Federal Register Vol. 80, No.107,

Authority for This Rulemaking

The Commercial Space Launch Act of 1984, as amended and re-codified at 51 U.S.C. 50901-50923 (the Act), authorizes the Department of Transportation and the FAA, through delegations, to oversee, license, and regulate commercial launch and reentry activities, and the operation of launch and reentry sites as carried out by U.S. citizens or within the United States (51 U.S.C. 50904, 50905). The Act directs the FAA to exercise this responsibility consistent with public health and safety, safety of property, and the national security and foreign policy interests of the United States (51 U.S.C. 50905). Section 50901(a)(7) directs the FAA to regulate only to the extent necessary, in relevant part, to protect the public health and safety and safety of property. The FAA is also responsible for encouraging, facilitating, and promoting commercial space launches by the private sector (51 U.S.C. 50903).

This action provides launch vehicle, tether system, and operational criteria required to conduct a safe tethered launch. Tethered launches that meet the criteria contained in this final rule are excluded from chapter III licensing, permitting, and waiver requirements.

This rule defines a tether system as a device that contains launch vehicle hazards by physically constraining a launch vehicle in flight to a specified range from its launch point. It includes all components, from the point where the tether attaches to the vehicle to a solid base, that experience load during a tethered launch. For a tethered launch to be excluded from the FAA's licensing and permitting requirements, the tether system, including the points of attachment within the tether system, must:

• Not yield or fail under the maximum dynamic load on the system or two times the maximum potential engine thrust;

• Have a minimum safety factor of 3.0 for yield stress and 5.0 for ultimate stress;

• Constrain the launch vehicle within 75 feet above ground level as measured from the ground to the attachment point of the vehicle to the tether;

• Display no damage prior to launch; and

• Be insulated or located such that it will not experience thermal damage due to the launch vehicle's exhaust.

In addition, tethered operations must be carried out within specified separation distances based on the amount of propellant onboard a launch vehicle. Lastly, the launch vehicle must be unmanned, be powered by a liquid or hybrid engine, carry no more than 5,000 pounds of propellant, and must not use any of the toxic propellants listed in Table I417-2 or I417-3 in Appendix I of part 417. The structural criteria mitigate the hazards that can compromise the structural integrity of the tether system. The vehicle requirements and operational criteria provide additional protection to the public by mitigating potential hazards posed by a tether system failure.

This action alleviates burdens on both the vehicle operator and the FAA. The operator will no longer incur the costs associated with submitting a launch license application, permit application or petition for waiver under chapter III. Also, the operator will not incur the costs associated with any delay in processing applications or waivers. Finally, the FAA will not have to evaluate applications, conduct independent analyses, or issue licenses, permits or waivers.

On August 23, 2012, the FAA published a notice of proposed rulemaking (NPRM) (77 FR 50956) 1 that proposed to exclude certain tethered launches from chapter III requirements if the tethered launches met specified safety criteria. The proposed criteria did not address the use of toxic propellants onboard a launch vehicle. During the NPRM comment period, the FAA received a comment stating the agency should revise the proposed rule to protect the public from the potential harm that could result from exposure to a toxic propellant. The FAA agreed that it should have addressed toxic propellants in its proposal. As a result, in July 2014, the agency issued a supplemental notice of proposed rulemaking (SNPRM) 2 proposing to require any launch operator using any of the toxic propellants identified in tables I417-2 and I417-3 in Appendix I of part 417 to satisfy the chapter III requirements.

In addition to the comment about toxic propellants, the FAA received other comments to the NPRM, which were discussed in the SNPRM. Two of the comments resulted in clarifications to the proposed rule and have been adopted in this final rule. First, the FAA removed the term, “established strength properties” from § 400.2(c)(2)(i) to better clarify the proposed requirement and preserve the original intent, which is to ensure that the tether system can withstand the maximum dynamic load placed on it without imposing on the launch operator the burden of determining strength properties. Second, the FAA revised § 400.2(c)(2)(iii) to clarify that the maximum flight limit of 75 feet for a tethered launch vehicle would be measured from the ground to a fully-extended tether's attachment point to a vertically-oriented vehicle.

The comment period for the July 2014 SNPRM closed on September 22, 2014. The FAA did not receive comments to the SNPRM. However, as noted under the “Background” section of this final rule, the agency did receive comments to the August 2012 NPRM, and provided detailed responses to them in the SNPRM. If you wish to review that information, refer to the “Background” section of the SNPRM.

Because the FAA did not receive comments to the SNPRM, the agency adopts the amendments proposed in the SNPRM without change.

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 final rule.

Department of Transportation Order DOT 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it be included in the preamble if a full regulatory evaluation of the cost and benefits is not prepared. Such a determination has been made for this final rule. The reasoning for this determination is because the FAA has licensing authority over tethered launches, which are considered launches under chapter III unless they meet the definition of an amateur rocket launch.3 Today, to conduct such tethered non-amateur rocket launches, operators must obtain a launch license, experimental permit, or apply for a waiver from chapter III. Applying for waivers, licenses, and permits imposes a financial burden on vehicle operators and the FAA because of time and resources required to create and analyze these applications.

The final rule establishes clear and simple criteria for an effective tether system, and vehicle and operational criteria as added measures to protect the public in the event of a tether system failure. Operators will not have to apply for a launch license, permit, or waiver from chapter III to conduct tethered launches of non-amateur rockets 4 that meet the rule criteria for an effective tether system and the vehicle and operational criteria. Operators that meet the criteria will not have to incur the costs of applying for a launch license, permit, or waiver and will not have to sustain the costs associated with delay in the processing of these applications. The FAA will not have to conduct case-by-case analyses of tethered launches that meet the established criteria to verify public safety from a launch vehicle explosion or confirm that the tether system will not fail. Furthermore, launch operators that conduct tethered launches will not be compelled to follow the criteria in this final rule because they will still have the option of applying for a launch license, permit, or waiver under chapter III. Therefore, the final rule will impose no additional requirements on operators, but will provide an alternative to conducting a tethered launch under chapter III. If the operator deems it more cost effective or prefers to apply for a license, permit, or waiver than to follow the criteria listed here, the operator will have that option.

The FAA requested but received no comments on its conclusion in the NPRM that the rule would be cost relieving to operators and the FAA. The FAA then issued an SNPRM that revised the FAA's original proposal by excluding from chapter III only those eligible launches that do not use specified toxic propellants. Even with the change that was proposed in the SNPRM, the rule is still cost relieving relative to the current regulations. Tethered launches using toxic fuel will continue to comply with current chapter III requirements and incur no new costs. Operators launching vehicles that are eligible for the chapter III exclusion will still benefit from cost savings relative to the current chapter III requirements. The FAA concluded in the SNPRM that the rule would be cost relieving to operators and the FAA. The FAA did not receive any comments to the SNPRM.

For the reasons discussed, the rule will be cost relieving to both operators and the FAA. The FAA has determined that this final 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 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, 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 the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

This final rule is expected to provide an alternative to conducting tethered launches under chapter III and therefore could alleviate the financial burden of applying for a launch license, permit, or waiver to chapter III if an operator met the criteria. The expected outcome will therefore be either a cost saving impact or no impact on small entities affected by the rule. Even the change proposed in the SNPRM that launches using toxic propellants would have to continue to comply with chapter III will not impose costs, as operators conducting tethered launches currently have to comply with chapter III. Thus, the FAA concludes the rule will still have either a cost saving impact or no impact on small entities. The FAA did not receive comments when it reached this conclusion in both the SNPRM and NPRM.

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. Therefore, as provided in section 605(b), the Administrator of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.

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 as 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. If a foreign launch operator conducts a tethered launch in the United States that meets the requirements of this final rule, it will be eligible for the exclusion from chapter III. The FAA has assessed the potential effect of this final rule and determined that it will have the same impact on domestic and international entities and thus have 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 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 million in lieu of $100 million. This final rule does not contain such a mandate; therefore, the requirements of Title II of the Act do not apply.

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 is no new requirement for information collection associated with this final rule.

Public comments: The FAA did not receive comments to the NPRM or the SNPRM on its determination that the proposed rule would not impose new paperwork requirements.

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 determined that there are no ICAO Standards and Recommended Practices that correspond to these regulations.

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 312f and involves no extraordinary circumstances.

The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The agency determined that this action will 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, does not have Federalism implications.

The FAA analyzed this final 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 is not a “significant energy action” under the executive order and it is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

An electronic copy of a rulemaking document may be obtained by using the Internet—

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

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

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

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

Comments received may be viewed by going to http://www.regulations.gov and following the online instructions to search the docket number for this action. Anyone is able to search the electronic form of all comments received into any of the FAA's dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.).

The Small Business Regulatory Enforcement Fairness Act (SBREFA) of 1996 requires the FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document, may contact its local FAA official, or the person listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the Internet, visit http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

In consideration of the foregoing, the Federal Aviation Administration amends chapter III of title 14, Code of Federal Regulations as follows:

Background

The Entity List notifies the public about entities that have engaged in activities that could result in an increased risk of the diversion of exported, reexported or transferred (in-country) items to weapons of mass destruction (WMD) programs. Since its initial publication, grounds for inclusion on the Entity List have expanded to include activities sanctioned by the State Department and activities contrary to U.S. national security or foreign policy interests. Certain exports, reexports, and transfers (in-country) to entities identified on the Entity List require licenses from BIS and are usually subject to a policy of denial. The availability of license exceptions in such transactions is very limited. The license review policy for each entity is identified in the license review policy column on the Entity List and the availability of license exceptions is noted in the Federal Register notices adding persons to the Entity List. BIS places entities on the Entity List based on certain sections of part 744 (Control Policy: End-User and End-Use Based) and part 746 (Embargoes and Other Special Controls) of the EAR.

The End-User Review Committee (ERC), composed of representatives of the Departments of Commerce (Chair), State, Defense, Energy and, where appropriate, the Treasury, makes all decisions regarding additions to, removals from, or other modifications to the Entity List. The ERC makes all decisions to add an entry to the Entity List by majority vote and all decisions to remove or modify an entry by unanimous vote. This rule implements a decision of the Advisory Committee on Export Policy (ACEP), which the ERC has deemed to also be the decision of the ERC in this matter, to approve this change to the Entity List.

Under § 744.11(b) (Criteria for revising the Entity List) of the EAR, persons for whom there is reasonable cause to believe, based on specific and articulable facts, have been involved, are involved, or pose a significant risk of being or becoming involved in, activities that are contrary to the national security or foreign policy interests of the United States and those acting on behalf of such persons may be added to the Entity List. The person being added to the Entity List has been determined to be involved in activities that are contrary to the national security or foreign policy interests of the United States. Paragraphs (b)(1) through (b)(5) of § 744.11 include an illustrative list of activities that could be contrary to the national security or foreign policy interests of the United States.

The Departments represented on the ERC, by way of a decision of the ACEP, which the ERC has deemed to also be the decision of the ERC in this matter, determined that the person being added to the Entity List under the destination of Ecuador has been involved in activities contrary to the national security and foreign policy interests of the United States. There is reasonable cause to believe that the Corporacion Nacional de Telecommunicaciones (CNT), the state-owned telecommunications utility in Ecuador, has been involved, is involved, or poses a significant risk of being or becoming involved in, activities that are contrary to the foreign policy interests of the United States as defined in § 744.11(b) of the EAR.

Pursuant to § 744.11(b) of the EAR, the Departments represented on the ERC by way of a decision of the ACEP, which the ERC has deemed to also be the decision of the ERC in this matter, determined that the conduct of this person raises sufficient concern that prior review of exports, reexports, or transfers (in-country) of items subject to the EAR involving this person, and the possible imposition of license conditions or license denials on shipments to the person, will enhance BIS's ability to prevent violations of the EAR.

For the one person added to the Entity List, BIS imposes a license requirement for any transaction in which items classified under Export Control Classification Numbers (ECCNs) 5D002 or 5A002 are to be exported, reexported, or transferred (in-country) to this person or in which such person acts as purchaser, intermediate consignee, ultimate consignee, or end-user. The license review policy will be case-by-case review. In addition, no license exceptions are available for exports, reexports, or transfers (in-country) to the person being added to the Entity List in this rule for items classified under ECCNs 5D002 or 5A002.

This final rule adds the following person to the Entity List:

Shipments of items removed from eligibility for a License Exception or export or reexport without a license (NLR) as a result of this regulatory action that were en route aboard a carrier to a port of export or reexport, on June 4, 2015, pursuant to actual orders for export or reexport to a foreign destination, may proceed to that destination under the previous eligibility for a License Exception or export or reexport without a license (NLR).

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of August 7, 2014, 79 FR 46959 (August 11, 2014), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222 as amended by Executive Order 13637.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been determined to be not significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to nor be subject to a penalty for failure to comply with a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid Office of Management and Budget (OMB) Control Number. This regulation involves collections previously approved by OMB under control number 0694-0088, Simplified Network Application Processing System, which includes, among other things, license applications and carries a burden estimate of 43.8 minutes for a manual or electronic submission. Total burden hours associated with the PRA and OMB control number 0694-0088 are not expected to increase as a result of this rule. You may send comments regarding the collection of information associated with this rule, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget (OMB), by email to [email protected], or by fax to (202) 395-7285.

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

4. The provisions of the Administrative Procedure Act (5 U.S.C. 553) requiring notice of proposed rulemaking, the opportunity for public comment and a delay in effective date are inapplicable because this regulation involves a military or foreign affairs function of the United States. (See 5 U.S.C. 553(a)(1)). BIS implements this rule to protect U.S. national security or foreign policy interests by preventing items from being exported, reexported, or transferred (in country) to the person being added to the Entity List. If this rule were delayed to allow for notice and comment and a delay in effective date, then the entity being added to the Entity List by this action would continue to be able to receive items without a license and to conduct activities contrary to the national security or foreign policy interests of the United States. In addition, publishing a proposed rule would give this party notice of the U.S. Government's intention to place them on the Entity List and would create an incentive for this person to either accelerate receiving items subject to the EAR to conduct activities that are contrary to the national security or foreign policy interests of the United States, and/or to take steps to set up additional aliases, change addresses, and other measures to try to limit the impact of the listing on the Entity List once a final rule was published. Further, no other law requires that a notice of proposed rulemaking and an opportunity for public comment be given for this rule. Because a notice of proposed rulemaking and an opportunity for public comment are not required to be given for this rule by 5 U.S.C. 553, or by any other law, the analytical requirements of the Regulatory Flexibility Act, 5 U.S.C. 601 et seq., are not applicable. Accordingly, no regulatory flexibility analysis is required and none has been prepared.

Accordingly, part 744 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

In FR Document No. 2015-07305, published on April 20, 2015, on page 21894, third column, 5th line, instruction number 1 should read as follows:

Background

On June 6, 2006, temporary regulations under section 7874 (TD 9265) were published in the Federal Register (71 FR 32437) concerning the treatment of a foreign corporation as a surrogate foreign corporation (2006 temporary regulations). A notice of proposed rulemaking (REG-112994-06) cross-referencing the 2006 temporary regulations was published in the same issue of the Federal Register (71 FR 32495). On July 28, 2006, Notice 2006-70 (2006-2 CB 252) was published, announcing a modification to the effective date contained in the 2006 temporary regulations. See § 601.601(d)(2)(ii)(b). On June 12, 2009, the 2006 temporary regulations and the related notice of proposed rulemaking were withdrawn and replaced with new temporary regulations (2009 temporary regulations), which generally apply to acquisitions completed on or after June 9, 2009. TD 9453 (74 FR 27920). A notice of proposed rulemaking (REG-112994-06) cross-referencing the 2009 temporary regulations was published in the same issue of the Federal Register (74 FR 27947). On June 12, 2012, the 2009 temporary regulations and the related notice of proposed rulemaking were withdrawn and replaced with new temporary regulations (2012 temporary regulations), which generally apply to acquisitions completed on or after June 7, 2012. TD 9592 (77 FR 34785). A notice of proposed rulemaking (REG-107889-12) cross-referencing the 2012 temporary regulations was published in the same issue of the Federal Register (77 FR 34887). No public hearing was requested or held; however, comments were received. All comments are available at www.regulations.gov or upon request. After consideration of the comments, the 2012 temporary regulations are adopted as final regulations with the modifications described in this preamble. The 2012 temporary regulations are removed.

A foreign corporation generally is treated as a surrogate foreign corporation under section 7874(a)(2)(B) if pursuant to a plan (or a series of related transactions): (i) The foreign corporation completes after March 4, 2003, the direct or indirect acquisition of substantially all of the properties held directly or indirectly by a domestic corporation (acquisition); (ii) after the acquisition, at least 60 percent of the stock (by vote or value) of the foreign corporation is held by former shareholders of the domestic corporation by reason of holding stock in the domestic corporation; and (iii) after the acquisition, the expanded affiliated group that includes the foreign corporation (EAG) does not have substantial business activities in the foreign country in which, or under the law of which, the foreign corporation is created or organized (relevant foreign country), when compared to the total business activities of the EAG. Similar provisions apply if a foreign corporation acquires substantially all of the properties constituting a trade or business of a domestic partnership.

The 2009 temporary regulations provided that whether an EAG will be considered to have substantial business activities in the relevant foreign country is based on all the facts and circumstances and, unlike the 2006 temporary regulations, did not provide a safe harbor. The 2012 temporary regulations replaced this facts-and-circumstances test with a bright-line rule describing the threshold of activities required for an EAG to be considered to have substantial business activities in the relevant foreign country. Under this bright-line rule, an EAG will be considered to have substantial business activities in the relevant foreign country only if at least 25 percent of the group employees, group assets, and group income are located or derived in the relevant foreign country.

Some comments criticized this approach and asserted that there is insufficient support for this bright-line rule in the legislative history. In addition, some comments recommended reverting to a general facts and circumstances test, along with a safe harbor, given the difficulty of formulating a bright-line rule that produces appropriate results in all circumstances. As an alternative, comments suggested that the failure to satisfy the bright-line rule could establish a rebuttable presumption that an EAG does not have substantial business activities in the relevant foreign country.

After consideration of the comments, the Department of the Treasury (Treasury Department) and the IRS have concluded that the bright-line rule in the 2012 temporary regulations is consistent with section 7874 and its underlying policies. In addition, the bright-line rule has proven more administrable than a facts-and-circumstances test and has the benefit of providing certainty in applying section 7874 to particular transactions. As a result, these final regulations retain the bright-line rule subject to certain modifications, which are described in this preamble.

As described in section A of this preamble, the 2012 temporary regulations provide that an EAG will be considered to have substantial business activities in the relevant foreign country only if at least 25 percent of its group employees, group assets, and group income are located or derived in the relevant foreign country. Comments addressed both the magnitude of the 25-percent threshold and the requirement that each of the group employees, group assets, and group income tests must be satisfied. Although one comment stated that a 25-percent threshold is a reasonable measure of substantiality, other comments stated that it is overly stringent, asserting that it is unlikely that an EAG would have 25 percent of its business activities in any one country given the global nature of commerce. Another comment suggested that an EAG should only be required to satisfy the 25-percent threshold with respect to two out of the three tests provided that the average of all three tests is at least 25 percent.

After consideration of these comments, the Treasury Department and the IRS have concluded that requiring an EAG to satisfy a 25-percent threshold for all three tests in order to be considered to have substantial business activities in the relevant foreign country is consistent with the policies underlying section 7874. Accordingly, the final regulations retain the 25-percent threshold for all three tests in the 2012 temporary regulations.

The 2012 temporary regulations provide standards for determining which employees, assets, and income are group employees, group assets, and group income, respectively, for purposes of determining if the EAG has substantial business activities in the relevant foreign country. All employees of members of the EAG constitute group employees. Group income generally is limited to the gross income of members of the EAG from transactions occurring in the ordinary course of business with customers that are not related persons. In order to constitute group assets, assets must be tangible personal property or real property used or held for use in the active conduct of a trade or business by members of the EAG.

A comment questioned the need for these different standards and suggested applying the same standard for determining the employees, assets, and income that are taken into account, with the one standard being based on whether the employees, assets, or income relate to the active conduct of a trade of business. The comment acknowledged, however, that, under this alternative approach, special rules would be necessary to exclude gain from the sale of capital assets and section 1231 property from group income and to address situations in which an EAG has primarily passive income and only a small active business.

The Treasury Department and the IRS have concluded that it is not necessary for the definitions of group employees, group assets, and group income to be based on the same standard, as they measure different facets of an EAG's business activities. In addition, the standards used in the 2012 temporary regulations are commonly used in other areas of the tax law and therefore are more administrable than the recommended alternative. Consequently, the final regulations do not adopt this recommendation.

Section 7874(a)(2)(B)(iii) provides that the determination of whether an EAG has substantial business activities is made after an acquisition described in section 7874(a)(2)(B)(i). Under the 2012 temporary regulations, group assets and the number of group employees are measured as of the “applicable date,” and group income and employee compensation are calculated for a one-year “testing period” ending on the applicable date. The applicable date, which must be applied consistently, is either the date on which the acquisition is completed (acquisition date) or the last day of the month immediately preceding the month in which the acquisition is completed. The 2012 temporary regulations permit taxpayers to use the latter date because certain information required for the tests may not be readily determinable as of the acquisition date if the acquisition is not completed on the last day of the month.

A comment suggested that the definition of applicable date be modified to be either the acquisition date or, for transactions involving unrelated parties, the first date on which the written agreement to effect the acquisition becomes binding. The comment stated that this change would allow taxpayers sufficient opportunity to unwind their contractual commitments if it appears that the EAG would not be treated as having substantial business activities in the relevant foreign country. Because a written agreement may become binding long before the date on which the acquisition is completed, the Treasury Department and the IRS have determined that this change would be inconsistent with section 7874(a)(2)(B)(iii), which looks to whether the EAG has substantial business activities in the relevant foreign country after the acquisition. In addition, as the comment noted, taxpayers may condition the closing of the acquisition on the EAG's having substantial business activities in the relevant foreign country after the acquisition. Accordingly, the final regulations do not adopt this suggestion.

The 2012 temporary regulations provide that the EAG that includes the foreign acquiring corporation is determined as of the close of the acquisition date. One comment requested that this standard be clarified to provide that the EAG includes both the foreign acquiring corporation and the domestic entity that it acquires, but that it excludes entities that are disposed of (or substantially all the assets of which are disposed of) before the acquisition.

The Treasury Department and the IRS believe that it is clear under the 2012 temporary regulations that the EAG generally does not include an entity that is disposed of before the acquisition. Nonetheless, in response to this comment and for the avoidance of doubt, the final regulations are modified to further clarify that an entity that is not a member of the EAG on the acquisition date is not a member of the EAG, even though the entity would have qualified as a member if the EAG were determined at some earlier point during the testing period. The disposition of substantially all the assets of an entity may or may not cause it to cease to be a member of the EAG, depending on whether the entity remains in existence on the acquisition date.

The final regulations also clarify that, consistent with the requirement under section 7874(a)(2)(B) to take into account all events that occur “pursuant to a plan (or series of related transactions)” in determining whether an entity is a surrogate foreign corporation, members of the EAG are determined taking into account all transactions related to the acquisition, even if they occur after the acquisition date. This clarification is consistent with the rule provided in section 2.03(b)(i) of Notice 2014-52 (2014-42 IRB 712), which provides that all transactions related to an acquisition must be taken into account for purposes of determining the members of an EAG, a U.S-parented group, and a foreign-parented group.

The 2012 temporary regulations provide that, for purposes of the substantial business activities test, a partnership is treated as a corporation that is a member of an EAG if, in the aggregate, more than 50 percent (by value) of its interests are owned by one or more members of the EAG (deemed corporation rule). A comment stated that the deemed corporation rule would not treat a partnership owning more than 50 percent of the stock of the foreign acquiring corporation or its corporate partners as members of the EAG because the partnership is not otherwise owned by a member of the EAG. For example, assume that P, a corporation, owns (by value) 75 percent of the interests of PS, a domestic partnership. PS forms FA, a foreign corporation, and transfers substantially all of its assets constituting a trade or business to FA in exchange for all the stock of FA. According to the comment, neither PS nor P is treated as a member of the EAG that includes FA under the 2012 temporary regulations.

The Treasury Department and the IRS have determined that this result is inappropriate. Accordingly, the final regulations provide that, in determining the corporations that are members of the EAG, each partner in a partnership is treated as holding its proportionate share of the stock held by the partnership (look-through rule). This rule is consistent with the rules provided in § 1.7874-1(e) (disregarding certain affiliate-owned stock) and section 2.03(b)(i) of Notice 2014-52 (addressing subsequent transfers of stock of the foreign acquiring corporation). The final regulations coordinate the application of the deemed corporation rule with the look-through rule by providing that the look-through rule applies first and without regard to the deemed corporation rule. The result is that the look-through rule applies only for purposes of determining whether an entity that is actually a corporation for U.S. income tax purposes is a member of the EAG. Then, once those corporate entities are identified, the deemed corporation rule applies to treat certain partnerships in which those corporate entities are partners as corporations that are members of the EAG.

The 2012 temporary regulations contain an anti-abuse rule pursuant to which the following items are not taken into account in the numerator, but are taken into account in the denominator, for purposes of the group employees, group assets, and group income tests: (i) Any group assets, group employees, or group income attributable to business activities that are associated with property or liabilities the transfer of which is disregarded under section 7874(c)(4) (generally, if the transfer is part of a plan with a principal purpose of avoiding the purposes of section 7874); (ii) any group assets or group employees located in, or group income derived in, the relevant foreign country as part of a plan with a principal purpose of avoiding the purposes of section 7874; and (iii) any group assets or group employees located in, or group income derived in, the relevant foreign country if such group assets or group employees, or the business activities to which such group income is attributable, are subsequently transferred to another country in connection with a plan that existed at the time of the acquisition.

A comment suggested modifying the anti-abuse rule by revising the first prong and eliminating the second prong. The comment stated that the first prong of the rule should exclude items from both the numerator and the denominator for consistency. Although such a rule may, for example, produce appropriate results in the case of certain transfers through which the EAG acquires assets from shareholders, it would not produce appropriate results for certain other transfers, such as distributions of assets by EAG members to shareholders. Accordingly, the final regulations adopt this suggestion for items associated with a transfer of property to the EAG that is disregarded under section 7874(c)(4), but retain the rule in the 2012 temporary regulations in all other cases.

The comment also suggested eliminating the second prong of the anti-abuse rule because it relies on an inherently subjective determination and has the potential to detract from the certainty provided by the bright-line rule. Although the same argument could be made for eliminating the third prong, the comment recommended retaining the third prong because the statute looks to whether the EAG has substantial business activities in the relevant foreign country after the acquisition.

The Treasury Department and the IRS believe, in this context, that it is appropriate to bolster bright-line rules with anti-abuse rules. Furthermore, the Treasury Department and the IRS have determined that the second prong of the rule is necessary because otherwise a member of the EAG may be able to relocate assets or employees or shift income to the relevant foreign country without engaging in a “transfer” that would implicate the first prong. Accordingly, the final regulations do not adopt this suggestion.

This section discusses comments that are specific to each of the group employees, group assets, and group income tests.

The 2012 temporary regulations set forth two prongs of the group employees test, both of which must be satisfied based on individuals who are employees of members of the EAG (group employees). The first prong is satisfied if, on the applicable date, the number of group employees based in the relevant foreign country is at least 25 percent of the total number of group employees. The second prong is satisfied if, during the one-year testing period, the employee compensation incurred with respect to group employees based in the relevant foreign country is at least 25 percent of the total employee compensation incurred with respect to all group employees. The final regulations adopt the definition of the terms “group employees” and “employee compensation” in the 2012 temporary regulations, subject to certain modifications.

Under the 2012 temporary regulations and the final regulations, a group employee is considered to be based in the relevant foreign country only if the employee spent more time providing services in that country than in any other country during the testing period. One comment noted that other potential approaches might be more reflective of where the employee's activities take place, but nevertheless suggested that the standard in the 2012 temporary regulations be retained for its simplicity. The Treasury Department and the IRS agree with this comment, and the final regulations retain this standard.

The 2012 temporary regulations do not specify the standard for determining if an individual is an employee for purposes of the group employees test. One comment suggested that individuals who are treated as employees under either U.S. federal tax principles or under applicable local country law should be treated as employees for this purpose. In response to this comment, and to simplify the application of the group employees test, the final regulations provide that whether individuals are employees must be determined for all members of the EAG under U.S. federal tax principles or for all members of the EAG based on the relevant tax laws (in general, for each member of the EAG, the tax law to which that member is subject). For example, if the EAG has two members, FA, the foreign acquiring corporation that is subject to the tax law of Country A, and USP, the domestic entity, the EAG may determine its employees either (i) under U.S. federal tax principles, or (ii) based on the tax law of Country A for those individuals who perform services for FA and U.S. federal tax law for those individuals who perform services for USP.

A comment suggested taking into account independent contractors for purposes of the group employees test in certain circumstances, as they may constitute the majority of the workforce in certain industries. The comment further suggested as a possible approach that the rule include only those independent contractors who perform core functions of the business. The Treasury Department and the IRS have determined that it is not appropriate to include independent contractors for this purpose given, at least in some cases, the transient nature of their relationships with the member of the EAG for which they perform services. In addition, the Treasury Department and the IRS have concluded that taking into account independent contractors based on whether they perform core functions of the business would add undue complexity. Accordingly, this comment is not adopted.

Comments requested clarification of when employee compensation is deemed to be incurred, as well as the standard for determining the amount of compensation. One comment recommended that the compensation be treated as incurred in the period for which it would be deductible for U.S. federal income tax purposes. In response to these comments, and to simplify the determination of employee compensation, the final regulations provide that employee compensation is treated as incurred when it would be deductible by the employer as compensation, and the amount of employee compensation equals the amount that would be deductible by the employer as compensation. Both the timing and the amount of the deduction for all employee compensation must be determined for all group employees under U.S. federal income tax principles or for all group employees based on the relevant tax laws.

Under the 2012 temporary regulations, the group assets test is satisfied if, on the applicable date, the value of the group assets located in the relevant foreign country is at least 25 percent of the total value of all group assets. The term group assets means tangible personal property or real property used or held for use in the active conduct of a trade or business by members of the EAG, provided such property is owned (or leased from a non-member) by members of the EAG at the close of the acquisition date. Group assets must be valued consistently using either their adjusted tax basis or fair market value. A group asset that is leased, however, is valued at eight times the annual rent. The final regulations adopt the definition of the term “group assets” in the 2012 temporary regulations, subject to the modifications discussed below.

The 2012 temporary regulations provide that a group asset is considered to be located in the relevant foreign country only if the asset was physically present in such country (i) at the close of the acquisition date, and (ii) for more time than in any other country during the testing period. One comment stated that the requirement that an asset be present in the relevant country on the acquisition date is problematic for highly mobile assets (such as aircraft and vessels) and therefore should be eliminated. The comment also suggested, as an alternative, special rules for determining the location of assets, including, depending on the type of asset: (i) Applying a proportionate approach based on the source of income produced from the asset during the testing period, (ii) ignoring the asset for purposes of the group asset test (for example, an asset used in space), or (iii) treating the asset as located outside of the relevant foreign country (for example, an offshore drilling rig located exclusively in international waters). The Treasury Department and the IRS have determined that providing special rules to address all types of assets in all fact patterns would be unduly complex. The Treasury Department and the IRS agree, however, that relief should be provided for assets that are mobile in nature and are used in transportation activities, like vessels, aircraft, and motor vehicles. Accordingly, the final regulations provide that such assets do not have to be physically present in the relevant foreign country at the close of the acquisition date, and need only be physically present in such country for more time than in any other country during the testing period, to be considered present in the relevant foreign country.

The 2012 temporary regulations provide that group assets include certain property rented by members of the EAG and treat the value of such rented property as equal to eight times the net annual rent paid or accrued with respect to such property. One comment stated that valuing all rented assets at eight times the net annual rent is potentially distortive and suggested that the multiple instead be based on the type of asset (for example, based on the applicable recovery period of the asset under section 168). After consideration of these comments, the Treasury Department and the IRS have concluded that the benefits of using different multiples for different classes of rented assets would be outweighed by the complexity and difficulty of determining appropriate multiples and classes. Consequently, the final regulations retain the rule in the 2012 temporary regulations.

A comment suggested excluding from the test certain assets that are owned and maintained by third parties, such as computer servers. The comment noted that start-up companies may be especially reliant on such assets, and their ability to satisfy the bright-line rule may depend on the location of such assets and whether they are viewed as leased by the company or as being used by the third party to provide a service to the company. The Treasury Department and the IRS have concluded that these types of assets do not merit special treatment, and the final regulations do not adopt this comment.

Under the 2012 temporary regulations, the group income test is satisfied if, during the one-year testing period, group income derived in the relevant foreign country is at least 25 percent of the total group income. The term group income means the gross income of members of the EAG from transactions occurring in the ordinary course of business with customers that are not related persons. The final regulations adopt the definition of the term “group income” in the 2012 temporary regulations, subject to the modifications discussed below.

The 2012 temporary regulations state that group income is considered to be derived in the relevant foreign country only if it is derived from a transaction with a customer located in that country. One comment stated that this standard is difficult to apply in practice because it is difficult to determine where a customer is located in certain contexts. The comment suggested instead that income be treated as derived in a relevant foreign country if the services, goods, or other property are sold for use, consumption, or disposition within that country. The comment also suggested that special rules for certain financial income could be developed based on the current rules for determining whether such income is effectively connected with a trade or business conducted in the United States. The Treasury Department and the IRS have concluded that the location of the customer provides a more accurate and less manipulable measure of the business activities of the EAG than the suggested alternative. Accordingly, the final regulations retain the standard in the 2012 temporary regulations.

A comment also suggested that the group income test be based on gross receipts rather than gross income. The comment stated that gross receipts may be a more appropriate standard because (i) the amount of gross income will depend on the choice of inventory accounting method, (ii) the gross receipts standard would take into account sales that generate losses or no income, and (iii) an EAG's gross income will be reduced if there are intermediate transactions among members of the EAG. The Treasury Department and the IRS have determined that gross income should be the standard for determining group income, as this standard better reflects the location of an EAG's profitable business activities. In addition, gross income is a standard used in analogous contexts. See, for example, § 1.884-5(e)(3)(i)(B) (regarding the substantial presence test for purposes of determining whether a foreign corporation is a qualified resident of a foreign country for treaty purposes). Thus, the final regulations do not adopt this comment. However, to simplify the application of the group income test, the final regulations provide that group income must be determined consistently for all members of the EAG using either U.S. federal income tax principles or relevant financial statements, in general, defined as financial statements prepared in accordance with U.S. Generally Accepted Accounting Principles (U.S. GAAP) or International Financial Reporting Standards (IFRS).

The final regulations apply to acquisitions completed on or after June 3, 2015.

It has been determined that this Treasury decision is not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13563. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations, and because the regulations do not impose a collection of information on small entities, the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6) do not apply. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is David A. Levine of the Office of Associate Chief Counsel (International). However, other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

The Coast Guard will enforce the safety zones listed in 33 CFR 165.941, Safety Zones; Annual Events in the Captain of the Port Detroit Zone, at the following times for the following events:

(1) Put-In-Bay Chamber of Commerce Fireworks, Put-In-Bay, OH. The safety zone listed in 33 CFR 165.941(a)(57) will be enforced between from 9:45 p.m. until 10:15 p.m. on July 4, 2015.

(2) Catawba Island Club Fireworks, Catawba Island, OH. The safety zone listed in 33 CFR 165.941(a)(21) will be enforced from 9:40 p.m. to 10:05 p.m. on July 2, 2015.

(3) Catawba Island Club Fireworks, Catawba Island, OH. The safety zone listed in 33 CFR 165.941(a)(28) will be enforced from 9:30 p.m. to 9:45 p.m. on September 6, 2015.

(4) Toledo Fourth of July Fireworks, Toledo, OH. The safety zone listed in 33 CFR 165.941(a)(54) will be enforced from 9:30 p.m. to 10 p.m. on July 4, 2015.

(5) Bay Point Fireworks Display, Marblehead, OH. The safety zone listed in 33 CFR 165.941(a)(58) will be enforced from 10 p.m. to 10:30 p.m. on July 3, 2015.

(6) Catawba Island Club Memorial Day Fireworks, Catawba Island, OH. The safety zone listed in 33 CFR 165.941(a)(56) will be enforced from 9:15 p.m. to 9:35 p.m. on May 24, 2015.

(7) Luna Pier Fireworks Show, Luna Pier, MI. The safety zone listed in 33 CFR 165.941(a)(16) will be enforced from 9:30 p.m. to 11 p.m. on July 4, 2015.

(8) Lakeside Labor Day Fireworks, Lakeside, OH. The safety zone listed in 33 CFR 165.941(a)(27) will be enforced from 9:45 p.m. to 10:30 p.m. on September 5, 2015.

(9) Washington Township Firefighters Summerfest, Toledo, OH. The safety zone listed in 33 CFR 165.941(a)(2) will be enforced from 8 p.m. to 10:30 p.m. on June 27, 2015.

(10) Revolution 3 Triathlon, Cedar Point, OH. The safety zone listed in 33 CFR 165.941(a)(60) will be enforced from 7 a.m. to 10 a.m. on each day of September 12-13, 2015.

(11) Red, White and Blues Bang Fireworks, Huron, OH. The safety zone listed in 33 CFR 165.941(a)(22) will be enforced from 10:30 p.m. to 10:45 p.m. on July 4, 2015.

(12) Huron Riverfest Fireworks, Huron, OH. The safety zone listed in 33 CFR 165.941(a)(23) will be enforced from 10:15 p.m. to 10:30 p.m. on July 10, 2015.

Under the provisions of 33 CFR 165.23, entry into, transiting, or anchoring within these safety zones during an enforcement period is prohibited unless authorized by the Captain of the Port Detroit or his designated representative. Vessels that wish to transit through the safety zones may request permission from the Captain of the Port Detroit or his designated representative. Requests must be made in advance and approved by the Captain of Port Detroit before transits will be authorized. Approvals will be granted on a case by case basis. The Captain of the Port Detroit may be contacted via U.S. Coast Guard Sector Detroit on channel 16, VHF-FM. The Coast Guard will give notice to the public via a Broadcast to Mariners that the regulation is in effect.

This notice is issued under authority of 33 CFR 165.23 and 5 U.S.C. 552(a). If the Captain of the Port Detroit determines that the enforcement of these safety zones need not occur as stated in this notice, he or she may suspend such enforcement and notify the public of the suspension via a Broadcast Notice to Mariners.

This document contains two revisions to 39 CFR 601.109, Contract claims and disputes. That section implements the Contract Disputes Act of 1978, 41 U.S.C. 7101-7109. The first amended paragraph, § 601.109(a), General, states that the regulation implements the Contract Disputes Act of 1978. The sole purpose of the revision is to update the recodified citation for the Contract Disputes Act.

The second amended paragraph, § 601.109(g)(7), Wording of decisions, clarifies that the identified paragraph must be included in decisions issued by a contracting officer for the Postal Service subject to the Contract Disputes Act of 1978, and advises contractors of the implementation of an electronic filing system by the Postal Service Board of Contract Appeals.

Accordingly, for the reasons stated, 39 CFR part 601 is amended as follows:

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

EPA is taking final action to approve the SIP revision submitted by the state of Missouri for 10 CSR 10-6.060, “Construction Permits Required”. EPA previously proposed approval of this rule on March 18, 2015 (80 FR 14062). On October 3, 2013, EPA received a request to amend the SIP to incorporate by reference all paragraphs of title 40, Code of Federal Regulations (CFR), section 52.21, except for paragraphs (a), (q) and (s) through July 1, 2012. Missouri also requested to amend the SIP to incorporate by reference EPA's July 12, 2012, final rule finalizing PALs for GHGs (77 FR 41051) and EPA's October 25, 2012, final rule amending the definition of “Regulated NSR Pollutant” concerning condensable particulate matter (77 FR 65107). In Missouri's letter to EPA, Missouri also requested to amend the SIP to incorporate EPA's May 18, 2011, rule repealing the grandfathering provisions for particulate matter less than 2.5 micrometers (PM2.5) under the PSD program; the state already has an approved PSD program which incorporates by reference the provisions of 40 CFR 52.21 through July 1, 2011. Therefore, Missouri's Federally approved program already incorporates this action. Other revisions to Missouri's rule which we are taking final action on include clarifying the requirements for conducting an air quality analysis in section 5, De Minimis Permits; making minor administrative clarifications; and revising the notification period for initial start-up in section 6, General Permits.

The state submission has met the public notice requirements for SIP submissions in accordance with 40 CFR 51.102. The submission also satisfied the completeness criteria of 40 CFR part 51, appendix V. In addition, as explained above and in more detail in the proposed rule that was published in the Federal Register on March 18, 2015, the revision meets the substantive SIP requirements of the CAA, including section 110 and implementing regulations.

The public comment period on EPA's proposed rule opened March 18, 2015, the date of its publication in the Federal Register, and closed on April 18, 2015. During this period, EPA received no comments.

EPA is taking final action to approve the revisions to the SIP. These revisions update the construction permits rule to incorporate by reference recent EPA actions related to PALs for GHGs, and amend the definition of “Regulated NSR Pollutant.” Other revisions include modifying the notification period for initial equipment start-up and clarifying de minimis permit air quality analysis requirements.

In this rule, EPA is including final EPA rule regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is taking final action to incorporate by reference Missouri 10 CSR 10-6.060 “Construction Permits Required” described in the 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 Act 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 approves state law as meeting Federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by August 3, 2015. Filing a petition for reconsideration by the Administrator of this rule does not affect the finality of this rulemaking for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectivess of such future rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

The NFIP enables property owners to purchase Federal flood insurance that is not otherwise generally available from private insurers. In return, communities agree to adopt and administer local floodplain management measures aimed at protecting lives and new construction from future flooding. Section 1315 of the National Flood Insurance Act of 1968, as amended, 42 U.S.C. 4022, prohibits the sale of NFIP flood insurance unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed in this document no longer meet that statutory requirement for compliance with program regulations, 44 CFR part 59. Accordingly, the communities will be suspended on the effective date in the third column. As of that date, flood insurance will no longer be available in the community. We recognize that some of these communities may adopt and submit the required documentation of legally enforceable floodplain management measures after this rule is published but prior to the actual suspension date. These communities will not be suspended and will continue to be eligible for the sale of NFIP flood insurance. A notice withdrawing the suspension of such communities will be published in the Federal Register.

In addition, FEMA publishes a Flood Insurance Rate Map (FIRM) that identifies the Special Flood Hazard Areas (SFHAs) in these communities. The date of the FIRM, if one has been published, is indicated in the fourth column of the table. No direct Federal financial assistance (except assistance pursuant to the Robert T. Stafford Disaster Relief and Emergency Assistance Act not in connection with a flood) may be provided for construction or acquisition of buildings in identified SFHAs for communities not participating in the NFIP and identified for more than a year on FEMA's initial FIRM for the community as having flood-prone areas (section 202(a) of the Flood Disaster Protection Act of 1973, 42 U.S.C. 4106(a), as amended). This prohibition against certain types of Federal assistance becomes effective for the communities listed on the date shown in the last column. The Administrator finds that notice and public comment procedures under 5 U.S.C. 553(b), are impracticable and unnecessary because communities listed in this final rule have been adequately notified.

Each community receives 6-month, 90-day, and 30-day notification letters addressed to the Chief Executive Officer stating that the community will be suspended unless the required floodplain management measures are met prior to the effective suspension date. Since these notifications were made, this final rule may take effect within less than 30 days.

National Environmental Policy Act. This rule is categorically excluded from the requirements of 44 CFR part 10, Environmental Considerations. No environmental impact assessment has been prepared.

Regulatory Flexibility Act. The Administrator has determined that this rule is exempt from the requirements of the Regulatory Flexibility Act because the National Flood Insurance Act of 1968, as amended, Section 1315, 42 U.S.C. 4022, prohibits flood insurance coverage unless an appropriate public body adopts adequate floodplain management measures with effective enforcement measures. The communities listed no longer comply with the statutory requirements, and after the effective date, flood insurance will no longer be available in the communities unless remedial action takes place.

Regulatory Classification. This final rule is not a significant regulatory action under the criteria of section 3(f) of Executive Order 12866 of September 30, 1993, Regulatory Planning and Review, 58 FR 51735.

Executive Order 13132, Federalism. This rule involves no policies that have federalism implications under Executive Order 13132.

Executive Order 12988, Civil Justice Reform. This rule meets the applicable standards of Executive Order 12988.

Paperwork Reduction Act. This rule does not involve any collection of information for purposes of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

Accordingly, 44 CFR part 64 is amended as follows:

Retroactive Application

This IFR conforms TSA's regulations to recently enacted amendments to 49 U.S.C. 44940(c) that require a limitation for round-trip air transportation.1 As the law stipulates that the statutory amendment shall apply “to a trip in air transportation or intrastate air transportation that is purchased on or after the date of the enactment of this Act,” 2 the statutory amendments became effective on December 19, 2014. Therefore, direct air carriers and foreign air carriers in air transportation, foreign air transportation, and intrastate air transportation originating at airports in the United States (air carriers) will be held responsible for applying the round-trip limitation to all relevant air transportation sold on or after 12 a.m. (Eastern Standard Time) on December 19, 2014.

TSA is requesting public comment on this IFR. TSA invites interested persons to participate in this rulemaking by submitting written comments, data, or views. Comments must be limited to the issues raised in this IFR as the comment period for the 2014 IFR has closed. See ADDRESSES above for information on where to submit comments.

With each comment, please identify the docket number at the beginning of your comments. TSA encourages commenters to provide their names and addresses. The most helpful comments reference a specific portion of the rulemaking, explain the reason for any recommended change, and include supporting data. You may submit comments and material electronically, in person, by mail, or fax as provided under ADDRESSES, but please submit your comments and material by only one means. If you submit comments by mail or delivery, submit them in an unbound format, no larger than 8.5 by 11 inches, suitable for copying and electronic filing.

If you would like TSA to acknowledge receipt of comments submitted by mail, include with your comments a self-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it to you.

TSA will file all comments to our docket address, as well as items sent to the address or email under FOR FURTHER INFORMATION CONTACT, in the public docket, except for comments containing confidential information and sensitive security information (SSI). Should you wish your personally identifiable information redacted prior to filing in the docket, please so state. TSA will consider all comments that are in the docket on or before the closing date for comments and will consider comments filed late to the extent practicable. The docket is available for public inspection before and after the comment closing date.

Do not submit comments that include trade secrets, confidential commercial or financial information, or SSI to the public regulatory docket. Please submit such comments separately from other comments on the rulemaking. Comments containing this type of information should be appropriately marked as containing such information and submitted by mail to the address listed in FOR FURTHER INFORMATION CONTACT section.

TSA will not place comments containing SSI in the public docket and will handle them in accordance with applicable safeguards and restrictions on access. TSA will hold documents containing SSI, confidential business information, or trade secrets in a separate file to which the public does not have access, and place a note in the public docket explaining that commenters have submitted such documents. TSA may include a redacted version of the comment in the public docket. If an individual requests to examine or copy information that is not in the public docket, TSA will treat it as any other request under the Freedom of Information Act (FOIA) (5 U.S.C. 552) and the Department of Homeland Security's (DHS') FOIA regulation found in 6 CFR part 5.

Please be aware that anyone is able to search the electronic form of all comments in any of our dockets by the name of the individual who submitted the comment (or signed the comment, if an association, business, labor union, etc., submitted the comment). You may review the applicable Privacy Act Statement published in the Federal Register on April 11, 2000 (65 FR 19477) and modified on January 17, 2008 (73 FR 3316).

You may review TSA's electronic public docket on the Internet at http://www.regulations.gov. In addition, DOT's Docket Management Facility provides a physical facility, staff, equipment, and assistance to the public. To obtain assistance or to review comments in TSA's public docket, you may visit this facility between 9 a.m. and 5 p.m., Monday through Friday, excluding legal holidays, or call (202) 366-9826. This docket operations facility is located in the West Building Ground Floor, Room W12-140 at 1200 New Jersey Avenue SE., Washington, DC 20590.

You may obtain an electronic copy of this document using the Internet by—

(1) Searching the electronic Federal Docket Management System (FDMS) Web page at http://www.regulations.gov;

(2) Accessing the Government Printing Office's Web page at http://www.thefederalregister.org/fdsys/browse/collection.action?collectionCode=FR to view the daily published Federal Register edition; or accessing the “Search the Federal Register by Citation” in the “Related Resources” column on the left, if you need to do a Simple or Advanced search for information, such as a type of document that crosses multiple agencies or dates; or

(3) Visiting TSA's Security Regulations Web page at http://www.tsa.gov and accessing the link for “Stakeholders” at the top of the page, then the link “Research Center” in the left column.

In addition, copies are available by writing or calling the individual in the FOR FURTHER INFORMATION CONTACT section. Make sure to identify the docket number of this rulemaking.

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) requires TSA to comply with small entity requests for information and advice about compliance with statutes and regulations within TSA's jurisdiction. Any small entity that has a question regarding this document may contact the person listed in FOR FURTHER INFORMATION CONTACT. Persons can obtain further information regarding SBREFA on the Small Business Administration's Web page at http://www.sba.gov/advo/laws/law_lib.html.

The security service fee was initially authorized under the Aviation and Transportation Security Act (ATSA), enacted in 2001 following the events of September 11, 2001 and the government's assumption of civil aviation services previously provided by air carriers.3 As enacted under ATSA, the fee was limited by statute to no more than $2.50 per enplanement or $5.00 per one-way trip.4 The ATSA provision was implemented through an IFR published in December 2001 (2001 IFR).5 In the 2001 IFR, the passenger fee was set at $2.50 per enplanement. The regulation further limited application of the passenger fee to no more than two (2) enplanements per one-way trip or four (4) enplanements per round trip. As enacted by ATSA, the law provided that the fee “may not exceed” [emphasis added] $2.50 per enplanement or $5.00 per one-way trip, thus vesting TSA with discretion to cap fees at a lower amount, such as by including a cap on enplanements charged per round trip.6

In December of 2013, Congress amended 49 U.S.C. 44940(c) as part of the Bipartisan Budget Act of 2013 (Budget Act of 2013).7 The Budget Act of 2013 amended 49 U.S.C. 44940 to restructure the basis and amount of the fee. As amended, 49 U.S.C. 44940(c) stated that the fee “shall be $5.60 per one-way trip. . . .” TSA implemented the Budget Act of 2013's amendments through an IFR published on June 20, 2014 (2014 IFR),8 which took effect July 21, 2014.

Since publication of the 2014 IFR, sec. 44940(c) was further amended by Congress in December 2014 to include a round-trip limitation.9 The section now reads (amendment in italics):

The amendment also added a definition of round trip:

This action is being taken without providing the opportunity for notice and comment. Section 44940(d) of title 49, U.S.C., exempts the imposition of the civil aviation security fees authorized in sec. 44940 from the procedural rulemaking notice and comment procedures set forth in 5 U.S.C. 553 of the Administrative Procedure Act (APA).

Apart from the statutory exemption discussed above, the APA allows an agency to forego notice and comment rulemaking when “the agency for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.” 10 Public Law 113-294 took effect on December 19, 2014, creating a discrepancy between TSA's regulations and what is statutorily required. Because the requirement is in effect without this rulemaking, TSA finds that good cause exists under 5 U.S.C. 553(b) for making this an IFR without advance notice and comment. In addition, as the statute has already taken effect and passengers and industry may seek confirmation from TSA with respect to proper implementation of the statute, TSA believes that further delays associated with notice and comment procedures would be impracticable and contrary to the public interest.

This IFR only includes a delayed effective date for the co-terminal definition (including the approved list of co-terminals referenced in that definition), which has not been previously included in TSA's regulations—although it has been consistently applied throughout the history of implementing the security service fee. The APA allows an agency to implement a rule immediately, rather than requiring a 30-day delayed effective date, if the agency finds good cause.11 This regulation is necessary to make TSA's regulations consistent with adjustments to the security service fee that took effect on December 19, 2014. Publication of this IFR does not modify the effective date of the statutory requirement contained in Public Law 113-294; air carriers are required to apply a round-trip limitation to the security service fee for air transportation sold on or after December 19, 2014. Therefore, TSA finds good cause to implement these conforming regulations immediately, as the statutory requirements are already in effect, and thus a delayed effective date is unnecessary.

Although this action is exempt from notice and comment requirements, TSA has chosen to issue this rulemaking as an IFR to provide an opportunity for comments before the 2014 IFR is finalized. TSA will accept comments on this rulemaking supplement to the 2014 IFR until August 3, 2015. TSA is not soliciting comments with respect to any other issues concerning the 2014 IFR, except to the extent affected by this rule, as the deadline for such comments has expired. See DATES and SUPPLEMENTARY INFORMATION for guidance on the schedule and method for submitting comments. TSA will address the comments received on this IFR in a subsequent final rule.

In light of amendments to the relevant statutory provision while TSA is in the rulemaking process to implement previous amendments to the same provision, TSA is issuing an IFR to conform its regulations consistent with the statute (i.e., 49 U.S.C. 44940(c) as amended by Pub. L. 113-294). This IFR, like the 2014 IFR, implements the requirements of 49 U.S.C. 44940 in TSA regulations and allows TSA to ensure consistent implementation of the statute as it affects passengers in air transportation until such time as a final rule is published.

The amendments made by Public Law 113-294 provide that the fee imposed per round trip shall not exceed $11.20 and define “round trip” to mean a trip on an air travel itinerary that terminates or has a stopover at the origin point (or co-terminal). Therefore, 49 CFR 1510.5 is amended by this IFR to add that passengers may not be charged more than $11.20 per round trip, conforming the regulation to the amendments made by Public Law 113-294. The definition of a “round trip” stipulated in Public Law 133-294 is being added to 49 CFR 1510.3. As previously noted, a “round trip” is defined in 49 U.S.C. 44940(c)(2) 12 as “a trip on an air travel itinerary that terminates or has a stopover at the origin point (or co-terminal).” 13 This definition is the same definition in use before the 2014 IFR for purposes of determining with a round-trip limitation applied. Consistent with previous practice, TSA notes that just as it is possible for there to be multiple one-way trips on an itinerary, there can also be multiple round trips on an itinerary.14 In addition to including the definition of “round trip” provided in the statute, which is consistent with TSA's use of this term in the past for implementing the fee,15 this IFR also includes definitions for other terms used in the statutory definition of “round trip.” These terms include “co-terminal,” “origin point,” and “terminates.” The term “stopover,” which is also used in the statute, was previously defined in the 2014 IFR.

Consistent with the statute and previous practice before July 21, 2014, a trip on an air travel itinerary that terminates or has a stopover at either the origin point, or a co-terminal of the origin point, is subject to the round-trip limitation. A “co-terminal” is defined to incorporate situations where multiple airports provide service to the same geographic area.16 Co-terminal relationships are used by some air carriers for fare construction or routing, such as standby and flight changes.

The docket for this rulemaking includes a comprehensive list of co-terminal airports (both domestic and foreign airports) which TSA has approved for determining application of the security service fee. TSA has based its list of approved co-terminals on consistent use of these designations by the industry for purposes of fare construction and routing and by TSA for compliance reviews associated with the security service fee. Through this IFR, TSA invites comments on the co-terminal designations. TSA will publish a notice in the Federal Register should the list of approved co-terminals be revised in the future.

The terms “origin point” and “terminates” are added solely for the purpose of determining whether the round-trip limitation applies. In other words, the “origin point” of an itinerary is considered for purposes of determining whether the round-trip limitation applies; the definition has no bearing on the determination whether a trip is in “air transportation . . . that originates at an airport in the United States.” 17 The security service fee applies to any one-way trip in air transportation that departs from an airport in the United States, including certain domestic flights that are part of air travel to or from a foreign country.18

TSA welcomes comment on each of these changes.

In Table 1 of the 2014 IFR, TSA provided an analysis comparing itinerary examples showing the difference in fee imposition between the 2001 IFR and the 2014 IFR. In Table 1 of this IFR, TSA updates that analysis to reflect a comparison between fee imposition under the 2014 IFR and imposition as a result of Pub. L. 113-294.19 Consistent with past practice under the regulatory round-trip limitation that existed until July 2014, the only itinerary example in this analysis affected by the round-trip limitation is the trip that begins in Newark, sequential stopovers in Chicago, Denver, Las Vegas, and Chicago, then returns to Newark (the penultimate itinerary in Table 1).

Executive Orders (E.O.s) 12866 (“Regulatory Planning and Review”) and 13563 (“Improving Regulation and Regulatory Review”) direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility.

This IFR consists of an administrative revision necessary to conform TSA regulations to a self-executing amendment to 49 U.S.C. 44940(c), which took effect on the date of enactment—December 19, 2014.21 This rulemaking is significant under E.O. 12866 and, therefore, OMB has reviewed this IFR. TSA has prepared an analysis of its estimated costs and benefits, presented in the following paragraphs using the current 2014 IFR as a baseline. Table 2 presents the OMB Circular A-4 Accounting Statement for this IFR.

As previously noted, this IFR consists of an administrative revision to make TSA's regulations consistent with an amendment to 49 U.S.C. 44940(c), which requires air carriers to apply a round-trip limitation of $11.20 to the security service fee for air transportation sold on or after December 19, 2014.22 As this limitation was not included in the Budget Act of 2013, it was not considered for the analysis of the 2014 IFR. As such, to estimate the impact of this IFR, TSA compares the impact of the fee structure imposed by the Budget Act of 2013 (considered as baseline) and the fee structure with a round-trip limitation as imposed by Public Law 113-294.

Under the Budget Act of 2013, TSA was required to deposit a specified amount of revenue per year from 2014-2023 to the general fund of the Treasury, with the remaining receipts offsetting TSA appropriations. Table 3 below shows this breakdown, as it was presented in the 2014 IFR.

The estimated fees collected, as presented in Table 3, do not include a round-trip limitation. As described in the Background section of this preamble, the Budget Act of 2013 amended 49 U.S.C. to restructure the basis and amount of the security service fee and also removed TSA's ability to provide for a round-trip limitation in its regulations. TSA implemented the Budget Act of 2013's amendments through the 2014 IFR.

A round-trip limitation is now being imposed as a result of the amendment to 49 U.S.C. 44940(c) made by Public Law 113-294. To estimate the fee collection with the $11.20 limitation on round trips, TSA first determined the number of round-trip itineraries using data from the Bureau of Transportation Statistics (BTS).23 According to BTS data, approximately 66 percent of all tickets are considered round-trip tickets. Using the number of round-trip versus not-round-trip tickets, TSA estimates that approximately 79 percent 24 of total one-way trips are part of a round-trip itinerary. Table 4 presents the breakdown of trips. As required by Public Law 113-294, imposition of a round-trip limitation took effect at 12:00 a.m. on December 19, 2014. As such, TSA only accounts for 285 days in FY15 in order to estimate the impact of the statutory amendment upon implementation.

The imposition of a fee limitation for round trips results in a decrease in fees assessed from air passengers for those one-way trips that are part of a round-trip itinerary. To establish this difference, TSA again used BTS data to determine the average number of segments per each round-trip flight. Based on the BTS data of round-trip itineraries with more than two flight-coupons,26 TSA estimates that the average round-trip itinerary has 3.1 coupons. TSA uses the number of coupons to represent the number of one-way trips on a single itinerary. The fee limitation allows TSA to collect security service fees for two segments of an average round-trip itinerary. As a result, on average, TSA estimates the round-trip limitation will result in not collecting 1.1 security service fees for each itinerary with more than two segments.27 Table 5 provides TSA's estimates of the count and amount of revenue collected with a round-trip limitation. The total fees collected over the period of analysis would be $33.95 billion undiscounted, or $24.19 billion and $29.17 billion, discounted at 7 and 3 percent, respectively.

Comparing the fee structure, with and without a round-trip limitation, results in an estimated decrease in revenue collected from passengers of $785.63 million over the period of analysis.29 Table 6 compares the estimated revenue as analyzed in the 2014 IFR to the estimated revenue as a result of the amendments made by Public Law 213-294.

Electronic Access

This rule is accessible via the Internet at the Office of the Federal Register Web site at https://www.federalregister.gov. Background information and documents are available at the Pacific Fishery Management Council's Web site at http://www.pcouncil.org/. Copies of the final environmental impact statement (FEIS) for the Groundfish Specifications and Management Measures for 2015-2016 and Biennial Periods Thereafter are available from Donald McIsaac, Executive Director, Pacific Fishery Management Council (Council), 7700 NE. Ambassador Place, Portland, OR 97220, phone: 503-820-2280.

The PCGFMP and its implementing regulations at title 50 in the Code of Federal Regulations (CFR), part 660, subparts C through G, regulate fishing for over 90 species of groundfish off the coasts of Washington, Oregon, and California. Groundfish specifications and management measures are developed by the Pacific Fishery Management Council (Council), and are implemented by NMFS.

The final rule to implement the 2015-2016 harvest specifications and management measures for most species of the Pacific coast groundfish fishery was published on March 10, 2015 (80 FR 12567).

The Council, in coordination with Pacific Coast Treaty Indian Tribes and the States of Washington, Oregon, and California, recommended changes to current groundfish management measures at its April 10-16, 2015, meeting. Specifically, the Council recommended implementing a trip limit for big skate in the Shorebased Individual Fishing Quota (IFQ) Program and scheduled re-consideration of the stocks ecosystem component (EC) species designation. Consistent with the Council's recommendation and regulations at § 660.12, NMFS is implementing the trip limit and a sorting requirement for big skate in the Shorebased IFQ Program.

Up until 2015, big skate was managed as a component stock within the Other Fish complex. The Other Fish complex was comprised of several skate species and other species where catch was low and little information was available to inform stock status. Best available estimates of the overfishing limit (OFL) for component stocks contributed to the OFL harvest specification that was set at for the Other Fish complex. For additional description of the methods used for calculating OFLs for component stocks that are managed in a complex, see proposed rule for the 2011-2012 harvest specifications and management measures (75 FR 67810, November 3, 2010).

During development of the 2015-2016 harvest specifications and management measures the Council, based on the best information available when they made their final recommendation, recommended removing skates except for longnose skate from the Other Fish complex and designating most of the skates including big skate as EC species. NMFS approved and implemented that recommendation. Best estimates of mortality at that time indicated that harvest of big skate was 18 percent of the big skate contribution to the Other Fish OFL. Big skate was designated as an EC species because best available scientific information indicated that it was not in need of conservation and management and that it generally met many of the criteria for EC species designation outlined in the National Standard 1 Guidelines.

Since that time, new information indicates that mortality of big skate is approaching or exceeding the 2014 big skate contribution to the Other Fish OFL and therefore big skate may not be appropriately designated as an EC species. Therefore, at the April meeting, the Council considered management measures to reduce mortality of big skate to a level at or below its 2014 OFL contribution while the Council, its Scientific and Statistical Committee (SSC), and NMFS determine how and when to reclassify big skate.

In conjunction with the EC species designation, impacts to the species are monitored to inform whether the designation should be reconsidered based on new information. At its 2015 April meeting, the Council considered new information indicating landings of “unspecified skate” were predominantly big skate (over 90 percent) and therefore recent mortality of big skate may be much closer to the 2014 big skate contribution to the Other Fish OFL than previously believed.

Big skate landings are currently sorted and accounted for at a species-specific level in California, but the states of Oregon and Washington report big skate landings combined with other skate species within “unspecified” and “other” skate categories. As described in statements from the Council's Groundfish Management Team at the April meeting, a coastwide total mortality estimate for big skate was developed using a methodology endorsed by the SSC. Based on this estimate, harvest of big skate in 2014 may have been as high as 500 mt, exceeding the 2014 big skate contribution to the Other Fish OFL of 458 mt. Because in 2014 big skate contributed to the Other Fish complex OFL, and estimated catch of other species in the complex was lower than their respective contributions, the OFL for the Other Fish complex was not exceeded. Therefore, this level of catch of big skate is not overfishing by definition. However, it raised concerns that harvest of the stock may be above the fishing level that would maintain maximum sustainable yield (MSY), and that the designation of this stock as an EC species may not be appropriate.

To reduce the risk of overfishing big skate, the Council considered options for taking inseason action to reduce harvest to a level below the best estimate of the OFL; the 2014 OFL contribution of 458 mt. The Council also considered what changes to management measures would be necessary to reduce catch to a level below the big skate acceptable biological catch (ABC) contribution of 318 mt to the Other Fish ABC.

Based on available information from the Pacific Fisheries Information Network (PacFIN), catch of big skate occurs predominantly by vessels using bottom trawl gear, which is used primarily in the Shorebased IFQ Program. The Council and NMFS may implement trip limits for big skate as a routine management measure for the Shorebased IFQ Program. Since an action to reduce big skate landings in the Shorebased IFQ Program is anticipated to reduce total impacts to the stock, and because the Council and NMFS can take swift inseason action, the Council dismissed alternatives involving creation of new management measures for other sectors of the groundfish fishery that harvest less big skate. Therefore, the changes to management measures described in this action will apply only to vessels participating in the Shorebased IFQ Program.

The Council considered setting a trip limit for big skate in the Shorebased IFQ Program, beginning in June 2015. A range of trip limits was considered: Unlimited, a high trip limit (37,500 lb per two months) estimated to bring total mortality just below the OFL contribution, and a low trip limit (2,000 lb per two months) estimated to bring total mortality just below the ABC contribution. The Council's recommended a trip limit that was more precautionary than 37,000 lbs per two months but much less restrictive than the 2,000 lbs per two months trip limit to maximize opportunity, while keeping mortality estimates below the OFL contribution. The Council recommended and NMFS is implementing a trip limit reduction from “unlimited” to “15,000 lb per month” for the month of June, and “20,000 lbs per two months” in periods 4-6 (from July through December). Best estimates indicate that total mortality of big skate through the end of 2015 under this trip limit structure would be 441 mt, 17 mt lower than the 2014 OFL contribution of 458 mt. The Council-recommended trip limits are added to Tables 1 (North) and 1 (South) to Subpart C.

It is prohibited for first receivers and catcher vessels in the Shorebased IFQ Program to fail to sort any species with a trip limit (though timing and weighing methods may vary, as described in § 660.140(j)). This is because sorting must occur to account for catch of each species or species group against the applicable trip limit. Analyses presented to the Council at its April 2015 meeting indicated that sorting is necessary for trip limits to be effectively implemented. Therefore, in order to effectively implement the Council's recommended trip limits, NMFS is including in this inseason action the addition of big skate to the list of species required to be sorted under the Shorebased IFQ Program, at § 660.130(d).

The Council acknowledged that the mortality estimates and the OFL contribution have a high degree of uncertainty, and recommended these precautionary management measures described above to reduce the risk of overfishing big skate. Additionally, these measures will increase the amount of species-specific landings information, thereby reducing the uncertainty in estimated landings for both big skate and “unspecified” skates. This information will likely prove useful when the Council considers reclassifying big skate in the future.

The Council recommended that reconsideration of the stock's EC species designation be incorporated into development of the 2017-2018 harvest specifications and management measures. That 2017-2018 biennial management process begins at the Council's June 2015 meeting, and will continue into the following year. If a change is made to re-designate big skate as “in the fishery,” then harvest specifications for this species would be necessary; therefore it is opportune to consider re-designation of big skate within the biennial harvest specifications process.

This final rule makes routine inseason adjustments to groundfish fishery management measures, based on the best available information, consistent with the PCGFMP and its implementing regulations.

This action is taken under the authority of 50 CFR 660.60(c) and is exempt from review under Executive Order 12866.

The aggregate data upon which these actions are based are available for public inspection at the Office of the Administrator, West Coast Region, NMFS, during business hours.

NMFS finds good cause to waive prior public notice and comment on the revisions to groundfish management measures under 5 U.S.C. 553(b) because notice and comment would be impracticable and contrary to the public interest. Also, for the same reasons, NMFS finds good cause to waive the 30-day delay in effectiveness pursuant to 5 U.S.C. 553(d)(3), so that this final rule may become effective June 1, 2015.

New information regarding the likely historical catch of big skate was presented to the Council at its April 2015 meeting. At that meeting, the Council recommended that these changes be implemented June 1, 2015, which is the beginning of a cumulative limit period in the commercial groundfish fishery off the West Coast. These restrictions to the amount of landings must be implemented at the start of a cumulative limit period to allow fishermen in the Shorebased IFQ Program an opportunity to continue harvesting big skate, but at a level that will not exceed the new, lower trip limit that will be imposed for the cumulative limit period. If this limit is not in place by the start of the cumulative limit period, a vessel that landed an amount greater than these limits early in the cumulative limit period would find themselves in violation of this new, lower trip limit. The trip limits recommended by the Council and implemented by NMFS in this action are anticipated to keep catch of big skate below its contribution to the Other Fish OFL, if implemented on June 1. If the recommended limits are not in place June 1, more restrictive measures may be necessary later in the year to keep catch of big skate below its contribution to the Other Fish OFL. There was not sufficient time after the April meeting to undergo proposed and final rulemaking before June 1. For the actions to be implemented in this final rule, affording the time necessary for prior notice and opportunity for public comment would prevent NMFS from managing fisheries using the best available science to prevent overfishing in accordance with the PCGFMP and applicable law. It would be contrary to the public interest to delay implementation of these changes until after public notice and comment, because making this regulatory change by June 1, 2015, allows harvest as intended by the Council, consistent with the best scientific information available. These changes allow continued harvest in fisheries that are important to coastal communities while continuing to prevent potential overfishing.

No aspect of this action is controversial, and changes of this nature were anticipated in the biennial harvest specifications and management measures established for 2015-2016.

Accordingly, for the reasons stated above, NMFS finds good cause to waive prior notice and comment and to waive the delay in effectiveness.

For the reasons set out in the preamble, 50 CFR part 660 is amended as follows:

On April 21, 2015, NMFS published proposed specifications and a request for public comments (80 FR 22158) for the Deep 7 bottomfish in the main Hawaiian Islands (MHI) for the 2014-15 fishing year. You may review additional background information on this action in the preamble to the proposed specifications; we do not repeat this information here.

Through this action, NMFS is specifying an ACL of 346,000 lb of Deep 7 bottomfish in the MHI for the 2014-15 fishing year. This ACL is the same as that set for the 2013-14 fishing year. The MHI Management Subarea is the portion of U.S. Exclusive Economic Zone around the Hawaiian Archipelago lying to the east of 161°20′ W. longitude. The Deep 7 bottomfish consist of: onaga (Etelis coruscans), ehu (E. carbunculus), gindai (Pristipomoides zonatus), kalekale (P. sieboldii), opakapaka (P. filamentosus), lehi (Aphareus rutilans), and hapuupuu (Epinephelus quernus). The ACL that is established by this final rule adopts the Council's recommended ACL, which was based on the best available scientific, commercial, and other information, taking into account the associated risk of overfishing.

The MHI bottomfish fishing year started September 1, 2014, and is currently open. NMFS will monitor the fishery, and if the fishery reaches the ACL before August 31, 2015, NMFS will, as an associated accountability measure authorized in 50 CFR 665.4(f), close the non-commercial and commercial fisheries for Deep 7 bottomfish in Federal waters through August 31. During a fishery closure for Deep 7 bottomfish, no person may fish for, possess, or sell any of these fish in the MHI. There is no prohibition on fishing for or selling other (non-Deep 7) bottomfish throughout the year. All other management measures continue to apply in the MHI bottomfish fishery.

The comment period for the proposed specifications ended on May 6, 2015. NMFS received comments from three individuals, including two fishermen who participate in the Deep 7 bottomfish fishery, all in support of the proposed action.

Comments: In addition to expressing support for the proposed specifications, two commenters provided suggestions for improving future bottomfish stock assessments. The suggestions included increasing fishermen involvement in the development of stock assessment models, incorporating the potential effects of bottomfish restricted fishing areas in estimating exploitable biomass, and refining catch per unit of effort methodologies by better accounting for differences in catchability of bottomfish between fishermen of the various Hawaiian Islands due differences in available fishing areas, fishing strategies, and environmental factors.

Response: While these comments are beyond the immediate scope of the proposed specifications, NMFS continues to make improvements in the stock assessment process, and will consider the recommended actions in future stock assessments and updates. Additionally, NMFS is already reaching out to fishermen to ensure that their input is considered at important points in the bottomfish stock assessment process. NMFS continues to explore fishery-independent methods and technologies for assessing bottomfish resources. As information becomes available, NMFS will accommodate such data in future stock assessments to improve our understanding of the condition of bottomfish resources.

There are no changes in the final specifications from what was published in the proposed specifications on April 21, 2015.

The Regional Administrator, NMFS PIR, determined that this action is necessary for the conservation and management of MHI Deep 7 bottomfish, and that it is consistent with the Magnuson-Stevens Fishery Conservation and Management Act and other applicable laws.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed specification stage that this action would not have a significant economic impact on a substantial number of small entities. NMFS published the factual basis for certification in the proposed specifications, and does not repeat it here. NMFS did not receive comments regarding this certification. As a result, a final regulatory flexibility analysis is not required, and one was not prepared.

This action is exempt from review under Executive Order 12866.

Background

Blueline tilefish (Caulolatilus microps) are mainly distributed off the southeastern U.S., and have been managed as part of the South Atlantic Fishery Management Council's Snapper Grouper Fishery Management Plan (FMP). The South Atlantic Council developed, and NMFS has implemented, Amendment 32 to the Snapper Grouper FMP to end overfishing of blueline tilefish within the South Atlantic Council's management jurisdiction. Amendment 32 includes reduced commercial and recreational possession limits (80 FR 16583; March 30, 2015). However, Amendment 32 measures do not apply to vessels fishing for blueline tilefish north of the South Atlantic Council's jurisdiction (which extends as far north as the latitude of the Virginia/North Carolina border).

In recent years, there has been increasing recreational and commercial fishing activity for blueline tilefish in the Greater Atlantic Region, outside the jurisdiction of the South Atlantic Council's Snapper Grouper FMP. Commercial landings in the Greater Atlantic Region (Virginia to Maine) averaged 11,000 lb (5 mt) per year for 2005-2013. Recreational charter/party vessels reported an average of 2,400 fish per year for 2002-2011. However, commercial landings in 2014 increased to over 217,000 lb (98 mt), and recreational landings from 2012-2014 increased to 10,000-16,000 fish per year. The rapid increase in blueline tilefish harvest in the Greater Atlantic Region represents a risk to the conservation of the species and the long-term sustainability of the fisheries.

Blueline tilefish north of the Virginia/North Carolina border warrant precautionary management. Based upon these concerns, on March 10, 2015, the Mid-Atlantic Fishery Management Council submitted a request for Secretarial emergency action under section 305(c) of the Magnuson-Stevens Act to implement temporary management measures for blueline tilefish in the Greater Atlantic Region. Additionally, at its April 2015 meeting, the Mid-Atlantic Council initiated an action to develop a long-term management approach.

Subsequently, on May 6, 2015, the South Atlantic Council submitted a new request to the NMFS Southeast Regional Office for emergency action in the blueline tilefish fishery, based upon the preliminary findings of its Scientific and Statistical Committee (SSC). In its request, the South Atlantic Council states that the most recent stock assessment for blueline tilefish (SEDAR 32) applied to the blueline tilefish stock coastwide, and that the assessment represents the best scientific information available on which to base management measures. Therefore, the South Atlantic Council requested that the current blueline tilefish management measures included in its Snapper Grouper Fishery Management Plan (analyzed as “Alternative 2” in the environmental assessment supporting the temporary rule) be implemented in the Greater Atlantic Region. The Council further asserts that these measures, which appear to be more restrictive than those included in the current temporary rule as requested by the Mid-Atlantic Council, are needed to end overfishing on the stock.

On May 11, 2015, the Mid-Atlantic Council commented on the South Atlantic Council's emergency action request in a letter to the Greater Atlantic Regional Administrator. The Mid-Atlantic Council disagrees with the South Atlantic Council's interpretation of the results of SEDAR 32, identifies relevant data that were not included in SEDAR 32, and argues that the assessment is not applicable to the blueline tilefish resource in the Greater Atlantic Region.

Based upon the conflicting information received from the two Councils, there is a need to further evaluate the scientific basis for the conclusions reached by both Councils in order to decide on the proper long-term approach. The South Atlantic Council's SSC is meeting on June 3, 2015, to consider stock projections and fishing level recommendations. While the more restrictive management measures recommended by the South Atlantic Council may appear to be warranted, additional time would be necessary to fully analyze the impacts of those measures on both the blueline tilefish resource and the recreational and commercial fisheries that depend on access to these fish. The additional time needed for this further review and analysis would prolong addressing the primary, immediate emergency need of stopping unacceptably high levels of harvest by the commercial fleet. Both Councils are united by the desire to immediately put some measures in place in order to constrain the ability of the commercial fleet to land in New Jersey or other ports where there are no limits on the landing of blueline tilefish.

The proposed emergency rule to implement the Mid-Atlantic Council's request will have the practical effect of equaling what appear to be the more restrictive South Atlantic measures for the commercial fishery. The commercial fishery is the component that is exerting substantial pressure on the stock, while the recreational fishery appears to be having less of an impact. The proposed 300-lb (136-kg) trip limit will have the practical effect of ending directed commercial fishing on this stock once the South Atlantic Council's 100-lb (45.4-kg) trip limit south of Virginia has been reached, or the South Atlantic Council's commercial fishery has been closed. This is because it is not economically feasible for vessels to catch a limit of 300 lb (136 kg) of blueline tilefish off Virginia or Maryland and then steam all the way to New Jersey to land it. We expect a 300-lb (136-kg) trip limit to induce fishermen to cease commercially targeting blueline tilefish. The trip limit allows fishermen targeting other species to retain limited amounts of incidentally caught blueline tilefish, thus reducing waste that would occur if no retention was allowed.

Moreover, the proposed recreational limit of seven fish per angler is consistent with measures in place in Virginia and Maryland. The recreational component of this fishery is very small compared to the commercial component and our records indicate that only 12 percent of anglers catch seven blueline tilefish per day. Implementing the less restrictive recreational measures mitigates socio-economic impacts on the recreational fleet without undermining the conservation benefits coming from the primary focus of this rule which is to stop the commercial fleet's landing of high levels of blueline tilefish.

These measures are expected to constrain fishing mortality and reduce the risk of overfishing on blueline tilefish while the Mid-Atlantic and South Atlantic Councils develop a long-term management plan for blueline tilefish throughout its range. NMFS will continue to evaluate all of the available information and determine whether additional restrictions are needed.

Based upon the recommendation of the Mid-Atlantic Council, we are implementing the following management measures for blueline tilefish in the Greater Atlantic Region:

1. A requirement for commercial or charter/party vessels landing blueline tilefish in the Northeast region (i.e., north of the latitude of the Virginia/North Carolina border: 36° 33′ 01.0″ N. latitude) to hold a valid Northeast open access golden tilefish commercial or charter/party vessel permit, which are issued by the Greater Atlantic Regional Fisheries Office;

2. A commercial possession limit of 300 lb (136 kg) whole weight per trip; and

3. A recreational possession limit of seven blueline tilefish per person, per trip.

None of these management measures modify the existing possession regulations for golden tilefish, or any other species. The requirement to hold a valid Northeast permit will ensure that catch, effort, and fishing location information for blueline tilefish will be reported moving forward. This information will be valuable to both Councils as they further develop long-term approaches for managing blueline tilefish across its distribution. The duration of this emergency action is limited by the Magnuson-Stevens Act to an initial period of 180 days, with a potential extension of an additional 186 days.

NMFS has determined that this rule is necessary to respond to an emergency situation and is consistent with the Magnuson-Stevens Act and other applicable law. NMFS has determined that the rapid expansion of fishing activity for blueline tilefish in the Greater Atlantic Region justifies the emergency requested by the Mid-Atlantic Council. NMFS reviewed the Council's request for temporary emergency rulemaking with respect to section 305(c) of the Magnuson-Stevens Act and NMFS policy guidance for the use of emergency rules (62 FR 44421, August 21, 1997) and determined that the Council's request meets both the criteria and justifications for invoking the emergency rulemaking provisions of the Magnuson-Stevens Act. The action is needed to address unforeseen rapid increases in landings and fishing effort for blueline tilefish in the Greater Atlantic Region. This action is needed to help prevent a serious conservation problem—fishing potentially resulting in rapidly increasing catch and the potential for unconstrained fishing mortality. Finally, the immediate benefits to the blueline tilefish resource outweigh the value of the advance notice and public comments provided under the normal rulemaking process, hence, this action is being implemented as a final temporary rule.

Pursuant to section 553(b)(B) of the Administrative Procedure Act, the Assistant Administrator (AA) for Fisheries, NOAA, finds that it would be impracticable and contrary to the public interest to provide for prior notice and opportunity for the public to comment on this rule. During the 2014 fishing year, it became apparent that unregulated blueline tilefish landings in the Greater Atlantic Region were increasing rapidly compared to previous years. The Mid-Atlantic Council analyzed and discussed the issue, and on February 25, 2015, voted to request that we implement emergency measures. The emergency request was submitted to us on March 10, 2015. Since blueline tilefish fishing activity has typically started in May, and there is a clear need to establish measures to constrain fishing mortality on the stock in the Greater Atlantic Region, it would be potentially harmful to the long-term sustainability of resource to further delay implementation of these measures through notice-and-comment rulemaking. Given the South Atlantic Council's concerns about the status of the blueline tilefish stock, any additional unregulated harvests could increase the risk of overfishing during the current fishing year. Public comments will be accepted on this final temporary rule, and there will be multiple opportunities for public participation and notice-and-comment rulemaking as the Mid-Atlantic and South Atlantic Councils develop a long-term management plans for blueline tilefish in the Greater Atlantic Region.

Additionally, the AA finds good cause to waive the requirement for a 30-day delay in effectiveness pursuant to section 553(d) of the Administrative Procedure Act. For the reasons described above, delaying the effectiveness of these regulations could undermine the purpose of this emergency action, to put in place measures to reduce catch during the 2015 fishing year as a stop-gap measure while both Councils further develop suitable long-term approaches for sustainable harvest of blueline tilefish.

This action is being taken pursuant to the emergency provision of the Magnuson-Stevens Act and is exempt from OMB review.

This rule is exempt from the otherwise applicable requirement of the Regulatory Flexibility Act to prepare a regulatory flexibility analysis because the rule is issued without opportunity for prior public comment.

For the reasons set out in the preamble, 50 CFR part 648 is amended as follows: