48848 Federal Register / Vol. 68, No. 158 / Friday, August 15, 2003 / Proposed Rules 

Environment 

We have analyzed this proposed rule 

under Commandant Instruction 

M16475.1D, which guides the Coast 

Guard in complying with the National 

Environmental Policy Act of 1969 

(NEPA)(42 U.S.C. 4321–4370f), and 

have concluded that there are no factors 

in this case that would limit the use of 

a categorical exclusion under section 

2.B.2 of the Instruction. Therefore, this 

rule is categorically excluded, under 

figure 2–1, paragraph (34)(h), of the 

Instruction, from further environmental 

documentation. Special local 

regulations issued in conjunction with a 

regatta or marine parade permit are 

specifically excluded from further 

analysis and documentation under that 

section. 

Under figure 2–1, paragraph (34)(h), 

of the Instruction, an ‘‘Environmental 

Analysis Check List’’ and a ‘‘Categorical 

Exclusion Determination’’ are not 

required for this rule. Comments on this 

section will be considered before we 

make the final decision on whether to 

categorically exclude this rule from 

further environmental review.

List of Subjects in 33 CFR Part 100 

Marine safety, Navigation (water), 

Reporting and recordkeeping 

requirements, Waterways.

For the reasons discussed in the 

preamble, the Coast Guard proposes to 

amend 33 CFR part 100 as follows:

PART 100—SAFETY OF LIFE ON 

NAVIGABLE WATERS 

1. The authority citation for part 100 

continues to read as follows:

Authority: 33 U.S.C. 1233 through 1236; 

Department of Homeland Security Delegation 

No. 0170.1, 33 CFR 100.35.

2. Add a temporary § 100.35–T05–109 

to read as follows:

§ 100.35–T05–109 Sunset Lake, Wildwood 

Crest, NJ 

(a) Definitions—(1) Coast Guard 

Patrol Commander means a 

commissioned, warrant, or petty officer 

of the Coast Guard who has been 

designated by the Commander, Coast 

Guard Group Atlantic City. 

(2) Official Patrol means any vessel 

assigned or approved by Commander, 

Coast Guard Group Atlantic City with a 

commissioned, warrant, or petty officer 

on board and displaying a Coast Guard 

ensign. 

(3) Participant includes all vessels 

participating in the Sunset Lake 

Hydrofest under the auspices of the 

Marine Event Permit issued to the event 

sponsor and approved by Commander, 

Coast Guard Group Atlantic City. 

(4) Regulated area includes all waters 

of Sunset Lake, New Jersey, from 

shoreline to shoreline, south of latitude 

38° 58′32′′ N. All coordinates reference 

Datum: NAD 1983. 

(b) Special local regulations. (1) 

Except for event participants and 

persons or vessels authorized by the 

Coast Guard Patrol Commander, no 

person or vessel may enter or remain in 

the regulated area. 

(2) The operator of any vessel in the 

regulated area shall: 

(i) Stop the vessel immediately when 

directed to do so by any Official Patrol. 

(ii) Proceed as directed by any Official 

Patrol. 

(iii) Unless otherwise directed by the 

Official Patrol, operate at a minimum 

wake speed not to exceed six (6) knots. 

(c) Enforcement period. This section 

will be enforced from 7:30 a.m. to 2:30 

p.m. on September 27 and 28, 2003.

Dated: August 5, 2003. 

Sally Brice-O’Hara, 

Rear Admiral, Coast Guard, Commander, 

Fifth Coast Guard District.

[FR Doc. 03–20928 Filed 8–14–03; 8:45 am] 

BILLING CODE 4910–15–P

ENVIRONMENTAL PROTECTION 

AGENCY 

40 CFR Part 81 

[CA087–DESIG; FRL–7544–8] 

Clean Air Act Area Designations; 

California

AGENCY: Environmental Protection 

Agency (EPA).

ACTION: Proposed rule.

SUMMARY: EPA is proposing to make 

minor changes in the boundaries 

between areas in Southern California 

established under the Clean Air Act for 

purposes of addressing the national 

ambient air quality standards (NAAQS) 

for 1-hour ozone, particulate matter 

(PM–10), carbon monoxide (CO), 

nitrogen dioxide (NO2), and sulfur 

dioxide (SO2), and the prior NAAQS for 

total suspended particulate matter 

(TSP). 

We are taking comments on this 

proposal and plan to follow with a final 

action.

DATES: Any comments must arrive by 

September 15, 2003.

ADDRESSES: Please address your 

comments to: Dave Jesson, Air Planning 

Office (AIR–2), Air Division, EPA, 

Region IX, 75 Hawthorne Street, San 

Francisco, CA 94105–3901, or to 

jesson.david@epa.gov. 

A copy of the State’s submittal is 

available for public inspection during 

normal business hours at EPA’s Region 

IX office. Please contact Dave Jesson if 

you wish to schedule a visit. A copy of 

the submittal is also available at the 

following location: California Air 

Resources Board, 1001 ‘‘I’’ Street, 

Sacramento, CA 95812.

FOR FURTHER INFORMATION CONTACT:

Dave Jesson, EPA Region IX, at (415) 

972–3957, or jesson.david@epa.gov.

SUPPLEMENTARY INFORMATION:

Throughout this document, ‘‘we,’’ ‘‘us,’’

and ‘‘our’’ refer to EPA. 

I. Background 

A. Current Area Boundaries, 

Designations, and Classifications 

Areas of the country were originally 

designated as attainment, 

nonattainment, or unclassifiable 

following enactment of 1977 

Amendments to the Clean Air Act 

(‘‘CAA’’ or ‘‘the Act’’). 43 FR 8962 

(March 3, 1978). These designations 

were generally based on monitored air 

quality values compared to the 

applicable NAAQS. 

On November 15, 1990, the date of 

enactment of the 1990 CAA 

Amendments, each ozone and CO area 

designated nonattainment, attainment, 

or unclassifiable immediately before 

enactment of the Amendments was 

designated, by operation of law, as a 

nonattainment, attainment, or 

unclassifiable area, respectively. CAA 

section 107(d)(1)(C). The specific 

boundaries of the areas were determined 

subsequently based on requests by each 

state and final determinations by EPA. 

56 FR 56694 (November 6, 1991). Ozone 

and CO nonattainment areas were also 

given classifications according to the 

design values prescribed in the 1990 

Amendments. CAA sections 181(a)(1) 

and 186(a)(1), respectively.

PM–10 areas meeting the 

requirements of either (i) or (ii) of CAA 

section 107(d)(4)(B) were designated 

nonattainment for PM–10 by operation 

of law and classified ‘‘moderate’’ at the 

time of enactment of the 1990 CAA 

Amendments. EPA later designated 

additional PM–10 nonattainment areas 

(see, for example, 58 FR 67335, 

December 21, 1993) and amended the 

initial classifications in accordance with 

CAA section 188(b). 

SO2 and NO2 areas designated as 

nonattainment or attainment/

unclassified before enactment of the 

1990 CAA Amendments retained those 

designations by operation of law. CAA 

section 107(d)(1)(C)(i) and (ii), 

respectively. 

Area boundaries and (for ozone, CO, 

and PM–10) area classifications have 

been amended over the years under the 

Federal Register / Vol. 68, No. 158 / Friday, August 15, 2003 / Proposed Rules 48849

1Boundary changes are an inherent part of a 

designation or redesignation of an area under the 

CAA. See CAA section 107(d)(1)(B)(ii).

2The Los Angeles-South Coast Air Basin Area 

includes all of Orange County and the more 

populated portions of Los Angeles, San Bernardino, 

and Riverside Counties. The Southeast Desert Air 

Basin includes portions of Los Angeles, San 

Bernardino, and Riverside Counties. For a 

description of the current boundaries of the basins 

and subareas, see 40 CFR 81.305.

3The Coachella Valley area is part of the 

Southeast Desert nonattainment area for ozone and 

is its own PM–10 nonattainment area.

4CAA sections 181(a)(1) and (2) establish an 

ozone classification scheme based on 1-hour ozone 

design values, and set attainment deadlines for each 

classification. CAA section 182 then provides 

progressively more stringent requirements for the 

State Implementation Plans (SIPs) depending upon 

an area’s classification. The 1-hour ozone 

classifications are marginal, moderate, serious, 

severe, and extreme, and the severe classification is 

divided into those areas with attainment deadlines 

15 years after enactment of the 1990 CAA 

Amendments and those areas with deadlines 17 

years after enactment. Similarly, the CAA sets 

moderate and serious classifications for CO (in 

section 186(a)(1)) and for PM–10 (in sections 188(a) 

and (b)).

applicable CAA provisions, either by 

request of each state, by operation of 

law, or by EPA initiative. For the State 

of California, the current area 

designations and classifications are 

codified at 40 CFR 81.305. For historical 

reference, this regulatory section also 

includes designations for TSP, a 

NAAQS which was replaced in 1987 

when we promulgated the PM–10 

NAAQS. 

B. California’s Request for Area Changes 

Under CAA section 107(d)(3)(D), the 

Governor of any state, on the Governor’s 

own motion, is authorized to submit to 

the Administrator a revised designation 

of any nonattainment area or portions 

thereof within the State.1 On November 

18, 2002, the California Air Resources 

Board (CARB) submitted to EPA a 

request under CAA section 107(d)(3)(D) 

to revise the boundaries of the LosAngeles-South Coast Air Basin Area 

(‘‘South Coast Air Basin’’) and the 

Southeast Desert Air Basin.2 The 

purposes of CARB’s request are to:

(1) Enlarge the South Coast Air Basin 

to include the Banning Pass area, 

thereby excluding the area from the 

Southeast Desert; 

(2) harmonize the PM–10 and ozone 

boundaries of the Coachella Valley 

area 3 by changing the ozone area 

boundaries to match the PM–10 area 

boundaries; and

(3) correct the eastern boundary of the 

South Coast Air Basin with respect to 

CO. 

II. EPA Review of the State’s Request 

A. Applicable Criteria 

In determining whether to approve or 

deny a state’s request for a revision to 

the designation of an area under section 

107(d)(3)(D), we use the same factors 

Congress directed us to consider when 

we initiate a revision to a designation of 

an area on our own motion under 

section 107(d)(3)(A). These factors 

include ‘‘air quality data, planning and 

control considerations, or any other air 

quality-related considerations the 

Administrator deems appropriate.’’

B. Expansion of the South Coast Air 

Basin to Include the Banning Pass 

The Banning Pass area in Riverside 

County is also known as the San 

Gorgonio Pass area. The area is a 

mountain saddle about 15 miles long by 

5 miles wide in northwestern Riverside 

County. There are only 4 communities 

in this area: Banning, Beaumont, 

Cabazon, and Cherry Valley. This area is 

currently part of the Southeast Desert 

severe-17 ozone nonattainment area and 

the Coachella Valley serious PM–10 

nonattainment area, and the area has 

been designated as attainment or 

unclassifiable with respect to CO, NO2, 

SO2, and TSP.4 The populated portion 

of the Southeast Desert-Coachella Valley 

area is primarily low desert. Palm 

Springs is the largest community, and 

tourism and agriculture are the major 

industries in the Coachella Valley.

The South Coast Air Quality 

Management District (SCAQMD) has 

local jurisdiction over the South Coast 

Air Basin, the Banning Pass area, and 

the Coachella Valley portion of the 

Southeast Desert. Both CARB and 

SCAQMD conclude that the Banning 

Pass area is more similar to the South 

Coast Air Basin in climate and 

topography and measured air quality, 

and that air pollution levels within the 

Banning Pass area are far more heavily 

influenced by emissions originating in 

the South Coast Air Basin than in the 

Southeast Desert-Coachella Valley. 

The climate of the Banning Pass area 

closely resembles the ‘‘steppe’’ (semiarid) climate of the South Coast Air 

Basin in terms of rainfall and 

temperature. Precipitation levels 

recorded in the Banning Pass are much 

higher than those of the Coachella 

Valley, which has a ‘‘desert’’ (arid) 

climate classification. For example, the 

annual average rainfall is 17 inches in 

Beaumont, and only 5.2 inches in Palm 

Springs. On average, summer 

temperatures in the Coachella Valley are 

10–15 degrees F warmer than those 

recorded at the Banning Pass and in the 

central South Coast Air Basin. The mean 

temperature in Palm Springs for July is 

92 degrees F, compared to 77 degrees F 

in Beaumont.

Pollution from western and central 

portions of the South Coast Air Basin is 

typically transported eastward by 

prevailing ocean breezes. This results in 

high ozone concentrations measured in 

mountain sites at the eastern boundary 

of the basin, including Banning 

(elevation 2300 feet), which recorded a 

total of 25 exceedances with a design 

value of 0.143 parts per million (ppm) 

during the period 1999 to 2001. During 

this same period, Palm Springs 

(elevation 200 feet) recorded only 7 

exceedances, with a design value of 

0.128 ppm. Similarly, the Banning Pass 

is much more closely linked to the 

South Coast Air Basin than to the 

Southeast Desert with respect to 

emissions and ambient concentrations 

for the other pollutants, such as NO2

and SO2. 

In terms of ozone generation, the 

South Coast Air Basin has far greater 

emissions than the Southeast Desert 

generally and the Coachella Valley 

specifically, and the easterly direction 

of the prevailing winds also ensures that 

elevated pollution levels in Banning 

Pass are a consequence of the air mass 

shared with the western and central 

portions of the South Coast Air Basin, 

and are not associated with the 

Coachella Valley or other portions of the 

Southeast Desert. 

For these reasons, the Banning Pass 

area was moved to the South Coast Air 

Basin under State law in 1996. CARB 

and SCAQMD therefore request that the 

Federal boundaries be adjusted to match 

the boundaries used for State air quality 

purposes, by moving the Banning Pass 

area from the Southeast DesertCoachella Valley area to the South Coast 

Air Basin. 

The table below labeled ‘‘Banning 

Pass Area’’ shows the current federal 

designations and classifications of this 

area, and the changes that would result 

from approval of the State’s proposed 

revision.

48850 Federal Register / Vol. 68, No. 158 / Friday, August 15, 2003 / Proposed Rules 

BANNING PASS AREA

Ozone CO PM–10 NO2 SO2

Designation Classification Designation Classification Designation Classification Designation Designation 

Current ............ Non-attainment 

(area is part 

of SE Desert 

Modified 

AQMA Area).

Severe 17 ........ Unclassifiable/

Attainment 

(part of SE 

Desert Air 

Basin, Riverside County, 

AQMA portion).

N/A ................... Non-attainment 

(part of Riverside County, 

Coachella 

Valley planning area).

Serious ............. Cannot be classified or better than national standards (part of 

Riverside 

County, nonAQMA portion).

Cannot be classified (part of 

SE Desert Air 

Basin, excluding Imperial 

County). 

Proposed ........ Non-attainment 

(area becomes part of 

South Coast 

Air Basin).

Extreme ........... Non-attainment 

(area becomes part of 

South Coast 

Air Basin).

Serious ............. Non-attainment 

(area becomes part of 

South Coast 

Air Basin).

Serious ............. Cannot be classified or better than national standards (area becomes part of 

South Coast 

Air Basin).

Cannot be classified (area 

becomes part 

of South 

Coast Air 

Basin). 

We believe that Banning is more 

similar to the South Coast than the 

Coachella area, and that it would 

support efficient planning and control 

to move the federal boundary of the 

South Coast Air Basin eastward to 

encompass the Banning Pass area.

C. Revision to the Southeast Desert 

Ozone Nonattainment Boundary to 

Align It’s Eastern Border With the 

Coachella Valley PM–10 Nonattainment 

Boundary 

At present, the boundary of the 

Coachella Valley portion of the 

Southeast Desert ozone nonattainment 

area is different from the boundary of 

the Coachella Valley nonattainment area 

for PM–10. The existing ozone 

nonattainment area boundary differs 

from the Riverside portion of the 

Southeast Desert Air Basin boundary by: 

(1) Excluding a sparsely populated, 550 

square mile portion of the Coachella 

Valley area, and (2) including a tiny 

portion of the Southeast Desert Air 

Basin. The State has proposed to align 

the Coachella Valley nonattainment area 

boundaries by using for all pollutants 

the boundary of the Coachella Valley 

nonattainment area for PM–10. This 

boundary tracks the mountain ridge line 

that separates the air basins and thus 

reflects air quality considerations. The 

change will simplify and make more 

consistent the planning activities for 

ozone and PM–10, and will reconcile 

boundaries for Federal and State 

planning purposes. As a result of the 

change, a sparsely-populated 

mountainous area above the Coachella 

Valley would shift from an ozone 

attainment area to a nonattainment area, 

with a severe-17 classification. 

We agree with the State’s argument 

that it is appropriate to align the federal 

boundaries of the Coachella Valley 

portion of the Southeast Desert Air 

Basin ozone nonattainment area to 

match the Coachella Valley PM–10 

nonattainment area. 

D. Typographical Correction to the 

Boundaries of the South Coast Air Basin 

for Carbon Monoxide 

The CO boundaries of the South Coast 

Air Basin in 40 CFR 81.305 are incorrect 

because they mistakenly incorporate the 

following phrase: ‘‘and that portion of 

San Bernardino County which lies south 

and west of a line described as follows: 

3. latitude 35 degrees, 10 minutes north 

and longitude 115 degrees, 45 minutes 

west.’’ Neither EPA nor CARB intended 

the South Coast CO nonattainment area 

to include this portion of San 

Bernardino County, which was 

inadvertently incorporated in the 

designations promulgated on November 

6, 1991 (56 FR 56724). California 

requests that we correct this 

typographical mistake in the original 

designation by deleting the portion of 

the boundary description quoted above. 

Correction of this error will result in the 

CO boundaries conforming to the 1-hour 

ozone boundaries for the South Coast 

Air Basin. We agree that this correction 

is appropriate. 

III. Summary of Proposed Action and 

Request for Comment 

EPA is proposing to take the following 

actions: 

(1) Approve the State’s request to 

revise the boundary of the South Coast 

Air Basin to incorporate the Banning 

Pass; 

(2) Approve the State’s request to 

amend the 1-hour ozone boundary of 

the Coachella Valley area (Riverside 

County portion of the Southeast Desert 

Air Basin to correspond to the PM–10 

boundary; and 

(3) Approve the State’s request to 

make a typographical correction to the 

boundary of the South Coast Air Basin 

with respect to CO. 

Because EPA believes the proposed 

boundary revisions, reorganizations, 

and corrections are consistent with 

relevant requirements, we are proposing 

to fully approve them under CAA 

section 107(d)(3)(D). We will accept 

comments from the public on this 

proposal for the next 30 days. Unless we 

receive convincing new information 

during the comment period, we intend 

to publish a final approval of the 

designation changes. 

IV. Administrative Requirements 

Under Executive Order 12866 (58 FR 

51735, October 4, 1993), this proposed 

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 proposed action merely 

proposes to approve state law as 

meeting Federal requirements and 

imposes no additional requirements 

beyond those imposed by state law. 

Accordingly, the Administrator certifies 

that this proposed rule will not have a 

significant economic impact on a 

substantial number of small entities 

under the Regulatory Flexibility Act (5 

U.S.C. 601 et seq.). Because this rule 

proposes to approve pre-existing 

requirements under state law and does 

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 proposed rule also does not have 

tribal implications because it will not 

Federal Register / Vol. 68, No. 158 / Friday, August 15, 2003 / Proposed Rules 48851

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 does not have 

substantial direct effects on the States, 

on the relationship between the national 

government and the States, or on the 

distribution of power and 

responsibilities among the various 

levels of government, as specified in 

Executive Order 13132 (64 FR 43255, 

August 10, 1999). This action merely 

proposes to approve a state rule 

implementing a Federal standard, and 

does not alter the relationship or the 

distribution of power and 

responsibilities established in the Clean 

Air Act. This proposed 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 is not economically 

significant. 

In reviewing SIP submissions, EPA’s 

role is to approve state choices, 

provided that they meet the criteria of 

the Clean Air Act. 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 Clean Air Act. 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 proposed 

rule does not impose an information 

collection burden under the provisions 

of the Paperwork Reduction Act of 1995 

(44 U.S.C. 3501 et seq.).

List of Subjects in 40 CFR Part 81 

Environmental protection, Air 

pollution control, National parks, 

Wilderness areas.

Dated: August 6, 2003. 

Deborah Jordan, 

Acting Regional Administrator, Region IX.

[FR Doc. 03–20894 Filed 8–14–03; 8:45 am] 

BILLING CODE 6560–50–U

OFFICE OF PERSONNEL 

MANAGEMENT 

48 CFR Parts 1601, 1602, 1604, 1615, 

1631, 1632, 1644, and 1652 

RIN 3206–AJ20 

Federal Employees Health Benefits; 

Acquisition Regulation: Large Provider 

Agreements, Subcontracts, and 

Miscellaneous Changes

AGENCY: Office of Personnel 

Management.

ACTION: Proposed regulation.

SUMMARY: The Office of Personnel 

Management (OPM) is issuing a 

proposed regulation to amend the 

Federal Employees Health Benefits 

Acquisition Regulation (FEHBAR). We 

are proposing a new policy that 

establishes notification and information 

requirements, including audit, for 

Federal Employees Health Benefits 

(FEHB) Program experience rated 

carriers’ large provider agreements. The 

proposed regulation also modifies the 

threshold for review of carrier 

subcontracts; revises the definitions of 

Cost or Pricing Data and Experience 

Rate to reflect mental health parity 

requirements effective with the 2001 

contract year; updates the records 

retention period, updates the FEHB 

Program Clause Matrix, and conforms 

various subpart and paragraph 

references in the Federal Acquisition 

Regulation (FAR) revisions made since 

we last updated the FEHBAR.

DATES: Comments must be received on 

or before October 14, 2003.

ADDRESSES: Send written comments to 

Abby L. Block, Deputy Associate 

Director, Employee and Family 

Services, Strategic Human Resources 

Policy Division, Office of Personnel 

Management, Washington, DC 20415–

3601; or deliver to OPM, Room 3425, 

1900 E Street NW., Washington, DC; or 

FAX to (202) 606–0633.

FOR FURTHER INFORMATION CONTACT:

Michael W. Kaszynski, (202) 606–0004; 

or send email to mwkaszyn@opm.gov.

SUPPLEMENTARY INFORMATION: The 

primary purpose of this rulemaking is to 

provide for additional OPM oversight of 

the FEHB Program carriers’ contract 

costs that are charged to the 

Government. Since the beginning of the 

Program, we have maintained oversight 

of FEHB carriers’ costs, including their 

subcontractor costs. We have specified 

standard contracting requirements for 

review and audit of those costs and have 

routinely updated our requirements as 

necessary. Historically, we did not 

consider providers of medical services 

or supplies to be subcontractors as the 

term is defined in the Federal 

Acquisition Regulation (FAR) because 

hundreds of thousands of such 

agreements between carriers and 

providers are in place, and until 

recently, the dollar value of each 

individual agreement was relatively 

small. However, the healthcare delivery 

system has changed over the years and 

new large healthcare delivery entities 

now play a significant role in the 

healthcare industry. FEHB carriers 

contract with those types of entities for 

the delivery of services that represent a 

significant portion of individual carriers 

total costs charged to the FEHB 

Program, and in the aggregate represent 

a sizeable portion of overall Program 

costs. Because of the impact of these 

costs on the FEHB Program, we are 

expanding our oversight in this area. 

Even though large providers of medical 

services or supplies are not defined as 

subcontractors under the FEHB 

Program, the proposed regulatory 

changes would bring them under the 

umbrella of the FEHBAR and subject 

them to audit requirements currently 

applicable to carriers and their 

subcontractors. Some but not all FEHB 

carriers’ large provider agreements 

already provide for a limited right to 

audit. We believe the provision should 

be in regulation rather than in 

individual contracts to make the context 

clear, explicit and consistent for all 

experience-rated carriers by mirroring 

the regulatory requirements for 

subcontracting arrangements that are 

already in place. As is currently the case 

with audit findings in subcontract 

arrangements, any audit findings 

regarding large providers would be 

referred to the FEHB carriers holding 

the provider contract. 

For FAR audit purposes, we define a 

large provider agreement as an 

agreement between (1) an FEHB carrier, 

at least 25 percent of whose total 

contracts are comprised of FEHB 

enrollee contracts, and (2) a provider, 

where the total costs charged to the 

FEHB carrier for a contract term for 

FEHB members, including benefits and 

services, are reasonably expected to 

exceed 5 percent of the carrier’s total 

FEHB benefits costs, or 5 percent of the 

carrier’s total FEHB administrative costs 

(where the provider is not responsible 

for benefits costs under the agreement). 

We will use the FEHB Program Annual 

Accounting Statement for the prior 

contract year to determine the 5 percent 

threshold. 

The proposed regulation requires 

experience rated carriers to meet 

minimum notification and information 

requirements with respect to any new