Background

Brucellosis is a contagious disease affecting animals and humans, caused by bacteria of the genusBrucella.

The brucellosis regulations, contained in 9 CFR part 78 (referred to below as the regulations), provide a system for classifying States or portions of States according to the rate ofBrucellainfection present and the general effectiveness of a brucellosis control and eradication program. The classifications are Class Free, Class A, Class B, and Class C. States or areas that do not meet the minimum standards for Class C are required to be placed under Federal quarantine.

The brucellosis Class Free classification is based on a finding of no known brucellosis in cattle for the 12 months preceding classification as Class Free. The Class C classification is for States or areas with the highest rate of brucellosis. Class A and Class B fall between these two extremes. Restrictions on moving cattle interstate become less stringent as a State approaches or achieves Class Free status.

The standards for the different classifications of States or areas entail (1) maintaining a cattle herd infection rate not to exceed a stated level during 12 consecutive months; (2) tracing back to the farm of origin and successfully closing a stated percentage of all brucellosis reactor cases found in the course of Market Cattle Identification (MCI) testing; (3) maintaining a surveillance system that includes testing of dairy herds, participation of all recognized slaughtering establishments in the MCI program, identification and monitoring of herds at high risk of infection (including herds adjacent to infected herds and herds from which infected animals have been sold or received), and having an individual herd plan in effect within a stated number of days after the herd owner is notified of the finding of brucellosis in a herd he or she owns; and (4) maintaining minimum procedural standards for administering the program.

Before the effective date of this interim rule, Texas was classified as a Class A State.

To attain and maintain Class Free status, a State or area must (1) remain free from field strainBrucella abortusinfection for 12 consecutive months or longer; (2) trace back at least 90 percent of all brucellosis reactors found in the course of MCI testing to the farm of origin; (3) successfully close at least 95 percent of the MCI reactor cases traced to the farm of origin during the consecutive 12-month period immediately prior to the most recent anniversary of the date the State or area was classified Class Free; and (4) have a specified surveillance system, as described above, including an approved individual herd plan in effect within 15 days of locating the source herd or recipient herd.

The last brucellosis-infected cattle herd in Texas was detected in August 2005. The brucellosis reactors in the herd were depopulated. The remaining cattle in the herd were tested and found to be free of brucellosis; they were released from quarantine in September 2006. Since then, no brucellosis-affected herds have been detected.

After reviewing the brucellosis program records for Texas, we have concluded that this State meets the standards for Class Free status. Therefore, we are removing Texas from the list of Class A States in § 78.41(b) and adding it to the list of Class Free States in § 78.41(a). This action relieves certain restrictions on moving cattle interstate from Texas.

Immediate action is warranted to remove unnecessary restrictions on the interstate movement of cattle from Texas. Under these circumstances, theAdministrator has determined that prior notice and opportunity for public comment are contrary to the public interest and that there is good cause under 5 U.S.C. 553 for making this action effective less than 30 days after publication in theFederal Register.

We will consider comments we receive during the comment period for this interim rule (seeDATESabove). After the comment period closes, we will publish another document in theFederal Register. The document will include a discussion of any comments we receive and any amendments we are making to the rule.

This rule has been reviewed under Executive Order 12866. For this action, the Office of Management and Budget has waived its review under Executive Order 12866.

Brucellosis is a contagious, costly disease of ruminants and other animals that can also affect humans. It is mainly a threat to cattle, bison, and swine. The disease causes decreased milk production, weight loss in animals, loss of young, infertility, and lameness. There is no known effective treatment.

The State of Texas has met all the requirements for obtaining Class Free status as outlined in the definition of “Class Free State or area” in § 78.1 of the regulations. The interim rule upgrades the brucellosis status of Texas from Class A to Class Free. Cattle and bison that are to be moved interstate from Class A States, except those moving directly to slaughter or to quarantined feedlots, must be tested before they are eligible for movement. Attaining Class Free status allows producers in Texas to forgo the cost of this test.

Brucellosis testing, including veterinary fees and handling expenses, costs about $7.50 to $15 per test. The expenses forgone as a result of this reclassification in status will be insignificant to cattle owners in Texas. There were 14 million cattle and calves in Texas in 2002. Of this total, 50.7 percent were breeding animals; the rest were composed of non-breeding animals in and outside feedlots. About 9.2 percent of cattle and calves in Texas are moved interstate.1 The average per head value of cattle in Texas was $790 in 2006.2 Thus, the cost of testing represents between 0.9 and 1.8 percent of the average value of the animals sold. The upgrading of the State to brucellosis Class Free status will result in a small savings for those entities moving cattle interstate other than directly to slaughter or to quarantined feeding.

We expect that the majority of cattle and calves operations that will be affected by the interim rule are small entities. Under guidelines established by the Small Business Administration (SBA), an enterprise producing cattle and calves is considered small if it has annual receipts of $750,000 or less.3 There were 125,518 farms with sales of cattle and calves in Texas in 2002.4 Over 99 percent of these farms had annual receipts not exceeding $750,000. These small farms had average sales of $17,700.

The interim rule will benefit producers that sell cattle and calves out of State for breeding and feeding purposes. However, the savings from the forgone testing will be very small, estimated to be between approximately 1 and 2 percent of the value of the animals sold.

Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action will not have a significant economic impact on a substantial number of small entities.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 7 CFR part 3015, subpart V.)

This interim rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule: (1) Preempts all State and local laws and regulations that are in conflict with this rule; (2) has no retroactive effect; and (3) does not require administrative proceedings before parties may file suit in court challenging this rule.

This interim rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501et seq.).

On December 14, 2007, the FAA issued Emergency AD 2007-26-51 for Eurocopter Model EC135 helicopters, which requires, within 5 hours TIS, inspecting the control rod and adjoining ball pivot and replacing any unairworthy parts before further flight. That action was prompted by a report of a fatal accident involving the failure of a control rod. This condition, if not corrected, could result in the failure of a control rod and subsequent loss of control of the helicopter.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, notified us that an unsafe condition may exist on Eurocopter EC135 and EC635 helicopters. EASA advises that an accident recently occurred with an EC135 helicopter in Japan. Preliminary investigation results indicate that the helicopter loss of control was due to the failure of the control rod.

Eurocopter has issued Alert Service Bulletin No. EC135-67A-017, dated December 13, 2007 (ASB), which specifies procedures for checking the attachment hardware on the control rod for a tight fit, checking the ball pivot for damage and freedom of movement, and replacing any damaged part before the next flight. EASA classified this ASB as mandatory and issued EASA AD No. 2007-0301-E, dated December 13, 2007, to ensure the continued airworthiness of these helicopters in the Federal Republic of Germany.

These helicopter models are manufactured in the Federal Republic of Germany and are type certificated for operation in the United States under the provisions of 14 CFR 21.29 and the applicable bilateral agreement. Pursuant to the applicable bilateral agreement, EASA has kept the FAA informed of the situation. The FAA has examined the findings of EASA, reviewed all available information, and determined that AD action is necessary for products of this type design that are certificated for operation in the United States.

Since the unsafe condition described is likely to exist or develop on other Eurocopter Model EC135 helicopters of the same type design, the FAA issued Emergency AD 2007-26-51 to prevent failure of a control rod and subsequent loss of control of the helicopter. The AD requires, within 5 hours TIS, inspecting the control rod and adjoining ball pivot and replacing any unairworthy parts before further flight. The short compliance time involved is required because the previously described critical unsafe condition can adversely affect the controllability of the helicopter. Therefore, within 5 hours TIS, inspecting the control rod and adjoining ball pivot and replacing any unairworthy parts before further flight are required, and this AD must be issued immediately.

Since it was found that immediate corrective action was required, notice and opportunity for prior public comment thereon were impracticable and contrary to the public interest, and good cause existed to make the AD effective immediately by individual letters issued on December 14, 2007, to all known U.S. owners and operators of Eurocopter Model EC135 helicopters. These conditions still exist, and the AD is hereby published in theFederal Registeras an amendment to 14 CFR 39.13 to make it effective to all persons.

The FAA estimates that this AD will affect 163 helicopters of U.S. registry. We estimate 1 work hour to inspect the control rod and ball pivot and 3 work hours to replace a control rod or ball pivot, if necessary, at an average labor rate of $80 per work hour. Required parts will cost $400 for the control rod and $675 for the ball pivot, per helicopter. Based on these figures, we estimate the total cost impact of the AD on U.S. operators to be $32,765, assuming 15 helicopters require a control rod and ball pivot to be replaced.

This AD is a final rule that involves requirements that affect flight safety and was not preceded by notice and an opportunity for public comment; however, we invite you to submit any written data, views, or arguments regarding this AD. Send your comments to an address listed underADDRESSES. Include “Docket No. FAA-2008-0101; Directorate Identifier 2007-SW-76-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of the AD. We will consider all comments received by the closing date and may amend the AD in light of those comments.

We will post all comments we receive, without change, tohttp://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact with FAA personnel concerning this AD. Using the search function of our docket web site, you can find and read the comments to any of our dockets, including the name of the individual who sent the comment. You may review the DOT's complete Privacy Act Statement in theFederal Registerpublished on April 11, 2000 (65 FR 19477-78), or you may visithttp://www.regulations.govfor the Federal government privacy notice.

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

For the reasons discussed above, I certify that the regulation:

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

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

3. Will not have a significant economic impact, positive or negative, on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

We prepared an economic evaluation of the estimated costs to comply with this AD. See the AD docket to examine the economic evaluation.

Title 49 of the United States Code specifies the FAA's authority to issue rules on aviation safety. Subtitle I, section 106, describes the authority of the FAA Administrator. Subtitle VII, Aviation Programs, describes in more detail the scope of the Agency's authority.

We are issuing this rulemaking under the authority described in subtitle VII, part A, subpart III, section 44701, “General requirements.” Under that section, Congress charges the FAA with promoting safe flight of civil aircraft in air commerce by prescribing regulations for practices, methods, and procedures the Administrator finds necessary for safety in air commerce. This regulation is within the scope of that authority because it addresses an unsafe condition that is likely to exist or develop on products identified in this rulemaking action.

The Commission is amending rule 3a [17 CFR 202.3a] of its Informal and Other Procedures, rule 111 [17 CFR 230.111] under the Securities Act of 1933 (“Securities Act”),1 rule 0-9 [17 CFR 240.0-9] under the Securities Exchange Act of 1934 (“Exchange Act”),2 rule 7a-10 [17 CFR 260.7a-10] under the Trust Indenture Act of 1939 (“Trust Indenture Act”),3 and rule 0-8 [17 CFR 270.0-8] under the Investment Company Act of 1940 (“Investment Company Act”).4

The federal securities laws impose a number of fees.5 Many of these fees currently are transmitted to a Treasury designated lockbox depository. Mellon Bank, N.A. (“Mellon”) currently serves as this lockbox depository. As of February 4, 2008, the responsibility for providing lockbox depository services to Treasury will switch from Mellon to U.S. Bank. Mellon is referenced in payment instructions appearing in rule 3a [17 CFR 202.3a] of the Commission's Informal and Other Procedures and rule 111 [17 CFR 230.111] under the Securities Act. The Commission is amending these rules to reflect the change in depository institutions.

The Commission also is amending rule 111 [17 CFR 230.111] under the Securities Act, rule 0-9 [17 CFR 240.0-9] under the Exchange Act, and rule 0-8 [17 CFR 270.0-8] under the Investment Company Act to clarify that payment of fees pursuant to these rules may be made by wire transfer, as well as by certified check, bank cashier's check, United States postal money order, or bank money order, and to eliminate the option of making payment by cash or personal check.

In addition, the Commission is amending rule 3a [17 CFR 202.3a] of its Informal and Other Procedures, which governs the payment of filing fees under the Securities Act, Exchange Act, and Investment Company Act. The revised rule updates the instructions for payment of filing fees to the Treasury designated lockbox depository, as discussed above. It also eliminates outdated procedures for the payment of filing fees, such as payment by hand delivery, payment by mail directly to the Commission's headquarters in Washington, DC, the use of Form ID to update a filer's address, and the distinction between “restricted” and “unrestricted” fees. In addition, the revised rule incorporates the special instructions for payment of filing fees for rule 462(b) and rule 110(d) filings previously included in rule 111 [17 CFR 230.111] under the Securities Act.

An explanatory note also is added to rule 3a [17 CFR 202.3a] with respect to filing fee accounts. A filing fee account is maintained for each filer who submits a filing requiring a fee on the Commission's EDGAR system or who submits funds to the Treasury designated lockbox depository in anticipation of paying a filing fee. The note explains that, under current law, the deposit of money into a filing fee account does not constitute payment of a filing fee. Payment of the filing fee occurs at the time the filing is made, commensurate with the drawing down of the balance of the filing fee account.

Finally, the Commission is removing references in its regulations to the payment of fees under the Trust Indenture Act, since fees that were imposed under that Act were repealed by the Investor and Capital Markets Fee Relief Act.6

The Commission has determined that these amendments to its rules relate solely to the agency's organization, procedure, or practice. Therefore, the provisions of the Administrative Procedure Act (“APA”) regarding notice of proposed rulemaking and opportunity for public participation are not applicable.7 The APA also requires publication of a rule at least 30 days before its effective date unless the agency finds otherwise for good cause.8 Since the Commission's Treasury designated lockbox depository will change on February 4, 2008, we find that immediate effectiveness of these amendments will clarify the obligations of payors and prevent the confusion that might otherwise occur if the Commission's rules are not amended contemporaneously. Consequently, we find there is good cause for the amendments to take effect immediately upon publication in theFederal Register. For the same reasons, and because these amendments do not substantially affect the rights or obligations of non-agency parties, the provisions of the Small Business Regulatory Enforcement Fairness Act are not applicable.9 In addition, the provisions of the Regulatory Flexibility Act, which apply only when notice and comment are required by the APA or other law, are not applicable.10 Finally, these amendments do not contain any collection of information requirements as defined by the Paperwork Reduction Act of 1995, as amended.11

The Commission is sensitive to the costs and benefits imposed by its rules. The rule amendments the Commission is adopting today amend the Commission's rules to reflect a change of the Commission's Treasury designated lockbox depository and to update the procedures for payment of fees required under the securities laws. The Commission does not believe that the rule amendments will impose any costs on non-agency parties, or that if there are any such costs, they are negligible.

Section 23(a)(2) of the Exchange Act requires the Commission, in making rules pursuant to any provision of the Exchange Act, to consider among other matters the impact any such rule would have on competition. Section 2(c) of the Investment Company Act requires the Commission to give the same consideration in making rules under the Investment Company Act. The Commission does not believe that the amendments that the Commission is adopting today will have any impact on competition.

The Commission is adopting amendments pursuant to sections 6(b) and 19 of the Securities Act, sections 13(e), 14(g), 23, and 31 of the Exchange Act, section 319 of the Trust Indenture Act, and sections 24(f) and 38 of the Investment Company Act.

This document addresses submissions that FDA received in response to a June 4, 2003, final rule for OTC skin protectant drug products (68 FR 33362). The final rule establishes reduced labeling requirements for the following products (68 FR 33362 at 33374):

• products formulated and labeled as lip protectants that meet the criteria established in § 201.66(d)(10) (21 CFR 201.66(d)(10)) (§ 347.50(e));

• products containing only cocoa butter, petrolatum, or white petrolatumidentified in § 347.10(d), (m), and (r), used singly or in combination with each other, and marketed other than as a lip protectant (§ 347.50(f));

• sunscreen drug products labeled for use only on specific small areas of the face (e.g., lips, nose, ears, and around the eyes) and that meet the criteria established in § 201.66(d)(10) (§ 352.52(f)); and

• products containing combinations of skin protectant and sunscreen active ingredients (§ 352.60(b)(2), (c), and (d)).

Because we had not previously proposed this reduced labeling, we requested comments specifically on these new labeling requirements. This document addresses the five issues presented in the three sets of comments that we received after the final rule. All of the comments request changes to existing regulatory requirements. As explained in section II of this document, we agree to make the changes requested in two of the comments and are, therefore, amending the final rule to:

• add an alternative statement of identity for skin protectant products formulated and marketed as lip protectants and

• allow omission of a warning for lip protectant products that meet the criteria established in § 201.66(d)(10).

(Comment 1) A drug manufacturer requested that we include the term “lip protectant” as an alternative statement of identity for skin protectants marketed as lip protectants (Ref. 1). The manufacturer notes that we have distinctly identified products formulated and marketed as lip protectants in other areas of the skin protectant final rule, including §§ 347.3 and 347.50(b)(2)(ii), (e), and (f). The manufacturer further points out that we have permitted a product used to treat poison ivy, oak, and sumac to be distinctly identified as a “poison ivy, oak, sumac protectant” in § 347.50(a)(3).

We agree with the manufacturer and are including the term “lip protectant” as an alternative statement of identity for skin protectant drug products formulated and marketed as lip protectants. We agree that the term “lip protectant” accurately describes this category of products and is readily understood by consumers. Accordingly, we are adding the following new paragraph in § 347.50(a):For any product formulated as a lip protectant.“Skin protectant,” “lip protectant,” or “lip balm” (optional, may add dosage form, e.g., “cream,” “gel,” “lotion,” or “ointment”).

(Comment 2) A drug manufacturer requested that we allow reduced labeling for all lip protectant products, whether or not they meet the criteria established in § 201.66(d)(10) (i.e., whether or not they are sold in small packages) (Ref. 1). The manufacturer states that the skin protectant final rule (68 FR 33362 at 33380 to 33381) amends the final rule for OTC sunscreen drug products to allow reduced labeling “without the need to meet the criteria established in § 201.66(d)(10)” for the following products:

• Sunscreen products that are marketed as lip protectants or lipsticks (§ 352.52(c)(2) and (d)(4)) and

• Combination sunscreen-skin protectant drug products marketed as lip protectants or lipsticks (§ 352.60(c) and (d)).

We have determined that the reduced labeling requirements established under § 347.50(e) for OTC lip protectant products are appropriate only if the criteria of § 201.66(d)(10) are met. If the criteria of § 201.66(d)(10) are not met, at least one of the factors upon which we relied to conclude that minimal information is needed for safe and effective use of lip protectants would not apply, namely, the product would not necessarily be sold in small packages (see 68 FR 33362 at 33371). Further, if the § 201.66(d)(10) criteria are not met, space constraints would not exist to support reduced labeling. We believe the current labeling requirements for lip protectant products that do not satisfy the § 201.66(d)(10) criteria benefit consumers and should continue to apply.

Therefore, we are not revising the criteria for reduced labeling in the skin protectant monograph. We will address, in a separate rulemaking for the sunscreen monograph, whether sunscreen lip protectant products (i.e., sunscreen products marketed as lip protectants or combination sunscreen-skin protectant drug products marketed as lip protectants or lipsticks) should also be required to satisfy the conditions of § 201.66(d)(10) in order to qualify for reduced labeling requirements. We intend to publish a sunscreen rulemaking in a future issue of theFederal Register. The rulemaking will address various labeling and testing requirements for both ultraviolet A (UVA) and ultraviolet B (UVB) rays, including reduced labeling requirements for sunscreen lip protectant products.

(Comment 3) A drug manufacturer argued that the warning statement exemption allowed for sunscreens combined with skin protectants (§ 352.60(c)) should be extended to all lip protectant products (Ref. 1). Section 352.60(c) of the sunscreen monograph permits sunscreen-skin protectant combinations to omit the warning in § 347.50(c)(3): “Stop use and ask a doctor if [bullet] condition worsens [bullet] symptoms last more than 7 days or clear up and occur again within a few days.” The manufacturer points out that the skin protectant monograph does not allow this warning to be omitted for skin protectants formulated and labeled as lip protectants. Section 347.50(e)(1)(iii) of the skin protectant monograph allows the warning to be shortened (i.e., “Stop use and ask a doctor if condition lasts more than 7 days”) but not omitted. The manufacturer argues that the requirement for this warning makes the skin protectant and sunscreen monographs inconsistent.

We agree with the manufacturer and are changing the skin protectant monograph to allow the warning to be omitted for lip protectant products that meet the requirements in § 201.66(d)(10). In the preamble to the skin protectant final rule, we concluded that minimal information is needed for safe and effective use of lip protectant products because of specific characteristics of these products (68 FR 33362 at 33371), including that they:

• are typically packaged in small amounts,

• are applied to limited areas of the body,

• have high therapeutic index,

• are extremely low risk in consumer use situations,

• provide a favorable public health benefit,

• require no specified dosage limitation, and

• require few specific warnings and no general warnings.

(Comment 4) A law firm requested that we allow additional reduced labeling for lip protectants and all other skin protectant drug products by eliminating the requirement to list the established name of an active ingredient both on the principal display panel (PDP) and in the Drug Facts box (Ref. 2). The law firm argues that the PDP for skin protectants and, in fact, most OTC drug products should only include the general pharmacological category as the statement of identity.

The issue raised by the law firm is outside the scope of the reduced labeling issues for which we sought comments in the skin protectant final rule. We do not believe it appropriate to address this issue in this document because the issue impacts the labeling for all OTC drug products. The law firm, or any other party interested in amending the OTC labeling regulations, can submit a citizen petition in accordance with 21 CFR 10.30.

(Comment 5) A drug manufacturers' association requested that we consider a greater degree of flexibility in the reduced labeling allowed for skin protectant (lip protectant) and skin protectant-sunscreen combination products (Ref. 3). Specifically, the association asks that we permit manufacturers to list inactive ingredients somewhere other than on the container label for “products such as lip balms and lip balms with sunscreen,” which are sold in very small containers similar to lipsticks containing sunscreens. The association notes that we permit this labeling exception for some cosmetic products.

We are denying the request to list inactive ingredients somewhere other than on the container label for skin protectant and skin protectant-sunscreen combination drug products. We do allow listing of inactive ingredients for some cosmetic products in labeling accompanying the product rather than on the container label (21 CFR 701.3(i)). However, we do not allow inactive ingredients to be listed somewhere other than on the container label if the cosmetic product is also a drug product (e.g., a lipstick containing sunscreen).

Section 502(e)(1)(A)(iii) of the Federal Food, Drug, and Cosmetic Act (the act) (21 U.S.C. 352(e)(1)(A)(iii)) requires that the inactive ingredients of a drug be listed on the outside of the retail package and, if determined to be appropriate by FDA, on the immediate container. Under § 201.66, the regulation implementing section 502(e)(1)(A)(iii) for OTC drugs, inactive ingredients must be listed on the outside container of a retail package or on the immediate container of the product if there is no outside container or wrapper. The association asserts that section 502(e)(1)(B) of the act (21 U.S.C. 352(e)(1)(B)) gives us the “authority to grant relief from the inactive ingredient listing requirements in appropriate circumstances.” However, section 502(e)(1)(B) addresses only prescription drug labeling. We do not find a basis for allowing an option to list the inactive ingredients of an OTC drug product in a different location, such as in other labeling accompanying the product.

We have examined the impacts of this final rule under Executive Order 12866, the Regulatory Flexibility Act (5 U.S.C. 601-612), and 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). We believe that this final rule is not a significant regulatory action under the Executive order.

The Regulatory Flexibility Act requires agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. This rule provides an additional statement of identity for OTC skin protectant drug products. The revision provides manufacturers of OTC lip protectant drug products the option to label their products as a “lip protectant” or “lip balm” in addition to “skin protectant,” as required by the monograph. The rule also allows manufacturers to omit a warning if the packaging meets the requirements of § 201.66(d)(10). Thus, this rule does not impose any new requirements. Rather, manufacturers may make these changes if they wish to do so. If manufacturers choose to make the changes, they may do so when ordering new labeling in the normal course of business. Therefore, we do not believe that this final rule will have a significant economic impact on a substantial number of small entities.

Section 202(a) of the Unfunded Mandates Reform Act of 1995 requires that agencies prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $127 million, using the most current (2006) Implicit Price Deflator for the Gross Domestic Product. We do not expect this final rule to result in any 1-year expenditure that would meet or exceed this amount.

We conclude that the labeling requirements in this document are not subject to review by the Office of Management and Budget because they do not constitute a “collection of information” under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501et seq.). Rather, the labeling statements are a “public disclosure of information originally supplied by the Federal Government to the recipient for the purpose of disclosure to the public” (5 CFR 1320.3(c)(2)).

We have analyzed this final rule in accordance with the principles set forth in Executive Order 13132. We have determined that this final rule has a preemptive effect on State law. Section 4(a) of the Executive order requires agencies to “construe * * * a Federal statute to preempt State law only where the statute contains an express preemption provision or there is some other clear evidence that the Congress intended preemption of State law, or where the exercise of State authority conflicts with the exercise of Federal authority under the Federal statute.” Section 751 of the act (21 U.S.C. 379r) is an express preemption provision. Section 751(a) of the act (21 U.S.C. 379r(a)) provides that “* * * no State or political subdivision of a State may establish or continue in effect any requirement—(1) that relates to the regulation of a drug that is not subject to the requirements of section 503(b)(1) or 503(f)(1)(A); and (2) that is different from or in addition to, or that is otherwise not identical with, a requirement under this Act, the Poison Prevention Packaging Act of 1970 (15 U.S.C. 1471et seq.), or the Fair Packaging and Labeling Act (15 U.S.C. 1451et seq.).” Currently, this provision operates to preempt States fromimposing requirements related to the regulation of nonprescription drug products. Section 751(b) through (e) of the act outlines the scope of the express preemption provision, the exemption procedures, and the exceptions to the provision.

This final rule provides an additional statement of identity for skin protectants formulated and marketed as lip protectants and allows omission of a warning for certain lip protectant products. Any final rule has a preemptive effect in that it precludes States from issuing requirements related to the labeling of OTC skin protectant drug products that are different from or in addition to, or not otherwise identical with a requirement in the final rule. This preemptive effect is consistent with what Congress set forth in section 751 of the act. Section 751(a) of the act displaces both State legislative requirements and State common law duties. We also note that even where the express preemption provision is not applicable, implied preemption may arise (seeGeierv.American Honda Co., 529 US 861 (2000)).

We believe that the preemptive effect of the final rule is consistent with Executive Order 13132. Section 4(e) of the Executive order provides that “when an agency proposes to act through adjudication or rulemaking to preempt State law, the agency shall provide all affected State and local officials notice and an opportunity for appropriate participation in the proceedings.”

We provided the States with an opportunity for appropriate participation in this rulemaking when we sought input from all stakeholders on the reduced labeling requirements that this rulemaking addresses, through publication of the request for comments in theFederal Registerin the preamble to the final rule on June 4, 2003 (68 FR 33362). We received no comments from any States in response to the request.

In addition, on December 10, 2007, FDA's Division of Federal and State Relations provided notice via e-mail transmission to elected officials of State governments and their representatives of national organization. The notice provided the States with further opportunity to comment. It advised the States of the publication of the request for comments and encouraged State and local governments to review the request and to provide any comments to the dockets for this rulemaking (Docket Nos. 1978N-0021 and 1978N-0021P) by a date 30 days after the date of the notice (i.e., by January 10, 2008), or to contact certain named individuals. FDA received no comments in response to this notice. The notice has been filed in the previously mentioned dockets.

In conclusion, we believe that we have complied with all of the applicable requirements under the Executive order and have determined that the preemptive effects of this rule are consistent with Executive Order 13132.

We have determined under 21 CFR 25.31(a) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

The following references are on display in the Division of Dockets Management, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852 under Docket No. 1978N-0021 and may be seen by interested persons between 9 a.m. and 4 p.m., Monday through Friday.

Pfizer, Inc., 235 East 42d St., New York, NY 10017, filed a supplement to NADA 141-244 for DRAXXIN (tulathromycin)Injectable Solution. The supplemental NADA provides for treatment of infectious bovine keratoconjunctivitis associated withMoraxella bovisand the addition of a pathogen,Mycoplasma hyopneumoniae, to the indication for use for treatment of swine respiratory disease. The application is approved as of December 28, 2007, and the regulations are amended in 21 CFR 522.2630 to reflect the approval.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

Under section 512(c)(2)(F)(iii) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 360b(c)(2)(F)(iii)), this supplemental approval qualifies for 3 years of marketing exclusivity beginning on the date of approval.

The agency has determined under 21 CFR 25.33(a)(1) and (d)(5) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

Intervet, Inc., P.O. Box 318, 29160 Intervet Lane, Millsboro, DE 19966, filed NADA 141-276 that provides for use of ZILMAX (zilpaterol hydrochloride), and RUMENSIN (monensin), and TYLAN (tylosin phosphate) Type A medicated articles to make dry and liquid three-way combination Type B and Type C medicated feeds used for increased rate of weight gain, improved feed efficiency, and increased carcass leanness; for prevention and control of coccidiosis due toEimeria bovisandE. zuernii; and for reduction of incidence of liver abscesses caused byFusobacterium necrophorumandArcanobacterium (Actinomyces) pyogenesin cattle fed in confinement for slaughter during the last 20 to 40 days on feed. The NADA is approved as of January 10, 2008, and the regulations in 21 CFR 558.355, 558.625, and 558.665 are amended to reflect the approval.

In accordance with the freedom of information provisions of 21 CFR part 20 and 21 CFR 514.11(e)(2)(ii), a summary of safety and effectiveness data and information submitted to support approval of this application may be seen in the Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, rm. 1061, Rockville, MD 20852, between 9 a.m. and 4 p.m., Monday through Friday.

The agency has determined under 21 CFR 25.33(a)(2) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

This rule does not meet the definition of “rule” in 5 U.S.C. 804(3)(A) because it is a rule of “particular applicability.” Therefore, it is not subject to the congressional review requirements in 5 U.S.C. 801-808.

I. Background

On October 17, 1988, Congress enacted the Indian Gaming Regulatory Act (“IGRA” or “Act”), 25 U.S.C. 2701-21, creating the National Indian Gaming Commission (“NIGC” or “Commission”) and developing a comprehensive framework for the regulation of gaming on Indian lands. 25 U.S.C. 2702. The NIGC was granted, among other things, the authority to promulgate such regulations and guidelines as it deems appropriate to implement the provisions of IGRA, 25 U.S.C. 2706(b)(10), as well as oversight and enforcement authority, including the authority to monitor tribal compliance with the Act, Commission regulations, and tribal gaming ordinances.

First, the IGRA allows gaming on Indian lands pursuant to 25 U.S.C. 2703(4), and it contains a general prohibition against gaming on lands acquired into trust by the United States for the benefit of the tribe after the Act's effective date of October 17, 1988, unless one of several exceptions are met. 25 U.S.C. 2719. The Commission has jurisdiction only over gaming operations on Indian lands and therefore must establish that it has jurisdiction as a prerequisite to its monitoring, enforcement, and oversight duties. 25 U.S.C. 2702(3).

Second, the NIGC needs to obtain information on a tribe's environmental and public health and safety laws to oversee the implementation of approved tribal gaming ordinances. Before opening a gaming operation, a tribe must adopt an ordinance governing gaming activities on its Indian lands. 25 U.S.C. 2710. The Act specifies a number of mandatory provisions to be contained in each tribal gaming ordinance and subjects such ordinances to the NIGC Chairman's approval.Id.Approval by the Chairman is predicated on the inclusion of each of the Act's specified mandatory provisions in the tribal gaming ordinance.Id.Among these is a requirement that the ordinance must contain a provision ensuring that “the construction and maintenance of the gaming operation, and the operation of that gaming is conducted in a manner that adequately protects the environment and the public health and safety.” 25 U.S.C. 2710(b)(2)(E). Since 1993, when the Commission became operational, the Chairman has required each tribal gaming ordinance submitted for approval to include the express environmental and public health and safety statement set out in 25 U.S.C. 2710(b)(2)(E).

The Commission believes that tribes must have some form of basic laws in the following environmental and public health and safety areas: (1) Emergency preparedness, including but not limitedto fire suppression, law enforcement and security; (2) food and potable water; (3) construction and maintenance; (4) hazardous materials; and (5) sanitation (both solid waste and wastewater). Accordingly, in 2002, the Commission issued an interpretive rule to ensure the adequate protection of the environment, public health, and safety. 67 FR 46109, Jul. 12, 2002 (“Interpretive Rule”).

The NIGC has conducted many environment and public health and safety inspections since the issuance of the Interpretive Rule and has worked with a consultant to allow the agency to gain expertise in this area. Through this inspection process, the NIGC has identified weaknesses in tribal laws or enforcement thereof and has worked with tribes to cure deficiencies. The Commission has also identified several deficiencies in the Interpretative Rule that will be corrected by the Facility License Standards. Namely, the Interpretive Rule does not assist the Commission in identifying what environmental and public health and safety laws apply to each gaming operation nor does it ensure that tribal gaming regulatory authorities are enforcing those laws.

There is a need for a submission to the Commission of a certification by the tribe that it has enacted or identified laws applicable to its gaming operation and is in compliance with them together with a document listing those laws. This process will enable tribes and the Commission to identify problem areas where laws are needed so that the NIGC may offer technical advice and encourage adoption and enforcement of appropriate laws. The final Facility License Standards will not replace the Interpretive Rule but will work in conjunction with it. The final rule does not preclude the Chairman's authority to take an enforcement action in the event imminent jeopardy exists at a tribal gaming facility.

The rule will not have a significant economic effect on a substantial number of small entities as defined under the Regulatory Flexibility Act, 5 U.S.C. 601,et seq.Moreover, Indian tribes are not considered to be small entities for the purposes of the Regulatory Flexibility Act.

The rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. The rule does not have an annual effect on the economy of $100 million or more. The rules will not cause a major increase in costs or prices for consumers, individual industries, Federal, state or local government agencies or geographic regions and does not have a significant adverse effect on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises.

The Commission, as an independent regulatory agency within the Department of the Interior, is exempt from compliance with the Unfunded Mandates Reform Act, 2 U.S.C. 1502(1); 2 U.S.C. 658(1). Regardless, the rule does not impose an unfunded mandate on state, local, or tribal governments or on the private sector of more than $100 million per year. Thus, it is not a “significant regulatory action” under the Unfunded Mandates Reform Act.

In accordance with Executive Order 12630, the Commission has determined that the rule does not have significant takings implications. A takings implication assessment is not required.

In accordance with Executive Order 12988, the Office of General Counsel has determined that the rule does not unduly burden the judicial system and meet the requirements of sections 3(a) and 3(b)(2) of the Order.

The Commission has determined that the rule does not constitute a major federal action significantly affecting the quality of the human environment and that no detailed statement is required pursuant to the National Environmental Policy Act of 1969, 42 U.S.C. 4321,et seq.

The following final Facility Licensing Standards require information collection under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501,et seq., and are subject to review by the Office of Management and Budget.

We requested written comments from the public on the proposed Facility License Standards (72 FR 59044) during the comment period that opened on October 18, 2007, and closed on December 3, 2007. During that comment period we received 81 comments: 70 from tribal governments or tribal gaming commissions; 3 from citizens' associations; 3 from gaming associations and 1 each from a governor's association, a county, a private citizen, a state environmental agency, and a cardroom. Many of the comments were grouped based on the common topics addressed. The Commission carefully reviewed all comments and where appropriate revised the final rule to reflect those comments. The comments and the NIGC response follow.

Many of the comments to the proposed Facility License Standards pertained to the Commission's authority. We address the specific issues and Commission response below.

Several commenters stated that the proposed rule improperly intrudes upon tribal sovereignty in the absence of a clearly expressed intent by Congress to do so and seeks to replace the tribe's sovereign regulatory authority with NIGC's authority. Stated variously, the proposed rule would compel the tribes to adopt NIGC's facility licensing standards instead of the tribes' own, or it would compel the tribes to enact positive law and then grant the NIGC the right to judge the adequacy of that law.

The Commission disagrees with these characterizations of IGRA and of the proposed rule's purpose and consequence. The Commission recognizes that tribes are the primary regulators of Indian gaming and has no intention or desire to intrude upon that vital role or to usurp tribal authority. Thus, in the general case, the rule only asks each tribe to identify and enforce the laws it has adopted to ensure the health and safety of the public and the environment, i.e., the laws or standards it has adopted in the areas of emergency preparedness, food and potable water, construction and maintenance, etc. There is no requirement that a tribe adopt and enforce any particular law. The Commission merely wishes to know, for example, whether a tribe has written its own fire code, whether it has adopted a county's code, or whether a tribal-state compact provides for the application of a particular fire code.

It is only in the unusual case where a tribe has adopted no, or obviously inadequate, health and safety standards that the rule would insist that the tribe adopt laws. That, however, places no obligation on the tribe that does not already exist. IGRA obligates each tribe, through its gaming ordinance, to ensurethat the construction, maintenance, and operation of each tribal gaming facility is conducted in a manner that adequately protects the environment and the public health and safety. 25 U.S.C. 2710(b)(1)(E). In short, the rule encroaches no further on tribal sovereignty than IGRA already has.

Likewise, the Commission already “judges” the adequacy of tribal health and safety standards. The Commission already has, and already exercises, oversight responsibility for health and safety at tribal gaming operations. As with all aspects of regulating Indian gaming, the primary responsibility belongs to the tribes, and the Commission plays only an oversight role under the Commission's existing interpretive rule, 67 FR 46109. The adoption of the rule would make no change to this arrangement.

Several commenters stated that the NIGC has no authority to require adoption of specific health and safety or operational standards because IGRA contains no such standards.

Although IGRA does not enumerate specific health and safety requirements for gaming facilities, the Act requires that the construction, maintenance and operation of a gaming facility “is conducted in a manner which adequately protects the environment and the public health and safety.” 25 U.S.C. 2710(b)(1)(E). Congress created the NIGC, 25 U.S.C. 2704(a), and gave it the specific authority to “promulgate such regulations and guidelines as it deems appropriate to implement the provisions of [IGRA].” 25 U.S.C. 2706(b)(10). The Commission is doing so here. This rule mandates that tribes identify, and certify their enforcement of, the health and safety laws, resolutions, codes, policies, standards and/or procedures that apply to their gaming operations. Therefore, the rule implements the requirements of 25 U.S.C. 2710(b)(1)(E). Further, when certain terms are used herein to describe applicable health and safety requirements, such as laws, resolutions, codes, policies, standards and/or procedures, the use of such term or terms is not meant to exclude all other terms of similar meaning.

Several commenters stated that NIGC has no authority to attach specific requirements, such as a three-year renewal period, to issuing a facility license because IGRA contains no such requirements. Other commenters suggested that the three-year renewal period was arbitrary.

The Commission agrees that IGRA does not specify any period of renewal or other conditions to the obligation to issue a facility license. The Commission disagrees, however, with the commenters' conclusion that the Commission therefore lacks the authority to promulgate such requirements. The Commission also disagrees that the three-year renewal period is arbitrary, as it is a reasonable period to periodically review changes in tribal requirements and/or changes in physical circumstances at a gaming facility.

IGRA obligates each tribe to license its gaming facilities: “A separate license issued by the Indian tribe shall be required for each place, facility or location on Indian lands at which Class II gaming is conducted.” 25 U.S.C. 2710(b)(1). IGRA also obligates each tribe, through its gaming ordinance, to ensure that the construction, maintenance, and operation of each tribal gaming facility is conducted in a manner that adequately protects the environment and the public health and safety. 25 U.S.C. 2710(b)(1)(E). What exactly is required by each of these sections, or when it is required, however, Congress did not say. Congress has neither the institutional expertise nor the inclination to specify all regulatory details in this or any other organic statute for any regulatory agency. Accordingly, it creates regulatory agencies and gives to them the responsibility to fill in those gaps.

Congress created the NIGC, 25 U.S.C. 2704(a), and gave it the specific authority to “promulgate such regulations and guidelines as it deems appropriate to implement the provisions of this chapter [i.e., IGRA].” 25 U.S.C. 2706(b)(10). The Commission has deemed it appropriate to implement the specific provisions set out in 25 U.S.C. 2710(b)(1) and 2710(b)(1)(E).

The rule does not require that each facility be licensed only every three years. Rather, the rule requires that a facility be licensed no less frequently than once every three years, proposed 25 CFR 559.3, and the Commission observes that most tribes license their gaming facilities more frequently. The choice of a three-year renewal period is therefore consistent with, and largely encompasses, the tribes' existing practices. The rule also requires that the tribe submit a list of applicable health and safety laws and certify its compliance with them. Proposed 25 CFR 559.5. The Commission has deemed it appropriate to implement the specific provisions in 25 U.S.C. 2710(b)(1) and 2710(b)(1)(E).

By seeking to have tribes periodically license gaming facilities and identify the health and safety rules they enforce, the rule creates mechanisms by which the tribes and the Commission can ensure that gaming facilities are licensed and that their construction, maintenance and operation is “conducted in a manner which adequately protects the environment and the public health and safety.” 25 U.S.C. 2710(b)(1)(E).

Several commenters stated that NIGC has no authority to require submissions of facility licenses, a list of all applicable health and safety laws and standards, or any documents other than those specifically identified in IGRA such as: (1) Annual audit reports; (2) proposed gaming ordinances; (3) notice of the issuance of a gaming license to key employees and primary management officials; and (4) an application for self-regulation.

The Commission agrees that IGRA does not specifically identify the submissions required by the proposed rule. The Commission disagrees that the comment contains an exhaustive list of documents whose submission IGRA specifically requires. The comment omits, for example, the submission of management contracts for the Chairman's review and approval. 25 U.S.C. 2711. The Commission also disagrees with the commenters' conclusion that the ability to require submission of information is limited to those specific submissions identified in IGRA.

As to the submission of the facility license itself and the information about health and safety laws and compliance that must accompany it, IGRA, again, obligates each tribe to license its gaming facilities. 25 U.S.C. 2710(b)(1). IGRA also obligates each tribe, through its gaming ordinance, to ensure that the construction, maintenance, and operation of each tribal gaming facility is conducted in a manner that adequately protects the environment and the public health and safety. 25 U.S.C. 2710(b)(1)(E). What exactly is required by each of these sections, however, Congress did not say. Congress has neither the institutional expertise nor the inclination to specify all regulatory details in this or any other organic statute for any regulatory agency. Accordingly, it creates regulatory agencies and gives to them the responsibility to fill in those gaps.

Congress created the NIGC, 25 U.S.C. 2704(a), and gave it the specific authority to “promulgate such regulations and guidelines as it deems appropriate to implement the provisions of this chapter [i.e., IGRA].” 25 U.S.C. 2706(b)(10). The Commission has deemed it appropriate to implement the specific provisions set out in 25 U.S.C. 2710(b)(1) and 2710(b)(1)(E).

By seeking to have tribes periodically license gaming facilities and identify thehealth and safety rules they enforce, the rule creates mechanisms by which the tribes and the Commission can ensure that gaming facilities are licensed and that their construction, maintenance and operation is “conducted in a manner which adequately protects the environment and the public health and safety.” 25 U.S.C. 2710(b)(1)(E).

That said, there is a second, sufficient source of authority within IGRA for the submission of facility licenses to the Commission. A facility license is a requirement of IGRA, 25 U.S.C. 2710(b)(1), and the failure to issue a license is a violation of IGRA against which the NIGC Chairman may bring an enforcement action. 25 U.S.C. 2713. The Chairman, therefore, has the authority to request any facility license for any facility as part of a routine investigation. 25 U.S.C. 2706(b). Rather than regularly making such a demand through the Commission's enforcement staff, the proposed rule simply establishes an administrative process for the submission of facility licenses upon their issuance.

Similarly, as to the submission of Indian lands information, IGRA requires that all gaming take place on “Indian lands.”See, e.g., 25 U.S.C. 2710(b)(1), 2710(d)(1). Gaming that does not take place on Indian lands is subject to all state and local gambling laws and federal laws apart from IGRA. The Chairman therefore has the authority to request Indian lands information for any facility as part of a routine investigation in order to establish whether gaming is, in fact, occurring under IGRA. 25 U.S.C. 2706(b). Rather than regularly making such a demand through the Commission's enforcement staff, the proposed rule simply establishes an administrative process for the submission of minimal Indian lands information before the opening of a new facility.

A few commenters stated that requiring tribes to submit site-specific facility licenses to the NIGC for approval presumes the NIGC is mandated by IGRA to engage in site-specific Indian lands determinations, but the Commission has no role in determining Indian lands. In previous litigation, the Commission has argued that it does not have a statutory duty to make pre-construction Indian lands determinations.

The Commission disagrees with the characterization of the proposed rule and with the commenters' assertion that the Commission has no role in determining Indian lands.

The rule does not establish any mechanism or system whereby facility licenses are submitted to the Commission for approval. Rather, the rule simply requires that 120 days prior to the opening of a new facility, the tribe submit a notice that a facility license is under consideration to make the Commission aware of the impending opening. The rule also requires the submission of minimal information for determining Indian lands. Again, the location of a gaming facility on Indian lands is a necessary prerequisite to gaming under IGRA. The proposed rule requests some of the information necessary to make an Indian lands determination and was a change from a previous draft of the rule, which imposed an affirmative obligation on each tribe to make an Indian lands determination before opening a new facility.

One commenter stated that the NIGC does not have the authority to make Indian lands determinations because IGRA plainly gives that authority to the Secretary of the Interior.

The Commission disagrees. IGRA gives the ability to make Indian lands determinations both to the Secretary, for example, while taking land into trust, and to the Commission. Again, the location of a gaming facility on Indian lands is a necessary prerequisite to gaming under IGRA and to the Commission's jurisdiction under IGRA. A reading of IGRA under which the Commission is unable to determine its own jurisdiction would undermine, if not make meaningless, the Chairman's enforcement authority under 25 U.S.C. 2713.

A number of commenters stated that under the decisions inColorado River Indian Tribesv.NIGC,the Commission does not have the authority to regulate class III gaming and that these regulations are an unauthorized rulemaking intended to encroach on class III gaming.

The Commission respects and abides by the courts' decisions in theColorado River Indian Tribesv.National Indian Gaming Commission(“CRIT”) cases. The Commission disagrees, however, that the CRIT cases stand for the broad proposition that the NIGC lacks any authority over class III gaming. Rather, CRIT stands for the narrower propositions that (1) an administrative agency has only the authority Congress delegated to it and (2) that Congress did not grant the Commission authority to promulgate minimum internal control standards for class III gaming. The latter is not applicable here and the Commission, as stated at length above, believes that it does have the authority to promulgate these facility license standards.

A few commenters stated that the NIGC may not issue these regulations because under the well-established canons of construction in federal Indian law, statutory ambiguities must be resolved in favor of the tribes.

The Commission agrees that the Indian canon of construction holds that statutory ambiguities are to be resolved in favor of the tribes. The Commission disagrees, however, that the canon prohibits the Commission from adopting the rule. The Commission believes that the rule effectuates some of IGRA's statutory requirements: the licensing of gaming facilities and the construction, maintenance and operation of those facilities so as to protect the environment and the public health and safety. Doing these things ensures not only the health of casino employees and patrons but the health of the Indian gaming industry itself.

Assuming for the sake of argument that there are ambiguities in IGRA, the Commission believes that the rule resolves them in favor of the tribes. The commenters would have otherwise. In such a situation where there are competing views of what is “in favor of the tribes,” the canon will not bar the Commission's decision.See, e.g., Shakopee Mdewakanton Sioux Communityv.Hope, 16 F.3d 261, 264 n.6 (8th Cir. 1994).

A few commenters stated that there is no authority to demand that a tribe perform information gathering for the Commission without a contract or compensation. Section 2710(b)(7) of IGRA plainly requires that if the Commission desires a tribal government to perform commission functions, then the Commission should contract to pay them.

The Commission disagrees with this reading of 25 U.S.C. 2710(b)(7). Nothing in this section requires the Commission to contract with tribes for compliance with Commission regulations. Rather, this section permits and recommends to the Commission that it contract with the tribes for enforcement of Commission regulations.

Some commenters stated that the requirements of the proposed rule are unnecessary because they duplicate existing Federal and tribal regulations.

The Commission disagrees. The rule does not require the adoption of any particular health and safety rules or standards and thus cannot conflict with standards the tribe has adopted on its own that apply under a tribal-state compact, or that apply under federallaw. Even in a case where the proposed rule would mandate the adoption of a health and safety law—because none had been adopted, for example—no particular law is mandated.

As for the submission of “Indian lands” information, the rule does not require the submission of information already in the possession of the Bureau of Indian Affairs and thus avoids unnecessary duplication.

Some commenters stated that the NIGC has not demonstrated that the current system of licensing facilities is inadequate.

The Commission believes that the rule fills two important regulatory needs. First, it allows the Commission to have advance notice of the opening of gaming facilities, and thus to have the ability to exercise its oversight regulatory authority appropriately and timely. Second, it helps ensure that adequate health and safety standards are maintained and complied with at all gaming facilities.

One commenter sought clarification whether the tribal gaming regulatory authority is the entity that is responsible for implementing the rule, which only uses the word “tribe”.

The rule mirrors the language used in IGRA when it places regulatory responsibility on a “tribe.” Nothing, however, prohibits a tribe from vesting a tribal gaming regulatory authority with the responsibility to act in compliance with the proposed rule.

A number of commenters recommended that the NIGC require tribal governments to certify the implementation of their public health and safety ordinances as part of the annual audit process.

The Commission disagrees. The rule is designed to be minimally intrusive. It requires licensing of facilities no less frequently than once every three years. Making certification of enforcement of health and safety ordinances part of each tribe's annual audit process would make three times the work and is more likely to be inconsistent with current licensing practices.

One commenter requested that facility license submission be required not only for new facilities but also for substantial expansions of existing facilities (substantial being defined as either a 25% increase in the number of class II/III machines or an increase of more than 150 machines).

The Commission disagrees. This would be inconsistent with the purpose underlying notification to the Commission of new facilities. The notification allows the Commission to exercise its oversight regulatory responsibility for the new facility appropriately and timely. There is no such need for notification with existing facilities because the Commission has regular contact with, and is generally aware of the circumstances of, gaming facilities already in operation.

One commenter believed that a copy of the tribe's facility license submission should be sent to the governing boards of the county and any city immediately adjacent to or surrounding the facility as well as to the Governor of the state and allow those entities to provide comment. One commenter proposed that notice be provided to state Governors of tribal submissions concerning the opening and closing of gaming facilities.

The Commission disagrees. Indian gaming is an expression of the sovereign right of Indian tribes to regulate their own affairs on their own land, separate and apart from the laws and requirements of the states or their political subdivisions. To the extent Congress wished the involvement of the states in Indian gaming, IGRA so provides, and the Commission does not believe it to be appropriate to add more. As facility licensing is a matter of gaming regulation, notification to the states may be provided for by tribal-state compact.

One commenter requested that the rule distinguish between class II and class III in each subsection and that tribes be required to submit tribal-state compacts as part of their submission as evidence of compliance of state law as it relates to new facilities.

The Commission disagrees. The requirements of the rule are applicable regardless of the class of gaming involved, and thus no distinction is necessary. Further, if a tribal-state compact provides for the application of particular health and safety laws, then identification of the compact and its requirements is sufficient.

One commenter stated that it is unclear whether state or local governments or other entities could challenge tribes' facility license notice and, thus, Indian lands determinations.

The Commission does not intend to permit such a challenge.

One commenter believed that the license submission should also state whether the land is trust land eligible for Indian gaming under IGRA and the basis for that assertion.

The Commission disagrees. The submission of Indian lands information is required only for new facilities. If a tribe is opening a facility on land newly taken into trust, then the Department of the Interior will have made an Indian lands determination as part of the trust acquisition process. Requiring the information suggested here would be duplicative.

Several commenters suggested that adopting the Facility License Standards would conflict with the Interpretative Rule previously issued by the NIGC that lays out a “limited and discrete responsibility” for the Commission in regulating the environment and public health and safety.

The Commission agrees with the commenters that the Environment, Public Health and Safety Interpretative Rule (67 FR 46109) envisions a limited and discrete responsibility. The Interpretative Rule also highlighted, however, that this did not leave the Commission without authority or responsibility in this area as “IGRA explicitly accords the Commission a role in ensuring compliance with the environment, public health and safety provision of IGRA.” The Facility License Standards do not increase the NIGC's limited role. They do not demand adoption of any particular health and safety rules; rather, the rule primarily requires tribes to make the NIGC aware of what health and safety rules apply. This compliments NIGC's oversight role under 67 FR 46109.

Several commenters noted that the requirements of the Facility License Standards are already addressed in some tribal-state compacts and that those tribes should be exempted from the reporting requirements in this rule.

For those tribes whose tribal-state compacts identify those laws, resolutions, codes, policies or standards, other than federal laws that are required in the NIGC's Facility License Standards, they can submit to the NIGC the location where that information can be found in their tribal-state compact. It should be noted, however, that tribal-state compacts are only required for class III gaming and the Facility License Standards apply to both class II and class III gaming facilities.

Several comments related to the ability of the NIGC to carry out its duties under the Facility License Standards without creating a new bureaucracy within the Commission.

The Commission disagrees. The NIGC already has existing personnel who conduct site visits to tribal gaming facilities under the Interpretative Rule and who handle environmental issues. Existing personnel will continue to work on these and other environmental issues that arise.

Several comments related to the NIGC's statement that it had conducted many site visits and inspections sinceissuance of the Interpretative Rule which led to the NIGC identifying the deficiencies addressed by this rule. Commenters requested that the NIGC detail the results of those inspections to justify the necessity of the Facility License Standards.

The NIGC has identified the following health and safety issues during site visits: lack of fire suppression systems; lack of fire or ambulance service; insanitary food storage and handling; and, storage of hazardous materials in locations with non-compatible chemicals. In its Facility License Standards, the Commission seeks to carry out its obligations under IGRA to ensure that gaming is occurring in a manner that adequately protects the environment and the public health and safety.

Several commenters were unclear as to what the NIGC's remedy would be for non-compliance with the Facility License Standards.

The Chairman has the power to order temporary closure of a gaming facility for substantial violation of the provisions of 25 U.S.C. 2713.

One commenter requested that the Facility License Standards be expanded to provide for independent audits by qualified, certified environmental/engineering firms, according to a schedule established by the tribe and agreed upon by the Commission, with local governmental entities allowed to review the results of the audit.

The Commission determined that adding this requirement to the Facility License Standards would be unnecessary as the NIGC's site visits and the material requested to be submitted with the Facility License Standard would be sufficient for the NIGC to determine compliance with IGRA.

Several comments stated that the information required for a new gaming facility is onerous, duplicative and overly-burdensome.

The Commission disagrees. In this final rule, the NIGC has significantly reduced the lands information tribes are required to submit with a new facility license. In the initial working drafts of the proposed rule, the NIGC required the lands information on both new and existing gaming facilities. In this final rule, the NIGC is only requiring qualifying land information for a facility license on new facilities. In addition, the final rule only requires the facility name, legal description, and BIA tract number for a new facility. Prior drafts required a great deal more: A legal analysis, copies of trust documents, copies of court decisions, executive orders, secretarial proclamations or other documentation regarding land ownership. The information required in the final rule represents the basic information necessary so that the NIGC can then determine whether additional lands documentation is required.

One commenter expressed concern that the NIGC will respond directly to inquiries from other governmental offices and Congress while public and state governments will be subject to the Freedom of Information Act, 5 U.S.C. 552.

The Commission complies with the Freedom of Information Act (“FOIA”), therefore, any requests for information submitted as part of the Facility License Standards requirements will be subject to FOIA and the Privacy Act of 1974, 5 U.S.C. 552a. With the exception of law enforcement agencies and requests from Congressional committees, which are exempt from FOIA, the NIGC treats all requests for information obtained as subject to FOIA. This includes requests from Congressional offices, state and federal offices, and the general public.

One commenter suggested that the estimates provided by the NIGC regarding the amount required for information collection are far too low in the event a tribe does not have laws already in place in one or more of the areas identified as required by the Facility License Standards.

The Commission's estimate of approximately $5,000 to $10,000 is for those tribes who do not currently have laws in one of the areas enumerated in § 559.5 of the rule. The Commission feels this estimate is reasonable for a tribe who must hire an attorney to assist in identification of those laws, codes, or standards that apply to its gaming facility. The Commission recognizes that there may be underlying expenses related to instituting an environmental, public health and safety program in the event a tribe identifies a deficiency in a certain area while complying with the Facility License Standards; however, the costs associated with these efforts would vary greatly depending on the size and location of the gaming facility and on the level of environmental, public health and safety standards already in place.

One commenter suggested that the environment, public health and safety requirements in the Facility License Standards be tied to applicable federal laws (i.e., Clean Water Act, Safe Drinking Water Act, Resource Conservation and Recovery Act, etc.).

The Commission disagrees. The purpose of the rule is to identify environment, public health and safety laws that apply that are not Federal laws.

The commenter requested that “burden” be struck through this section and replaced with “resources required for” and that “annual information burden” be replaced with “resources required to collect the information annually.”

This language, however, is based on the language in the Paperwork Reduction Act and is not the NIGC's language.

The Commission received a comment that contrary to the statement in the proposed rule that Indian tribes are not considered to be small entities for purposes of the Regulatory Flexibility Act, it may be that tribes are small entities for this purpose. The Commission disagrees. Indian tribes are not included in this definition. 5 U.S.C. 601(5)(c).

Several comments pertained to the level of consultation conducted in connection with the Facility License Standards stating that the NIGC did not conduct meaningful consultation and that the consultation conducted was in violation of the NIGC's consultation policy.

The NIGC published its Government-to-Government Tribal Consultation Policy on March 24, 2004, 69 FR 16973. In that policy the Commission recognized the government-to-government relationship that exists between the NIGC and federally-recognized tribes and stated that the primary focus on the NIGC's consultation policies would involve consulting with individual tribes and their recognized governmental leaders. The Commission's consultation policy also calls for providing early notification to effected tribes of any regulatory policies prior to a final agency decision regarding their formulation or implementation.

In keeping with its consultation policy, the NIGC sent its first working draft of the Facility License Standards to tribal leaders on May 12, 2006. That notice was also published on the NIGCWeb site,http://www.nigc.gov, for public comment. The Commission also invited 309 tribes to meet with it in consultation on this rule and other gaming matters. Following notification of this first working draft, the NIGC received 56 written comments and held over 53 government-to-government consultation meetings with tribal leaders.

Following written and oral comments from tribal leaders, the draft Facility License Standards were revised and sent to tribal leaders for comment on March 21, 2007, with comments due on May 15, 2007. The comment period was subsequently extended another 15 days to May 30, 2007. Again the Commission invited tribal leaders to provide comments and to meet with the Commission during tribal consultations. The Commission received 78 written comments and held over 60 separate consultation meetings to discuss this draft of the Facility License Standards and other gaming matters.

The Facility License Standards were again revised based on input from tribal leaders and the public. The Commission published the proposed Facility License Standards on October 18, 2007, after holding more than 113 meetings with tribal leaders and careful consideration of the 134 comments received on the two prior drafts.

In keeping with its consultation policy, the NIGC involved tribes early in the process of considering the Facility License Standards and tribes had the opportunity to provide written comments and to meet with the Commission over a lengthy period. The Commission carefully reviewed the comments received on the proposed rule and took those comments into consideration prior to making a final determination on the final Facility License Standards.

Several commenters stated that the NIGC's consultation process for this regulation fell short of prior agency consultations where tribal representatives were active participants not only in providing advice and input to the NIGC, but also in the drafting process itself.

While the NIGC has chosen to utilize various rulemaking formats when formulating several Commission regulations, including tribal advisory committees, the NIGC consultation policy provides that the NIGC will utilize that form of rulemaking to the extent it deems practicable and appropriate. It is within the Commission's discretion to determine the appropriate form of rulemaking for each regulation. The Commission determined that for purposes of such a narrow and limited rule such as the Facility License Standards, sharing early drafts and allowing for a lengthy period of comment and consultation would be the most comprehensive approach.

Many commenters requested that the NIGC extend the comment period in which to provide comments on the proposed rule.

The NIGC received a total of 83 tribal comments on the proposed Facility License Standards. This was in addition to the 134 written comments received and considered on the prior working drafts of the rule and after meeting with over 113 tribal leaders in consultation on the proposed rule along with other Commission matters.

The Commission allowed for a 45-day comment period on the proposed rule. In deciding not to grant an extension of the comment period, the Commission took into account the significant number of comments received on the proposed rule and on the two prior drafts, totaling over 215 written comments combined. In addition the consultation period for this rule was well over one and one-half years, from the first draft in May 2006 to the publication of the proposed rule in October 2007.

Several commenters suggested that the NIGC may have violated the Government Performance and Results Act (“GPRA”) by embarking on several rulemaking exercises without an overall plan in violation of Public Law 109-221.

The Commission agrees that Public Law 109-221, the Native American Technical Corrections Act of 2006, provides that the NIGC shall be subject to the GPRA. On September 30, 2007, the NIGC filed its performance and accountability report with the Office of Management and Budget. The Commission is currently seeking comments from tribes and all interested parties on the contents of this report.

Several commenters were concerned that the Facility License Standards would have an impact on a tribe's ability to secure financing for gaming development projects.

The NIGC disagrees that requiring tribes to notify the Commission 120 days prior to opening a new facility will interfere with financing opportunities for new gaming operations. The purpose of the regulation is to inform the NIGC prior to the opening of a new facility. The NIGC believes any financing difficulties posed by compliance with this rule will be less significant than if it is later determined that a new facility has been constructed on lands that do not meet the requirements for “Indian lands” under IGRA. Further, the Facility License Standards have no effect in those circumstances where a tribe has not yet obtained financing due to uncertainty regarding the status of the lands.

One commenter suggested the addition of the word “standards” wherever the phrase “laws, resolutions, codes, policies, or procedures” appears in the regulation. The Commission agrees and has revised §§ 502.22 and 559.5(b) accordingly.

One commenter suggested that standards pertaining to the environment and the public health and safety may be included in Secretarial procedures. Accordingly, the Commission revised § 502.22 to reflect this change from “including standards negotiated under a tribal-state compact” to “including standards under a tribal-state compact or Secretarial procedures.”

One commenter noted the use of the phrase “gaming operations” in § 559.5(b) and correctly pointed out that the term should be “gaming facilities” as is used throughout the remainder of the regulation. This correction was made.

One commenter noted the use of the phrase “gaming facilities, places or locations” as contradicting the statutory language of IGRA which uses the phrase “gaming places, facilities or locations.” This correction was made in § 559.5(b)(6).

One commenter recommended that the Commission remove the phrase “as needed” following in §§ 552.2(i) and 559.7. The commenter felt this phrase was redundant as the statement prior reflects that the Chairman may use his or her discretion to request lands or environmental and public health and safety information. The Commission agrees and made this correction in the final rule.

One commenter noted that the title to § 559.6 was inconsistent with the language in the body of the section and recommended the Commission add “or reopens” to the title to match the requirements set out in the section. The Commission agrees and this change was made.

One commenter felt the proposed rules were unclear regarding the submission requirements to theCommission. The Commission agreed that clarification could be added to ensure that tribes more clearly understood the requirements for initial and subsequent submissions of their facility licenses. The following changes were made in §§ 559.3, 559.4, and 559.5 to reflect clarification of the submission requirements. Section 559.3 in the proposed rule read “[a]t least once every three years, a tribe shall issue a separate facility license to * * *.” In the final rule, this section was changed to “[a]t least once every three years after the initial issuance of a facility license, a tribe shall renew or reissue a separate facility license.” Section 559.4 previously read “When must a tribe submit a copy of a facility license to the Chairman?” A tribe must submit to the Chairman a copy of each issued facility license within 30 days of issuance. This section is now clarified to read, “When must a tribe submit a copy of a newly issued or renewed license to the Chairman? A tribe must submit to the Chairman a copy of each newly issued or renewed facility license within 30 days of issuance.” Section 559.5 also changed to clarify the submission requirement. This section previously read “What must a tribe submit to the Chairman with the copy of each facility license that has been issued?” It now reads, “What must a tribe submit to the Chairman with the copy of each facility license that has been issued or renewed?”

A few commenters objected to the insertion of the definition of “construction and maintenance of the gaming facility, and the operation of that gaming is conducted in a manner which adequately protects the environment and the public health and safety” as “clarification” for 2710(b)(2)(E) of IGRA without any explanation or foundation for the NIGC's conclusion that this “definition” provides clarification.

The Commission believes that this definition and the entire rule clarifies what the expectations are for tribes to verify that that they are maintaining their gaming facilities in a manner that adequately protects the environment, public health and safety.

Another commenter objected to § 502.22(f), “other environmental or public health and safety standards adopted by the tribe in light of climate, geography, and other local conditions and applicable to its gaming facilities, places or locations,” as being too broad a standard.

The Commission retained subsection (f). The geographical and local conditions under which Indian gaming may occur vary greatly. This provision was included to capture the varying circumstances under which Indian gaming facilities may occur and allow for a tribe to address specific local and geographic conditions that may apply to its gaming facility.

One commenter stated that the phrase “the construction and maintenance of the gaming operation and the operation of the gaming is conducted in a manner which adequately protects the environment, public health and safety,” defies understanding.

While the Commission agrees that this language is not a model of clarity, this language is taken directly from IGRA at 25 U.S.C. 2710(b)(2)(E).

One commenter suggested consideration should be given to deleting the defined term proposed to be added as new § 502.22. The defined term is only used in the proposed regulations twice, at §§ 559.1(a) and 559(a)(3). Both of those sections work well if the sentence is used in its plain meaning sense, rather than in its defined meaning sense. Also, it is unconventional for the definition section to include substantive provisions, such as the sentence in the proposed definition which states that the “laws * * * shall * * *.” Finally, including substantive provisions in the definitional section could lead to misunderstandings by readers who read part 559 and miss the fact that the thirty word sentence starting with the words “Construction and maintenance * * *” is actually a defined term. Therefore, consideration should be given to simplifying the regulations by deleting the defined term and moving the substantive content contained in the proposed defined term to a location in § 559.5.

While this recommendation has its merits, the Commission ultimately decided to retain the definition.

The same commenter suggested that if the defined term is retained, consideration should be given to modifying the text by including a reference to Secretarial procedures and standards.

The Commission agrees to this recommendation.

One commenter suggested that language be added which referenced the various federal environmental laws that tribes are required to follow.

The Commission disagrees. The purpose of the rule is to identify environment, public health and safety laws that apply that are not federal laws.

One commenter suggested § 502.22 should be revised to add: “(f) If an Environmental Impact Statement was prepared for the gaming facility, then the laws, resolutions, codes, policies or procedures in this area shall cover at a minimum, the construction, operational and maintenance standards identified in the EIS as well as mitigation measures that address the environmental consequences of the facility.”

The Commission disagrees that this change would be useful.

One commenter suggested that the Commission revise § 502.22 by changing “construction and maintenance of the gaming facility, and the operation of that gaming” to “construction and maintenance of the gaming facility, and the operation of class II or class III gaming.”

The Commission disagrees. This language was taken directly from IGRA at 2710(b)(2)(E).

One commenter requests the addition of new § 502.23 to read as follows: “Facility license means a separate license issued by a tribe to each place, facility, or location on Indian lands where the tribe elects to allow class II or class III gaming.”

No change is necessary, however, as this proposed language is identical to that of the rule.

One commenter suggested language that clarifies that the information required in § 522.2 is in addition to the requirements of §§ 559.2 and 559.5.

The Commission disagrees as the submission requirement is already repeated in § 559.5.

A commenter suggested that consideration should be given to adding the phrase “gaming eligibility” or “gaming eligibility (for lands acquired after October 17, 1988)” to § 522.2 this and to § 559.7.

The Commission disagrees that this recommendation would clarify the rule.

A commenter suggested that consideration should be given to deleting the phrase “as needed” in this section to avoid disputes as to whether the documentation requested by the Chairman is “needed.”

The Commission agrees to this change.

A commenter urged the Commission to revise the draft rule to distinguish between class II and class III gaming in each subsection.

The Commission has not made this revision. The requirements for submission of facility license remain the same whether gaming is occurring in a class II or class III gaming facility.

One commenter suggested that since part 559 is presumably intended to apply to a “gaming operation” as that term is defined in § 502.10, consideration could be given to changing the phrase “the operation of class II or class III gaming” to “class II or class III gaming operation.”

The Commission uses the reference to “gaming places, facilities or locations” to remain consistent with IGRA.

Another commenter recommended that part 559 should be clarified to determine whether the Commission intends to regulate (i) a tribe; (ii) place, facility or location; or (iii) both.

No change was made as a result of this comment. The Commission believes it is clear from the language of IGRA that “a separate license issued by the Indian tribe shall be required for each place, facility, or location.”

One commenter suggested that the phrase “the construction and maintenance of the gaming facility” be changed to “the gaming facility is constructed and maintained.”

The Commission declined to make this change as the language is taken from IGRA at 2710(b)(2)(E).

One commenter observed that § 559.1 fails to require that the land must be under the jurisdiction of the tribe. Furthermore, the regulations do not detail the eligibility requirements for gaming on Indian lands, and make clear that the land must be under the jurisdiction of the tribe.

The purpose of part 559 is to ensure that each facility where gaming is operated is located on Indian lands eligible for gaming pursuant to IGRA. IGRA sets out the eligibility requirements and jurisdictional requirements for gaming to occur on Indian lands. Consequently, no additional language is contemplated.

One commenter observed that the regulation fails to require that the NIGC actually make a determination [on Indian lands] and fails to provide a process for such determination. Furthermore, the regulations as proposed apply only to new facilities when the same rules need to be applied to existing facilities.

The Commission did not intend, under these rules, to develop a broad program for making Indian lands decisions. The Commission makes such decisions in the context of its enforcement actions and approval of management contracts and site-specific ordinances.

One commenter recommended that the notice requirement include documentation that the tribe seeking a new facility license complies with the class III conditions necessary to engage in casino-style gambling. The commenter recommended that the tribe submit a valid state-tribal compact as evidence of compliance.

No change was made as a result of this comment. The Commission has endeavored to take into consideration that various documentation may be available at other federal agencies (i.e., Department of the Interior) and has removed any duplicative submission requirements for documents that are available through other means.

Several commenters requested that additional language be added requiring notification to surrounding local and state governmental entities when tribes submit notice to the Chairman that a facility license is under consideration for a new facility.

The Commission disagrees. Indian gaming is an expression of the sovereign right of Indian tribes to regulate their own affairs on their own land, separate and apart from the laws and requirements of the states or their political subdivisions. To the extent Congress wished the involvement of the states in Indian gaming, IGRA so provides, and the Commission does not believe it to be appropriate to add more. As facility licensing is a matter of gaming regulation, notification to the states may be provided for by tribal-state compacts.

One commenter suggested that that the proposed “charitable events” exception creates a loophole that swallows the notice requirement. Absent a reasonable numeric cap, a tribe could sponsor a string of charitable events lasting six days or less on a continuous basis without giving notice to the NIGC or, if class III gaming is involved, the state that a tribe issued a new facilities license.

The Commission disagrees. The language of § 559.2(b) makes clear that this exception relates to the “occasional charitable event” and not to continuous gaming or class III gaming.

One commenter requested additional language that requires notification to surrounding local and state governmental entities.

The Commission disagrees. Indian gaming is an expression of the sovereign right of Indian tribes to regulate their own affairs on their own land, separate and apart from the laws and requirements of the states or their political subdivisions. To the extent Congress wished the involvement of the states in Indian gaming, IGRA so provides, and the Commission does not believe it to be appropriate to add more. As facility licensing is a matter of gaming regulation, notification to the states may be provided for by tribal-state compact.

One commenter recommended that the NIGC require submission of applicable state or federal licenses or permits that demonstrate that a tribe is in compliance with federal or state environmental laws applicable to its gaming operation.

The Commission disagrees. The NIGC has determined that for purposes of this rule, Tribes will supply a list of identified applicable laws and that it shall be within the Chairman's discretion to request additional information if necessary. These state and federal licenses could be requested by the Chairman if a need for such documentation is deemed necessary.

One commenter suggested deleting the term “identified” in § 559.5(a)(1) and replacing with “adopted, issued or agreed to” as any law or standard which the tribe has “identified” but has not adopted, issued or agreed to, is without legal effect or significance.

The Commission declined to make this change as the term identified is a broader term which allows tribes to show that they are aware of the environment, public health and safety laws that apply to their facilities even if those laws may not have been specifically promulgated by the tribes themselves.

One commenter suggested that in order to be consistent with the Interpretative Rule, the Commission should consider requiring the tribe to certify that it has established policies, procedures or systems for monitoring compliance. No change was made based on this suggestion. The Commission anticipates that the three-year renewal process for facility licensing will ensure that a system for ongoing monitoring is in place.

One commenter recommended that clarification is needed in § 559.5(a)(3) to determine whether the regulation intends for the entity or thing which the tribe is to certify to be in compliance with various laws is (i) the tribe; (ii) theplace, facility or location; (iii) the gaming operation; or (iv) some combination of the three. The language adopts the approach that the tribe certifies that both the gaming operation and the place, facility or location (but not the tribe) are in compliance with the identified laws.

The rule mirrors the language used in IGRA when it places regulatory responsibility on a “tribe.” Nothing, however, prohibits a tribe from vesting a tribal gaming commission with the authority to act in compliance with the rule.

One commenter suggested that consideration should be given to adding appropriate language to accommodate the possibility that, at the time of the tribe's submission to the Commission, the gaming operation and or gaming place, facility or location is not in full compliance. The commenter recommended adding the phrase “or, if the tribe has identified any noncompliance, the tribe has taken appropriate action to ensure future compliance” to this section.

The Commission agreed with this concept and changed this section to require that if a tribe is not in compliance with any or all of its environmental and public health and safety laws, resolutions, codes, policies, standards or procedures, the tribe will identify those with which it is not in compliance, and will adopt and submit its written plan for the specific action it will take, within a period not to exceed six months, required for compliance. At the successful completion of such written plan, or at the expiration of the period allowed for its completion, the tribe shall report the status thereof to the Commission. In the event that the tribe estimates that action for compliance will exceed six months, the Chairman must concur in such an extension of the time period, otherwise the tribe will be deemed noncompliant. The Chairman will take into consideration the consequences on the environment and the public health and safety, as well as mitigating measures the tribe may provide in the interim, in his or her consideration of requests for such an extension of the time period.

One commenter pointed out the confusion in usage of the terms “facilities” and “operations” with the correct term being “gaming facilities.”

The Commission agreed with the commenter and changed the term to be consistent throughout the regulation.

One commenter suggested that the language of § 559.5(b) as written is overbroad and unclear as to whether it requires only a list of items material to the topic, or requires detailed information of specific laws, resolutions, codes, policies, or procedures for each area. The commenter also requested that the Commission specify how much detail is required in the information to be submitted with the facility license. The commenter requested an option for the gaming operation to list the name of the applicable policy and procedure manual or to identify individual items that are material, and to allow an option to develop and submit a matrix in the form of a table or spreadsheet.

The Commission recognizes that tribes may utilize varying internal methods for maintaining this information and refrained from specifying what form the list of applicable laws must take. This will allow each facility to submit the information in the form or format that is appropriate for each facility without the NIGC dictating a particular approach which may require increased resources at the tribal level.

One commenter suggested that consideration should be given to adding the phrase “to the extent not already addressed by applicable federal laws, regulations and standards” to § 559.5(b).

The Commission did not make this change. The language in this section already addresses the commenter's concern with the phrase “other than federal laws.”

One commenter suggested the Commission consider whether the topics of “fire suppression” and “law enforcement and security” in § 559.5(b)(1) should be independent topics rather than subsets of “emergency preparedness.”

The Commission determined that the topics are appropriately grouped and declined to make this change.

One commenter pointed out that the phrase “facility, place or location” in § 559.5(a)(6) differs from the statutory language of IGRA which reads “place, facility or location.”

The Commission agreed with this comment and made the change.

One commenter requested that the Commission include tribal regulation in its list of laws governing the gaming operation in § 559.5(a)(6).

The Commission did not make this change because the term “laws” in this section is meant to include all laws applicable to the gaming operations, which includes tribal laws.

One commenter requested that if a tribe's environment, public health and safety laws are available in a public location, the tribe notify the Commission so the Commission can locate such items and as necessary can notify members of the public who make inquires.

The Commission did not make this change in the language of the rule. Any information obtained from tribes in relation to this rule will be governed by the Freedom of Information Act. However, if the information provided by the tribe is available publically and the Commission has such information available, it could direct inquiries to the appropriate public site.

One commenter recommended that that state Governors also receive notification of the termination or non-renewal of a class III facility license by a tribe, or if such a gaming facility closes or reopens.

The Commission disagrees. Indian gaming is an expression of the sovereign right of Indian tribes to regulate their own affairs on their own land, separate and apart from the laws and requirements of the states or their political subdivisions. To the extent Congress wished the involvement of the states in Indian gaming, IGRA so provides, and the Commission does not believe it to be appropriate to add more. As facility licensing is a matter of gaming regulation, notification to the states may be provided for by tribal-state compacts.

One commenter recommended adding “reopens” to the end of the title in § 559.6. The language would read “Does a tribe need to notify the Chairman if a facility license is terminated or not renewed or if a gaming place, facility, or location closed or reopens?”

The Commission agrees with this recommended change.

Several commenters were concerned that the language in this section relating to the Chairman's discretion in requesting additional documentation was too broad and allowed for too much interpretation on what to request on the part of the Chairman.

The Commission has endeavored to require only the minimum obligation for documentation submission, but must reserve the right of the Chairman to request additional information in the event it is necessary to carry out his or her duties in ensuring that all gamingfacilities are located on Indian lands and are operated in a manner that adequately protects the environment, public health and safety.

One commenter requested language in this section to clarify that the “Tribe” and “Tribal Gaming Regulatory Authority are separate entities and it is the Tribal Gaming Regulatory Authority who is responsible for enforcing the environment, public health and safety laws and for issuing the facility license.”

The rule mirrors the language used in IGRA when it places regulatory responsibility on a “tribe.” Nothing, however, prohibits a tribe from vesting a tribal gaming commission with the authority to act in compliance with the rule.

One commenter requested that the Commission delete the phrase “as needed” from § 559.7 or change to “from time to time” so there is no dispute as to what is “needed.”

The Commission agreed with commenter and removed “as needed” from this section.

A discussion of the changes we are making in this rule follows.

The FY 2008 NARA Budget in the Consolidation Appropriations Act of 2007 signed by President Bush on December 26, 2007, includes $1.3 million to restore evening and Saturday hours in the research rooms in the National Archives Building and the National Archives at College Park (Archives II). Prior to October 1, 2006, these research rooms were open three evenings per week (Tuesday, Thursday, and Friday) and every Saturday. Under this interim final rule, the research rooms will be open from 9 a.m. to 5 p.m. on Monday, Tuesday, and Saturday. On Wednesday, Thursday, and Friday they will be open from 9 a.m. to 9 p.m. We decided to make this adjustment to the previous schedule so that out-of-town researchers will have consecutive evenings along with Saturday to work. This schedule will also make staffing the rooms easier for managers. We set the effective date of the new hours as April 14, 2008 to allow time to hire and train the additional research room staff and to adjust the terms of the security guard contract.

When we restore evening hours our researchers will need to have records provided to them late in the afternoon. We will provide the additional service of pulling records from the stacks at 3:30 p.m. on the three weekdays that we are open in the evening. As was the case prior to October 2006, there will be no records pulled on Saturday.

In § 1253.3, we are adding the address and contact information for the Richard Nixon Presidential Library and Museum, which became a NARA Presidential Library on July 11, 2007. In § 1253.6(i), we have revised the address and contact information for the Fort Worth Federal Records Center, which moved to a new location in 2007.

The issuance of an “interim final rule” may be followed under the “good-cause” exemption of 5 U.S.C. 553(b)(3)(B) as “impracticable” or “contrary to the public interest.” In this instance, good cause exists because delay in implementation of the new hours would be contrary to the public interest and the intent of the Congress.

This rule is not a significant regulatory action for the purposes of Executive Order 12866 and has not been reviewed by the Office of Management and Budget. As required by the Regulatory Flexibility Act, I certify that this rule will not have a significant impact on a substantial number of small entities because it affects individual researchers. This regulation does not have any federalism implications.

The Postal Service first approved the domestic Priority Mail flat-rate box as an experiment more than three years ago. Board of Governors' Decision, Docket No. MC 2004-2 (October 29, 2004). Subsequently, a permanent classification for the flat-rate box was approved as part of the R2006-1 omnibus rate case. The use of Priority Mail flat-rate boxes for Priority Mail International shipments was adopted concurrently with the rate case.

The offering of a larger Priority Mail flat-rate box will enhance customer choice, convenience, and ease of use. Accordingly, the Postal Service offers a new Priority Mail large flat-rate box with a weight restriction of 20 pounds to international destinations. The dimensions are 121/4″ x 121/4″ x 6″ exterior, and 12″ x 12″ x 51/2″ interior.

The new Priority Mail large flat-rate box will be available for order online at USPS.com and in most post offices nationwide.

The Postal Service adopts the following changes toMailing Standards of the United States Postal Service, International Mail Manual (IMM), which is incorporated by reference in theCode of Federal Regulations. See 39 CFR part 20.

The Postal Service first approved the Priority Mail flat-rate box as an experiment more than three years ago. Board of Governors' Decision, Docket No. MC 2004-2 (October 29, 2004). Subsequently, a permanent classification for the flat-rate box was approved as part of the R2006-1 omnibus rate case.

The Priority Mail flat-rate box has been a big success and has proven to provide value to customers in the form of convenience and ease of use.

This success suggested a market for a larger Priority Mail flat-rate box. Such an offering would enhance customer choice, convenience, and ease of use. Accordingly, the Postal Service is offering a new, Priority Mail large flat-rate box.

The new boxes are approximately 50 percent larger than the regular flat-rate boxes currently available. The dimensions are 121/4″ x 121/4″ x 6″ exterior, and 12″ x 12″ x 51/2″ interior.

The weight restriction for the large flat-rate box is 70 pounds to APO/FPO and domestic destinations and 20 pounds to International destinations.

The lower rate for APO/FPO destinations provides an opportunity for the Postal Service to show support for American troops stationed abroad and their families.

The new Priority Mail large flat-rate box will be available for order online at USPS.com and in most post offices nationwide.

The Postal Service adopts the following changes toMailing Standards of the United States Postal Service,Domestic Mail Manual (DMM), which is incorporated by reference in theCode of Federal Regulations.See 39 CFR part 111.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA. This supplementary information section is arranged as follows:

EPA is approving a revision to Ohio's SIP, submitted on September 26, 2007, that modifies the application of certain provisions of the CAIR FIP concerning SO2, NOXannual, and NOXozone season emissions. (As discussed below, this less comprehensive CAIR SIP is termed an abbreviated SIP.) Ohio is subject to the CAIR FIPs that implement the CAIR requirements by requiring certain EGUs to participate in the EPA-administered Federal CAIR SO2, NOXannual, and NOXozone season cap-and-trade programs. The SIP revision provides a methodology for allocating NOXallowances for the NOXannual and NOXozone season trading programs. The CAIR FIPs provide that this methodology will be used to allocate NOXallowances to sources in Ohio, instead of the Federal allocation methodology otherwise provided in the FIP. The SIP revision provides a methodology for allocating the compliance supplement pool in the CAIR NOXannual trading program. The SIP also allows for individual units not otherwise subject to the CAIR trading programs to opt into such trading programs in accordance with opt-in provisions of the CAIR FIP. Consistent with the flexibility provided in the FIPs, these provisions will be used to replace or supplement, as appropriate, the corresponding provisions in the CAIR FIPs for Ohio. EPA is not making any changes to the CAIR FIP, but is amending to the extent EPA approves Ohio's SIP revision, the appropriate appendices in the CAIR FIP trading rules simply to note that approval.

The CAIR was published by EPA on May 12, 2005 (70 FR 25162). In this rule, EPA determined that 28 States and the District of Columbia contribute significantly to nonattainment and interfere with maintenance of the national ambient air quality standards (NAAQS) for fine particles (PM2.5) and/or 8-hour ozone in downwind States in the eastern part of the country. As a result, EPA required those upwind States to revise their SIPs to include control measures that reduce emissions of SO2, which is a precursor to PM2.5formation, and/or NOX, which is a precursor to both ozone and PM2.5formation. For jurisdictions that contribute significantly to downwind PM2.5nonattainment, CAIR sets annual State-wide emission reduction requirements (i.e., budgets) for SO2and annual State-wide emission reduction requirements for NOX. Similarly, for jurisdictions that contribute significantly to 8-hour ozone nonattainment, CAIR sets State-wide emission reduction requirements for NOXfor the ozone season (May 1st to September 30th). Under CAIR, States may implement these emission budgets by participating in the EPA-administered cap-and-trade programs or by adopting any other control measures.

CAIR explains to subject States what must be included in SIPs to address the requirements of section 110(a)(2)(D) of the Clean Air Act (CAA) with regard to interstate transport with respect to the 8-hour ozone and PM2.5NAAQS. EPA made national findings, effective May 25, 2005, that the States had failed to submit SIPs meeting the requirements of section 110(a)(2)(D). The SIPs were due in July 2000, 3 years after the promulgation of the 8-hour ozone and PM2.5NAAQS. These findings started a 2-year clock for EPA to promulgate a Federal Implementation Plan (FIP) to address the requirements of section 110(a)(2)(D). Under CAA section 110(c)(1), EPA may issue a FIP anytime after such findings are made and must do so within two years unless a SIP revision correcting the deficiency is approved by EPA before the FIP is promulgated.

On April 28, 2006, EPA promulgated FIPs for all States covered by CAIR in order to ensure the emissions reductions required by CAIR are achieved on schedule. Each CAIR State is subject to the FIPs until the State fully adopts, and EPA approves, a SIP revision meeting the requirements of CAIR. The CAIR FIPs require certain EGUs to participate in the EPA-administered CAIR SO2, NOXannual, and NOXozone-season model trading programs, as appropriate. The CAIR FIP SO2, NOXannual, and NOXozone season trading programs impose essentially the same requirements as, and are integrated with, the respective CAIR SIP trading programs. The integration of the CAIR FIP and SIP trading programs means that these trading programs will work together to create effectively a single trading program for each regulated pollutant (SO2, NOXannual, and NOXozone season) in all States covered by CAIR FIP or SIP trading program for that pollutant. The CAIR FIPs also allow States to submit abbreviated SIP revisions that, if approved by EPA, will automatically replace or supplement the corresponding CAIR FIP provisions (e.g., the methodology for allocating NOXallowances to sources in the state), while the CAIR FIP remains in place for all other provisions.

On April 28, 2006, EPA published two more CAIR-related final rules that added the States of Delaware and New Jersey to the list of States subject to CAIR for PM2.5and announced EPA's final decisions on reconsideration of five issues without making any substantive changes to the CAIR requirements.

CAIR establishes State-wide emission budgets for SO2and NOXand is to be implemented in two phases. The first phase of NOXreductions starts in 2009 and continues through 2014, while the first phase of SO2reductions starts in 2010 and continues through 2014. Thesecond phase of reductions for both NOXand SO2starts in 2015 and continues thereafter. CAIR requires States to implement the budgets by either requiring EGUs to participate in the EPA-administered cap-and-trade programs or adopting other control measures of the State's choosing and demonstrating that such control measures will result in compliance with the applicable State SO2and NOXbudgets.

The May 12, 2005, and April 28, 2006, CAIR rules provide model rules that States must adopt (with certain limited changes, if desired) if they want to participate in the EPA-administered trading programs. With two exceptions, only States that choose to meet the requirements of CAIR through methods that exclusively regulate EGUs are allowed to participate in the EPA-administered trading programs. One exception is for States that adopt the opt-in provisions of the model rules to allow non-EGUs individually to opt into the EPA-administered trading programs. The other exception is for States that include all non-EGUs from their NOXSIP Call trading programs in their CAIR NOXozone season trading programs.

States have the flexibility to choose the type of control measures they will use to meet the requirements of CAIR. EPA anticipates that most States will choose to meet the CAIR requirements by selecting an option that requires EGUs to participate in the EPA-administered CAIR cap-and-trade programs. For such States, EPA has provided two approaches for submitting and obtaining approval for CAIR SIP revisions. States may submit full SIP revisions that adopt the model CAIR cap-and-trade rules. If approved, these SIP revisions will fully replace the CAIR FIPs. Alternatively, States may submit abbreviated SIP revisions. These SIP revisions will not replace the CAIR FIPs; however, the CAIR FIPs provide that, when approved, the provisions in these abbreviated SIP revisions will be used instead of or in conjunction with, as appropriate, the corresponding provisions of the CAIR FIPs (e.g., the NOXallowance allocation methodology).

A State submitting an abbreviated SIP revision, may submit limited SIP revisions to tailor the CAIR FIP cap-and-trade programs to the state submitting the revision. Specifically, an abbreviated SIP revision may establish certain applicability and allowance allocation provisions that, the CAIR FIPs provide, will be used instead of or in conjunction with the corresponding provisions in the CAIR FIP rules in that State. Specifically, the abbreviated SIP revisions may:

1. Include NOXSIP Call trading sources that are not EGUs under CAIR in the CAIR FIP NOXozone season trading program;

2. Provide for allocation of NOXannual or ozone season allowances by the State, rather than the Administrator, and using a methodology chosen by the State;

3. Provide for allocation of NOXannual allowances from the CSP by the State, rather than by the Administrator, and using the State's choice of allowed, alternative methodologies; and/or

4. Allow units that are not otherwise CAIR units to opt individually into the CAIR FIP cap-and-trade programs under the opt-in provisions in the CAIR FIP rules.

With approval of an abbreviated SIP revision, the CAIR FIP remains in place, as tailored to sources in the State by that approved SIP revision. Abbreviated SIP revisions can be submitted in lieu of, or as part of, CAIR full SIP revisions. States may want to designate part of their full SIP as an abbreviated SIP for EPA to act on first when the timing of the State's submission might not provide EPA with sufficient time to approve the full SIP prior to the deadline for recording NOXallocations. This will help ensure that the elements of the trading programs where flexibility is allowed are implemented according to the State's decisions. Submission of an abbreviated SIP revision does not preclude future submission of a CAIR full SIP revision. In this case, the September 26, 2007, submittal from Ohio has been submitted as an abbreviated SIP revision. As discussed below, Ohio requested three of the four provisions for which a State may request an abbreviated SIP. The State requested that its allocation of NOXannual and NOXozone season allowances for EGUs under the FIP be used instead of the corresponding provisions of the CAIR FIPs in effect in the State. The State requested that its allocation by the State of NOXannual allowances from the CSP be used instead of the corresponding provisions of the CAIR FIPs in effect in the State. Finally, the State also provided that units that are not otherwise CAIR units may opt individually into the CAIR FIP cap-and-trade program under the opt-in provisions in the CAIR FIP rules.

The CAIR NOXannual and ozone season budgets were developed from historical heat input data for EGUs. Using these data, EPA calculated annual and ozone season regional heat input values, which were multiplied by 0.15 lb/mmBtu, for phase 1, and 0.125 lb/mmBtu, for phase 2, to obtain regional NOXbudgets for 2009-2014 and for 2015 and thereafter, respectively. EPA derived the State NOXannual and ozone season budgets from the regional budgets using State heat input data adjusted by fuel factors.

The CAIR State SO2budgets were derived by discounting the tonnage of emissions authorized by annual allowance allocations under the Acid Rain Program under title IV of the CAA. Under CAIR, each allowance allocated under the Acid Rain Program for the years in phase 1 of CAIR (2010 through 2014) authorizes 0.5 ton of SO2emissions in the CAIR trading program, and each Acid Rain Program allowance allocated for the years in phase 2 of CAIR (2015 and thereafter) authorizes 0.35 ton of SO2emissions in the CAIR trading program.

The CAIR FIPs established the budgets for Ohio as 108,667 tons for NOXannual emissions, 45,664 tons for NOXozone season emissions, and 333,520 tons for SO2emissions. Ohio's SIP revision, approved in today's action, does not affect these budgets, which are total amounts of allowances available for allocation for each year under the EPA-administered cap-and-trade programs under the CAIR FIPs. In short, the abbreviated SIP revision only affects allocations of allowances under the established budgets.

The CAIR NOXannual and ozone-season FIPs both largely mirror the structure of the NOXSIP Call model trading rule in 40 CFR part 96, subparts A through I. While the provisions of the NOXannual and ozone-season FIPs are similar, there are some differences. For example, the NOXannual FIP (but not the NOXozone season FIP) provides for a CSP, which is discussed below and under which allowances may be awarded for early reductions of NOXannual emissions. As a further example, the NOXozone season FIP reflects the fact that the CAIR NOXozone season trading program replaces the NOXSIP Call trading program after the 2008 ozone season and is coordinated with the NOXSIP Call program. The NOX ozone season FIP provides incentives for early emissions reductions by allowing banked, pre-2009 NOXSIP Call allowances to be used for compliance in the CAIR NOXozone-season trading program. In addition, States have the option of continuing to meet their NOXSIP Call requirement by participating in the CAIR NOXozone season trading program and including all of their NOXSIP Call trading sources in that program.

The provisions of the CAIR SO2FIP are also similar to the provisions of the NOXannual and ozone season FIPs. However, the SO2FIP is coordinated with the ongoing Acid Rain SO2cap-and-trade program under CAA title IV. The SO2FIP uses the title IV allowances for compliance, with each allowance allocated for 2010-2014 authorizing only 0.50 ton of emissions and each allowance allocated for 2015 and thereafter authorizing only 0.35 ton of emissions. Banked title IV allowances allocated for years before 2010 can be used at any time in the CAIR SO2cap-and-trade program, with each such allowance authorizing 1 ton of emissions. Title IV allowances are to be freely transferable among sources covered by the Acid Rain Program and sources covered by the CAIR SO2cap-and-trade program.

EPA used the CAIR model trading rules as the basis for the trading programs in the CAIR FIPs. The CAIR FIP trading rules are virtually identical to the CAIR model trading rules, with changes made to account for Federal rather than state implementation. The CAIR model SO2, NOXannual, and NOXozone season trading rules and the respective CAIR FIP trading rules are designed to work together as integrated SO2, NOXannual, and NOXozone season trading programs.

Ohio is subject to the CAIR FIPs concerning SO2, NOXannual, and NOXozone season emissions, and the CAIR FIP trading programs for SO2, NOXannual, and NOXozone season apply to sources in Ohio. Consistent with the flexibility they give to States, the CAIR FIPs provide that States may submit abbreviated SIP revisions that will replace or supplement, as appropriate, certain provisions of the CAIR FIP trading programs. The Ohio EPA September 26, 2007, submission is such an abbreviated SIP revision.

In general, the CAIR FIP trading programs apply to any stationary, fossil-fuel-fired boiler or stationary, fossil-fuel-fired combustion turbine serving at any time, since the later of November 15, 1990, or the start-up of the unit's combustion chamber, a generator with nameplate capacity of more than 25 MWe producing electricity for sale.

States have the option of bringing in, for the CAIR NO Xozone season program only, those units in the State's NOXSIP Call trading program that are not EGUs as defined under CAIR. EPA advises States exercising this option to use provisions for applicability that are substantively identical to the provisions in 40 CFR 96.304 and add the applicability provisions in the State's NOXSIP Call trading rule for non-EGUs to the applicability provisions in 40 CFR 96.304 in order to include in the CAIR NOXozone season trading program all units required to be in the State's NOXSIP Call trading program that are not already included under 40 CFR 96.304. Under this option, the CAIR NOXozone season program must cover all large industrial boilers and combustion turbines, as well as any small EGUs (i.e. units serving a generator with a nameplate capacity of 25 MWe or less), that the State currently requires to be in the NOXSIP Call trading program.

Consistent with the flexibility given to States in the CAIR FIP, Ohio has not chosen, in the abbreviated CAIR SIP approved here, to expand the applicability provisions of the CAIR NOXozone season trading program to include all non-EGUs in the State's NOXSIP Call trading program. However, EPA notes that Ohio has indicated that the full SIP revision submitted on September 26, 2007, expands the applicability provisions of CAIR NOXozone season trading program in this manner. As such, EPA is not taking final action on the non-EGU portion of the State's September 26, 2007, full CAIR SIP revision. The full CAIR SIP revision including actions to approve the non-EGU portions of the State's CAIR rule will be the subject of a separate future action.

Under the NOXallowance allocation methodology in the CAIR model trading rules and in the CAIR FIP, NOXannual and ozone season allowances are allocated to units that have operated for five years, based on heat input data from a three-year period that are adjusted for fuel type by using fuel factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. The CAIR model trading rules and the CAIR FIP also provide a new unit set-aside from which units without five years of operation are allocated allowances based on the units' prior year emissions.

The CAIR FIP provides States the flexibility to establish a different NOXallowance allocation methodology that will be used to allocate allowances to sources in the States if certain requirements are met concerning the timing of submission of units' allocations to the Administrator for recordation and the total amount of allowances allocated for each control period. In adopting alternative NOXallowance allocation methodologies, States have flexibility with regard to:

1. The cost to recipients of the allowances, which may be distributed for free or auctioned;

2. The frequency of allocations;

3. The basis for allocating allowances, which may be distributed, for example, based on historical heat input or electric and thermal output; and

4. The use of allowance set-asides and, if used, the size of the set-aside.

Consistent with the flexibility given to States in the CAIR FIPs, Ohio has chosen to replace the provisions of the CAIR NOXannual FIP concerning the allocation of NOXannual allowances with its own methodology. Ohio has chosen to distribute NOXannual allowances based upon heat input data from a three year period adjusted for fuel type by using fuel adjustment factors of 1.0 for coal, 0.6 for oil, and 0.4 for other fuels. Based on this methodology, Ohio determined NOXallocations for EGUs in the State under the CAIR FIP, and submitted its allocations to EPA on April 24, 2007.

Ohio also has included, in the abbreviated SIP revision, provisions regarding set-aside programs for energy efficiency/renewable energy and innovative technology projects under the CAIR NOXOzone Season program. The State's energy-efficiency/renewable energy (EE/RE) and innovative technology set-aside program provisions establish two set-asides for each control period—one set-aside for EE/RE projects and one set-aside for innovative technology projects—and specify procedures for allocating the allowances in the set-asides. Each set-aside is limited to one percent of the state trading budget for NOXozone season allowance allocations. Beginning with the end of 2009 and every three years thereafter, Ohio EPA will review the number of allowances allocated from the set-asides and will, under certain circumstances, increase the size of each set-aside in future years as necessary, up to a maximum of five percent of the state trading budget.

EPA notes that the set-aside provisions do not explicitly state how allowances will be reserved in the set-asides if the total amount of allowances requested from a set-aside exceeds the total amount of allowances in that set-aside. However, set-aside provisionsexplicitly limit the amount of allowances available from each set-aside to one percent of the state trading budget unless Ohio EPA expands the set-asides in future years. In addition, Ohio informed EPA, in the September 26, 2007, letter, that its guidance for the set-asides provides that set-aside allowances will be reserved on a pro-rata basis if the total requested allowances exceed the size of the set-aside. Ohio has indicated that it will clarify its set-aside provisions consistent with this guidance.

The set-aside provisions also do not explicitly state how a set-aside will be increased up to five percent of the state trading budget if the existing set-aside amounts plus the total amounts allocated to units with and without baseline heat input under Ohio's other allocation provisions for NOXozone season allowances already equal the state trading budget. However, Ohio's CAIR NOXozone season allocation provisions clearly limit the total allocations for each control period of CAIR NOXozone season allowances to the amount of the state trading budget for that control period. Further, as written, the provisions for expanding the set-asides cannot have any effect on the current allocations, which Ohio has already submitted to the Administrator for phase 1 of the trading program. In addition, Ohio informed EPA, in the September 28, 2007 letter, that Ohio EPA will reduce the total amount of allowances allocated to existing units under the other allocation provisions to the extent the size of a set-aside is increased in the future. Ohio has indicated that it will clarify its allocation provisions consistent with this statement in the September 28, 2007, letter.

Consequently, EPA interprets Ohio's abbreviated SIP to limit, consistent with the requirements of 40 CFR 51.123(ee)(2)(ii)(B), the total allocations for each control period of CAIR NOXozone season allowances—whether from current or expanded set-asides or under the other allocation provisions in the abbreviated SIP—to the state trading budget.

The CSP provides an incentive for early reductions in NOXannual emissions. The CSP consists of 200,000 CAIR NOXannual allowances of vintage 2009 for the entire CAIR region, and a State's share of the CSP is based upon the State's share of the projected emission reductions under CAIR. States may distribute CSP allowances, one allowance for each ton of early reduction, to sources that make NOXreductions during 2007 or 2008 beyond what is required by any applicable State or Federal emission limitation. States also may distribute CSP allowances based upon a demonstration of need for an extension of the 2009 deadline for implementing emission controls.

The CAIR NOXannual FIP establishes specific methodologies for allocations of CSP allowances. States may choose an allowed, alternative CSP allocation methodology to be used to allocate CSP allowances to sources in those States.

Consistent with the flexibility given to States in the FIP, Ohio has chosen to modify the provisions of the CAIR NOXannual FIP concerning the allocation of allowances from the CSP. Ohio has chosen to distribute CSP allowances using an allocation methodology that provides more certainty to unit owners and operators that a known quantity of allowances per unit will be available for distribution at the beginning of the control period. Ohio also provides owners and operators with an incentive for the operation of expensive post-combustion control equipment year-round and provides incentives for early reductions in emissions before 2009. Ohio EPA is required to submit allocations from the CSP to the Administrator by July 1, 2009, or such time when unit's 2008 emissions data are available so that the allocations can be determined. Ohio's abbreviated SIP also states that the Administrator will record the allocations by January 1, 2010. While Ohio's abbreviated SIP does not explicitly state that allocations will be submitted to the Administrator by November 30, 2009, EPA notes that units' 2008 emissions data should certainly be available before that date and that the allocations need to be submitted by that date in order to ensure that the Administrator will complete recordation of allowances by January 1, 2010. Further, Ohio has indicated, in the September 26, 2007, letter, that it will clarify its CSP provisions to provide for a November 30, 2009, deadline for submission of CSP allocations to the Administrator. Consequently, EPA considers the Ohio abbreviated SIP to meet the requirements of 40 CFR 51.123(p)(2).

The opt-in provisions allow for certain non-EGUs (i.e., boilers, combustion turbines, and other stationary fossil-fuel-fired devices) that do not meet the applicability criteria for a CAIR trading program to participate voluntarily in (i.e., opt into) the CAIR trading program. A non-EGU may opt into one or more of the CAIR trading programs. In order to qualify to opt into a CAIR trading program, a unit must vent all emissions through a stack and be able to meet monitoring, recordkeeping, and recording requirements of 40 CFR part 75. The owners and operators seeking to opt a unit into a CAIR trading program must apply for a CAIR opt-in permit. If the unit is issued a CAIR opt-in permit, the unit becomes a CAIR unit, is allocated allowances, and must meet the same allowance-holding and emissions monitoring and reporting requirements as other units subject to the CAIR trading program. The opt-in provisions provide for two methodologies for allocating allowances for opt-in units, one methodology that applies to opt-in units in general and a second methodology that allocates allowances only to opt-in units that the owners and operators intend to re-power before January 1, 2015.

States have several options concerning the opt-in provisions. The rules for each of the CAIR FIP trading programs include opt-in provisions that are essentially the same as those in the respective CAIR SIP model rules, except that the CAIR FIP opt-in provisions become effective in a State only if the State's abbreviated SIP revision adopts the opt-in provisions. The State may adopt the opt-in provisions entirely or may adopt them but exclude one of the allowance allocation methodologies. The State also has the option of not adopting any opt-in provisions in the abbreviated SIP revision and thereby providing for the CAIR FIP trading program to be implemented in the State without the ability for units to opt into the program.

Consistent with the flexibility given to States in the FIPs, Ohio has chosen to allow non-EGUs meeting certain requirements to participate in the CAIR NOXannual trading program, the CAIR NOXozone season trading program and the CAIR SO2trading program. Ohio EPA submitted the CAIR SIP program rules, OAC 3745-109-08 and OAC 3745-109-14 and OAC 3745-109-21, which incorporate the opt-in provisions as provided in the final EPA CAIR rule of April 28, 2006. These rules address opt-ins for NOXozone season, NOXannual, and SO2annual programs.

Comment:On November 9, 2007, the Connecticut Department of Environmental Protection (CTDEP) submitted comments on EPA's direct final rule (DFR) notice approving Ohio's abbreviated CAIR SIP. CTDEP encourages EPA to approve the state's CAIR program adopted to meet theemission reduction requirements of CAIR. However, it argues that before approving state plans, EPA should evaluate individually and in the aggregate each state's clean air programs. CTDEP argues that such evaluation is necessary to ensure that each state's emissions do not significantly contribute to ozone nonattainment in Connecticut. CTDEP asserts its belief that the CAIR program does not ensure that the CAA section 110(a)(2)(D)(i) requirements to prohibit transported emissions that significantly contribute to nonattainment in Connecticut and other states will be met. CTDEP expresses concern that EPA is determining through this and other similar rulemakings that CAIR programs are sufficient to meet States' section 110(a)(2)(D)(i) obligations. CTDEP asserts, based on EPA and State modeling for CAIR, that the levels of transported pollution remaining after CAIR implementation are large enough that, even with local controls, it may be difficult for Connecticut to attain the 8-hour ozone NAAQS by 2010. Finally, CTDEP questions EPA's determination that highly cost effective controls are adequate to address States' section 110(a)(2)(D)(i) obligations as compared to “reasonable cost” controls that could be achieved to effect more stringent NOXreductions.

Response:EPA does not agree that it is appropriate or necessary for EPA to conduct additional analysis before approving the Ohio abbreviated CAIR SIP for NOXallowances and NOXallowance methodology. Ohio has chosen an abbreviated SIP for NOXallowances and NOXallocation methodology, one of four SIP elements for which states may request an abbreviated SIP. With an abbreviated SIP, the CAIR FIP remains in place for Ohio. EPA's proposed approval of Ohio's abbreviated SIP would therefore only have the effect of replacing, as provided for in the CAIR FIP, the corresponding FIP provisions with the State's preferred allocations and methodology. EPA has evaluated this abbreviated SIP revision and determined that it complies with the requirements of the CAIR FIP provisions regarding abbreviated SIPs. CTDEP does not challenge this determination. Thus, CTDEP's comments do not specifically pertain to any aspect of EPA's proposed specific action to approve the Ohio CAIR SIP revision. Rather, the comments appear to be directed broadly at EPA's decisions with regard to States' section 110(a)(2)(D)(i) obligations. These decisions were made by EPA in the context of the CAIR rulemaking, which was promulgated on May 12, 2005 (70 FR 25162), not in the EPA action to approve Ohio's abbreviated CAIR SIP revision. Therefore, CTDEP's comments are not relevant to this final action. CTDEP had ample opportunity to submit comments both during the comment period for the proposed CAIR rulemaking of January 30, 2004 (69 FR 4566), and during the comment period for the proposed CAIR FIP of August 24, 2005 (70 FR 49708). EPA's action to approve Ohio's abbreviated CAIR SIP did not reopen either the CAIR or CAIR FIP rulemakings. Consequently, CTDEP's comments are not relevant to this rulemaking, or timely with respect to the CAIR and CAIR FIP rulemakings. Thus, EPA does not believe it is necessary to conduct additional analysis on whether Ohio or any other state satisfies the requirements of 110(a)(2)(D) before approving the Ohio abbreviated CAIR SIP submission.

EPA is promulgating the rules contained in Ohio's abbreviated CAIR SIP revision submitted on September 26, 2007. Ohio is covered by the CAIR FIPs, which require participation in the EPA-administered CAIR FIP cap-and-trade programs for SO2, NOXannual, and NOXozone season emissions. Under this abbreviated SIP revision, and consistent with the flexibility given to States in the FIPs, Ohio adopts provisions for allocating allowances under the CAIR FIP NOXannual and ozone season trading programs. In addition, Ohio adopts in the abbreviated SIP revision provisions that establish a methodology for allocating allowances in the CSP and allow for individual non-EGUs to opt into the CAIR FIP SO2, NOXannual, NOXozone season cap-and-trade programs. As provided for in the CAIR FIPs, these provisions in the abbreviated SIP revision will replace or supplement the corresponding provisions of the CAIR FIPs in Ohio. The abbreviated SIP revision meets the applicable requirements in 40 CFR 51.123(p) and (ee), with regard to NOXannual and NOXozone season emissions, and 40 CFR 51.124(r), with regard to SO2emissions. EPA is not making any changes to the CAIR FIP, but is amending the appropriate appendices in the CAIR FIP trading rules simply to note that approval.

In accordance with 5 U.S.C 553(d), EPA finds that there is good cause for these actions to become effective immediately upon publication. Ordinarily, a delay in the effective date is provided to give affected sources more time to plan for meeting applicable requirements. In this case, the various requirements under Ohio's rule take effect at fixed times, and an immediate effective date (and nearly immediate issuance of allowances under Ohio's allocation rules) will provide sources more time to plan for meeting the rules' requirements. Thus, an immediate effective date better serves the purposes of 5 U.S.C. 553 than would a delayed effective date. An immediate effective date will provide positive impact from the final rule on sources which can utilize the allowances methodology under the State's rule. EPA concluded that the Connecticut comment did not oppose approval of Ohio's rule and was not intended to delay implementation of the Ohio CAIR program. The immediate effective date for this action is authorized under both 5 U.S.C. 553(d)(1), which provides that rulemaking actions may become effective less than 30 days after publication if the rule “* * * grants or recognizes an exemption or relieves a restriction,” and section 553(d)(3)e which allows an effective date less than 30 days after publication “* * * as otherwise provided by the agency for good cause found and published with the rule.” The purpose of the 30-day waiting period prescribed in 553(d) is to give the affected parties a reasonable time to adjust their planning actions as the final rule takes effect. Today's rule, however, does not create any new regulatory requirements such that affected parties would need time to prepare before the rule takes effect. Rather, today's “immediate effective” action provides sufficient time for affected sources to plan the use of allowances under the State rule through the implementation of the Ohio abbreviated CAIR implementation plan.

Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and, therefore, is not subject to review by the Office of Management and Budget. For this reason, this action is also not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001). This action merely approves state law as meeting Federal requirements and would impose no additional requirements beyond those imposed by state law. Accordingly, the Administrator certifies that this rule would not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601et seq.). Because this action approves pre-existingrequirements under state law and would not impose any additional enforceable duty beyond that required by state law, it does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4).

This rule also does not have tribal implications because it would not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000). This action also does not have Federalism implications because it would 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This action merely approves a state rule implementing a federal standard and to amend the appropriate appendices in the CAIR FIP trading rules to note that approval. It does not alter the relationship or the distribution of power and responsibilities established in the CAA. This rule also is not subject to Executive Order 13045 “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997), because it would approve a state rule implementing a federal standard.

In reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. In this context, in the absence of a prior existing requirement for the state to use voluntary consensus standards (VCS), EPA has no authority to disapprove a SIP submission for failure to use VCS. It would thus be inconsistent with applicable law for EPA, when it reviews a SIP submission, to use VCS in place of a SIP submission that otherwise satisfies the provisions of the CAA. Thus, the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. This rule would not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501,et seq.).

The Congressional Review Act, 5 U.S.C. 801,et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in theFederal Register. A major rule cannot take effect until 60 days after it is published in theFederal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by April 1, 2008. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

On October 4, 2005, ACA filed a petition for expedited clarification and declaratory ruling against the Commission'sRules and Regulations Implementing the Telephone Consumer Protection Act of 1991,Report and Order, FCC 03-153, published at 68 FR 44144 (July 25, 2003). This is a summary of the Commission's document, FCC 07-232, adopted December 28, 2007, released January 4, 2008, addressing a Petition for Expedited Clarification and Declaratory Ruling filed by ACA International (ACA).

Copies of document FCC 07-232 and any subsequently filed documents in this matter will be available for public inspection and copying during regular business hours at the FCC Reference Information Center, Portals II, 445 12th Street, SW., Room CY-A257, Washington, DC 20554. Document FCC 07-232 and any subsequently filed documents in this matter may also be purchased from the Commission's duplicating contractor at Portals II, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. Customers may contact the Commission's duplicating contractor at their Web site:www.bcpiweb.comor call 1-800-378-3160. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an e-mail tofcc504@fcc.govor call the Consumer Governmental Affairs Bureau at (202) 418-0530 (voice) or (202) 418-0432 (TTY). Document FCC 07-232 can also be downloaded in Word and Portable Document Format (PDF) at:http://www.fcc.gov/cgb/policy.

Document FCC 07-232 does not contain new information collection requirements subject to the Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, it does not contain any new or modified “information collection burden for small business concerns with fewer than 25 employees,” pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198.See47 U.S.C. 3506(c)(4).

On October 4, 2005, ACA filed a petition seeking clarification that the prohibition against autodialed or prerecorded calls to wireless telephone numbers in 47 CFR 64.1200(a)(1)(iii) of the Commission's rules does not apply to creditors and collectors when calling wireless telephone numbers to recover payments for goods and services received by consumers.

Although the TCPA generally prohibits autodialed calls to wireless phones, it also provides an exception for autodialed and prerecorded message calls for emergency purposes or made with the prior express consent of the called party. Because the Commission finds that autodialed and prerecorded message calls to wireless numbers provided by the called party in connection with an existing debt are made with the “prior express consent” of the called party, the Commission clarifies that such calls are permissible. The Commission concludes that the provision of a cell phone number to a creditor, e.g., as part of a credit application, reasonably evidences prior express consent by the cell phone subscriber to be contacted at that number regarding the debt. In the1992 TCPA Order(FCC 92-443) published at 57 FR 48333 (October 23, 1992), the Commission determined that “persons who knowingly release their phone numbers have in effect given their invitation or permission to be called at the number which they have given, absent instructions to the contrary.” The legislative history in the TCPA provides support for this interpretation. Specifically, the House report on whatultimately became section 227 of the Communications Act states that: “[t]he restriction on calls to emergency lines, pagers, and the like does not apply when the called party has provided the telephone number of such a line to the caller for use in normal business communications.”

The Commission emphasizes that prior express consent is deemed to be granted only if the wireless number was provided by the consumer to the creditor, and that such number was provided during the transaction that resulted in the debt owed. To ensure that creditors and debt collectors call only those consumers who have consented to receive autodialed and prerecorded message calls, the Commission concludes that the creditor should be responsible for demonstrating that the consumer provided prior express consent. The creditors are in the best position to have records kept in the usual course of business showing such consent, such as purchase agreements, sales slips, and credit applications. The Commission encourages creditors to include language on credit applications and other documents informing the consumer that, by providing a wireless telephone number, the consumer consents to receiving autodialed and prerecorded message calls from the creditor or its third party debt collector at that number. Should a question arise as to whether express consent was provided, the burden will be on the creditor to show it obtained the necessary prior express consent. Similarly, a creditor on whose behalf an autodialed or prerecorded message call is made to a wireless number bears the responsibility for any violation of the Commission's rules. Calls placed by a third party collector on behalf of that creditor are treated as if the creditor itself placed the call. A third party collector may also be liable for a violation of the Commission's rules. In addition, prior express consent provided to a particular creditor will not entitle that creditor (or third party collector) to call a consumer's wireless number on behalf of other creditors, including on behalf of affiliated entities.

The Commission also reiterates that the plain language of section 227(b)(1)(A)(iii) of the Communications Act prohibits the use of autodialers to make any call to a wireless number in the absence of an emergency or the prior express consent of the called party. The Commission notes that this prohibition applies regardless of the content of the call, and is not limited only to calls that constitute “telephone solicitations.”

However, the Commission agrees with ACA and other commenters that calls solely for the purpose of debt collection are not telephone solicitations and do not constitute telemarketing. Therefore, calls regarding debt collection or to recover payments are not subject to the TCPA's separate restrictions on “telephone solicitations.”

In document FCC 07-232, the Commission affirms that a predictive dialer constitutes an automatic telephone dialing system and is subject to the TCPA's restrictions on the use of autodialers. In its Supplemental Submission, ACA argues that the Commission erred in concluding that the term “automatic telephone dialing system” includes a predictive dialer. ACA states that debt collectors use predictive dialers to call specific numbers provided by established customers, and that a predictive dialer meets the definition of autodialer only when it randomly or sequentially generates telephone numbers, not when it dials numbers from customer telephone lists.

As noted above, the Commission first sought comment on predictive dialers in 2002 and asked whether using a predictive dialer is subject to the TCPA's autodialer restrictions. The Commission found that, based on the statutory definition of “automatic telephone dialing system,” the TCPA's legislative history, and current industry practice and technology, a predictive dialer falls within the meaning and definition of autodialer and the intent of Congress. The Commission noted that the evolution of the teleservices industry had progressed to the point where dialing lists of numbers was far more cost effective, but that the basic function of such dialing equipment, had not changed—the capacity to dial numbers without human intervention. The Commission noted that it expected such automated dialing technology to continue to develop and that Congress had clearly anticipated that the FCC might need to consider changes in technology.

Moreover, the Commission noted that the TCPA does not ban the use of automated dialing technology. It merely prohibits such technologies from dialing emergency numbers, health care facilities, telephone numbers assigned to wireless services, and any other numbers for which the consumer is charged for the call. Such practices were determined by Congress to threaten public safety and inappropriately shift costs to consumers. Most importantly, the Commission said that, to find that calls to emergency numbers, health care facilities, and wireless numbers are permissible when the dialing equipment is paired with predictive dialing software and a database of numbers, but prohibited when the equipment operates independently of such lists, would be inconsistent with the avowed purpose of the TCPA and the intent of Congress in protecting consumers from such calls. ACA raises no new information about predictive dialers that warrants reconsideration of these findings. With this ruling, however, creditors and debt collectors may use predictive dialers to call wireless phones, provided the wireless phone number was provided by the subscriber in connection with the existing debt. The Commission notes, however, that where the subscriber has not made the number available to the creditor regarding the debt, we expect debt collectors to be able to utilize the same methods and resources that telemarketers have found adequate to determine which numbers are assigned to wireless carriers, and to comply with the TCPA's prohibition on telephone calls using an autodialer or an artificial or prerecorded voice message to wireless numbers.

The Commission will not send a copy of document FCC 07-232 pursuant to the Congressional Review Act,see5 U.S.C. 801(a)(1)(A), because no new rules were adopted in the document.

Pursuant to sections 1-4, 227, and 303(r) of the Communications Act of 1934, as amended, 47 U.S.C. 151-154, 227 and 303(r); and § 64.1200 of the Commission's rules, 47 CFR 64.1200, document FCC 07-232is adopted.

By Commission authority, the Request for Clarification filed by ACA International in CG Docket 02-278 on October 4, 2005 and supplemented by ACA on April 26, 2006,is grantedinsofar as ACA seeks clarification that autodialed and prerecorded message calls to wireless numbers that are provided by the called party to a creditor in connection with an existing debt are permissible as calls made with the “prior express consent” of the called party, and in all other respects,is denied.

This is a summary of the Federal Communications Commission's Third Report and Order in CS Docket No. 98-120, FCC 07-170, adopted September 11, 2007, and released November 30, 2007. The full text of this document is available for public inspection and copying during regular business hours in the FCC Reference Center, Federal Communications Commission, 445 12th Street, SW., CY-A257, Washington, DC 20554. These documents will also be available via ECFS (http://www.fcc.gov/cgb/ecfs/). (Documents will be available electronically in ASCII, Word 97, and/or Adobe Acrobat.) The complete text may be purchased from the Commission's copy contractor, 445 12th Street, SW., Room CY-B402, Washington, DC 20554. To request this document in accessible formats (computer diskettes, large print, audio recording, and Braille), send an e-mail tofcc504@fcc.govor call the Commission's Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

Paperwork Reduction Act of 1995 Analysis:

This document contains modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, will invite the general public to comment on the information collection requirements contained in this RO as required by the Paperwork Reduction Act of 1995, Public Law 104-13. The Commission will publish a separateFederal RegisterNotice at a later date seeking these PRA comments from the public. In addition, the Commission notes that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,see44 U.S.C. 3506(c)(4), we previously sought specific comment on how the Commission might “further reduce the information collection burden for small business concerns with fewer than 25 employees.”

1. As discussed below, the Act requires that cable systems carry broadcast signals without material degradation and ensure that all subscribers can receive and view mandatory-carriage signals. ThisThird Report and Orderfinalizes the material degradation requirements adopted by the Commission in 2001, and establishes two alternative approaches that cable operators may use to meet their responsibility to ensure that cable subscribers with analog television sets can continue to view all must-carry stations after the end of the DTV transition. Cable operators may either carry such signals in analog, or, for all-digital systems, carry the signal in digital only.

2. In this section, we adopt rules requiring that cable operators not discriminate in their carriage between broadcast and non-broadcast signals, and that they not materially degrade broadcast signals. As explained below, we reaffirm the approach adopted by the Commission in 2001 to determining whether material degradation has occurred, as well as the requirement that HD signals be carried in HD.

3. The Act requires that cable operators carry local broadcast signals “without material degradation,” and instructs the Commission to “adopt carriage standards to ensure that, to the extent technically feasible, the quality of signal processing and carriage provided by a cable system for the carriage of local commercial television stations will be no less than that provided by the system for carriage of any other type of signal.” As noted above, section 614(b)(4)(B) of the Act directs the Commission “to establish any changes in the signal carriage requirements of cable television systems necessary to ensure cable carriage of such broadcast signals of local commercial television stations which have been changed” as a result of the DTV transition.

4. In theSecond Further Notice of Proposed Rulemaking (Second FNPRM)72 FR 312444, December 31, 2007, we sought comment on proposals for ensuring that broadcast signals would not be materially degraded after the digital transition. We proposed that the measurement by which we determine whether an operator is degrading the broadcast signal change from a subjective to an objective standard or, in the alternative, to maintain the comparative standard established in theFirst Report and Order66 FR 16523, March 26, 2001. We asked whether we should require cable operators to pass through all primary video and program-related bits (“content bits”). In addition, we proposed a rule that would create a framework for negotiations between cable operators who wanted to carry fewer than all content bits and the broadcasters whose signals were at issue. Such a rule would require any operator that wished to carry fewer than all content bits to demonstrate to the broadcaster that it could meet the picture-quality-nondegradation standard without carriage of all content bits. Finally, in theSecond FNPRM, we reminded commenters of the existing requirement to carry high definition signals in HD to those subscribers who have signed up for an HD package, andreiterated that this requirement will continue after the transition.

5. We retain the requirement that HD signals be carried in HD, as well as the comparative approach to determining whether material degradation has occurred. In 2001, theFirst Report and Orderestablished two requirements to avoid material degradation. First, “a cable operator may not provide a digital broadcast signal in a lesser format or lower resolution than that afforded to any” other signal on the system. Second, a cable operator must carry broadcast stations such that, when compared to the broadcast signal, “the difference is not really perceptible to the viewer.” Thus, “a broadcast signal delivered in HDTV must be carried in HDTV.” Because we decline to rely on measurement of bits to determine whether degradation has occurred, we do not require carriage of all content bits. Additionally, for the reasons described below, we decline to adopt the proposed negotiation framework.

6. The Act requires that broadcast signals not be “materially degraded.” It also requires the Commission to “adopt carriage standards to ensure that, to the extent technically feasible, the quality of signal processing and carriage provided by a cable system for the carriage of local commercial television stations will be no less than that provided by the system for carriage of any other type of signal.” The Commission stated in 2001 that “[f]rom our perspective, the issue of material degradation is about the picture quality the consumer receives and is capable of perceiving.” Cable commenters argued that this should remain the focus of the Commission's decision making, and we agree.

7. We considered the “all content bits” proposal, the main benefit of which was a clear means of measurement and consequently ease of enforcement. Ultimately, we conclude, however, that the all content bits approach is likely to stifle innovation and the very efficiency that digital technology offers, and may be more exacting a standard than necessary to ensure that a given signal will be carried withoutmaterialdegradation. We also conclude that it is unnecessary at this time to impose such a requirement in light of the paucity of material degradation complaints over the 15 years since enactment of the Must Carry statute.

8. A number of commenters support the existing standard, and most argue that a comparative approach remains the best method of measuring material degradation. As these commenters point out, there is little evidence to indicate otherwise. We note Comcast's observations that there appear to have been no more than two material degradation complaints since the 1992 adoption of the prohibition, and that both of those were dismissed. Even if there has been limited opportunity to “test” these rules in a digital context, there is every reason to believe that they will prove just as robust in an environment of greater attention to picture quality.

9. Furthermore, there are technological benefits to the current comparative standard. Time Warner argues that the content bits standard proposed in theSecond FNPRMwould require devoting additional bandwidth to carriage even when it would not improve the quality of the transmitted image, hurting consumers by limiting other uses of the bandwidth. ATT further argues that an “all content bits” standard could “dampen[ ] incentives to invest in video compression and other technologies * * * that would allow even greater transmission efficiencies and higher quality pictures.” We recognize these concerns, and do not intend to impede improvements in technology. Some cable operators may, currently or in the future, rely on advanced compression technologies such as MPEG 4 to provide service to subscribers with greater efficiency. We particularly recognize the value of compression technologies that take the broadcast signal back to uncompressed baseband and then re-encode it in a more efficient manner without materially degrading the picture. Such advanced compression utilizes a minimum bit rate that does not reduce the quality of the resolution. We agree with commenters that a comparative standard is currently the best way to encourage and reward technological innovations, like MPEG4 compression, that allow for more efficient use of bandwidth without diminishing viewer experience.

10. We decline to adopt the proposal of Agape Church Inc., that we require carriage of secondary channels. Our rules here focus only on the broadcaster's primary video and program related content. The prohibition on material degradation adds no additional requirement to carry non-program-related content.

11. Commenters requested clarification that downconversion to analog does not constitute material degradation. We accordingly clarify that it is not material degradation to downconvert that signal to comply with the “viewability” requirement discussed below.

12. As noted above, we do not adopt the negotiation framework proposed in theSecond FNPRM, and direct parties to continue to follow the rules as established in section 76.61. Both broadcasters and cable operators, the parties who would be involved in these negotiations, raised serious objections to the proposal. The National Association of Broadcasters (“NAB”) and The Association for Maximum Service Television (“MSTV”) are highly critical of any required negotiations, particularly ones which would begin and end upon the request of operators. They state that the 30 day window for carriage complaints is too short, and that the proposal as a whole places the burden of ensuring compliance on the broadcasters, rather than on the operators who have the duty by statute. Finally, they argue that the requirements and penalties for noncompliance are insufficiently detailed or strict. Cable commenters object to the requirement that operators make a showing of non material-degradation to the satisfaction of the broadcaster. They express concern about what they anticipate would be: (1) A major shift in power to must-carry broadcasters, who do not have an incentive to bargain; and (2) an addition of significant transaction costs for operators, who currently do not negotiate with must carry stations at all. They argue that this would add an unnecessary complication to mandatory carriage. As NAB and MSTV note, the goal of these rules is to provide cable subscribers with the full benefits of the digital transition. Given the broad based objections to the proposal, we decline to establish a formal procedure by which broadcasters would waive the material degradation requirements. We note that enforcement of the material degradation requirements is initiated by a broadcaster's carriage complaint, and that the rules provide for the broadcaster to complain first to the cable operator before filing such a complaint. This gives the parties an opportunity to informally address material degradation disputes, and if the station is satisfied with the resultant carriage, no complaint will be filed. No additional formal process is necessary. 47 CFR 76.61.

13. In this section, we adopt rules requiring cable systems that are not “all-digital” to provide must-carry signals in analog, while “all-digital” systems may provide them in digital form only. We also require that the cost of any downconversion be borne by operators, but that downconverted signals may count toward the cap on commercialbroadcast carriage. Pursuant to sections 614 and 615 of the Act, cable operators must ensure that all cable subscribers have the ability to view all local broadcast stations carried pursuant to mandatory carriage. Specifically, section 614(b)(7) (for commercial stations) states that broadcast signals that are subject to mandatory carriage must be “viewable via cable onalltelevision receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable operator provides a connection.” Similarly, section 615(h) for noncommercial stations states that “[s]ignals carried in fulfillment of the carriage obligations of a cable operator under this section shall be available to every subscriber as part of the cable system's lowest priced tier that includes the retransmission of local commercial television broadcast signals.” These statutory requirements plainly apply to cable carriage of digital broadcast signals, and, as a consequence, cable operators must ensure that all cable subscribers—including those with analog television sets—continue to be able to view all commercial and non-commercial must-carry broadcast stations after February 17, 2009.

14. These rules shall be in force for three years from the date of the digital transition, subject to review by the Commission during the last year of this period (i.e., between February 2011 and February 2012). In light of the numerous issues associated with the transition, it is important to retain flexibility as we deal with emerging concerns. A three-year sunset ensures that both analog and digital cable subscribers will continue to be able to view the signals of must-carry stations, and provides the Commission with the opportunity after the transition to review these rules in light of the potential cost and service disruption to consumers, and the state of technology and the marketplace. To assist the Commission in this review, we will include questions in our annual Cable Price Survey to assess, for example, digital cable penetration, cable deployment of digital set-top boxes with various levels of processing capabilities, and cable system capacity constraints.

15. In theSecond FNPRM, we sought comment on proposals that would ensure the viewability, for all subscribers, of signals carried pursuant to mandatory carriage. To that end, we proposed that

16. We adopt these proposals, and note that they apply to all operators, regardless of their rate-regulated status. In sum, cable operators must comply with the statutory mandate that must-carry broadcast signals “shall be viewable via cable on all television receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable operator provides a connection,” and they have two options of doing so. First, to the extent that such subscribers do not have the capability of viewing digital signals, cable systems must carry the signals of commercial and non-commercial must-carry stations in analog format to those subscribers, after downconverting the signals from their original digital format at the headend. This proposal is in line with the approach already voluntarily planned by many cable operators, as described in testimony by Time Warner CEO Glenn Britt before the House Subcommittee on Telecommunications and the Internet. In the alternative, operators may choose to operate “all-digital systems.” “All-digital” systems are systems that do not carry analog signals or provide analog service. Under this option, operators will not be required to downconvert the signal to analog, and may provide these stations only in a digital format. In any event, any downconversion costs will be borne by the operator.

17. To fulfill its must-carry obligations in cases where a cable operator uses digital-to-analog converter boxes that do not have analog tuners, the operator can deliver a standard definition digital version of a must-carry broadcaster's high definition digital signal, in addition to the analog and high definition signal, or use boxes that convert high definition signals for viewing on an analog television set, or use other technical solutions so long as cable subscribers have the ability to view the signals.

18. As NCTA notes, the congressionally mandated end of the Digital Television transition does not apply directly to cable operators. We thus recognize that there may be two different kinds of cable systems for some period of time after the DTV transition is complete. Some operators may choose to deliver programming in both digital and analog format. NAB and MSTV describe these systems as those in which they “keep an analog tier and continue to provide local television signals (and perhaps many cable channels as well) to analog receivers in a format that does not require additional equipment.” Other operators may choose, as many already have, to operate or transition to “all-digital systems,” and as NAB and MSTV further note, “virtually all cable operators ultimately will do so.” Game Show Network, LLC (“GSN”) questions why there should be any rules protecting owners of analog sets, since that is “a format the government itself has determined is no longer worthy of any spectrum.” Congress did decide to end analog broadcasting, but declined to turn its backs on the millions of Americans with analog sets. Thus, they established the NTIA converter box program to protect the continued availability of over-the-air signals to all Americans; they accepted the claims of the cable industry that subscribers with analog sets would continue to be served; and we now establish these rules to ensure that those subscribers do continue to be served.

19. NAB proposes that cable operators carry all broadcasters on their systems in the same manner; i.e., if one must carry station is carried in analog, all broadcasters, whether carried pursuant to retransmission consent or must carry, would be carried in analog. Cable operators object to this proposal, and we decline to adopt it. Although a system that is not “all-digital” will be required to carry analog versions of all must-carry signals to ensure their viewability, retransmission consent stations may be carried in any manner that comports with the private agreements of the parties.

20. The “viewability” requirement that we adopt today is based on a straightforward reading of the relevant statutory text. While some cable commenters dispute our interpretation of section 614(b)(7), their arguments are at odds with both the plain meaning of the statutory text as well as the structure of the provision. These commenters principally argue that the viewability mandate is satisfied whenever cable operators transmit broadcast signals and “ ‘offerto sell or lease * * * a converter box' to their customers” that will allow those signals to be viewed on their receivers. To the extent that such subscribers do not have the necessary equipment, however, the broadcast signals in question are not “viewable” on their receivers. In addition, it is important to note that the relevant question under the statute is not whether subscribers can view over-the-air broadcast signals using their receivers. Rather, it is whethersubscribers can view the signals of broadcast stations that are carried through their cable system.See47 U.S.C. 534(b)(7). To be sure, “[i]f a cable operator authorizes subscribers to installadditionalreceiver connections, but does not provide the subscriber with such connections, or with the equipment and materials for such connections, the operator [is only required to] notify such subscribers of all broadcast stations carried on the cable system which cannot be viewed without a converter box and * * * offer to sell or lease such a converter box to such subscribers at rates in accordance with section 623(b)(3).” But these commenters confuse the separate mandates set forth in the second and third sentences of section 614(b)(7), a distinction we clarified as early as 1993. As NAB and MSTV observe, “there is no evidence that the third sentence of section 614(b)(7) was intended to narrow the scope of the viewability requirement for sets connected by cable operators.” For every receiver “connected to a cable system by a cable operator or for which a cable operator provides a connection,” that operator must ensure that the broadcast signals in question are actually viewable on their subscribers' receivers.

21. As we explained in theSecond FNPRM, the operators of either all-digital or mixed digital-analog systems will be responsible under the statute for ensuring that mandatory carriage stations are actually viewable by all subscribers, “including those with analog television sets.” Two commenters argued that our proposed rules were overbroad, because analog-only televisions will not “qualify as `television receivers' after the transition for purposes of the viewability requirement.” These arguments fail to recognize, however, that the hard deadline set by Congress does not apply to Low Power television stations, including translators and Class A stations. Thus, Low Power broadcasters, operating hundreds of channels, will still be lawfully transmitting analog signals on February 18, 2009, and for some period of time afterwards. Those consumers who rely on Low Power stations and turn on their over-the-air analog sets that morning to watch a local newscast will be using a device “engaged or able to engage in `the process of * * * radio transmission.’ ” More broadly, as NAB and MSTV point out, the Commission's authority over these sets is not predicated merely on their ability to receive over the air signals. Rather, we believe that a device that allows subscribers to view signals sent by their cable operator is a television receiver for purposes of section 614(b)(7) of the Act.

22. NCTA also argues that the situation in the early 1990s that spurred the creation of these viewability requirements was different from the situation that will be faced by consumers post-transition. Therefore, they posit, it is inappropriate to rely on sections 614(b)(7) and 615(h) to address viewability on analog receivers. To begin with, it is our primary task to implement the text of the statutory provision. While the enactment of a statute may be principally aimed at a particular set of circumstances present at the time, it is often written in general language so that it applies to similar sets of circumstances in the future. As the United States Supreme Court has instructed, “statutory prohibitions often go beyond the principal evil to cover reasonably comparable evils, and it is ultimately the provisions of our laws rather than the principal concerns of our legislators by which we are governed.” In any event, the cable commenters' own descriptions of the driving force behind the statutory provision demonstrate that the situation at hand is directly analogous. NCTA explains that “[a]t the time [of the provision's enactment], certain television sets were not ‘cable-ready' and could not receive [some] channels at all,” and observes that the Commission therefore required converter boxes provided by cable operators to contain “the necessary channel capacity to permit a subscriber to access a UHF must-carry signal through the converter.” Replace “cable-ready” with “digital cable-ready,” and “UHF” with “digital,” and NCTA has described the problem at hand, and one of the options the Commission has again offered to resolve it. The Commission's charge is to implement the statutory language enacted by Congress, and this language reflects Congress's unambiguous determination that broadcast signals must be viewable by all cable subscribers. Indeed, as NAB and MSTV note, “the authority that Congress gave the Commission under section 614(b)(4)(B) to make rules regarding advanced television reflects Congress' understanding that broadcast technology certainly would change over time, and that the Commission was expected to modify the carriage rules as needed.” While the circumstances today differ from those present at the time of the provision's enactment, the basic issue, ensuring the viewability of broadcast signals, is the same.

23. Time Warner argues that we do not have the authority to read section 614(b)(7) as a “manner of carriage” requirement, even to offer analog carriage as one option for complying with the statute. They see the Commission's early interpretation of the viewability provision as a statement that operators must provide converter boxes “in a specific and limited context,” and that the section cannot serve as the basis for a carriage requirement. On the contrary, the Commission has frequently allowed cable operators to meet their 614(b)(7) obligations by placing must carry signals on a channel viewable to all subscribers instead of by providing boxes. The rules we adopt today are firmly grounded in longstanding Commission practice, and echo previous solutions to similar problems.

24. Some cable programmer commenters, such as the Weather Channel, argue that the proposal “unquestionably would consume vast amounts of cable system bandwidth” with duplicative programming. In actuality, as Time Warner admits, these rules will not have an impact on the carriage of most stations; the “vast majority of broadcasters opt for retransmission consent.” Thus, as NAB notes in its reply, any incremental increase of bandwidth devoted to must-carry stations will be “negligible.” Gospel Music Channel, LLC (Gospel) articulates a concern that flows from Weather Channel's: That these rules could reduce their chances of carriage on any given system. While we recognize Gospel's concerns, Congress already acknowledged them when it mandated that systems with more than 12 usable activated channels need carry local commercial television stations only “up to one-third of the aggregate number of usable activated channels of such system[s].” Furthermore, Gospel fails to recognize that to the extent operators choose the second option and become “all-digital,” these rules could contribute to a very positive impact on independent programmers' ability to make carriage deals due to the concomitant effective increase in channel capacity. The Africa Channel, et al. (“TAC”) also argue that the potential loss of independent cable programmers serving focused audiences “are digital transition issues as important as a consideration of what constitutes viewability or material degradation for broadcasters who are the least likely television market participants to be left behind with or without burdensome new must-carry rules.” In essence, TAC argues that independent cable programmers deserve protections on par with must-carry broadcasters. Congress, however, disagrees, and the Supreme Court hasupheld the must-carry regime to ensure the viewability and prevent the material degradation of the signals of those broadcasters.

25. Some commenters have incorrectly characterized our rule as “dual carriage.” Comcast attempts to frame this requirement as “a requirement to carry broadcast signals in [analog] * * * in perpetuity.” Not only is this not the Commission's rule, Comcast's proposal for avoiding “dual carriage” would read “viewability” itself out of the Act. Dual carriage, as considered and rejected by the Commission, would have required cable operators “to carry both the digital and analog signals of a station during the transition when television stations are still broadcasting analog signals”; that is, the mandatory simultaneous carriage of two different channels broadcast by the same station. The Commission ultimately rejected this concept. The rule we establish in thisThird Report and Orderis quite distinct. It requires carriage only of a single broadcast signal, and gives operators the freedom to choose how to ensure that signal is viewable by all subscribers. It does not require carriage of more than one broadcast signal from a given must-carry broadcaster, and it does not require carriage of an analog version of a signal unless an operator chooses not to operate an all-digital system.

26. NCTA notes that the Act allows a cable operator to decline to carry signals from stations whose programming substantially duplicates that of a station it already carries. The commenter argues from this that the statute can not be read to require carriage of additional versions of a signal under any circumstances. The connection, however, is tenuous at best. Section 614(b)(5) speaks specifically to the issue of the carriage of different stations providing substantially identical programming, and does not address a requirement to carry multiple versions of a single station's signals. In the former case, subscribers would be receiving multiple channels all showing the same programs at virtually the same time. In this case, however, some subscribers will not be able to see any of a station's programming unless a downconverted version is carried. From the perspective of these subscribers, the actual people sections 614 and 615 were designed to reach, there need not be more than one viewable version of a broadcaster's signal—but there must be at least one.

27. Comcast argues that enforcement of the viewability provisions of the Act will force the Commission into conflict with other sections of the Act, particularly the effective competition provisions of section 623(b). Comcast misstates the case, however, when it says that a deregulated system may provide must carry stations “in any format that it wishes.” Indeed, as the Commission made clear in the 2001 Order, signals broadcast in HD must be carried by cable operators in HD, regardless of whether or not the system is rate-regulated. While some requirements are lifted when an operator is deregulated, deregulation is not an exemption from the carriage requirements of the statute. Stations electing mandatory carriage must be carried, they must not be materially degraded, and they must be made viewable.

28. If an operator chooses not to operate an “all-digital system” and therefore ensures viewability by providing a digital broadcast signal and a downconverted version of the signal for analog subscribers, it will in some cases use more than the 6 MHz of bandwidth occupied by an analog must-carry signal alone. Comcast argues that this improperly forecloses the use of the bandwidth for other purposes. Congress recognized the importance of preserving cable bandwidth for non-broadcast programmers when it mandated that systems with more than 12 usable activated channels need carry local commercial television stations only “up to one-third of the aggregate number of usable activated channels of such system[s].” This limit has been upheld by the courts and will continue to ensure that operators have sufficient bandwidth for carriage of non-broadcast programming and other services. Moreover, to the extent that a cable operator wishes to free bandwidth for other purposes, it may choose to operate an “all-digital” system.

29. We are bound by statute to ensure that commercial and non-commercial mandatory carriage stations are actually viewable by all cable subscribers. The Commission also believes, however, that it is important to provide cable operators flexibility in meeting the requirements of sections 614(b)(7) and 615(h). Therefore, we have declined to require a specific approach, instead allowing operators to choose whether or not to operate “all-digital systems,” and therefore whether or not to provide mandatory carriage stations in an analog format. This is in accord with the Commission's decision, in theFirst Report and Order, not to require operators to provide set-top boxes.

30. Time Warner argues that the requirement of section 629, that navigation devices be available at retail, supersedes the requirements of section 614(b)(7), which was enacted four years earlier. We disagree. Section 629(f) provides that “[n]othing in this section shall be construed as expanding or limiting any authority that the Commission may have under [the] law” prior to the 1996 Telecommunications Act. This includes the viewability provisions of section 614(b)(7). Furthermore, Time Warner's argument is premised on an interpretation of section 614(b)(7) that we decline to adopt, namely that it requires cable operators to provide set top boxes. Indeed, the retail availability of set-top boxes should facilitate subscriber purchase of digital equipment and lessen the burden on all-digital cable operators to provide such boxes. However, we adopt the analog downconversion option to address these very concerns, and provide an option which does not even potentially implicate set-top boxes. An operator may choose not to go “all-digital,” and instead satisfy its section 614(b)(7) obligations by downconverting must carry stations to analog, until the operator concludes that the local market is ready for an all-digital cable system.

31. We note that Americans for Tax Reform, Ovation, LLC, and other commenters appear to misapprehend the functionality of the “converter boxes” that will be available through the NTIA coupon program. These boxes will, by design, be limited to use in converting over-the-air digital signals into analog signals that can be interpreted by an analog television. Because of differences in the modulation used by digital broadcasters and digital cable systems, these boxes will not be usable by digital cable subscribers to connect their analog receivers. Such converters will be available, but it is important to ensure that the public understands that there are different functionalities provided by different boxes.

32. Discovery observes that, during the transition period, a digital-only broadcaster has had the right to request carriage in digital only, rendering it non-viewable to analog subscribers. As the Commission explained in theFirst Report and Order,however, this is an interim policy, assisting both broadcasters and cable operators to adjust to digital broadcasting over a limited period of time. Discovery argues that the post-transition period will “similarly be limited,” and indeed, eventually analog-only sets will be as rare as VHF tuner-only sets are today. There are still important differences, however. In the post-transition period, every channel subject to mandatory carriage will be broadcast solely in digital, while the use of analog receiverswill continue for an indefinite time. Furthermore, making stations actually viewable to cable subscribers is the most fundamental interest expressed in the must carry rules that have been upheld by the Supreme Court. If we declined to enforce the viewability requirement it would render the regime almost meaningless, contrary to the clearly expressed will of the Congress as upheld by the Supreme Court.

33. Because the interim policy governing downconversion makes it an option exercised by broadcasters, they are responsible for any associated costs. Cequel argues that post-transition analog downconversion would only be necessary because the broadcaster itself is no longer providing an analog signal, and that any costs should therefore be borne by the broadcaster. Agape Church Inc. and other broadcast commenters agree with our proposal that, because the decision will shift to cable operators after the transition, so should the costs. NAB and MSTV further argue that these downconversion costs would be modest. ACA says that one of its members paid as much as $4,390.25 per channel to downconvert from HD to analog, and argues in an ex parte that these costs could approach $16,500 per channel. We find this estimate surprisingly high and note that $12,000 of this total appears to be dedicated to format conversion, rather than digital to analog conversion. It is also unclear whether or not the prices or equipment quoted are industry standards, or whether some of the equipment costs presented cumulatively are actually redundant or usable for more than just analog downconversion of one broadcast signal. Nevertheless, we are taking up the issue of flexibility for small cable operators in theThird FNPRM, infra.Entravision Holdings, LLC (Entravision) notes that, while it supports our proposal, it would not object to a requirement that broadcasters pay the cost of downconversion if it became necessary in order to ensure the continued viewability of must-carry stations for analog subscribers. However, since the post-transition downconversion will be undertaken by operators at their discretion, in order to comply with the Act, we adopt the proposal that any expense necessary for an operator's compliance with the requirements of sections 614(b)(7) and 615(h) shall be borne by the operator, and not the broadcaster. Specifically, operators of systems that provide analog service are responsible for the cost of downconverting a digital must-carry signal to analog at the headend. To the extent that a standard definition digital subscriber is unable to view a high definition signal via their equipment, operators have a similar responsibility to ensure that the signal is viewable.

34. Such downconverted signals will, however, count toward the one-third carriage cap. Section 614(b)(1)(B) of the Act requires that cable systems with more than “12 usable activated channels” devote “up to one-third of the aggregate number of usable activated channels of such system[s]” to the carriage of local commercial television stations. Beyond this requirement, the carriage of additional commercial television stations is at the discretion of the cable operator. The Commission determined in theFirst Report and Orderthat with respect to carriage of digital broadcast signals, the channel capacity calculation will be made by taking the total usable activated channel capacity of the system in megahertz and dividing it by three to find the limit on the amount of system spectrum that a cable operator must make available for commercial broadcast signal carriage purposes. After the transition, when calculating whether an operator has reached or exceeded the one-third cap, we will count the system spectrum occupied by all versions of a commercial broadcast signal (both digital and analog).

35. We also find that operators of systems with an activated channel capacity of 552 MHz or less that do not have the capacity to carry the additional digital must-carry stations may seek a waiver from the Commission. Such systems must, however, commit to continue carrying an analog version such that their subscribers are assured of being able to view all must-carry stations carried on the system.

36. We observe that a number of cable comments imply or state that it is not possible to transition from a system that provides analog service to an all-digital system without the agreement of all current subscribers. While each operator will choose to transition or not based on local market conditions and other business considerations, it is clear that this choice is fully within their discretion. Both of these options are available to all operators at any time, a fact unaffected by this rule. We do note, that as with any change in programming service, particularly one which will have an impact on the compatibility of subscriber equipment, cable operators must comply with certain notice requirements. We remind operators who transition their systems to all-digital that they must provide written notice to subscribers about the switch, containing any information they need or actions they will have to take to continue receiving service.

37. Entravision, licensee of a number of commercial broadcast stations, argues that analog downconversion is the best way to ensure continued viewability, but does not object to the use of other methods by cable operators so long as the result is the same. As an alternative to the option we proposed for systems that continue to carry analog programming, Entravision proposes that must-carry stations be provided in analog, but only until such time as 85% of subscribers in each zip code served by a given operator have the means to view those signals if provided in digital. As Entravision acknowledges, however, the statute requires that must carry broadcast stations be made available to all cable subscribers with analog television sets. As we have noted before, we do not believe we have the authority to exempt any class of subscribers from this requirement, no matter how few the analog subscribers. Therefore, we decline to adopt the proposal offered by Entravision.

38. The Consumer Electronics Association (CEA) asks that the Commission rely on technical solutions shaped by earlier rules and developed by the market to resolve concerns about viewability. CEA suggests that the agency can rely on the retail availability of sets with digital tuners to ensure continued viewability of high quality programming. It argues that this can be assured by requiring the carriage of must carry signals to conform to three requirements: (1) Unencrypted, unscrambled, and in QAM (i.e., “in the clear”); (2) modulated using MPEG-2, a widely used and accepted codec; and (3) not in switched digital. CEA expresses concern that the requirement to carry must-carry stations “in the clear” is not sufficiently articulated outside the context of rate-regulated systems. Although we decline to reach the question of requiring MPEG-2 and prohibiting switched digital, as they are beyond the scope of this proceeding, we do address CEA's essential concern, which is at the heart of our viewability proceeding. Like CEA's proposals, our rules are designed to ensure that all subscribers to a cable system have “in the clear” access to all must carry stations.

39. A number of commenters assert that the rules we adopt herein constitute “mandatory dual carriage” and are unconstitutional. We disagree. Thestatutory must-carry provisions upheld by the Supreme Court inTurner IIinclude the requirement that must-carry signals “shall be viewable” on all television receivers of a subscriber which are connected to a cable system by a cable operator or for which a cable operator provides a connection. The rules we adopt in this order do nothing more than ensure the continued fulfillment of this statutory mandate at the conclusion of the digital television (“DTV”) transition in February 2009. The must-carry obligation is meaningful only if all cable subscribers are able to view local broadcasters' signals, even if they have analog televisions. If we fail to act, however, analog cable subscribers will be unable to view must-carry stations after the DTV transition. Rather than mandating downconversion to prevent this loss of signals after the transition, however, we offer cable operators a choice: those operators that choose not to operate an “all-digital system” must down-convert the broadcasters' digital signal for their analog subscribers. Cable operators that elect to operate “all-digital” systems, on the other hand, do not have to down-convert these signals and may provide them solely in a digital format. The choice rests with the individual cable operator. In this way, cable operators decide for themselves, taking into account their particular circumstances, how best to operate following the digital transition.

40. We reject the argument of cable commenters that the “second option is effectively no option at all,” or that we have presented cable operators with a “Hobson's Choice.” Rather, we believe that the second option represents a viable choice for complying with the viewability mandate. Cable operators complain about the burden of transitioning to “all-digital systems.” In particular, they object to requiring subscribers with analog television sets who do not yet have digital-set top boxes to use such boxes because, they argue, it is not “feasible” to require those customers to install set-top boxes, because customers do not want set-top boxes, or because of the expense associated with providing the boxes. After the DTV transition, however, some sort of set-top or converter box will be the rule rather than the exception for those Americans with analog television sets. Whether consumers currently obtain video programming through over-the-air broadcasts, cable, or DBS, they generally will need either set-top boxes or digital televisions to receive programming once the transition is complete. Thus, cable operators' fear that they will lose customers to other providers of video programming if they pursue this option seems misplaced. As to cable operators' concerns about the expense of providing set-top boxes, nothing in this order precludes them from recovering the costs of those boxes from subscribers, and cable operators offer no evidence to support their claim that they will lose a meaningful number of customers because of such charges. Indeed, such claims are rather ironic in light of the cable industry's recent practice of raising its prices at a rate significantly in excess of inflation.

41. Cable operators' complaints about the second option are also belied by these same parties' assurances that they have both the incentive and the means to “mak[e] the digital transition as seamless as possible for their customers.” NCTA asserts, for example, that cable operators have committed to “ensure that cable viewers do not experience disruption after February 17, 2009,” and that they “already have the means to ensure continuing service to analog television sets with no government intervention or subsidy required.” Cequel Communications notes that it has every incentive to continue providing must-carry stations to all subscribers after the transition, if only because it welcomes free programming. Comcast similarly assures us that “cable operators have powerful incentives to meet their customers' demands” and that “no cable operator will allow its subscribers to become ‘disenfranchised' since to do so would be economically irrational.” If cable operators, in fact, “have every incentive to move customers to digital” and “equipment will be available to enable cable customers to view digital broadcast signals,” then we do not understand the cable companies' complaint that the all-digital option is so burdensome that it is merely a “fantasy.” Indeed, numerous cable operators have indicated to the Commission their intent to convert to all-digital operations prior to February 2009. The record in this proceeding also demonstrates that cable operators are already reducing analog programming and moving it to digital tiers. For all of these reasons, we conclude that the second option set forth in this item offers cable operators a meaningful choice about how to fulfill their must-carry obligations.

42. Turning to the First Amendment challenge, we do not believe that the “all-digital” option for complying with the statute's viewability mandate implicates any First Amendment interest beyond that inherent in the must-carry mandate for digital signals already adopted by the Commission. We note, moreover, that this mandate is significantly less burdensome than the analog must-carry mandate upheld by the Supreme Court inTurner IIbecause digital signals occupy much less bandwidth on a cable system than do analog signals. The “all-digital” option does not require cable operators to carryanyadditional signals over its system or to displaceanyadditional programming beyond that required by the Commission's previously adopted digital must-carry mandate. Rather, it simply requires cable operators to take steps to ensure that all subscribers are able to view signals that will already be carried on their systems, and we do not believe that such a mandate can reasonably be described as an independent “infringement” of cable operators' free speech rights.

43. While cable commenters argue that the second option triggers additional First Amendment scrutiny, we do not find their claims to be persuasive. We do not agree that the second option coerces operators into downconverting broadcaster's digital signals or impermissibly penalizes them for failing to downconvert. The purpose and effect of the second option are neither to coerce operators into downconverting nor to penalize them for failing to do so. Rather, they are to provide cable operators with an alternative means of fulfilling the statutory requirement that the signals of must-carry stations must be viewable by all subscribers.

44. However, even if we were to find that the second option implicates a First Amendment interest beyond that inherent in the must-carry mandate for digital signals already adopted by the Commission or, for that matter, that the second option did not represent a realistic choice for cable operators, we would still conclude that our approach here is constitutional because we believe thatbothoptions for complying with the viewability mandate are fully and independently consistent with the First Amendment.

45.Content-Neutral Regulation. As articulated by the Supreme Court inTurner II, “[a] content-neutral regulation will be sustained under the First Amendment if it advances important governmental interests unrelated to the suppression of free speech and does not burden substantially more speech than necessary to further those interests.” There can be little argument that must-carry obligations are content-neutral regulations. The Supreme Court held inTurner Ithat must-carry does not “distinguish favored speech from disfavored speech on the basis of theideas or views expressed” but is instead a content-neutral regulation subject to intermediate-level scrutiny under the First Amendment. Similarly, with respect to the first option provided to cable operators today, requiring downconversion of digital signals does not distinguish speech on the basis of content; it merely requires cable operators to carry whatever message the must-carry stations choose to transmit. We thus reject the notion that ensuring that cable subscribers with analog television sets are able to view must-carry stations reflects an “effort to exercise content control” that triggers strict scrutiny. With respect to the “all-digital” option, we do not think that permitting cable operators to fulfill their must-carry obligations by providing digital must-carry signals that are viewable by all of their subscribers changes the analysis. This option does not distinguish speech on the basis of content; instead, it simply requires that subscribers can view broadcasters' digital signals—regardless of the content those signals contain.

46. We also reject the argument that, in light of “enormous technological and market changes,” a First Amendment challenge to must-carry regulations today would be subject to strict scrutiny. This argument is premised on the mistaken notion that the Supreme Court applied intermediate scrutiny to must-carry regulation due to the existence of cable market power. The Court made clear, however, that the applicable level of scrutiny was tied to the content-neutral character of must-carry regulation. Like the regulations upheld in theTurnerdecisions, requiring cable operators to down-convert digital must-carry signals or make such signals viewable by all subscribers is a content-neutral regulation that guarantees the carriage of broadcast programming regardless of content and is not designed to promote speech of a particular content.

47. Moreover, to the extent cable operators' arguments about market power are meant to suggest that they no longer represent the threat to free, over-the-air broadcasting that drove theTurnerdecisions, the evidence convinces us otherwise. Although it faces competition by DBS operators and others, the cable industry by far remains the dominant player in the MVPD market, commanding approximately 69 percent of all MVPD households. By contrast, the percentage of households that rely on over-the-air broadcast signals has declined significantly since theTurnerdecisions. In 1992, 40 percent of American households continued to rely on over-the-air signals for television programming. Today, however, that figure has shrunk to 14 percent. The shift in the competitive balance between broadcast and cable can also be seen in viewership trends. Between 1995 and 2006, ad-supported cable channels' total day share of the market increased from 28 to 49.5 percent, whereas the total day share of ABC, CBS, and NBC affiliates shrunk precipitously from 44 percent to 23.5 percent. As cable capacity and the number of cable programming networks have grown, the fragmentation of the market for video programming has accelerated, further weakening broadcast stations.

48. In addition, cable operators continue to “exercise `control over most (if not all) of the television programming that is channeled into the subscriber's home [and] can thus silence the voice of competing speakers with a mere flick of the switch.”' As in 1992, few consumers have the choice of more than one cable operator. Cable systems also are more clustered than they were in 1992. While clustering may have beneficial effects, the Supreme Court has recognized that it also may increase cable's threat to local broadcasters and the risk of anticompetitive carriage denials. Furthermore, the share of subscribers served by the 10 largest multiple system operators (“MSOs”) has continued to accelerate since Congress recognized a trend toward horizontal concentration of the cable industry, “giving MSOs increasing market power.” The figure was nearly 54 percent in 1989 and over 60 percent in 1994. The figure remains over 60 percent in 2005. And there remains a significant amount of vertical integration in the cable industry. In 2005, approximately 22 percent of the 531 nonbroadcast video programming networks were vertically integrated with at least one cable operator. “Congress concluded that vertical integration gives cable operators the incentive and ability to favor their affiliated programming services.”

49. The incentives that theTurner IICourt recognized for cable operators to drop local broadcasters in favor of other programmers less likely to compete with them for audience and advertisers also have steadily increased. The Court explained that:

50. Consistent with theTurner IICourt's analysis, the evidence confirms that local advertising revenue has become an increasingly important source of revenue for the cable industry, “providing a steady, increasing incentive to deny carriage to local broadcasters in an effort to capture their advertising revenue.” For example, between 1992 and 2003, cable revenue from local advertising rose dramatically, increasing by approximately 525 percent. Thus, cable operators have even greater incentives today to withhold carriage of broadcast stations.

51. We also cannot conclude that the option of switching between cable and broadcast input significantly weakens cable operators' ability to harm broadcasters. With respect to the A/B switch, the Supreme Court found,inter alia, that many households lack adequate antennas to receive broadcast signals and that installation and use of such switches with other video equipment could be cumbersome or impossible. Notwithstanding technical improvements since then, moreover, there is no evidence of consumer acceptance of the switch, or that more households have adequate antennas to receive broadcast signals. And since the percentage of television viewers relying solely on broadcast signals has dropped from approximately 40 percent to 14 percent in the years sinceTurner II, the number of households with adequate antennas to receive broadcast signals through an A/B switch has almost certainly dropped. Thus, while A/B switches have largely moved from mechanical to electronic in the decade since theTurnerdecisions, switching signal sources still remains cumbersome or impossible for television viewers and does not represent an adequate alternative to must-carry regulation. In sum, we cannot conclude that technological and market changes dictate that must-carry obligationswould now be subject to strict constitutional scrutiny.

52.Important Governmental Interests.The Supreme Court has already recognized that must-carry regulations serve important governmental interests. In particular, it held that there was substantial evidence to support a finding that must-carry requirements serve the important, and interrelated, governmental interests of (1) preserving the benefits of free, over-the-air local broadcast television; and (2) promoting the widespread dissemination of information from a multiplicity of sources. Congress found, and the Court agreed, that both these interests were threatened by cable operators' refusals to carry local broadcast stations. Broadcasters denied carriage on cable systems lose a substantial portion of their audience, which, in turn, translates into lost advertising revenues. As a result, the stations have less money to invest in equipment and programming, leading to further reductions in audience size. This cycle of audience loss followed by revenue loss repeats to the point that the stations “deteriorate to a substantial degree or fail altogether.” Thus, the viability of local broadcast stations and, consequently, the availability of over-the-air broadcasts for non-cable households depend to a material extent on cable carriage. Furthermore, we note that the must-carry mandate found by the Court inTurner IIto advance these governmental interests required that the signals of must-carry stations be viewable by all cable subscribers; it did not merely require cable operators to carry such signals and make them viewable to a limited class of their customers.

53. The steps we take here to ensure that cable operators comply with the statutory viewability requirement after the DTV transition serve these same interests. Cable operators are free to choose whether or not to operate as all-digital systems. We require cable operators that choose not to operate “all-digital systems” to down-convert the digital broadcast signals; otherwise, their analog subscribers will lose access to must-carry stations altogether on February 17, 2009. This fact distinguishes the present circumstances from those the Commission addressed in 2005 when it decided not to require cable operators to carry both the digital and analog signals of broadcast stations during the DTV transition, while television stations continue to broadcast analog signals. At that time, the Commission concluded that a dual carriage requirement was not needed to preserve over-the-air broadcasting for viewers who lack cable because local analog broadcasts were already carried on virtually every cable system. Therefore, the lack of a dual carriage requirement would not have any meaningful effect on a station's viewership, and there was thus no evidence that the absence of dual carriage would diminish the availability of broadcast signals to non-cable subscribers. In contrast, this order addresses the impact of the end of the DTV transition, where the signals of must-carry stations will be completely unavailable to analog cable subscribers, absent the actions we take here. This obviously poses a much more serious challenge for must-carry stations. For this reason, we do not agree that this order is at odds with the Commission's 2005 constitutional analysis. If cable operators did not downconvert the digital signals, broadcasters would stand to lose an audience of millions of households that are analog cable subscribers and the concomitant advertising revenues, thus jeopardizing their continued health and viability. Should these stations deteriorate or cease to exist, the impact of these lost programming options would fall most heavily on those that most need them: the roughly fifteen percent of Americans who rely solely on over-the-air television, which disproportionately consist of low-income and minority households. This is precisely the harm that Congress sought to prevent when it enacted the must-carry provisions upheld by the Supreme Court inTurner II, and no party has suggested a plausible argument that preserving free, over-the-air broadcast television no longer qualifies as an important governmental interest. The Court also recognized that “preserving a multiplicity of broadcasters” serves the related governmental interest of “promoting the widespread dissemination of information from a multiplicity of sources.” All cable programming other than that carried in fulfillment of must-carry obligations is under the control of cable operators. Unless we act, analog cable subscribers and households that rely solely on over-the-air broadcast television may well face “a reduction in the number of media voices” and the loss of “the widest possible dissemination of information from diverse and antagonistic sources.” Thus, this Order clearly advances the important governmental interests identified by Congress and upheld by the Supreme Court. Alternatively, cable operators may fulfill their must-carry and viewability obligations by providing digital signals that are viewable by all of their subscribers, thus serving the same governmental interests upheld in theTurnercases.

54. In addition, the actions we take here advance a separate, but also important, governmental interest of minimizing adverse consumer impacts associated with the DTV transition. The DTV transition results in the return of analog spectrum that can be allocated for other important, indeed critical, purposes, but Congress also recognized the need to protect consumers by ensuring that their television sets continue to work at the end of the transition just as they do today. To that end, Congress created a program to make available coupons that consumers can use to buy digital-to-analog converter boxes for the analog television sets in their homes. Just as Congress sought to minimize the burden of the DTV transition on consumers who rely on over-the-air broadcasting, we act here to minimize the impact of the DTV transition on cable subscribers. Analog downconversion minimizes the impact of the DTV transition on cable subscribers who do not own digital television sets. By ensuring that these consumers continue to receive local broadcast signals, we ensure that they experience little or no disruption in service due to the DTV transition. We do not agree that requiring cable systems offering analog programming to down-convert digital signals undermines, rather than promotes, the digital conversion by encouraging continued dependence on analog televisions. Just as Congress's set-top box program does not undermine but merely smoothes the transition for certain vulnerable consumers, we act here to promote widespread consumer acceptance of the DTV transition by addressing a major source of potential consumer confusion and frustration. Similarly, subscribers to cable systems that convert to all-digital operations will continue to receive local broadcast signals without interruption and thus will experience minimal disruption due to the DTV transition.

55. For all of these reasons, we conclude that both options available to cable operators—downconversion of digital signals and the operation of all-digital systems—advance numerous important governmental interests.

56.Burden on Speech.The thrust of the cable operators' objections to downconversion is the “severe burden” they allege it imposes on protected speech. They contend that a downconversion obligation imposes a greater burden than the must-carry rules upheld inTurner IIbecause cablecompanies will now be required to transmit the must-carry stations' digital signalanddown-convert it to analog, thus displacing additional speech. Even assuming that analog downconversion, together with digital must-carry, requires greater bandwidth than existing must-carry requirements, we do not agree that it burdens “substantially more speech than necessary” to further the government's important interests.

57. The relative burden that must-carry regulation places on cable operators must be measured in context. At the time of theTurnercases, cable capacity was significantly more constrained than it is today. In the early 1990s, most cable systems were all-analog and offered far fewer than 100 channels. In 1995, for example, the Commission defined a “high capacity” cable system as a system with 54 or more channels. By contrast, analog carriage today accounts for only a small percentage of the total number of cable channels and spectrum capacity. By 2004, cable operators were providing, on average, 70 analog video channels and approximately 150 digital video channels, with enough additional bandwidth to provide high-definition television, video-on-demand, Internet access services, and both circuit-switched and IP-based voice services. As a result, therelativeburden of the first option set forth above on cable operators today would be far less of a burden than was the analog mandate upheld by the Supreme Court inTurner II.

58. The Supreme Court foresaw in 1994 that “rapid advances in fiber optics and digital compression technology” might one day result in “no practical limitation on the numbers of speakers that may use the cable medium.” And today, we have every reason to expect that cable capacity will continue to expand in future years, thus further decreasing the relative burden on cable operators. Cable operators continue to develop ways to use their available capacity more efficiently. For example, cable operators, in order to keep pace with their competitors, are beginning to deploy “switched digital” capability in their networks. In a switched digital environment, a channel is transmitted via coaxial cable to a subscriber's premises only when the subscriber tunes to that channel. Time Warner already has deployed switched digital in three cities. Time Warner has said that switched digital gives cable operators the means of adding channels and never running out of capacity. Moreover, because digital cable systems offer so much more capacity, the proportion of overall bandwidth devoted to must-carry signals is that much smaller than was the case at the time of theTurnerdecisions. For example, NAB and MSTV explain that 18 basic analog channels, which includes all must-carry stations, represent about 4.2 percent of the total number of channels and about 6.8 percent of the total downstream spectrum of a typical cable system today. In 1993, by contrast, the same number of channels represented 33 percent of the capacity of a “high capacity” cable system. We believe that the typical cable operator electing to down-convert digital signals will devote significantly less than one-third of its channel capacity to local broadcasters, the cap that was upheld inTurner II.

59. We also conclude that the relative burden on speech of downconversion is outweighed by the benefits. Unless we act, subscribers of cable systems that choose not to operate “all-digital systems” will suffer both the loss of local broadcasts and confusion over that loss, and non-MVPD consumers risk deterioration, if not loss, of over-the-air broadcasting options. Preserving local television broadcasting will help these consumers more than a downconversion obligation will hurt cable operators, particularly given that downconversion is necessary only until cable operators complete the transition to all-digital systems. We also reject Time Warner's contention that a downconversion requirement burdens more speech than is necessary because the governmental interests at issue can be promoted in a less burdensome manner—namely by providing digital set-top boxes to subscribers. Time Warner's objection proves too much, of course, for we have provided cable operators with precisely that choice: they may avoid analog downconversion by converting to all-digital systems, including by providing their subscribers with set-top boxes. Also, to the extent that cable operators do not take the necessary steps to ensure that the digital signals of must-carry stations can be viewed by all subscribers, the carriage of analog signals is necessary to advance the governmental interests identified above. Although we conclude that downconversion is in fact necessary to advance important governmental interests, we note that a regulation is not invalid under the intermediate scrutiny analysis even if the government's interest might be adequately served by some less-restrictive alternative. Finally, we note that the cable operators' arguments about the burdens of downconversion are undercut by their admission that they might down-convert on a purely voluntary basis. For all these reasons, we find that analog-down conversion does not burden “substantially more speech” than is necessary and, therefore, this option does not violate the First Amendment.

60. We also conclude that the “all-digital” option does not burden “substantially more speech than necessary” to further the important governmental interests discussed above. Indeed, this option imposes less of a burden on speech than the must-carry regulations upheld inTurner II.The transmission of digital signals requires far less bandwidth than that required for analog signals, so cable companies transmitting signals, including must-carry signals, in digital rather than analog will gain bandwidth. In addition, while cable operators complain that transitioning to “all-digital systems” will impose an onerous burden on them and therefore does not represent a meaningful choice, we reject those arguments for the reasons discussed above.

61. We conclude, therefore, that both analog downconversion and the “digital-only” options are consistent with the First Amendment on a stand-alone basis. By offering cable operators the flexibility to choose, based on their particular circumstances, either option to fulfill their must-carry obligations, moreover, we have minimized the burden imposed on any particular cable operator.

62. In addition to the First Amendment issue, some parties contend that requiring downconversion of digital must-carry signals constitutes a taking of property without just compensation in violation of the Fifth Amendment. To begin with, as discussed above, we provide cable operators here with two options for complying with the statutory viewability requirement and do not mandate the downconversion of digital signals. But in any event, for the reasons stated below, we also conclude that requiring cable operators to down-convert the digital must-carry signals so that they are viewable by their subscribers with analog televisions would present no problems under the Fifth Amendment.

63. The “takings” clause of the Fifth Amendment provides: “[N]or shall private property be taken for public use, without just compensation.” In general, there are two types of Fifth Amendment takings: “per se” takings and “regulatory” takings. Government authorization of a permanent physical occupation of property constitutes a perse taking. A permanent physical occupation of property is a taking without regard to the public interest that it may serve, the size of the occupation, or the economic impact on the property owner. NAB has argued elsewhere that must carry regulation cannot constitute a per se taking because no physical property is involved; rather the “property” taken consists of electronic bits. Moreover, we agree that the downconversion obligation does not affect the takings analysis. As NAB states:

64. Applying the above framework to the issue here, we believe that a court would find that a per se takings analysis would not apply. The Supreme Court has advised that a per se taking is “relatively rare and easily identified,” and this is not one of those rare and easily identifiable instances. Mandatory carriage regulation effectuates no permanent physical occupation of a cable operator's property, such as the installation of physical equipment that was at issue inLorettov.Teleprompter Manhattan CATV Corp.Rather, multiple programming streams are simply transmitted in bits of data over cable bandwidth through electrons or photons at the speed of light while the cable operator retains complete control over its physical property (i.e., headend equipment). Courts have consistently rejected attempts to apply the concept of permanent physical occupation to the technological realm, and we believe these decisions to be consistent with the Supreme Court's admonition that a permanent physical occupation of property is easily identified and, where found, “presents relatively few problems of proof.”

65. We therefore turn to whether requiring downconversion of digital must-carry signals would constitute a regulatory taking. An allegation that a regulation is so onerous as to constitute a regulatory taking is analyzed under the multi-factor inquiry set forth by the Supreme Court inPenn Central Transportation Co.v.City of New York.A court will examine the following factors identified inPenn Centralto determine whether a regulatory taking has occurred: (1) The character of the governmental action; (2) its economic impact; and (3) its interference with reasonable investment-backed expectations. Applying this test here, we easily conclude that requiring downconversion of digital signals does not effectuate a regulatory taking.

66. First, looking at the character of the governmental action at issue here, we believe it to be a quite modest attempt to “adjust the benefits and burdens of economic life to promote the common good.” As explained above, requiring downconversion of digital must-carry signals will likely impose only a modest burden on a cable operator's system as a whole and will materially advance the government's important interests in preserving over-the-air broadcasting, promoting the widespread dissemination of information from a multiplicity of sources, and minimizing any adverse consumer impacts associated with the DTV transition. Moreover, it is critical to recognize that the government action here involves what traditionally has been and remains a heavily regulated industry.

67. Second, there is no evidence in the record that the economic impact on cable operators of requiring downconversion will cause significant harm. As we explain above, mandatory carriage of analog signals accounts for only a small percentage of the total number of cable channels and total spectrum capacity. As cable operators continue to convert to digital programming, must-carry signals will impose a decreasing relative capacity burden. Given that the cable channels devoted to the mandatory carriage of commercial broadcast signals is capped at one-third of the cable system's usable capacity and in practice is likely to be significantly less than one-third, we find the economic burden on cable operators to be modest.

68. Third, there is no evidence in the record that requiring downconversion will interfere with reasonable investment-backed expectations. Based upon the statutory cap for commercial stations and the numerical limit for non-commercial stations, cable operators should reasonably expect to devote up to one-third of their capacity to carriage of local broadcast stations. Requiring downconversion of digital must-carry signals does not change this limit. Finally, cable operators should have reasonably expected that they would be required to comply with the statutory viewability mandate after the digital transition. For all of these reasons, we conclude that requiring downconversion does not interfere with reasonable investment-backed expectations.

69. We do not find evidence or persuasive argument in the record that requiring downconversion transforms must-carry regulation into a per se taking or a regulatory taking.

70. In its comments, United Communications Corporation made an argument for a revision of the Must Carry rules generally, to increase the carriage rights of low power stations, particularly Class A stations that serve as local network affiliates. Ensuring the continued viability of low power broadcasters is a major concern of the Commission; these proposals, however, are beyond the scope of the current proceeding. We will consider whether there is some alternative or future proceeding in which they could be more fully addressed.

71. Given the statutory directive to treat OVS operators like cable operators with regard to broadcast signal carriage, we find that OVS operators must carry digital-only television stations pursuant to section 76.1506 of the Commission's Rules. Thus, OVS operators must comply with all requirements set forth in thisThird Report and Order.Section 653(c)(1) of the Act provides that any provision that applies to cable operators under sections 614, 615, and 325 shall apply to open video system operators certified by the Commission. Section 653(c)(2)(A) provides that, in applying these provisions to open video system operators, the Commission “shall, to the extent possible, impose obligations that are no greater or lesser” than the obligations imposed on cable operators. The Commission, in implementing the statutory language, held that there are no public policy reasons to justify treating an open video system operator differently from a cable operator in the same local market for purposes of broadcast signal carriage. Thus, OVS operators generally have the same requirements for the carriage of local television stations as do cable operators except that these entities are under no obligation to place television stations on a basic service tier. OVS operators are also obligated to abide by section 325 and the Commission's Rules implementing retransmission consent. We note that section 76.1506(e) specifically emphasizes the mandate to make must-carry signals viewable, and reiterates that the requirements established in thisThird Report and Orderapply equally to cable operators and OVS operators.

For the reasons discussed above, we adopt these rules with respect to material degradation and viewability. A number of detailed issues must be addressed now that the broadframework of rules has been established. We believe it is appropriate to provide stakeholders and the public with an opportunity to weigh in on these matters; therefore theThird Further Noticeseeks comment on some specific applications of these general rules.

72. As required by the Regulatory Flexibility Act of 1980 (“RFA”), the Commission has prepared a Final Regulatory Flexibility Analysis (“FRFA”) relating to thisThird Report and Order.The FRFA is set forth in Appendix A of the order.

73. ThisThird Report and Ordercontains modified information collection requirements subject to the Paperwork Reduction Act of 1995 (“PRA”), Public Law 104-13. The modified information collection requirements relate solely to Office of Management and Budget (“OMB”) Control No. 3060-0647, the Commission's Annual Cable Price Survey. They will be submitted to OMB for review under section 3507(d) of the PRA. OMB, the general public, and other Federal agencies will be invited to comment on the modified information collection requirements contained in this proceeding. The Commission will publish a separateFederal RegisterNotice at a later date seeking these PRA comments from the public. In addition, we note that pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198,see44 U.S.C. 3506(c)(4), we have considered how the Commission might “further reduce the information collection burden for small business concerns with fewer than 25 employees.” We find that the modified requirements must apply fully to small entities (as well as to others) to protect consumers and further other goals, as described in the Order.

74. The Commission will send a copy of thisThird Report and Orderin a report to be sent to Congress and the Government Accountability Office, pursuant to the Congressional Review Act.

75.It is orderedthat, pursuant to the authority contained in sections 4, 303, 614, and 615 of the Communications Act of 1934, as amended, 47 U.S.C. 154, 303, 534, and 535, this Third Report and Order and Third Further Notice of Proposed Rule Makingis adoptedand the Commission's Rulesare hereby amendedas set forth in Appendix C of the order.

76.It is further orderedthat thisThird Report and Orderand the rules in Appendix Care adoptedandshall be effectiveMarch 3, 2008. The modified information collection requirements concerning the Annual Cable Price Survey will become effective upon approval by the Office of Management and Budget and our publication in theFederal Registerof a notice announcing the effective date of the modified requirements.

77.It is further orderedthat the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center,shall senda copy of this Third Report and Order and Third Further Notice of Proposed Rule Making, including the Initial and Final Regulatory Flexibility Analyses, to the Chief Counsel for Advocacy of the Small Business Administration.

78.It is further orderedthat the Commissionshall senda copy of this Third Report and Order and Third Further Notice of Proposed Rule Making in a report to be sent to Congress and the Government Accountability Office pursuant to the Congressional ReviewAct, see 5U.S.C. 801(a)(1)(A).

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

NMFS closed the directed fishery for the shallow-water species fishery by Amendment 80 vessels subject to sideboard limits in the GOA under § 679.20(d)(1)(iii) on January 23, 2008 (73 FR 4760, January 28, 2008).

NMFS has determined that approximately 10 mt remain in the first seasonal apportionment of the 2008 Pacific halibut PSC limit specified for the shallow-water fishery by Amendment 80 vessels subject to sideboard limits in the GOA. Therefore, in accordance with § 679.25(a)(1)(i), (a)(2)(i)(C), and (a)(2)(iii)(D), and to fully utilize the first seasonal apportionment of the 2008 Pacific halibut PSC limit specified for the shallow-water species fishery by Amendment 80 vessels subject to sideboard limits in the GOA, NMFS is terminating the previous closure and is reopening directed fishing for shallow-water species by Amendment 80 vessels subject to sideboard limits in the GOA.

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the opening of the shallow-water species fishery by Amendment 80 vessels subject to sideboard limits in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of January 28, 2008.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

Without this inseason adjustment, NMFS could not allow the fishery for shallow-water species by Amendment 80 vessels subject to sideboard limits in the GOA to be harvested in an expedient manner and in accordance with the regulatory schedule. Under § 679.25(c)(2), interested persons are invited to submit written comments on this action to the above address until February 13, 2008.

This action is required by § 679.20 and § 679.25 and is exempt from review under Executive Order 12866.