Federal Register Vol. 80, No.102,

Table of Contents I. Background II. Proposed Criteria for Inclusion of U.S. Municipal Securities as Eligible HQLA A. Criteria for Inclusion as Level 2B Liquid Assets 1. U.S. General Obligation Municipal Securities 2. Investment Grade U.S. General Obligation Municipal Securities 3. Proven Record as a Reliable Source of Liquidity 4. Not an Obligation of a Financial Sector Entity or Its Consolidated Subsidiaries B. Limitations on a Company's Inclusion of U.S. General Obligation Municipal Securities as Eligible HQLA 1. Limitation on the Inclusion of U.S. General Obligation Municipal Securities With the Same CUSIP Number as Eligible HQLA 2. Limitation on the Inclusion of the U.S. General Obligation Municipal Securities of a Single Issuer as Eligible HQLA 3. Limitation on the Amount of U.S. General Obligation Municipal Securities That Can Be Included in the HQLA Amount III. Plain Language IV. Regulatory Flexibility Act V. Paperwork Reduction Act I. Background

On September 3, 2014, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, the agencies) adopted a final rule that implemented a quantitative liquidity requirement 1 (LCR) consistent with the liquidity coverage ratio standard established by the Basel Committee on Banking Supervision (Basel III Liquidity Framework).2 The LCR is designed to promote the short-term resilience of the liquidity risk profile of large and internationally active banking organizations, and to further improve the measurement and management of liquidity risk, thereby improving the banking sector's ability to absorb shocks arising during periods of significant stress. The LCR requires a company subject to the rule to maintain an amount of high-quality liquid assets (HQLA) (the numerator of the ratio) 3 that is no less than 100 percent of its total net cash outflows over a prospective 30 calendar-day period of significant stress (the denominator of the ratio). Community banking organizations are not subject to the LCR.4

Under the LCR, only a limited number of asset classes that have historically been used as a source of liquidity in the United States during periods of significant stress and have a demonstrable record of liquidity are included as HQLA. In identifying the types of assets that qualify as HQLA under the Basel III Liquidity Framework the Basel Committee on Banking Supervision considered several factors, including the asset's risk profile and characteristics of the market for the asset (e.g., active sale or repurchase markets at all times, significant diversity in market participants, and high trading volume). The agencies considered similar factors in developing the LCR. In addition, the agencies developed certain other criteria, such as operational requirements, that assets must meet for inclusion as eligible HQLA.

The LCR divides HQLA into three categories of assets: Level 1, level 2A, and level 2B liquid assets. Specifically, level 1 liquid assets are limited to balances held at a Federal Reserve Bank and foreign central bank withdrawable reserves, all securities issued or unconditionally guaranteed as to timely payment of principal and interest by the U.S. Government, and certain highly liquid, high credit quality sovereign, international organization and multilateral development bank debt securities. Level 1 liquid assets, which are the highest quality and most liquid assets, may be included in a covered company's HQLA amount without limit and without haircuts. Level 2A and 2B liquid assets have characteristics that are associated with being relatively stable and significant sources of liquidity, but not to the same degree as level 1 liquid assets. Level 2A liquid assets include certain obligations issued or guaranteed by a U.S. government-sponsored enterprise (GSE) and certain obligations issued or guaranteed by a sovereign entity or a multilateral development bank that are not eligible to be treated as level 1 liquid assets. The LCR subjects level 2A liquid assets to a 15 percent haircut and limits the aggregate of level 2A and level 2B liquid assets to no more than 40 percent of the total HQLA amount. Level 2B liquid assets, which are liquid assets that generally exhibit more volatility than level 2A liquid assets, are subject to a 50 percent haircut and may not exceed 15 percent of the total HQLA amount. Under the LCR, level 2B liquid assets include certain corporate debt securities and certain common equity shares of publicly traded companies. Level 2 liquid assets, including all level 2B liquid assets, must be liquid and readily marketable as defined in the LCR to be included as HQLA.5 Other classes of assets, such as debt securities issued or guaranteed by a U.S. public sector entity (U.S. municipal securities), are not treated as HQLA. The LCR final rule defines a public sector entity to include any state, local authority, or other governmental subdivision below the U.S. sovereign entity level.6

The agencies received a substantial number of comments in connection with the LCR rulemaking 7 from U.S. and foreign firms, public officials (including state and local governments and members of the U.S. Congress), public interest groups, private individuals, and other interested parties requesting that U.S. municipal securities be treated as HQLA. Commenters asserted that U.S. municipal securities exhibit liquidity characteristics consistent with those considered by the agencies in identifying assets as HQLA and presented data to demonstrate the liquidity of U.S. municipal securities. In particular, some commenters indicated that certain U.S. municipal securities trade more often and in greater volumes than some corporate debt securities that qualify as HQLA under the LCR. In addition, commenters argued that the exclusion of U.S. municipal securities from HQLA could lead to higher funding costs for U.S. municipalities, which could affect local economies and infrastructure.

In the SUPPLEMENTARY INFORMATION section to the LCR final rule, the agencies expressed concern that covered companies would be limited in their ability to rapidly monetize U.S. municipal securities during a period of significant stress. For example, the funding of many U.S. municipal securities in the repurchase market is limited, which lessens the opportunity for companies to convert the securities to cash quickly during a period of significant stress. Accordingly, the LCR final rule did not include U.S. municipal securities as HQLA.

However, the Board indicated a willingness to continue to study the question of whether at least some U.S. municipal securities should be permitted under some circumstances to be included as HQLA. The Board now proposes to allow Board-regulated institutions to include as level 2B liquid assets under the LCR U.S. general obligation municipal securities that exhibit characteristics that are comparable to other asset classes included as level 2B liquid assets. The proposal contains a variety of criteria and limitations designed to ensure that U.S. general obligation municipal securities included as HQLA are liquid and appropriately valued for purposes of the LCR.

This proposed rule would apply to all Board-regulated institutions that are subject to the LCR, which include: (1) Bank holding companies, certain savings and loan holding companies, and state member banks that, in each case, have $250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet foreign exposure; (2) state member banks with $10 billion or more in total consolidated assets that are consolidated subsidiaries of bank holding companies subject to the LCR described in (1); and (3) nonbank financial companies designated by the Financial Stability Oversight Council for Board supervision to which the Board has applied the LCR by rule or order. This proposed rule would also allow bank holding companies and certain savings and loan holding companies, in each case with $50 billion or more in total consolidated assets, that are subject to the Board's modified minimum liquidity coverage ratio to take advantage of the proposed expanded definition of HQLA.

As described in more detail below, this proposed rule would include limited amounts of U.S. general obligation municipal securities as level 2B liquid assets under the LCR if the securities meet certain criteria. The Board invites comment on all aspects of the proposal including whether these criteria and limitations are appropriate, reasonable, and achieve their intended purposes.

The Board proposes to include U.S. general obligation municipal securities as level 2B liquid assets, rather than as level 2A liquid assets. Municipal securities are less liquid than assets that are included as level 2A liquid assets. For example, the daily trading volume of securities issued or guaranteed by U.S. GSEs far exceeds that of U.S. municipal securities.

As a threshold matter, to qualify as HQLA under the proposal, U.S. general obligation municipal securities must be liquid and readily marketable and meet other criteria consistent with the criteria for corporate debt securities that are included as level 2B liquid assets. These criteria help to ensure comparable treatment between U.S. general obligation municipal securities and corporate debt securities included as HQLA.8 In addition, to help ensure sufficient liquidity of the U.S. general obligation municipal securities that are included in the total HQLA amount, this proposed rule would impose certain limits on the amount of U.S. general obligation municipal securities that a Board-regulated institution may include as eligible HQLA.9 This proposed rule would not limit the amount of U.S. municipal securities a Board-regulated institution could hold for other purposes.

Under this proposed rule, U.S. municipal securities would qualify as HQLA only if they are general obligations of the issuing entity. General obligations of U.S. public sector entities, which include bonds or similar obligations that are backed by the full faith and credit of the public sector entities, are assigned a 20 percent risk weight under the Board's risk-based capital rules.10 This provision, which is consistent with the Basel III Liquidity Framework, is designed to limit the liquidity and credit risk associated with U.S. municipal securities included in the HQLA amount.

Revenue obligations, which include bonds or similar obligations that are obligations of U.S. public sector entities, but which the public sector entities have committed to repay with revenues from a specific project rather than from general tax funds, are assigned a 50 percent risk weight under the Board's risk-based capital rules.11 Revenue obligations are assigned a higher risk weight than general obligations because repayment of revenue obligations is dependent on revenue from an underlying project without an obligation from a public sector entity to repay these obligations from other revenue sources.12 The Board has proposed to exclude revenue obligations because, during a period of significant stress, revenue derived from a particular project, such as a stadium, may fall dramatically as domestic consumption declines and the associated revenue bond may experience significant price declines and become less liquid.

Consistent with the requirements for corporate debt securities included as level 2B liquid assets, this proposed rule would require that U.S. general obligation municipal securities be “investment grade” under 12 CFR part 1 as of the calculation date.13 This criterion requires an issuer of a U.S. general obligation municipal security to have adequate capacity to meet its financial commitments under the security for the projected life of the security, which is met by showing a low risk of default and an expectation of the timely repayment of principal and interest.

Consistent with the requirements for corporate debt securities included as level 2B liquid assets under the LCR, this proposed rule would require that U.S. general obligation municipal securities included as level 2B liquid assets be issued by an entity whose obligations have a proven record as a reliable source of liquidity in repurchase or sales markets during a period of significant stress. A Board-regulated institution would be required to demonstrate this record of liquidity reliability and lower volatility during periods of significant stress by showing that the market price of the U.S. general obligation municipal securities or equivalent securities of the issuer declined by no more than 20 percent during a 30 calendar-day period of significant stress, or that the market haircut demanded by counterparties to secured lending and secured funding transactions that were collateralized by such debt securities or equivalent securities of the issuer increased by no more than 20 percentage points during a 30 calendar-day period of significant stress. This percentage decline in value and percentage increase in haircut is the same as those applicable to corporate debt securities included as level 2B liquid assets under the LCR.14 This limitation is meant to exclude volatile U.S. municipal securities because their volatility indicates these assets may not hold their value during a period of significant stress, thereby over-estimating the amount of HQLA actually available to the banking entity.

As discussed in the Supplementary Information section to the LCR final rule, a Board-regulated institution may demonstrate a historical record that meets this criterion through reference to historical market prices and available funding haircuts of the U.S. general obligation municipal security during periods of significant stress, such as the 2007-2009 financial crisis.15 Board-regulated institutions should also look to other periods of systemic and idiosyncratic stress to see if the asset under consideration has proven to be a reliable source of liquidity. As noted above, HQLA include only those assets that have demonstrated an ability to maintain relatively stable prices such that they can be rapidly sold by a Board-regulated institution to meet its obligations during a period of significant stress.

Under this proposed rule, U.S. general obligation municipal securities would qualify as HQLA only if they are not obligations of a financial sector entity and not obligations of a consolidated subsidiary of a financial sector entity. For purposes of this provision, the Board considers a security that is issued or guaranteed by a financial sector entity to be an obligation of the financial sector entity. The LCR defines a financial sector entity to include a regulated financial company, investment company, non-regulated fund, pension fund, investment adviser, or a company that the Board has determined should be treated the same as the foregoing for the purposes of the LCR. Thus, if a bond insurer insures the general obligation municipal securities of a U.S. public sector entity (such insurance is commonly referred to as a “wrap”), the securities would not be eligible for inclusion in HQLA. The Board has proposed to include this criterion in order to exclude U.S. general obligation municipal securities that are valued, in part, based on guarantees provided by financial sector entities, because these financial sector entity guarantees could exhibit similar risks and correlation with Board-regulated institutions (wrong-way risk) during a liquidity stress period, thus overestimating the amount of HQLA that would be available to the banking entity during a liquidity stress period. This criterion is consistent with the Basel III Liquidity Framework and with the requirements imposed on corporate debt securities and publicly traded common equity shares that are included as level 2B liquid assets under the LCR.

1. How should the Board supplement or amend the proposed criteria for including U.S. general obligation municipal securities as HQLA?

2. Is it appropriate to exclude U.S. general obligation municipal securities that are guaranteed (or “wrapped”) by bond insurers or other financial sector entities from HQLA because of wrong-way risk? Why or why not? How else could the Board address concerns regarding the wrong-way risk associated with such securities?

This proposed rule would limit the amount of U.S. general obligation municipal securities a Board-regulated institution could include as eligible HQLA based on the total amount outstanding of U.S. general obligation municipal securities with the same CUSIP number, on the average daily trading volume of general obligation municipal securities issued by a particular U.S. municipal issuer, and on a percentage of the institution's total HQLA amount. These limitations are intended to address the unique structure of the U.S. municipal securities market and designed to help ensure sufficient liquidity of the U.S. general obligation municipal securities included in the HQLA amount under the LCR.

Individual issuances of U.S. municipal securities (those with the same CUSIP number) by a single public sector entity are frequently far smaller and more numerous than issuances of debt securities by a single corporate issuer and exhibit a diverse array of maturity dates and interest rates. This is in part due to legal and other restrictions on the size of individual issuances by public sector entities and because U.S. municipal securities are frequently marketed to retail or smaller institutional investors. For example, a very large issuer of U.S. municipal securities (such as a state or large city) may have several hundred individual issuances outstanding. In contrast, a single corporate issuer may have a comparable dollar amount of securities outstanding but with only 20 to 30 individual issuances outstanding. Investors in U.S. municipal securities sometimes purchase a large percentage, including more than 50 percent of the outstanding amount, of the individual issuance.

The Board is concerned that a Board-regulated institution would not be able to monetize a concentration in the holding of a particular issuance of U.S. general obligation municipal securities during a period of significant stress without a material impact on the securities' price. This proposed rule therefore would permit a Board-regulated institution to count U.S. general obligation municipal securities as eligible HQLA only to the extent the fair value of the institutions' securities with the same CUSIP number do not exceed a maximum of 25 percent of the total amount of outstanding securities with the same CUSIP number. Under the proposal, this threshold for inclusion as eligible HQLA would be calculated prior to application of the 50 percent haircut applicable to level 2B liquid assets that is set forth in § 249.21(a)(3) of the LCR final rule. This requirement is designed to ensure that a Board-regulated institution does not include in its HQLA amount a concentration of an individual issuance of U.S. general obligation municipal securities.

The Board is proposing a limit on the amount of securities issued by a single U.S. public sector entity that a Board-regulated institution may include as eligible HQLA, based on the trading volume that the secondary market for the entity's general obligation municipal securities could be expected to withstand before prices materially decline. For each U.S. public sector entity, this proposed rule would limit the aggregate fair value of the general obligation securities that a Board-regulated institution could include as eligible HQLA to two times the average daily trading volume, as measured over the previous four quarters, of all general obligation municipal securities issued by that public sector entity.

The LCR was designed to include as eligible HQLA assets that remain relatively liquid and have multiple buyers and sellers during periods of significant stress, as a covered company may be expected to sell HQLA to meet its cash outflows during such periods. To remain consistent with the design of the LCR, the proposal seeks to include U.S. general obligation municipal securities as eligible HQLA to the extent that they would exhibit liquidity without dramatic loss in value during periods of significant stress. The U.S. municipal securities market includes a large diversity of issuers, size of issuances, and volumes of secondary market trading. The Board analyzed data on the historical trading volume of municipal securities in order to determine the general level of increased sales of municipal securities that could be absorbed by the market during periods of significant stress before prices would materially decline. The proposal would limit the aggregate fair value of the U.S. general obligation municipal securities of a public sector entity that may be included as eligible HQLA to two times the average daily trading volume of all U.S. general obligation municipal securities issued by that public sector entity because, based on the Board's analysis, a holding of two times the average daily trading volume could likely be absorbed by the market within a 30 calendar-day period of significant stress without materially disrupting the functioning of the market.

Rather than proposing an average daily trading volume limitation on a per-security basis, the Board is proposing a limitation based on the average daily trading volume of all U.S. general obligation municipal securities issued by the public sector entity. Due to the smaller size of many U.S. municipal securities issuances, applying this limit on a per-security basis may unnecessarily restrict a covered company's ability to invest in a particular security that meets the Board-regulated institution's investment criteria and liquidity needs. However, as discussed above, the Board has proposed a separate limitation on the amount of an individual issuance that may be included as eligible HQLA to address the concern that a high concentration of an individual U.S. general obligation municipal security could be included as eligible HQLA.

The Board is proposing to limit the amount of U.S. general obligation municipal securities that are included in a Board-regulated institution's HQLA amount to no more than five percent of its total HQLA amount. This limit is in addition to the 40 percent limit on the aggregate amount of level 2A and level 2B liquid assets and the 15 percent limit on level 2B liquid assets that can be included in the HQLA amount. It also complements the other two limits on U.S. general obligation municipal securities described above, which relate solely to a particular issuance and individual issuers. Although the Board has concluded that certain U.S. general obligation municipal securities are sufficiently liquid to be included as eligible HQLA, the Board proposes to limit the aggregate amount of all U.S. general obligation municipal securities that may be included in the HQLA amount to ensure appropriate diversification of asset classes within a Board-regulated institution's HQLA amount. Consistent with the LCR's limits on level 2A and level 2B liquid assets, this proposed five percent limit applies both on an unadjusted basis and after adjusting the composition of the HQLA amount upon the unwind of certain secured funding transactions, secured lending transactions, asset exchanges and collateralized derivatives transactions.16

The proposed five percent limit would be applied to the calculation of the HQLA amount by amending the definitions of the unadjusted excess HQLA amount and the adjusted excess HQLA amount.17 Under this proposed rule, the unadjusted excess HQLA amount would equal the sum of the level 2 cap excess amount, the level 2B cap excess amount and the public sector entity security cap excess amount. The method of calculating the public sector entity security cap excess amount is set forth in § 249.21(f) of this proposed rule. Under this provision, the public sector entity security cap excess amount would be calculated as the greater of: (1) The public sector entity security liquid asset amount minus the level 2 cap excess amount minus level 2B cap excess amount minus 0.0526 (or 5/95, which is the ratio of the maximum allowable public sector entity security liquid assets to the level 1 liquid assets and other level 2 liquid assets) times the sum of (i) the level 1 liquid asset amount, (ii) the level 2A liquid asset amount, and (iii) the level 2B liquid asset amount minus the public sector entity security liquid asset amount; or (2) zero.

Under this proposed rule, the adjusted excess HQLA amount would equal the sum of the adjusted level 2 cap excess amount, the adjusted level 2B cap excess amount, and the adjusted public sector entity cap excess amount. The method of calculating the adjusted public sector entity security cap excess amount is set forth in § 249.21(k) of this proposed rule. Under this provision, the adjusted public sector entity security cap excess amount would be calculated as the greater of: (1) The adjusted public sector entity security liquid asset amount minus the adjusted level 2 cap excess amount minus the adjusted level 2B cap excess amount minus 0.0526 (or 5/95, which is the ratio of the maximum allowable adjusted public sector entity security liquid assets to the adjusted level 1 liquid assets and other adjusted level 2 liquid assets) times the sum of (i) the adjusted level 1 liquid asset amount, (ii) the adjusted level 2A liquid asset amount, and (iii) the adjusted level 2B liquid asset amount minus the adjusted public sector entity security liquid asset amount; or (2) zero.

3. What additional or alternative limitations should the Board consider relating to the inclusion of individual and aggregate issuances of U.S. public sector entities as eligible HQLA and in a Board-regulated institution's HQLA amount? How else could the Board address concerns regarding concentrations and minimizing market price movements associated with sales of HQLA?

Section 722 of the Gramm-Leach Bliley Act (Pub L. 106-102, 113 Stat. 1338, 1471, 12 U.S.C. 4809) requires the Board to use plain language in all proposed and final rules published after January 1, 2000. The Board invites your comments on how to make this proposal easier to understand. For example:

• Has the Board organized the material to suit your needs? If not, how could this material be better organized?

• Are the requirements in the proposed rule clearly stated?

• If not, how could the proposed rule be more clearly stated?

• Does the proposed rule contain language or jargon that is not clear? If so, which language requires clarification?

• Would a different format (grouping and order of sections, use of headings, paragraphing) make the proposed rule easier to understand? If so, what changes to the format would make the proposed rule easier to understand?

• What else could the Board do to make the regulation easier to understand?

The Regulatory Flexibility Act 18 (RFA), requires an agency to either provide an initial regulatory flexibility analysis with a proposed rule for which a general notice of proposed rulemaking is required or to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include banks with assets less than or equal to $550 million). In accordance with section 3(a) of the RFA, the Board is publishing an initial regulatory flexibility analysis with respect to this proposed rule. Based on its analysis and for the reasons stated below, the Board believes that this proposed rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing an initial regulatory flexibility analysis. A final regulatory flexibility analysis will be conducted after commenters received during the public comment period have been considered.

As discussed above, this proposed rule would amend the liquidity coverage ratio rule to include certain high-quality general obligation U.S. municipal securities as high-quality liquid assets for the purposes of the LCR.

Under regulations issued by the Small Business Administration, a “small entity” includes a depository institution, bank holding company, or savings and loan holding company with total assets of $550 million or less (a small banking organization). As of December 31, 2014, there were approximately 664 small state member banks, 3,832 small bank holding companies, and 275 small savings and loan holding companies.

This proposed rule does not apply to “small entities” and would apply only to Board-regulated institutions subject to the LCR, which include: (1) Bank holding companies, certain savings and loan holding companies, and state member banks that, in each case, have $250 billion or more in total consolidated assets or $10 billion or more in on-balance sheet foreign exposure; (2) state member banks with $10 billion or more in total consolidated assets that are consolidated subsidiaries of bank holding companies subject to the LCR; and (3) nonbank financial companies designated by the Financial Stability Oversight Council for Board supervision to which the Board has applied the LCR by rule or order. This proposed rule also would apply to bank holding companies and certain savings and loan holding companies with $50 billion or more in total consolidated assets, which are subject to the modified minimum liquidity coverage ratio. Companies that are subject to this proposed rule therefore substantially exceed the $550 million asset threshold at which a banking entity is considered a “small entity” under SBA regulations.

As noted above, because this proposed rule is not likely to apply to any company with assets of $550 million or less, if adopted in final form, it is not expected to apply to any small entity for purposes of the RFA. The Board is aware of no other Federal rules that duplicate, overlap, or conflict with this proposed rule. In light of the foregoing, the Board does not believe that this proposed rule, if adopted in final form, would have a significant economic impact on a substantial number of small entities supervised and therefore believes that there are no significant alternatives to this proposed rule that would reduce the economic impact on small banking organizations supervised by the Board.

The Board welcomes comment on all aspects of its analysis. A final regulatory flexibility analysis will be conducted after consideration of comments received during the public comment period.

In accordance with the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521) (PRA), the Board may not conduct or sponsor, and a respondent is not required to respond to, an information collection unless it displays a currently valid Office of Management and Budget (OMB) control number. The Board reviewed this proposed rule and determined that it would not introduce any new collection of information pursuant to the PRA.

For the reasons stated in the Supplementary Information section, the Board proposes to amend part 249 of chapter II of title 12 of the Code of Federal Regulations as follows:

The additions read as follows:

Comments Invited

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments received in the docket on or before the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions based on the comments we receive.

On February 14, 2013, Pratt and Whitney Canada applied for an amendment to Type Certificate No. E00083EN-E to include the new PW210A engine model. The PW210A, which is a derivative of the PW210S currently approved under E00083EN-E, is intended for rotorcraft use. For their PW210A engine model, Pratt and Whitney Canada requests an additional OEI rating that combines the 30-second and 2-minute OEI rating into a single rating to satisfy the rotorcraft requirements for increased power in OEI scenarios. This additional OEI rating is named “Flat 30-second and 2-minute OEI.”

These special conditions are necessary because the applicable airworthiness regulations do not contain adequate or appropriate safety standards for combining the requirements of the flat 30-second and 2-minute OEI rating.

Under the provisions of § 21.101, Pratt and Whitney Canada must show that the PW210A meets the applicable provisions of 14 CFR part 33, as amended by Amendments 33-1 through 33-30. These regulations will be incorporated into Type Certificate No. E00083EN after type certification approval of the PW210A. The regulations incorporated by reference in the type certificate are commonly referred to as the “original type certification basis.” The regulations incorporated by reference in Type Certificate No. E00083NE are as follows:

Title 14 of the Code of Federal Regulations (14 CFR part 33), effective February 1, 1965, Amendments 33-1 through 33-24 and two special conditions: 33-008-SC: For on ground engine operation in auxiliary power unit (APU) mode, and 33-009-SC: For 30-minutes all engines operating (AEO) hovering power engine rating.

For the PW210A the certification basis is:

1. Airworthiness Standards: 14 CFR part 33, effective February 1, 1965, Amendments 33-1 through 33-30, inclusive.

2. Environmental Standards: 14 CFR part 34, effective September 10, 1990, as amended by 34-1 through 34-4 and 40 CFR part 87, effective (ICAO Annex 16, Volume II—Aircraft Engine Emissions, as amended up to and including Amendment 6).

In addition, the certification basis includes other regulations, special conditions and exemptions that are not relevant to these proposed special conditions. Type Certificate No. E00083EN will be updated to include a complete description of the certification basis for this model engine.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 33) do not contain adequate or appropriate safety standards for the PW210A because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same or similar novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same or similar novel or unusual design feature, the special conditions would also apply to the other model under § 21.101.

Accordingly, should type certificate E00083EN be amended to include another model that incorporates the “Flat 30-second and 2-minute OEI,” the special conditions as defined would apply to models whose certification basis is amendment 33-25 or later.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type-certification basis under § 21.17(a)(2).

The PW210A will incorporate the following novel or unusual design features: The design feature is a “Flat 30-second and 2-minute” one engine inoperative (OEI) rating. The Flat 30-second and 2-minute OEI rating represents a case where the power levels and associated operating limitations for the 30-second OEI and 2-minute OEI ratings (defined in Part 33) are the same.

These proposed special conditions are necessary because current part 33 regulations do not contain airworthiness standards for extending the 2-minute OEI rating for 30-seconds. These special conditions extend the time dependent requirements applicable to the 30-second OEI or 2-minute OEI to the 2.5 minutes time duration of the “Flat 30-second and 2-minute OEI” Power.

The 2.5 minutes time duration for the rating may affect the engine's structural and operational characteristics that are time dependent, such as the values for transients, time duration for stabilization to steady state, and part growth due to deformation. To address these aspects, we propose special conditions based on revised requirements of §§ 33.27, 33.87(a)(7), and 33.88(b).

The 2.5 minutes time duration for the rating affects the test conducted for the endurance test. For the 30-second OEI and 2-minute OEI the test schedule of § 33.87(f) is divided among the two ratings. We propose special conditions based on revised requirements of § 33.87(f) to ensure the test will be run for 2.5 minutes duration with no interruption.

The 2.5 minutes time duration for the rating necessitates extending the time duration requirement of § 33.28(k) applicable to the 30-second OEI rating from 30 seconds to 2.5 minutes. This proposed requirement is for automatic availability and control of the engine for the entire duration of the rating's usage.

The 2.5 minutes time duration for the rating necessitates extending the requirements of § 33.29(c) that are applicable to 30-second OEI and 2-minute OEI ratings to the single Flat 30-second and 2-minute OEI Power rating. We propose special conditions to ensure that the instrumentation requirements normally reserved for 30-second OEI and 2-minute OEI ratings are applied to the Flat 30-second and 2-minute OEI Power rating over its whole duration. The pilot does not have to be alerted at the end of 30 seconds use of the Flat 30-second and 2-minute OEI Power rating, only after the entire 2 minutes 30 seconds has expired.

Paragraph 2.(e)(3) of these special conditions states that the engine must provide means or provision of means to alert maintenance of use of the Flat 30-second and 2-minute OEI Power rating, `alert' means after the aircraft lands, so any required maintenance actions can be completed before next flight.

As discussed above, these special conditions are applicable to the PW210A. Should Pratt and Whitney Canada apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, the special conditions would apply to that model as well.

Certification of the PW210A is currently scheduled for May 1, 2015. The substance of these special conditions has been subject to the notice and public-comment procedure in a prior instance. Therefore, because a delay would significantly affect the applicant's both installation of the system and certification of the airplane, we are shortening the public-comment period to 10 days.

This action affects only the Flat 30-second and 2-minute OEI design features on the PW210A engine model. It is not a rule of general applicability and applies only to Pratt and Whitney Canada, who requested FAA approval of this engine feature.

The authority citation for these special conditions is as follows:

Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Pratt and Whitney Canada PW210A engine model.

“Rated Flat 30-second and 2-minute One Engine Inoperative (OEI) Power,” with respect to rotorcraft turbine engines, means (1) a single rating for which the shaft horsepower and associated operating limitations of the 30-second OEI and 2-minute OEI ratings are equal, and (2) the shaft horsepower is that developed under static conditions at the altitude and temperature for the hot day, and within the operating limitations established under Part 33. The rating is for continuation of flight operation after the failure or shutdown of one engine in multiengine rotorcraft, for up to three periods of use no longer than 2.5 minutes each in any one flight, and followed by mandatory inspection and prescribed maintenance action.

(a) The airworthiness standards in Part 33 Amendment 30 for the 30-second OEI and 2-minute OEI ratings are applicable to the Flat 30-second and 2-minute OEI Power rating. In addition the following special conditions apply;

(b) Section 33.7 Engine ratings and operating limitations. Flat 30-second and 2-minute OEI Power rating and operating limitations are established for power, torque, rotational speed, gas temperature, and time duration.

(c) Section 33.27 Turbine, compressor, fan, and turbosupercharger rotor overspeed. The requirements of § 33.27, except that following the test, the rotor may not exhibit conditions such as cracking or distortion which preclude continued safe operation.

(d) Section 33.28 Engine controls systems. Must incorporate a means, or a provision for a means, for automatic availability and automatic control of the Flat 30-second and 2-minute OEI Power within the declared operating limitations.

(e) Section 33.29 Instrument Connection. In lieu of the requirements of 33.29(c) the PW210A must incorporate a means or a provision for a means to:

(1) Alert the pilot when the engine is at the Flat 30-second and 2-minute OEI Power level, when the event begins, and when the time interval expires;

(2) Automatically record each usage and duration of power at the Flat 30-second and 2-minute OEI Power rating;

(3) Following each flight when the Flat 30-second and 2-minute OEI Power rating is used, alert maintenance personnel in a positive manner that the engine has been operated at the Flat 30-second and 2-minute OEI Power level, and permit retrieval of the recorded data; and

(4) Enable routine verification of the proper operation of the above means.

(f) Section 33.87 Endurance test. The requirements applicable to 30-second and 2-minute OEI ratings, except for:

(1) The test of § 33.87(a)(7) for the purposes of temperature stabilization, must be run with a test period time of 2.5 minutes.

(2) The tests in § 33.87(f)(2) and (3) must be run continuously for the duration of 2.5 minutes, and

(3) The tests in § 33.87(f)(6) and (7) must be run continuously for the duration of 2.5 minutes.

(g) Section 33.88 Engine overtemperature test. The requirements of § 33.88(b) except that the test time is 5 minutes instead of 4 minutes.

We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-1425; Directorate Identifier 2014-NM-185-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

Structural fatigue damage is progressive. It begins as minute cracks, and those cracks grow under the action of repeated stresses. This can happen because of normal operational conditions and design attributes, or because of isolated situations or incidents such as material defects, poor fabrication quality, or corrosion pits, dings, or scratches. Fatigue damage can occur locally, in small areas or structural design details, or globally. Global fatigue damage is general degradation of large areas of structure with similar structural details and stress levels. Multiple-site damage is global damage that occurs in a large structural element such as a single rivet line of a lap splice joining two large skin panels. Global damage can also occur in multiple elements such as adjacent frames or stringers. Multiple-site-damage and multiple-element-damage cracks are typically too small initially to be reliably detected with normal inspection methods. Without intervention, these cracks will grow, and eventually compromise the structural integrity of the airplane, in a condition known as WFD. As an airplane ages, WFD will likely occur, and will certainly occur if the airplane is operated long enough without any intervention.

The FAA's WFD final rule (75 FR 69746, November 15, 2010) became effective on January 14, 2011. The WFD rule requires certain actions to prevent structural failure due to WFD throughout the operational life of certain existing transport category airplanes and all of these airplanes that will be certificated in the future. For existing and future airplanes subject to the WFD rule, the rule requires that DAHs establish a limit of validity (LOV) of the engineering data that support the structural maintenance program. Operators affected by the WFD rule may not fly an airplane beyond its LOV, unless an extended LOV is approved.

The WFD rule (75 FR 69746, November 15, 2010) does not require identifying and developing maintenance actions if the DAHs can show that such actions are not necessary to prevent WFD before the airplane reaches the LOV. Many LOVs, however, do depend on accomplishment of future maintenance actions. As stated in the WFD rule, any maintenance actions necessary to reach the LOV will be mandated by airworthiness directives through separate rulemaking actions.

In the context of WFD, this action is necessary to enable DAHs to propose LOVs that allow operators the longest operational lives for their airplanes, and still ensure that WFD will not occur. This approach allows for an implementation strategy that provides flexibility to DAHs in determining the timing of service information development (with FAA approval), while providing operators with certainty regarding the LOV applicable to their airplanes.

This proposed AD was prompted by an evaluation by the DAH indicating that the circumferential fuselage splice at fuselage-station (FS) 695 is subject to WFD. The root cause of this WFD is fatigue cracks manifesting and growing simultaneously at similar structural details and stress levels at the circumferential fuselage splice. Fatigue cracking is increasingly likely as the airplane is operated and aged, and without intervention, fatigue cracking could lead to loss of residual strength of the circumferential fuselage splice at FS 695, which could lead to rapid decompression of the cabin area and potential loss of the airplane.

We reviewed Lockheed Martin Electra Service Bulletin 88/SB-722, dated April 30, 2014. This service bulletin describes procedures for doing the following actions:

• A general visual inspection (GVI) for corrosion and previous repairs, severed stringers, cracking, and loose or distressed fasteners of the forward and aft ends of the stringer splices of stringers 1-7 and 66-72, and corrective actions if necessary.

• At stringers 1-7 and 66-72, removing the four rivets common to the stringer and splice member at the forward and aft ends of the splice and doing a bolt hole eddy current (BHEC) inspection or an equivalent inspection procedure for cracking in each of the fastener holes, and corrective actions if necessary.

• Corrective actions for cracked holes include reaming to the maximum permissible hole diameter of the next larger size rivet. If a crack indication remains after reaming, this service information specifies repairing the cracked stringer.

• If a severed stringer is found during the GVI, doing related investigative actions of an eddy current surface scan inspection for cracking of the fuselage skin at the skin-to-stringer attachments immediately forward and aft of the stringer break and confirming skin cracks with a dye penetrant inspection. Corrective actions include repairing the severed stringer or skin cracks.

• For holes without crack indications, other specified actions include modifying the fastener holes by reaming to a certain maximum permissible hole diameter of the same size rivet and installing replacement fasteners; or if original hole is larger than the maximum permissible diameter, installing the next rivet size and type.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this NPRM.

We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.”

Although Lockheed Martin Electra Service Bulletin 88/SB-722, dated April 30, 2014, specifies that crack indications should be confirmed by an alternate inspection method, this proposed AD would not require that action.

Operators should note that, although the Accomplishment Instructions of Lockheed Martin Electra Service Bulletin 88/SB-722, dated April 30, 2014, describe procedures for submitting a report of damage, this proposed AD would not require that action.

Lockheed Martin Electra Service Bulletin 88/SB-722, dated April 30, 2014, does not describe corrective actions if any corrosion or previous repair is found, and if any loose or distressed fastener is found. This proposed AD would require repair.

The compliance time for the modification specified in this proposed AD for addressing WFD was established to ensure that discrepant structure is replaced before WFD develops in airplanes. Standard inspection techniques cannot be relied on to detect WFD before it becomes a hazard to flight. We will not grant any extensions of the compliance time to complete any AD-mandated service bulletin related to WFD without extensive new data that would substantiate and clearly warrant such an extension.

We estimate that this proposed AD affects 4 airplanes of U.S. registry.

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

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

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.

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

For the reasons discussed above, I certify this proposed regulation:

(1) Is not a “significant regulatory action” under Executive Order 12866,

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

(3) Will not affect intrastate aviation in Alaska, and

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

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

Authority for This Rulemaking

The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. Sections 106(f), 40113, and 44701 authorize the FAA Administrator to prescribe regulations necessary for aviation safety. Section 40103 authorizes the Administrator to prescribe regulations to enhance the efficiency of the national airspace. This rulemaking is within the scope of these authorities because it would remove existing safety and airspace-related regulations that the FAA no longer finds necessary to protect aviation safety.

This Notice of Proposed Rulemaking (NPRM) proposes to remove the requirement in Appendix G of part 91 of Title 14 of the Code of Federal Regulations (14 CFR) that any operator seeking Reduced Vertical Separation Minimum (RVSM) authorization must develop and submit an RVSM maintenance program for FAA approval. Currently, any applicant for RVSM authorization must include such a program as part of the application. This requirement was first promulgated in 1997, when most aircraft required significant design changes or inspections to qualify for RVSM operation. The FAA, therefore, required operators to submit for FAA approval a detailed plan for the maintenance of RVSM systems and equipment. Since then, RVSM operations have become much more common. RVSM systems are now incorporated into aircraft type designs or supplemental type designs, and operators must properly maintain those systems as part of their airworthiness obligations.

In light of these developments, the requirement that RVSM applicants submit specialized maintenance plans to the FAA is no longer necessary. Eliminating this requirement would reduce both operators' costs and FAA workload, while maintaining the existing high level of safety.

This proposed rulemaking is a retrospective regulatory review. Because the RVSM maintenance plan requirement is no longer necessary, this proposed rulemaking would eliminate the considerable burden and expense of developing, processing, and approving RVSM maintenance programs. The proposed rulemaking, therefore, promotes cost savings for both part 91 operators and the FAA. The total cost savings are estimated to be $76.1 million over a five-year period ($66.8 million present value).

As RVSM technology has become integral to the design of aircraft capable of flying in RVSM airspace, the current requirement that any aircraft operator seeking RVSM authorization must submit an RVSM maintenance plan to the FAA is no longer necessary. More specifically, now that RVSM technology is incorporated into aircraft type designs, the FAA's airworthiness and maintenance regulations require any operator of an aircraft incorporating that technology to maintain the RVSM equipment in a condition for safe operation. The FAA, with input from industry, has determined that eliminating the redundant maintenance plan component of RVSM authorization will improve efficiency and reduce costs for both the agency and operators.

Vertical separation standards establish the vertical distance that must separate aircraft routes in the national airspace system. In the early 1970's, rising air-traffic volume and fuel costs sparked an interest in reducing vertical separation standards for aircraft operating above flight level (FL) 290. Above 18,000 feet, flight levels are a measure of altitude assigned in 500-feet increments; FL290 represents an altitude of 29,000 feet. At the time, the FAA required aircraft operating above FL290 to maintain a minimum of 2000 ft. of vertical separation between routes. These high-altitude routes were desirable, because the diminished atmospheric drag at high altitudes results in a corresponding decrease in fuel consumption. Operators, therefore, sought and continue to seek not only the most direct routes, but also the most efficient altitudes for their aircraft. Higher demand for these high-altitude routes resulted in greater congestion.

In 1973, the Air Transport Association of American petitioned the FAA to reduce the vertical separation of high altitude routes to 1000 feet. The FAA denied the petition in 1977, in part, because of insufficient standards and technology, including aircraft altitude-keeping standards, maintenance and operational standards, and altitude correction technology. In mid-1981, however, the FAA initiated the Vertical Studies Program. This program, in conjunction with the RTCA (formerly the Radio Technical Commission for Aeronautics) Special Committee (SC)-150 and the International Civil Aviation Organization (ICAO) Review of General Concept of Separation Panel (RGCSP), determined:

• RVSM was “technically feasible without imposing unreasonably demanding technical requirements on the equipment”;

• RVSM could provide “significant benefits in terms of economy and en-route airspace capacity”; and

• Implementation of RVSM would require “sound operational judgment supported by an assessment of system performance based on: aircraft altitude-keeping capability, operational considerations, system performance monitoring, and risk assessment.” 1

Following these determinations, the FAA began a two-phase implementation of RVSM operations for aircraft registered in the United States (U.S.). In 1997, in the first phase, the FAA published two amendments to part 91 of 14 CFR. The first amendment added appendix G (Operations in Reduced Vertical Separation Minimum (RVSM) Airspace), containing a set of operational, aircraft design, and other standards applicable to operators and those seeking to operate in RVSM airspace. Among other things, appendix G requires all applicants for RVSM authorization to submit to the FAA an approved RVSM maintenance plan. In addition, the FAA promulgated § 91.706 (Operations within airspace designed as Reduced Vertical Separation Minimum Airspace), which, among other things, allows operators of U.S.-registered aircraft to fly in RVSM airspace outside of the U.S., in accordance with the requirements of appendix G.

The second phase of RVSM implementation occurred in October 2003, with a second RVSM-related FAA rulemaking. The 2003 rule introduced RVSM airspace over the U.S. and, like the 1997 rulemaking, requires all U.S.-registered RVSM operators to comply with the application, operations, and aircraft design requirements of part 91, appendix G.2 The FAA's RVSM program allows for 1000 feet of vertical separation for aircraft between FL290 and FL410. Before the 2003 rule, air traffic controllers could only assign Instrument Flight Rules (IFR) aircraft flying at FL290 and above to FL290, 310, 330, 350, 370, 390, and 410 because the existing vertical separation standard was 2000 feet. After the rule changes, IFR aircraft could also fly at FL300, 320, 340, 360, 380, and 400—nearly doubling capacity within this particular segment of airspace. The changes both mitigated the fuel penalties attributed to flying at sub-optimum altitudes, and increased the flexibility of air traffic control.

In 2008, the FAA reviewed its RVSM program and operator authorization policies. At the time, the FAA database contained more than 7,000 active RVSM authorizations, covering in excess of 15,000 U.S.-registered aircraft. The FAA's evaluation found the existing processes ensured compliance with the RVSM operating requirements.

At the same time, FAA representatives began meeting with the National Business Aviation Association (NBAA) to develop ways to streamline the RVSM application process to lower operators' burden to obtain authorization and reduce the FAA's workload associated with processing and granting authorizations. The parties formed the RVSM Process Enhancement Team (PET), tasking it to focus on changes that could be accomplished without rulemaking. The PET completed its tasks in 2013. Among other things, it revised existing policies and guidance to facilitate more efficient processing of operators' requests to change existing authorizations, and created a job aid to assist inspectors and standardize their review of operator applications.

This proposed rulemaking would address another element identified by the PET: reducing the burden on part 91 operators to create and obtain approval of an RVSM-specific maintenance program. The PET could not address this issue because the workgroup's charter limited the PET to changes that could be made through guidance and without rulemaking action. However, both the FAA and the NBAA agreed that RVSM-related airworthiness standards, applicable to all part 91 operators, should be treated more like other, substantially similar aircraft maintenance requirements, while maintaining an equivalent level of safety.

Under current requirements, section 3 (Operator Authorization) of appendix G contains application requirements for an operator seeking RVSM authorization. As described above, this section requires any RVSM applicant to develop and submit for FAA approval an RVSM maintenance program. The program must outline service and maintenance procedures and include acceptable maintenance practices, a quality assurance program for test equipment, and procedures for return to service.

During the early implementation of RVSM, most aircraft required upgrades, modifications, or the application of service bulletins to meet the FAA's RVSM system safety standards. In 1997, requiring operators to create RVSM maintenance programs was essential to ensure that operators satisfied these standards and, by extension, the continued airworthiness of their aircraft. Today, however, nearly 17 years since first implementation, RVSM systems are the standard among aircraft capable of operating between FL290 and FL410. Additionally, most RVSM-capable aircraft are either newly built or have been modified, under a supplemental type certificate, to meet RVSM performance requirements by original design. All of these aircraft designs have Instructions for Continued Airworthiness (ICA)—maintenance instructions to which aircraft operators must adhere—providing operators with detailed instructions for maintaining any RVSM equipment. And, most importantly, the continued airworthiness of RVSM-capable aircraft is also ensured by the FAA's airworthiness regulations, which require operators to maintain each aircraft in accordance with its type design and in a condition for safe operation.

The specific terms of the FAA's maintenance requirements vary according to the type of operator involved. Commercial operators are required to use a structured, organizational approach to maintenance that may include named oversight personnel, manuals, and an FAA-approved maintenance program. Both currently and under this proposal, these maintenance programs must account for the maintenance of RVSM equipment. On the other hand, non-commercial operators—such as those operating privately—are not required to create an organizational maintenance structure, but are instead required (both currently and if this proposal goes into effect) to have their aircraft inspected in accordance with part 91, and to have repairs executed in accordance with part 43. Ultimately, all operators' RVSM-related obligations under these airworthiness regulations are substantially identical to the independent maintenance requirements of section 3 of appendix G. The FAA has determined, therefore, that an independent requirement to develop and submit RVSM-specific maintenance programs for FAA approval is no longer necessary or justified.

In light of the foregoing, the FAA proposes to revise section 3 of appendix G by removing the requirement that an applicant submit an approved RVSM maintenance program, currently codified as § 3(b)(1)-(3). The FAA proposal would reserve § 3(b)(1) and leave in place the other application-related requirements and paragraphs. The FAA does not intend for this proposal to affect the other elements of an application for RVSM authorization.

Changes to Federal regulations must undergo several economic analyses. First, Executive Order 12866 and Executive Order 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, the Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this proposed rule.

DOT Order 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. Because this proposed rulemaking is a retrospective regulatory review, the expected outcome would be a cost savings with positive net benefits. The FAA has, therefore, determined that this proposed rule is not a “significant regulatory action” as defined in section 3(f) of Executive Order 12866, and is not “significant” as defined in DOT's Regulatory Policies and Procedures. The FAA requests comments with supporting justification about the FAA determination of the proposed rule providing a cost savings. The reasoning for this determination follows:

This proposed rulemaking would remove the requirement in Appendix G of part 91 that operators seeking RVSM authorization must develop and submit an RVSM maintenance plan for FAA approval. It would eliminate the considerable burden and expense to operators and FAA safety inspectors of developing, processing, and approving RVSM maintenance plans.

When the current requirement was established, RVSM systems were yet to be incorporated into aircraft type design. This is no longer the case. RVSM systems are now incorporated into aircraft type designs and supplemental type designs, and operators must properly maintain these systems as part of their airworthiness obligation. In light of these developments, the requirement in Appendix G of part 91 for RVSM applicants to submit specialized maintenance plans is redundant.

To quantify the relief to part 91 operators and FAA safety inspectors from the streamlining of regulations, the FAA has estimated three variables, which are: (1) The number of RVSM maintenance programs approved for calendar year (CY) 2014, (2) the costs per operator of submitting an RVSM maintenance program for FAA approval, and (3) the average number of hours expended by an FAA safety inspector to review and approve an RVSM maintenance program. The value for each of these variables is shown below.

Applying these estimates, the FAA anticipates that operators would experience cost savings of approximate $14.1 million in year one of implementation. We calculated this figure by multiplying the estimated number of maintenance approvals submitted to the FAA during CY 2014 (2,821 approvals) by each operator's cost for submitting a RVSM maintenance program to the FAA for approval ($5,000).

In addition to the cost savings realized by operators, eliminating the requirement would free 33,852 hours for FAA safety inspectors to perform alternative tasks during year one of implementation. The hours are calculated by multiplying the average number of hours FAA safety inspectors expend reviewing and approving each RVSM maintenance program submitted (12 hours) by the number of RVSM maintenance program approvals estimated for CY 2014 (2,821 approvals). The annual cost savings of $1.1 million to the FAA equals the 33,852 hours multiplied by the FAA fully-burdened wage of $33.06.7

Based on these calculations, the cost savings to operators during the first five years of the rule's implementation would be approximately $70.5 million ($61.9 million present value), and the FAA cost savings would total $5.6 million ($4.9 million present value). The results are presented below.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation.” To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.”

The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions. Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If an agency anticipates such an impact, the agency must prepare a regulatory flexibility analysis as described in the RFA. Section 603 of the RFA requires agencies to prepare and make available for public comment an initial regulatory flexibility analysis (IRFA) describing the impact of proposed rule on small entities. This rule is relieving. The FAA is issuing this rule to eliminate duplicative requirements. The FAA estimates that this rule would reduce firm's costs by $5,000 to develop and submit an RVSM maintenance plan. Under Section 603(b), this initial analysis must account for the following issues, which are addressed below:

All part 91 operator RVSM-related obligations are required by FAA airworthiness regulations to maintain RVSM equipment in an airworthy condition. Thus, the requirement in section 3 of Appendix G, that operators seeking RVSM authorization to develop and submit an RVSM maintenance plan for FAA approval342 is redundant. The FAA estimates that the removal of this redundant requirement will save each affected small entity $5,000 per RVSM authorization.

The FAA's authority to issue rules regarding aviation safety is found in 49 U.S.C. Sections 106, 40113, and 44701 therein authorize the FAA Administrator to prescribe regulations necessary for aviation safety. Section 40103 authorizes the Administrator to prescribe regulations to enhance the efficiency of the national airspace. This rulemaking is within the scope of these authorities because it removes existing safety and airspace-related regulations that the FAA no longer finds necessary to protect aviation safety.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there would be no new requirement for information collection associated with this proposed rule.

The FAA is not aware of any Federal rules that would duplicate, overlap or conflict with this proposed change. This rule would reduce duplicative requirements saving firms about $5,000.

Under the RFA, the FAA must determine whether a proposed rule significantly affects a substantial number of small entities. This determination is typically based on small entity size and revenue thresholds that vary depending on the affected industry.8 In most cases, the FAA cannot determine the size of part 91 operators because financial and employment data for privately held entities is sparse. Nevertheless, we believe the number of small business entities is substantial.

Alternative 1: Do Nothing.

Analysis: Without changes to Appendix G of part 91, any operator seeking RVSM authorization would continue to be required to develop and submit an RVSM maintenance program. A non-commercial operator with no requirement to hold a maintenance program for any other performance-based authorization would nevertheless be required to develop and obtain FAA approval of an RVSM maintenance program—despite the fact that the operator is already required by FAA regulations to maintain RVSM equipment in accordance with its type designation and in a condition for safe operation. Furthermore, the review and approval of this information would continue to consume FAA resources.

Alternative 2: Replace the current Appendix G requirement that operators include an “approved RVSM maintenance program” with a requirement that operators “identify practices” for the maintenance of RVSM equipment

Analysis: Relaxing Appendix G application requirements to allow operators to “identify practices” for the maintenance of RVSM equipment would allow a non-commercial operator to cite the applicable manufacturer's maintenance manual or instructions for continued airworthiness. This alternative would likely reduce the time and resources spent by operators and the FAA in compiling and reviewing RVSM applications. This alternative is undesirable, however, because it fails to address the absence of any safety benefits associated with continuing to require RVSM maintenance programs as a component of an RVSM application.

If an agency determines that a rulemaking will not result in a significant economic impact on a substantial number of small entities, the head of the agency may so certify under section 605(b) of the RFA. This rule would eliminate an existing duplicative requirement. In doing so, this rule would, reduce a firm's costs by $5,000; hence the rule reduces costs. Therefore, as provided in section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities because this rule is cost relieving.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. The FAA has assessed the potential effect of this proposed rule and determined that it would have the same impact on domestic and international entities and thus has a neutral trade impact.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $151.0 million in lieu of $100 million. This proposed rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act (PRA) of 1995 (44 U.S.C. 3507(d)) requires the FAA to consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined no PRA requirement for information collection associated with this proposed rule. Specifically, the cost of preparing and obtaining approval of a maintenance program was never evaluated as a paperwork burden in the original PRA Supporting Statement of RVSM (OMB Control no. 2120-0679).

(1) In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization (ICAO) Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these proposed regulations.

(2) Executive Order 13609, Promoting International Regulatory Cooperation, promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues, and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of Executive Order 13609, and has determined that this action would have no effect on international regulatory cooperation.

FAA Order 1050.1E identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 312d (regulatory documents covering administrative or procedural requirements) and involves no extraordinary circumstances.

The FAA has analyzed this proposed rule under the principles and criteria of Executive Order 13132, Federalism. The agency has determined that this action would not have a substantial direct effect on the States, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government, and, therefore, would not have Federalism implications.

The FAA analyzed this proposed rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The agency has determined that it would not be a “significant energy action” under the executive order and would not be likely to have a significant adverse effect on the supply, distribution, or use of energy.

The FAA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. The agency also invites comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this NPRM. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

The FAA will file in the docket all comments it receives, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, the FAA will consider all comments it receives on or before the closing date for comments. The FAA will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. The agency may change this proposal in light of the comments it receives.

Proprietary or Confidential Business Information: Commenters should not file proprietary or confidential business information in the docket. Such information must be sent or delivered directly to the person identified in the FOR FURTHER INFORMATION CONTACT section of this document, and marked as proprietary or confidential. If submitting information on a disk or CD-ROM, mark the outside of the disk or CD-ROM, and identify electronically within the disk or CD-ROM the specific information that is proprietary or confidential.

Under 14 CFR 11.35(b), if the FAA is aware of proprietary information filed with a comment, the agency does not place it in the docket. It is held in a separate file to which the public does not have access, and the FAA places a note in the docket that it has received it. If the FAA receives a request to examine or copy this information, it treats it as any other request under the Freedom of Information Act (5 U.S.C. 552). The FAA processes such a request under DOT procedures found in 49 CFR part 7.

An electronic copy of rulemaking documents may be obtained from the Internet by—

1. Searching the Federal eRulemaking Portal (http://www.regulations.gov);

2. Visiting the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies or

3. Accessing the Government Printing Office's Web page at http://www.thefederalregister.org/fdsys/.

Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW., Washington, DC 20591, or by calling (202) 267-9680. Commenters must identify the docket or notice number of this rulemaking.

All documents the FAA considered in developing this proposed rule, including economic analyses and technical reports, may be accessed from the Internet through the Federal eRulemaking Portal referenced in item (1) above.

In consideration of the foregoing, the Federal Aviation Administration proposes to amend chapter I of title 14, Code of Federal Regulations as follows:

Invitation to Comment: We invite you to submit comments regarding this priority. To ensure that your comments have maximum effect in developing the final priority, we urge you to identify clearly the specific section of the proposed priority that each comment addresses.

We invite you to assist us in complying with the specific requirements of Executive Orders 12866 and 13563 and their overall requirement of reducing regulatory burden that might result from this proposed priority. Please let us know of any further ways we could reduce potential costs or increase potential benefits while preserving the effective and efficient administration of the program.

During and after the comment period, you may inspect all public comments about this notice by accessing regulations.gov. You may also inspect the comments in person in room 5040, 550 12th Street SW., PCP, Washington, DC 20202-2800, between the hours of 8:30 a.m. and 4:00 p.m., Washington, DC time, Monday through Friday of each week except Federal holidays.

Assistance to Individuals with Disabilities in Reviewing the Rulemaking Record: On request we will provide an appropriate accommodation or auxiliary aid to an individual with a disability who needs assistance to review the comments or other documents in the public rulemaking record for this notice. If you want to schedule an appointment for this type of accommodation or auxiliary aid, please contact the person listed under FOR FURTHER INFORMATION CONTACT.

Purpose of Program: This program is designed to (a) develop new types of training programs for rehabilitation personnel and to demonstrate the effectiveness of these new types of training programs for rehabilitation personnel in providing rehabilitation services to individuals with disabilities; and (b) develop new and improved methods of training rehabilitation personnel so that there may be a more effective delivery of rehabilitation services by State and other rehabilitation agencies.

Program Authority: 29 U.S.C. 772(a)(1).

Applicable Program Regulations: 34 CFR parts 385 and 387.

Proposed Priority:

This notice contains one proposed priority.

Training and Technical Assistance Center for Vocational Rehabilitation Agency Program Evaluation and Quality Assurance (PEQA).

Background:

Federal agencies are increasingly being called upon to implement accountability systems designed to assess and improve the effectiveness and efficiency of the programs they administer. Legislation such as the Government Performance and Results Act of 1993 (GPRA) and the GPRA Modernization Act of 2010 have provided a performance management framework that holds Federal agencies accountable for achieving program results.

The recently enacted Workforce Innovation and Opportunity Act (WIOA) made major changes to improve accountability for performance of the core programs of the Federal workforce system, including the State Vocational Rehabilitation (VR) Services program. In particular, WIOA amendments to section 106 of the Rehabilitation Act eliminate the VR program's evaluation standards and indicators and make the program subject to the common performance accountability measures, established in section 116(b) of WIOA, that are applicable to all core programs of the workforce development system.

In addition to required evaluation activities under the Rehabilitation Act, section 116(e)(1) of WIOA requires States, in coordination with local boards and the State agencies responsible for the administration of the core programs, to conduct ongoing evaluations of activities carried out under such programs “in order to promote, establish, implement, and utilize methods for continuously improving core program activities in order to achieve high-level performance within, and high-level outcomes from, the workforce development system.”

To carry out the WIOA performance accountability and evaluation requirements, State VR agencies will need to build their capacity to develop and evaluate methods to achieve high-level performance and program outcomes, including the effective and efficient use of program resources. In particular, State VR agencies will need personnel with the knowledge and skills to improve agency performance management systems through rigorous program evaluation and the implementation of quality assurance systems.

In anticipation of the increased focus on improving performance management, in 2011, the 36th Institute on Rehabilitation Issues (IRI) study group recommended that (1) the Rehabilitation Services Administration (RSA) work with the rehabilitation field to improve performance management systems and tools, and (2) State agencies embrace continuous improvement practices to properly inform public policy development and measurement of effectiveness (IRI, 2011). The 36th IRI described how bolstering program evaluation and quality assurance within State agencies could improve the quality of service delivery and better achieve successful employment for VR consumers. For example, trained evaluators could provide agencies with valuable data and analysis to use in planning and forecasting, to tailor training to meet the needs of staff, to evaluate staff performance, to respond to policy initiatives, and to monitor overall performance of the agency. As a result, State VR agencies will be more accountable, efficient, and successful.

The demand for program evaluation and quality assurance skill development is also evidenced by the growing number of grassroots communities of practice. These communities of practice, which usually consist of VR agency staff, have identified that one of the greatest needs of State VR agencies is structured program evaluation training specifically tailored for existing staff.

For State VR agencies, a workforce with skills focused on performance evaluation and quality assurance is essential. There is a demonstrated interest and need in the field for additional, structured training opportunities for new and existing State VR agency staff, and RSA believes a training and technical assistance center would be ideally suited to meet this need.

Reference:

Institute on Rehabilitation Issues (2011). Performance management: Program evaluation and quality assurance in vocational rehabilitation. Hot Springs, AR: University of Arkansas CURRENTS.

Proposed Priority:

The purpose of this proposed priority is to fund a cooperative agreement for a training and technical assistance center that will assist State vocational rehabilitation (VR) agencies to improve performance management by building their capacity to carry out high quality program evaluations and quality assurance practices that promote continuous program improvement.

The Training and Technical Assistance Center for Program Evaluation and Quality Assurance (PEQA) will assist State VR agencies in building this capacity through professional education and training of vocational rehabilitation evaluators. To this end, PEQA will:

(a) Provide educational opportunities for State VR staff from recognized experts in program evaluation and quality assurance;

(b) Develop interagency collaboration networks and work teams committed to the improvement of quality assurance systems and tools; and

(c) Deliver technical, professional, and continuing educational support to State VR program evaluators.

Project Activities:

To meet the requirements of this priority, the PEQA must, at a minimum, conduct the following activities:

Basic Certification Program:

(a) Develop a one-year certificate program in VR program evaluation that will result in increasing the numbers and qualifications of program evaluators in State VR agencies. At a minimum, this certificate program must:

(1) Be designed to develop key competencies necessary for successful implementation of program evaluation and quality assurance activities, including, but not limited to:

(i) Knowledge of the State-Federal VR program;

(ii) Data collection methodologies;

(iii) Data analysis and interpretation;

(iv) Making evaluative judgments and recommendations;

(v) Effective communication of results (including presentations, drafting reports, and building partnerships); and

(vi) Ethical practice.

(2) Be responsive to the prior knowledge and skills of participants;

(3) Incorporate adult learning principles and opportunities for practice into training;

(4) Be delivered through multiple modalities and in an accessible format;

(5) Assess, at regular intervals, the progress of training participants toward attainment of the key competencies; and

(6) Require the completion of a capstone project in order to successfully complete the program. The capstone project must:

(i) Be completed within one year of the completion of formal coursework for the certificate program;

(ii) Be conducted on a topic responsive to the needs of the State VR agency and agreed to by the PEQA, the participant, and the State VR agency; and

(iii) Be completed as part of the normal work duties of the participant in the State VR agency.

(7) Be provided at no cost to participants, excluding travel and per diem costs, which may be provided by the sponsoring agency.

(b) Provide training through the certificate program to a cohort of eight to ten working professionals in each year of the project.

(c) Select participants for the certificate program based, in part, on the considered recommendation of their employing State VR agencies.

Special Topical Training:

(a) Develop a series of special training opportunities for intermediate-level program evaluators. These training opportunities must, at a minimum:

(1) Be designed to develop higher-level knowledge, skills, and abilities of program participants;

(2) Be focused on a range of topics determined by the PEQA with input from State VR agencies and other relevant groups or organizations;

(3) Provide opportunities for hands-on application of the competencies discussed in the trainings;

(4) Be of sufficient duration and intensity to ensure that participants obtain the competencies discussed in the trainings; and

(5) Assess the progress of program participants in attaining the competencies discussed in the trainings.

(b) Conduct no fewer than four special training opportunities each year of the project.

Coordination Activities:

(a) Establish a community of practice that will act as a vehicle for communication, exchange of information among program evaluation professionals, and a forum for sharing the results of capstone projects that are in progress or have been completed. This community of practice must be focused on challenges facing project evaluation professionals and the development of key competencies to address such challenges;

(b) Maintain a Web site that, at a minimum:

(1) Provides a central location for later reference and use of capstone projects, resources from special training opportunities, and other relevant materials; and

(2) Ensures peer-to-peer access between State VR project evaluation professionals.

(c) Communicate and coordinate, on an ongoing basis, with other relevant Department-funded projects and those supported by the Departments of Labor, Commerce, and Health and Human Services; and

(d) Maintain ongoing communication with the RSA project officer and other RSA staff as required.

Application Requirements:

To be funded under this priority, applicants must meet the application and administrative requirements in this priority. RSA encourages innovative approaches to meet these requirements, which are:

(a) Demonstrate, in the narrative section of the application under “Significance of the Project,” how the proposed project will—

(1) Address State VR agencies' capacity to conduct high quality program evaluation and data analysis activities. To address this requirement, the applicant must:

(i) Demonstrate knowledge of emerging and best practices in program evaluation and quality assurance;

(ii) Demonstrate knowledge of current State VR and other efforts designed to improve evaluation and performance management practices.

(2) Increase the number of program evaluators working in State VR agencies who have obtained a certificate in their field of work and the number and quality of program evaluation activities performed by State VR agencies.

(b) Demonstrate, in the narrative section of the application under “Quality of Project Services,” how the proposed project will—

(1) Achieve its goals, objectives, and intended outcomes. To meet this requirement, the applicant must provide—

(i) Measurable intended project outcomes;

(ii) A plan for how the proposed project will achieve its intended outcomes; and

(iii) A plan for communicating and coordinating with relevant training programs and communities of practice, State VR agencies, and other RSA partners.

(2) Use a conceptual framework to develop project plans and activities, describing any underlying concepts, assumptions, expectations, beliefs, or theories, as well as the presumed relationships or linkages among these variables, and any empirical support for this framework.

(3) Be based on current research and make use of evidence-based practices. To meet this requirement, the applicant must describe:

(i) How the current research about adult learning principles and implementation science will inform the proposed training; and

(ii) How the proposed project will incorporate current research and evidence-based practices in the development and delivery of its products and services.

(4) Develop products and provide services that are of high quality and sufficient intensity and duration to achieve the intended outcomes of the proposed project. To address this requirement, the applicant must describe—

(i) Its proposed curriculum for a certificate program for VR evaluation professionals;

(ii) Its proposed plan for recruiting and selecting trainees for the certification program;

(iii) Its proposed plan for collecting information on the impact of capstone projects;

(iv) Its proposed plan for identifying, selecting and addressing the special topical program evaluation and quality assurance related training needs of State VR agency staff;

(v) Its proposed plan for annual follow-up with participants in special training opportunities;

(5) Develop products and implement services to maximize the project's efficiency. To address this requirement, the applicant must describe—

(i) How the proposed project will use technology to achieve the intended project outcomes; and

(ii) With whom the proposed project will collaborate and the intended outcomes of this collaboration.

(c) Demonstrate, in the narrative section of the application under “Quality of the Evaluation Plan,” how the proposed project will—

(1) Measure and track the effectiveness of the training provided. To meet this requirement, the applicant must describe its proposed approach to—

(i) Collecting data on the effectiveness of training activities;

(ii) Analyzing and reporting data on the effectiveness of training, including any proposed standards or targets for determining effectiveness;

(2) Collect and analyze data on specific and measurable goals, objectives, and intended outcomes of the project, including measuring and tracking the effectiveness of the training provided. To address this requirement, the applicant must describe—

(i) Its proposed evaluation methodologies, including instruments, data collection methods, and analyses;

(ii) Its proposed standards or targets for determining effectiveness;

(iii) How it will use the evaluation results to examine the effectiveness of its implementation and its progress toward achieving the intended outcomes; and

(iv) How the methods of evaluation will produce quantitative and qualitative data that demonstrate whether the project and individual training activities achieved their intended outcomes.

(d) Demonstrate, in the narrative section of the application under “Adequacy of Project Resources,” how—

(1) The proposed project will encourage applications for employment from persons who are members of groups that have traditionally been underrepresented based on race, color, national origin, gender, age, or disability, as appropriate;

(2) The proposed key project personnel, consultants, and subcontractors have the qualifications and experience to achieve the project's intended outcomes;

(3) The applicant and any key partners have adequate resources to carry out the proposed activities; and

(4) The proposed costs are reasonable in relation to the anticipated results and benefits.

(e) Demonstrate, in the narrative section of the application under “Quality of the Management Plan,” how—

(1) The proposed management plan will ensure that the project's intended outcomes will be achieved on time and within budget. To address this requirement, the applicant must describe—

(i) Clearly defined responsibilities for key project personnel, consultants, and subcontractors, as applicable; and

(ii) Timelines and milestones for accomplishing the project tasks.

(2) Key project personnel and any consultants and subcontractors will be allocated to the project and how these allocations are appropriate and adequate to achieve the project's intended outcomes, including an assurance that such personnel will have adequate availability to ensure timely communications with stakeholders and RSA;

(3) The proposed management plan will ensure that the products and services provided are of high quality; and

(4) The proposed project will benefit from a diversity of perspectives, including those of State and local personnel, technical assistance providers, researchers, and policy makers, among others, in its development and operation.

Types of Priorities:

When inviting applications for a competition using one or more priorities, we designate the type of each priority as absolute, competitive preference, or invitational through a notice in the Federal Register. The effect of each type of priority follows:

Absolute priority: Under an absolute priority, we consider only applications that meet the priority (34 CFR 75.105(c)(3)).

Competitive preference priority: Under a competitive preference priority, we give competitive preference to an application by (1) awarding additional points, depending on the extent to which the application meets the priority (34 CFR 75.105(c)(2)(i)); or (2) selecting an application that meets the priority over an application of comparable merit that does not meet the priority (34 CFR 75.105(c)(2)(ii)).

Invitational priority: Under an invitational priority, we are particularly interested in applications that meet the priority. However, we do not give an application that meets the priority a preference over other applications (34 CFR 75.105(c)(1)).

Final Priority:

We will announce the final priority in a notice in the Federal Register. We will determine the final priority after considering responses to this notice and other information available to the Department. This notice does not preclude us from proposing additional priorities, requirements, definitions, or selection criteria, subject to meeting applicable rulemaking requirements.

Executive Orders 12866 and 13563:

Regulatory Impact Analysis:

Under Executive Order 12866, the Secretary must determine whether this regulatory action is “significant” and, therefore, subject to the requirements of the Executive order and subject to review by the Office of Management and Budget (OMB). Section 3(f) of Executive Order 12866 defines a “significant regulatory action” as an action likely to result in a rule that may—

(1) Have an annual effect on the economy of $100 million or more, or adversely affect a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities in a material way (also referred to as an “economically significant” rule);

(2) Create serious inconsistency or otherwise interfere with an action taken or planned by another agency;

(3) Materially alter the budgetary impacts of entitlement grants, user fees, or loan programs or the rights and obligations of recipients thereof; or

(4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles stated in the Executive order.

This proposed regulatory action is not a significant regulatory action subject to review by OMB under section 3(f) of Executive Order 12866.

We have also reviewed this proposed regulatory action under Executive Order 13563, which supplements and explicitly reaffirms the principles, structures, and definitions governing regulatory review established in Executive Order 12866. To the extent permitted by law, Executive Order 13563 requires that an agency—

(1) Propose or adopt regulations only on a reasoned determination that their benefits justify their costs (recognizing that some benefits and costs are difficult to quantify);

(2) Tailor its regulations to impose the least burden on society, consistent with obtaining regulatory objectives and taking into account—among other things and to the extent practicable—the costs of cumulative regulations;

(3) In choosing among alternative regulatory approaches, select those approaches that would maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity);

(4) To the extent feasible, specify performance objectives, rather than the behavior or manner of compliance a regulated entity must adopt; and

(5) Identify and assess available alternatives to direct regulation, including economic incentives—such as user fees or marketable permits—to encourage the desired behavior, or provide information that enables the public to make choices.

Executive Order 13563 also requires an agency “to use the best available techniques to quantify anticipated present and future benefits and costs as accurately as possible.” The Office of Information and Regulatory Affairs of OMB has emphasized that these techniques may include “identifying changing future compliance costs that might result from technological innovation or anticipated behavioral changes.”

We are issuing this proposed priority only on a reasoned determination that their benefits would justify its costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that this regulatory action is consistent with the principles in Executive Order 13563.

We also have determined that this regulatory action would not unduly interfere with State, local, and tribal governments in the exercise of their governmental functions.

In accordance with both Executive orders, the Department has assessed the potential costs and benefits, both quantitative and qualitative, of this regulatory action. The potential costs are those resulting from statutory requirements and those we have determined as necessary for administering the Department's programs and activities.

The benefits of a grant under the Rehabilitation Training program have been established over the years through the successful completion of similar training projects funded for the purpose of improving the skills of State VR agency staff. The proposed priority would specifically improve the skills of State VR agency evaluators. A project of this type will be particularly beneficial to State VR agencies in this era of increased emphasis on accountability and program results.

Intergovernmental Review: This program is subject to Executive Order 12372 and the regulations in 34 CFR part 79. One of the objectives of the Executive order is to foster an intergovernmental partnership and a strengthened federalism. The Executive order relies on processes developed by State and local governments for coordination and review of proposed Federal financial assistance.

This document provides early notification of our specific plans and actions for this program.

Accessible Format: Individuals with disabilities can obtain this document in an accessible format (e.g., braille, large print, audiotape, or compact disc) on request to the program contact person listed under FOR FURTHER INFORMATION CONTACT.

Electronic Access to This Document: The official version of this document is the document published in the Federal Register. Free Internet access to the official edition of the Federal Register and the Code of Federal Regulations is available via the Federal Digital System at: www.thefederalregister.org/fdsys. At this site you can view this document, as well as all other documents of this Department published in the Federal Register, in text or Adobe Portable Document Format (PDF). To use PDF you must have Adobe Acrobat Reader, which is available free at the site.

You may also access documents of the Department published in the Federal Register by using the article search feature at: www.federalregister.gov. Specifically, through the advanced search feature at this site, you can limit your search to documents published by the Department.

Throughout this document whenever “we,” “us,” or “our” is used, we refer to EPA. This section provides additional information by addressing the following questions:

In this proposed rulemaking, EPA is proposing to take action on three Nebraska SIP submissions. EPA received the first submission on April 3, 2008, addressing the infrastructure SIP requirements relating to the 1997 PM2.5 NAAQs. EPA received the second SIP submission on August 29, 2011, addressing the infrastructure SIP requirements relating to the 2006 PM2.5 NAAQs. The requirement for states to make a SIP submission of this type arises out of CAA section 110(a)(1). If EPA takes final action as proposed, we will have acted on both the April 3, 2008 and August 8, 2011 SIP submission in their entirety.

The third submission was received by EPA on November 14, 2011, as a part of a larger submission dealing with various title 129 revisions, which we will address at a later date. This submission revises Chapter 4, Title 129 of the Nebraska Administrative Code. The change will repeal the annual NAAQS for PM10 which was revoked by the EPA on December 2006 and adopt the new 24-hour PM2.5 NAAQS which was issued by EPA in December 2006.

On October 2, 2007, EPA issued guidance to address infrastructure SIP elements required under sections 110(a)(1) and (2) for the 1997 8-hour ozone and PM2.5 NAAQS.1 On September 25, 2009, EPA issued guidance to address infrastructure SIP elements required under sections 110(a)(1) and (2) for the 2006 24-hour PM2.5 NAAQS.2 EPA will address these elements below under the following headings: (A) Emission limits and other control measures; (B) Ambient air quality monitoring/data system; (C) Program for enforcement of control measures (PSD, New Source Review for nonattainment areas, and construction and modification of all stationary sources); (D) Interstate and international transport; (E) Adequate authority, resources, implementation, and oversight; (F) Stationary source monitoring system; (G) Emergency authority; (H) Future SIP revisions; (I) Nonattainment areas; (J) Consultation with government officials, public notification, prevention of significant deterioration (PSD), and visibility protection; (K) Air quality and modeling/data; (L) Permitting fees; and (M) Consultation/participation by affected local entities.

On July 18, 1997, EPA promulgated new PM2.5 primary and secondary NAAQS (62 FR 38652). On October 17, 2006, EPA made further revisions to the primary and secondary NAAQS for PM2.5 (71 FR 61144). EPA is proposing action on Nebraska's April 3, 2008, 1997 PM2.5 infrastructure SIP submission and the 2006 PM2.5 infrastructure SIP, submitted August 29, 2011. The April 3, 2008, SIP submission became complete as a matter of law on October 3, 2008, while the August 29, 2011 submittal was reviewed and found to be administratively and technically complete on August 30, 2011.

The requirement for states to make a SIP submission of this type arises out of CAA section 110(a)(1). Pursuant to section 110(a)(1), states must make SIP submissions “within 3 years (or such shorter period as the Administrator may prescribe) after the promulgation of a national primary ambient air quality standard (or any revision thereof),” and these SIP submissions are to provide for the “implementation, maintenance, and enforcement” of such NAAQS. The statute directly imposes on states the duty to make these SIP submissions, and the requirement to make the submissions is not conditioned upon EPA's taking any action other than promulgating a new or revised NAAQS. Section 110(a)(2) includes a list of specific elements that “[e]ach such plan” submission must address.

EPA has historically referred to these SIP submissions made for the purpose of satisfying the requirements of CAA sections 110(a)(1) and 110(a)(2) as “infrastructure SIP” submissions. Although the term “infrastructure SIP” does not appear in the CAA, EPA uses the term to distinguish this particular type of SIP submission from submissions that are intended to satisfy other SIP requirements under the CAA, such as “nonattainment SIP” or “attainment plan SIP” submissions to address the nonattainment planning requirements of part D of title I of the CAA, “regional haze SIP” submissions required by EPA rule to address the visibility protection requirements of CAA section 169A, and nonattainment new source review permit program submissions to address the permit requirements of CAA, title I, part D.

Section 110(a)(1) addresses the timing and general requirements for infrastructure SIP submissions, and section 110(a)(2) provides more details concerning the required contents of these submissions. The list of required elements provided in section 110(a)(2) contains a wide variety of disparate provisions, some of which pertain to required legal authority, some of which pertain to required substantive program provisions, and some of which pertain to requirements for both authority and substantive program provisions.3 EPA therefore believes that while the timing requirement in section 110(a)(1) is unambiguous, some of the other statutory provisions are ambiguous. In particular, EPA believes that the list of required elements for infrastructure SIP submissions provided in section 110(a)(2) contains ambiguities concerning what is required for inclusion in an infrastructure SIP submission. The following examples of ambiguities illustrate the need for EPA to interpret some section 110(a)(1) and section 110(a)(2) requirements with respect to infrastructure SIP submissions for a given new or revised NAAQS. One example of ambiguity is that section 110(a)(2) requires that “each” SIP submission must meet the list of requirements therein, while EPA has long noted that this literal reading of the statute is internally inconsistent and would create a conflict with the nonattainment provisions in part D of title I of the Act, which specifically address nonattainment SIP requirements.4 Section 110(a)(2)(I) pertains to nonattainment SIP requirements and part D addresses when attainment plan SIP submissions to address nonattainment area requirements are due. For example, section 172(b) requires EPA to establish a schedule for submission of such plans for certain pollutants when the Administrator promulgates the designation of an area as nonattainment, and section 107(d)(1)(B) allows up to two years or in some cases three years, for such designations to be promulgated.5 This ambiguity illustrates that rather than apply all the stated requirements of section 110(a)(2) in a strict literal sense, EPA must determine which provisions of section 110(a)(2) are applicable for a particular infrastructure SIP submission.

Another example of ambiguity within sections 110(a)(1) and 110(a)(2) with respect to infrastructure SIPs pertains to whether states must meet all of the infrastructure SIP requirements in a single SIP submission, and whether EPA must act upon such SIP submission in a single action. Although section 110(a)(1) directs states to submit “a plan” to meet these requirements, EPA interprets the CAA to allow states to make multiple SIP submissions separately addressing infrastructure SIP elements for the same NAAQS. If states elect to make such multiple SIP submissions to meet the infrastructure SIP requirements, EPA can elect to act on such submissions either individually or in a larger combined action.6 Similarly, EPA interprets the CAA to allow it to take action on the individual parts of one larger, comprehensive infrastructure SIP submission for a given NAAQS without concurrent action on the entire submission. For example, EPA has sometimes elected to act at different times on various elements and sub-elements of the same infrastructure SIP submission.7

Ambiguities within sections 110(a)(1) and 110(a)(2) may also arise with respect to infrastructure SIP submission requirements for different NAAQS. Thus, EPA notes that not every element of section 110(a)(2) would be relevant, or as relevant, or relevant in the same way, for each new or revised NAAQS. The state's attendant infrastructure SIP submissions for each NAAQS therefore could be different. For example, the monitoring requirements that a state might need to meet in its infrastructure SIP submission for purposes of section 110(a)(2)(B) could be very different for different pollutants, for example because the content and scope of a state's infrastructure SIP submission to meet this element might be very different for an entirely new NAAQS than for a minor revision to an existing NAAQS.8

EPA notes that interpretation of section 110(a)(2) is also necessary when EPA reviews other types of SIP submissions required under the CAA. Therefore, as with infrastructure SIP submissions, EPA also has to identify and interpret the relevant elements of section 110(a)(2) that logically apply to these other types of SIP submissions. For example, section 172(c)(7) requires that attainment plan SIP submissions required by part D have to meet the “applicable requirements” of section 110(a)(2). Thus, for example, attainment plan SIP submissions must meet the requirements of section 110(a)(2)(A) regarding enforceable emission limits and control measures and section 110(a)(2)(E)(i) regarding air agency resources and authority. By contrast, it is clear that attainment plan SIP submissions required by part D would not need to meet the portion of section 110(a)(2)(C) that pertains to the PSD program required in part C of title I of the CAA, because PSD does not apply to a pollutant for which an area is designated nonattainment and thus subject to part D planning requirements. As this example illustrates, each type of SIP submission may implicate some elements of section 110(a)(2) but not others.

Given the potential for ambiguity in some of the statutory language of section 110(a)(1) and section 110(a)(2), EPA believes that it is appropriate to interpret the ambiguous portions of section 110(a)(1) and section 110(a)(2) in the context of acting on a particular SIP submission. In other words, EPA assumes that Congress could not have intended that each and every SIP submission, regardless of the NAAQS in question or the history of SIP development for the relevant pollutant, would meet each of the requirements, or meet each of them in the same way. Therefore, EPA has adopted an approach under which it reviews infrastructure SIP submissions against the list of elements in section 110(a)(2), but only to the extent each element applies for that particular NAAQS.

Historically, EPA has elected to use guidance documents to make recommendations to states for infrastructure SIPs, in some cases conveying needed interpretations on newly arising issues and in some cases conveying interpretations that have already been developed and applied to individual SIP submissions for particular elements.9 EPA most recently issued guidance for infrastructure SIPs on September 13, 2013 (2013 Guidance).10 EPA developed this document to provide states with up-to-date guidance for infrastructure SIPs for any new or revised NAAQS. While today's proposed action relies on the specific guidance issued for the 1997 and 2006 NAAQS, we have also considered this more recent 2013 guidance where applicable (although not specifically issued for the PM2.5 NAAQS) and have found no conflicts between the issued guidance and our review of Nebraska's SIP submissions. Within the 2013 guidance, EPA describes the duty of states to make infrastructure SIP submissions to meet basic structural SIP requirements within three years of promulgation of a new or revised NAAQS. EPA also made recommendations about many specific subsections of section 110(a)(2) that are relevant in the context of infrastructure SIP submissions.11 The guidance also discusses the substantively important issues that are germane to certain subsections of section 110(a)(2). Significantly, EPA interprets sections 110(a)(1) and 110(a)(2) such that infrastructure SIP submissions need to address certain issues and need not address others. Accordingly, EPA reviews each infrastructure SIP submission for compliance with the applicable statutory provisions of section 110(a)(2), as appropriate.

As an example, section 110(a)(2)(E)(ii) is a required element of section 110(a)(2) for infrastructure SIP submissions. Under this element, a state must meet the substantive requirements of section 128, which pertain to state boards that approve permits or enforcement orders and heads of executive agencies with similar powers. Thus, EPA reviews infrastructure SIP submissions to ensure that the state's SIP appropriately addresses the requirements of section 110(a)(2)(E)(ii) and section 128. The 2013 Guidance explains EPA's interpretation that there may be a variety of ways by which states can appropriately address these substantive statutory requirements, depending on the structure of an individual state's permitting or enforcement program (e.g., whether permits and enforcement orders are approved by a multi-member board or by a head of an executive agency). However they are addressed by the state, the substantive requirements of section 128 are necessarily included in EPA's evaluation of infrastructure SIP submissions because section 110(a)(2)(E)(ii) explicitly requires that the state satisfy the provisions of section 128.

As another example, EPA's review of infrastructure SIP submissions with respect to the PSD program requirements in sections 110(a)(2)(C), (D)(i)(II), and (J) focuses upon the structural PSD program requirements contained in part C and EPA's PSD regulations. Structural PSD program requirements include provisions necessary for the PSD program to address all regulated sources and New Source Review (NSR) pollutants, including greenhouse gases (GHGs). By contrast, structural PSD program requirements do not include provisions that are not required under EPA's regulations at 40 CFR 51.166 but are merely available as an option for the state, such as the option to provide grandfathering of complete permit applications with respect to the 2012 PM2.5 NAAQS. Accordingly, the latter optional provisions are types of provisions EPA considers irrelevant in the context of an infrastructure SIP action.

For other section 110(a)(2) elements, however, EPA's review of a state's infrastructure SIP submission focuses on assuring that the state's SIP meets basic structural requirements. For example, section 110(a)(2)(C) includes, inter alia, the requirement that states have a program to regulate minor new sources. Thus, EPA evaluates whether the state has an EPA-approved minor NSR program and whether the program addresses the pollutants relevant to that NAAQS. In the context of acting on an infrastructure SIP submission, however, EPA does not think it is necessary to conduct a review of each and every provision of a state's existing minor source program (i.e., already in the existing SIP) for compliance with the requirements of the CAA and EPA's regulations that pertain to such programs.

With respect to certain other issues, EPA does not believe that an action on a state's infrastructure SIP submission is necessarily the appropriate type of action in which to address possible deficiencies in a state's existing SIP. These issues include: (i) Existing provisions related to excess emissions from sources during periods of startup, shutdown, or malfunction that may be contrary to the CAA and EPA's policies addressing such excess emissions (“SSM”); (ii) existing provisions related to “director's variance” or “director's discretion” that may be contrary to the CAA because they purport to allow revisions to SIP-approved emissions limits while limiting public process or not requiring further approval by EPA; and (iii) existing provisions for PSD programs that may be inconsistent with current requirements of EPA's “Final NSR Improvement Rule,” 67 FR 80186 (December 31, 2002), as amended by 72 FR 32526 (June 13, 2007) (“NSR Reform”). Thus, EPA believes it may approve an infrastructure SIP submission without scrutinizing the totality of the existing SIP for such potentially deficient provisions and may approve the submission even if it is aware of such existing provisions.12 It is important to note that EPA's approval of a state's infrastructure SIP submission should not be construed as explicit or implicit re-approval of any existing potentially deficient provisions that relate to the three specific issues just described.

EPA's approach to review of infrastructure SIP submissions is to identify the CAA requirements that are logically applicable to that submission. EPA believes that this approach to the review of a particular infrastructure SIP submission is appropriate, because it would not be reasonable to read the general requirements of section 110(a)(1) and the list of elements in 110(a)(2) as requiring review of each and every provision of a state's existing SIP against all requirements in the CAA and EPA regulations merely for purposes of assuring that the state in question has the basic structural elements for a functioning SIP for a new or revised NAAQS. Because SIPs have grown by accretion over the decades as statutory and regulatory requirements under the CAA have evolved, they may include some outmoded provisions and historical artifacts. These provisions, while not fully up to date, nevertheless may not pose a significant problem for the purposes of “implementation, maintenance, and enforcement” of a new or revised NAAQS when EPA evaluates adequacy of the infrastructure SIP submission. EPA believes that a better approach is for states and EPA to focus attention on those elements of section 110(a)(2) of the CAA most likely to warrant a specific SIP revision due to the promulgation of a new or revised NAAQS or other factors.

For example, EPA's 2013 Guidance gives simpler recommendations with respect to carbon monoxide than other NAAQS pollutants to meet the visibility requirements of section 110(a)(2)(D)(i)(II), because carbon monoxide does not affect visibility. As a result, an infrastructure SIP submission for any future new or revised NAAQS for carbon monoxide need only state this fact in order to address the visibility prong of section 110(a)(2)(D)(i)(II).

With respect to element[s] C and J, EPA interprets the CAA to require each state to make an infrastructure SIP submission for a new or revised NAAQS that demonstrates that the air agency has a complete PSD permitting program meeting the current requirements for all regulated NSR pollutants. The requirements of element D(i)(II) may also be satisfied by demonstrating the air agency has a complete PSD permitting program correctly addressing all regulated NSR pollutants. Nebraska has shown that it currently has a PSD program in place that covers all regulated NSR pollutants, including greenhouse gases (GHGs).

On June 23, 2014, the United States Supreme Court issued a decision addressing the application of PSD permitting requirements to GHG emissions. Utility Air Regulatory Group v. Environmental Protection Agency, 134 S.Ct. 2427. The Supreme Court said that the EPA may not treat GHGs as an air pollutant for purposes of determining whether a source is a major source required to obtain a PSD permit. The Court also said that the EPA could continue to require that PSD permits, otherwise required based on emissions of pollutants other than GHGs, contain limitations on GHG emissions based on the application of Best Available Control Technology (BACT). In order to act consistently with its understanding of the Court's decision pending further judicial action to effectuate the decision, the EPA is not continuing to apply EPA regulations that would require that SIPs include permitting requirements that the Supreme Court found impermissible. Specifically, EPA is not applying the requirement that a state's SIP-approved PSD program require that sources obtain PSD permits when GHGs are the only pollutant (i) that the source emits or has the potential to emit above the major source thresholds, or (ii) for which there is a significant emissions increase and a significant net emissions increase from a modification (e.g. 40 CFR 51.166(b)(48)(v)). EPA anticipates a need to revise Federal PSD rules in light of the Supreme Court opinion. In addition, EPA anticipates that many states will revise their existing SIP-approved PSD programs in light of the Supreme Court's decision. The timing and content of subsequent EPA actions with respect to the EPA regulations and state PSD program approvals are expected to be informed by additional legal process before the United States Court of Appeals for the District of Columbia Circuit. At this juncture, EPA is not expecting states to have revised their PSD programs for purposes of infrastructure SIP submissions and is only evaluating such submissions to assure that the state's program correctly addresses GHGs consistent with the Supreme Court's decision.

At present, EPA has determined the Nebraska's SIP is sufficient to satisfy elements C, D(i)(II), and J with respect to GHGs because the PSD permitting program previously approved by EPA into the SIP continues to require that PSD permits (otherwise required based on emissions of pollutants other than GHGs) contain limitations on GHG emissions based on the application of BACT. Although Nebraska's approved PSD permitting program may currently contain provisions that are no longer necessary in light of the Supreme Court decision, this does not render the infrastructure SIP submission inadequate to satisfy elements C, (D)(i)(II), and J. The SIP contains the necessary PSD requirements at this time, and the application of those requirements is not impeded by the presence of other previously-approved provisions regarding the permitting of sources of GHGs that EPA does not consider necessary at this time in light of the Supreme Court decision. Accordingly, the Supreme Court decision does not affect EPA's proposed approval of Nebraska's infrastructure SIP as to the requirements of elements C, D(i)(II), and J.

Finally, EPA believes that its approach with respect to infrastructure SIP requirements is based on a reasonable reading of sections 110(a)(1) and 110(a)(2) because the CAA provides other avenues and mechanisms to address specific substantive deficiencies in existing SIPs. These other statutory tools allow EPA to take appropriately tailored action, depending upon the nature and severity of the alleged SIP deficiency. Section 110(k)(5) authorizes EPA to issue a “SIP call” whenever the Agency determines that a state's SIP is substantially inadequate to attain or maintain the NAAQS, to mitigate interstate transport, or to otherwise comply with the CAA.13 Section 110(k)(6) authorizes EPA to correct errors in past actions, such as past approvals of SIP submissions.14 Significantly, EPA's determination that an action on a state's infrastructure SIP submission is not the appropriate time and place to address all potential existing SIP deficiencies does not preclude EPA's subsequent reliance on provisions in section 110(a)(2) as part of the basis for action to correct those deficiencies at a later time. For example, although it may not be appropriate to require a state to eliminate all existing inappropriate director's discretion provisions in the course of acting on an infrastructure SIP submission, EPA believes that section 110(a)(2)(A) may be among the statutory bases that EPA relies upon in the course of addressing such deficiency in a subsequent action.15

On April 3, 2008, EPA Region 7 received Nebraska's infrastructure SIP submission for the 1997 PM2.5 standard. On August 29, 2011, EPA Region 7 received Nebraska's infrastructure SIP submission for the 2006 PM2.5 standard. EPA has reviewed Nebraska's infrastructure SIP submissions and the relevant statutory and regulatory authorities and provisions referenced in those submissions or referenced in Nebraska's SIP. Below is EPA's evaluation of how the state addressed the relevant elements of section 110(a)(2) for both the 1997 and 2006 PM2.5 NAAQS.

(A) Emission limits and other control measures: Section 110(a)(2)(A) requires SIPs to include enforceable emission limits and other control measures, means or techniques, schedules for compliance and other related matters as needed to implement, maintain and enforce each NAAQS.16

The state of Nebraska's statutes and Air Quality Regulations authorize the Nebraska Department of Environmental Quality (NDEQ) to regulate air quality and implement air quality control regulations. Section 81-1504 of the Nebraska Revised Statutes authorizes NDEQ to act, among other things, as the state air pollution control agency for all purposes of the CAA and to develop comprehensive programs for the prevention, control and abatement of new or existing pollution to the air of the state. Air pollution is defined in section 81-1502 of the Nebraska Revised Statutes as the presence in the outdoor atmosphere of one or more air contaminants or combinations thereof in such quantities and of such duration as are or may tend to be injurious to human, plant, or animal life, property, or the conduct of business.

Section 81-1505(1) of the Nebraska Revised Statutes authorizes the Nebraska Environmental Quality Council (EQC) to adopt and promulgate rules which set air standards that will protect public health and welfare. The EQC is also authorized to classify air contaminant sources according to levels and types of discharges, emissions or other characteristics.

The 1997 PM2.5 NAAQS specified in 40 CFR 50.7 was proposed and adopted into Nebraska title 129 chapter 4, section 001.02 of the Nebraska Administrative Code, by the EQC on September 7, 2001, with an effective date of April 1, 2002. The 2006 PM2.5 NAAQS specified in 40 CFR 50.13 was proposed and adopted into Nebraska title 129 chapter 4, section 001.02 of the Nebraska Administrative Code, by the EQC on July 1, 2008, with an effective date of August 18, 2008. Therefore, PM2.5 is an air contaminant which may be regulated under Nebraska law.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that the Nebraska SIP adequately addresses the requirements of section 110(a)(2)(A) for the 1997 and 2006 PM2.5 NAAQS and is proposing to approve this element in the April 3, 2008 and August 29, 2011 SIP submissions.

(B) Ambient air quality monitoring/data system: Section 110(a)(2)(B) requires SIPs to include provisions to provide for establishment and operation of ambient air quality monitors, collection and analysis of ambient air quality data, and making these data available to EPA upon request.

To address this element, section 81-1505(12)(o) of the Nebraska Revised Statutes provides the enabling authority necessary for Nebraska to fulfill the requirements of section 110(a)(2)(B). This provision gives the EQC the authority to promulgate rules and regulations concerning the monitoring of emissions. The Air Quality Division within NDEQ implements these requirements. Along with their other duties, the monitoring program within NDEQ's Air Compliance and Enforcement Program collects air monitoring data, quality assures the results, and reports the data. In accordance with the requirements of 40 CFR part 58 appendix D, section 4.7.1(b), Nebraska operates seven PM2.5 monitors throughout the state.

NDEQ submits annual monitoring network plans to EPA for approval, including plans for its PM2.5 monitoring network, as required by 40 CFR 58.10. Prior to submission to EPA, Nebraska makes the plans available for public review on NDEQ's Web site. See, http://deq.ne.gov/Publica.nsf/Pubs_Air_Amb.xsp, for NDEQ's 2014 Ambient Air Monitoring Network Plan. This Plan includes, among other things, the locations for the PM2.5 monitoring network. On February 9, 2015, EPA approved Nebraska's 2014 ambient air network monitoring plan. NDEQ also conducts five-year monitoring network assessments, including the PM2.5 monitoring network, as required by 40 CFR 58.10(d). Title 129, chapter 4, section 001.02 of the NAC requires that attainment with the PM2.5 standard be determined in accordance with the applicable Federal regulations in 40 CFR part 50, appendix N. Nebraska submits air quality data to EPA's Air Quality System (AQS) quarterly, pursuant to the provisions of work plans developed in conjunction with EPA grants to the state.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that the Nebraska SIP meets the requirements of section 110(a)(2)(B) for the 1997 and 2006 PM2.5 NAAQS and is proposing to approve this element in the April 3, 2008 and August 29, 2011 submissions.

(C) Program for enforcement of control measures (PSD, New Source Review for nonattainment areas, and construction and modification of all stationary sources): Section 110(a)(2)(C) requires states to include the following three elements in the SIP: (1) A program providing for enforcement of all SIP measures described in section 110(a)(2)(A); (2) a program for the regulation of the modification and construction of stationary sources as necessary to protect the applicable NAAQS (i.e., state-wide permitting of minor sources); and (3) a permit program to meet the major source permitting requirements of the CAA (for areas designated as attainment or unclassifiable for the NAAQS in question).17

(1) Enforcement of SIP Measures. With respect to enforcement of requirements of the SIP, the Nebraska statutes provide authority to enforce the requirements of section 81-1504(1) of the Nebraska Revised Statutes provide authority for NDEQ to enforce the requirements of the Nebraska Environmental Protection Act, and any regulations, permits, or final compliance orders issued under the provisions of that law. In addition, section 81-1504(7) authorizes NDEQ to issue orders prohibiting or abating discharges of waste into the air and requiring the modification, extension or adoption of remedial measures to prevent, control, or abate air pollution. Section 81-1507 authorizes NDEQ to commence an enforcement action for any violations of the Environmental Protection Act, any rules or regulations promulgated thereunder, or any orders issued by NDEQ. This enforcement action can not only seek civil penalties, but also require that the recipient take corrective action to address the violation. See section 81-1507(1) and 81-1508.02. Section 81-1508.01 provides for criminal penalties for knowing or willful violations of the statute, regulations or permit conditions, in addition to other acts described in that section.

(2) Minor New Source Review. Section 110(a)(2)(C) also requires that the SIP include measures to regulate construction and modification of stationary sources to protect the NAAQS. With respect to smaller state-wide minor sources (Nebraska's major source permitting program is discussed in (3) below), Nebraska has a program under title 129, chapter 17 of the NAC that requires such sources to first obtain a construction permit from NDEQ. The permitting process is designed to ensure that new and modified sources will not interfere with NAAQS attainment. NDEQ has the authority to require the source applying for the permit to undergo an air quality impact analysis. If NDEQ determines that emissions from a constructed or modified source interfere with attainment of the NAAQS, it may deny the permit until the source makes the necessary changes to obviate the objections to the permit issuance. See chapter 17, sections 008 and 009 of the NAC.

EPA has determined that Nebraska's minor new source review (NSR) program adopted pursuant to section 110(a)(2)(C) of the Act regulates emissions of NAAQS pollutants. EPA has also determined that certain provisions of the state's minor NSR program adopted pursuant to section 110(a)(2)(C) of the Act likely do not meet all the requirements found in EPA's regulations implementing that provision. See 40 CFR 51.160-51.164. EPA previously approved Nebraska's minor NSR program into the SIP, and at the time there was no objection to the provisions of this program. See 37 FR 10842 (May 31, 1972) and 60 FR 372 (January 4, 1995). Since then, the state and EPA have relied on the existing state minor NSR program to assure that new and modified sources not captured by the major NSR permitting programs do not interfere with attainment and maintenance of the NAAQS.

In this action, EPA is proposing to approve Nebraska's infrastructure SIP for the 1997 and 2006 PM2.5 NAAQS with respect to the general requirement in section 110(a)(2)(C) to include a program in the SIP that regulates the modification and construction of any stationary source as necessary to assure that the NAAQS are achieved. In this action, EPA is not proposing to approve or disapprove the state's existing minor NSR program to the extent that it is inconsistent with EPA's regulations governing this program. EPA has maintained that the CAA does not require that new infrastructure SIP submissions correct any defects in existing EPA-approved provisions of minor NSR programs in order for EPA to approve the infrastructure SIP for element (C) (e.g., 76 FR 41076-76 FR 41079).

(3) Prevention of Significant Deterioration (PSD) permit program. Nebraska also has a program approved by EPA as meeting the requirements of part C, relating to prevention of significant deterioration of air quality. In order to demonstrate that Nebraska has met this sub-element, this PSD program must cover requirements not just for the 1997 and 2006 PM2.5 NAAQS, but for all other regulated NSR pollutants as well.

Nebraska's implementing rule, title 129, chapter 19, Prevention of Significant Deterioration of Air Quality, incorporates the relevant portions of the Federal rule, 40 CFR 52.21 by reference. In this action, EPA is not proposing to approve or disapprove any state rules with regard to NSR reform requirements. EPA will act on NSR reform submittals through a separate rulemaking process. For Nebraska, we have previously approved Nebraska's NSR reform rules for attainment areas, see 76 FR 15852 (March 22, 2011).

The Nebraska SIP also contains a permitting program for major sources and modifications in nonattainment areas (see Title 129, chapter 17, section 013). This section is currently not applicable to Nebraska because all areas of Nebraska are currently in attainment with the NAAQS. Even if it were applicable, the SIP's discussion of nonattainment areas is not addressed in this rulemaking (see discussion of the section 110(a)(2)(I) requirements for nonattainment areas, below).

With respect to the PSD program, title 129, chapter 19, of the NAC provides for the permitting of construction of a new major stationary source or a major modification of an existing major stationary source. Further, chapter 19, section 010 of the NAC establishes threshold emissions for establishing whether the construction project is a major source of regulated NSR pollutants, including but not limited to PM2.5.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in these submissions or referenced in Nebraska's SIP, with respect to the requirements of section 110(a)(2)(C) for the 1997 and 2006 PM2.5 NAAQS, EPA is proposing to approve this element in the April 3, 2008 and August 29, 2011, submissions.

(D) Interstate and international transport: Section 110(a)(2)(D)(i) includes four requirements referred to as prongs 1 through 4. Prongs 1 and 2 are provided at section 110(a)(2)(D)(i)(I); Prongs 3 and 4 are provided at section 110(a)(2)(D)(i)(II). Section 110(a)(2)(D)(i)(I) requires SIPs to include adequate provisions prohibiting any source or other type of emissions activity in one state from contributing significantly to nonattainment, or interfering with maintenance, of any NAAQS in another state. Section 110(a)(2)(D)(i)(II) requires SIPs to include adequate provisions prohibiting any source or other type of emissions activity in one state from interfering with measures required of any other state to prevent significant deterioration of air quality or to protect visibility.

With respect to 110(a)(2)(D)(i)(I)—prongs 1 and 2, EPA acted on this issue as it relates to Nebraska on August 8, 2011. See 76 FR 48208.

With respect to the PSD requirements of section 110(a)(2)(D)(i)(II)—prong 3, EPA notes that Nebraska's satisfaction of the applicable infrastructure SIP PSD requirements for attainment/unclassifiable areas of the 1997 and 2006 PM2.5 NAAQS have been detailed in the section addressing section 110(a)(2)(C). As discussed above for element (C)(3), EPA has previously approved Nebraska's NSR reform rules for attainment areas, and, as previously stated, Nebraska currently has no nonattainment areas See 76 FR 15852 (March 22, 2011). EPA also notes that the proposed action in that section related to PSD is consistent with the proposed approval related to PSD for section 110(a)(2)(D)(i)(II). Therefore, EPA is proposing to approve the PSD requirements of section 110(a)(2)(D)(i)(II)—prong 3.18

EPA is proposing to disapprove Nebraska's SIP as it relates to section 110(a)(2)(D)(i)(II) with respect to visibility, or “Prong 4” of the requirements of section 110(a)(2)(D). In its SIP submittal, Nebraska refers to its submittal of a SIP revision in July, 2011, addressing the regional haze requirements. An approved regional haze SIP that fully meets the regional haze requirements in 40 CFR 51.308 would satisfy the requirements of section 110(a)(2)(D)(i)(II) for visibility protection as such a SIP would ensure that emissions from the state will not interfere with measures required to be included in other state SIPs to protect visibility. EPA has not, however, fully approved Nebraska's Regional Haze SIP.

On July 6, 2012, after reviewing Nebraska's submittal of a Regional Haze SIP, EPA published the “Approval, Disapproval and Promulgation of Implementation Plans; State of Nebraska; Regional Haze State Implementation Plan; Federal Implementation Plan for Best Available Retrofit Technology Determination; Final Rule” (77 FR 40150). In that action, EPA partially approved the SIP revision as meeting the applicable regional haze requirements set forth in sections 169A and 169B of the Act and in the Federal regulations codified at 40 CFR 51.308, and the requirements of 40 CFR part 51, subpart F and appendices V and Y. EPA disapproved the SO2 BART determinations for units 1 and 2 of the Gerald Gentleman Station (GGS) because they do not comply with EPA's regulations. EPA also disapproved Nebraska's long-term strategy insofar as it relied on the deficient SO2 BART determination at GGS. Instead, EPA finalized a FIP relying on the Transport Rule as an alternative to BART for SO2 emissions from GGS to address these deficiencies. Given this, EPA cannot approve Nebraska's SIP as meeting the prong 4 requirements based on the absence of a fully approved Regional Haze SIP.

In the absence of a fully approved Regional Haze SIP, a State may meet the requirements of prong 4 by showing that its SIP contains adequate provisions to prevent emission from within the State from interfering with other state's measures to protect visibility. See, e.g., 76 FR 8326 (February 14, 2011). Nebraska did not, however, provide a demonstration in its infrastructure SIP that emissions within its jurisdiction do not interfere with other States' plans to protect visibility.

Section 110(a)(2)(D)(ii) also requires that the SIP insure compliance with the applicable requirements of sections 126 and 115 of the CAA, relating to interstate and international pollution abatement, respectively.

Section 126(a) of the CAA requires new or modified sources to notify neighboring states of potential impacts from sources within the state. Although Nebraska sources have not been identified by EPA as having any interstate or international impacts under section 126 or section 115 in any pending actions relating to the 1997 or 2006 PM2.5 NAAQS, the Nebraska regulations address abatement of the effects of interstate pollution. Title 129, chapter 14, section 010.03 of the NAC requires NDEQ, after receiving a complete PSD permit application, to notify EPA, as well as officials and agencies having cognizance where the proposed construction is to occur. This includes state or local air pollution control agencies and the chief executives of the city and county where the source would be located; any comprehensive regional land use planning agency; and any state, Federal Land Manager, or Indian governing body whose lands may be affected by emissions from the source or modification. Finally, we believe that Nebraska could use the same statutory authorities previously discussed, primarily section 81-1505 of the Nebraska Revised Statutes, to respond to any future findings with respect to the 1997 and 2006 PM2.5 NAAQS.

Section 115 of the CAA authorizes EPA to require a state to revise its SIP under certain conditions to alleviate international transport into another country. There are no final findings under section 115 of the CAA against Nebraska with respect to any air pollutant. Thus, the state's SIP does not need to include any provisions to meet the requirements of section 115.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in these submissions or referenced in Nebraska's SIP, EPA is not proposing to take action, at this time, as it relates to section 110(a)(2)(D)(i)(I)—prongs 1 and 2 and proposes to disapprove 110(a)(i)(II)—prong 4. However, EPA believes that Nebraska has the adequate infrastructure needed to address sections 110(a)(2)(D)(i)(II)—Prong 3 and 110(a)(2)(D)(ii) for the 1997 and 2006 PM2.5 NAAQS and is proposing to approve the April 3, 2008 submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for those elements as indicated above.

(E) Adequate authority, resources, implementation, and oversight: Section 110(a)(2)(E) requires that SIPs provide for the following: (1) necessary assurances that the state (and other entities within the state responsible for implementing the SIP) will have adequate personnel, funding, and authority under state or local law to implement the SIP, and that there are no legal impediments to such implementation; (2) requirements that the state comply with the requirements relating to state boards, pursuant to section 128 of the CAA; and (3) necessary assurances that the state has responsibility for ensuring adequate implementation of any plan provision for which it relies on local governments or other entities to carry out that portion of the plan.

(1) Section 110(a)(2)(E)(i) requires states to establish that they have adequate personnel, funding and authority. With respect to adequate authority, we have previously discussed Nebraska's statutory and regulatory authority to implement the 1997 and 2006 PM2.5 NAAQS, primarily in the discussion of section 110(a)(2)(A) above. Neither Nebraska nor EPA has identified any legal impediments in the state's SIP to implementation of the NAAQS.

With respect to adequate resources, NDEQ asserts that it has adequate personnel to implement the SIP. State statutes provide NDEQ the authority to establish bureaus, divisions and/or sections to carry out the duties and powers granted by the Nebraska state law to address the control of air pollution, to be administered by full-time salaried, bureau, division or section chiefs. See Nebraska Revised Statutes section 81-1504(14). NDEQ's Air Quality Division is currently divided into the Permitting Section, the Compliance Section, and the Program Planning and Development Unit.

With respect to funding, the Nebraska statutes require the EQC to establish various fees for sources, in order to fund the reasonable costs of implementing various air pollution control programs. For example, section 81-1505(12)(e) of the Nebraska Revised Statutes requires the EQC to establish a requirement for sources to pay fees sufficient to pay the reasonable direct and indirect costs of developing and administering the air quality operating permit program. These costs include overhead charges for personnel, equipment, buildings and vehicles; enforcement costs; costs of emissions and ambient monitoring; and modeling analyses and demonstrations. See Nebraska Revised Statutes section 81-1505.04(2)(b). Similarly, section 81-1505(12)(a) requires the EQC to establish application fees for air contaminant sources seeking to obtain a permit prior to construction.

Section 81-1505.05 of the Nebraska Revised Statutes provides that all fees collected pursuant to section 81-1505.04 be credited to the “Clean Air Title V Cash Fund” to be used solely to pay for the direct and indirect costs required to develop and administer the air quality permit program. Similarly, section 81-1505.06 provides that all fees collected pursuant to section 81-1505(12) be deposited in the “Air Quality Permit Cash Fund.”

Nebraska uses funds in the non-Title V subaccounts, along with General Revenue funds and EPA grants under, for example, sections 103 and 105 of the Act, to fund the programs. EPA conducts periodic program reviews to ensure that the state has adequate resources and funding to, among others, implement the SIP.

(2) Conflict of interest provisions—Section 110(a)(2)(E)(ii) requires that each state SIP meet the requirements of section 128, relating to representation on state boards and conflicts of interest by members of such boards. Section 128(a)(1) requires that any board or body which approves permits or enforcement orders under the CAA must have at least a majority of members who represent the public interest and do not derive any “significant portion” of their income from persons subject to permits and enforcement orders under the CAA. Section 128(a)(2) requires that members of such a board or body, or the head of an agency with similar powers, adequately disclose any potential conflicts of interest.

On October 21, 2014, EPA approved Nebraska's SIP revision addressing section 128 requirements. For a detailed analysis concerning Nebraska's section 128 provisions, see EPA's approval of Nebraska's 2008 Lead infrastructure SIP (79 FR 62832).

(3) With respect to assurances that the state has responsibility to implement the SIP adequately when it authorizes local or other agencies to carry out portions of the plan, section 81-1504(18) of the Nebraska Revised Statutes grants NDEQ the authority to encourage local units of government to handle air pollution problems within their own jurisdictions. NDEQ may delegate, by contract with governmental subdivisions which have adopted air pollution control programs, the enforcement of state-adopted air pollution control regulations within a specified region surrounding the jurisdictional area of the governmental subdivision. See section 81-1504(23). However, the Nebraska statutes also retain authority in NDEQ to carry out the provisions of state air pollution control law. Section 81-1504(1) gives NDEQ “exclusive general supervision” of the administration and enforcement of the Nebraska Environmental Protection Act. In addition, section 81-1504(4) designates NDEQ as the air pollution control agency for the purposes of the CAA.

The State of Nebraska relies on two local agencies for assistance in implementing portions of the air pollution control program: Lincoln/Lancaster County Health Department and Omaha Air Quality Control. NDEQ oversees the activities of these local agencies to ensure adequate implementation of the plan. NDEQ utilizes sub-grants to the local agencies to provide adequate funding, and as an oversight mechanism. EPA conducts reviews of the local program activities in conjunction with its oversight of the state program.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS and relevant statutory and regulatory authorities and provisions referenced in these submissions or referenced in Nebraska's SIP, EPA believes that Nebraska has the adequate infrastructure needed to address section 110(a)(2)(E) for the 1997 and 2006 PM2.5 NAAQS submitted and is proposing to approve the April 3, 2008 submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(F) Stationary source monitoring system: Section 110(a)(2)(F) requires states to establish a system to monitor emissions from stationary sources and to submit periodic emission reports. Each SIP shall require the installation, maintenance, and replacement of equipment, and the implementation of other necessary steps, by owners or operators of stationary sources, to monitor emissions from such sources. The SIP shall also require periodic reports on the nature and amounts of emissions and emissions-related data from such sources, and requires that the state correlate the source reports with emission limitations or standards established under the CAA. These reports must be made available for public inspection at reasonable times. To address this element, section 81-1505(12)(o) of the Nebraska Revised Statutes gives the EQC the authority to promulgate rules and regulations for air pollution control, including requirements for owner or operator testing and monitoring of emissions. It also gives the EQC the authority to promulgate similar rules and regulations for the periodic reporting of these emissions. See section 81-1505(12)(l). Title 129 chapter 34, section 002 of the NAC incorporates various EPA reference methods for testing source emissions, including methods for PM2.5. The Federal test methods in 40 CFR part 60, appendix A are referenced in title 129, chapter 34 section 002.02.

The Nebraska regulations also require that all Class I and Class II operating permits include requirements for monitoring of emissions. See title 129, chapter 8, sections 004.01 and 015 of the NAC. Furthermore, title 129, chapter 34, section 001 of the NAC allows NDEQ to order an emissions source to make or have tests made to determine the rate of contaminant emissions from the source whenever NDEQ has reason to believe that the existing emissions from the source exceed the applicable emissions limits.

The Nebraska regulations also impose reporting requirements on sources subject to permitting requirements. See title 129, chapter 6, section 001; chapter 8, sections 004.03 and 015 of the NAC. Nebraska makes all monitoring reports submitted as part of Class I or Class II permit a publicly available document. Although sources can submit a claim of confidentiality for some of the information submitted, Nebraska regulations specifically exclude emissions data from being entitled to confidential protection. See title 129, chapter 7, section 004 of the NAC. Nebraska uses this information to track progress towards maintaining the NAAQS, developing control and maintenance strategies, identifying sources and general emission levels, and determining compliance with emission regulations and additional EPA requirements.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that Nebraska has the adequate infrastructure needed to address section 110(a)(2)(F) for the 1997 and 2006 PM2.5 NAAQS submitted and is proposing to approve the April 3, 2008, submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(G) Emergency authority: Section 110(a)(2)(G) requires SIPs to provide for authority to address activities causing imminent and substantial endangerment to public health or welfare or the environment (comparable to the authorities provided in section 303 of the CAA), and to include contingency plans to implement such authorities as necessary.

Section 81-1507(4) of the Nebraska Revised Statutes states that whenever the Director of NDEQ finds that an emergency exists requiring immediate action to protect the public health and welfare, he or she may issue an order requiring that such action be taken as the Director deems necessary to meet the emergency. Title 129, chapter 38, section 003 of the NAC states that the conditions justifying the proclamation of an air pollution alert, air pollution warning, or air pollution emergency exist whenever the Director determines that the accumulation of air pollutants in any place is attaining or has attained levels which could, if such levels are sustained or exceeded, lead to a substantial threat to the health of persons. This regulation also establishes action levels for various air pollutants. The action levels (which include “Air Pollution Alert,” “Air Pollution Warning,” and “Air Pollution Emergency”) and associated contingency measures vary depending on the severity of the concentrations. Appendix I to title 129 of the NAC provides an Emergency Response Plan with actions to be taken under each of the severity levels. These steps are designed to prevent the excessive build-up of air pollutants to concentrations which can result in imminent and substantial danger to public health. Both the regulation at chapter 38 and the Emergency Response Plan are contained in the Federally approved SIP.

Based on EPA's experience to date with the PM2.5 NAAQS and designated PM2.5 nonattainment areas, EPA expects that an emergency event involving PM2.5 would be unlikely, and if it were to occur, would be the result of a malfunction or other emergency situation at a relatively large source of PM2.5. Accordingly, EPA believes that the central components of a contingency plan would be to reduce emissions from the source at issue (if necessary, by curtailing operations) and public communication as needed. EPA believes that Nebraska's statutes referenced above provide the requisite authority to NDEQ to address such situations.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in that submission or referenced in Nebraska's SIP, EPA believes that the Nebraska SIP adequately addresses section 110(a)(2)(G) for the 1997 and 2006 PM2.5 NAAQS submitted and is proposing to approve the April 3, 2008 submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(H) Future SIP revisions: Section 110(a)(2)(H) requires states to have the authority to revise their SIPs in response to changes in the NAAQS, availability of improved methods for attaining the NAAQS, or in response to an EPA finding that the SIP is substantially inadequate to attain the NAAQS.

As discussed previously, section 81-1504 of the Nebraska Revised Statutes authorizes NDEQ to regulate air quality and implement air quality control regulations. It also authorizes NDEQ to act as the state air pollution control agency for all purposes of the CAA. Section 81-1505(1) gives the EQC the authority to adopt and promulgate rules which set air standards that will protect public health and welfare. This authority includes the authority to revise rules as necessary to respond to a revised NAAQS.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that Nebraska has adequate authority to address section 110(a)(2)(H) for the 1997 and 2006 PM2.5 NAAQS submitted and is proposing to approve this element in regard to the April 3, 2008, submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(I) Nonattainment areas: Section 110(a)(2)(I) requires that in the case of a plan or plan revision for areas designated as nonattainment areas, states must meet applicable requirements of part D of the CAA, relating to SIP requirements for designated nonattainment areas.

As noted earlier, EPA does not expect infrastructure SIP submissions to address subsection (I). The specific SIP submissions for designated nonattainment areas, as required under CAA title I, part D, are subject to different submission schedules than those for section 110 infrastructure elements. Instead, EPA will take action on part D attainment plan SIP submissions through a separate rulemaking governed by the requirements for nonattainment areas, as described in part D.

(J) Consultation with government officials, public notification, PSD and visibility protection: Section 110(a)(2)(J) requires SIPs to meet the applicable requirements of the following CAA provisions: (1) section 121, relating to interagency consultation regarding certain CAA requirements; (2) section 127, relating to public notification of NAAQS exceedances and related issues; and (3) part C of the CAA, relating to prevention of significant deterioration of air quality and visibility protection.

(1) With respect to interagency consultation, the SIP should provide a process for consultation with general-purpose local governments, designated organizations of elected officials of local governments, and any Federal Land Manager having authority over Federal land to which the SIP applies. Section 81-1504(3) authorizes NDEQ to advise and consult and cooperate with other Nebraska state agencies, the Federal government, other states, interstate agencies, and with affected political subdivisions, for the purpose of implementing its air pollution control responsibilities. Nebraska also has appropriate interagency consultation provisions in its preconstruction permit program. See, e.g., title 129, chapter 14 section 010 of the NAC (requiring NDEQ to send a copy of a notice of public comment on construction permit applications to any state or local air pollution control agency; the chief executives of the city and county in which the source would be located; any comprehensive regional land use planning agency; and any state, Federal Land Manager, or Indian governing body whose lands may be affected by emissions from the source or modification).

(2) With respect to the requirements for public notification in CAA section 127, title 129 chapter 38 of the NAC, discussed previously in connection with the state's authority to address emergency episodes, contains provisions for public notification of elevated ozone and other air pollutant levels. Appendix I to title 129 of the NAC includes measures which can be taken by the public to reduce concentrations. In addition, information regarding air pollution and related issues, is provided on an NDEQ Web site, http://www.deq.state.ne.us/NDEQSite.nsf/AirDivSecProg?OpenView&Start=1&ExpandView&Count=500. NDEQ also prepares an annual report on air quality in the state which is available to the public on its Web site, at http://www.deq.state.ne.us/Publica.nsf/c4afc76e4e077e11862568770059b73f/a12a5ada6cce1c1686257a47004e0633!OpenDocument.

(3) With respect to the applicable requirements of part C, relating to prevention of significant deterioration of air quality and visibility protection, we previously noted in the discussion of section 110(a)(2)(C) (relating to enforcement of control measures) how the Nebraska SIP meets the PSD requirements, incorporating the Federal rule by reference. Regarding the prevention of significant deterioration requirements, EPA previously approved Nebraska's PM2.5 PSD program as found at 79 FR 45108. On January 22, 2013, the U.S. Court of Appeals for the District of Columbia vacated and remanded the provisions at 40 CFR 51.166(k)(2) and 52.21(k)(2) concerning implementation of the PM2.5 SILs and vacated the provisions at 40 CFR 51.166(i)(5)(i)(c) and 52.21 (i)(5)(i)(c) (adding the PM2.5 SMCs) that were promulgated as part of the October 20, 2010, rule, Prevention of Significant Deterioration (PSD) for Particulate Matter less than 2.5 Micrometers (PM2.5)—Increments, Significant Impact Levels and Significant Monitoring Concentrations, 75 CFR 64864. Consistent with the court's ruling, on June 27, 2013, Nebraska submitted a request to not include the SIP provisions relating the Significant Impact Levels (SILs) and Significant Monitoring Concentrations (SMCs).

With respect to the visibility component of section 110(a)(2)(J), Nebraska stated in its 1997 and 2006 PM2.5 infrastructure SIP submittals that the “Visibility Protection” requirements of chapter 43 of title 129 of the Nebraska Administrative Code met part C visibility requirements of element J. The “Visibility Protection” requirements of chapter 43 were submitted by Nebraska for incorporation into the Nebraska SIP on November 8, 2011, and will be addressed in a separate rulemaking.

EPA recognizes that states are subject to visibility and regional haze program requirements under part C of the CAA. However, when EPA establishes or revises a NAAQS, these visibility and regional haze requirements under part C do not change. EPA believes that there are no new visibility protection requirements under part C as a result of a revised NAAQS. Therefore, there are no newly applicable visibility protection obligations pursuant to element J after the promulgation of a new or revised NAAQS. As such, EPA is proposing to find that Nebraska's SIP meets the visibility requirements of element J with respect to the 1997 and 2006 PM2.5 NAAQS as there are no new applicable requirements triggered by the 1997 and 2006 PM2.5 NAAQS.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that Nebraska has met the applicable requirements of section 110(a)(2)(J) for the 1997 and 2006 PM2.5 NAAQS in the state and is therefore proposing to approve the April 3, 2008, submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(K) Air quality and modeling/data: Section 110(a)(2)(K) requires that SIPs provide for performing air quality modeling, as prescribed by EPA, to predict the effects on ambient air quality of any emissions of any NAAQS pollutant, and for submission of such data to EPA upon request.

Nebraska has authority to conduct air quality modeling and report the results of such modeling to EPA. Section 81-1504(5) provides NDEQ with the authority to encourage, participate in, or conduct studies, investigations, research and demonstrations relating to air pollution and its causes and effects. As an example of regulatory authority to perform modeling for purposes of determining NAAQS compliance, the regulations at title 129, chapter 19, section 019 provide for the use of EPA-approved air quality models (e.g., those found in 40 CFR part 51, appendix W) for PSD construction permitting. If the use of these models is inappropriate, the model may be modified or an alternate model may be used with the approval of NDEQ and EPA.

The Nebraska regulations also give NDEQ the authority to require that modeling data be submitted for analysis. Title 129, chapter 19, section 021.02 states that upon request by NDEQ, the owner or operator of a proposed source or modification must provide information on the air quality impact of the source or modification, including all meteorological and topographical data necessary to estimate such impact.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that Nebraska has the adequate infrastructure needed to address section 110(a)(2)(K) for the 1997 and 2006 PM2.5 NAAQS and is proposing to approve the April 3, 2008, submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(L) Permitting Fees: Section 110(a)(2)(L) requires SIPs to require each major stationary source to pay permitting fees to the permitting authority, as a condition of any permit required under the CAA, to cover the cost of reviewing and acting upon any application for such a permit, and, if the permit is issued, the costs of implementing and enforcing the terms of the permit. The fee requirement applies until a fee program established by the state pursuant to title V of the CAA, relating to operating permits, is approved by EPA.

Section 81-1505 of the Nebraska Revised States provides authority for NDEQ to collect permit fees, including title V fees. For example, section 81-1505(12)(e) requires that the EQC establish fees sufficient to pay the reasonable direct and indirect of developing and administering the air quality permit program. Nebraska's title V program, including the fee program addressing the requirements of the Act and 40 CFR 70.9 relating to title V fees, was approved by EPA on October 18, 1995 (60 FR 53872).

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that Nebraska has the adequate infrastructure needed to address section 110(a)(2)(L) for the 1997 and 2006 PM2.5 NAAQS and is proposing to approve the April 3, 2008, submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

(M) Consultation/participation by affected local entities: Section 110(a)(2)(M) requires SIPs to provide for consultation and participation by local political subdivisions affected by the SIP.

Section 81-1504(5) of the Nebraska Revised Statutes gives NDEQ the authority to encourage local governments to handle air pollution problems within their respective jurisdictions and at the same time provide them with technical and consultative assistance. NDEQ is also authorized to delegate the enforcement of air pollution control regulations down to governmental subdivisions which have adopted air pollution control programs. As discussed previously, NDEQ currently relies on two local agencies for assistance in implementing portions of the air pollution control program: Lincoln/Lancaster County Health Department and Omaha Air Quality Control.

In addition, as previously noted in the discussion about section 110(a)(2)(J), Nebraska's statutes and regulations require that NDEQ consult with local political subdivisions for the purposes of carrying out its air pollution control responsibilities.

Based upon review of the state's infrastructure SIP submission for the 1997 and 2006 PM2.5 NAAQS, and relevant statutory and regulatory authorities and provisions referenced in the submission or referenced in Nebraska's SIP, EPA believes that Nebraska has the adequate infrastructure needed to address section 110(a)(2)(M) for the 1997 and 2006 PM2.5 NAAQS and is proposing to approve the April 3, 2008, submission regarding the 1997 PM2.5 infrastructure SIP requirements and the August 29, 2011, submission regarding the 2006 PM2.5 infrastructure SIP requirements for this element.

On November 14, 2011, Nebraska Department of Environmental Quality submitted a request for the approval of revisions to chapter 4 of title 129. The revision to chapter 4, section 001.01, repeals the annual National Ambient Air Quality Standard (NAAQS) for PM10, which was revoked by EPA effective December 18, 2006 and at section 001.02 of chapter 4, adopt the new 24 hour NAAQS for PM2.5 which was issued by EPA also effective December 18, 2006. See 71 FR 61144. The proposed revisions to title 129, chapter 4, are consistent with Federal standards and therefore EPA is proposing to approve NDEQ's request in regards to the repeal of the annual NAAQS for PM10 and adoption of the 24 hour NAAQS of PM2.5.

EPA is proposing to approve the April 3, 2008, and August 29, 2011, infrastructure SIP submissions from Nebraska which address the requirements of CAA sections 110 (a)(1) and (2) as applicable to the 1997 and 2006 PM2.5 NAAQS. Specifically, EPA is proposing to approve the following infrastructure elements, or portions thereof: 110(a)(2)(A), (B), (C), (D)(i)(II)—Prong 3, (D)(ii), (E), (F), (G), (H), (J), (K), (L), and (M). As discussed in each applicable section of this rulemaking, EPA is not proposing to take action on section 110(a)(2)(D)(i)(I)—prongs 1 and 2, and 110(a)(2)(I)—Nonattainment Area Plan, or Plan Revisions under part D. And finally, EPA is proposing to disapprove 110(a)(2)(D)(i)(II)—prong 4, as it relates to the protection of visibility.

Based upon review of the state's infrastructure SIP submissions and relevant statutory and regulatory authorities and provisions referenced in those submissions or referenced in Nebraska's SIP, EPA believes that Nebraska has the infrastructure to address all applicable required elements of sections 110(a)(1) and (2) (except otherwise noted) to ensure that the 1997 and 2006 PM2.5 NAAQS are implemented in the state.

In addition, EPA is proposing to approve an additional SIP submission from Nebraska which repeals the annual PM10 NAAQS and adopts the 24 hour PM2.5 NAAQS.

We are hereby soliciting comments on this proposed action. Final rulemaking will occur after consideration of any comments.

In this action, EPA is proposing to include in a final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is proposing to incorporate by reference the EPA approved Nebraska regulations for Ambient Air Quality Standards, and the EPA approved Nebraska nonregulatory provisions described in the proposed amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely proposes to approve state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason this proposed action:

• Is not a “significant regulatory action” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993) and is therefore not subject to review under Executive Orders 12866 and 13563 (76 FR 3821, January 21, 2011);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• 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);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

The SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

The statutory authority for this action is provided by section 110 of the CAA, as amended (42 U.S.C. 7410).

For the reasons stated in the preamble, EPA proposes to amend 40 CFR part 52 as set forth below:

Chapter I, title 40 of the Code of Federal Regulations is amended as follows:

The revisions and additions read as follows:

The uniform regulation for the procurement of supplies and services by federal departments and agencies, the Federal Acquisition Regulation (FAR), was promulgated on September 19, 1983 (48 FR 42102). The FAR is codified in title 48, chapter 1, of the Code of Federal Regulations. HUD promulgated its regulation to implement the FAR on March 1, 1984 (49 FR 7696).

The HUDAR (title 48, chapter 24 of the Code of Federal Regulations) is prescribed under section 7(d) of the Department of HUD Act (42 U.S.C. 3535(d)); section 205(c) of the Federal Property and Administrative Services Act of 1949 (40 U.S.C. 121(c)); and the general authorization in FAR 1.301. The HUDAR was last revised by final rule published on December 10, 2012 (77 FR 73524), and a subsequent correcting amendment published on August 15, 2013 (78 FR 49697).

This proposed rule would amend the HUDAR at 48 CFR chapter 24, as follows:

The rule proposes several administrative corrections, including: Revising section 2404.7001 to refer to the correct contract clause 2452.204-70, “Preservation of, and Access to, Contract Records (Tangible and Electronically Stored Information (ESI) Formats),” and removing the title and redesignating the clause that is codified at section 2432.705-70 as 2432.705-70(a).

In part 2406, the rule would add section 2406.303 which requires the use of HUD Form 24012 1 for justifications for other than full and open competition, and section 2406.304(a)(3), which designates the HUD Deputy Chief Procurement Officer as the responsible official with the authority to approve, in writing, justifications for other than full and open procurements for proposed contracts over $12.5 million, but not exceeding $62.5 million.

In part 2408, this rule would add subpart 2408.4, “Federal Supply Schedules,” and, in that subpart, would add section 2408.405-6(c)(2), which requires the use of HUD form 24013 for justifications for limiting sources exceeding the simplified acquisition threshold when using the Federal Supply Schedules.2 This rule would also add section 24(d)(3) which designates the HUD Deputy Chief Procurement Officer as the responsible official with the authority to approve, in writing, justifications for Limited Source considerations for proposed Federal Supply Schedule order or Blanket Purchase Agreement (BPA) with an estimated value exceeding $12.5 million, but not exceeding $62.5 million.

In part 2409, this rule would add subpart 2409.1, entitled “Responsible Prospective Contractors,” and, within that subpart, section 2409.105, “Procedures,” which includes information to be collected in determining financial responsibility.

This rule would also:

Revise section 2415.303(a) to HUDAR section 2415.303(a)(1) and, except for those acquisitions identified in HUDAR section 2415.303(a)(2), designate HUD Assistant Secretaries, or their equivalent, as the Source Selection Authorities for selections made using the tradeoff process and to allow Assistant Secretaries to delegate this function to other departmental officials;

Add section 2415.303(a)(2) to designate HUD's General Counsel as the Source Selection Authority, regardless of contract amount, in all Headquarters procurements for legal services, unless the General Counsel specifically designates another agency official to perform that function;

Clarify section 2415.305(a)(5) to apply to Best Value Tradeoff technical evaluations;

Add part 2444 and, within that part, section 2444.204 entitled “Subcontracting Policies and Procedures”; and

Codify a class deviation approved by HUD's Chief Procurement Officer dated April 10, 2013 to add Alternate 1 to clauses 2452.232-70 and 2452.232-71.

In part 2452, the proposed rule would:

Add clause 2452.232-74, entitled “Not to Exceed Limitation,” and, in part 2432, add a reference to that clause and requirements regarding its use at section 2432.705;

Revise clause 2452.237-77(c)(1)(A) to change “21 days per month” to “number of business days in the month”;

Add clause 2452.237-79, “Post-Award Conference,” and a reference to that clause and requirements regarding its use at section 2437.110(e)(5);

Add clause 2452.237-81, “Labor Categories, Unit Prices Per Hour and Payment,” and a reference to that clause and requirements regarding its use at section 2437.110(e)(6);

Add section 2452.244-70, “Consent to Subcontract,” and a reference to that clause and requirements regarding its use at section 2444.204; and

Incorporate a new HUDAR matrix under subpart 2452.3.

The information collection requirements contained in this proposed rule are currently approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB control number 2535-0091. The information collection requirements for the HUDAR are currently approved by OMB under control number 2535-0091. In accordance with the Paperwork Reduction Act, an agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a currently valid OMB control number.

Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531- 1538) (UMRA) establishes requirements for federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments and the private sector. This rule does not impose any federal mandate on any state, local, or tribal government or the private sector within the meaning of UMRA.

The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.) generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This proposed rule makes technical changes to existing contracting procedures and does not make any major changes that would significantly impact businesses. Accordingly, the undersigned certifies that this rule will not have a significant economic impact on a substantial number of small entities.

Notwithstanding HUD's determination that this rule will not have a significant economic impact on a substantial number of small entities, HUD specifically invites comments regarding less burdensome alternatives to this rule that will meet HUD's objectives as described in this preamble.

This proposed rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern or regulate real property acquisition, disposition, leasing, rehabilitation, alteration, demolition, or new construction, or establish, revise, or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this proposed rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule imposes substantial direct compliance costs on state and local governments and is not required by statute, or the rule preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive Order. This proposed rule would not have federalism implications and would not impose substantial direct compliance costs on state and local governments or preempt state law within the meaning of the Executive Order.

For the reasons discussed in the preamble, and pursuant to the authority under 42 U.S.C. 3535(d), HUD proposes to amend 48 CFR chapter 24 as follows: