Federal Register Vol. 80, No.148,

I. Introduction

The NRC is amending its regulations in parts 1, 37, 40, 50, 55, 74 and 75 of Title 10 of the Code of Federal Regulations (10 CFR) to make miscellaneous corrections. These changes include updating the name of the U.S. Government Publishing Office, updating the address for the National Technical Information Service, correcting typographical errors, correcting misspellings, and correcting and removing references. This document is necessary to inform the public of these non-substantive changes to the NRC's regulations.

Update Office Address. In § 1.3, this final rule removes the old office address for the “National Technical Information Service” and replaces it with the new address “5301 Shawnee Road, Alexandria, VA 22312.”

Correct Reference. In § 37.23(b)(2), this final rule removes the incorrect reference “§ 37.25(b)” and replaces it with the correct reference “§ 37.25(c).”

Correct Typographical Error. In § 40.61(a)(2), this final rule removes the first use of the word “or” and replaces it with the word “of.”

Update Office Title and Telephone Number. In Footnote 4 of § 50.49, this final rule removes the old office title for the “U.S. Government Printing Office” and replaces it with the new office title “U.S. Government Publishing Office.” This final rule also removes the telephone number “202-275-2060” and replaces it with “202-512-1800.”

Remove Reference. In § 50.54, this final rule removes the incorrect reference “(q)” from the introductory text.

Return Omitted Information, Update Access Information, Correct Reference. In § 50.55a, this final rule includes a document that was previously approved for incorporation by reference but inadvertently omitted from the list of incorporated documents in § 50.55a(a)(2). The document is the Institute of Electrical and Electronics Engineers (IEEE) Standard 279-1968, “Proposed IEEE Criteria for Nuclear Power Plant Protection Systems,” which was approved for incorporation by reference in 1972 (37 FR 17021; August 24, 1972). The documents currently listed in § 50.55a(a)(2)(i)-(iii) are moved to § 50.55a(a)(2)(ii)-(iv), and IEEE Standard 279-1968 is added back as § 50.55a(a)(2)(i), so that the documents are listed in chronological order. The access information in new § 50.55a(2)(iv) has been updated. This final rule also updates § 50.55a(h)(2) to reference the correct standards.

Update Office Title and Address. In Footnote 1 of § 55.40, this final rule removes the old office title “U.S. Government Printing Office” and replaces it with the new office title “U.S. Government Publishing Office.” This final rule also removes the old office address for the National Technical Information Service and replaces it with the new address “5301 Shawnee Road, Alexandria, VA 22312.”

Correct Spelling. In § 74.4, this final rule corrects the definition of Tamper-safing by removing the misspelled word “previouly” and replacing it with the correct word “previously.”

Correct Typographical Error. In § 74.55(b)(2), this final rule removes the incorrect reference “Category BI items” and replaces it with the correct reference “Category IB items.”

Correct References. In § 75.6(d), this final rule revises the second column of the table by removing the incorrect references “75.11(c)(1),” “75.11(c)(2),” “75.11(c)(3),” “75.11(c)(4),” “75.11(c)(5),” “75.11(c)(6),” and “75.11(c)(7)” and replacing them with the correct references “75.11(b)(1),” “75.11(b)(2),” “75.11(b)(3),” “75.11(b)(4),” “75.11(b)(5),” “75.11(b)(6),” and “75.11(b)(7).”

Under the Administrative Procedure Act (5 U.S.C. 553(b)), an agency may waive the normal notice and comment requirements if it finds, for good cause, that they are impracticable, unnecessary, or contrary to the public interest. As authorized by 5 U.S.C. 553(b)(3)(B), the NRC finds good cause to waive notice and opportunity for comment on the amendments, because notice and opportunity for comment are unnecessary. The amendments will have no substantive impact and are of a minor and administrative nature dealing with corrections to certain CFR sections related only to management, organization, procedure, and practice. Specifically, the revisions correct typographical errors, misspellings, and incorrect references.

The Commission is exercising its authority under 5 U.S.C. 553(b)(3)(B) to publish these amendments as a final rule. The amendments are effective September 2, 2015. These amendments do not require action by any person or entity regulated by the NRC. Also, the final rule does not change the substantive responsibilities of any person or entity regulated by the NRC.

The NRC has determined that this final rule is the type of action described in 10 CFR 51.22(c)(2), which categorically excludes from environmental review rules that are corrective or of a minor, nonpolicy nature and do not substantially modify existing regulations. Therefore, neither an environmental impact statement nor an environmental assessment has been prepared for this rule.

This final rule does not contain information collection requirements and, therefore, is not subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

The NRC may not conduct or sponsor, and a person is not required to respond to, a request for information or an information collection requirement unless the requesting document displays a currently valid Office of Management and Budget control number.

The Plain Writing Act of 2010 (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, and well-organized manner. The NRC has written this document to be consistent with the Plain Writing Act as well as the Presidential Memorandum, “Plain Language in Government Writing,” published June 10, 1998 (63 FR 31883).

The NRC has determined that the corrections in this final rule do not constitute backfitting and are not inconsistent with any of the issue finality provisions in 10 CFR part 52. The revisions are non-substantive in nature, including correcting typographical errors, correcting misspellings, and correcting and removing references. They impose no new requirements and make no substantive changes to the regulations. The corrections do not involve any provisions that would impose backfits as defined in 10 CFR chapter I, or would be inconsistent with the issue finality provisions in 10 CFR part 52. For these reasons, the issuance of the rule in final form would not constitute backfitting or represent an inconsistency with any of the issue finality provisions in 10 CFR part 52. Therefore, the NRC has not prepared any additional documentation for this correction rulemaking addressing backfitting or issue finality.

For the reasons set out in the preamble and under the authority of the Atomic Energy Act of 1954, as amended; the Energy Reorganization Act of 1974, as amended; and 5 U.S.C. 552 and 553, the NRC is adopting the following amendments to 10 CFR parts 1, 37, 40, 50, 55, 74, and 75.

The Federal Credit Union Act (FCU Act) authorizes an FCU to purchase, hold, and dispose of property necessary or incidental to its operations.1 NCUA's fixed assets rule interprets and implements this provision of the FCU Act.2 NCUA's current fixed assets rule: (1) limits FCU investments in fixed assets; (2) establishes occupancy, planning, and disposal requirements for acquired and abandoned premises; and (3) prohibits certain transactions.3 Under the current rule, fixed assets are defined as premises, furniture, fixtures, and equipment, including any office, branch office, suboffice, service center, parking lot, facility, real estate where a credit union transacts or will transact business, office furnishings, office machines, computer hardware and software, automated terminals, and heating and cooling equipment.4

The Board has a policy of continually reviewing NCUA's regulations to update, clarify, and simplify existing regulations and eliminate redundant and unnecessary provisions. To carry out this policy, NCUA identifies one-third of its existing regulations for review each year and provides notice of this review so the public may comment. In 2012, NCUA reviewed its fixed assets rule as part of this process. As a result of that review, in March 2013, the Board issued proposed amendments to the fixed assets rule to make it easier for FCUs to understand it.5 The proposed amendments did not make any substantive changes to the regulatory requirements. Rather, they only clarified the rule and improved its overall organization, structure, and readability.

In response to the Board's request for public comment on the March 2013 proposal, several commenters offered suggestions for substantive changes to the fixed assets rule, such as increasing or eliminating the aggregate limit on fixed assets, changing the current waiver process, and extending the time frames for occupying premises acquired for future expansion. These comments, however, were beyond the scope of the March 2013 proposal, which only reorganized and clarified the rule. Accordingly, in September 2013, the Board adopted the March 2013 proposal as final without change except for one minor modification.6 In finalizing that rule, however, the Board indicated it would take the commenters' substantive suggestions into consideration if it were to make subsequent amendments to NCUA's fixed assets rule.

In July 2014, the Board issued a proposed rule to provide regulatory relief to FCUs and to allow FCUs greater autonomy in managing their fixed assets.7 These amendments reflected some of the public comments received on the March 2013 proposal. Specifically, in the July 2014 proposal, the Board proposed to allow an FCU to exceed the five percent aggregate limit,8 without the need for a waiver, provided the FCU implemented a fixed assets management (FAM) program that demonstrated appropriate pre-acquisition analysis to ensure the FCU could afford any impact on earnings and net worth levels resulting from the purchase of fixed assets. Under the July 2014 proposal, an FCU's FAM program would have been subject to supervisory scrutiny and would have had to provide for close ongoing oversight of fixed assets levels and their effect on the FCU's financial performance. It also would have had to include a written policy that set an FCU board-established limit on the aggregate amount of the FCU's fixed assets. In the July 2014 proposal, the Board also proposed to simplify the partial occupancy requirement for premises acquired for future expansion by establishing a single five-year time period for partial occupancy of any premises acquired for future expansion, including improved and unimproved property, and by removing the current fixed assets rule's 30-month time limit for submitting a partial occupancy waiver request.

The public comment period for the July 2014 proposal closed on October 10, 2014, and NCUA received thirty-six comments on the proposal. While commenters generally supported the Board's efforts to provide regulatory relief from the requirements concerning FCU fixed assets, most commenters advocated for more relief or suggested alternative approaches to achieving that objective.

For example, a significant number of commenters suggested that the July 2014 proposal did not provide sufficient regulatory relief and that the five percent aggregate limit should be eliminated. These commenters noted that the aggregate limit is not statutorily mandated by the FCU Act and, thus, FCUs should be allowed to independently manage their own fixed assets without a strict regulatory limit. Several commenters argued further that FCUs should be permitted to manage their own fixed assets without the additional requirements.

In addition, a large percentage of commenters opposed the proposed FAM program requirement. Commenters argued that it would be unnecessary or overly burdensome, and it would impose additional burdens that FCUs are not already subject to under the current rule. For example, one commenter argued that the July 2014 proposal simply shuffled regulatory burden, rather than providing meaningful regulatory relief. Several other commenters proffered a similar argument that the additional requirements imposed after assets are acquired would increase FCUs' compliance responsibilities and costs, mitigating any flexibility gained under the proposal.

The July 2014 proposal also would have simplified the partial occupancy requirement for premises acquired for future expansion. Virtually all commenters that provided feedback on the proposed amendments to the partial occupancy requirement supported the overall concept of streamlining or improving this aspect of the fixed assets rule. However, most commenters requested additional relief beyond that proposed. For example, a number of commenters suggested that the time period for partial occupancy should be extended. Commenters also recommended that regulatory timeframes for occupancy should be eliminated entirely.

After careful consideration of the public comments, particularly those relating to the fixed assets aggregate limit, the Board determined that additional regulatory relief beyond what was provided in the July 2014 proposal was warranted. Therefore, the Board did not adopt the July 2014 proposal, including any FAM program requirements. The Board concluded upon further review that oversight of the purchase of FCU investments in fixed assets can be effectively achieved through supervisory guidance and the examination process, rather than through prescriptive regulatory limitations. Accordingly, in March 2015, the Board issued a new proposal to eliminate the five percent aggregate limit on fixed assets.

In March 2015, largely because of the public comments received in response to the July 2014 proposal, the Board issued a new proposal to address commenters' requests for additional regulatory relief from the aggregate limit on fixed assets.9 The Board also incorporated into the March 2015 proposal partial occupancy requirements similar to those from the July 2014 proposal, but with one modification to the proposed single time period for partial occupancy, to provide even more regulatory relief to FCUs.

Specifically, in March 2015, the Board proposed to eliminate the five percent aggregate limit on FCU investments in fixed assets. It also proposed to eliminate the related provisions governing waivers of the aggregate limit because those provisions would no longer be relevant in the absence of a prescriptive aggregate limit.

In addition, in the March 2015 proposal, the Board proposed to incorporate, with one change, the proposed amendments in the July 2014 proposal relating to the partial occupancy requirements for FCU premises acquired for future expansion. Specifically, the Board proposed to require an FCU to partially occupy any premises acquired for future expansion, regardless of whether the premises are improved or unimproved property, within six years from the date of the FCU's acquisition of those premises. In the July 2014 proposal, the Board proposed to require partial occupancy within a uniform five-year time period. However, in response to public comments, the March 2015 proposal revised it to six years rather than five years for partial occupancy, which would retain the current fixed assets rule's time period for unimproved land or unimproved real property and extend the current rule's time period for improved premises by three years. The March 2015 proposal also reissued, without change, the amendment in the July 2014 proposal to eliminate the current requirement for an FCU that wishes to apply for a waiver of the partial occupancy requirement to do so within 30 months of acquisition of the property acquired for future expansion.

The public comment period for the March 2015 proposal ended on April 29, 2015. NCUA received sixteen comments on the proposed rule: two from credit union trade associations, four from state credit union leagues, seven from FCUs, and three from FISCUs. Most commenters were generally supportive of the proposal and the Board's continuing efforts to provide regulatory relief in this area. Four commenters supported the proposal without stipulation, but eight commenters asked for more relief and flexibility or expressed concern about one or more aspects of the proposal. None of the commenters opposed the proposal entirely. However, one commenter indicated that it could not support the rule without first evaluating any related supervisory guidance.

The substantive comments on the key aspects of the March 2015 proposal are discussed in more detail below.

Section 701.36(c) of the current fixed assets rule establishes an aggregate limit on investments in fixed assets for FCUs with $1,000,000 or more in assets. For an FCU meeting this asset threshold, the aggregate of all its investments in fixed assets is limited to five percent of its shares and retained earnings, unless NCUA grants a waiver establishing a higher limit.10 The March 2015 proposal eliminated this provision. It also eliminated the provisions in the current fixed assets rule relating to waivers from the aggregate limit.

Eleven commenters expressed support for eliminating the five percent aggregate limit. Of those, two commenters also supported the reissuance of the proposal without the FAM program requirements that were included in the July 2014 proposal. One commenter asserted that NCUA should not impose an aggregate limit on FCU investments in fixed assets because it is not required by the FCU Act. Two commenters noted that the five percent aggregate limit is outdated and the removal of the limitation is long overdue. One commenter indicated that the current one-size-fits-all rule is very restrictive and may disadvantage credit unions in higher cost areas because credit unions located in areas with higher property costs can reach the cap much more easily and quickly. The same commenter posited that the latest proposed approach is preferable to the current rule because the individuality of each credit union can be incorporated into the supervisory evaluation process through examiner judgment.

Two commenters noted that the removal of the five percent limit will allow credit unions to make the business decisions necessary to thrive, and to accomplish their growth strategies and meet the needs of their members. Another commenter stated that the proposed amendment will allow credit unions more flexibility in finding the greatest value for their members. A different commenter said the change will increase a credit union's flexibility in the management and ownership of its fixed assets. One commenter said that the removal of the aggregate limit represents significant reform that provides FCUs with flexibility to meet their business or operational needs and the needs of members.

One commenter generally supported the concept of moving oversight of fixed assets from the regulatory process to the supervisory process, but expressed concern that the proposal simply shifts the same requirements from regulatory oversight to supervisory oversight.

In view of the generally positive comments received on this aspect of the March 2015 proposal, the Board is adopting, without change, the amendment to remove the five percent aggregate limit. As discussed in the preamble to the March 2015 proposal, the objective of the fixed assets rule is to place reasonable limits on the risk associated with excessive or speculative acquisition of fixed assets.11 The Board continues to believe this objective can be effectively achieved through the supervisory process as opposed to a regulatory limit.12 Accordingly, the final rule eliminates the five percent aggregate limit on FCU investments in fixed assets. It also eliminates the related provisions governing waivers of the aggregate limit because those provisions are no longer necessary in the absence of a prescriptive regulatory limit.

The Board emphasizes, however, that NCUA's supervisory expectations remain high. As noted in the March 2015 proposal, the Board cautions that the elimination of the aggregate limit should not be interpreted as an invitation for FCUs to make excessive, speculative, or otherwise irresponsible investments in fixed assets. This final rule reflects the Board's recognition that relief from the prescriptive limit on fixed assets is appropriate, but FCU investments in fixed assets are, and will continue to be, subject to supervisory review. If an FCU has an elevated level of fixed assets, NCUA will maintain close oversight to ensure the FCU conducts prudent planning and analysis with respect to fixed assets acquisitions, can afford any such acquisitions, and properly manages any ongoing risk to its earnings and capital.

Most commenters generally supported the overall concept of overseeing FCU ownership of fixed assets through the supervisory process and guidance, instead of applying a prescriptive aggregate limit provided by regulation. One commenter noted that the supervisory examination process works well in the majority of cases. Another commenter said the proposed approach is rational because investments in fixed assets present little safety and soundness risk.

A number of other commenters, however, expressed concern about the oversight of FCU fixed assets through supervisory guidance and review. One commenter argued that a credit union's purchase of a fixed asset should not be left to an individual examiner's interpretation of what should be acquired by the credit union. One commenter encouraged the agency to adopt guidance that clearly articulates the criteria that an examiner will use to determine if a credit union's investments in fixed assets are safe and sound. Another commenter suggested that when a credit union maintains a well-capitalized net worth ratio and positive earnings, and produces a sound business plan, NCUA should not intervene or second guess the credit union's decisions. Another commenter stated generally that supervisory guidance and the examination process should allow a credit union flexibility to manage its own operations and not subject it to micro-management and the rigid scrutiny of examiners. A different commenter stated that fixed assets acquisitions must be evaluated within the context of the individual strategies of each credit union and examiners should be trained accordingly.

In addition, six commenters requested that any guidance governing investments in fixed assets be issued for public comment. One commenter said the Board should re-issue for public comment a new proposal that includes proposed supervisory guidance as an appendix to the proposed rule. One commenter asked that guidance be provided before any final rule is adopted. Another commenter suggested that guidance should be issued in conjunction with the final rule. One commenter simply urged that guidance be timely issued.

While the Board appreciates the value in affording the opportunity for public comment, the Board does not believe that formal notice-and-comment procedures for the final rule's companion guidance are required or necessary in this circumstance. As noted above, the Board has already formally solicited public comment on the subject of fixed assets in 2013, 2014, and 2015, and virtually all of the amendments contained in this final rule are in response to the comments received. Further, the amendments are intended to grant significant regulatory relief to FCUs, and a fourth notice-and-comment process on this subject would only further delay their implementation.

The Board notes that supervisory guidance does not require notice and comment rulemaking under the Administrative Procedure Act (APA), and thus, it does not have the force and effect of law or regulation.13 The purpose of supervisory guidance and other interpretive rules is generally “to advise the public of the agency's construction of the statutes and rules that it administers.” 14 Supervisory guidance regarding FCU ownership of fixed assets is not intended to supplant FCUs' business decisions or to impose rigid and prescriptive requirements on FCUs in the management of their investments in fixed assets. Rather, the guidance will provide examiners and credit unions with clear information about NCUA's supervisory expectations with respect to the final rule, and establish a consistent framework for the exam and supervision process for the review of credit union management of fixed assets.

The Board recognizes that clear and timely supervisory guidance is important to the effective implementation of this final rule. Thus, before this final rule takes effect, NCUA will issue updated supervisory guidance to examiners that will be shared with FCUs. The guidance will reflect current supervisory expectations 15 that require an FCU to demonstrate appropriate due diligence, ongoing board and management oversight,16 and prudent financial analysis to ensure the FCU can afford any impact on earnings and net worth levels caused by its purchase of fixed assets. The guidance will ensure examiners effectively identify any risks to safety and soundness due to an FCU's excessive investment in fixed assets. It will focus on evaluating the quality of an FCU's fixed assets management relative to its planning for fixed assets acquisitions and controlling the related financial risks. The guidance will also focus on evaluating an FCU's quality of earnings and capital relative to its projected performance under both baseline (expected) and stressed scenarios. The Board notes that the evaluation of fixed assets is not a current baseline review requirement for any examinations, and is only expected if examiners identify a material safety and soundness concern. In general, if an FCU can demonstrate an ability to afford and manage its fixed assets, the level of fixed assets will not be a supervisory concern.

Two commenters recommended that the final rule include a formal appeals process to allow credit unions the opportunity to defend fixed assets investment decisions that are challenged through supervision.

The Board emphasizes that it is not NCUA's goal to second guess an FCU's reasonable business decisions, and NCUA anticipates that open communications between an FCU and its examiner should resolve most kinds of fixed assets disputes about which commenters have raised concern. Nevertheless, as with any other regulation, an FCU that fails to comply with the requirements of this final rule may be subject to commensurate supervisory action. The Board notes that all rights and procedures generally available to an FCU in appealing an NCUA administrative or enforcement action are likewise available to an FCU under this final rule.

Most commenters were supportive of the overall concept of streamlining or improving the fixed assets rule's partial occupancy requirement. A number of commenters, however, asked for additional relief beyond that proposed.

Under the current rule, if an FCU acquires premises for future expansion and does not fully occupy them within one year, it must have an FCU board resolution in place by the end of that year with definitive plans for full occupation.17 The current rule does not set a specific time period within which an FCU must achieve full occupation of premises acquired for future expansion. However, partial occupancy of the premises is required within a reasonable period, but no later than three years after the date of acquisition of improved property, or six years if the premises are unimproved land or unimproved real property.18 Partial occupancy must be sufficient to show, among other things, that the FCU will fully occupy the premises within a reasonable time and consistent with its plan for the premises.19 In the March 2015 proposal, the Board proposed to simplify the occupancy requirements in the fixed assets rule by establishing a single time period of six years from the date of acquisition for partial occupancy of any premises acquired for future expansion, regardless of whether the premises are improved or unimproved.

Three commenters agreed with the proposal to establish a single, uniform six-year time period for partial occupancy. One commenter, however, suggested that six years is too short a timeframe to achieve partial occupancy. Another commenter agreed that partial occupancy within six years may be appropriate in some instances, but disagreed that it should be mandated by regulation. Two commenters suggested that the rule should allow for up to ten years for partial occupancy. One commenter noted generally that allowing a longer timeframe for partial occupancy would reduce the need for waivers. One commenter said the proposed six-year timeframe is an improvement over the current rule, but preferred that the regulatory occupancy timeframes be removed altogether.

Six commenters suggested that the partial occupancy requirement should be eliminated entirely. Of those, four commenters observed that the FCU Act does not require a specific timeframe for occupancy or otherwise prescribe occupancy requirements for permissible real estate holdings. One commenter posited that NCUA has the statutory authority to provide greater flexibility in the partial occupancy requirements of the fixed assets rule.

As discussed in the preambles to the July 2014 and the March 2015 proposals, the FCU Act authorizes an FCU to purchase, hold, and dispose of property necessary or incidental to its operations.20 NCUA has interpreted this provision to mean that an FCU may only invest in property it intends to use to transact credit union business or in property that supports its internal operations or member services.21 There is no authority in the FCU Act for an FCU to invest in real estate for speculative purposes or to otherwise engage in real estate activities that do not support its purpose of providing financial services to its members.

As noted above, the purpose of the fixed assets rule is to place reasonable controls on the risk associated with excess or speculative acquisition of fixed assets. The Board believes that, while partial occupancy is not expressly mandated by the FCU Act, the requirement for an FCU to partially occupy premises acquired for future expansion within a specified timeframe functions as a reasonable safeguard against speculative real estate investments or other impermissible real estate activities that are not permitted for FCUs under the FCU Act. Further, the Board maintains that a single six-year time period for partial occupancy will simplify and improve the rule, and the final rule adopts this amendment without modification. The final rule therefore retains the current time period for unimproved land or unimproved real property, and extends the current time period for improved premises by three years.

The Board emphasizes that the elimination of the 30-month requirement for partial occupancy waiver requests, which is discussed below, will allow an FCU additional leeway to apply for a waiver, as needed, if it is not able to achieve partial occupancy of premises within six years.

Under the current rule, an FCU must submit its request for a waiver from the partial occupancy requirement within 30 months after the property is acquired. In the March 2015 proposal, the Board proposed to eliminate the 30-month requirement and allow FCUs to apply for a waiver beyond that time frame as appropriate. Four commenters provided feedback on the proposal to eliminate the 30-month timeframe for requesting a waiver of the partial occupancy requirement, and all were supportive of it. One commenter noted that the current 30-month waiver deadline does not allow FCUs the necessary flexibility to react to unanticipated business developments. The same commenter indicated that delays often occur outside the 30-month waiver timeframe and FCUs are left without options, causing greater hardship for an FCU already facing a business set-back in the development of its unimproved property.

In light of the unanimous support from commenters on this aspect of the proposal, the Board is adopting, without change, the proposal to eliminate the 30-month timeframe for requesting a waiver of the partial occupancy requirement.

As mentioned above, the current rule does not set a specific time period within which an FCU must achieve full occupancy of premises acquired for future expansion. However, if an FCU acquires such premises and does not fully occupy them within one year, it must have a board resolution in place by the end of that year with definitive plans for full occupation.22 Further, partial occupancy of the premises is required within a set timeframe and must be sufficient to show, among other things, that the FCU will fully occupy the premises within a reasonable time and consistent with its plan for the premises.23 The Board requested and received public comment on this topic in connection with the July 2014 proposal. The Board did not propose to amend the full occupancy requirement in the March 2015 proposal, but several commenters provided comment on this subject.

One commenter stated that the FCU Act includes no express occupancy mandate on FCU property that supports the purpose of providing financial services to credit union members. Accordingly, the commenter believed that NCUA's interpretation of Section 107(4) of the FCU Act is unnecessarily restrictive, and the Board should eliminate the occupancy requirements from the rule. In support of this contention, the same commenter suggested that removing occupancy restrictions would allow FCUs to better compete with other financial institutions.

Another commenter stated generally that NCUA should reconsider its position on full occupancy because it oftentimes makes sense for a credit union to own a building and lease out part or all of the building to help offset the cost of property ownership.

The Board appreciates the additional comments on the full occupancy requirement and is carefully considering commenters' continued requests for relief in this area. The Board may address the full occupancy requirement in a future proposed rulemaking.

One commenter suggested NCUA review the small credit union exemption in the current fixed assets rule in order to provide additional regulatory relief to FCUs. This commenter asserted that the fixed assets rule does not apply to credit unions with less than $1 million in assets, and observed that NCUA has not adjusted the exemption amount in a number of years.

The Board clarifies, however, that the current exemption for FCUs with less than $1 million in assets 24 does not exempt those FCUs from the entirety of the fixed assets rule. Rather, the exemption applies only to the five percent aggregate limit on FCU ownership of fixed assets, which is eliminated in this final rule. Thus, the small credit union exemption to that limit is rendered moot and likewise eliminated.

After careful consideration of all the public comments, the Board is generally adopting the March 2015 proposed rule as final without change.

In summary, this final rule amends the current fixed assets rule by: (1) Eliminating the five percent aggregate limit on fixed assets for FCUs with $1,000,000 or more in assets, as well as the provisions relating to waivers from that aggregate limit; (2) establishing a single time period of six years from the date of acquisition of real property for an FCU to partially occupy any premises acquired for future expansion, regardless of whether the premises are improved or unimproved property; and (3) eliminating the requirement that an FCU applying for a waiver of the partial occupancy requirement do so within 30 months of acquisition of any property acquired for future expansion.

In addition, the final rule makes conforming and technical amendments to the scope, definitions, and other sections of the fixed assets rule to reflect these changes, and it amends the title of § 701.36 to more accurately reflect its amended scope and applicability.

Because the final rule eliminates the five percent aggregate limit on fixed assets and the provisions relating to waivers from that aggregate limit, any waiver previously approved by NCUA concerning this aspect of the rule is rendered moot upon the effective date of this final rule. However, any constraints imposed on an FCU in connection with its investments in fixed assets, such as may be contained in a Letter of Understanding and Agreement, Document of Resolution, Regional Director Letter, Preliminary Warning Letter, or formal enforcement action, will remain intact. Thus, any particular enforcement measure to which an FCU is uniquely subject takes precedence over the more general application of the regulation. A constraint may take the form of a limitation or other condition that is actually imposed as part of a waiver. In such cases, the constraint will survive the adoption of this final rule.

The Regulatory Flexibility Act (RFA) generally requires that, in connection with a rulemaking, an agency prepare and make available for public comment a regulatory flexibility analysis that describes the impact of a rule on small entities. A regulatory flexibility analysis is not required, however, if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities (defined for purposes of the RFA to include credit unions with assets less than $50 million) and publishes its certification and a short, explanatory statement in the Federal Register together with the rule. This rule will provide regulatory relief by allowing FCUs to manage their investments in fixed assets without having to prepare and submit a waiver request to exceed the five percent aggregate limit. Regulatory relief will also be achieved by extending the time period from three to six years for a FCU to partially occupy improved premises acquired for future expansion and by eliminating the requirement to submit a waiver request within 30 months after the property is acquired. This will reduce the number of credit unions needing to request an occupancy waiver. This rule will result in no additional costs to FCUs. NCUA certifies that this final rule will not have a significant economic impact on a substantial number of small credit unions.

The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden.25 For purposes of the PRA, a paperwork burden may take the form of either a reporting or a recordkeeping requirement, both referred to as information collections. The final rule provides regulatory relief to FCUs by eliminating the requirement that, for an FCU with $1,000,000 or more in assets, the aggregate of all its investments in fixed assets must not exceed five percent of its shares and retained earnings, unless it obtains a waiver from NCUA. The final rule does not impose new paperwork burdens. However, the final rule will relieve FCUs from the current requirement to obtain a waiver to exceed the five percent aggregate limit on investments in fixed assets.

According to NCUA records, as of September 30, 2014, there were 3,707 FCUs with assets over $1,000,000 and subject to the five percent aggregate limit on fixed assets. Of those, approximately 150 FCUs would prepare and file a new waiver request to exceed the five percent aggregate limit. This effort, which is estimated to create 15 hours burden per waiver, would no longer be required under the final rule. Accordingly, the reduction to existing paperwork burdens that would result from the final rule is analyzed below:

Estimated FCUs which will no longer be required to prepare a waiver request and file a waiver request: 150.

Frequency of waiver request: Annual.

Reduced hour burden: 15.

150 FCUs × 15 hours = 2250 hours annual reduced burden.

In accordance with the requirements of the PRA, NCUA submitted a copy of the rule to the Office of Management and Budget for its review and approval.

Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. NCUA, an independent regulatory agency, as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order to adhere to fundamental federalism principles. Because the fixed assets rule applies only to FCUs, and not to state-chartered credit unions, this final rule will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. As such, NCUA has determined that this final rule does not constitute a policy that has federalism implications for purposes of the executive order.

NCUA has determined that this final rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act of 1999.26

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the APA. NCUA does not believe this final rule is a “major rule” within the meaning of the relevant sections of SBREFA because it will provide regulatory relief to give FCUs greater autonomy in managing their investments in fixed assets. The elimination of the aggregate limit on fixed assets and the extension of the occupancy requirement will significantly reduce the number of FCUs needing to prepare a waiver request. NCUA has submitted the rule to the Office of Management and Budget for its determination in that regard.

For the reasons stated above, NCUA amends 12 CFR part 701 as follows:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus Model A318, A319, and A320 series airplanes modified by a particular STC. The NPRM published in the Federal Register on April 15, 2015 (80 FR 20175). The NPRM was prompted by reports of cracks found during inspections of the in-flight entertainment system radome assembly that had in-flight entertainment systems installed using an STC issued to Live TV (STC ST00788SE, http://rgl.faa.gov/Regulatory_and_Guidance_Library/rgstc.nsf/0/6df40775b10ef09a86257ae200613cfe/$FILE/ST00788SE.pdf). Investigation of the cause of the cracks revealed that radome manufacturing variation, due to a lack of dimensional controls on the radome manufacturing drawings, can result in the introduction of preload stress on the radome during its assembly with the skirt fairing. Preload stress combined with flight or handling stress, such as maintenance personnel stepping on the radome fairing assembly, might initiate a crack. The radome manufacturing drawings were revised on September 13, 2010, to add a control dimension, which was incorporated into production at radome serial number 498. The NPRM proposed to require detailed inspections for cracks in the radome assembly, and replacement of the radome if necessary. We are issuing this AD to detect and correct cracks in the radome assembly, which could result in the radome (or pieces) separating from the airplane and striking the tail, consequently reducing the controllability of the airplane.

We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM (80 FR 20175, April 15, 2015) or on the determination of the cost to the public.

We reviewed the relevant data and determined that air safety and the public interest require adopting this AD as proposed except for minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (80 FR 20175, April 15, 2015) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (80 FR 20175, April 15, 2015).

We reviewed Live TV Service Bulletin A320-53-006, Rev 01, dated September 10, 2014. The service information describes procedures for repetitive detailed inspections for cracks in the outer ply of the radome, and replacement of the radome with a new or serviceable radome if any crack is found. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this AD.

We estimate that this AD affects 120 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary replacements that would be required based on the results of the inspections. We have no way of determining the number of aircraft that might need this replacement:

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591. ATTN: Information Collection Clearance Officer, AES-200.

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

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

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

For the reasons discussed above, I certify that this AD:

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

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

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

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain The Boeing Company Model 777-200, 777-200LR, 777-300ER, and 777F series airplanes. The NPRM published in the Federal Register on July 1, 2014 (79 FR 37243). The NPRM was prompted by a report indicating that sealant might not have been applied in production to the wing skin panel gaps above certain underwing fittings. The NPRM proposed to require an inspection for missing sealant, and applicable other specified, related investigative and corrective actions. We are issuing this AD to detect and correct missing sealant from the wing skin panel gaps above the underwing fittings, which could result in corrosion and fatigue cracking in the wing skin panel, and consequent loss of limit load capability of the wing skin and potential subsequent structural failure of the wings.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM (79 FR 37243, July 1, 2014) and the FAA's response to each comment. Boeing concurs with the contents of the NPRM.

FedEx requested that any FAA-approved repair be accepted without the requirement of obtaining an AMOC.

We do not agree with the request. The FAA does not consider that any FAA-approved repair will be acceptable to repair this condition. As the sealant was missing from the airplane at the time of initial delivery, it may not have been restored in prior repairs. In addition, repairs may not have detected all corrosion because the repair might not have included the inspection information contained in Boeing Service Bulletin 777-57A0097, Revision 1, dated May 4, 2015.

Repairs for this AD must be approved by the Manager, Seattle ACO, FAA; or by the Boeing Organization Designation Authorization (ODA) using FAA Form 8100-9 in accordance with the procedures specified in paragraph (j)(3) of this AD. We intend to delegate authority to approve AMOCs to the Boeing ODA for the repair approval process. In addition to knowledge of the unsafe condition, the Boeing ODA is knowledgeable about the original airplane design and compliance substantiation. We have not changed this AD regarding this issue.

American Airlines (AAL) stated that the Boeing 777 Maintenance Review Board Report (MRBR) has existing inspections intended to identify deterioration of sealant, as well as any corrosion or cracking. These inspections will detect deterioration or damage to the fillet seal that would lead to moisture ingression to the area of concern. AAL therefore considers the NPRM (79 FR 37243, July 1, 2014) to be unwarranted.

We disagree with the commenter's request to withdraw the NPRM (79 FR 37243, July 1, 2014). Evaluation of the quality escapement revealed that, under certain environmental conditions, moisture can get trapped within a cavity directly under the nacelle fittings that are normally filled with sealant. With the presence of moisture in this cavity, the existing corrosion protection would degrade within an estimated ten years of service, and corrosion pitting would form on the stringer surface. Under flight loading, cracks would initiate and propagate from the corrosion pits until the stringer would no longer be able to sustain limit load, and would eventually fail. This corrosion and cracking would not be detected by the existing maintenance program prior to stringer failure. We have not changed this AD regarding this issue.

American Airlines (AAL) stated that accomplishing the actions specified in Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, could be detrimental to aircraft safety. According to AAL, any attempt at the sealant removal to do the inspection based upon the existing instructions in Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, could potentially damage or degrade the protective surface finish of the wing skin or underwing fitting and lead to future corrosion or fatigue cracking.

AAL stated that it attempted and failed to accomplish the inspection in accordance with Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, because access to some of the intended inspection areas was severely inhibited by hydraulic lines. AAL also stated that any sealant, if present, would have been applied to the entire gap, so inspection from only one side should be sufficient. In addition, AAL used the recommended tooling and alternate tooling as specified in Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, but experienced multiple problems with the use of this tooling. In addition, AAL requested that Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, be validated with workable tooling on an in-service airplane prior to any future action.

We infer that the commenter is requesting that we delay issuance of the final rule pending validation of the existing procedures. We do not agree. AAL reported “multiple problems with the use of this tooling,” but did not describe any specific problems. However, we understand that the tools themselves require frequent but inexpensive replacement. We have determined that use of the appropriate tools and processes to remove the sealant from underneath the fitting should not damage the skin or adjacent structures.

Boeing has performed and validated the procedures in Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, on certain airplanes that are representative of the fleet on the flight line before delivery with no damage to the skin or adjacent structures. However, Boeing has revised Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, to clarify the sealant removal process and tooling, to ensure that it will not damage the skin. We also discussed AAL's concerns with Boeing, and Boeing reported that they have provided AAL with assistance. Boeing is also willing to work with any other operator that is having difficulty implementing the SB.

Boeing considers that the revision of Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, should address AAL's concerns about the tooling and procedures for sealant removal. We have revised paragraphs (c), (g), (h)(1), and (h)(2) of this AD to refer to Boeing Service Bulletin 777-57A0097, Revision 1, dated May 4, 2015. We have added new paragraph (i) to this AD to give credit for actions done before the effective date of this AD using Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014. We have redesignated subsequent paragraphs accordingly. The FAA will consider approving alternative procedures if they are shown to be effective.

AAL requested that, once Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, is validated, sufficient time should be provided to allow operators to procure such tooling.

We infer that the commenter is requesting an extension to the compliance time. We do not agree with the commenter's request to extend the compliance time. We coordinated with Boeing regarding tool availability and fabrication. The tools stated in Boeing Service Bulletin 777-57A0097, dated January 10, 2014; and Revision 1, dated May 4, 2015; are nonmetallic sealant scrapers, which are widely available, with no lead time to procure these tools. Existing tools may be modified to match the wing panel gaps by cutting them to the correct size. However, we do understand that cutting the tools to size may weaken the tools, which could cause them to fracture and result in more frequent replacement of the tools. Boeing has stated that there is no engineering or drawing work required for fabrication. Any certified aircraft mechanic can fabricate the necessary tools. Boeing stated that during validation of the Boeing Alert Service Bulletin 777-57A0097, dated January 10, 2014, the tools were fabricated in a working shift. We have not changed this AD in this regard.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (79 FR 37243, July 1, 2014) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 37243, July 1, 2014).

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

We reviewed Boeing Service Bulletin 777-57A0097, Revision 1, dated May 4, 2015. The service information describes procedures for the inspection and repair of underwing fitting sealant at wing panel gaps. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this AD.

We estimate that this AD affects 6 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

We estimate the following costs to do any necessary actions that would be required based on the results of the inspection. We have no way of determining the number of aircraft that might need these actions:

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

According to the manufacturer, some of the costs of this AD may be covered under warranty, thereby reducing the cost impact on affected individuals. We do not control warranty coverage for affected individuals. As a result, we have included all costs in our cost estimate.

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

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

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

For the reasons discussed above, I certify that this AD:

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

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

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

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

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

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus Model A319 series airplanes; Model A320-211, -212, -214, -231, -232, and -233 airplanes; and Model A321 series airplanes. The NPRM published in the Federal Register on October 1, 2014 (79 FR 59160).

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Community, has issued EASA Airworthiness Directive 2014-0081, dated March 31, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus Model A319 series airplanes; Model A320-211, -212, -214, -231, -232, and -233 airplanes; and Model A321 series airplanes. The MCAI states:

The modification includes doing applicable related investigative and corrective actions. Related investigative actions include measuring the diameter of a hole of a fastener and doing a rotating probe inspection. Corrective actions include repairs. You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2014-0652-0003.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM (79 FR 59160, October 1, 2014) and the FAA's response to each comment.

United Airlines (UAL) and Airbus requested that we revise the NPRM (79 FR 59160, October 1, 2014) to include the latest service information. UAL explained that Airbus Service Bulletin A320-53-1267, Revision 02, dated May 19, 2014, has similar modification requirements to those specified in Airbus Service Bulletin A320-53-1267, Revision 01, dated October 2, 2013, but also has updates including two new airplane configurations, which update compliance times corresponding to the times listed in paragraph (g)(2) of the NPRM. Airbus stated that Airbus Service Bulletin A320-53-1267, Revision 02, dated May 19, 2014, updates the effectivity and compliance times in the service information.

We agree to include Airbus Service Bulletin A320-53-1267, Revision 02, dated May 19, 2014, in this AD. Airbus Service Bulletin A320-53-1267, Revision 02, dated May 19, 2014, was issued to provide updated compliance times and effectivity. Airbus Service Bulletin A320-53-1267, Revision 02, dated May 19, 2014, does not add additional requirements for AD compliance times.

Also, we have added Airbus Service Bulletin A320-53-1267, Revision 01, dated October 2, 2013, to paragraph (j)(2) of this AD to offer credit for the corresponding actions performed before the effective date of this AD.

UAL requested that we revise the NPRM (79 FR 59160, October 1, 2014) to omit paragraph (h) of the proposed AD. UAL explained that Task 534126-01-3, of the Airworthiness Limitation Section (ALS) Part 2, “Damage-Tolerant Airworthiness Limitation Items” of the Airbus A319/A320/A321 Airworthiness Limitation Items is addressed separately in other rulemaking, NPRM Docket No. FAA-2013-0692, Directorate Identifier 2012-NM-024-AD (78 FR 49213, August 13, 2013), and that NPRM contains the instructions for the corrective actions in paragraph (o)(2) of that NPRM. UAL concluded that paragraph (h) of the NPRM (79 FR 59160, October 1, 2014), which specifies corrective actions for Task 534126-01-3, might cause confusion. UAL also suggested that, as an alternative to omitting paragraph (h) of NPRM (79 FR 59160, October 1, 2014), paragraph (h) of the NPRM could be revised so that the Task 534126-01-3 requirement refers to the other rulemaking, NPRM Docket No. FAA-2013-0692, Directorate Identifier 2012-NM-024-AD (78 FR 49213, August 13, 2013), which has since been issued as AD 2014-23-15, Amendment 39-18031 (80 FR 3871, January 26, 2015). (AD 2014-23-15 has since been superseded by AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015)).

We disagree to omit or revise paragraph (h) of this AD. Paragraph (h) of this AD is not a duplicated action. Paragraph (h) of this AD specifies that for Airbus A320 airplanes having pre-modification 160001, that have exceeded 46,400 flight cycles or 92,800 flight hours, whichever occurred first since the airplane's first flight, operators must repair cracks found during accomplishment of Task 534126-01-3, using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval. This specific condition and corrective action is not included in paragraph (p)(2) of AD 2015-05-02, Amendment 39-18112 (80 FR 15152, March 23, 2015, which corresponds to paragraph (o)(2) of NPRM Docket No. FAA-2013-0692, Directorate Identifier 2012-NM-024-AD (78 FR 49213, August 13, 2013). AD 2015-05-02, does not mandate corrective actions associated with Task 534126-01-3, of the Airworthiness Limitation Section (ALS) Part 2, “Damage-Tolerant Airworthiness Limitation Items” of the Airbus A319/A320/A321 Airworthiness Limitation Items, but instead mandates incorporation of that task into operators' maintenance or inspection programs. We have made no changes to this AD in this regard.

We reviewed the relevant data, considered the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these minor changes:

• Are consistent with the intent that was proposed in the NPRM (79 FR 59160, October 1, 2014) for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM (79 FR 59160, October 1, 2014).

We also determined that these changes will not increase the economic burden on any operator or increase the scope of this AD.

Airbus has issued Airbus Service Bulletin A320-53-1267, Revision 02, dated May 19, 2014; and Airbus Service Bulletin A320-53-1272, Revision 02, dated May 19, 2014. The service information describes procedures for a modification, which includes measuring the diameter of a hole of a fastener and doing a rotating probe inspection, and repairs if necessary. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this AD.

We estimate that this AD affects 851 airplanes of U.S. registry.

We also estimate that it will take about 25 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $420 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $2,165,795, or $2,545 per product.

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

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

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

For the reasons discussed above, I certify that this AD:

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

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

3. Will not affect intrastate aviation in Alaska; and

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

You may examine the AD docket on the Internet at http://www.regulations.gov/#!docketDetail;D=FAA-2014-0652; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone 800-647-5527) is in the ADDRESSES section.

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

This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part § 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C 553(d), good cause exists for making some SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary. This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

The material incorporated by reference is publicly available as listed in the ADDRESSES section.

The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, Part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

NASA has determined this rulemaking meets the criteria for a direct final rule because it involves non-substantive changes to correct citations and office titles in 14 CFR part 1217. No opposition to the changes and no significant adverse comments are expected. However, if the Agency receives a significant adverse comment, it will withdraw this direct final rule by publishing a notice in the Federal Register. A significant adverse comment is one that explains: (1) Why the direct final rule is inappropriate, including challenges to the rule's underlying premise or approach; or (2) why the direct final rule will be ineffective or unacceptable without a change. In determining whether a comment necessitates withdrawal of this direct final rule, NASA will consider whether it warrants a substantive response in a notice and comment process.

Part 1217 was last amended February 12, 1997, [62 FR 6467] to extend and expand NASA's authority with respect to duty-free imports of articles for use by NASA and for the implementation of its international programs, as prescribed by Presidential Proclamation 6780 issued March 23, 1995 [60 FR 15845]. The Part is being amended to correct citations and office titles. The revisions to this rule are part of NASA's retrospective plan completed in August 2011 under Executive Order (EO) 13563. NASA's full plan can be accessed on the Agency's open Government Web site at http://www.nasa.gov/feature/compliance-and-other-documents.

The National Aeronautics and Space Act (the Space Act), 51 U.S.C. 20113(a), authorizes the Administrator of NASA to make, promulgate, issue, rescind, and amend rules and regulations governing the manner of its operations and the exercise of the powers vested in it by law.

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). EO 13563 emphasizes the importance of quantifying both costs and benefits of reducing costs, harmonizing rules, and promoting flexibility. This rule has been designated as “not significant” under section 3(f) of EO 12866.

The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires an agency to prepare an initial regulatory flexibility analysis to be published at the time the proposed rule is published. This requirement does not apply if the agency “certifies that the rule will not, if promulgated, have a significant economic impact on a substantial number of small entities” (5 U.S.C. 603). This rule revises subpart 1 to correct citations and office titles.

This direct final rule does not contain any information collection requirements subject to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

EO 13132, “Federalism,” 64 FR 43255 (August 4, 1999) requires regulations be reviewed for Federalism effects on the institutional interest of states and local governments, and if the effects are sufficiently substantial, preparation of the Federal assessment is required to assist senior policy makers. The amendments will not have any substantial direct effects on state and local governments within the meaning of the EO. Therefore, no Federalism assessment is required.

Accordingly, under the authority of the National Aeronautics and Space Act, as amended, NASA amends 14 CFR part 1217 as follows:

Paperwork Reduction Act

The collection of information contained in this Treasury decision has been submitted to the OMB for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by October 2, 2015. Comments are specifically requested concerning:

Whether the proposed collection of information is necessary for the proper performance of the functions of the IRS, including whether the information will have practical utility;

The accuracy of the estimated burden associated with the proposed collection of information; and

Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

The collections of information in the final regulations are in § 1.706-4(f), which requires partnerships adopting the proration method, adopting the semi-monthly or monthly convention, choosing to perform semi-monthly or monthly interim closings, or selecting an additional class of extraordinary items, to maintain a statement with their books and records. This information will be available to the IRS upon examination to document the partnership's selection of the method, convention, optional interim closings, or additional class of extraordinary items. The collections of information are required to obtain a benefit. The likely respondents are partnerships. The collections will be reported and collected through the OMB approval number for Form 1065, U.S. Return of Partnership Income, under control number 1545-0123; please see the instructions for Form 1065 for estimates of the burden associated with the collection of information.

An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by the OMB.

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by section 6103.

These final regulations contain amendments to the Income Tax Regulations (26 CFR part 1) under section 706 of the Internal Revenue Code (Code). On April 14, 2009, the Treasury Department and the IRS published a notice of proposed rulemaking (REG-144689-04) (the 2009 proposed regulations) in the Federal Register to provide guidance under section 706(d)(1) and to conform the Income Tax Regulations for certain provisions of section 1246 of the Taxpayer Relief Act of 1997, Public Law 105-34 (111 Stat. 788 (1997)), and section 72 of the Deficit Reduction Act of 1984, Public Law 98-369 (98 Stat. 494 (1984)). The Treasury Department and the IRS did not hold a public hearing because there were no requests to speak at a hearing. However, the Treasury Department and the IRS received comments in response to the 2009 proposed regulations. The comments are discussed in this preamble.

The 2009 proposed regulations provided methods for determining partners' distributive shares of partnership items in any year in which there is a change in a partner's interest in the partnership, whether by reason of a disposition of the partner's entire interest or less than the partner's entire interest, or by reason of a reduction of a partner's interest due to the entry of a new partner or partners. The 2009 proposed regulations also added proposed § 1.706-1(c)(2)(iii) to provide that a deemed disposition of a partner's interest pursuant to §§ 1.1502-76(b)(2)(vi) (relating to corporate partners that become or cease to be members of a consolidated group within the meaning of § 1.1502-1(h)), 1.1362-3(c)(1) (relating to the termination of the subchapter S election of an S corporation partner), or 1.1377-1(b)(3)(iv) (regarding an election to terminate the taxable year of an S corporation partner) shall be treated as a disposition of the partner's entire interest in the partnership. Finally, the 2009 proposed regulations amended the rules applicable to the determination of the taxable year of a partnership when a partnership interest is held by a “disregarded foreign partner” (as defined in § 1.706-1(b)(6)(i)).

After consideration of the comments, the 2009 proposed regulations are adopted as modified by this Treasury decision.

The 2009 proposed regulations under § 1.706-4 provided guidance under section 706(d)(1), which provides that, except as required by section 706(d)(2) and (d)(3), if there is a change in a partner's interest in the partnership during the partnership's taxable year, each partner's distributive share of any partnership item of income, gain, loss, deduction, or credit for such taxable year is determined by the use of any method prescribed by the Secretary by regulations which takes into account the varying interests of the partners in the partnership during such taxable year. The 2009 proposed regulations incorporated several of the existing varying interest rules in the regulations under section 706. These final regulations finalize the varying interest rules contained in the 2009 proposed regulations with the modifications described in this Part 1 of the preamble. The Treasury Department and the IRS have decided that these modifications necessitate reorganizing § 1.706-4 for clarity. As finalized by these regulations, § 1.706-4(a)(3) now contains a step-by-step process for making allocations under § 1.706-4. In addition, the remainder of § 1.706-4 has been reorganized into discrete sections addressing the scope of § 1.706-4, exceptions to § 1.706-4, partnership conventions, extraordinary items, and procedures for partnership decisions relating to § 1.706-4. Where possible, this preamble tracks the organization of § 1.706-4 as finalized by these regulations.

Section 1.706-4 of the final regulations provides rules for determining the partners' distributive shares of partnership items when a partner's interest in a partnership varies during the taxable year as a result of the disposition of a partial or entire interest in a partnership as described in § 1.706-1(c)(2) and (c)(3), or with respect to a partner whose interest in a partnership is reduced as described in § 1.706-1(c)(3), including by the entry of a new partner (collectively, a “variation”). The final regulations further provide that, in all cases, all partnership items for each taxable year must be allocated among the partners, and no items may be duplicated, regardless of the particular provision of section 706 which applies, and regardless of the method or convention adopted by the partnership.

The 2009 proposed regulations contained two exceptions for allocations that would otherwise be subject to the rules of § 1.706-4: one exception applies to certain partnerships with contemporaneous partners, and the other exception applies to certain service partnerships. As described below, the final regulations adopt these exceptions with certain modifications.

The 2009 proposed regulations did not address the interaction of the allocable cash basis item rules of section 706(d)(2) and the tiered partnership rules of section 706(d)(3) with the rules in § 1.706-4 for determining a partner's distributive share when a partner's interest varies. However, the 2009 proposed regulations did request comments on issues that arise with regard to allocable cash basis items and tiered partnerships. In response to comments received, §§ 1.706-2 and 1.706-3 are proposed to be amended as described in a notice of proposed rulemaking issued contemporaneously with these final regulations to address the treatment of allocable cash basis items and tiered partnerships, respectively. The final regulations clarify that § 1.706-4 does not apply to items subject to allocation under other rules, including section 706(d)(2) and section 706(d)(3).

The 2009 proposed regulations contained a “contemporaneous partner exception” based on the Tax Court's opinion in Lipke v. Commissioner, 81 T.C. 689 (1983), and the legislative history of section 706. Section 761(c) provides that a partnership agreement includes any modifications of the partnership agreement made prior to, or at, the time prescribed by law for the filing of the partnership return for the taxable year (not including extensions). In Lipke, the Tax Court held that section 706(c)(2)(B) (as in effect prior to 1984) prohibited retroactive allocations of partnership losses when the allocations resulted from additional capital contributions made by both new and existing partners. However, the Tax Court held that the prohibition on retroactive allocations under section 706(c)(2)(B) did not apply to changes in the allocations among partners that were members of the partnership for the entire year (contemporaneous partners) if the changes in the allocations did not result from capital contributions. Congress amended section 706 in 1984, in part to clarify that the varying interests rule applies to any change in a partner's interest, whether in connection with a complete disposition of the partner's interest or otherwise. To that end, Congress replaced the varying interests rule in section 706(c)(2)(B) with the rule that now appears in section 706(d)(1). The legislative history pertaining to this amendment reflects Congress's intention that the new rule of section 706(d)(1) be comparable to the pre-1984 law without overruling the longstanding rule of section 761(c):

Consistent with this authority, proposed § 1.706-4(b)(1) provided an exception to the rule in proposed § 1.706-4(a)(1) for dispositions of less than a partner's entire interest in the partnership described in § 1.706-1(c)(3), provided that the variation in the partner's interest is not attributable to a capital contribution or a partnership distribution to a partner that is a return of capital, and the allocations resulting from the modification otherwise comply with section 704(b) and the regulations promulgated thereunder.

Commenters requested guidance on determining when changes in the allocations among partners are attributable to capital contributions to, and distributions from, the partnership, and which requirements of section 704(b) must be met. The final regulations do not address the determination of whether an amended allocation is attributable to a contribution or a distribution to a partner or whether such allocations otherwise satisfy section 704(b) because these comments raise issues beyond the scope of this project and require further consideration. However, the Treasury Department and the IRS may address these issues in future guidance.

Commenters also requested that the final regulations expand the scope of the contemporaneous partner exception to include allocations of items attributable solely to a particular segment of a partnership's year (see § 1.706-4(a)) among partners who are partners of the partnership for that entire segment. The final regulations adopt this recommendation and finalize the contemporaneous partner exception.

Proposed § 1.706-4(b)(2) provided that a service partnership (a partnership in which substantially all the activities involve the performance of services in the fields of health, law, engineering, architecture, accounting, actuarial science, or consulting) may choose to determine the partners' distributive shares of partnership income, gain, loss, deduction, and credit using any reasonable method, provided that the allocations were valid under section 704(b). Commenters recommended the final regulations extend the safe harbor to non-service partnerships that satisfy specific revenue and allocation thresholds (for example, gross receipts of $100 million or less and no partner receives an allocation of an item listed under section 702(a) in excess of $10 million). Another commenter requested that the final regulations provide that the list of service partnerships could be expanded by other published guidance.

The Treasury Department and the IRS intend the safe harbor for service partnerships to be limited to partnerships that derive their income from the provision of services and not from capital because, in general, allocations among individual partners in partnerships for which capital is not a material income-producing factor do not raise concerns that may be present in allocations among partners in capital-intensive partnerships. Therefore the final regulations do not provide an exception based upon revenue and allocation thresholds. However, the Treasury Department and the IRS agree that the definition of a service partnership in the proposed regulations was overly narrow. Accordingly, the final regulations apply the service partnership safe harbor to any partnership for which capital is not a material income-producing factor.

The 2009 proposed regulations generally provided that a partnership shall take into account any variation in the partners' interests in the partnership during the taxable year in determining the distributive share of partnership items under section 702(a) by using either the interim closing method or the proration method. Unless the partners agree to use the proration method, the partnership was required to use the interim closing method and allocate its items among the partners in accordance with their respective partnership interests during each segment of the taxable year. Under the 2009 proposed regulations, if the partners agreed to use the proration method, the partnership was required to allocate the distributive share of partnership items among the partners in accordance with their pro rata shares of the items for the entire taxable year. The 2009 proposed regulations did not, however, allow certain “extraordinary items” to be prorated, and instead required that those items be allocated according to special rules. These regulations finalize the method rules of the 2009 proposed regulations with certain modifications.

Proposed § 1.706-4(a)(1) required the partnership and all of its partners to use the same method for all variations in the partners' interests occurring within the partnership's taxable year, whether resulting from a complete or partial termination of a partner's interest or the entry of a new partner. Commenters recommended that the final regulations allow a partnership to use different methods for separate variations during the partnership's taxable year, provided that the overall combination of methods is reasonable based on the overall facts and circumstances. Commenters stated that it would be reasonable for a partnership to be allowed to apply the interim closing method to a transfer of a large interest in the partnership, where the partnership or transferee or transferor partner is willing to pay for the additional accounting costs associated with the interim closing method, and in the same year apply the proration method for transfers of small interests (or other large transfers of interests if, for example, the parties are unwilling to bear the costs of closing the books), in order to minimize the costs and administrative burden of accounting for such transfers. The Treasury Department and the IRS agree that partnerships may be more willing to use the interim closing method, which is generally more accurate but more costly, for significant variations if doing so would not require the partnership to use the interim closing method for all variations, regardless of size, that occur throughout the year. Therefore, in response to comments, the final regulations allow a partnership to use different methods for different variations within the partnership's taxable year, as explained in Part 1.B.iii of this Preamble. Accordingly, a partnership may use the interim closing method with respect to one variation and may choose to use the proration method for another variation in the same year. However, the final regulations provide that the Commissioner may place restrictions on the ability of a partnership to use different methods during the same taxable year in guidance published in the Internal Revenue Bulletin.

The 2009 proposed regulations require partnerships applying the interim closing method to perform the interim closing at the time the variation is deemed to occur, and do not require or permit a partnership to perform an interim closings of its books except at the time of any variation for which the partnership uses the interim closing method. One commenter stated that of the partnerships that close their books at times other than year end, most do so at month end, and some close their books semi-monthly. The commenter stated that most partnerships that currently are subject to the interim closing method do not actually close their books other than at month end as they do not have the resources and systems organized in order to do that. The commenter requested that partnerships using the interim closing method and the calendar day convention be allowed under the final regulations to determine income on a calendar day basis by closing their books at month's end, and then prorating the last month's income to the periods of the month before and after the calendar day on which the variation occurred.

The Treasury Department and the IRS agree that partnerships should be permitted to perform regular monthly or semi-monthly interim closings, and to prorate items within each month or semi-month, as applicable. Therefore, the final regulations provide that a partnership may, by agreement of the partners, perform regular interim closings of its books on a monthly or semi-monthly basis, regardless of whether any variation occurs. The Treasury Department and the IRS believe that this combination of the use of regular interim closings and the proration method with respect to variations should generally achieve the results sought by the commenter. The final regulations continue to require a partnership using the interim closing method with respect to a variation to perform the interim closing at the time the variation is deemed to occur, and do not require a partnership to perform an interim closings of its books except at the time of any variation for which the partnership uses the interim closing method.

The final regulations provide guidance on the meaning of the term “agreement of the partners,” including for purposes of the decision to perform regular monthly or semi-monthly interim closings. Because that term applies to several different decisions in § 1.706-4, the discussion of “agreement of the partners” is consolidated into Part 1.E of this preamble.

For purposes of accounting for the partners' varying interests in the partnership, the 2009 proposed regulations required the partnership to maintain, for each partner whose interest changes in the taxable year, segments to account for such changes. Under the 2009 proposed regulations, a segment was a specific portion of a partnership's taxable year created by a variation, regardless of whether the partnership used the interim closing method or the proration method for that variation. The final regulations continue to rely on the concept of segments; however, because the final regulations now permit partnerships to use both the interim closing method and the proration method in the same taxable year, the final regulations also contain a new concept of proration periods. Under the final regulations, segments are specific periods of the partnership's taxable year created by interim closings of the partnership's books, and proration periods are specific portions of a segment created by a variation for which the partnership chooses to apply the proration method. The partnership must divide its year into segments and proration periods, and spread its income among the segments and proration periods according to the rules for the interim closing method and proration method, respectively.

Under the final regulations, the first segment commences with the beginning of the taxable year of the partnership and ends at the time of the first interim closing of the partnership's books. Any additional segment shall commence immediately after the closing of the prior segment and ends at the time of the next interim closing. However, the last segment of the partnership's taxable year ends no later than the close of the last day of the partnership's taxable year. If there are no interim closings, the partnership has one segment, which corresponds to its entire taxable year.

Under the final regulations, the first proration period in each segment begins at the beginning of the segment, and ends at the time of a variation for which the partnership uses the proration method. The next proration period begins immediately after the close of the prior proration period and ends at the time of the next variation for which the partnerships uses the proration method. However, each proration period ends no later than the close of the segment. Thus, segments close proration periods. Therefore, the only items subject to proration are the partnership's items attributable to the segment containing the proration period.

Proposed § 1.706-4(a)(2)(i) required that a partnership using the interim closing method treat each segment as though the segment was a separate distributive share period and that therefore a partnership using the interim closing method may compute a capital loss for a segment of a taxable year even though the partnership has a net capital gain for the entire taxable year. Similarly, proposed § 1.706-4(a)(2)(ii) provided that any limitation applicable to the partnership year as a whole (for example, the limitation under section 179 relating to elections to expense certain depreciable business assets) must be apportioned among the segments using any reasonable method, provided that the total amount of the items apportioned among the segments does not exceed the limitation applicable to the partnership year as a whole.

Commenters expressed concern that the examples do not clarify how a partnership accounts for items that are not determined until the end of the taxable year, such as waterfall allocations, minimum gain chargebacks, and certain reserves. Commenters specifically inquired whether these determinations are made at the interim closing dates or at the end of the partnership's taxable year. Other commenters questioned whether the distributive share periods are treated as separate taxable years for purposes of sections 461(h) (relating to economic performance) and 404(a)(5) (relating to deductions for contributions to employee plans). Finally, other commenters requested guidance on the interaction of sections 168 (relating to the modified accelerated cost recovery system) and 471 (relating to accounting for inventories) with the 2009 proposed regulations.

Proposed § 1.706-4(a)(2)(i) and (ii) were intended to demonstrate that year-end determinations and annual limitations are evaluated only at the end of the partnership's taxable year. The final regulations continue to provide that each segment is generally treated as a separate distributive share period. Additionally, the final regulations provide that for purposes of determining allocations to segments, any special limitation or requirement relating to the timing or amount of income, gain, loss, deduction, or credit applicable to the entire partnership taxable year will be applied based on the partnership's satisfaction of the limitation or requirements as of the end of the partnership's taxable year. For example, the expenses related to the election to expense a section 179 asset must first be calculated (and limited if applicable) based on the partnership's full taxable year, and then the effect of any limitation must be apportioned among the segments in accordance with the interim closing method or the proration method using any reasonable method. Thus, the segments are not treated as separate taxable years for purposes of sections 461(h) and 404(a)(5). The final regulations do not address inventory accounting under section 471 because those issues are beyond the scope of this project.

Moreover, other provisions of the Code providing a convention for making a particular determination still apply. For example, section 168 provides conventions for determining when property is placed in service and when property is disposed of. The convention in section 168 would apply first to determine when the property is placed in service or when the property is disposed of, and section 706 would apply second to determine who was a partner during that segment. The Treasury Department and the IRS are studying issues relating to the interaction of section 706 and the partnership minimum gain provisions in § 1.704-2 and therefore the final regulations do not address these issues. As discussed in Part 1.F of this preamble, the interaction of sections 704 and 706 is generally beyond the scope of these final regulations; accordingly, these final regulations do not address the treatment of waterfall allocations.

Under the 2009 proposed regulations, if the partners agreed to use the proration method, the partnership was required to allocate the distributive share of partnership items among the partners in accordance with their pro rata shares of the items for the entire taxable year. The Treasury Department and the IRS received several comments suggesting various modifications to the proration method. Commenters stated that the 2009 proposed regulations provided less flexibility in accounting for partners' varying interests under the proration method than the current regulations under section 706. Commenters recommended that the final regulations retain the flexibility of the current regulations by allowing partnerships to use any reasonable proration method to determine partners' distributive shares of partnership items and that the final regulations provide examples of reasonable proration methods. The Treasury Department and the IRS believe that, because the final regulations provide partnerships with flexibility to use either the interim closing method or the proration method for each variation, and because the proration method can be less accurate than the interim closing method, it is appropriate to generally retain the rules applicable to the proration method from the 2009 proposed regulations. Accordingly, the final regulations do not adopt this suggestion. However, because the final regulations permit partnerships to use both the proration method and the interim closing method in the same taxable year, the rules for the proration method are now based upon the items in each segment, rather than the items for the partnership's entire taxable year. Section 1.706-4(a)(4) of the final regulations contains a detailed example illustrating the interaction of segments and proration periods.

Proposed § 1.706-4(d)(1) provided that, for purposes of the proration method, specific items aggregated by the partnership at the end of the year (other than extraordinary items) shall be disregarded, and the aggregate of the items shall be considered to be the partnership item for the year. Commenters questioned whether proposed § 1.706-4(a)(2)(i) and (ii) and (d)(1) were intended to provide the same rules for both the interim closing method and the proration method. These sections address different issues. Proposed § 1.706-4(d)(1) was intended to allow partnerships that have multiple items that are aggregated by the partnership at the end of the year to also treat those items as a single item for purposes of the proration method (for example, capital gains and capital losses). By contrast, proposed § 1.706-4(a)(2)(i) and (ii) were intended to demonstrate that for purposes of determining allocations to segments, any annual limitation will be disregarded as long as the limitation is satisfied by the end of the partnership's taxable year.

One commenter requested that the final regulations allow publicly traded partnerships (as defined in section 7704(b)) that are treated as partnerships (“PTPs”) using the proration method and calendar day convention to prorate their annual aggregate tax items by the number of months instead of the number of days. Because the use of the proration method can be less accurate than the interim closing method in certain circumstances, the Treasury Department and the IRS believe that partnerships using the proration method should prorate by the number of days. Therefore, the final regulations do not adopt this recommendation.

Consistent with the 2009 proposed regulations, under the final regulations the proration method may be used only by “agreement of the partners.” Commenters requested guidance on the meaning of this term, and the final regulations provide guidance as described in Part 1.E of this preamble.

The 2009 proposed regulations acknowledged that for certain partnerships using the interim closing method, such as partnerships in which interests are frequently transferred, determining the partnership items for each segment could create a significant administrative burden. Accordingly, the 2009 proposed regulations allowed the use of simplifying conventions. Conventions are rules of administrative convenience that determine when each variation is deemed to occur for purposes of § 1.706-4. Because the timing of each variation determines the partnership's segments and proration periods, which in turn are used to determine the partners' distributive shares, the convention used by the partnership with respect to a variation will generally affect the allocation of partnership items. However, as discussed in Part 1.D.ii of this preamble, extraordinary items generally must be allocated without regard to the partnership's convention.

The 2009 proposed regulations provided that a partnership using the interim closing method could use either the calendar day convention or the semi-monthly convention to determine the segments of the partnership's taxable year, and provided that a partnership using the proration method shall use the calendar day convention. The 2009 proposed regulations required the partnership to use the same convention for all variations during a taxable year. The 2009 proposed regulations requested comments with regard to the possible expansion of these rules to include other conventions or other methods. The final regulations generally finalize the rules for conventions from the 2009 proposed regulations with the modifications described in this Part 1.C of the preamble.

Commenters noted that the legislative history of section 706(d) contemplated that regulations under section 706 would provide a monthly convention for all partnerships. These commenters also argued that the administrative burden and accounting complexity inherent in the interim closing method would be alleviated by a monthly convention. Accordingly, the commenters recommended that the monthly convention be available to all partnerships, regardless of method, provided that the overall allocation of partnership items is reasonable.

The legislative history indicates that Congress did consider providing for a statutory election to use a monthly convention:

Consistent with the rules for the selection of the proration method, the final regulations provide that the selection of the convention must be made by agreement of the partners by satisfying the provisions of § 1.706-4(f) of these final regulations as explained in Part 1.E of this preamble. In the absence of an agreement to use a convention, the partnership will be deemed to have chosen the calendar day convention.

Commenters also requested that the final regulations allow partnerships using the proration method to allocate extraordinary items under either the calendar day convention or the semi-monthly convention to mirror the rules under the interim closing method. As explained in Part 1.D.i of this preamble, the final regulations provide that extraordinary items must generally be allocated based on the date and time on which the extraordinary items arise, without regard to the partnership's convention or use of the proration method or interim closing method. Thus, under the final regulations the allocation of extraordinary items will generally be the same regardless of the partnership's selected method or convention.

The partnership's method and convention are generally relevant in determining allocations of non-extraordinary items. The final regulations retain the requirement that partnerships using the proration method must use a calendar day convention. Partnerships using the interim closing method have the option of using a semi-monthly or monthly convention in addition to the calendar day convention because of the additional administrative burdens inherent in using the more accurate interim closing method. Although the proration method may impose less administrative burdens on a partnership, it is less accurate than the interim closing method. Thus, the Treasury Department and the IRS believe it is necessary to retain the requirement of a calendar day convention for the proration method.

Proposed § 1.706-4(b)(3) provided a safe harbor for PTPs that permitted a PTP using either the interim closing method or the proration method to treat all transfers of its publicly traded units (as described in § 1.7704-1(b)(1)) except for certain block transfers during the calendar month as occurring, for purposes of determining partner status, on the first day of the following month under a consistent method adopted by the partnership. Proposed § 1.706-4(b)(3) also provided that, alternatively, PTPs could use the semi-monthly convention described in proposed § 1.706-4(e)(2). The proposed PTP safe harbor referenced both rules for determining partner status and conventions in the same sentence, which could cause confusion. To eliminate this confusion, the Treasury Department and the IRS have decided to incorporate the rules of the PTP safe harbor from the 2009 proposed regulations, modified in response to comments as described in this section of the preamble, into the portions of the regulations providing rules for partnership conventions and methods. Therefore, the PTP safe harbor from the 2009 proposed regulations is no longer necessary and has been removed from the final regulations. However, as described below, the substantive rules from the PTP safe harbor remain largely unchanged in these final regulations.

Commenters on the PTP safe harbor recommended that PTPs should be able to apply their conventions to all transfers of units, not just publicly traded units, including block transfers. The IRS and the Treasury Department agree that the rules from the proposed regulations should be extended to block transfers, but believe that transfers of non-publicly traded units should be accounted for similar to transfers of interests in non-publicly traded partnerships. Accordingly, the final regulations provide that a PTP may, by agreement of the partners, use any of the calendar day, the semi-monthly, or the monthly convention with respect to all variations during the taxable year relating to its publicly-traded units, regardless of whether the PTP uses the proration method with respect to those variations. A PTP must use the same convention for all variations during the taxable year relating to its publicly traded units. The final regulations provide that a PTP must use the calendar day convention with respect to all variations relating to its non-publicly traded units for which the PTP uses the proration method. In addition, consistent with the rules from the PTP safe harbor in the 2009 proposed regulations, the final regulations provide that a PTP using a monthly convention generally may consistently treat all variations occurring during each month as occurring at the end of the last day of that calendar month, if the PTP uses the monthly convention for those variations.

The preamble to the 2009 proposed regulations acknowledged that some PTPs use conventions not described in the 2009 proposed regulations and requested comments concerning the use of additional conventions. In response to this request for comments, one commenter on the PTP safe harbor also recommended that the final regulations allow PTPs to use a quarterly convention. This commenter stated that PTPs generally declare cash distributions quarterly to their unit holders of record on the last day of the quarter to align the distributions with the PTPs' quarterly financial reporting. The Treasury Department and the IRS believe that a quarterly convention could significantly reduce the accuracy of the allocations of a partnership's tax items to a particular partner. Accordingly, the final regulations do not permit PTPs to use a quarterly convention. As discussed in Part 1.D.iii.a of this preamble, however, proposed regulations under section 706 (REG-109370-10) are being published concurrently with these final regulations, and, subject to certain exceptions, provide that PTPs may, by agreement of their partners, treat all items of income that are amounts subject to withholding as defined in § 1.1441-2(a) (excluding income effectively connected with the conduct of a trade or business within the United States) or withholdable payments under § 1.1473-1(a) as extraordinary items. If the partners so agree, then for purposes of section 706 such items are treated as occurring at the next time as of which the recipients of a distribution by the PTP are determined, or, to the extent such income items arise between the final time during the taxable year as of which the recipients of a distribution are determined and the end of the taxable year, such items shall be treated as occurring at the final time during the taxable year that the recipients of a distribution by the PTP are determined. This proposed rule does not apply unless the PTP has a regular practice of making at least four distributions (other than de minimis distributions) to its partners during each taxable year. The Treasury Department and the IRS believe that this proposed rule is desirable to link each partner's distributive share to the related cash distributions, thereby enabling PTPs and their transfer agents to satisfy their withholding obligations under chapter 4 of the Code and under sections 1441 through 1443 from distributions.

The convention rules in proposed § 1.706-4(c)(2) and (d)(2) did not apply to existing PTPs (existing PTP exception). Solely for purposes of the 2009 proposed regulations, an existing PTP was a partnership described in section 7704(b) that was formed on a date before the 2009 proposed regulations were published. Commenters noted that an existing PTP that terminates under section 708(b)(1)(B) due to the sale or exchange of 50 percent or more of the total interests in partnership capital and profits (a “technical termination”) on or after the publication of the 2009 proposed regulations would not receive the benefit of the existing PTP exception. These commenters noted that a technical termination is a tax concept and does not result in any changes to the partnership agreement, including any provisions relating to section 706(d). Commenters also noted that disregarding technical terminations of PTPs would be consistent with other regulation provisions (such as § 1.731-2(g)(2), which provides that a successor partnership formed as a result of technical termination is disregarded for purposes of applying section 731(c)). The final regulations adopt this recommendation and provide that, for purposes of the effective date provision, the termination of a PTP under section 708(b)(1)(B) is disregarded in determining whether the PTP is an existing PTP.

The 2009 proposed regulations required the partnership to use the same convention for all variations during a taxable year. Because the final regulations permit partnerships to use both the proration and interim closing methods during a taxable year, the final regulations provide that the partnership and all of its partners must use the same convention for all variations for which the partnership chooses to use the interim closing method. Furthermore, because PTPs are also permitted to use the semi-monthly and monthly conventions with respect to variations for which the PTP uses the proration method, the final regulations provide that PTPs must use the same convention for all variations during the taxable year.

Under the semi-monthly convention in the 2009 proposed regulations, the first segment of the partnership's taxable year commenced with the beginning of the partnership's taxable year, and with respect to a variation in interest occurring on the first through the 15th day of the month, was deemed to close at the end of the last day of the immediately preceding calendar month. Thus, although the 2009 proposed regulations provided that the first segment commences with the beginning of the partnership's taxable year, they also provided that a variation occurring on the first through the 15th day of the first calendar month of the partnership's taxable year was deemed to close at the end of the last day of the immediately preceding calendar month, which would be the last day of the prior taxable year. The final regulations provide that all variations within a taxable year are deemed to occur no earlier than the first day of the partnership's taxable year, and no later than the close of the final day of the partnership's taxable year. Thus, under the semi-monthly or monthly convention, a variation occurring on January 1st through January 15th for a calendar year partnership will be deemed to occur for purposes of § 1.706-4 at the beginning of the day on January 1. The conventions are not applicable to a sale or exchange of an interest in the partnership that causes a termination of the partnership under section 708(b)(1)(B); instead, such a sale or exchange will be considered to occur when it actually occurred.

The Treasury Department and the IRS recognize that, while the conventions are rules of administrative convenience that simplify the partnership's determination of the partners' distributive shares, the application of the conventions could result in some partners not being allocated any share of partnership items at all. For example, under the monthly convention, if a new partner buys a partnership interest on or after the 16th day of a month, and sells the entire partnership interest on or before the 15th day of the following month, that partner would not be treated as having been a partner at all for purposes of § 1.706-4, even if that partner otherwise is treated as a partner for purposes of other Code and regulations provisions, including section 6031(b) (relating to the partnership's obligation to furnish each partner a Schedule K-1, “Partner's Share of Income, Deductions, Credits, etc.”) and §§ 1.6012-1(b) and 1.6012-2(g) (relating to the obligation of certain foreign persons engaged in a U.S. trade or business to file a return). However, the Treasury Department and the IRS believe that the application of the conventions should not cause persons who are admitted to and exit from a partnership during a single convention period to avoid all allocations under § 1.706-4. Accordingly, the final regulations provide that in the case of a partner who becomes a partner during the partnership's taxable year as a result of a variation, and ceases to be a partner as a result of another variation, and under the application of the partnership's conventions both such variations would be deemed to occur at the same time, the variations with respect to that partner's interest will instead be treated as occurring when they actually occurred. Thus, in such a case, the partnership must treat the partner as a partner for the entire portion of its taxable year during which the partner actually owned an interest. However, in recognition of the increased administrative difficultly this exception would have for PTPs, this exception does not apply to PTPs with respect to holders of publicly traded units (as described in § 1.7704-1(b) or (c)(1)).

Section 1.706-4(d)(3) of the 2009 proposed regulations required a partnership using the proration method to allocate extraordinary items among the partners in proportion to their interests at the beginning of the day on which they are taken into account. Section 1.706-4(d)(3) of the 2009 proposed regulations contained a list of nine enumerated extraordinary items. These final regulations continue to provide special rules for the allocation of extraordinary items; in addition, as discussed in this Part 1.D of the preamble, the final regulations expand the application of the extraordinary item rules to cover partnerships using the interim closing method, modify the list of extraordinary items and the timing of extraordinary item inclusions, and add a small item exception.

The 2009 proposed regulations did not require partnerships using the interim closing method to separately account for extraordinary items. However, the Treasury Department and the IRS are aware (and commenters pointed out) that partnerships using the interim closing method and either the semi-monthly convention or the monthly convention to account for extraordinary items may achieve inappropriate tax consequences by shifting the tax consequences of extraordinary items to partners that were not partners in the partnership when the partnership incurred the extraordinary item. The Treasury Department and the IRS believe that extraordinary items should generally be taken into account by the partners that were partners at the time the partnership incurred the extraordinary item. Therefore, the final regulations provide that the extraordinary item rules also apply to partnerships using the interim closing method. Thus, the final regulations require the allocation of extraordinary items as an exception to (1) the proration method, which would otherwise ratably allocate the extraordinary items across the segment, and (2) the conventions, which might otherwise inappropriately shift extraordinary items between a transferor and transferee. The final regulations also provide that extraordinary items continue to be subject to any special limitation or requirement relating to the timing or amount of income, gain, loss, deduction, or credit applicable to the entire partnership taxable year (for example, the limitation for section 179 expenses).

Proposed § 1.706-4(d)(3) provided that a partnership must allocate extraordinary items among the partners in proportion to their interests at the beginning of the calendar day on which they are taken into account (beginning of the day rule). One commenter noted that under this rule, if a partnership interest is transferred on a given date and an extraordinary item is recognized by the partnership after the transfer, but still on the transfer date, the 2009 proposed regulations required the item to be allocated to the transferor. This commenter noted that other regulation sections use a “next day rule” (for example, §§ 1.1502-76(b)(1)(ii)(B) and 1.338-1(d)). According to the commenter, under the next day rule, an item would be treated as occurring at the beginning of the day following the day on which the extraordinary item is taken into account by the partnership. Another commenter expressed concern that the beginning of the day rule was incompatible with partnership agreements that provide that partners' distributive shares are determined on the basis of hurdles, waterfalls, or other income/loss thresholds.

The Treasury Department and the IRS agree that extraordinary items should generally be allocated according to the partners' interests in the item at the time the extraordinary item arose. However, the Treasury Department and the IRS believe that a “next day” rule could result in inappropriate shifts of extraordinary items between a transferor and a transferee in situations in which the extraordinary items arise before, but on the same day as, the transfer of a partnership interest. In addition, the Treasury Department and the IRS believe that allowing allocation of extraordinary items based upon end of year threshold determinations such as hurdles or waterfalls would be inconsistent with the purpose of the varying interest rule and could result in inappropriate shifts in extraordinary items. Therefore, to avoid inappropriate shifts in extraordinary items, the final regulations provide that extraordinary items must be allocated in accordance with the partners' interests in the partnership item at the time of day that the extraordinary item occurs, regardless of the method and convention otherwise used by the partnership. Thus, if a partner disposes of its entire interest in a partnership before an extraordinary item occurs (but on the same day), the partnership and all of its partners must allocate the extraordinary item in accordance with the partners' interests in the partnership item at the time of day on which the extraordinary item occurred; in such a case, the transferor will not be allocated a portion of the extraordinary item, regardless of when the transfer is deemed to occur under the partnership's convention. However, the final regulations provide that PTPs (as defined in section 7704(b)) may, but are not required to, respect the applicable conventions in determining who held their publicly traded units (as described in § 1.7704-1(b) or 1.7704-1(c)(1)) at the time of the occurrence of an extraordinary item. The Treasury Department and the IRS believe that this exception is necessary for administrative convenience given the frequency of variations experienced by PTPs. Examples 1 through 4 of § 1.706-4(e)(4) illustrate these timing rules.

As discussed in Part 1.B.i of this preamble, proposed § 1.706-4(a)(1) required the partnership and all of its partners to use the same method for all variations in the partners' interests occurring within the partnership's taxable year, whether in complete or partial termination of the partners' interests. Proposed § 1.706-4(d)(3) provided that partnerships using the proration method must allocate extraordinary items among the partners in proportion to their interests at the beginning of the calendar day of the day on which they are taken into account, thus prohibiting the partnership from allocating extraordinary items using the proration method. Commenters stated that proposed § 1.706-4(a)(1) and (d)(3), when read together, could be interpreted to prohibit partnerships with extraordinary items from the using the proration method. These commenters also stated that these provisions could be interpreted to prohibit the use of the so-called “hybrid method.” One commenter explained that under a hybrid method, a partnership separates certain extraordinary items and allocates them to partners based on their interests in the partnership on particular days or periods (for example, the date of sale), effectively using the interim closing method and a calendar day convention with respect to these extraordinary items. According to this commenter, the partnership then allocates the remaining partnership items in accordance with the proration method. A commenter also requested that the final regulations permit partnerships using the proration method to use the interim closing method and a semi-monthly convention to account for extraordinary items. Under the final regulations, a partnership with extraordinary items may use the proration method. As a result, the final regulations effectively permit the hybrid method described by the commenter. However, the final regulations provide that partnerships must allocate extraordinary items according to the partners' interests in the partnership item at the time of day that the extraordinary item arose, generally without regard to the method and convention otherwise used by the partnership.

The 2009 proposed regulations defined an extraordinary item as (i) any item from the disposition or abandonment (other than in the ordinary course of business) of a capital asset as defined in section 1221 (determined without the application of any other rules of law); (ii) any item from the disposition or abandonment of property used in a trade or business (other than in the ordinary course of business) as defined in section 1231(b) (determined without the application of any holding period requirement); (iii) any item from the disposition or abandonment of an asset described in section 1221(a)(1), (3), (4), or (5), if substantially all the assets in the same category from the same trade or business are disposed of or abandoned in one transaction (or series of related transactions); (iv) any item from assets disposed of in an applicable asset acquisition under section 1060(c); (v) any section 481(a) adjustment; (vi) any item from the discharge or retirement of indebtedness (for example, if a debtor partnership transfers a capital or profits interest in such partnership to a creditor in satisfaction of its recourse or nonrecourse indebtedness, any discharge of indebtedness income recognized under section 108(e)(8) must be allocated among the persons who were partners in the partnership immediately before the discharge); (vii) any item from the settlement of a tort or similar third-party liability; (viii) any credit, to the extent it arises from activities or items that are not ratably allocated (for example, the rehabilitation credit under section 47, which is based on placement in service); and (ix) any item which, in the opinion of the Commissioner, would, if ratably allocated, result in a substantial distortion of income in any consolidated return or separate return in which the item is included.

The 2009 proposed regulations requested comments on whether any items should be added to or removed from the definition of extraordinary items. After consideration of the comments received, the Treasury Department and the IRS have decided to generally retain the list of enumerated extraordinary items, subject to changes that are discussed in this Part 1.D.iii of the preamble.

In response to comments, the final regulations add two items to the extraordinary item list. First, commenters requested that the final regulations provide partnerships with more flexibility in determining what items are extraordinary items. One commenter argued that the definition of extraordinary item should be tied to the uniqueness of the partnership and materiality of the item. Another commenter recommended the final regulations remove the mandatory treatment of the specifically enumerated items as extraordinary items and instead highlight these specific items as items the partnership may agree to treat as extraordinary. In addition, commenters recommended that the final regulations allow the partners to agree to treat other nonenumerated items as extraordinary items. The commenters noted that this could prevent distortion of the economic deal of the partners in certain circumstances. The final regulations adopt the recommendation to allow a partnership to treat additional nonenumerated items as extraordinary items for a taxable year if, for that taxable year, there is an agreement of the partners (as described in Part 1.E of this preamble) to treat consistently such items as extraordinary items. However, this rule does not apply if treating that additional item as an extraordinary item would result in a substantial distortion of income in any partner's return. Any additional extraordinary items continue to be subject to any special limitation or requirement relating to the timing or amount of income, gain, loss, deduction, or credit applicable to the entire partnership taxable year (for example, the limitation for section 179 expenses).

Second, the final regulations provide that an extraordinary item includes any item identified as an additional class of extraordinary item in guidance published in the Internal Revenue Bulletin. The Treasury Department and the IRS believe that this addition is necessary to provide flexibility and guidance in the event that additional classes of items should be treated as extraordinary items.

In addition, proposed regulations under section 706 (REG-109370-10) being published concurrently with these final regulations propose to add two additional extraordinary items. The first proposed additional extraordinary item responds to comments regarding the administrative difficulty PTPs face in satisfying certain withholding obligations if the PTPs are not permitted to use a quarterly convention. As discussed in Part 1.C.iii of this preamble, the final regulations do not permit PTPs to use a quarterly convention. However, the proposed regulations being published concurrently with these final regulations would add an optional extraordinary item for PTPs, which the Treasury Department and the IRS believe is desirable to link each partner's distributive share to the related cash distributions, thereby enabling PTPs and their transfer agents to satisfy their withholding obligations under Chapter 4 of the Code and sections 1441 through 1443 from distributions. Specifically, the proposed regulations provide that, for PTPs, all items of income that are amounts subject to withholding as defined in § 1.1441-2(a) (excluding income effectively connected with the conduct of a trade or business within the United States) or withholdable payments under § 1.1473-1(a) occurring during a taxable year may be treated as extraordinary items if, for that taxable year, the partners agree to consistently treat all such items as extraordinary items for that taxable year. If the partners so agree, then for purposes of section 706 such items shall be treated as occurring at the next time as of which the recipients of a distribution by the PTP are determined, or, to the extent such income items arise between the final time during the taxable year as of which the recipients of a distribution are determined and the end of the taxable year, such items shall be treated as occurring at the final time during the taxable as of which the recipients of a distribution are determined. This proposed rule does not apply unless the PTP has a regular practice of making at least four distributions (other than de minimis distributions) to its partners during each taxable year. The proposed regulations provide that taxpayers may rely on this proposed additional extraordinary item for PTPs until final regulations are issued.

The second proposed additional extraordinary item addresses partnership deductions attributable to the transfer of partnership equity in connection with the performance of services. Specifically, the proposed regulations being published concurrently with these final regulations would add as an additional extraordinary item any deduction for the transfer of an interest in the partnership in connection with the performance of services and would provide that such deduction is treated as occurring immediately before the transfer or vesting of the partnership interest that results in compensation income for the person who performs the services. Moreover, for such deductions the proposed regulations would “turn off” the exceptions to the extraordinary item rules which would otherwise apply to certain small items and for partnerships for which capital is not a material income-producing factor. The Treasury Department and the IRS believe that this rule is necessary to ensure that, in the case of a transfer of partnership equity in connection with the performance of services, no portion of the deduction for the transfer of a partnership interest in connection with the performance of services will be allocated to the person who performs the services.

This Part 1.D.iii.b provides additional clarification on five of the extraordinary items from the 2009 proposed regulations.

First, the 2009 proposed regulations provided that an extraordinary item includes any item from the disposition or abandonment (other than in the ordinary course of business) of a capital asset as defined in section 1221 (determined without the application of any other rules of law). One commenter requested that the final regulations clarify that gains or losses from the actual or deemed sale of securities by securities partnerships (as defined in § 1.704-3(e)(3)(iii)) are items resulting from the disposition or abandonment of a capital asset (as defined in section 1221) in the ordinary course of business. Without such a rule, the commenter noted that a securities partnership would incur significant administrative and accounting costs to account for each security bought and sold. The Treasury Department and the IRS believe that it is unnecessary to provide a special rule for securities partnerships; if a securities partnership is engaged in the trade or business of trading securities then it will generally be true that any gains or losses from the actual or deemed sale of securities are items from the disposition of a capital asset in the ordinary course of the partnership's business. Accordingly, the final regulations do not modify this extraordinary item.

Second, commenters inquired as to whether revaluations of partnership property under § 1.704-1(b)(2)(iv)(e) or (f) are extraordinary items. Section 1.704-1(b)(2)(iv)(e) generally requires that a partner's capital account be decreased by the fair market value of property distributed by the partnership to such partner. To do so, the partners' capital accounts are adjusted to reflect the manner in which the unrealized income, gain, loss, and deduction inherent in the property would be allocated among the partners if there were a taxable disposition of the property for fair market value on the date of distribution. Section 1.704-1(b)(2)(iv)(f) provides that a partnership may increase or decrease the capital accounts of the partners to reflect a revaluation of partnership property on the partnership's books upon the occurrence of certain events. The adjustments to the partners' capital accounts must reflect the manner in which the unrealized income, gain, loss, or deduction inherent in the property would be allocated among the partners if there were a taxable disposition of the property for fair market value on that date. Under § 1.704-3(a)(6)(i), section 704(c) principles apply to allocations with respect to property for which differences between book value and adjusted tax basis are created when a partnership revalues partnership property pursuant to § 1.704-1(b)(2)(iv)(f) (reverse section 704(c) allocations). However, partnerships are not generally required to revalue their property on the occurrence of these events. The Treasury Department and the IRS believe that the treatment of an item as an extraordinary item should not depend upon whether the partnership chooses to revalue its assets. Additionally, as discussed in Part 1.F of this preamble, the final regulations generally do not address the interaction of sections 704(b), 704(c), and 706. Accordingly, the final regulations do not include book items from partnership revaluations as extraordinary items.

Third, the 2009 proposed regulations provided that an extraordinary item included any item which, in the opinion of the Commissioner, would, if ratably allocated, result in a substantial distortion of income in any consolidated return or separate return in which the item is included. One commenter recommended that the final regulations provide that the Commissioner may only treat a nonenumerated item as an extraordinary item where the Commissioner has provided advance notice by notice or regulation of the types of income subject to scrutiny, or where there is evidence that the proration method was chosen with the intent to substantially distort income. However, the Treasury Department and the IRS believe that such a rule would unduly impede the ability of the IRS to correct substantial distortions of income, and accordingly the final regulations do not adopt this suggestion.

Fourth, the 2009 proposed regulations provided that an extraordinary item included any section 481(a) adjustment. The Treasury Department and the IRS have determined that the inclusion of section 481(a) adjustments within the meaning of “extraordinary items” for purposes of section 706 may be overbroad. The purpose of the extraordinary items rule is to avoid substantial distortions of income among partners by requiring a partnership to allocate certain significant, nonrecurring items incurred other than in the ordinary course of business among its partners in proportion to their ownership interests in the partnership on the date the extraordinary item was incurred. Section 481 requires a taxpayer that has changed its method of accounting to compute its income by taking into account adjustments necessary to prevent any duplication or omission that would otherwise result from the change. Under certain circumstances, these adjustments may be spread over a period of years, and in all circumstances, the adjustments relate to a change of accounting method by the taxpayer rather than a particular item incurred by the taxpayer. Because the new accounting method that triggers the section 481 adjustment applies to the entire taxable year of the change, the adjustment similarly relates to that entire taxable year rather than any specific date within that taxable year. Therefore, the Treasury Department and the IRS believe that not all section 481 adjustments should be treated as extraordinary items. However, in situations in which the change in accounting method is initiated after the occurrence of a variation, the Treasury Department and the IRS believe it is appropriate to allocate any resulting item attributable to the change among the partners in accordance with their percentage interests at and after the time the method change is initiated. Therefore, the final regulations have changed this extraordinary item to include only the effects of any change in accounting method initiated by the filing of the appropriate form after a variation occurs.

Fifth, the 2009 proposed regulations provided that an extraordinary item included:

In addition to receiving comments on the items on the extraordinary item list, the Treasury Department and the IRS received many comments requesting that the final regulations provide a de minimis rule for extraordinary items. One commenter suggested that an extraordinary item would be considered de minimis if, for the partnership's taxable year: (i) The total of the particular class of extraordinary items is less than five percent of the partnership's (a) gross income in the case of income or gain items, or (b) gross expenses and losses, including section 705(a)(2)(B) expenditures, in the case of losses and expenses; and (ii) all extraordinary items in total do not exceed $10 million. Another commenter recommended using a dollar amount threshold per item, a cumulative amount (for example, $100,000), or an amount that varies depending on the size of the partnership or whether the partnership is a PTP.

The Treasury Department and the IRS recognize that accounting for extraordinary items can be burdensome to partnerships. Accordingly, the final regulations adopt the recommendation to include a small item exception. Specifically, the final regulations allow a partnership to treat an otherwise extraordinary item as not extraordinary if, for the partnership's taxable year: (1) The total of all items in the particular class of extraordinary items (for example, all tort or similar liabilities) is less than five percent of the partnership's (a) gross income, including tax-exempt income described in section 705(a)(1)(B), in the case of income or gain items, or (b) gross expenses and losses, including section 705(a)(2)(B) expenditures, in the case of losses and expense items; and (2) the total amount of the extraordinary items from all classes of extraordinary items amounting to less than five percent of the partnership's (a) gross income, including tax-exempt income described in section 705(a)(1)(B), in the case of income or gain items, or (b) gross expenses and losses, including section 705(a)(2)(B) expenditures, in the case of losses and expense items, does not exceed $10 million in the taxable year, determined by treating all such extraordinary items as positive amounts. Examples 5 and 6 of § 1.706-4(e)(4) illustrate the small item exception.

As discussed in this preamble, the final regulations provide that partnerships may make certain decisions under § 1.706-4 by agreement of the partners. See Part 1.B.ii (agreement to perform regular monthly or semi-monthly interim closings), Part 1.B.iv (selection to use the proration method), Part 1.C.i (choice of convention), and Part 1.D.iii.a (adding extraordinary items).

Proposed § 1.706-4(a)(1) provided that a partnership may only use the proration method by agreement of the partners. Proposed § 1.706-4(c)(3) and -(d)(4) provided examples that indicated that the agreement of the partners to use the proration method must be part of the partnership agreement. Commenters requested clarification on the meaning of “by agreement of the partners” and on whether a partnership may delegate the authority to select the proration method. Another commenter suggested that the final regulations adopt different rules for a variation caused by a transaction between the partnership and one or more partners, and for a variation caused by a transaction between partners. One commenter noted that existing partnerships may not be able to amend the partnership agreement within the timeframe prescribed by section 761(c). Section 1.706-4(f) of the final regulations provides guidance on the meaning of “agreement of the partners.”

The Treasury Department and the IRS believe that the final regulations should provide the partners with a voice in the choice of methods, conventions, and additional extraordinary items, and should allow the IRS to easily ascertain what the partnership selected, without unduly burdening the partnership. In response to comments, the Treasury Department and the IRS have determined that each of these objectives can be achieved by allowing partnerships to select their method, convention, or additional extraordinary items through a dated, written statement maintained with the partnership's books and records by the due date, including extensions, of the partnership's tax return. The final regulations provide that such a statement would include, for example, a selection included in the partnership agreement. The final regulations also permit the selection of the method, convention, or additional extraordinary item to be made by a person authorized to make that selection (including under a grant of general authority provided for by either state law or in the partnership agreement), if that person's selection is in a dated, written statement maintained with the partnership's books and records by the due date, including extensions, of the partnership's tax return. That person's selection will be binding on the partnership and the partners.

The 2009 proposed regulations did not address the interaction of section 706(d) with the rules under section 704. Section 1.704-1(b)(1) generally provides that, under section 704(b), if a partnership agreement does not provide for the allocation of income, gain, loss, deduction, or credit (or item thereof) to a partner, or if the partnership agreement provides for the allocation of income, gain, loss, deduction, or credit (or item thereof) to a partner but such allocation does not have substantial economic effect, then the partner's distributive share of such income, gain, loss, deduction, or credit (or item thereof) shall be determined in accordance with such partner's interest in the partnership (taking into account all facts and circumstances). However, § 1.704-1(b)(1)(iii) provides that the determination of a partner's distributive share of income, gain, loss, deduction, or credit (or item thereof) under section 704(b) and the regulations thereunder is not conclusive as to the tax treatment of a partner with respect to such distributive share. Section 1.704-1(b)(1)(iii) further provides that an allocation that is respected under section 704(b) and the regulations nevertheless may be reallocated under other provisions, such as section 706(d) (and related assignment of income principles).

The Treasury Department and the IRS received several comments requesting guidance on the interaction of sections 706(d) and 704. One commenter requested clarification on the effect of a reallocation under section 706(d) on the application of provisions of section 704(b), particularly regarding the capital account maintenance provisions in § 1.704-1(b)(2)(iv). Another commenter indicated that partnership agreements are drafted to apply section 706 to section 704(b) items and allocate tax items in the same manner as the corresponding book items, subject to the application of section 704(c). This commenter asked that the final regulations address whether section 706(d) applies to the allocation of book items rather than tax items.

The Treasury Department and the IRS have carefully considered the comments relating to the interaction of sections 706(d) and 704 and believe that the issues require further consideration and are generally outside the scope of these final regulations. However, the Treasury Department and the IRS may consider addressing these issues in future guidance.

Proposed § 1.706-1(c)(2)(iii) provided that a deemed disposition of a partner's interest pursuant to § 1.1502-76(b)(2)(vi) (relating to corporate partners that become or cease to be members of a consolidated group within the meaning of § 1.1502-1(h)), § 1.1362-3(c)(1) (relating to the termination of the subchapter S election of an S corporation partner), or § 1.1377-1(b)(3)(iv) (regarding an election to terminate the taxable year of an S corporation partner) shall be treated as a disposition of the partner's entire interest in the partnership. The preamble to the 2009 proposed regulations indicated that this treatment is solely for purposes of section 706. One commenter explained that unless the regulatory language specifically limits the disposition treatment to section 706, taxpayers could deem these transactions to be dispositions for other purposes of the Code, thereby achieving unintended results. For example, the commenter stated that, unless clarified, the 2009 proposed regulations could cause unintended consequences under sections 708, 743(b), or 1001 when a member of a consolidated group sells an interest in a partnership that exits the consolidated group after the sale. Consistent with the preamble to the 2009 proposed regulations, the final regulations clarify that deemed dispositions under §§ 1.1502-76(b)(2)(vi), 1.1362-3(c)(1), or 1.1377-1(b)(3)(iv) are treated as a disposition of the partner's entire interest in the partnership solely for purposes of section 706.

With respect to amendments to §§ 1.706-1 (with the exception of two special rules applicable to § 1.706-1(b)(6)(iii)), 1.706-4 (with the exception of a special rule applicable to § 1.704-4(c)(3)), and 1.706-5, these final regulations are applicable to partnership taxable years that begin on or after August 3, 2015.

With respect to the final regulations contained in § 1.706-1(b)(6)(iii), the regulations apply to the partnership taxable years that begin on or after August 3, 2015, subject to two special rules. First, under the current regulations, partnerships formed prior to September 23, 2002 (existing partnerships) generally are exempt from the rules of § 1.706-1(b)(6) unless they have voluntarily chosen to apply them or unless they have undergone a technical termination under section 708(b)(1)(B). The final regulations retain this special rule, such that an existing partnership will not be subject to the modified minority interest rule in § 1.706-1(b)(6)(iii) unless there has been such an election or technical termination of the partnership. Second, because the final regulations modify § 1.706-1(b)(6)(iii) but otherwise leave the rules of § 1.706-1(b)(6) unchanged, it is appropriate to exempt other partnerships from the modified minority interest rule if they are already subject to § 1.706-1(b)(6) and the minority interest rule of the current regulations (interim period partnerships). Thus, interim period partnerships will be exempt from the modified minority interest rule of § 1.706-1(b)(6)(iii) unless they voluntarily elect to be subject to this rule or undergo a technical termination.

The final regulations under § 1.706-4 generally apply for partnership taxable years that begin on or after August 3, 2015; however, the rules of § 1.706-4(c)(3) do not apply to existing PTPs. For purposes of this effective date provision, an existing PTP is a partnership described in section 7704(b) that was formed prior to April 19, 2009. For purposes of this effective date provision, the termination of a PTP under section 708(b)(1)(B) due to the sale or exchange of 50 percent or more of the total interests in partnership capital and profits is disregarded in determining whether the PTP is an existing PTP.

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 has also been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these final regulations. It is hereby certified that the collection of information in this Treasury decision will not have a significant economic impact on a substantial number of small entities within the meaning of section 601(6) of the Regulatory Flexibility Act (5 U.S.C. chapter 6). The Treasury Department and the IRS believe that the economic impact on small entities as a result of the collection of information in this Treasury decision will not be significant. The small entities subject to the collection are business entities formed as partnerships that choose to adopt the proration method, the semi-monthly or monthly convention, perform semi-monthly or monthly interim closings, or to add an additional class of extraordinary item, in which case the partnership must keep a written statement with its books and records evidencing the decision or delegation. Thus, the collection only applies if the partnership does not wish to accept the default method, convention, and list of extraordinary items provided in these regulations. Furthermore, the information required to be maintained with the partnership's books and records is simply a short statement evidencing the agreement of the partners. For these reasons, the Treasury Department and the IRS do not believe that the collection of information in this Treasury decision has a significant economic impact.

Pursuant to section 7805(f) of the Code, this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business and no comments were received.

The principal author of these final regulations is Benjamin H. Weaver, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the Treasury Department and the IRS participated in their development.

Accordingly, 26 CFR parts 1 and 602 are amended as follows:

Please note that all comments received are considered part of the public record and are made available for public inspection online at www.regulations.gov. Such information includes personal identifying information (such as your name, address, etc.) voluntarily submitted by the commenter.

If you want to submit personal identifying information (such as your name, address, etc.) as part of your comment, but do not want it to be posted online, you must include the phrase “PERSONAL IDENTIFYING INFORMATION” in the first paragraph of your comment. You must also locate all the personal identifying information you do not want posted online in the first paragraph of your comment and identify what information you want redacted.

If you want to submit confidential business information as part of your comment but do not want it to be posted online, you must include the phrase “CONFIDENTIAL BUSINESS INFORMATION” in the first paragraph of your comment. You must also prominently identify confidential business information to be redacted within the comment. If a comment contains confidential business information that cannot be effectively redacted, all or part of that comment may not be posted on www.regulations.gov.

Personal identifying information identified and located as set forth above will be placed in the agency's public docket file but not posted online. Confidential business information identified and located as set forth above will not be placed in the public docket file. If you wish to inspect the agency's public docket file in person by appointment, please see the For Further Information Contact paragraph.

In this document, the Bureau of Prisons (Bureau) makes a minor technical change to its regulations on contraband and inmate personal property to maintain consistency in language which describes the purpose of the regulations as ensuring the “safety, security, or good order of the facility or protection of the public.”

Variations on this phrase appear throughout the Bureau's regulations in 28 CFR Chapter V. See 28 CFR 500.1(h), 501.2(b), 501.3(b), 511.10(a), 511.11(a), 511.12(a), 511.15(b), 511.17(b), 540.12(a), 540.14(c) and (d), 540.15(d), 540.40, 540.44(c), 540.51(h), 540.70, 540.71(b) and (d), 540.100(a), 540.101(a), 541.12, 541.43(b), 541.63(c), 543.11(f), 543.14(a) and (c), 543.15(c), 543.16(b), 544.20, 544.21(b), 548.10, 548.16-.18, 549.13(b), 549.50, 549.51(b), 551.1, 551.10, 551.12(d), 551.16(a), 551.31(b), 551.34(b), 551.35, 551.71(d), 551.110(a), 551.112(b), 551.113(a), 551.115(a), 552.13(b), 552.20, 552.21(a) and (d), 553.11(h), 553.12(b).

The Bureau has conformed the phrase in all revised regulations since approximately 2005. We now propose to similarly alter our regulations on contraband, an important threat to the safety, security, or good order of the facility or protection of the public.

Currently, the definition of contraband in § 500.1(h) reads as follows: “Contraband is material prohibited by law, or by regulation, or material which can reasonably be expected to cause physical injury or adversely affect the security, safety, or good order of the institution.” We now propose to conform the “security, safety, or good order” phrase to the language we have used in recent years, to read as follows: “Contraband is material prohibited by law, regulation, or policy that can reasonably be expected to cause physical injury or adversely affect the safety, security, or good order of the facility or protection of the public.”

Likewise, in order to conform the phrase and underscore the importance of prohibiting contraband, we propose to add the phrase to the end of the first sentence of § 553.10, regarding inmate personal property, to read as follows: “It is the policy of the Bureau of Prisons that an inmate may possess ordinarily only that property which the inmate is authorized to retain upon admission to the institution, which is issued while the inmate is in custody, which the inmate purchases in the institution commissary, or which is approved by staff to be mailed to, or otherwise received by an inmate, that does not threaten the safety, security, or good order of the facility or protection of the public.” [Emphasis added.] Further, § 543.12(b) contains another description/definition of contraband, categorizing it as either “hard contraband” or “nuisance contraband.” We add the “safety, security” phrase to this regulation as well.

It is important to note that this interim rule changes none of the substantive requirements or obligations relating to petitions for commutation of sentence, nor does it alter the Bureau's responsibilities in this regard.

The Administrative Procedure Act (5 U.S.C. 553) allows exceptions to notice-and-comment rulemaking for “(A) interpretive rules, general statements of policy, or rules of agency organization, procedure, or practice; or (B) when the agency for good cause finds . . . that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest.”

This rulemaking is exempt from normal notice-and-comment procedures because it is a minor technical change. Because this change is a minor clarification of current agency procedure and practice by conforming language, we find that normal notice-and-comment rulemaking is unnecessary. The alternation of the language in this regulation is a minor clarification of current agency procedure, and is therefore exempt from normal notice-and-comment procedures under 5 U.S.C. 553(b)(A). Adding a rote phrase indicating that the purpose of the regulation is to insure the safety, security, and good order of the facility and the protection of the public does not impose any new rights or obligations, nor does it leave the Bureau free to exercise further discretion. See National Ass'n of Broadcasters v. F.C.C., 569 F.3d 416, 426 (D.C. Cir. 2009). Despite the technical nature of the change, however, we are still allowing the public to comment on this rule change by publishing it as an interim final rule.

This regulation falls within a category of actions that the Office of Management and Budget (OMB) has determined not to constitute “significant regulatory actions” under section 3(f) of Executive Order 12866 and, accordingly, it was not reviewed by OMB.

This regulation will not have substantial direct effect on the States, on the relationship between the national government and the States, or on distribution of power and responsibilities among the various levels of government. Therefore, under Executive Order 13132, we determine that this regulation does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

The Director of the Bureau of Prisons, under the Regulatory Flexibility Act (5 U.S.C. 605(b)), reviewed this regulation and by approving it certifies that it will not have a significant economic impact upon a substantial number of small entities for the following reasons: This regulation pertains to the correctional management of offenders committed to the custody of the Attorney General or the Director of the Bureau of Prisons, and its economic impact is limited to the Bureau's appropriated funds.

This regulation will not result in the expenditure by State, local and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This regulation is not a major rule as defined by § 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This regulation will not result in an annual effect on the economy of $100,000,000 or more; a major increase in costs or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete with foreign-based companies in domestic and export markets.

Under rulemaking authority vested in the Attorney General in 5 U.S.C. 301; 28 U.S.C. 509, 510 and delegated to the Director, Bureau of Prisons in 28 CFR 0.96, we amend 28 CFR parts 500 and 553 as follows.

The Coast Guard will enforce the safety zones listed in 33 CFR 165.160 on the specified dates and times as indicated in Table 1 below. This regulation was published in the Federal Register on November 9, 2011 (76 FR 69617).

Under the provisions of 33 CFR 165.160, vessels may not enter the safety zones unless given permission from the COTP or a designated representative. Spectator vessels may transit outside the safety zones but may not anchor, block, loiter in, or impede the transit of other vessels. The Coast Guard may be assisted by other Federal, State, or local law enforcement agencies in enforcing this regulation.

This notice is issued under authority of 33 CFR 165.160(a) and 5 U.S.C. 552(a). In addition to this notice in the Federal Register, the Coast Guard will provide mariners with advanced notification of enforcement periods via the Local Notice to Mariners and marine information broadcasts.

If the COTP determines that a safety zone need not be enforced for the full duration stated in this notice, a Broadcast Notice to Mariners may be used to grant general permission to enter the safety zone.

The Coast Guard will enforce the safety zones listed in 33 CFR 165.151 on the specified dates and times as indicated in the following Table.

Under the provisions of 33 CFR 165.151, the fireworks displays listed above are established as safety zones. During the enforcement periods, persons and vessels are prohibited from entering into, transiting through, mooring, or anchoring within the safety zones unless they receive permission from the COTP or designated representative.

This notice is issued under authority of 33 CFR part 165 and 5 U.S.C. 552(a). In addition to this notice in the Federal Register, the Coast Guard will provide the maritime community with advance notification of this enforcement period via the Local Notice to Mariners or marine information broadcasts. If the COTP determines that the safety zones need not be enforced for the full duration stated in this notice, a Broadcast Notice to Mariners may be used to grant general permission to enter the regulated area.

Throughout this document whenever “we,” “us,” or “our” is used, we mean EPA.

On October 31, 2012, the State of Connecticut submitted a formal revision to its State Implementation Plan (SIP). The SIP revision consists of two modifications to existing Trading and Agreement Orders (TAO) issued to PSEG Power Connecticut, LLC. The modified TAOs are No. 8187 Modification 1 issued to PSEG Power Connecticut, LLC (formerly Wisvest Connecticut LLC.) and No. 8242 Modification 1 issued to PSEG Power Connecticut, LLC. The modified TAOs remove an outdated restriction in the original TAOs No. 8187 and No. 8242 that limited the use of the NOX offsets to sources that were also subject to a NOX emission trading program in Section 22a-174-22a or 22a-174-22b of Connecticut's regulations, or another NOX budget trading program established by another state in accordance with the Ozone Transport Commission Memorandum of Understanding dated September 27, 1994 or 40 CFR part 96. Connecticut held a public hearing on the proposed SIP revision on October 19, 2012.

EPA approved the original TAO No. 8187 on March 23, 2001 (see 66 FR 16135). This TAO recognized that Wisvest, the owner of Bridgeport Harbor Electric Generating Station at the time, voluntarily reduced actual NOX emissions from Unit No. 2. The TAO made the voluntary reductions mandatory, thus creating a permanent, enforceable reduction of 816 tons of NOX emissions at Unit No. 2. Subsequently, these NOX emission reductions could be used for offsetting NOX emissions for sources subject to the nonattainment new source review permitting program under Connecticut's Regulation Section 22a-174-3a. As discussed above, TAO No. 8187 also limited the use of the NOX offsets to sources that were also subject to a NOX emission trading program in Section 22a-174-22a or 22a-174-22b of Connecticut's regulations, or another NOX budget trading program established by another state in accordance with the Ozone Transport Commission Memorandum of Understanding dated September 27, 1994 or 40 CFR part 96.

In late 2001, 424 tons of NOX offset credits from the original 816 tons were transferred to sources subject to nonattainment new source review in New York and are no longer available for use in Connecticut. Moreover, in late 2001, 192 tons of NOX offset credits were transferred to a private entity and held for future use.

On December 6, 2002, PSEG purchased Bridgeport Harbor Electric Generating Station from Wisvest along with the remaining 200 tons of the 816 tons NOX offsets created by TAO No. 8187. To recognize this transaction, Connecticut issued a new TAO (No. 8242) on February 13, 2003 that acknowledged the change in ownership of the facility and the 200 tons of NOX offsets from Wisvest to PSEG. EPA approved TAO No. 8242 on September 9, 2013 (78 FR 54962). As with the original TAO that created the NOX offsets (i.e., TAO No. 8187), TAO No. 8242 also limited the use of NOX offsets for nonattainment new source review to sources that were also subject to a NOX emission trading program in Section 22a-174-22a or 22a-174-22b of Connecticut's regulations, or another NOX budget trading program established by another state in accordance with the Ozone Transport Commission Memorandum of Understanding dated September 27, 1994 or 40 CFR part 96.

Under Connecticut's Regulations for the Abatement of Air Pollution, Section 22a-174-22a was repealed effective September 4, 2007, and Section 22a-174-22b was repealed May 1, 2010. Moreover, with the transition from the Clean Air Interstate Rule (CAIR) to the Cross-State Air Pollution Rule (CSAPR), the State of Connecticut is no longer part of any trading program under 40 CFR part 96. As such, the original restrictions in TAOs No. 8187 and 8242 are now outdated and would no longer serve the purpose for which they were created.

On February 1, 2008, Connecticut submitted its 2002 to 2008 reasonable further progress (RFP) plans and 2002 base year inventory to EPA as part of its attainment demonstration SIP submittal for the 1997 8-hr ozone standard. On October 14, 2009, Connecticut submitted a revision to the RFP plans which it had originally submitted to EPA on February 1, 2008. The revision consisted of the incorporation of a small number of banked NOX ERCs into the state's RFP analysis. Those banked NOX ERCs were incorporated into Connecticut's 2002 and 2008 emission inventories, and included all of the remaining unused portion of the 816 tons of NOX offsets created under TAO No. 8187 (i.e., the 200 tons of NOX owned by PSEG under TAO No. 8242, and the 192 tons of NOX transferred to a private entity in late 2001). The inclusion of the banked ERCs into the RFP analysis did not alter Connecticut's conclusion that it easily meets RFP requirements, and EPA approved Connecticut's RFP plans on August 22, 2012 (77 FR 50595). Since ERCs represent emissions that may occur at some point in the future, banked emissions need to be accounted for in a state's RFP analysis, and Connecticut has properly done that.

Today, EPA is approving two modifications to existing TAOs that will allow the NOX offset credits, originally created in TAO No. 8187, to be used for nonattainment new source review without the additional outdated restrictions contained in the original TAOs No. 8187 and 8242. As described above, Connecticut has properly accounted for the unused portion of the NOX offset credits (i.e., 392 tons) from the original TAO No. 8187 in the state's RFP analysis, and thus these credit remain available for future use.

This action does not alter any existing requirements in Connecticut's approved SIP that a facility must meet when using NOX emission reductions to offset any new permitted emissions. This is important to note since subsection 22a-174-3a(l)(4)(B)(ii) of Connecticut's regulations states that:

Pursuant to this provision in Section 22a-174-3a, the unused portion of the NOX emission reduction credits originally created under TAO No. 8187 will need to be adjusted pursuant to subsection 22a-174-22(e)(3) of Connecticut's regulations. This provision in Section 22a-174-22 was adopted by Connecticut after the original issuance of TAO No. 8187 and requires sources such as Unit No. 2 at Bridgeport Harbor Electric Generating Station to meet a NOX emission limit of 0.15 lbs/MMBtu during the nonozone season. Because the NOX emission limit for Unit No. 2 became more stringent after the time when the NOX offset credits were first created, the original number of tons of NOX offset credits must be adjusted downward to reflect the new, more stringent NOX emission limit, before a source subject to NNSR may use the credits.

Pursuant to section 110 of the CAA, EPA is approving Trading and Agreement Orders No. 8187 Modification 1 issued to PSEG Power Connecticut, LLC (formerly Wisvest Connecticut LLC) and 8242 Modification 1 issued to PSEG Power Connecticut, LLC. The EPA is publishing this action without prior proposal because the Agency views this as a noncontroversial amendment and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should relevant adverse comments be filed. This rule will be effective October 2, 2015 without further notice unless the Agency receives relevant adverse comments by September 2, 2015.

If the EPA receives such comments, then EPA will publish a notice withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. The EPA will not institute a second comment period on the proposed rule. All parties interested in commenting on the proposed rule should do so at this time. If no such comments are received, the public is advised that this rule will be effective on October 2, 2015 and no further action will be taken on the proposed rule. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the [State Agency Regulations] described in the amendments to 40 CFR part 52 set forth below. The 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 Clean Air Act, 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 Clean Air Act. 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 subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) 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 Clean Air Act; 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).

In addition, 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).

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. Section 804, however, exempts from section 801 the following types of rules: Rules of particular applicability; rules relating to agency management or personnel; and rules of agency organization, procedure, or practice that do not substantially affect the rights or obligations of non-agency parties. 5 U.S.C. 804(3). Because this is a rule of particular applicability, EPA is not required to submit a rule report regarding this action under section 801.

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 2, 2015. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of this Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

I. Background

On October 8, 2014, Maryland submitted a formal revision (#14-05) to its State Implementation Plan (SIP). The SIP revision consists of amendments to COMAR 26.11.13, Control of Gasoline and Volatile Organic Compound Storage and Handling. The amendments consist of establishing an alternative and equivalent method of transfer of high pressure materials as well as changing incorrect references in regulations .04 and .05.

COMAR 26.11.13, Control of Gasoline and Volatile Organic Compound Storage and Handling, provides regulations that control the emissions of volatile organic compounds (VOCs) from the storage and handling of substances containing VOCs. The October 8, 2014 SIP submittal includes corrections to references found within sections .04 and .05 of COMAR 26.11.13. The corrected references add an update regarding the technical memorandum referenced in the sections. Maryland updated its citation to Test Methods and Equipment Specifications for Stationary Sources for both Sections .04 and .05 by adding a reference to an update to the memorandum. The reference now reads as Test Methods and Equipment Specifications for Stationary Sources [(]January 1991[)], as amended through Supplement 3 (October 1, 1997). Section .04 was amended to establish an alternative and equivalent method of transfer of high pressure materials.

Section .04 sets requirements for loading/transfer operations of high pressure materials (defined as having a pressure which exceeds 1.5 pound per square inch absolute (psia)). Currently in the State of Maryland an industry standard is used for the transfer of gasoline and fuel grade ethanol products. The industry standard is referred to as a dry disconnect. Dry disconnects transfer high pressure materials and upon disconnection, they immediately close to prevent the release of VOCs or high pressure material. Currently, there is no industry standard for the loading/transfer of other high pressure materials outside of gasoline and fuel grade ethanol. Because there is a lack of industry standard for the transfer of other high pressure materials, this SIP revision provides amendments to establish alternative and equivalent compliance procedures for the transfer of other high pressure materials.

The alternative compliance procedures include the use of an overhead loading rack that would transfer the high pressure materials from a railroad tank car to a tank truck or vice versa. This would also require the utilization of spill control equipment, such as spill pans, that would prevent the leak of high pressure material during post loading disconnection. In addition to this system one of the following measures must also be used: Walking the hose clear of material, using a pump to clean the line of material, or using an inert gas to clean the material from the hose.

EPA is approving amendments to COMAR 26.11.13, Control of Gasoline and Volatile Organic Compound Storage and Handling, which include establishing an alternative and equivalent method of transfer of high pressure materials as well as changing incorrect references in regulations .04 and .05. EPA is publishing this rule prior to proposal because EPA views this as a noncontroversial amendment and anticipates no adverse comment. However, in the “Proposed Rules” section of today's Federal Register, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision if adverse comments are filed. This rule will be effective on October 2, 2015 without further notice unless EPA receives adverse comment by September 2, 2015. If EPA receives adverse comment, EPA will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. EPA will address all public comments in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. Please note that if EPA receives adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, EPA may adopt as final those provisions of the rule that are not the subject of an adverse comment.

In this rulemaking action, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of COMAR 26.11.13. The EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the CAA and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely 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” subject to review by the Office of Management and Budget under Executive Order 12866 (58 FR 51735, October 4, 1993);

• 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).

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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 October 2, 2015. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking action.

This action which approves changes to COMAR 26.11.13 may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2)).

40 CFR part 52 is amended as follows:

Background

The Department of the Interior (DOI) published a notice of proposed rulemaking in the Federal Register on May 14, 2015, 80 FR 27623, proposing to exempt certain records in the Indian Arts and Crafts Board system of records in accordance with 5 U.S.C. 552a(k)(2) of the Privacy Act because of criminal, civil, and administrative law enforcement requirements. The Indian Arts and Crafts Board system of records notice was published in the Federal Register on May 14, 2015, 80 FR 27700. Comments were invited on the Indian Arts and Crafts Board system of records notice and the notice of proposed rulemaking. DOI received no comments on the published system of records notice and one general comment on the notice of proposed rulemaking that required no revisions, and will therefore implement the rulemaking as proposed.

The Office of Management and Budget (OMB) has determined that this rule is not a significant rule and has not reviewed it under the requirements of Executive Order 12866. We have evaluated the impacts of the rule as required by E.O. 12866 and have determined that it does not meet the criteria for a significant regulatory action. The results of our evaluation are given below.

(a) This rule will not have an annual effect of $100 million or more on the economy. It will not adversely affect in a material way the economy, productivity, competition, jobs, the environment, public health or safety, or State, local or tribal governments or communities.

(b) This rule would not create a serious inconsistency or otherwise interfere with an action taken or planned by another agency.

(c) This rule does not alter the budgetary effects of entitlements, grants, user fees, concessions, loan programs, water contracts, management agreements, or the rights and obligations of their recipients.

(d) This rule does not raise any novel legal or policy issues.

The Department of the Interior certifies that this document will not have a significant economic effect on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601, et seq.). This rule does not impose a requirement for small businesses to report or keep records on any of the requirements contained in this rule. The exemptions to the Privacy Act apply to individuals, and individuals are not covered entities under the Regulatory Flexibility Act.

This rule is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rule:

(a) Does not have an annual effect on the economy of $100 million or more.

(b) Will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions.

(c) Does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises.

This rule does not impose an unfunded mandate on State, local, or tribal governments in the aggregate, or on the private sector, of more than $100 million per year. The rule does not have a significant or unique effect on State, local, or tribal governments or the private sector. This rule makes only minor changes to 43 CFR part 2. A statement containing the information required by the Unfunded Mandates Reform Act (2 U.S.C. 1531 et seq.) is not required.

In accordance with Executive Order 12630, the rule does not have significant takings implications. This rule makes only minor changes to 43 CFR part 2. A takings implication assessment is not required.

In accordance with Executive Order 13132, this rule does not have any federalism implications to warrant the preparation of a Federalism Assessment. The rule is not associated with, nor will it have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. A Federalism Assessment is not required.

This rule complies with the requirements of Executive Order 12988. Specifically, this rule:

(a) Does not unduly burden the judicial system.

(b) Meets the criteria of section 3(a) requiring that all regulations be reviewed to eliminate errors and ambiguity and be written to minimize litigation; and

(c) Meets the criteria of section 3(b)(2) requiring that all regulations be written in clear language and contain clear legal standards.

In accordance with Executive Order 13175, the Department of the Interior has evaluated this rule and determined that it would have no substantial effects on Federally recognized Indian tribes.

This rule does not require an information collection from 10 or more parties and a submission under the Paperwork Reduction Act is not required.

This rule does not constitute a major Federal action and would not have a significant effect on the quality of the human environment. Therefore, this rule does not require the preparation of an environmental assessment or environmental impact statement under the requirements of the National Environmental Policy Act of 1969.

In developing this rule, there was no need to conduct or use a study, experiment, or survey requiring peer review under the Data Quality Act (Pub. L. 106-554).

This rule is not a significant energy action under the definition in Executive Order 13211. A Statement of Energy Effects is not required.

We are required by Executive Order 12866 and 12988, the Plain Writing Act of 2010 (H.R. 946), and the Presidential Memorandum of June 1, 1998, to write all rules in plain language. This means each rule we publish must:

For the reasons stated in the preamble, the Department of the Interior amends 43 CFR part 2 as follows:

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:

This document announces that, on July 20, 2015, OMB approved the information collection requirements relating to the wireless E911 location accuracy rules contained in the Commission's Fourth Report and Order, FCC 15-9, published at 80 FR 11806 March 4, 2015. The OMB Control Number is 3060-1210. The Commission publishes this document as an announcement of the effective date of the rules.

If you have any comments on the burden estimates listed below, or how the Commission can improve the collections and reduce any burdens caused thereby, please contact Benish Shah, Federal Communications Commission, Room 1-A866, 445 12th Street SW., Washington, DC 20554. Please include the OMB Control Number, 3060-1210, in your correspondence. The Commission will also accept your comments via email at [email protected]. To request materials in accessible formats for people with disabilities (Braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer and Governmental Affairs Bureau at (202) 418-0530 (voice), (202) 418-0432 (TTY).

As required by the Paperwork Reduction Act of 1995 (44 U.S.C. 3507), the FCC is notifying the public that it received OMB approval on July 20, 2015, for the information collection requirements contained in the modifications to the Commission's rules in 47 CFR part 20. Under 5 CFR 1320, an agency may not conduct or sponsor a collection of information unless it displays a current, valid OMB Control Number. No person shall be subject to any penalty for failing to comply with a collection of information subject to the Paperwork Reduction Act that does not display a current, valid OMB Control Number. The OMB Control Number is 3060-1210. The foregoing notice is required by the Paperwork Reduction Act of 1995, Public Law 104-13, October 1, 1995, and 44 U.S.C. 3507.

The total annual reporting burdens and costs for the respondents are as follows:

OMB Control Number: 3060-1210.

OMB Approval Date: July 20, 2015.

OMB Expiration Date: July 31, 2018.

Title: Wireless E911 Location Accuracy Requirements.

Form Number: N/A.

Type of Review: New Collection.

Respondents: Businesses or other for profit institutions; and state, local or tribal governments.

Number of Respondents and Responses: 4,394 respondents; 29,028 responses.

Estimated Time per Response: 1—100 hours.

Frequency of Response: Recordkeeping requirements, and third-party disclosure requirement.

Obligation to Respond: Mandatory and voluntary. Statutory authority for this information collection is contained in 47. U.S.C. 1, 2, 4(i), 7, 10, 201, 214, 222, 251(e), 301, 302, 303, 303(b), 303(r), 307, 307(a), 309, 309(j)(3), 316, 316(a), and 332 of the Communications Act of 1934, as amended.

Total Annual Burden: 143,138 hours.

Total Annual Cost: No cost.

Nature and Extent of Confidentiality: The Commission will work with respondents to ensure that their concerns regarding the confidentiality of any proprietary or business-sensitive information are resolved in a manner consistent with the Commission's rules.

Privacy Act Impact Assessment: This information collection does not affect individuals or households, and therefore a privacy impact assessment is not required.

Needs and Uses: Section 20.18(i)(2)(ii)(A) rule requires that, within three years of the effective date of rules, CMRS providers shall deliver to uncompensated barometric pressure data from any device capable of delivering such data to PSAPs. This requirement is necessary to ensure that PSAPs are receiving all location information possible to be used for dispatch. This requirement is also necessary to ensure that CMRS providers implement a vertical location solution in the event that the proposed “dispatchable location” solution does not function as intended by the three-year mark and beyond.

Section 20.18(i)(2)(ii)(B) requires that the four nationwide providers submit to the Commission for review and approval a reasonable metric for z-axis (vertical) location accuracy no later than 3 years from the effective date of rules. The requirement is critical to ensure that the vertical location framework adopted in the Fourth Report and Order is effectively implemented.

Section 20.18(i)(2)(iii) requires CMRS providers to certify compliance with the Commission's rules at various benchmarks throughout implementation of improved location accuracy. This requirement is necessary to ensure that CMRS providers remain “on track” to reach the goals that they themselves agreed to.

Section 20.18(i)(2)(iv) provides that PSAPs may seek Commission enforcement of the location accuracy requirements within their geographic service area, as long as they have implemented policies that are designed to obtain all location information made available by CMRS providers when initiating and delivering 911 calls to the PSAP, and, prior to seeking Commission enforcement, a PSAP must provide the CMRS provider with 30 days written notice, and the CMRS provider shall have an opportunity to address the issue informally.

Section 20.18(i)(3)(i) requires that within 12 months of the effective date, the four nationwide CMRS providers must establish the test bed described in the Fourth Report and Order, which will validate technologies intended for indoor location, The test bed is necessary for the compliance certification framework adopted in the Fourth Report and Order.

Section 20.18(i)(3)(ii) requires that beginning 18 months from effective date of rules, nationwide CMRS providers providing service in any of the six Test Cities identified by ATIS (Atlanta, Denver/Front Range, San Francisco, Philadelphia, Chicago, and Manhattan Borough of New York City) must collect and report aggregate data on the location technologies used for live 911 calls. This reporting requirement is necessary to validate and verify the compliance certifications made by CMRS providers.

Section 20.18(i)(3)(iii) requires that CMRS providers shall retain testing and live call data gathered pursuant to this section for a period of 2 years.

Section 20.18(i)(4)(i) and (ii) require that no later than 18 months from the effective date, each CMRS provider shall submit to the Commission its plan for implementing improved indoor location accuracy and a report on its progress toward doing so. Non-nationwide CMRS providers will have an additional 6 months to submit their progress reports. All CMRS providers shall provide an additional progress report no later than 36 months from the effective date of the adoption of this rule. The 36-month reports shall indicate what progress the provider has made consistent with its implementation plan.

Section 20.18(i)(4)(iii) requires that prior to activation of the NEAD but no later than 18 months from the effective date of the adoption of this rule, the nationwide CMRS providers shall file with the Commission and request approval for a security and privacy plan for the administration and operation of the NEAD. This requirement is necessary to ensure that the four nationwide CMRS providers are building in privacy and security measures to the NEAD from its inception.

Section 20.18(i)(4)(iv) requires that before use of the NEAD or any information contained therein, CMRS providers must certify that they will not use the NEAD or associated data for any non-911 purpose, except as otherwise required by law. This requirement is necessary to ensure the privacy and security of any personally identifiable information that may be collected by the NEAD.

Section 20.18(j) requires CMRS providers to provide standardized confidence and uncertainty (C/U) data for all wireless 911 calls, whether from outdoor or indoor locations, on a per-call basis upon the request of a PSAP. This requirement will serve to make the use of C/U data easier for PSAPs

Section 20.18(k) requires that CMRS providers must record information on all live 911 calls, including, but not limited to, the positioning source method used to provide a location fix associated with the call, as well as confidence and uncertainty data. This information must be made available to PSAPs upon request, as a measure to promote transparency and accountability for this set of rules.

In a final rule published on Tuesday, June 3, 2014 (79 FR 31877), the revision description of § 63.18(k) incorrectly states that “Section 63.18 is amended by revising paragraph (k) introductory text,” instead of correctly stating that “Section 63.18 is amended by revising paragraph (k),” leading the published final regulation § 63.18(k) to incorrectly keep subparagraphs (1)-(3), which should be removed. This correcting amendment document removes subparagraphs (1)-(3) of § 63.18(k).

Accordingly, 47 CFR part 63 is corrected by making the following correcting amendment:

DARS published a document in the Federal Register of June 26, 2015, (80 FR 36903) escalating the acquisition-related dollar threshold in DFARS, which included an adjustment to section 207.170-3 to revise the threshold from $6 million to $6.5 million. As published in the Federal Register on June 26, 2015 (80 FR 36903), the DFARS final rule 2014-D025 contains an error, which is in need of correction. To address this error, this correction removes the amendment to DFARS section 207.170-3 thereby reinstating the $6 million threshold.

In final rule Federal Register document (80 FR 36903) published on June 26, 2015, make the following correction: