

To simplify the registration and listing form, we are not asking for specific manufacturing information for each product but for the establishment in general. If there is a need, we may possibly ask for more specific information in the future.

(Comment 44) One comment questioned whether the addition of an adjacent building with a different address would be considered a new location, requiring an amendment to registration under § 1271.26.

No. Adding an adjacent building would not require an amendment to registration.

(Comment 45) No comments were received on proposed § 1271.27, which deals with the assignment of a registration number. We wish, however, to note that establishments that are currently registered under the drug or device registration and listing requirements, and who would in the future register and list using the procedures in part 1271, when that part is fully effective, would keep the same registration number that was issued previously. Those establishments should provide that number to us when registering for the first time using the new procedures.

(Comment 46) One comment supported the release of registration and listing information under § 1271.37, but questioned how we would determine which information to disclose to the public.

The information submitted on Form FDA 3356 is not proprietary or confidential in nature and may be released to the public. Section 1271.37(a)(4) notes that the agency may also release all data or information that has already become a matter of public record. The agency will follow the procedures and requirements set out in 21 CFR part 20 to determine which information has become a matter of public record and may be released.

(Comment 47) No comments were submitted on the proposed amendments to §§ 207.20 and 807.20.

We have modified the language proposed for §§ 207.20(f) and 807.20(e) to clarify that establishments that manufacture HCT/P's regulated as devices, drugs, and/or biological products will register and list their products following the procedures in part 1271 instead of the procedures in parts 207 and 807. Thus, when this rule is effective for HCT/P's regulated as devices, drugs, and or biological products, these establishments will submit Form FDA 3356 according to the procedures set out in subpart B of part 1271, at the same time as other cell and tissue establishments, and will no longer have to submit other registration and listing forms. We have also renumbered proposed § 807.20(e) as § 807.20(d).

The effective date of §§ 207.20(f) and 807.20(d) is 2 years after the publication of this rule.

We asked nine manufacturers to participate in a pilot study to evaluate FDA Form 3356 in draft form, as allowed by the Office of Management and Budget (OMB) before we finalized the paperwork burden analysis. The pilot study had two purposes: To evaluate the ease of use of Form FDA 3356, and to validate the data base software developed for FDA under contract. The pilot study took place in May 1998, and in August 1998 we submitted to the docket a summary of the results of the study.

Six of the participating establishments noted that the draft form was easy to use and required less than 1 hour to complete. Other comments on the form noted several areas of potential confusion. We have addressed many of these issues elsewhere in this document, in response to comments submitted to the docket. We have addressed other issues by modifying the instructions for completing the form.

We have made minimal changes to Form FDA 3356 and its instructions to conform to the revised requirements in part 1271, subpart B. We have not added any additional information requirements.

FDA has examined the impacts of the rule under Executive Order 12866 and the Regulatory Flexibility Act (5 U.S.C. 601-612) as amended by subtitle D of the Small Business Regulatory Fairness Act of 1996 (Public Law 104-121) and under the Unfunded Mandates Reform Act of 1995 (Public Law 104-4). Executive Order 12866 directs agencies to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). The agency believes the final rule is consistent with the regulatory philosophy and principles identified in the Executive Order. OMB has determined that the final rule is a significant action as defined in Executive Order 12866.

The Regulatory Flexibility Act requires agencies to analyze whether a rule may have a significant impact on a substantial number of small entities and, if it does, to analyze regulatory options that would minimize the impact. The Unfunded Mandates Reform Act requires that agencies prepare an assessment of anticipated costs and benefits before proposing any rule that may result in an expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 (adjusted annually for inflation) in any one year. We have also determined that this rule will not result in aggregate expenditures for State, local, and tribal governments, or the private sector of $100 million in any one year (adjusted for inflation).

An analysis of available information suggests that costs to the entities most affected by this rule, including small entities, are not expected to be significant, as described in the analysis below. Therefore, the agency certifies that this rule will not have a significant impact on a substantial number of small entities.

This action is a first step in the regulation of the rapidly evolving industry of human cells and tissue. The entire industry has not been previously regulated under a single comprehensive regulatory program by FDA or other public health authorities. Lack of a single regulatory approach or registration system has prevented the agency from acquiring information regarding the full size of the cell and tissue industry and the scope of human cells, tissues, and cellular and tissue-based products (HCT/P's) that are used by the industry. The rule will require all manufacturers of HCT/P's to register with the agency and to submit to the agency a list of their HCT/P's. Through registration and listing, FDA will be able to identify industry participants and the scope of the HCT/P's produced. This will enable the agency to more efficiently monitor the industry, distribute new information such as guidances, policies, or requirements, and identify entities that may be subject to FDA oversight. This action is taken solely under the authority of section 361 of the PHS Act. Section 361 of the PHSAct is also used as authority to amend parts 207 and 807 so that the registration and data bases for all human cells, tissues, and cellular and tissue-based products may be consolidated. FDA has reviewed related Federal rules and has not identified any rules that duplicate, overlap, or conflict with the rule.

This rule affects both establishments that currently register with FDA and submit product lists to the agency under applicable sections of the act (parts 207 and 807), and those establishments that are not presently required to register or list with the agency. FDA has structured registration and listing for HCT/P's to have a minimal impact on affected establishments. However, the agency anticipates that the impact will be greater for those establishments that do not currently register or list. Because the final rule is effective 75 days after publication of this document for those establishments currently regulated under part 1270, and is effective in 2 years for all other HCT/P establishments, the economic impact on the industry will be staggered.

The total number of establishments that are required to register and list under part 1271 in 2 years after the publication of this rule is estimated to be 1,225. The registration and listing initiative will, in part, help the agency obtain more accurate numbers of HCT/P's establishments. In calculating the burden, the agency has relied on information obtained from trade organizations related to the human cells, tissue, and cellular and tissue-based products industry, several of which also provided estimates of what portion of the industry their membership represented. Along with this information and from our own research, we determined that 65 manufacturers of human cells, tissue, and cellular and tissue-based products are registered with the agency as required by part 807. The agency also determined that one manufacturer of an HCT/P drug is registered as required by part 207

According to the U.S. Small Business Administration, a tissue bank is a small entity if it has annual revenues less than $5 million. FDA estimates that 110 tissue banks are involved in the manufacture of conventional tissue and that approximately 77.5 percent (or 85) of these banks are small entities. FDA estimates that there are 425 stem cell facilities (400 peripheral blood stem cell facilities and 25 cord blood facilities), and that all are small entities. FDA estimates that approximately 114 eye banks are currently operating in the United States, and industry experts estimate that virtually all facilities would be classified as small. FDA estimates that there are approximately 400 assisted reproductive technology (ART) facilities. This estimate is consistent with industry comments. Consultants estimate that two-thirds of all ART facilities (or 267 establishments) would be classified as small entities. In addition, the American Society of Reproductive Medicine (ASRM) has a 1996 list of approximately 110 sperm banks operating in the U.S. Information about sperm banks from a report by Eastern Research Group (ERG) indicates that 95 percent (or 105) of these sperm banks are small. Thus, approximately 996 (85 + 425 + 114 + 267 + 105) of all 1,225 establishments would be considered small entities. In addition, 66 establishments are currently regulated as drugs, devices, or biological products under parts 207 and 807. Approximately 90 percent of these (or 60 establishments) are small entities. Therefore, we estimate that a total 1,056 establishments (996 + 60) are small entities.

The main cost in implementing this final rule is staff time, which we estimate to cost $38.00 per hour, based on 1997 Bureau of Labor Statistics estimates.

Out of a total 1,225 establishments affected by this rule, 66 HCT/P drug and device establishments currently submit registration and product listing information under parts 207 and 807. In the proposed rule, we incorrectly estimated both the time and the scope of annual information collection for these establishments. Our estimate inaccurately lumped the submission of all required information into one year and concluded that 2 hours would be needed annually to register and list initially, submit a subsequent annual registration, update HCT/P listings, and amend ownership or location information.

As proposed, however, this final rule requires that HCT/P drug and device manufacturers use a new, single form to register and list their HCT/P products. This rule does not impose any new registration or listing requirements for establishments regulated under parts 207 and 807. To avoid duplication, the rule provides HCT/P drug and device manufacturers a single, new form to replace the multiple forms currently required under parts 207 and 807. Therefore, we now estimate only the time needed to transition from the use of multiple forms to the use of the one form. Based on results from the pilot study described above in section III.G of this document, we estimate that establishments will need approximately 0.5 hour to transition to Form FDA 3356 at a one-time transition cost of approximately $19 [$38 x 0.5]. We estimate that the total impact for all 66 establishments will be approximately $1,254 [66 x $38 x 0.5].

For the 1,159 HCT/P manufacturers not regulated under parts 207 and 807, the costs are based upon the staff time needed to obtain the form, read the instructions, and complete and submit the form for the initial registration and HCP/T listing, subsequent annual registration, and, as needed, listing updates and location/ownership amendments. Based on the pilot study described above, FDA estimates that it will take an average of 0.75 hour of staff time per establishment for the initial submission. At $38.00 per hour of staff time, each establishment is expected to incur an initial one-time cost of approximately $28 [$38 x 0.75]. We estimate the total impact for all 1,159 establishments for the submission of initial registration and HCT/P listing to be approximately $33,032 [1,159 x $38 x 0.75].

After the initial registration, the final rule requires annual registration, which we estimate will take 0.5 hour to complete and submit to FDA. We estimate that the annual cost of these submissions will be approximately $22,021 [1,159 x $38 x 0.5] or $19 per establishment.

The final rule also requires HCT/P listing updates twice a year, a submission that is required only when a change has been made since the previous listing submission. FDA assumes that in any given year, 5 percent or 58 of the 1,159 establishments [1,159 x 0.05] will submit one listing. The listing update is estimated to take about 0.5 hours to complete and submit to FDA. We estimate that each establishment will incur an annual cost of approximately $19 [$38 x 0.5], for a total of $1,102 for all 58 establishments.

The rule also requires changes in ownership or location to be reported as an amendment within 5 days of such changes. FDA expects that this will be a rare event and that in any given year, no more than 5 percent or 58 of the 1,159 establishments [1,159 x 0.05] will change location or ownership and submit an amendment. This amendment is estimated to take 0.25 hours of staff time. We estimate that each establishment will incur a cost of approximately $10 [$38 x 0.25], totaling $580 for all 58 establishments.

In sum, we estimate the total annual for all submissions subsequent to the initial registration and listing (annual registration and, as needed, listing updates and location/ownership amendments) to be $23,702 [$22,021 + $1,101 + $580].

There are no specific educational or technical skills required to complete and submit the registration and listing form. Trained and qualified employees of an establishment who are involved with its operations generally complete similar activities.

This final rule is the first step in creating a tiered, risk-based regulatory scheme that will tailor the degree of scrutiny afforded to different HCT/P's to the risks associated with each of them. Through registration and listing, FDA will acquire the information needed to characterize the nature and extent of HCT/P's. This information will enable FDA to efficiently and effectively respond to emerging public health concerns related to human cells or tissue. Lists of industry members and their HCT/P's will also help FDA disseminate educational materials and other important information regarding FDA policies, guidances, and requirements.

FDA recognizes that a large number of the establishments that would be required to register and list under the rule will be small entities with limited resources. In recognition of this, the agency is proposing that the information to be provided during registration and listing be only that which is necessary to achieve the agency's goals of industry characterization and identification of its participants. To alleviate the impact on entities, especially small entities, FDA will consider the use of electronic submissions (e-mail or Internet) and electronic signatures.

The agency has determined under 21 CFR 25.30(h) that this action is of a type that is categorically excluded from the preparation of an environmental assessment because these actions, as a class, will not result in the production or distribution of any substance and therefore will not result in the production of any substance into the environment.

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

This final rule contains information collection requirements that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520). The title, description, and respondent description of the information collection requirements are shown below with an estimate of the initial one-time reporting burden and the annual reporting burden. Included in the estimate is the time for reviewing the instructions, searching existing data sources, gathering and maintaining the data needed, completing and reviewing each collection of information.

Title:Establishment Registration and Listing Requirements for Human Cells, Tissues, and Cellular and Tissue-Based Products.

Description:The final rule requires establishments that recover, process, store, label, package, or distribute any human cell, tissue, and cellular and tissue-based product (HCT/P), or that perform donor screening or testing, to submit an initial establishment registration and HCT/P list to FDA. Subsequently, establishments must submit an annual update to their establishment registration. In addition, establishments are required to submit HCT/P list updates, if any, and amendments whenever an establishment changes ownership or locations. FDA provides a registration and listing form (Form FDA 3356) to facilitate the ease and speed of submissions. Form FDA 3356 is an approved information collection format under OMB control number 0910-0372. The approval expires July 31, 2001.

Description of Respondents:Establishments that recover, process, store, label, package, or distribute any human cells, tissue, and cellular and tissue-based product.

As required by section 3506(c)(2)(B) of the PRA, FDA provided an opportunity for public comment on May 14, 1998 (63 FR 26744), on the information collection requirements of the proposed rule.

Table 1 of this document lists the estimated one-time reporting burden for the initial establishment registration and HCT/P listing, which is required under § 1271.10(b). Section 1271.25(a) and (b) identify the initial establishment and HCT/P listing information required. Sections 207.20(f) and 807.20(d) require HCT/P establishments to use Form FDA 3356 for providing registration and listing information required under parts 207 and 807.

Table 2 of this document provides the estimate of the ongoing annual reporting burden for establishment registration. In addition, table 2 of this document sets out estimated reporting burdens for HCT/P listing updates and establishment location or ownership amendments that would occur during any given year. If there is no change to an HCT/P listing, establishment location or ownership, a submission is not required.

Sections 1271.21(b) and 1271.10(b) require the annual establishment registration by domestic and foreign HCT/P establishments that are solely regulated under section 361 of the PHS Act and this part.

Sections 1271.21(c)(ii), 1271.25(c), and 1271.10(b) require domestic and foreign HCT/P establishments to submit HCT/P listing updates only when an HCT/P is changed, added, or discontinued, and when there has been a material change to information submitted previously to the agency. If no change has occurred since the previous submission, an update is not required.

Sections 1271.26 and 1271.10(b) require domestic and foreign HCT/P establishments to submit an amendment, but only when the establishment makes a change in location or ownership.

Sections 207.20, 207.26, 207.30, 807.20, 807.26, and 807.30 already require establishments that manufacture drug or device products to submit initial establishment registration and product listing, as well as annual establishment registration, product listing updates, and location and ownership amendments. This final rule adds §§ 207.20(f) and 807.20(d), which require that manufacturers of HCT/P drugs and devices submit this registration and listing information using Form FDA 3356 instead of the multiple forms identified under parts 207 and 807. Therefore, these establishments will incur only a one-time burden to transition from the use of several forms to the use of one form (see table 1 above). This rule adds no new registration and listing requirements.

This final rule is implemented according to the staggered effective dates. Human tissues intended for transplantation that are currently regulated under section 361 of the PHS Act and part 1270 are required to register with the agency and list their HCT/P's within 5 days of the first effective date. The effective date for all other HCT/P's is 2 years after publication of this rule in theFederal Register, about which time we expect that the remaining subparts of part 1271 will become effective.

In the proposed rule, FDA underestimated the number of respondents. Based on additional information provided to FDA by industry representatives, trade organizations, and professional societies, we have revised our estimate of establishments to approximately 1,225 (i.e., approximately 110 conventional tissue, 114 eye tissue banks, 400 peripheral blood stem cells, 25 stem cell products from cord blood, 400 reproductive tissue, 110 sperm banks, and 66 licensed biological products and approved devices).

Our burden estimates for the annual frequency per response and average hours per response are based on institutional experience with comparable reporting provisions for drugs, including biological products, and devices, information from industry representatives and trade organizations, and data provided by the Eastern Research Group (ERG), a consulting firm hired by FDA to prepare an economic analysis of the potential economic impact on sperm banks and other reproductive tissue facilities.

In the final rule, we have separated the initial, one-time reporting requirements (table 1 of this document) from the subsequent ongoing annual establishment registration, HCT/P updates and amendment requirements (table 2 of this document).

Table 1 of this document provides the initial, one-time estimated burden for HCT/P establishment registration and HCT/P listing. This information may be submitted simultaneously on the same form, Form FDA 3356. We estimate that 0.75 hour of staff time will be needed for each initial submission. This estimate is based on a pilot program described above in section III.G of this document conducted to evaluate Form FDA 3356.

In table 1 of this document we also include the one-time burden for HCT/P drug and device manufacturers regulated under parts 207 and 807. Parts 207 and 807 require that drug and device manufacturers submit initial establishment registration and product listing, annual establishment registration, product listing updates, and location/ownership amendments. New §§ 207.20(f) and 807.20(d) change only the reporting format and require use of only one form, new Form FDA 3356, in place of the multiple forms currently required, i.e., Forms FDA-2656 and FDA-2657 for drug manufacturers, and Forms FDA-2891, FDA-2891(a), and FDA-2892 for device manufacturers. Therefore, the one-time reporting burden estimate for §§ 207.20(f) and 807.20(d) in table 1 of this document reflects only the time necessary to transition from the use of current multiple forms to the use of Form FDA 3356. In the proposed rule, we incorrectly included the time needed to submit the registration and listing information already required under parts 207 and 807. As revised here, the reporting burden under new §§ 207.20(f) and 807.20(d) reflects only the time necessary to transition from the use of current multiple forms to the use of Form FDA 3356.

Table 2 of this document shows more accurately than in the proposed rule that on-going annual registration, updates and amendments require 0.50 hour, while the initial submission requires on average 0.75 hour. In addition, table 2 of this document shows that the average hours per response is less for the HCT/P listing updates and location/ownership amendments, which are required only when a change is made, than for the annual registration, which must be submitted every year. In table 2 of this document, we also estimate that approximately 5 percent of the 1,159 establishments, or 58 establishments, will make changes to HCT/P's, location, or ownership in any one year after the initial registration and listing. Based on additional information from industry representatives and from our own experiences, we estimate that annual registration, HCT/P listing updates, and location/ownership amendments will require 0.5, 0.5, and 0.25 hours, respectively, as opposed to the full hour estimated for every establishment submission in the proposed rule. The greater precision afforded by this breakout shows that, despite the increased number of total estimated respondents, the estimated total burden hours is lower than in the proposed rule. In table 2 of this document, the total annual burden of 623 hours for ongoing reporting is slightly less than the initial, one-time reporting burden total of 902.25 hours in table 1 of this document.

FDA estimates the burden of this collection of information as follows:

Individuals and organizations may submit comments on these burden estimates or on any other aspect of these information collection requirements, including suggestions for reducing the burden. Comments should be directed to the Food and Drug Administration, Center for Biologics Evaluation and Research, Tissue Establishment Registration Coordinator (HFM-305), 1401 Rockville Pike, suite 200N, Rockville, MD 20852.

The information collection requirements of the final rule have been submitted to OMB for review. Prior to the effective date of the final rule, FDA will publish a document in theFederal Registerannouncing OMB's decision to approve, modify, or disapprove the information collection requirements in the final rule. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

The 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.

Pursuant to Treasury Decision 120-01 (formerly 221), dated June 6, 1972, the Secretary of the Treasury delegated to the Director of the Bureau of Alcohol, Tobacco and Firearms (ATF), the authority to enforce, among other laws, the provisions of chapter 51 of the Internal Revenue Code of 1986 (IRC). The Director has subsequently redelegated certain of these authorities to appropriate subordinate officers by way of various means, including by regulation, ATF delegation orders, regional directives, or similar delegation documents. As a result, to ascertain what particular officer is authorized to perform a particular function under chapter 51, each of these various delegation instruments must be consulted. Similarly, each time a delegation of authority is revoked or redelegated, each of the delegation documents must be reviewed and amended as necessary.

ATF has determined that this multiplicity of delegation instruments complicates and hinders the task of determining which ATF officer is authorized to perform a particular function. ATF also believes these multiple delegation instruments exacerbate the administrative burden associated with maintaining up-to-date delegations, resulting in an undue delay in reflecting current authorities.

Accordingly, in this final rule, the Director of ATF is rescinding all authorities of the Director in parts 17 and 18 which were previously delegated to a specified ATF officer and placing all authorities of the Director with the “appropriate ATF officer.” Along with this final rule, ATF is publishing ATF Order 1130.13, Delegation Order—Delegation of the Director's Authorities in parts 17 and 18, in which certain of these authorities are then delegated down to the appropriate organizational level. The effect of these changes is to consolidate all delegations of authority in parts 17 and 18 into one delegation instrument. This action both simplifies the process for determining what ATF officer is authorized to perform a particular function and facilitates the updating of delegations in the event of a change in delegation or in the event of a restructuring. As a result, delegations of authority will be reflected in a more timely and user-friendly manner.

In addition to the above, this final rule also eliminates all references in the regulations which identify the ATF officer with whom an ATF form is filed. Thus, in lieu of identifying the authorized officer in the regulations, the form itself will indicate the officer with whom it shall be filed. Similarly, this final rule also amends parts 17 and 18 to provide that documents other than ATF forms (such as letterhead applications, notices and reports) will be filed with the “appropriate ATF officer.” The “appropriate ATF officer” is the Director's delegate and will be identified in the accompanying ATF Order (ATF Order 1130.13, Delegation Order—Delegation of the Director'sAuthorities in part 17 and 18). These changes will facilitate the identification of the officer with whom forms and other required submissions are filed in the event that authority to receive such submissions, or the title of the officer, changes.

Consistent with the above, this final rule makes various technical amendments to subpart C—Administrative and Miscellaneous Provisions of 27 CFR parts 17 and 18. Specifically, new §§ 17.7 and 18.12 will be added to recognize the authority of the Director to delegate regulatory authorities in parts 17 and 18, respectively, and to identify ATF Order 1130.13 as the instrument reflecting such delegations. Also, §§ 17.2 and 18.16 are amended to provide that the instructions on an ATF form identify the ATF officer with whom it is filed.

ATF has made or will make similar changes in delegations to all other parts of Title 27 of the Code of Federal Regulations through separate rulemakings. By amending the regulations part by part, rather than in one large rulemaking document and ATF Order, ATF minimizes the time expended in notifying interested parties of current delegations of authority.

The provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this final rule because there are no new or revised recordkeeping or reporting requirements.

Because no notice of proposed rulemaking is required for this rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) do not apply. A copy of this final rule was submitted to the Chief Counsel for Advocacy of the Small Business Administration in accordance with 26 U.S.C. 7805(f). No comments were received.

It has been determined that this rule is not a significant regulatory action because it will not: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

Because this final rule merely makes technical amendments and conforming changes to improve the clarity of the regulations, it is unnecessary to issue this final rule with notice and public procedure under 5 U.S.C. 553(b). Similarly it is unnecessary to subject this final rule to the effective date limitation of 5 U.S.C. 553(d).

The principal author of this document is Robert Ruhf, Regulations Division, Bureau of Alcohol, Tobacco and Firearms.

Pursuant to Treasury Order 120-01 (formerly 221), dated June 6, 1972, the Secretary of the Treasury delegated to the Director of the Bureau of Alcohol, Tobacco and Firearms (ATF), the authority to enforce, among other laws, the provisions ofchapter 51of the Internal Revenue Code of 1986 (IRC). The Director has subsequently redelegated certain of these authorities to appropriate subordinate officers by way of various means, including by regulation, ATF delegation orders, regional directives, or similar delegation documents. As a result, to ascertain what particular officer is authorized to perform a particular function under chapter 51, each of these various delegation instruments must be consulted. Similarly, each time a delegation of authority is revoked or redelegated, each of the delegation documents must be reviewed and amended as necessary.

ATF has determined that this multiplicity of delegation instruments complicates and hinders the task of determining which ATF officer is authorized to perform a particular function. ATF also believes these multiple delegation instruments exacerbate the administrative burden associated with maintaining up-to-date delegations, resulting in an undue delay in reflecting current authorities.

Accordingly, this final rule rescinds all authorities of the Director in parts 20, 21 and 22 that were previously delegated and places those authorities with the “appropriate ATF officer.” All of the authorities of the Director that were not previously delegated are also placed with the “appropriate ATF officer.” Along with this final rule, ATF is publishing ATF Order 1130.9, Delegation Order—Delegation of the Director's Authorities in 27 CFR Parts 20, 21 and 22, Distilled Spirits Plants, which delegates certain of these authorities to the appropriate organizational level. The effect of these changes is to consolidate all delegations of authority in parts 20, 21 and 22 into one delegation instrument. This action both simplifies the process for determining what ATF officer is authorized to perform a particular function and facilitates the updating of delegations in the future. As a result, delegations of authority will be reflected in a more timely and user-friendly manner.

In addition, this final rule also eliminates all references in the regulations that identify the ATF officer with whom an ATF form is filed. This is because ATF forms will indicate the officer with whom they must be filed. Similarly, this final rule also amends parts 20, 21 and 22 to provide that the submission of documents other than ATF forms (such as letterhead applications, notices and reports) must be filed with the “appropriate ATF officer” identified in ATF Order 1130.9. These changes will facilitate theidentification of the officer with whom forms and other required submissions are filed.

This final rule also makes various technical amendments to parts 20, 21 and 22 of Title 27 of the Code of Federal Regulations. First, new sections are added in each part to recognize the authority of the Director to delegate regulatory authorities and to identify ATF Order 1130.9 as the instrument reflecting such delegations. Second, § 20.21, 21.2, 22.21 of Title 27 of the Code of Federal Regulations are amended to provide that the instructions for an ATF form identify the ATF officer with whom it must be filed. Third, this rule removes from part 22 of Title 27 of the Code of Federal Regulations the definition of the term “delegate.” This term is used only in the definition of Secretary in part 22 of Title 27 of the Code of Federal Regulations. We have removed the definition of “delegate” to be consistent with most other parts of Title 27 of the Code of Federal Regulations and to minimize potential confusion and misunderstanding with the appropriate ATF officers to whom the Director has delegated authority.

ATF has begun to make similar changes in delegations to all other parts of Title 27 of the Code of Federal Regulations through separate rulemakings. By amending the regulations part by part, rather than in one large rulemaking document and ATF Order, ATF minimizes the time expended in notifying interested parties of current delegations of authority.

The provisions of the Paperwork Reduction Act of 1995, Pub. L. 104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this final rule because there are no new or revised recordkeeping or reporting requirements.

Because no notice of proposed rulemaking is required for this rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) do not apply. A copy of this final rule was submitted to the Chief Counsel for Advocacy of the Small Business Administration in accordance with 26 U.S.C. 7805(f). No comments were received.

It has been determined that this rule is not a significant regulatory action because it will not: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

Because this final rule merely makes technical amendments and conforming changes to improve the clarity of the regulations, we can issue this final rule without the notice and public procedure under 5 U.S.C. 553(b). For these same reasons, we are issuing this final rule effective on the same date of its publication in theFederal Register. This final rule is not subject to the effective date limitation of 5 U.S.C. 553(d).

Drafting Information:The principal author of this document is Robert Ruhf, Regulations Division, Bureau of Alcohol, Tobacco and Firearms.

Pursuant to Treasury Order 120-01 (formerly 221), dated June 6, 1972, the Secretary of the Treasury delegated to the Director of the Bureau of Alcohol, Tobacco and Firearms (ATF), the authority to enforce, among other laws, the provisions of chapter 51 of the Internal Revenue Code of 1986 (IRC). The Director has subsequently redelegated certain of these authorities to appropriate subordinate officers by way of various means, including by regulation, ATF delegation orders, regional directives, or similar delegation documents. As a result, to ascertain what particular officer is authorized to perform a particular function under chapter 51, each of these various delegation instruments must be consulted. Similarly, each time a delegation of authority is revoked or redelegated, each of the delegation documents must be reviewed and amended as necessary.

ATF has determined that this multiplicity of delegation instruments complicates and hinders the task of determining which ATF officer is authorized to perform a particular function. ATF also believes these multiple delegation instruments exacerbate the administrative burden associated with maintaining up-to-date delegations, resulting in an undue delay in reflecting current authorities.

Accordingly, this final rule rescinds all authorities of the Director in part 25 that were previously delegated and places those authorities with the “appropriate ATF officer.” All of the authorities of the Director that were not previously delegated are also placed with the “appropriate ATF officer.” Along with this final rule, ATF is publishing ATF Order 1130.10, Delegation Order—Delegation of the Director's Authorities in 27 CFR part 25, Beer, which delegates certain of these authorities to the appropriate organizational level. The effect of these changes is to consolidate all delegations of authority in part 25 into one delegation instrument. This action both simplifies the process for determining what ATF officer is authorized to perform a particular function and facilitates the updating of delegations in the future. As a result, delegations of authority will be reflected in a more timely and user-friendly manner.

In addition, this final rule also eliminates all references in the regulations that identify the ATF officer with whom an ATF form is filed. This is because ATF forms will indicate the officer with whom they must be filed. Similarly, this final rule also amends part 25 to provide that the submission of documents other than ATF forms (such as letterhead applications, notices and reports) must be filed with the “appropriate ATF officer” identified in ATF Order 1130.10. These changes will facilitate the identification of the officer with whom forms and other required submissions are filed.

This final rule also makes various technical amendments to Subpart A—Scope of Regulations of 27 CFR part 25. First, a new § 25.6 is added to recognize the authority of the Director to delegate regulatory authorities in part 25 and to identify ATF Order 1130.10 as the instrument reflecting such delegations. Second, § 25.3 is amended to provide that the instructions for an ATF form identify the ATF officer with whom it must be filed. Third, this rule removes from part 25 of Title 27 of the Code of Federal Regulations the definition of the term “delegate.” This term is used only in the definition of Secretary in part 25 of Title 27 of the Code of Federal Regulations. We have removed the definition of “delegate” to be consistent with most parts of title 27 of the Code of Federal Regulations and to minimize potential confusion and misunderstanding with the appropriate ATF officers to whom the Director has delegated authority.

ATF has made or will make similar changes in delegations to all other parts of Title 27 of the Code of Federal Regulations through separate rulemakings. By amending the regulations part by part, rather than in one large rulemaking document and ATF Order, ATF minimizes the time expended in notifying interested parties of current delegations of authority.

The provisions of the Paperwork Reduction Act of 1995, Pub. L. 104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this final rule because there are no new or revised recordkeeping or reporting requirements.

Because no notice of proposed rulemaking is required for this rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.) do not apply. A copy of this final rule was submitted to the Chief Counsel for Advocacy of the Small Business Administration in accordance with 26 U.S.C. 7805(f). No comments were received.

It has been determined that this rule is not a significant regulatory action because it will not: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

Because this final rule merely makes technical amendments and conforming changes to improve the clarity of the regulations, it is unnecessary to issue this final rule with notice and public procedure under 5 U.S.C. 553(b). Similarly it is unnecessary to subject this final rule to the effective date limitation of 5 U.S.C. 553(d).

The principal author of this document is Robert Ruhf, Regulations Division, Bureau of Alcohol, Tobacco and Firearms.

Pursuant to Treasury Order 120-01 (formerly 221), dated June 6, 1972, the Secretary of the Treasury delegated to the Director of the Bureau of Alcohol, Tobacco and Firearms (ATF), the authority to enforce, among other laws, the provisions of chapter 51 of the Internal Revenue Code of 1986 (IRC). The Director has subsequently redelegated certain of these authorities to appropriate subordinate officers by way of various means, including by regulation, ATF delegation orders, regional directives, or similar delegation documents. As a result, to ascertain what particular officer is authorized to perform a particular function under chapter 51, each of these various delegation instruments must be consulted. Similarly, each time a delegation of authority is revoked or redelegated, each of the delegation documents must be reviewed and amended as necessary.

ATF has determined that this multiplicity of delegation instruments complicates and hinders the task of determining which ATF officer isauthorized to perform a particular function. ATF also believes these multiple delegation instruments exacerbate the administrative burden associated with maintaining up-to-date delegations, resulting in an undue delay in reflecting current authorities.

Accordingly, this final rule rescinds all authorities of the Director in part 30 that were previously delegated and places those authorities with the “appropriate ATF officer.” Most of the authorities of the Director that were not previously delegated are also placed with the “appropriate ATF officer.” Along with this final rule, ATF is publishing ATF Order 1130.17, Delegation Order—Delegation of the Director's Authorities in part 30, Gauging Manual, which delegates certain of these authorities to the appropriate organizational level.

The effect of these changes is to consolidate all delegations of authority in part 30 into one delegation instrument. This action both simplifies the process for determining what ATF officer is authorized to perform a particular function and facilitates the updating of delegations in the future. As a result, delegations of authority will be reflected in a more timely and user-friendly manner.

The provisions of the Paperwork Reduction Act of 1995, Public Law 104-13, 44 U.S.C. Chapter 35, and its implementing regulations, 5 CFR part 1320, do not apply to this final rule because there are no new or revised recordkeeping or reporting requirements.

Because no notice of proposed rulemaking is required for this rule, the provisions of the Regulatory Flexibility Act (5 U.S.C. 601et seq.) do not apply. A copy of this final rule was submitted to the Chief Counsel for Advocacy of the Small Business Administration in accordance with 26 U.S.C. 7805(f). No comments were received.

It has been determined that this rule is not a significant regulatory action because it will not: (1) have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in Executive Order 12866.

Because this final rule merely makes technical amendments and conforming changes to improve the clarity of the regulations, it is unnecessary to issue this final rule with notice and public procedure under 5 U.S.C. 553(b). Similarly it is unnecessary to subject this final rule to the effective date limitation of 5 U.S.C. 553(d).

The principal author of this document is Lisa Gesser, Regulations Division, Bureau of Alcohol, Tobacco and Firearms.

Congress expressly extended coverage to “domestic service” workers under the FLSA in 1974, amending the law to apply to employees performing services of a household nature in or about the private home of the person by whom they are employed. 29 U.S.C. 202(a), 206(f), 207(l). Domestic service workers were made subject to the FLSA even though they worked for a private household and not for a covered enterprise. Domestic service workers include, for example, employees working as cooks, butlers, valets, maids, housekeepers, governesses, janitors, laundresses, caretakers, handymen, gardeners, and family chauffeurs. Senate Report No. 93-690, 93d Cong., 2d Sess. (1974), p. 20. Simultaneously with extending coverage under the FLSA to domestic service workers, Congress created a complete exemption from both the minimum wage and overtime requirements for casual babysitters and persons “employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary [of Labor]).” 29 U.S.C. 213(a)(15). Congress also created a more limited exemption from the overtime requirements for domestic service employees in a household who reside in that household. 29 U.S.C. 213(b)(21).

Congressional committee reports describe the reasons for extending the minimum wage protections to domestics as “so compelling and generally recognized as to make it hardly necessary to cite them.” Senate Report No. 93-690, p. 18. Private household work had been one of the least attractive fields of employment. Wages were low, work hours were highly irregular, and non-wage benefits were few. Senate Report No. 93-690, p. 18.

The U.S. House of Representatives, Committee on Education and Labor stated its expectation “that extending minimum wage and overtime protection to domestic workers will not only raise the wages of these workers but will improve the sorry image of household employment. * * * Including domestic workers under the protection of the Act should help to raise the status and dignity of this work.” House Report No. 93-913, 93d Cong., 2d Sess., (1974), pp. 33-34. The legislative history states that the 1974 Amendments were intended to include all employees whose vocation was domestic service, but to exempt from coverage babysitters and companions who were not regular bread-winners or responsible for their families' support. It was not intended that the statute exclude trained personnel such as nurses, whether registered or practical, from the protections of the Act. Senate Report No. 93-690, p. 20. Senator Williams, Chairman of the Senate Subcommittee on Labor and the Senate floor manager of the 1974 FLSA Amendments, described companions as “elder sitters” whose main purpose of employment is to watch over an elderly or infirm person in the same manner that a babysitter watches over children. All other work (such as occasionally making a meal or washing clothes for the person) must be incidental to that main purpose. 119 Cong. Rec. 24773, 24801 (1973).

The Department promulgated implementing regulations in 1975 that define “companionship services” as including “fellowship, care, and protection” provided to a person who, because of advanced age or physical or mental infirmity, could not care for his or her own needs. The regulation defined such exempt services as including household work related to the person's care (such as meal preparation, bed making, washing of clothes, and other similar services). A companion could also perform additional generalhousehold work without losing the exemption if it was incidental and comprised not more than 20 percent of the total weekly hours worked. Finally, a companion could be exempt even if employed solely by a third-party employer or agency, rather than by an individual or family directly. 29 CFR 552.6; 552.109(a). Similarly, live-in domestic service workers could be exempt even if employed solely by a third-party employer or agency, rather than by the individual or family in whose home they resided and worked. 29 CFR 552.109(c).

The home care industry has changed dramatically since the Department published the 1975 regulations implementing the exemption for companionship services. There has been a growing demand for long-term in-home care for persons of all ages, in part because of the rising cost of and increasing dissatisfaction with traditional institutional care, and because of the availability of public funding assistance for in-home care under Medicare and Medicaid. According to the National Association of Home Care (NAHC) publication,Basic Statistics About Home Care (March 2000), data from the Department of Health and Human Services' Health Care Financing Administration (HCFA) show that the number of Medicare-certified home care agencies increased over three-fold from 2,242 in 1975 to 7,747 in 1999. The number of for-profit agencies not associated with a hospital, rehabilitation facility, or skilled nursing facility,i.e., freestanding agencies, increased more than any other category of agency from 47 in 1975 to 3,129 in 1999. These for-profit agencies grew from 2 percent of total Medicare-certified agencies to over 40 percent by 1999, and now represent the greatest percentage of certified agencies. Public health agencies, which constituted over half of the certified agencies in 1975, now represent only 12 percent.

The Federal Government pays for much of the cost of providing home care services to care recipients. Medicare provides a notable portion of the industry's total revenues; other payment sources include Medicaid, insurance plans, and direct pay. Based on data from “A Profile of Medicare Home Health”—a HCFA publication—Medicare and Medicaid together account for more than half of the revenues paid to freestanding agencies (40 and 15 percent, respectively). Other private funds (philanthropy) account for 12 percent, while private health insurance accounts for 11 percent. Out-of-pocket funds account for 22 percent of agency revenues.

There has been a similarly dramatic increase in the employment of home health aides and personal and home care aides in the private homes of individuals who need assistance with basic daily living or health maintenance activities. Bureau of Labor Statistics' (BLS) national occupational employment and wage estimates from the Occupational Employment Statistics (OES) survey show that the number of workers in these jobs tripled during the decade between 1988 and 1998, and by 1998 there were 430,440 people working as home health aides and 255,960 people working as personal and home care aides. The combined occupations of personal care and home health aides constitute the seventh most rapidly growing occupational group, and BLS estimates that their number will increase by another 150 percent from 1998 to 2008. The earnings of both categories of employees remain among the lowest in the service industry—a 1998 mean annual wage of $16,250 for home health aides and $14,920 for personal and home care aides according to the OES data. Based on the same data source, ten percent of home health aides and personal and home care aides earn below $12,300 a year—lower than the 1999 poverty threshold level of $13,880 for a family of three.

Home health aides generally received more than personal and home care aides—$7.51 per hour (mean hourly wage) for personal and home care aides, and $8.17 per hour for home health aides. However, 10 percent of home health aides were paid less than $5.87 an hour, while 10 percent of personal and home care aides received less than $5.60 per hour. Although 90 percent of home health aides and personal and home care aides received hourly wages at or above $5.87 or $5.60, nearly 70,000 of these workers received hourly wages at or below such rates, and possibly below the minimum wage.

According to the BLS National Industry-Occupation Employment Matrix (1998), the largest percentage (38 percent) of personal care and home health care aides are employed in the home health care services industry. Others are employed by miscellaneous social service agencies, residential care facilities, personnel supply service agencies, nursing homes and hospitals. Only about two percent were self-employed and another two percent were employed in private households.

Current data suggest that many workers in the home care industry are now employed in their primary occupation. BLS National Current Employment Statistics for 1999 show an average weekly number of hours worked among non-supervisory employees in the home health care services industry (SIC 808) of 29.1 hours. Workers in the individual and family social services industry (SIC 832) averaged 31.2 hours per week. In the residential care industry (SIC 836), workers averaged 32.4 weekly hours worked. To the extent that time spent traveling from one client to the next has not been considered hours worked and thus captured in the above data, home care workers may actually be working longer than revealed by the BLS statistics. As indicated earlier, it clearly was Congress' intent under the 1974 FLSA Amendments to cover all workers who performed domestic services as avocation, excluding casual babysitters and providers of companionship services who werenotregular bread winners or responsible for their families' support.

These workers perform a variety of housekeeping, personal care, and medical duties for individuals who need assistance with activities of daily living to enable them to remain in their homes. Home health aides perform duties such as preparing meals, dressing patients, administering medication and performing medical procedures under a doctor's or nurse's direction. Personal and home care aides perform a variety of tasks in the home, including household work and assistance with nutrition and cleanliness. Employers have generally treated workers employed as home health aides and personal and home care aides as exempt companions, based upon the Department's current regulations. To the extent that the current regulations allow for the exemption of an employee who provides very little fellowship, and whose duties involve almost exclusively the performance of household chores or medical services, they do not appropriately implement Congress' limited exemption for employees who provide companionship services. As a result, the Department believes it is necessary to amend the regulations to focus them on the fellowship and protection duties that Congress originally intended the companion exemption to cover.

The Department proposes to amend the definition of “companionship services” in section 552.6 to clarify the focus on the element of fellowship, to align the regulation more closely with Congressional intent. The dictionary definition of “companionship” isinstructive in revising the regulation to conform to the concept of a companion as originally intended in the legislative history: someone in the home primarily to watch over and care for the elderly or infirm person, much as a neighbor or babysitter would. The dictionary defines companionship as the “relationship of companions; fellowship.” And the term “companion” is defined as a “person who accompanies or associates with another; comrade” and as a person “employed to assist, live with, or travel with another.” It further defines “fellowship” as including “the condition of being together,” “friendship” and coming together “in a congenial atmosphere.” The American Heritage Dictionary of the English Language, 1976 Edition. Thus, we propose a revision of the regulation that requires that fellowship be a significant, important and fundamental aspect of the job under the companionship services exemption. Only where the worker and the person being served or assisted interact on a close personal basis, for a significant percentage of the time, would the companionship services exemption be applicable. Of course, the precise nature of what activities constitute fellowship will vary, depending upon the needs, capabilities, and interests of the care recipient. For example, fellowship might involve reading a book or a newspaper to the person, chatting with him or her about family or other events, playing cards, watching television, or going for a walk. Whatever the specific activity, it must involve personal interaction between the in-home care provider and the care recipient in order for the proposed companionship services exemption to apply.

The regulatory definition of companionship services cannot be so broad as to include someone who essentially is serving as a maid or household worker. In 1974, Congress amended the FLSA specifically to include domestic service workers (such as maids, cooks, valets and laundresses) among those intended to be covered by the Act. Congress simultaneously created a narrowly-tailored exemption for casual babysitters and those providing companionship services to the elderly and infirm. The regulations implementing the exemption should strike a balance that implements Congress' twin goals by recognizing that the fellowship and protection provided by a companion are very different from the household chores performed by a maid or cook or laundress. Furthermore, the regulations should also reflect that coverage under the FLSA is construed broadly and exemptions narrowly to effectuate the Act's remedial purposes.

The Department recognizes that it is possible to define companionship services in several different ways, with the options arrayed along a spectrum. The definitions may vary in the degree to which they require the provision of fellowship only, or allow the provision of fellowship in conjunction with hands-on care. The percentage of time that must be spent in fellowship as compared to other care duties also may vary. The Department proposes three alternatives for defining companionship services and seeks comments on all three alternatives. The three possible definitions involve variations in the specific types of duties the employee may perform and the amount of time the employee may spend in performing such duties. All of the alternatives increase the emphasis on fellowship as a critical component of a companion's duties, and narrow or eliminate the type of care that may comprise a companion's duties. In all three alternatives, we also propose to eliminate the current regulatory provision that allows the exemption to apply when the worker spends up to 20 percent of his or her time performing general household work which is unrelated to the care of the person, such as general vacuuming and dusting. Such general household work is precisely the sort of work that Congress sought to cover when it amended the Act in 1974 to reach domestic service workers, and therefore would be precluded.

The first proposal requires that fellowship be a significant part of the person's duties for the companionship services exemption to apply, but does not require fellowship duties to occupy a set percentage of the worker's time. This proposal anticipates that fellowship would occur in conjunction with the performance of other intimate personal care chores, such as bathing, grooming, and dressing, which also would constitute exempt duties. The first proposal also would allow the exemption if the worker performs a limited amount (up to 20 percent of the hours worked per week) of work of a household nature that is directly related to the client's personal care, such as cooking the person's meal, making the person's bed, or washing the dishes for that person.

The second proposal focuses on fellowship and protection as the primary duties in order for the companionship services exemption to apply. Thus, an employee must spend more than 50 percent of his or her time engaging in fellowship or protection duties to be exempt. Such fellowship and protection duties would include activities providing only fellowship or protection as well as activities in which fellowship or protection is provided concurrently with the performance of other intimate personal care chores, such as bathing, grooming, and toileting. However, only one-half the time spent providing fellowship or protection simultaneously with such other intimate personal care chores would count when determining if the employee's primary duty was providing fellowship or protection. The second proposal also would allow the exemption if the worker performs a limited amount (up to 20 percent of the weekly hours) of work of a household nature that is directly related to the person's care.

The third proposal would require that fellowship and protection be the sole core duties in order for the exemption to apply. To qualify for the exemption, the individual would have to spend at least 80 percent of his or her time in activities that provide fellowship or protection, not in conjunction with other personal care duties. The 20 percent tolerance for other types of work would apply to other intimate care and related chores. Thus, under this proposal, time spent on intimate personal care chores (such as grooming, toileting, and feeding) and on directly related work for the person (such as cooking the person's meal) may not exceed 20 percent of the weekly hours worked for the companionship services exemption to apply.

There has also been a dramatic change since the enactment of the 1974 FLSA Amendments in the nature of the duties performed by many employees classified as exempt under the companionship services exemption. Because many individuals who were formerly institutionalized or moved to nursing homes are able, with assistance, to stay in their homes, home care providers have taken on a broader range of medically-related duties. For example, individuals treated as exempt in providing companionship services may now perform duties such as medication management, taking vital signs (pulse, temperature, respiration), routine skin and back care, and assistance with exercise and the performance of simple procedures as an extension of physical therapy service.

The training necessary for an employee to perform such duties, while less than the training of a physician or nurse, means that such individuals are not acting simply as elder sitters or as babysitters watching over their charge.

Some courts, interpreting the current regulations, have allowed employees to qualify for exemption under the present regulatory definition of companionship services despite the fact that they had extensive training, on the theory that they did not have the two or more years of training generally required for LPNs and RNs. For example, inMcCunev.Oregon Senior Services Division, 894 F.2d 1107 (9th Cir. 1990), the court found that certified nursing assistants who had to pass a 60-hour training class were exempt despite their extensive medical training. Similarly, inCoxv.Acme Health Services, Inc., 55 F.3d 1304 (7th Cir. 1995), the court held that certified home health aides with 75 hours of state-required training were exempt. The court inTerwilligerv.Home of Hope, Inc., 21 F. Supp. 2d 1294 (N.D. Okla. 1998), also found that employees with 160 hours of training, who had to obtain 40 additional hours of training each year, were exempt.

The Department believes that Congress did not intend for the companionship services exemption to apply to employees with the level of training necessary to perform medically-related duties such as medication management and assistance with physical therapy. Duties being performed that require such extensive training are beyond what Congress envisioned when it stated that persons providing companionship services are present in the home, as a neighbor might be, to watch over an elderly person the way a babysitter watches over a child. Thus, the Department proposes to clarify the regulatory definition of companionship services in section 552.6 to exclude personnel trained in the performance of such medically related duties from the companion exemption.

The Department also proposes to amend section 552.109, the regulation pertaining to employment by a third party. People providing in-home care and assistance to individuals with activities of daily living may be employed, or jointly employed, by various parties such as the family or household using the companionship services, State or local governments, private for-profit agencies, and hospital-related and not-for-profit agencies.

Under the existing regulation, employees who are employed by an employer or agency other than the family or household using the companionship services may still qualify for the exemption. Similarly, under the current regulation live-in workers who are employed by a third party, rather than by the family in whose household they work and reside, nevertheless may qualify for an overtime exemption under section 13(b)(21) of the FLSA.

The Department believes that employment by a party other than the family or household using the companionship services is inconsistent with the status of a companion, because the exemption for companionship services in section 13(a)(15) of the FLSA is limited to employees who are domestic service employees. The overtime exemption in section 13(b)(21) for live-in employees who reside in the household is similarly limited to domestic service employees. While domestic service was not defined by Congress in the Act, the Senate report reflects Congress' view that “the generally accepted meaning of domestic service relates to service of a household nature performed by an employee in or about a private home of the person by whom he or she is employed.” Senate Report No. 93-690, p. 20 (emphasis added). The regulations mirror Congressional intent in defining domestic service employment as services of a household nature performed by an “employee in or about a private home (permanent or temporary) of the person by whom he or she is employed.” 29 CFR 552.3. Thus, the current regulations contain an internal inconsistency, because they allow the companion and live-in domestic exemptions to be applied to an employee employed by someone other than the person in whose private home the work is being performed.

In 1993, the Department published a proposal to amend this regulation in light of the statutory requirement that the exemptions for companionship services and live-ins only applied to domestic service employees. The proposal provided that the companionship services exemption would not apply unless the person receiving the companionship services acted, alone or jointly, as an employer. 58 FR 69310, December 30, 1993. The subsection pertaining to live-in employees was similarly proposed for amendment. In 1995 the rule was reproposed, suggesting that the exemption might apply if either the person receiving the services or a family member or state agency acted as an employer of the person providing companionship services, if the care recipient was unable to act on his or her own behalf. 60 FR 46797, September 8, 1995. The Department received very few comments on either of those proposals, and many of the comments indicated that there was confusion about the impact and effect of the proposals.

The Department continues to believe that the current regulation impermissibly extends the exemption for companionship services and for live-in workers to employees who do not qualify as domestic service employees, because they are not workinginthe home of their employer,i.e., the third party employer. In addition, as discussed above, changes in the industry and in the nature of the duties being performed in peoples' homes by this segment of the work force have resulted in increasing numbers of employees working for third-party employers. Under the 1974 Amendments, Congress extended coverage of the FLSA to domestic service employees who were not previously covered,i.e.,those who worked only for a private family and not for a covered enterprise. Anyone who prior to 1974 had worked for a covered placement agency, for example, but who was assigned to work in someone's home, would have been covered previously by the FLSA. The Department believes that Congress did not intend the 1974 amendments to change the status of workers already covered by the FLSA, but only intended to exclude casual babysitters and companions from those newly covered by the law, that is, those exclusively employed by the homeowner or family member.

Accordingly, we propose to amend section 552.109 (a) and (c) to make the exemptions in sections 13(a)(15) and 13(b)(21) of the FLSA applicable only with respect to the family or household using the worker's services. For employees who are employed, whether solely or jointly, by an employerother thanthe family or household, such workers wouldnotbe engaged in “domestic service employment” with respect to those third party employers, and those third party employers, therefore, wouldnotbe able to avail themselves of the exemptions. A corresponding revision is made to the definition ofdomestic service employmentin section 552.103.

This proposed regulation does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act.

The proposed rule is not an “economically significant” regulatory action within the meaning of section 3(f)(1) of Executive Order 12866 on“Regulatory Planning and Review.” The rule is not likely to: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; or (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof. As a result, the Department concluded that a full economic impact and cost/benefit analysis was not required for the rule under Section 6(a)(3) of the Order. However, because of its importance to the public and to the Administration's priorities, the rule was treated as a significant regulatory action and it was, therefore, reviewed by the Office of Management and Budget.

Based on our preliminary analysis of the data, it is our conclusion that the proposals to change how the companionship services exemption is applied under the FLSA will not produce a significant economic or budgetary impact on affected entities. The data indicate that more than 90 percent of the workers employed in the potentially affected occupational categories already receive the current federal minimum wage of $5.15 an hour or higher, and changing their status under the FLSA from exempt to non-exempt would not impose any new wage costs to meet minimum wage requirements. Similarly, because it appears that most of the workers in these occupational categories do not regularly work overtime (i.e.,more than 40 hours per week), there would be little impact from overtime wage costs if their status were changed from exempt to non-exempt. Our analysis suggests that most of the likely impact, although small, will be limited to the less than 10 percent of workers who do not receive at least $5.15 an hour and to those workers who may be entitled to additional compensation (minimum wage or overtime) for time spent traveling between multiple client work sites during the day. Some employers may not now pay for such travel time. For those few workers who may be paid at or near the $5.15 minimum wage or who work overtime hours once the travel time is included, some employers could incur minor additional wage costs to meet FLSA's minimum wage or overtime requirements. However, there are many scheduling options available to employers to enable them in that event to limit the total hours worked by an employee to 40 or fewer hours per week to ensure that overtime costs are not incurred if paying overtime wages is not in their own economic self-interests.

The Department of Health and Human Services' Health Care Finance Administration informally estimates that the proposal will have a negligible effect on Medicare costs as the types of services at issue are not a significant component of the Medicare program. Annual Medicaid program expenditures may increase somewhere within a $30 to $40 million range, of which 57 percent would be the Federal share. An equivalent percent increase in private expenditures for home health services would suggest the possibility of a maximum additional increase of $35 million in total private expenditures. The combined private and public total would likely be no greater than $75 million.

Accordingly, it is our conclusion that this rulemaking is not an economically significant regulatory action for purposes of Executive Order 12866.

For similar reasons as noted above, the Department has concluded that this proposed rule is not a “major” rule requiring approval by the Congress under the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801et seq.). It will not likely result in (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or export markets.

For similar reasons for purposes of the Unfunded Mandates Reform Act of 1995, this rule does not include a Federal mandate that may result in increased expenditures by State, local, and tribal governments in the aggregate of more than $100 million, or increased expenditures by the private sector of more than $100 million.

The Department has reviewed this rule under the terms of Executive Order 13132 regarding federalism and has determined that it does not have federalism implications. Because the economic effects under the rule will not be substantial for the reasons noted above, the rule does not have “substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government.”

The Department has assessed this rule under section 654 of the Treasury and General Government Appropriations Act, 1999, for its effect on family well-being and hereby certifies that it will not adversely affect the well-being of families.

The Department has determined for similar reasons that this proposed regulation will not have a significant economic impact on a substantial number of small entities within the meaning of the Regulatory Flexibility Act, and the Department has so certified to the Chief Counsel for Advocacy of the Small Business Administration. As discussed above in the analysis under Executive Order 12866, more than 90 percent of the workers employed in occupational categories addressed by this rulemaking already receive wages at rates above the current federal minimum wage, and they typically work fewer than 40 hours per week. Furthermore, employers are reimbursed by the Federal government or insurance companies for most of the cost of providing these benefits. Thus, even assuming that the alternative covering the most additional (and therefore exempting the fewest) workers is adopted, the rule will not have a significant economic impact. The following regulatory flexibility analysis supports this determination.

Section 13(a)(15) of the Fair Labor Standards Act (29 U.S.C. 213(a)(15)) contains an exemption from both the minimum wage and overtime pay requirements for “3 any employee employed in domestic service employment to provide companionship services for individuals who (because of age or infirmity) are unable to care for themselves (as such terms are defined and delimited by regulations of the Secretary)” (emphasis added). Due to considerable growth in home care and the home health care industry since the implementing regulations were promulgated in 1975, the Department'smore recent experience indicates that the “companionship services” exemption is being asserted in an expansive way for many more workers than we believe the Congress originally intended based on a careful analysis of the background and legislative history to the exemption. Vast numbers of workers employed in regular vocations to provide domestic services and care for individuals in their private homes are being excluded from FLSA coverage as a result of this misapplication of this exemption, which we believe is contrary to the intent and specific purposes of the 1974 FLSA Amendments. The Department is therefore issuing this proposal to invite public comments on possible clarifications to the definitional terms describing the companionship services exemption to bring it more in line with original Congressional intent.

This proposed rule is issued under the authority provided by section 13(a)(15) of the FLSA (29 U.S.C. 213(a)(15)), which grants the Secretary of Labor legislative rulemaking authority to define and delimit the terms “employee employed in domestic service employment to provide companionship services” for purposes of exempting such workers from the minimum wage and overtime pay requirements of the FLSA.

A small business profile obtained from the U.S. Small Business Administration's Office of Advocacy web site indicates that the health services industry is among the top small business industries in the United States according to employment figures. The SBA small business size standard for Home Health Care Services, NAICS 6216, applies a $10 million threshold in annual receipts for defining a small business. Based on data from the U.S. Census Bureau's 1997 Economic Census, there were 16,895 home health care establishments (both exempt from and subject to federal income tax) in 1997 that operated for the entire year. Of that number, 16,486 (or 98%) had revenues (in the case of tax exempt firms) or receipts (in the case of non-exempt firms) of less than $10,000,000. For purposes of this analysis, we have assumed that most of the entities potentially affected by this proposal would likely meet the applicable criteria defining a small business in the home health care industry.

The rule contains no reporting, recordkeeping or other compliance requirements. All employers covered by the FLSA must comply with its minimum wage, overtime pay, child labor, and generally applicable recordkeeping requirements with respect to each employee who is not otherwise exempt from the FLSA's requirements.

There are no Federal rules that duplicate, overlap, or conflict with this rule governing the scope of the companionship services exemption under the FLSA. Regulations issued under the Medicare and Medicaid programs govern qualifying reimbursements for eligible expenses under those programs.

This proposed rule contains no reporting, recordkeeping, or other compliance requirements specifically applicable to small entities or that differ from FLSA requirements generally applicable to all employers subject to the FLSA. Furthermore, since this is a question of application of the basic minimum wage and overtime requirements of the Act, and most affected employers would be small, no special treatment would be appropriate for small entities. However, the Department has prepared three alternative definitions of the scope of exempt duties and requested comments on all three.

There is continuing confusion, among both employees and employers, over the scope of the companionship services exemption as it relates to the home health care industry. This proposal is intended to delimit how the exemption applies in a manner that conforms more fully with Congressional intent. Compliance requirements—i.e., payment of not less than the minimum wage for all hours worked and overtime pay, computed at time-and-one-half the regular rate for hours worked over 40 per week to all covered employees—are imposed by statute but are also relatively simple and easy to comply with. Under the recordkeeping requirements generally applicable to all FLSA-covered employers, no particular order or form of records is prescribed by regulation and employers are free to use any format that assures the essential records are kept that meets compliance needs.

This proposed regulation addresses only statutory coverage and definitional terms used in applying the “companionship services” exemption. Different standards for a statutory exemption are not appropriate for small businesses. It should be noted, however, that the proposed modification to the exemption to exclude from the exemption those workers who are employed by an employer or agency other than the family or household using their services would have the effect of excluding all large employers (as well as small employers other than the family or household).

An exemption based on the size of the entity/employer would not be permitted by the terms of the statute. Coverage and applicability of the wage and hours provisions of the FLSA are based on engagement in interstate commerce, production of goods for interstate commerce, employment in domestic service employment in private households (per se), and employment by certain enterprises named in the statute as subject to its provisions.

This document was prepared under the direction and control of Thomas M. Markey, Deputy Administrator for Operations, Wage and Hour Division, Employment Standards Administration, U.S. Department of Labor.

Several of the background documents for this interim final rule and the take reduction planning process can be downloaded from the ALWTRP web site at http://www.nero.nmfs.gov/whaletrp/.

The ALWTRP was developed pursuant to the Marine Mammal Protection Act (MMPA) to reduce the level of serious injury/mortality of all large whale species in East Coast lobster trap and finfish gillnet fisheries. The background for the take reduction planning process and development of the ALWTRP is set out in the preamble to the proposed (62 FR 16519, April 7, 1997), interim final (62 FR 39157, July 22, 1997), and final (64 FR 7529, February 16, 1999) rules implementing the ALWTRP. Additional information is available in the report from the ALWTRT after its recent series of meetings in 2000. Copies of these documents and supporting Environmental Assessments (EAs) are available from the NMFS/Northeast Region contact in theADDRESSESsection of this document.

Because of the status of the right whale population, there is a need to further reduce entanglement. The interim final rule published December 21, 2000, (65 FR 80368), with an effective date of January 22, 2001, implemented gear modifications (buoy line weak links, net panel weak links with anchoring systems, restrictions on number of buoy lines, and gear marking) that were initially discussed in the 1997 proposed and 1999 final rules and recommended by the TRT after the 2000 meetings. NMFS responded to these recommendations by promulgating the gear modifications in the December 21, 2000, interim final rule. It was agreed that the regulations implementing these gear modifications should be issued as soon as practicable. However, due to rough January weather conditions in the Gulf of Maine, effected fishers will be unable to retrieve and modify active gear by the January 22, 2001 effective date. This interim final rule delays the effective date until February 21, 2001, to allow fishers time to implement the gear modifications.

NMFS expects that a delay of the rule to February 21, 2001 will have minimal impact on the North Atlantic right whale population. Available sighting data for the January through February period suggests that most right whales in New England are congregated in Cape Cod Bay. Data reported by the NE Right Whale Alert System during 1999-2001, included only two sightings of right whales in New England waters outside of Cape Cod Bay. Whales do not begin to leave the Bay until late March (when they move to Stellwagen Bank and then perhaps on to the Great South Channel Area) by which time gear will have been modified as per the Interim Final Rule. Thus, the 30 day delay is not expected to adversely affect right whales in these waters.

An Environmental Assessment (EA) describing the impacts to the environment that would result from the implementation of the ALWTRP was prepared for the July 22, 1997, interim final rule (62 FR 39157). Supplemental EAs were also prepared for the April 9, 1999, final rule (64 FR 17292) and the December 21, 2000, interim final rule (65 FR 80368). The conclusion of those EAs was that the ALWTRP’s actions would pose no significant adverse environmental impact. The delay of the effective date by 30 days does not change the determination of those EAs. This action is categorically excluded from further review because it is an action of limited size and magnitude that does not result in a significant change in the original action.

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

Given the status of the species to be protected and the fact that entanglements continue to occur under the existing regulations, the Assistant Administrator for Fisheries (AA) NOAA, for good cause under 5 U.S.C. 553(b)(3)(B), found that extending the December 21, 2000, interim final rule (65 FR 80368) to allow for prior notice and an opportunity for public commentwould be contrary to the public interest. In addition, the AA finds for good cause under 5 U.S.C. 553(b)(3) that extending this interim final rule for prior notice and an opportunity for public comment would be contrary to the public interest. It would be unfair to subject fishers to changes in gear requirements under the December 21, 2000 interim final rule (65 FR 80368) when, due to weather, the affected fishers have been unable to implement these changes. Because prior notice and an opportunity for public comment are not required to be provided for this interim final rule by 5 U.S.C. 553 or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601et seq., are inapplicable.

This interim final rule delays implementation of a collection-of information requirement subject to the Paperwork Reduction Act that has already been approved by Office of Management and Budget (OMB control number: 0648-0364).

A biological opinion (BO) on the ALWTRP was finalized on July 15, 1997. That opinion concluded that implementation of the ALWTRP and continued operation of fisheries conducted under the American Lobster, Northeast Multispecies, and Shark Fishery Management Plans (FMPs), as modified by the ALWTRP, may adversely affect, but are not likely to jeopardize the continued existence of any listed species or adversely modify critical habitat. A further determination was made that the February 16, 1999, final rule (64 FR 7529) did not change the basis for that BO. NMFS also determined that the December 21, 2000, interim final rule (65 FR 80368) does not change the basis for the 1997 and 1999 ESA determinations. Because this interim final rule simply delays the effective date of the December 21, 2000, interim final rule, NMFS finds this action also does not change the basis for that BO.

This interim final rule should have no adverse impacts on marine mammals. Whale entanglement rates are not expected to increase significantly as a result of this action.

This interim final rule does not change the determination for the December 21, 2000, interim final rule (65 FR 80368) that the ALWTRP will be implemented in a manner that is consistent to the maximum extent practicable with the approved coastal zone management programs of the U.S. Atlantic coastal states.

This interim final rule does not contain policies with federalism implications sufficient to warrant preparation of a federalism assessment under Executive Order 12612.

This interim final rule is promulgated in compliance with all procedural requirements established by the Administrative Procedure Act.

The President has directed Federal agencies to use plain language in their communications with the public, including regulations. To comply with this directive, we seek public comment on any ambiguity or unnecessary complexity arising from the language used in this interim final rule. Send comments to the NMFS Marine Mammal Division Chief (seeADDRESSES).