Federal Register Vol. 80, No.246,

Federal Register Volume 80, Issue 246 (December 23, 2015)

Page Range79655-80206
FR Document

80_FR_246
Current View
Page and SubjectPDF
80 FR 80195 - Adjustments of Certain Rates of PayPDF
80 FR 79803 - Pesticides; Certification of Pesticide Applicators; Second Extension of the Comment PeriodPDF
80 FR 79956 - Notice of Availability of Draft Guidance Documents for Subsequent License RenewalPDF
80 FR 79881 - Sam Rayburn Dam Project Power RatePDF
80 FR 79883 - Robert D. Willis Hydropower Project Power RatePDF
80 FR 79817 - Privacy Act of 1974; New System of RecordsPDF
80 FR 79926 - Indian Gaming; Three Tribal-State Class III Gaming Compacts Taking Effect in the State of CaliforniaPDF
80 FR 79872 - Invitation for Public Comment To Inform the Design of a Consent-Based Siting Process for Nuclear Waste Storage and Disposal FacilitiesPDF
80 FR 79889 - Riverside Chrome Plating Superfund Site; Notice of Proposed CERCLA Administrative Cost Recovery SettlementPDF
80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-ODPI, Inc.PDF
80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Open Platform for NFV Project, Inc.PDF
80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-3D PDF Consortium, Inc.PDF
80 FR 79931 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-PXI Systems Alliance, Inc.PDF
80 FR 79931 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-National Armaments ConsortiumPDF
80 FR 79927 - Renewal of Approved Information Collection; OMB Control No. 1004-0185PDF
80 FR 79991 - Culturally Significant Objects Imported for Exhibition Determinations: “Pierre Bonnard: Painting Arcadia” ExhibitionPDF
80 FR 79820 - Authorization of Production Activity; Foreign-Trade Zone 84, Mitsubishi Caterpillar Forklift America, Inc. (Forklift Trucks), Houston, TexasPDF
80 FR 79820 - Application for Additional Production Authority; The Coleman Company, Inc., Subzone 119I (Textile-Based Personal Flotation Devices); Notice of Public Hearing and Extension of Comment PeriodPDF
80 FR 79820 - Light-Walled Rectangular Pipe and Tube From Mexico: Rescission of Antidumping Duty Administrative Review; 2014-2015PDF
80 FR 79918 - Announcement of Requirements and Registration for the “My Preparedness Story: Staying Healthy and Resilient” Video ChallengePDF
80 FR 79992 - Culturally Significant Objects Imported for Exhibition Determinations: “Shakespeare, Life of an Icon” ExhibitionPDF
80 FR 79711 - Propiconazole; Pesticide TolerancesPDF
80 FR 79888 - Pesticide Registration Review; Draft Human Health and Ecological Risk Assessments for Certain Organophosphates; Extension of Comment PeriodPDF
80 FR 79991 - Advisory Committee on International Postal and Delivery ServicesPDF
80 FR 79930 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Cooperative Research Group on ROS-Industrial Consortium-AmericasPDF
80 FR 79936 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Evaluation of the Linking to Employment Activities Pre-Release (LEAP) Program Grants ProgramPDF
80 FR 79907 - Draft Guidance for Industry on Advancement of Emerging Technology Applications To Modernize the Pharmaceutical Manufacturing Base; Draft Guidance for Industry; AvailabilityPDF
80 FR 79956 - Advisory Committee for International Science and Engineering; Notice of MeetingPDF
80 FR 79993 - National Express LLC-Acquisition of Control-White Plains Bus Company, Inc.PDF
80 FR 79724 - Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996PDF
80 FR 79869 - Privacy Act of 1974; System of RecordsPDF
80 FR 79687 - Partitions of Eligible Multiemployer PlansPDF
80 FR 79995 - Quarterly Rail Cost Adjustment FactorPDF
80 FR 79865 - Agency Information Collection Activities Under OMB ReviewPDF
80 FR 79934 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Employee Retirement Income Security Act Summary Annual Report RequirementPDF
80 FR 79951 - Records Schedules; Availability and Request for CommentsPDF
80 FR 79953 - Meeting of the Advisory Committee on the Presidential Library-Foundation PartnershipsPDF
80 FR 79950 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
80 FR 79819 - Submission for OMB Review; Comment RequestPDF
80 FR 79931 - Notice of Lodging of Proposed Joint Stipulation To Modify Consent Decree Under the Clean Air ActPDF
80 FR 79863 - New England Fishery Management Council; Public MeetingPDF
80 FR 79864 - North Pacific Fishery Management Council; Public MeetingPDF
80 FR 79862 - North Pacific Fishery Management Council; Public MeetingPDF
80 FR 79671 - Extensions of Credit by Federal Reserve BanksPDF
80 FR 79674 - Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption ThresholdPDF
80 FR 79947 - Privacy Act of 1974; Privacy Act System of RecordsPDF
80 FR 79949 - Privacy Act of 1974; Privacy Act System of RecordsPDF
80 FR 79937 - Privacy Act of 1974; Privacy Act System of RecordsPDF
80 FR 79867 - Privacy Act of 1974; System of RecordsPDF
80 FR 79673 - Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size Exemption ThresholdPDF
80 FR 79925 - Renewal of Agency Information Collection for Class III Gaming; Tribal Revenue Allocation Plans; Gaming on Trust LandsPDF
80 FR 79929 - Notice of Intent To Prepare an Environmental Impact Statement for a Wilderness Stewardship Plan, Mount Rainier National Park, Pierce and Lewis Counties, WashingtonPDF
80 FR 79821 - National Oceanic and Atmospheric Administration (NOAA) Ocean Exploration Advisory Board (OEAB); Public MeetingPDF
80 FR 79928 - Environmental Impact Statement for the Modification/Removal of the Canal Diversion Dam in Cuyahoga Valley National Park, OhioPDF
80 FR 79933 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Required Elements for Submission of the Unified or Combined State Plan and Plan Modifications Under the Workforce Innovation and Opportunity ActPDF
80 FR 79876 - Energy Resources USA, Inc.; Notice of Competing Preliminary Permit Application Accepted for Filing and Soliciting Comments and Motions To IntervenePDF
80 FR 79877 - Town of Walnut, Mississippi; Notice of ApplicationPDF
80 FR 79877 - Combined Notice of FilingsPDF
80 FR 79878 - Notice of Application Ready for Environmental Analysis and Soliciting Comments, Recommendations, Terms and Conditions, and PrescriptionsPDF
80 FR 79875 - Brookfield White Pine Hydro LLC; Notice of Application Tendered for Filing With the Commission and Establishing Procedural Schedule for Licensing and Deadline for Submission of Final AmendmentsPDF
80 FR 79874 - City of Banning, California; Notice of FilingPDF
80 FR 79880 - Williams Field Services-Gulf Coast Company LP; Notice of Petition for Declaratory OrderPDF
80 FR 79876 - Combined Notice of Filings #1PDF
80 FR 79803 - Solicitation of New Safe Harbors and Special Fraud AlertsPDF
80 FR 79871 - Submission of Data by State Educational Agencies; Submission Dates for State Revenue and Expenditure Reports for Fiscal Year (FY) 2015, Revisions to Those Reports, and Revisions to Prior Fiscal Year ReportsPDF
80 FR 79681 - Boundary Expansion of Thunder Bay National Marine Sanctuary; Correction and Expansion of Fagatele Bay National Marine Sanctuary, Regulatory Changes, and Sanctuary Name Change; CorrectionPDF
80 FR 79817 - Proposed North-South Project, San Bernardino National Forest, California EIR/EISPDF
80 FR 79819 - National Advisory CommitteePDF
80 FR 79897 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding CompanyPDF
80 FR 79718 - Allowing Importers To Provide Information to U.S. Customs and Border Protection in Electronic FormatPDF
80 FR 79926 - Notice of Public Meeting for the Southeast Oregon Resource Advisory CouncilPDF
80 FR 79695 - Drawbridge Operation Regulation; Mill Neck Creek, Oyster Bay, NYPDF
80 FR 79905 - Agency Information Collection Activities; Proposed Collection; Comment Request; Guidance: Emergency Use Authorization of Medical ProductsPDF
80 FR 79912 - Agency Information Collection Activities: Proposed Collection; Comment Request; Bar Code Label Requirement for Human Drug and Biological Products; CorrectionPDF
80 FR 79909 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Hearing, Aging, and Direct-to-Consumer Television AdvertisementsPDF
80 FR 79913 - Revised Recommendations for Reducing the Risk of Human Immunodeficiency Virus Transmission by Blood and Blood Products; Guidance for Industry; AvailabilityPDF
80 FR 79935 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Benefit Accuracy Measurement ProgramPDF
80 FR 79932 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Data Sharing Agreement ProgramPDF
80 FR 79903 - Determination of Regulatory Review Period for Purposes of Patent Extension; JETREAPDF
80 FR 79776 - Fixed-Combination and Co-Packaged Drugs: Applications for Approval and Combinations of Active Ingredients Under Consideration for Inclusion in an Over-the-Counter MonographPDF
80 FR 79821 - National Institute of Standards and Technology (NIST) Smart Grid Advisory Committee MeetingPDF
80 FR 79901 - Proposed Information Collection Activity; Comment RequestPDF
80 FR 79903 - Proposed Information Collection Activity; Comment RequestPDF
80 FR 79961 - New Postal ProductPDF
80 FR 79960 - Postal Rate ChangesPDF
80 FR 79962 - New Postal ProductPDF
80 FR 79958 - New Postal ProductPDF
80 FR 79959 - New Postal ProductPDF
80 FR 79922 - Agency Information Collection Activities: Petition for Alien Relative, Form I-130, and Form I-130A; Revision of a Currently Approved CollectionPDF
80 FR 79894 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated AuthorityPDF
80 FR 79924 - Proposed Renewal of Information Collection; Annual Certification of Hunting and Sport Fishing Licenses IssuedPDF
80 FR 79956 - Notice of Permits Issued Under the Antarctic Conservation Act of 1978PDF
80 FR 79923 - Agency Information Collection Activities: Genealogy Index Search Request and Genealogy Records Request. Forms G-1041 and G-1041A; Revision of a Currently Approved CollectionPDF
80 FR 79865 - 36(b)(1) Arms Sales NotificationPDF
80 FR 79891 - Proposed Information Collection Request; Comment Request; Distribution of Offsite Consequence Analysis Information Under Section 112(r)(7)(H) of the Clean Air Act (CAA)PDF
80 FR 79655 - General Administrative RegulationsPDF
80 FR 79655 - Foreign Quarantine NoticesPDF
80 FR 79695 - Air Plan Approval; SD; Update to Materials Incorporated by ReferencePDF
80 FR 79655 - Domestic Quarantine NoticesPDF
80 FR 79898 - Safety and Occupational Health Study Section (SOHSS), National Institute for Occupational Safety and Health (NIOSH or Institute)PDF
80 FR 79900 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial ReviewPDF
80 FR 79901 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial ReviewPDF
80 FR 79899 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial ReviewPDF
80 FR 79898 - Disease, Disability, and Injury Prevention and Control Special Emphasis Panel (SEP): Initial ReviewPDF
80 FR 79899 - Board of Scientific Counselors, National Center for Health StatisticsPDF
80 FR 79922 - Clinical Center; Notice of MeetingPDF
80 FR 79921 - National Center for Advancing Translational Sciences; Notice of Closed MeetingPDF
80 FR 79897 - Information Collection; Public Buildings Service; Art-in-Architecture Program National Artist Registry, GSA Form 7437PDF
80 FR 79655 - Participation of Retail Food Stores, Wholesale Food Concerns and Insured Financial InstitutionsPDF
80 FR 79655 - Performance Reporting SystemPDF
80 FR 79889 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; EPA Strategic Plan Information on Source Water ProtectionPDF
80 FR 79892 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Metal Furniture Surface Coating (Renewal)PDF
80 FR 79890 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Chromium Emissions From Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks (Renewal)PDF
80 FR 79893 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Beverage Can Surface Coating (Renewal)PDF
80 FR 79891 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Surface Coating of Large Appliances (Renewal)PDF
80 FR 79989 - Altegris KKR Commitments Master Fund, et al.; Notice of ApplicationPDF
80 FR 79983 - Order Granting Chicago Mercantile Exchange Inc.'s Request To Withdraw From Registration as a Clearing AgencyPDF
80 FR 79966 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Provide FINRA with Authority To Grant Exemptions from TRACE Reporting Requirements for Certain ATS TransactionsPDF
80 FR 79963 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Order Granting Approval of a Proposed Rule Change, as Modified by Amendment Nos. 1 and 2, To List and Trade Options That Overlie a Reduced Value of the FTSE China 50 IndexPDF
80 FR 79969 - Self-Regulatory Organizations; Financial Industry Regulatory Authority, Inc.; Notice of Filing of a Proposed Rule Change To Adopt the Capital Acquisition Broker RulesPDF
80 FR 79986 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Its Fee SchedulePDF
80 FR 79963 - Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change To Adopt a New Policy Relating to Trade Reports for Exchange Traded ProductsPDF
80 FR 79984 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change Relating to the Technical Disconnect MechanismPDF
80 FR 79995 - Petition for Exemption From the Federal Motor Vehicle Theft Prevention Standard; Maserati North America, Inc.PDF
80 FR 79992 - Public Hearings on Planned Upgrades to the New Car Assessment ProgramPDF
80 FR 79675 - Suspended Counterparty ProgramPDF
80 FR 79719 - Implementation of the Program Fraud Civil Remedies Act of 1986PDF
80 FR 79894 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NSPS for Metal Furniture Coating (Renewal)PDF
80 FR 79885 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Mercury (Renewal)PDF
80 FR 79921 - Submission for OMB Review; 30-Day Comment Request: Hazardous Waste Worker TrainingPDF
80 FR 79708 - 2-Propenoic Acid, Homopolymer, Ester With α-[2,4,6-Tris(1-Phenylethyl)Phenyl]-ω-Hydroxypoly(Oxy-1,2-Ethanediyl), Compd. With 2,2′,2″-Nitrilotris[Ethanol]; Tolerance ExemptionPDF
80 FR 79886 - Chlorinated Paraffins; Request for Available Information on PMN Risk AssessmentsPDF
80 FR 79918 - National Advisory Council on Nurse Education and Practice; Notice of MeetingPDF
80 FR 79915 - Agency Information Collection Activities: Proposed Collection; Public Comment RequestPDF
80 FR 79705 - Ammonium Acetate; Exemption From the Requirement of a TolerancePDF
80 FR 79953 - Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996PDF
80 FR 79862 - Proposed Information Collection; Comment Request; Antarctic Marine Living Resources Conservation and Management MeasuresPDF
80 FR 79822 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to a Dock Replacement ProjectPDF
80 FR 79843 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to the U.S. Air Force Conducting Maritime Weapon Systems Evaluation Program Operational Testing Within the Eglin Gulf Test and Training RangePDF
80 FR 79997 - Proposed Collection; Comment Request for Schedule C (Form 1040)PDF
80 FR 79917 - Agency Information Collection Activities: Proposed Collection: Public Comment RequestPDF
80 FR 79918 - National Advisory Council on Migrant Health; Notice of MeetingPDF
80 FR 79684 - Payout Requirements for Type III Supporting Organizations That Are Not Functionally IntegratedPDF
80 FR 79795 - Country-by-Country ReportingPDF
80 FR 80114 - System Safeguards Testing Requirements for Derivatives Clearing OrganizationsPDF
80 FR 80140 - System Safeguards Testing RequirementsPDF
80 FR 79874 - ETRACOM LLC; Michael Rosenberg; Notice of Designation of Commission Staff as Non-DecisionalPDF
80 FR 79868 - Intent To Prepare a Draft Supplemental Environmental Impact Statement To Evaluate Improvements to the Mobile Harbor Federal Navigation Channel, Mobile, AlabamaPDF
80 FR 79863 - Proposed Information Collection; Comment Request; Evaluations of Coastal Zone Management Act Programs-State Coastal Management Programs and National Estuarine Research ReservesPDF
80 FR 79902 - Submission for OMB Review; Comment RequestPDF
80 FR 79745 - Airworthiness Directives; Airbus AirplanesPDF
80 FR 79742 - Airworthiness Directives; Airbus AirplanesPDF
80 FR 79754 - Airworthiness Directives; The Boeing Company AirplanesPDF
80 FR 79805 - Endangered and Threatened Wildlife and Plants; Withdrawal of Proposed Rule To Reclassify the Arroyo Toad as ThreatenedPDF
80 FR 79735 - Airworthiness Directives; The Boeing Company AirplanesPDF
80 FR 79895 - Proposed Changes to the FCC Form 499-A, FCC Form 499-Q, and Accompanying InstructionsPDF
80 FR 79680 - Removal of Jet Route J-477; Northwestern United StatesPDF
80 FR 80000 - Endangered and Threatened Wildlife and Plants; Listing Two Lion SubspeciesPDF
80 FR 79655 - Energy Conservation Program: Test Procedures for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating EquipmentPDF
80 FR 79757 - Establishing the Form and Manner with which Security-Based Swap Data Repositories Must Make Security-Based Swap Data Available to the CommissionPDF
80 FR 80058 - Disclosure of Payments by Resource Extraction IssuersPDF
80 FR 79738 - Airworthiness Directives; Airbus AirplanesPDF
80 FR 79750 - Airworthiness Directives; Airbus AirplanesPDF

Issue

80 246 Wednesday, December 23, 2015 Contents Agriculture Agriculture Department See

Animal and Plant Health Inspection Service

See

Food and Nutrition Service

See

Forest Service

Animal Animal and Plant Health Inspection Service RULES Domestic Quarantine Notices; CFR Correction, 79655 2015-32214 Foreign Quarantine Notices; CFR Correction, 79655 2015-32217 Antitrust Division Antitrust Division NOTICES Changes under the National Cooperative Research and Production Act: Cooperative Research Group on ROS-Industrial Consortium-Americas, 79930 2015-32318 National Armaments Consortium, 79931 2015-32340 ODPi, Inc., 79930-79931 2015-32344 Open Platform for NFV Project, Inc., 79930 2015-32343 PDF Consortium, Inc., 79930 2015-32342 PXI Systems Alliance, Inc., 79931 2015-32341 Broadcasting Broadcasting Board of Governors NOTICES Privacy Act; Systems of Records, 79817-79819 2015-32361 Consumer Financial Protection Bureau of Consumer Financial Protection RULES Home Mortgage Disclosure: Adjustment to Asset-Size Exemption Threshold, 79673-79674 2015-32285 Truth in Lending: Adjustment to Asset-Size Exemption Threshold, 79674-79675 2015-32293 Census Bureau Census Bureau NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79819 2015-32300 Meetings: National Advisory Committee, 79819 2015-32262 Centers Disease Centers for Disease Control and Prevention NOTICES Meetings: Board of Scientific Counselors, National Center for Health Statistics, 79899-79900 2015-32205 Disease, Disability, and Injury Prevention and Control Special Emphasis Panel, 79898-79901 2015-32206 2015-32207 2015-32208 2015-32209 2015-32210 2015-32211 2015-32212 Safety and Occupational Health Study Section, National Institute for Occupational Safety and Health, 79898 2015-32213 Children Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Collection of LIHEAP Recipient Household Data for 2015 RECS LIHEAP Administrative Data Matching, 79901-79902 2015-32242 Head Start Grant Application and Budget Instruments, 79903 2015-32241 Native Language Preservation and Maintenance Grant Application Template Pilot, 79902-79903 2015-32097 Coast Guard Coast Guard RULES Drawbridge Operations: Mill Neck Creek, Oyster Bay, NY, 79695 2015-32254 Commerce Commerce Department See

Census Bureau

See

Foreign-Trade Zones Board

See

International Trade Administration

See

National Institute of Standards and Technology

See

National Oceanic and Atmospheric Administration

Commodity Futures Commodity Futures Trading Commission PROPOSED RULES System Safeguards Testing Requirements, 80140-80191 2015-32143 System Safeguards Testing Requirements for Derivatives Clearing Organizations, 80114-80138 2015-32144 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79865 2015-32306 Comptroller Comptroller of the Currency PROPOSED RULES Regulatory Publication and Review under the Economic Growth and Regulatory Paperwork Reduction Act, 79724-79735 2015-32312 Defense Department Defense Department See

Engineers Corps

See

Navy Department

NOTICES Arms Sales, 79865-79867 2015-32224 Privacy Act; Systems of Records, 79867-79868 2015-32286
Education Department Education Department NOTICES Submission of Data by State Educational Agencies: Submission Dates for State Revenue and Expenditure Reports for Fiscal Year (FY) 2015, Revisions to Those Reports, and Revisions to Prior Fiscal Year Reports, 79871-79872 2015-32266 Energy Department Energy Department See

Federal Energy Regulatory Commission

See

Southwestern Power Administration

RULES Energy Conservation Program: Test Procedures for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment, 79655-79671 2015-31906 NOTICES Invitation for Public Comment to Inform the Design of a Consent-Based Siting Process for Nuclear Waste Storage and Disposal Facilities, 79872-79874 2015-32346
Engineers Engineers Corps NOTICES Environmental Impact Statements; Availability, etc.: Mobile Harbor Federal Navigation Channel, Mobile, AL, 79868-79869 2015-32117 Environmental Protection Environmental Protection Agency RULES Air Quality State Implementation Plans; Approvals and Promulgations: South Dakota, 79695-79705 2015-32216 Exemptions from the Requirement of a Tolerance: Ammonium Acetate, 79705-79708 2015-32170 Pesticide Tolerances: Propiconazole, 79711-79718 2015-32327 Pesticide Tolerances; Exemptions: 2-propenoic acid, homopolymer, etc., 79708-79711 2015-32176 PROPOSED RULES Pesticides; Certification of Pesticide Applicators, Second Extension of the Comment Period, 79803 2015-32457 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Distribution of Offsite Consequence Analysis Information, 79891-79892 2015-32220 EPA Strategic Plan Information on Source Water Protection, 79889 2015-32198 NESHAP for Chromium Emissions from Hard and Decorative Chromium Electroplating and Chromium Anodizing Tanks, 79890 2015-32196 NESHAP for Mercury, 79885-79886 2015-32179 NESHAP for Metal Furniture Surface Coating, 79892-79893 2015-32197 NSPS for Beverage Can Surface Coating, 79893-79894 2015-32195 NSPS for Metal Furniture Coating, 79894 2015-32180 NSPS for Surface Coating of Large Appliances, 79891 2015-32194 Pesticide Registration Reviews: Draft Human Health and Ecological Risk Assessments for Certain Organophosphates, 79888-79889 2015-32326 Pesticide Tolerances: Chlorinated Paraffins, 79886-79888 2015-32175 Proposed CERCLA Administrative Cost Recovery Settlement: Riverside Chrome Plating Superfund Site, 79889-79890 2015-32345 Federal Aviation Federal Aviation Administration RULES Removal of Jet Route J-477; Northwestern United States, 79680-79681 2015-31992 PROPOSED RULES Airworthiness Directives: Airbus Airplanes, 79738-79754 2015-30821 2015-30822 2015-32082 2015-32084 The Boeing Company Airplanes, 79735-79738, 79754-79757 2015-32055 2015-32081 Federal Communications Federal Communications Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79894-79895 2015-32230 Proposed Changes to FCC Forms and Accompanying Instructions, 79895-79897 2015-32002 Federal Deposit Federal Deposit Insurance Corporation RULES General Administrative Regulations; CFR Correction, 79655 2015-32219 PROPOSED RULES Regulatory Publication and Review under the Economic Growth and Regulatory Paperwork Reduction Act, 79724-79735 2015-32312 Federal Energy Federal Energy Regulatory Commission NOTICES Applications: Brookfield White Pine Hydro, LLC, 79875 2015-32271 FFP Missouri 16, LLC; FFP Missouri 15, LLC; Solia 8 Hydroelectric, LLC; et al., 79878-79880 2015-32272 Town of Walnut, MS, 79877-79878 2015-32275 Combined Filings, 79876-79877 2015-32268 2015-32274 Designation of Commission Staff as Non-Decisional: ETRACOM LLC and Michael Rosenberg, 79874-79875 2015-32129 Filings: City of Banning, CA, 79874 2015-32270 Petitions for Declaratory Orders: Williams Field Services—Gulf Coast Co., LP, 79880-79881 2015-32269 Preliminary Permit Applications: Energy Resources USA, Inc., 79876 2015-32276 Federal Housing Finance Agency Federal Housing Finance Agency RULES Suspended Counterparty Program, 79675-79680 2015-32183 PROPOSED RULES Implementation of the Program Fraud Civil Remedies Act, 79719-79724 2015-32182 Federal Reserve Federal Reserve System RULES Extensions of Credit by Federal Reserve Banks, 79671-79673 2015-32295 PROPOSED RULES Regulatory Publication and Review under the Economic Growth and Regulatory Paperwork Reduction Act, 79724-79735 2015-32312 NOTICES Changes in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Company, 79897 2015-32261 Fish Fish and Wildlife Service RULES Endangered and Threatened Wildlife and Plants: Two Lion Subspecies: Panthera leo leo and P.l. melanochaita, 80000-80056 2015-31958 PROPOSED RULES Endangered and Threatened Wildlife and Plants: Reclassification of Arroyo Toad; Withdrawal, 79805-79816 2015-32075 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Annual Certification of Hunting and Sport Fishing Licenses Issued, 79924-79925 2015-32228 Food and Drug Food and Drug Administration PROPOSED RULES Fixed-Combination and Co-Packaged Drugs: Applications for Approval; Combinations of Active Ingredients under Consideration for Inclusion in an Over-the-Counter Monograph, 79776-79795 2015-32246 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Bar Code Label Requirement for Human Drug and Biological Products; Correction, 79912 2015-32252 Guidance—Emergency Use Authorization of Medical Products, 79905-79907 2015-32253 Hearing, Aging, and Direct-to-Consumer Television Advertisements, 79909-79912 2015-32251 Determination of Regulatory Review Period for Purposes of Patent Extension: JETREA, 79903-79905 2015-32247 Guidance for Industry: Advancement of Emerging Technology Applications to Modernize the Pharmaceutical Manufacturing Base, 79907-79908 2015-32316 Revised Recommendations for Reducing the Risk of Human Immunodeficiency Virus Transmission by Blood and Blood Products, 79913-79915 2015-32250 Food and Nutrition Food and Nutrition Service RULES Participation of Retail Food Stores, Wholesale Food Concerns and Insured Financial Institutions; CFR Correction, 79655 2015-32201 Performance Reporting; CFR Correction, 79655 2015-32200 Foreign Trade Foreign-Trade Zones Board NOTICES Applications for Production Authority: Coleman Co., Inc., Subzone 119I, 79820 2015-32333 Production Activities: Mitsubishi Caterpillar Forklift America, Inc., Foreign-Trade Zone 84, Houston, TX, 79820 2015-32334 Forest Forest Service NOTICES Environmental Impact Statements; Availability, etc.: Proposed North-South Project, San Bernardino National Forest, CA, 79817 2015-32263 General Services General Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79897-79898 2015-32202 Health and Human Health and Human Services Department See

Centers for Disease Control and Prevention

See

Children and Families Administration

See

Food and Drug Administration

See

Health Resources and Services Administration

See

Inspector General Office, Health and Human Services Department

See

National Institutes of Health

NOTICES My Preparedness Story--Staying Healthy and Resilient Video Challenges: Requirements and Registration, 79918-79921 2015-32331
Health Resources Health Resources and Services Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79915-79918 2015-32148 2015-32171 Meetings: National Advisory Council on Migrant Health, 79918 2015-32147 National Advisory Council on Nurse Education and Practice, 79918 2015-32172 Homeland Homeland Security Department See

Coast Guard

See

U.S. Citizenship and Immigration Services

Indian Affairs Indian Affairs Bureau NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Class III Gaming; Tribal Revenue Allocation Plans; Gaming on Trust Lands, 79925-79926 2015-32282 Indian Gaming: Three Tribal-State Class III Gaming Compacts Taking Effect in the State of California, 79926 2015-32347 Inspector General Health Inspector General Office, Health and Human Services Department PROPOSED RULES Solicitation of New Safe Harbors and Special Fraud Alerts, 79803-79805 2015-32267 Interior Interior Department See

Fish and Wildlife Service

See

Indian Affairs Bureau

See

Land Management Bureau

See

National Park Service

Internal Revenue Internal Revenue Service RULES Payout Requirements for Type III Supporting Organizations That are Not Functionally Integrated, 79684-79687 2015-32146 PROPOSED RULES Country-by-Country Reporting, 79795-79803 2015-32145 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79997 2015-32153 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Light-Walled Rectangular Pipe and Tube from Mexico, 79820-79821 2015-32332 Justice Department Justice Department See

Antitrust Division

NOTICES Proposed Joint Stipulation to Modify Consent Decree under the Clean Air Act, 79931-79932 2015-32299
Labor Department Labor Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79936-79937 2015-32317 Agency Information Collection Activities; Proposals, Submissions, and Approvals: Benefit Accuracy Measurement Program, 79935 2015-32249 Data Sharing Agreement Program, 79932-79933 2015-32248 Employee Retirement Income Security Act Summary Annual Report Requirement, 79934-79935 2015-32304 Required Elements for Submission of the Unified or Combined State Plan and Plan Modifications under the Workforce Innovation and Opportunity Act, 79933-79934 2015-32278 Land Land Management Bureau NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 79927-79928 2015-32339 Meetings: Southeast Oregon Resource Advisory Council, 79926-79927 2015-32255 NASA National Aeronautics and Space Administration NOTICES Privacy Act; Systems of Records, 79937-79950 2015-32289 2015-32290 2015-32291 National Archives National Archives and Records Administration NOTICES Agency Information Collection Activities; 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80 246 Wednesday, December 23, 2015 Rules and Regulations DEPARTMENT OF AGRICULTURE Food and Nutrition Service 7 CFR Part 275 Performance Reporting System CFR Correction In Title 7 of the Code of Federal Regulations, Parts 210 to 299, revised as of January 1, 2015, on page 944, in § 275.11, in paragraph (g), remove the fourth sentence which reads “However, all results of reviews of active and negative demonstration project/SSA processed cases shall be excluded from the determination of State agencies' active and negative case error rates, payment error rates, and underissuance error rates as described in § 275.23(c).” [FR Doc. 2015-32200 Filed 12-22-15; 8:45 am] BILLING CODE 1505-01-D DEPARTMENT OF AGRICULTURE Food and Nutrition Service 7 CFR Part 278 Participation of Retail Food Stores, Wholesale Food Concerns and Insured Financial Institutions CFR Correction In Title 7 of the Code of Federal Regulations, Parts 210 to 299, revised as of January 1, 2015, on page 1031, in § 278.6, in the introductory text of paragraph (h), after the word “bond”, add the words “or irrevocable letter of credit”. [FR Doc. 2015-32201 Filed 12-22-15; 8:45 am] BILLING CODE 1505-01-P DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 301 Domestic Quarantine Notices CFR Correction In Title 7 of the Code of Federal Regulations, Parts 300 to 399, revised as of January 1, 2015, on page 129, in § 301.86-5, in paragraph (b), remove the term “potato” wherever it appears and add “pale” in its place. [FR Doc. 2015-32214 Filed 12-22-15; 8:45 am] BILLING CODE 1505-01-D DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 319 Foreign Quarantine Notices CFR Correction

In Title 7 of the Code of Federal Regulations, Parts 300 to 399, revised as of January 1, 2015, make the following corrections:

1. On page 231, in § 319.8-24, in paragraph (c), after the first occurrence of the word “his”, add the words “or her”;
2. On page 312, in § 319.55-6, in paragraph (b)(1), in the first sentence, after the second occurrence of the word “treatment”, add the phrase “in accordance with part 305 of this chapter”; and 3. On page 342, in § 319.56-28, in paragraph (g)(1), at the end of the first sentence, add the phrase “of Morocco”.
[FR Doc. 2015-32217 Filed 12-22-15; 8:45 am] BILLING CODE 1505-01-D
DEPARTMENT OF AGRICULTURE Federal Crop Insurance Corporation 7 CFR Part 400 General Administrative Regulations CFR Correction In Title 7 of the Code of Federal Regulations, Parts 400 to 699, revised as of January 1, 2015, on page 28, in § 400.169, in paragraph (c), the second to last sentence is reinstated to read: “The determinations of the Deputy Administrator will be final and binding on the company.” [FR Doc. 2015-32219 Filed 12-22-15; 8:45 am] BILLING CODE 1505-01-D DEPARTMENT OF ENERGY 10 CFR Parts 429 and 431 [Docket No. EERE-2015-BT-TP-0015] RIN 1904-AD54 Energy Conservation Program: Test Procedures for Small, Large, and Very Large Air-Cooled Commercial Package Air Conditioning and Heating Equipment AGENCY:

Office of Energy Efficiency and Renewable Energy, Department of Energy.

ACTION:

Final rule.

SUMMARY:

In this final rule, the U.S. Department of Energy (DOE) reaffirms that the currently prescribed test procedure, with certain amendments adopted in this rulemaking, must be used when measuring the energy efficiency of certain categories of small, large, and very large air-cooled commercial package air conditioners and heating equipment. The final rule, in addition to satisfying the agency's obligation to periodically review its test procedures for covered equipment, also clarifies specific certification, compliance, and enforcement provisions related to this equipment. The final rule limits the incorporation by reference of the industry test procedure ANSI/AHRI Standard 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” to certain sections and addenda; clarifies indoor airflow tolerance and adjustment specifications when meeting other rating conditions; clarifies requirements for condenser head pressure controls; clarifies units of measurement for airflow; establishes a tolerance on part-load rating points and specifies the ambient temperatures used for the part-load rating points; and defines the term, “integrated energy efficiency ratio.”

DATES:

The effective date of this rule is January 22, 2016. The final rule changes will be mandatory for testing starting December 19, 2016. The incorporation by reference of certain material listed in this rule is approved by the Director of the Federal Register as of January 22, 2016.

ADDRESSES:

The docket, which includes Federal Register notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at regulations.gov. All documents in the docket are listed in the regulations.gov index. However, some documents listed in the index, such as those containing information that is exempt from public disclosure, may not be publicly available.

A link to the docket Web page can be found at: http://www.regulations.gov/#!documentDetail;D=EERE-2015-BT-TP-0015-0001. This Web page will contain a link to the docket for this notice on the regulations.gov site. The regulations.gov Web page will contain simple instructions on how to access all documents, including public comments, in the docket.

For further information on how to review the docket, contact Ms. Brenda Edwards at (202) 586-2945 or by email: [email protected]

FOR FURTHER INFORMATION CONTACT:

Ms. Ashley Armstrong, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Program, EE-2J, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-9590, or email [email protected]

For legal issues, please contact Mr. Michael Kido, U.S. Department of Energy, Office of the General Counsel, GC-33, 1000 Independence Avenue SW., Washington, DC 20585-0121. Telephone: (202) 586-8145. Email: [email protected]

SUPPLEMENTARY INFORMATION:

DOE intends to incorporate by reference the following industry standard into part 429 and appendix A to subpart F of part 431: ANSI/AHRI Standard 340/360-2007, (“AHRI 340/360-2007”), “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” with Addenda 1 and 2, approved by ANSI on October 27, 2011. This industry standard provides guidance regarding a variety of different elements related to the testing of commercial and industrial unitary air-conditioning and heat pump equipment, including definitions, classifications, as well as testing, rating, data, and operating requirements. ANSI/AHRI Standard 340/360-2007 is readily available from the Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or go to: http://www.ahrinet.org.

DOE intends to incorporate by reference the following industry standard into appendix A to subpart F of part 431: ANSI/ASHRAE Standard 37-2009, (“ANSI/ASHRAE 37”), “Methods of Testing for Rating Electrically Driven Unitary Air-Conditioning and Heat Pump Equipment,” approved by ASHRAE on June 20, 2009. This testing standard details test methods for the equipment addressed by this rulemaking. Copies of this testing standard are readily available from the American Society of Heating, Refrigerating, and Air-Conditioning Engineers, 1791 Tullie Circle NE., Atlanta, GA 30329, (800) 527-4723, or through its Web site at https://www.ashrae.org.

These standards are described further in section IV.M.

Table of Contents I. Authority and Background A. General Test Procedure Rulemaking Process II. Synopsis of the Final Rule III. Discussion A. Clarifications to the Current DOE Test Procedure 1. Sections of ANSI/AHRI 340/360-2007 Incorporated by Reference 2. Indoor Airflow Adjustment and Reporting 3. Condenser Head Pressure Controls 4. Unit of Measurement for Airflow 5. Tolerance on Percent Load for IEER Part-Load Tests 6. Definition of IEER 7. Additional Test Procedure Provisions B. Certification and Enforcement Issues and Compliance Dates 1. Measuring Cooling Capacity for Purposes of Certification, Assessment, and Enforcement 2. Compliance Dates of the Certification, Reporting, and Test Procedure Amendments C. Future Test Procedure Rulemakings D. Regulatory Text Language IV. Procedural Issues and Regulatory Review A. Review Under Executive Order 12866 B. Review Under the Regulatory Flexibility Act C. Review Under the Paperwork Reduction Act of 1995 D. Review Under the National Environmental Policy Act of 1969 E. Review Under Executive Order 13132 F. Review Under Executive Order 12988 G. Review Under the Unfunded Mandates Reform Act of 1995 H. Review Under the Treasury and General Government Appropriations Act, 1999 I. Review Under Executive Order 12630 J. Review Under Treasury and General Government Appropriations Act, 2001 K. Review Under Executive Order 13211 L. Review Under Section 32 of the Federal Energy Administration Act of 1974 M. Description of Materials Incorporated by Reference N. Congressional Notification O. Approval of the Office of the Secretary I. Authority and Background

Title III of the Energy Policy and Conservation Act of 1975 (42 U.S.C. 6291, et seq.; “EPCA” or, “the Act”) sets forth a variety of provisions designed to improve energy efficiency. (All references to EPCA in this document refer to the statute as amended through the Energy Efficiency Improvement Act of 2015, Public Law 114-11 (April 30, 2015).) Part C of Title III, which for editorial reasons was redesignated as Part A-1 upon incorporation into the U.S. Code (42 U.S.C. 6311-6317, as codified), establishes the Energy Conservation Program for Certain Commercial and Industrial Equipment. Among the equipment covered under this statutory framework are small, large, and very large air-cooled commercial package air conditioning and heating equipment—which are referred to in this notice as commercial unitary air conditioners (CUACs) and commercial unitary heat pumps (CUHPs). These equipment are the subject of this document. (42 U.S.C. 6311(1)(B)-(D))

Under EPCA, the energy conservation program consists essentially of four parts: (1) testing, (2) labeling, (3) Federal energy conservation standards, and (4) certification and enforcement procedures. The testing requirements consist of test procedures that manufacturers of covered equipment must use as the basis for (1) certifying to DOE that their equipment complies with the applicable energy conservation standards adopted under EPCA, and (2) making representations about the efficiency of that equipment. Similarly, DOE must use these test procedures to determine whether the equipment complies with any relevant standards promulgated under EPCA.

DOE's test procedure for CUACs and CUHPs is codified at Title 10 of the Code of Federal Regulations (CFR), § 431.96. The current regulations require that manufacturers use ANSI/AHRI 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment” (ANSI/AHRI 340/360-2007), when measuring the efficiency of a given CUAC or CUHP and certifying that equipment as compliant with the applicable standard.1 77 FR 28928, 28990 (May 16, 2012) (final rule specifying applicable energy conservation standards and test procedures for various commercial and industrial equipment, including CUACs and CUHPs).

1 DOE notes that for purposes of this notice, all references to ANSI/ASHRAE 340/360-2007 include Addenda 1 and 2 to this industry-based standard.

On February 1, 2013, DOE published a request for information and notice of document availability regarding the potential amendment of the energy conservation standards for CUACs and CUHPs. 78 FR 7296. DOE solicited information from the public to help determine whether national standards more stringent than the current ones would result in a significant amount of additional energy savings and whether those national standards would be technologically feasible and economically justified. DOE also sought information from the public on the merits of adopting the integrated energy efficiency ratio (IEER) as the energy efficiency descriptor for small, large, and very large air-cooled commercial air conditioners and heat pumps, and which includes provisions to measure equipment performance under partial-load operating conditions. Currently, manufacturers must measure the energy efficiency of their equipment using the energy efficiency ratio (EER), which measures the full-load efficiency of a given unit. The procedure to follow when measuring and calculating that value, like the proposed IEER metric, is found in ANSI/ASHRAE 340/360-2007. See ANSI/ASHRAE 340/360-2007, sec. 6. Comments received on the topic of IEER are discussed in a related notice of proposed rulemaking (NOPR) published September 30, 2014, which sought to amend the CUAC and CUHP energy conservation standards. 79 FR 58948.

Subsequently, on April 1, 2015, DOE issued a notice of intent to establish the Commercial Package Air Conditioners and Heat Pumps and Commercial Warm Air Furnaces Working Group to negotiate potential amendments to the energy conservation standards for this equipment. 80 FR 17363. This Working Group was established under the Appliance Standards and Rulemaking Federal Advisory Committee (ASRAC) in accordance with the Federal Advisory Committee Act and the Negotiated Rulemaking Act. See 5 U.S.C. Appendix—Federal Advisory Committee Act and 5 U.S.C. 561-570a. The Working Group, which consisted of 17 members, including one member from ASRAC and one DOE representative, met six times (five times in person and once by teleconference). The meetings were held on April 28, May 11-12, May 20-21, June 1-2, June 9-10, and June 15, 2015. The Working Group successfully reached consensus on energy conservation standards for CUACs, CUHPs, and commercial warm air furnaces, which the Working Group provided as recommendations as part of a Term Sheet for submission to ASRAC. The group also chose to provide test procedure and metric-related recommendations to the ASRAC. ASRAC voted unanimously to approve the Working Group's recommendations on June 17, 2015. Participants in the Working Group consisted of the following entities aside from DOE:

Organization Acronym,
  • Abbreviation
  • Affiliation
    Air Conditioning Contractors of America ACCA Contractor/Installer Group. Air-Conditioning, Heating, and Refrigeration Institute AHRI HVAC Manufacturers Group. American Council for an Energy Efficient Economy ACEEE Energy Efficiency Advocacy Group. Appliance Standards Awareness Project ASAP Energy Efficiency Advocacy Group. Emerson Climate Technologies Emerson Manufacturer. Goodman Manufacturing Goodman Manufacturer. Lennox International Lennox Manufacturer. Mitsubishi Electric Mitsubishi Manufacturer. Natural Resources Defense Council NRDC Energy Efficiency Advocacy Group. Northwest Energy Efficiency Alliance NEEA Energy Efficiency Advocacy Group. Pacific Gas & Electric Company, San Diego Gas & Electric Company, Southern California Edison, and Southern California Gas Company Cal. IOUs Investor-Owned Utilities. Rheem Manufacturing Company Rheem Manufacturer. Sheet Metal and Air Conditioning Contractors National Association, Inc. SMACCNA Contractor/Installer Group. Trane/Ingersoll Rand Trane Manufacturer. United Technologies Corporation (Carrier) Carrier Manufacturer. Underwriters Laboratories UL Test Lab.

    DOE initiated a rulemaking to amend the test procedure and associated certification requirements for CUACs and CUHPs to implement certain of the Working Group's recommendations regarding the metric and test procedure. On August 6, 2015, DOE published a NOPR (August 2015 NOPR), 80 FR 46870, in which DOE proposed to clarify aspects of the CUAC and CUHP test procedure. These clarifications include, among other things, limiting the incorporation by reference of ANSI/AHRI 340/360-2007 to certain sections and addenda, specifying requirements for indoor airflow adjustment and reporting, clarifying requirements for condenser head pressure controls, clarifying the unit of measurement for airflow, establishing a tolerance on percent load for IEER part-load tests, and defining the term IEER. In this final rule, DOE responds to comments received from stakeholders in response to the NOPR.

    A. General Test Procedure Rulemaking Process

    EPCA sets forth the general criteria and procedures DOE must follow when prescribing or amending test procedures for covered equipment. See generally 42 U.S.C. 6314. EPCA provides in relevant part that any test procedures prescribed or amended under this section must be reasonably designed to produce test results that measure the energy efficiency, energy use or estimated annual operating cost of a covered product during a representative average use cycle or period of use, and must not be unduly burdensome to conduct. (42 U.S.C. 6314(a)(2)) In addition, if DOE determines that a test procedure amendment is warranted, it must publish proposed test procedures and offer an opportunity for the public to present oral and written comments. (42 U.S.C. 6314(b))

    EPCA also requires DOE to evaluate its test procedures at least once every 7 years for each class of covered equipment (including CUACs and CUHPs) to determine if an amended test procedure would more accurately or fully comply with the requirement to be reasonably designed to produce test results that reflect the energy efficiency, energy use, and operating costs during a representative average use cycle. DOE must either prescribe amended test procedures or publish a notice in the Federal Register regarding its determination not to amend test procedures. (42 U.S.C. 6314(a)(1)-(2))

    DOE considers the activity associated with this rulemaking sufficient to satisfy this review requirement.

    II. Synopsis of the Final Rule

    This final rule clarifies aspects of DOE's test procedure for CUACs and CUHPs to improve the consistency and accuracy of the results generated when using that procedure. The rule clarifies how to test for compliance with the current energy conservation standards along with those standards that DOE anticipates adopting consistent with the Working Group's Term Sheet. The rule also amends certain certification, compliance, and enforcement provisions. DOE has determined that this final rule will not change the measured energy efficiency of CUACs and CUHPs when compared to the current test procedure.

    III. Discussion

    This final rule amends the test procedure for CUACs and CUHPs in appendix A to subpart F of part 431 and adds new equipment-specific certification and enforcement provisions in 10 CFR 429.43 and 429.134. With respect to the latter of these changes, a new § 429.134(g) would be added to the pre-existing provisions already contained in § 429.134(a)-(f). The rule also amends certain definitions found in 10 CFR 431.92 and updates certain materials incorporated by reference in 10 CFR 431.95.

    In response to the August 2015 NOPR, six interested parties submitted written comments: Air-Conditioning, Heating and Refrigeration Institute (AHRI); United Technologies Corporation (Carrier), Ingersoll Rand, the California Investor-Owned Utilities (Cal. IOUs), Goodman Manufacturing Company (Goodman), and Lennox International Inc. (Lennox). Interested parties commented on a range of issues, including those DOE identified in the August 2015 NOPR, as well as several other pertinent issues related to DOE's proposal. Commenters also offered thoughts on further opportunities to improve the clarity of the test procedure. These issues, as well as DOE's responses to them and the resulting changes to DOE's proposal, are discussed in the subsequent sections.

    A. Clarifications to the Current DOE Test Procedure

    In response to the August 2015 NOPR, DOE received input on a variety of test procedure issues, including: (1) sections of ANSI/AHRI 340/360-2007 incorporated by reference; (2) indoor airflow adjustment and reporting; (3) condenser head pressure controls; (4) the unit of measurement for airflow; (5) the tolerance on percent load for IEER part-load tests; (6) the definition of IEER; and (7) additional provisions in the current test procedure. DOE's treatment of these issues is addressed below.

    1. Sections of ANSI/AHRI 340/360-2007 Incorporated by Reference

    As noted previously, DOE intends to incorporate by reference ANSI/AHRI Standard 340/360-2007, (“AHRI 340/360-2007”), “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” which was approved by ANSI on October 27, 2011, and updated by addendum 1 in December 2010 and addendum 2 in June 2011. This industry standard provides guidance regarding a variety of different elements related to the testing of commercial and industrial unitary air-conditioning and heat pump equipment, including definitions, classifications, as well as testing, rating, data, and operating requirements. (ANSI/AHRI Standard 340/360-2007 is readily available from the Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or go to: http://www.ahrinet.org.)

    In its August 2015 NOPR, DOE proposed to specify that when testing CUACs and CUHPs for the EER, coefficient of performance (COP), and IEER metrics, only certain sections of ANSI/AHRI 340/360-2007 would be required—specifically, sections 3, 4, and 6 (omitting section 6.3)—rather than applying the entirety of ANSI/AHRI 340/360-2007. DOE also proposed not to incorporate section 5 of that testing standard, and to incorporate by reference ANSI/ASHRAE 37-2009, which was previously incorporated by reference through section 5 of ANSI/AHRI 340/360-2007. 80 FR at 46873.

    Responding to this aspect of DOE's proposal, AHRI, Carrier, Ingersoll Rand, Goodman, and Lennox commented that DOE should reference ANSI/AHRI Standard 340/360-2015 after its final version is released. (AHRI, No. 8 at p. 1; Carrier, No. 11 at p. 2; Ingersoll Rand, No. 9 at p. 13; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 2, 6) They commented that this revised testing standard addresses the issues that DOE raised in the NOPR and additional items identified by industry to improve the test procedure. In addition, Lennox noted that EPCA requires DOE to use those test procedures that are generally accepted by industry. (Lennox No. 13 at pp. 2, 6) See also 42 U.S.C. 6314(a)(4)(A) (indicating that the test procedures for commercial package air conditioning and heating equipment shall be those “generally accepted industry testing procedures or rating procedures” developed or recognized by AHRI or ASHRAE “as referenced in ASHRAE/IES Standard 90.1 and in effect on June 30, 1992”). Additionally, AHRI commented that sections 6.5 and 6.6 of the soon-to-be-released version of AHRI 340/360-2015, which address verification testing uncertainty and uncertainty allowances, respectively, should be referenced as well. AHRI commented that doing so will help the user of the standard more fully understand the causes of why measured capacity and efficiency may vary, which, in its view, will be helpful to laboratories performing tests to complete the uncertainty analyses required by ISO 17025.2

    2 ISO 17025 is a test facility standard that provides general requirements for standard operating procedures for accuracy of laboratory measurements and tests.

    AHRI agreed with DOE's proposal to incorporate by reference ANSI/ASHRAE 37-2009. (AHRI, No. 8 at p. 2) AHRI noted that ANSI/AHRI 340/360-2015 has updated the reference to ANSI/ASHRAE 37-2009, and that section 5 of ANSI/AHRI 340/360-2015 addresses items related to unit setup and operating conditions that are not currently covered by ANSI/ASHRAE 37-2009.

    Carrier commented that ANSI/AHRI 340/360-2015 requires that corrections be made for the impact of atmospheric pressure changes and resulting air density changes. Carrier requested that DOE adopt Appendix D of ANSI/AHRI 340/360-2015 to better account for changes in atmospheric pressure and altitude changes of test laboratories. (Carrier No. 11 at p. 3)

    AHRI and Carrier commented that DOE uses a confidence level of 95 percent in the sampling requirements given in 10 CFR 429.43, whereas section 6.4 of ANSI/AHRI 340/360-2015 uses a confidence level of 90 percent. (AHRI, No. 8 at p. 2; Carrier No. 11 at p. 2) AHRI and Carrier noted that commercial equipment has as much, if not more, uncertainty and variability in testing than residential equipment, and that 90 percent is an appropriate confidence level.

    After reviewing the comments from the August 2015 NOPR, DOE agrees that many of the raised issues are addressed in the draft version of ANSI/AHRI 340/360-2015. However, DOE is still investigating whether certain provisions in the draft ANSI/AHRI 340/360-2015 will change measured efficiency. Furthermore, a final version of the new standard was not available during the preparation of this final rule. For these reasons, DOE declines to adopt ANSI/AHRI 340/360-2015 in whole or in part at this time. In this final rule, DOE amends its test procedure to reference sections 3, 4, and 6 (omitting section 6.3) of ANSI/AHRI 340/360-2007. DOE may, however, consider incorporating the final version of ANSI/AHRI 340/360-2015, or additional provisions within it, in a future test procedure rulemaking, as discussed in section III.C. With respect to ANSI/ASHRAE 37-2009, DOE already incorporates by reference this testing standard in part 431.

    In the NOPR, DOE did not make any proposals regarding the confidence level in its certification and enforcement provisions. Accordingly, DOE declines to adopt provisions on this issue without holding further public comment. While DOE is open to considering changes to its confidence level in the future, manufacturers or other parties with access to relevant data should provide data regarding the variability of units in production and testing to enable DOE to facilitate its efforts to make any necessary adjustments in an appropriate future rulemaking proceeding.

    2. Indoor Airflow Adjustment and Reporting

    In the August 2015 NOPR, DOE proposed that equipment must be tested using the motor and drive assembly and settings specified in the certification report (supplemental testing instruction PDF), and that the external static pressure (ESP) during testing remain within the tolerances set forth in Section 6.1.3.2 of ANSI/AHRI 340/360-2007 with the indoor airflow rate staying within +/−5 percent of the manufacturer-rated full-load indoor airflow rate. DOE proposed that the unit and/or test facility be adjusted to set up the unit such that both the airflow and ESP are within the required tolerances. See 80 FR at 46873 (noting situations in which a test facility's equipment may need adjusting to maintain the proposed tolerances).

    ANSI/AHRI 340/360-2007, section 6.1.3.2.e, specifies that the full-load cooling airflow rate (in SCFM) must be employed, irrespective of resulting ESP, for all situations other than full-load cooling in which full-load airflow is used (e.g., full-load heating). DOE proposed that the +/−5 percent tolerance for airflow rate must be applied for these other conditions as well. DOE also indicated that it interpreted this section to mean that a test facility adjustment can be made to obtain the proper airflow (i.e. to maintain airflow within the proposed tolerance), but that the unit under test itself cannot be adjusted, and that there is no ESP requirement for this part of the test. 80 FR at 46873.

    In addition, DOE proposed that in cases where a unit is designed to operate with a different indoor airflow rate for cooling and heating modes, manufacturers would report the individual indoor airflow rates in cooling and heating modes. DOE also proposed that a manufacturer must include in its certification report the adjusted indoor airflow at each part-load condition. 80 FR at 46873.

    Responding to the NOPR, AHRI and Carrier agreed that the tester must use the same motor and drive kit that was used to determine the certified rating, as specified in the manufacturer's certification information. (AHRI, No. 8 at p. 5; Carrier No. 11 at p. 4) AHRI, Carrier, Goodman, and Lennox agreed that a tolerance for indoor airflow is needed to ensure that it closely approximates the manufacturer's rated full-load indoor airflow rate. (AHRI, No. 8 at p. 5; Carrier No. 11 at p. 4; Goodman, No. 14 at p. 1; Lennox, No. 13 at p. 4) However, these commenters indicated that a 5 percent tolerance would result in too much variation in EER and cooling capacity. The commenters recommended that the airflow should be allowed to vary by +/−3 percent of the rated full-load indoor airflow rate to reduce test uncertainty and to ensure the variations in EER and cooling capacity are at acceptable levels. (AHRI, No. 8 at p. 5; Carrier No. 11 at p. 4; Goodman, No. 14 at p. 1; Lennox, No. 13 at p. 4)

    In contrast, AHRI commented that no adjustments should be made to the airflow or the ESP during the heating test after it is set during the cooling test. (AHRI, No. 8 at p. 5). Goodman generally agreed with this view. (Goodman, No. 14 at p. 2) DOE's proposal would require adjustments to the test facility's equipment (but not the tested unit's fan settings) to maintain the full-load airflow rate when switching from the cooling test to the heating test, without regard to the resulting ESP. The method AHRI described is inconsistent with DOE's proposed method, because it would prohibit making adjustments to the ESP when switching from the cooling test to the heating test, whereas the proposal would allow the ESP to change between the cooling and heating tests as long as the full-load airflow rate is maintained. Lennox agreed with DOE's proposed approach to maintain the full-load airflow rate when switching from the cooling test to the heating test by making adjustments to the test facility's equipment—and not to the tested unit's fan settings—without regard to the resulting ESP. Lennox suggested that a +/−3 percent tolerance should apply to the full-load indoor airflow rate during the heating test. (Lennox, No. 13 at p. 5) Carrier also supported making adjustments to the test facility's equipment, but not to the unit's fan settings, to maintain proper airflow. Carrier also commented that the proposed ANSI/AHRI 340/360-2015 includes a requirement to manually adjust fan speed during the heating cycle if the unit is equipped with automatic controls that control the fan speed in heating mode. (Carrier No. 11 at pp. 4-5)

    AHRI, Carrier, Goodman, and Lennox agreed with DOE that indoor airflow should be reported in both cooling and heating mode if they are different. (AHRI, No. 8 at p. 6; Carrier, No. 11 at p. 5; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 5) AHRI and Carrier are not aware of any equipment that has a different airflow for heating and cooling but believe that it could be an option in the future.

    After reviewing the comments on the NOPR, DOE agrees that a 5-percent tolerance on the rated full-load indoor airflow rate would allow more variation than desired in the EER and cooling capacity. Test results provided by manufacturers regarding the range of potential variation are greater than the estimates DOE initially made, which supported the 5 percent proposal. Based on the additional information provided by manufacturers, DOE is revising its proposed tolerance level on the rated full-load indoor airflow rate from 5 percent to 3 percent. Additionally, given the generally positive feedback received in response to its proposed approach, DOE is also adopting its proposal that full-load airflow rate be maintained when switching from cooling mode to heating mode by adjusting the test facility (but not the unit under test) without regard to the resulting ESP. In addition, DOE is adopting its proposed certification and reporting requirements with minor clarifications. Specifically, a manufacturer must include in its certification report the adjusted indoor airflow at each part-load condition for both cooling and heating modes. In cases where a model is designed to operate with the same indoor airflow rate for cooling and heating modes, the reported numbers may be the same for each mode.

    3. Condenser Head Pressure Controls

    In the August 2015 NOPR, DOE proposed to specify that condenser head pressure controls, if included with the unit, must be active during testing. DOE proposed that if a unit with condenser head pressure controls cannot achieve steady-state operation with the controls active, and thus cannot be tested, the manufacturer would have to request a waiver. DOE also requested comment on whether there are any units on the market with condenser head pressure controls that would prevent the unit from achieving steady-state under the test conditions, and if so, how should DOE address these kinds of units for testing purposes. 80 FR at 46873-46874.

    In response, AHRI, Carrier, Ingersoll Rand, Goodman, and Lennox agreed with DOE's proposal to keep the head pressure controls active in automatic mode if present. (AHRI, No. 8 at p. 6; Carrier, No. 11 at p. 5; Ingersoll Rand, No. 9 at p. 31; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 5) AHRI, Carrier, Goodman, and Lennox also commented that the current draft of ANSI/AHRI 340/360-2015 clarifies the requirements for running the head pressure control in automatic mode and also provides a new test procedure to determine the rating performance when head pressure control results in unstable operation.

    After reviewing the comments, DOE is clarifying the current test procedure to specify that condenser head pressure controls, if included with the unit, must be active during testing, as proposed in the NOPR. As noted previously, AHRI 340/360-2015 is still a draft document, and DOE is not incorporating it by reference in this rule. In addition, DOE declines at this time to adopt a test method like that in AHRI 340/360-2015 regarding rating performance when head pressure control results in unstable operation. DOE will continue to review this industry testing standard and may consider adopting a method to address this issue in the future after a full public comment process.

    4. Unit of Measurement for Airflow

    DOE also proposed that all instances of CFM as a unit of airflow must be interpreted to mean SCFM where they appear in the sections of ANSI/AHRI 340/360-2007, incorporated by reference in 10 CFR part 431, subpart F. 80 FR at 46874.

    In response, AHRI, Carrier and Ingersoll Rand agreed with this approach. (AHRI, No. 8 at p. 4; Carrier No. 11 at p. 3; Ingersoll Rand No. 9 at p. 14) Each of these commenters recommended adopting ANSI/AHRI 340/360-2015, which would provide clear instructions to ensure that airflow is measured in SCFM for testing. AHRI noted that this issue is already addressed in ANSI/AHRI 340/360-2007 through the reference to ASHRAE 37-2009, which defines the unit of airflow as standard CFM.

    As noted in section III.A.1, DOE declines to reference ANSI/AHRI 340/360-2015 at this time. Further, although section 7.7.2.3 of ASHRAE 37-2009 may be interpreted as an indication that airflow rate is to be expressed in terms of standard air in all test standards that incorporate it by reference, this interpretation may not be sufficiently clear from the relevant text of the current test procedure, which refers to both CFM and SCFM in various locations. Hence, DOE is clarifying the test procedure to indicate that all instances of CFM as a unit of airflow must be interpreted to mean SCFM where they appear in the sections of ANSI/AHRI 340/360-2007 incorporated by reference in 10 CFR part 431, subpart F.

    5. Tolerance on Percent Load for IEER Part-Load Tests

    DOE proposed applying a +/−3-percent tolerance to each part-load test point in the IEER calculation, and formally requested comment on the appropriateness of establishing such a tolerance level. See 80 FR at 46878-46879 (request for comment) and 80 FR at 46874 (discussing DOE's +/−3-percent tolerance proposal). Specifically, if the measured load fraction is within 3 percent of the target load fraction, the measured EER would not have to be adjusted using interpolation or application of the degradation factor for cyclic operation.

    Responding to this aspect of the proposal, AHRI, Goodman, and Lennox agreed in principle with setting a tolerance on the part-load percent load when the unit cannot run at precisely 75-percent, 50-percent, and 25-percent part-load capacities. The commenters also agreed with DOE's tolerance level of 3 percent. (AHRI, No. 8 at p. 6; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 6)

    However, AHRI and Carrier commented that implementing the 3-percent tolerance without also adopting some other provisions of ANSI/AHRI 340/360-2015 would vary IEER results by as much as 5 percent, a magnitude they considered inappropriate. (AHRI, No. 8 at p. 6; Carrier No. 11 at p. 3) AHRI stated that this variation could be reduced significantly by changing the condenser air inlet temperature used for each given part-load point. Specifically, AHRI 340/360-2007 relies on condenser air inlet temperatures as a function of percent load, while AHRI 340/360-2015 specifies condenser air inlet temperatures that are fixed for each rating point percent load. (AHRI, No. 9 at p. 6) The relationship between condenser air inlet temperature and percent load is provided in section 6.2.2 of AHRI 340/360-2007. AHRI stated that adopting the proposed 3-percent tolerance for part-load tests with the current approach would result in an IEER variation of −4.6 percent to +4.8 percent. However, if the condenser air entering temperature is fixed to the target percent load, then IEER variations would be reduced to 1.5 or 1.6 percent. (AHRI, Public Meeting Transcript, No. 15 at p. 33-36) AHRI and Carrier, as well as Goodman and Lennox, proposed that DOE reference ANSI/AHRI 340/360-2015 (section 6.2) which includes the +/− 3-percent load fraction tolerance along with the other revisions to the IEER testing procedures. (AHRI, No. 8 at pp. 6-7; Carrier, No. 11 at p. 3; Goodman, No. 14 at p. 2; Lennox, No. 13 at p. 6)

    After reviewing the comments on the appropriateness of establishing a 3-percent tolerance on each part-load test point, as proposed in the NOPR, DOE is adopting the 3-percent part-load test point tolerance, and is also adopting the suggestion from several commenters for setting the condenser inlet air temperature for the test, which commenters viewed as being linked to the revised 3-percent tolerance level. DOE is adopting this suggestion in response to stakeholders' comments that a 3-percent tolerance on part-load testing would not be appropriate unless the condenser air entering temperature is fixed at the temperature for the target part-load point. Adopting this suggested approach will help reduce the variability in test results for variations in percent load within 3-percent of the target part-load point. AHRI supported this approach with data demonstrating how implementing this requirement for setting the condenser air entering temperature would reduce the variability in test results. (AHRI, No. 7 at p. 18) In addition, this change has the potential to significantly reduce test burden, since the current test procedure requirement, by specifying condenser inlet air temperature as a function of the measured load fraction, can lead to multiple repetitions of the test if the measured load fraction is different than the load fraction used to calculate the air temperature used for the test. Also, the suggested approach from the commenters is more consistent with the way a unit would actually operate in the field. Specifically, when a unit cycles between operating levels to satisfy an average load represented by the target load fraction, the ambient temperature remains constant. DOE investigated potential changes in measurement associated with this test procedure change and found that it would not change the measurement unless the interpolation method is used to determine one or more of the part-load EER levels and for which one of the measurements used for the interpolation(s) has a measured percent load less than 44.4 percent. Also, for typical units that fit this description, the change in the measurement is less than one percent. With respect to IEER, DOE concludes this is a de minimis change, the extent of which would not impact a model's ability to comply with a given IEER standard or alter the measured energy efficiency of the covered equipment.

    DOE has elected to implement the additional change regarding condenser air inlet temperature by noting this difference with respect to AHRI 340/360-2007 within the regulatory language in the CFR rather than incorporating by reference the 2015 version of the standard—DOE's decision not to incorporation AHRI 340/360-2015 by reference is discussed in section III.A.1.

    6. Definition of IEER

    DOE proposed to define IEER (i.e. integrated energy efficiency ratio) as meaning “a single number part-load efficiency based on weighting of EER at various load capacities, as measured in appendix A to subpart F of part 431, expressed in Btu/watt-hour.” (80 FR at 46880)

    In response to this proposed definition, AHRI and Carrier agreed that the definition of IEER must be improved and clarified. (AHRI, No. 8 at p. 4; Carrier, No. 11 at pp. 3-4) However, AHRI and Carrier commented that DOE's definition does not account for the operating conditions and rating conditions required to accurately rate IEER. They commented that this is a significant aspect of the IEER metric and it should be mentioned in the definition to avoid any misrepresentation. AHRI and Carrier further commented that the DOE definition also proposes to reference the new DOE appendix A, which does not directly address the requirements for IEER and refers back to AHRI 340/360. AHRI and Carrier suggested as an alternative that DOE use the IEER definition in ANSI/AHRI 340/360-2015. (AHRI, No. 8 at p. 4; Carrier, No. 11 at pp. 3-4)

    The draft version of ANSI/AHRI 340/360-2015 section 3.11 defines IEER as “a weighted calculation of mechanical cooling EERs at full-load and part-load Standard Rating Conditions, defined in Section 6.2, expressed in Btu/Wh.”

    Ingersoll Rand suggested a different definition for IEER: “Integrated energy efficiency ratio, or IEER, means the cooling energy efficiency descriptor for packaged air-conditioning and heating equipment (air-cooled with a rated cooling capacity ≥65,000 Btu/h), determined as a single number part-load efficiency based on weighting of EER at various load capacities, as measured in appendix A to subpart F of part 431, expressed in Btu/watt-hour.” (Ingersoll Rand, No. 9 at p. 2) Ingersoll Rand made this suggestion to clarify that: (1) IEER is the only cooling efficiency descriptor for CUAC and CUHP and (2) IEER is specific to CUAC and CUHP and does not apply to other commercial package air-conditioning and heating equipment. (Id.)

    DOE agrees that the rating conditions for IEER could be acknowledged in the definition. However, DOE declines to reference AHRI 340/360 directly, as all representations of IEER must be made based on DOE's test procedure, which contains additional provisions beyond those in the referenced industry standard. Therefore, DOE is adopting a modified definition for IEER that references rating conditions rather than load capacities, but still specifies that measurements be made in accordance with appendix A. DOE also declines to include equipment references at this time. In the future, DOE may adopt energy conservation standards based on IEER for equipment other than CUAC and CUHP. Hence, DOE declines to specify or otherwise limit what equipment uses this metric. DOE addresses Ingersoll Rand's concern regarding the efficiency descriptor in section III.D.

    DOE does agree that the IEER is intended to measure cooling provided by the refrigeration system, i.e. “mechanical cooling”, and does not address other modes of cooling that the equipment might provide. As an example, CUAC and CUHP equipment may provide economizer cooling, which involves use of cool outdoor air during cool weather to cool the interior of a building without the use of refrigeration system operation.

    For these reasons, DOE is adopting the following definition for IEER:

    Integrated energy efficiency ratio, or IEER, means a weighted average calculation of mechanical cooling EERs determined for four load levels and corresponding rating conditions, as measured in appendix A to subpart F of part 431, expressed in Btu/watt-hour.

    7. Additional Test Procedure Provisions

    Current DOE regulations include provisions for refrigerant charging and airflow rate relevant to multiple equipment categories, including CUACs and CUHPs. (10 CFR 431.96(e)) DOE proposed adding these provisions to the proposed appendix A, section (5) for CUACs and CUHPs, while maintaining the original provision in 431.96(e) for the other relevant equipment categories. 80 FR at 46881. These provisions require that if a manufacturer specifies a range (rather than a specific rating value) of superheat, sub-cooling, and/or refrigerant charge pressure in its installation and operation manual, any value within that range may be used to determine refrigerant charge or mass of refrigerant.

    In response to the NOPR, Goodman stated that manufacturers typically specify a broader range of superheat or subcooling for field charging than would be accepted in the laboratory (because field measurement equipment is not as accurate as laboratory measurement equipment). Goodman further added that the AHRI certification program has a policy of adjusting charge to the middle of the range, which makes the test more accurate. (Goodman, No. 14 at p. 3)

    DOE notes that the refrigerant charge, superheat, and subcooling values are interrelated such that DOE does not believe Goodman's suggestion of hitting the midpoint of all of the ranges can be achieved in all cases. Consequently, DOE is not requiring that the test be performed at the midpoint of each of the ranges. Instead, DOE is clarifying that test labs should only be adjusting charge once for both the cooling and heating test and a test lab should aim for the middle of the subheat or subcool range. However, DOE emphasizes that any point in the range is still acceptable at this point in time. Should industry believe additional specificity regarding these provisions would improve repeatability or reproducibility, DOE may consider further amendments in a future rulemaking. For consistency in testing, DOE will follow the approach of attempting to achieve the midpoint of one of the values, which it considers to be a best practice.

    In regards to airflow, DOE currently requires that the airflow rate used for testing must be in the installation and operations manual shipped with the basic model and clearly identified as the value used to generate DOE performance ratings; otherwise, a value of 400 SCFM per ton is used. See 10 CFR 431.96(e). Responding to DOE's proposal to include this set of requirements as part of appendix A, Goodman noted that manufacturers who certify through AHRI have the full-load cooling capacity shown in the AHRI Directory of Certified Product Performance, and that the value in that directory should be used as opposed to using 400 SCFM per ton. (Goodman, No. 14 at p. 3)

    DOE notes that for commercial package air conditioning and heating equipment, manufacturers are currently required to certify rated airflow in SCFM for each fan coil. See 10 CFR 429.43(b)(4)(i)-(ii) (specifying certification report contents for commercial package air conditioning and heating equipment). As noted earlier, DOE is clarifying this requirement as described in section III.A.2. DOE expects the certified airflow values to be consistent with those in the installation manual and reported to AHRI, because the airflow used in tests (whether for certifying performance to DOE or as used by AHRI) should be the same airflow that installers would use when setting up the unit based on the installation instructions. However, in the event a manufacturer fails to report airflow to DOE, the specified value of 400 SCFM per ton prescribed by 10 CFR 431.96(e) will continue to apply.

    B. Certification and Enforcement Issues and Compliance Dates

    In addition to addressing various aspects related to the testing of CUACs and CUHPs, DOE also proposed various certification and enforcement-related provisions with respect to this equipment. Additionally, DOE proposed including provisions related to the reporting of IEER values for certification and compliance purposes once the compliance dates for the standards recommended by the Working Group are reached. These issues are addressed in the following sections.

    1. Measuring Cooling Capacity for Purposes of Certification, Assessment, and Enforcement

    DOE proposed that the cooling capacity represented and subsequently certified to DOE for a given basic model must be the average of the capacities measured for the sample of units tested to certify that basic model, rounded according to the multiples in Table 4 in ANSI/AHRI 340/360-2007. DOE also proposed that when conducting assessment and enforcement testing, it would measure the total cooling capacity pursuant to the test requirements of 10 CFR 431.96 for each unit tested, and the results of the measurement(s) would be compared to the value of cooling capacity certified by the manufacturer. The manufacturer-certified cooling capacity will be considered valid if the cooling capacity determined through DOE testing is within 5 percent of the certified cooling capacity. (80 FR at 46874)

    With respect to the certification requirements, Lennox disagreed with DOE's proposal to require that the certified cooling capacity be the average of the capacities measured for the sample of units tested. (Lennox, No. 13 at p. 3) Lennox stated that conservative capacity ratings subject equipment to more stringent efficiency standards. Lennox further commented that if forced to reclassify equipment into higher-capacity classes, manufacturers could face unduly burdensome administrative and procedural obligations without any benefit to energy efficiency. Lennox also stated that if conservatively-rated equipment is categorized into a larger equipment class, it can change the test conditions (i.e. ESP), resulting in a further change from the designed capacity and IEER level of the product. Lennox added that in the past, DOE has allowed manufacturers to conservatively rate products, such as in the final rule establishing AEDMs for commercial air-conditioning and refrigeration equipment and walk-in coolers and freezers. (Lennox, No. 13 at pp. 3-4)

    Ingersoll Rand commented that, while DOE's certification regulations typically require manufacturers to report capacity, DOE does not specify that manufacturers determine capacity through testing specified by DOE, and that DOE has not found that capacity is a measure of energy consumption as defined by EPCA at 42 U.S.C. 6291(8). (Ingersoll Rand, No. 9 at p. 13) Ingersoll Rand also noted that DOE had not demonstrated why such a proposal is necessary. (Id.)

    With respect to the enforcement testing provisions, AHRI, Ingersoll Rand, and Goodman commented that a tolerance of 5 percent should not be applied to capacity because there are many factors that can affect measured capacity and performance, including variance in airflow, refrigerant charge levels, ambient conditions, test labs, and test setup. (AHRI, No. 8 at p. 3; Ingersoll Rand, No. 9 at p. 14; Goodman, No. 14 at p. 3) Goodman commented that a 5-percent tolerance is too low because, due to a number of variables, the true uncertainty of the test is probably at least 8 percent. (Goodman, No. 14 at p. 3)

    AHRI commented that in the event that a verification test for its certification program shows that the cooling capacity is less than 95 percent of its rated value, the manufacturer fails the test and is then subject to stiff penalties, which are, in its view, strong incentives to discourage manufacturers from over-rating cooling capacity and energy efficiency. AHRI recommended that DOE base the equipment classification on the rated capacity only. However, in the event that DOE feels compelled to move forward with its proposal, AHRI requested that the proposed requirement apply only when the tested cooling capacity is less than 95 percent of the certified value, and not when the tested cooling capacity is greater than 105 percent of the certified value. (AHRI, No. 7 at p. 3) Carrier agreed that any tolerance should be a one-sided tolerance, allowing manufacturers to choose to rate products conservatively. (Carrier, No. 11 at p.3)

    Trane commented that, in common practice, a tolerance on capacity becomes an issue at 240,000 Btu/h, which is a break between equipment classes as well as a nominal equipment tonnage. However, manufacturers do not always hit this design point, which puts them on one side or the other of the equipment class dividing line. For this reason, they tend to rate conservatively to avoid risk. (Trane, NOPR public meeting transcript, No. 15 at pp. 54-55) Carrier added that the need to conservatively rate will increase with the change in refrigerants, and that the current AHRI statistics show that they exceed 105 percent on many tests. (Carrier, NOPR public meeting transcript, No. 15 at pp. 55-56)

    DOE notes that the August 2015 NOPR proposed to add a provision that the represented value of cooling capacity must be the average of the capacities measured for the units in the sample selected for testing or the output of the AEDM when simulating results rounded according to the multiples in Table 4 in ANSI/AHRI 340/360-2007. DOE further proposed to add enforcement provisions for verifying the rated cooling capacity, as the rated cooling capacity determines both the equipment class and which testing conditions apply. See 80 FR at 46874 (discussing proposed clarification) and 46879 (presenting detailed regulatory text). Without reporting and enforcement provisions for cooling capacity, manufacturers may choose to over- or under-rate cooling capacity intentionally in order to achieve more favorable testing conditions or less stringent efficiency standards. DOE does not believe industry intended to suggest a regulatory approach where a manufacturer would self-declare its rating conditions and standards, as that approach could cause unintended consequences such as inequitable ratings due to differences in self-declarations. Many in industry, including commenters who participate in the AHRI Certification Program, saw the importance of including provisions surrounding cooling capacity since there is a verification tolerance reflected in that program, as AHRI noted. Consequently, in DOE's view, provisions regarding the determination of represented cooling capacity along the lines of the August 2015 proposal are needed.

    While DOE acknowledges that multiple factors may affect the measurement of cooling capacity, DOE maintains that capacity-related provisions are necessary to ensure the reliability and consistency of the reported ratings because, as commenters pointed out, DOE expects there to be variation in the capacity measurement from different units being tested at different laboratories. Consequently, DOE is modifying its proposal for determining represented cooling capacity based on the comments received to allow for conservative rating declared according to the multiples in Table 4 in ANSI/AHRI 340/360-2007 but is not less than 95% of the mean values of the two or more units in the sample for certification testing or the output from the AEDM. DOE believes this is consistent with that currently used in the industry, including the certified ratings program approach developed by AHRI. In the industry program, this tolerance serves as the basis for penalizing manufacturers if the tested cooling capacity is lower than 95% of the rated cooling capacity of that equipment. This tolerance will help to ensure that equipment is capable of performing at the cooling capacity for which it is represented to consumers. At this time, DOE is declining to adopt specific capacity-related enforcement provisions and will evaluate compliance with standards based on the testing results from the enforcement sample. DOE believes it is important that products comply with the applicable standards based on actual tested performance rather than based on a manufacturer self-declaration.

    2. Compliance Dates of the Certification, Reporting, and Test Procedure Amendments

    In the August 2015 NOPR, DOE indicated that its proposal would be unlikely to alter the measured efficiency of CUACs and CUHPs. DOE proposed to require the reporting of IEER and indoor part-load airflow rates used in the IEER calculation when certifying compliance with the 2018 or 2023 standards. DOE also proposed to apply a +/−3-percent tolerance to each part-load test point for manufacturers to use when developing the IEER ratings for a given basic model. This clarification would be required when testing to determine EER for part-load rating points. See 80 FR at 46879-82.

    DOE stated that its proposed amendments that were not specifically related to IEER would clarify how to test a given unit. The proposals, if adopted, would result in no procedural changes related to how testing would be performed. The proposed amendments, if adopted, would become effective 30 days after publication of the final rule in the Federal Register. Consistent with 42 U.S.C. 6314(d), DOE proposed that any representations of energy consumption or efficiency of CUACs and CUHPs must be based on any final amended test procedures 360 days after the publication of the test procedure final rule. 80 FR at 46874-46875.

    Ingersoll Rand disagreed with DOE's assertion that the proposed clarifications and amendments would not result in any changes to the energy efficiency of current equipment. While Ingersoll Rand agreed that the proposed changes would likely not affect the measure of EER for air-cooled commercial package air conditioning equipment, the proposed changes would add the IEER metric, which, in Ingersoll Rand's view, is a significant change to the measure of energy efficiency of current equipment. Ingersoll Rand commented that the proposed amendments to the test procedures will change the measure of energy itself, and, as DOE's proposal would require re-rating units within 360 days of publication of the final rule, that this would be a “change in the representations of the energy efficiency of current equipment.” (Ingersoll Rand, No. 9 at p. 12)

    Ingersoll Rand also noted that while many manufacturers, including itself, already include an IEER rating in the AHRI Directory of Certified Product Performance, that information is not based on testing units in accordance with the sampling plan contained in the proposed § 429.43, but is often based on testing a single unit. Therefore, to comply with the proposed rule, manufacturers would be required to perform a substantial amount of additional testing. Furthermore, since the testing requirements would go into effect before the compliance date of the energy conservation standards proposed by the ASRAC Commercial Package Air Conditioners and Commercial Warm Air Furnaces Working Group, those units currently offered for sale but not meeting the January 2018 standards proposed by the Working Group would still need to be tested in order for manufacturers to make IEER representations on which builders would rely for purposes of meeting the provisions contained in ASHRAE 90.1.2013. (That industry-based standard sets a minimum level of efficiency for CUAC and CUHP equipment and includes a minimum rating level based on IEER.) In its view, the proposal's impact will be far more than modest and must be addressed by DOE or accounted for in its estimates under the Paperwork Reduction Act. (Ingersoll Rand, No. 9 at pp. 10-11)

    For these reasons, Ingersoll Rand recommended that the effective date of compliance with the test procedure amendments with respect to testing, representations, and reporting of IEER be made to coincide with the effective date of the amended standard setting the initial IEER standard. (Ingersoll Rand, No. 9 at p. 12)

    DOE has carefully considered Ingersoll Rand's comments. DOE is adopting its proposal that reporting of IEER and indoor part-load airflow rates used in the IEER calculation will be required when certifying compliance with any amended standards and finds that this approach is consistent with Ingersoll Rand's comments. However, DOE also maintains that, consistent with 42 U.S.C. 6314(d), any representations of energy consumption or efficiency of CUACs and CUHPs must be based on any final amended test procedures 360 days after the publication of the test procedure final rule. See 80 FR at 46874-46875. Although Ingersoll Rand argued that this amendment would subject units that will not meet the recommended January 2018 standards to the testing requirements to demonstrate that the units meet the IEER levels of ASHRAE 90.1-2013 that many builders require, those units were already subject to those testing requirements. DOE recognizes that manufacturers currently do not need to certify their equipment to meet IEER. Manufacturers must, however, follow the applicable test procedure requirements when making representations of energy efficiency, including those aspects of the test procedure that apply to another metric should they decide to report the efficiency of their equipment using that metric. DOE's current test procedure for CUACs and CUHPs already includes a test method for measuring IEER. See 10 CFR 431.96(b)(2) (incorporating, through Table 2, various test procedures used for assessing compliance, including the procedures specified by AHRI 340/360-2007, which contains testing methods for measuring IEER). EPCA restricts representations of efficiency where DOE has prescribed a test method. Specifically, any representation of efficiency for a CUAC or CUHP must fairly disclose the results of testing in accordance with the DOE test procedure within 360 days of DOE having prescribed the test procedure. Therefore, all existing representations of IEER for this equipment would have already been made in accordance with DOE's regulations regarding test procedures and sampling plans, even though submission of a certification report for that metric is not required. As discussed in section III.A.5, DOE has determined that the amended requirements on part-load test points will produce only a de minimis change and not impact a model's ability to comply with an IEER standard or alter the measured and rated energy efficiency of the covered equipment. For these reasons, DOE does not anticipate that manufacturers will require additional time to comply with pre-existing requirements that they already must meet.

    Furthermore, with respect to Ingersoll Rand's claim that significant additional testing will be required to meet the sampling requirements, based on manufacturer compliance certifications, most CUAC and CUHP manufacturers use alternative efficiency determination methods (“AEDMs”) to rate the majority of their equipment for EER. Ingersoll Rand states that manufacturers have been testing for IEER and have single tests of a wide variety of basic models, so manufacturers already have sufficient test data to develop and support an AEDM, even if they have not yet developed AEDMs to simulate IEER. Therefore, even if a manufacturer is not currently making representations in accordance with the DOE test procedure (as it is already required to do), DOE believes a 360-day compliance period provides sufficient time for such a manufacturer to do so, particularly if the manufacturer already has a collection of existing test data for its equipment.

    Finally, DOE disagrees that the information collection approved by the Office of Management and Budget requires modification as a result of this rule. This rule does not change the test burden or record retention requirements that are reflected in the existing approval. Furthermore, although the metric reported to DOE will change from EER to IEER, there will be no increase in burden. DOE will revise its certification information collection to reflect the metric change prior to the reporting change in 2018.

    C. Future Test Procedure Rulemakings

    The California IOUs encouraged DOE to initiate a more expansive test procedure rulemaking before January 1, 2016, as recommended by the ASRAC Working Group. (California IOUs, No. 10 at p. 1) The California IOUs commented that a new, more representative, metric is needed.

    The California IOUs also suggested that DOE research the impact of fan energy on equipment ratings, specifically the external static pressure settings for equipment and whether it reflects field conditions. (California IOUs, No. 10 at p. 2) The IOUs further noted that the IEER test procedure proposed for inclusion by DOE in its regulations specified ESP ratings that are unrealistically low in the four test points, which results in measured fan energy consumption during testing conditions being lower than that found in actual operating conditions, which artificially inflates the IEER ratings. The California IOUs also encouraged DOE to create a test procedure that accounts for economizer energy consumption, as this aspect is omitted in the current proposed test procedure. See id.

    The California IOUs suggested further that DOE should investigate the impact of requiring an additional higher temperature test point rating, such as 105 °F or 115 °F, to better reflect operating conditions experienced in hotter climates. (California IOUs, No. 10 at p. 2) The California IOUs noted that the current efficiency rating measures equipment at a maximum outside dry bulb air temperature of 95 °F. In their collective view, while this value is appropriate for much of the United States, it does not reflect peak values often experienced in parts of the desert southwest.

    DOE notes that the Working Group recommended that a rulemaking to amend the test procedure shall be initiated no later than January 1, 2016, with the final rule issued no later than January 1, 2019. That rulemaking, based on the Working Group's recommendation, would be to focus on better representing the total fan energy use by considering (a) alternative external static pressures and (b) operation for other than mechanical cooling and heating. EERE-2013-BT-STD-0007-0093, ASRAC Working Group Term Sheet (recommending a series of actions for DOE to take with respect to CUAC and CUHP standards and testing). DOE plans to initiate an additional test procedure rulemaking focused on revising the IEER metric consistent with this recommendation. DOE may consider additional test procedure revisions at that time.

    D. Regulatory Text Language

    Ingersoll Rand asserted that the proposed IEER definition and the test procedure table (Table 1 to 10 CFR 431.96) are inconsistent with the terms of the ASRAC Working Group Term Sheet because they add IEER as a cooling metric but keep EER. Ingersoll Rand stated that the Working Group agreed that, subsequent to the effective date of the January 2018 energy conservation standard, IEER would be the sole DOE measure of cooling efficiency required to be reported to DOE. (Ingersoll Rand, No. 9 at pp. 1-2)

    Ingersoll Rand added that it believed that DOE proposed amending 10 CFR 431.96 in order to make it easier for the user to follow, but without consideration of the Working Group recommendation to initiate a rulemaking to amend the test procedure for small, large, and very large air-cooled commercial package air conditioning and heating equipment. In its view, Table 1 to 10 CFR 431.96 could be confusing to the user if it included a distinction between the different measures of energy consumption and the two different test procedures before and after the expected effective date of the IEER standards. Ingersoll Rand commented that it would be clearer and simpler for DOE to return to the earlier format of section 431.96 and add the test procedure and energy descriptor updates in separate tables with their effective dates. It offered alternative tables for DOE to consider. (Ingersoll Rand, No. 9 at pp. 3-8)

    DOE notes that that the primary purpose of the test procedure tables in 10 CFR 431.96 is to describe the test procedure relevant to each equipment category. The metrics required to be reported to DOE can be found in 10 CFR 429.43. As proposed (and amended by this rule), 10 CFR 429.43 will not require EER to be reported to DOE when certifying compliance with any IEER standards. However, consistent with DOE's incorporation of AHRI 340/360-2007, the test procedure itself will still include EER, which manufacturers are required to use when making EER-based representations when they choose to do so, independent of their representations required under DOE's compliance requirements.

    Ingersoll Rand also criticized DOE's proposed reference to the “January 1, 2018 and January 1, 2023 standards” that would be added to 10 CFR 429.43(b)(2)(i)(B), as being vague, particularly in light of the changes made to the standards table in 10 CFR 431.97(b) by the July 17, 2015 final rule regarding energy conservation standards for small three-phase commercial air-cooled air conditioners. 80 FR 42614. Ingersoll Rand suggested that DOE consider the format of 10 CFR 429.43(b)(2)(i) and 10 CFR 431.97 that will result from both the test procedure and energy conservation standards rulemakings in completing this test procedure rulemaking, rather than waiting for the standards rulemaking. Ingersoll Rand suggested wording for 10 CFR 429.43(b)(2)(i) and recommended that DOE insert two new tables (as Tables 4 and 5) that would accommodate the 2018 and 2023 standards and would be reserved until DOE completes the energy conservation standards rulemakings. (Ingersoll Rand, No. 9 at pp. 9-10)

    Ingersoll Rand also disagreed with the proposed language in § 429.43(b)(4) that lists certification report requirements (including the rated airflow for part-load operation which is needed for testing to measure IEER), and which refers to the “January 1, 2018 or the January 1, 2023 energy conservation standards.” Ingersoll Rand indicated that such references are vague and could lead to misinterpretations regarding DOE's regulations, recommending instead that DOE refer in these sections specifically to the appropriate standards listed in specific tables of § 431.97. (Ingersoll Rand, No. 9 at p. 12)

    DOE acknowledges the potential for misinterpretation. Therefore, DOE has revised the language in § 429.43 to refer to compliance with EER standards or IEER standards rather than making a reference to future 2018 or 2023 standards that have not been finalized.

    IV. Procedural Issues and Regulatory Review A. Review Under Executive Order 12866

    The Office of Management and Budget (OMB) has determined that test procedure rulemakings do not constitute “significant regulatory actions” under section 3(f) of Executive Order 12866, Regulatory Planning and Review, 58 FR 51735 (Oct. 4, 1993). Accordingly, this action was not subject to review under the Executive Order by the Office of Information and Regulatory Affairs (OIRA) in the Office of Management and Budget (OMB).

    B. Review Under the Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires preparation of an initial regulatory flexibility analysis (IFRA) for any rule that by law must be proposed for public comment, unless the agency certifies that the rule, if promulgated, will not have a significant economic impact on a substantial number of small entities. As required by Executive Order 13272, “Proper Consideration of Small Entities in Agency Rulemaking,” 67 FR 53461 (August 16, 2002), DOE published procedures and policies on February 19, 2003, to ensure that the potential impacts of its rules on small entities are properly considered during the DOE rulemaking process. 68 FR 7990. DOE has made its procedures and policies available on the Office of the General Counsel's Web site: http://energy.gov/gc/office-general-counsel.

    DOE reviewed this final rule under the provisions of the Regulatory Flexibility Act and the procedures and policies published on February 19, 2003. This final rule prescribes clarifications to DOE's already-existing test procedures that will be used to test compliance with energy conservation standards for the equipment that are the subject of this rulemaking. DOE has concluded that the final rule would not have a significant impact on a substantial number of small entities.

    For manufacturers of small, large, and very large air-cooled CUAC and CUHP, the Small Business Administration (SBA) has set a size threshold, which defines those entities classified as “small businesses” for the purposes of the statute. DOE used the SBA's small business size standards to determine whether any small entities would be subject to the requirements of the rule. 65 FR 30836, 30848 (May 15, 2000), as amended at 65 FR 53533, 53544 (Sept. 5, 2000) and codified at 13 CFR part 121. The size standards are listed by North American Industry Classification System (NAICS) code and industry description and are available at http://www.sba.gov/category/navigation-structure/contracting/contracting-officials/small-business-size-standards. Manufacturing of small, large, and very large air-cooled CUAC and CUHP is classified under NAICS 333415, “Air-Conditioning and Warm Air Heating Equipment and Commercial and Industrial Refrigeration Equipment Manufacturing.” The SBA sets a threshold of 750 employees or less for an entity to be considered as a small business for this category. DOE initially identified 13 potential manufacturers of commercial packaged air conditioners sold in the U.S. DOE then determined that 10 were large manufacturers, manufacturers that are foreign-owned and -operated, or manufacturers that do not produce equipment covered by this rulemaking. DOE was able to determine that the other three companies met the SBA's definition of a small business and sell CUAC/CUHP products.

    The first small company specialized in manufacturing double-duct CUAC/CUHP products, which would not subject to the amended IEER standards recommended by the Working Group formed to negotiate the CUAC/CUHP standards.3 This manufacturer did not produce any equipment that would be covered under the recommended IEER standards. The second small company did not own any production assets for CUAC/CUHP equipment. This company outsourced the design and manufacture of equipment to a supplier. The third small company manufactured covered equipment that are subject to the amended test procedures. Based on DOE's research, this small manufacturer has three product platforms with 11 models that would potentially be subject to testing to determine IEER, and no IEER ratings have been published for these units. Based on literature reviews, this small manufacturer specializes in custom and semi-custom products.

    3 See Docket No. EERE-2013-BT-STD-0007-0093. DOE must effectuate such change in metric through the rulemaking process and in a manner consistent with all applicable statutory requirements.

    DOE expects the impact of the final rule on manufacturers, including small businesses, to be minimal. The final rule amends DOE's certification requirements to specify additional reporting requirements and add enforcement provisions for verifying cooling capacity. The final rule also clarifies or amends DOE's test procedures to amend ANSI/AHRI 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment,” to incorporate certain sections by reference, specify requirements for airflow adjustment and tolerance to meet other rating conditions, require units with condenser head pressure controls to be tested with those controls active, clarify the unit of measurement for airflow, and establish a tolerance on part-load rating points.

    The amended energy conservation standards for CUAC/CUHP recommended by the Working Group would be based on IEER rather than EER. DOE expects the impact on test burden to be modest. AHRI ratings already include IEER, indicating that many manufacturers, representing a large portion of the market, already determine IEER for their units. ANSI/ASHRAE/IES Standard 90.1-2013, “Energy Standard for Buildings Except Low-Rise Residential Buildings” (ASHRAE 90.1-2013), has adopted an IEER requirement, which makes reporting of IEER necessary for shipment to those states and localities that will adopt that standard in building codes. Current procedures relating to alternative efficiency determination methods (AEDMs), including procedures for certifying IEER, require a limited amount of testing to be conducted when validating an AEDM for CUACs and CUHPs. 10 CFR 429.70(c)(2)(iv) (detailing the minimum number of distinct basic models required to be test for purposes of AEDM validation for different equipment types and classes). DOE expects that most CUAC and CUHP ratings will be based on results obtained from AEDMs. Although DOE recognizes that some ratings will be based on testing, DOE expects these ratings to comprise a small minority of products.

    For these reasons, DOE certifies that this final rule will not have a significant economic impact on a substantial number of small entities. Accordingly, DOE has not prepared a regulatory flexibility analysis for this rulemaking. DOE will transmit the certification and supporting statement of factual basis to the Chief Counsel for Advocacy of the SBA for review under 5 U.S.C. 605(b).

    C. Review Under the Paperwork Reduction Act of 1995

    Manufacturers of CUACs and CUHPs must certify to DOE that their equipment comply with any applicable energy conservation standards. In certifying compliance, manufacturers must test their equipment according to the DOE test procedures for CUACs and CUHPs, including any amendments adopted for those test procedures. DOE has established regulations for the certification and recordkeeping requirements for all covered consumer products and commercial equipment, including CUACs and CUHPs. 10 CFR part 429, subpart B. The collection-of-information requirement for the certification and recordkeeping is subject to review and approval by OMB under the Paperwork Reduction Act (PRA).

    In the Certification of Commercial Equipment Final Rule published in May 2014, DOE amended existing regulations governing compliance certification for a variety of commercial equipment covered by EPCA, which affected CUAC and CUHP manufacturers. 79 FR 25486, 25502 (May 5, 2014). DOE amends its certification requirements to specify additional reporting requirements. DOE does not believe that these additions to the certification requirements constitute a significant additional burden upon respondents, as they require minimal additional information over what manufacturers must already report in their certification reports. DOE believes that the Certification of Commercial Equipment Final Rule provides an accurate estimate of the existing burden on respondents and would continue to apply to the relevant aspects of the proposed amendments. 79 FR 25496-25498 (detailing burden estimates and indicating an average burden of approximately 30 hours per company on an annual basis). OMB has approved the revised information collection for DOE's certification and recordkeeping requirements. 80 FR 5099 (January 30, 2015).

    Notwithstanding any other provision of the law, no person is required to respond to, nor shall any person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the PRA, unless that collection of information displays a currently valid OMB control number.

    D. Review Under the National Environmental Policy Act of 1969

    In this final rule, DOE amends its test procedure for CUACs and CUHPs. DOE has determined that this rule falls into a class of actions that are categorically excluded from review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321 et seq.) and DOE's implementing regulations at 10 CFR part 1021. Specifically, this rule amends an existing rule without affecting the amount, quality or distribution of energy usage, and, therefore, will not result in any environmental impacts. Thus, this rulemaking is covered by Categorical Exclusion A5 under 10 CFR part 1021, subpart D, which applies to any rulemaking that interprets or amends an existing rule without changing the environmental effect of that rule. Accordingly, neither an environmental assessment nor an environmental impact statement is required.

    E. Review Under Executive Order 13132

    Executive Order 13132, “Federalism,” 64 FR 43255 (August 4, 1999), imposes certain requirements on agencies formulating and implementing policies or regulations that preempt State law or that have Federalism implications. The Executive Order requires agencies to examine the constitutional and statutory authority supporting any action that would limit the policymaking discretion of the States and to carefully assess the necessity for such actions. The Executive Order also requires agencies to have an accountable process to ensure meaningful and timely input by State and local officials in the development of regulatory policies that have Federalism implications. On March 14, 2000, DOE published a statement of policy describing the intergovernmental consultation process it will follow in the development of such regulations. 65 FR 13735. DOE examined this final rule and determined that it 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. EPCA governs and prescribes Federal preemption of State regulations as to energy conservation for the equipment that are the subject of this final rule. States can petition DOE for exemption from such preemption to the extent, and based on criteria, set forth in EPCA. (42 U.S.C. 6297(d)) No further action is required by Executive Order 13132.

    F. Review Under Executive Order 12988

    Regarding the review of existing regulations and the promulgation of new regulations, section 3(a) of Executive Order 12988, “Civil Justice Reform,” 61 FR 4729 (February 7, 1996), imposes on Federal agencies the general duty to adhere to the following requirements: (1) Eliminate drafting errors and ambiguity; (2) write regulations to minimize litigation; (3) provide a clear legal standard for affected conduct rather than a general standard; and (4) promote simplification and burden reduction. Section 3(b) of Executive Order 12988 specifically requires that Executive agencies make every reasonable effort to ensure that the regulation: (1) Clearly specifies the preemptive effect, if any; (2) clearly specifies any effect on existing Federal law or regulation; (3) provides a clear legal standard for affected conduct while promoting simplification and burden reduction; (4) specifies the retroactive effect, if any; (5) adequately defines key terms; and (6) addresses other important issues affecting clarity and general draftsmanship under any guidelines issued by the Attorney General. Section 3(c) of Executive Order 12988 requires Executive agencies to review regulations in light of applicable standards in sections 3(a) and 3(b) to determine whether they are met or it is unreasonable to meet one or more of them. DOE has completed the required review and determined that, to the extent permitted by law, this final rule meets the relevant standards of Executive Order 12988.

    G. Review Under the Unfunded Mandates Reform Act of 1995

    Title II of the Unfunded Mandates Reform Act of 1995 (UMRA) requires each Federal agency to assess the effects of Federal regulatory actions on State, local, and Tribal governments and the private sector. 2 U.S.C. 1531 For a regulatory action resulting in a rule that may cause the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector of $100 million or more in any one year (adjusted annually for inflation), section 202 of UMRA requires a Federal agency to publish a written statement that estimates the resulting costs, benefits, and other effects on the national economy. (2 U.S.C. 1532(a), (b)) The UMRA also requires a Federal agency to develop an effective process to permit timely input by elected officers of State, local, and Tribal governments on a proposed “significant intergovernmental mandate,” and requires an agency plan for giving notice and opportunity for timely input to potentially affected small governments before establishing any requirements that might significantly or uniquely affect small governments. On March 18, 1997, DOE published a statement of policy on its process for intergovernmental consultation under UMRA. 62 FR 12820; also available at http://energy.gov/gc/office-general-counsel. DOE examined this final rule according to UMRA and its statement of policy and determined that the rule contains neither an intergovernmental mandate, nor a mandate that may result in the expenditure of $100 million or more in any year, so these requirements do not apply.

    H. Review Under the Treasury and General Government Appropriations Act, 1999

    Section 654 of the Treasury and General Government Appropriations Act, 1999 (Pub. L. 105-277) requires Federal agencies to issue a Family Policymaking Assessment for any rule that may affect family well-being. This final rule will not have any impact on the autonomy or integrity of the family as an institution. Accordingly, DOE has concluded that it is not necessary to prepare a Family Policymaking Assessment.

    I. Review Under Executive Order 12630

    DOE has determined, under Executive Order 12630, “Governmental Actions and Interference with Constitutionally Protected Property Rights,” 53 FR 8859 (March 18, 1988), that this regulation will not result in any takings that might require compensation under the Fifth Amendment to the U.S. Constitution.

    J. Review Under Treasury and General Government Appropriations Act, 2001

    Section 515 of the Treasury and General Government Appropriations Act, 2001 (44 U.S.C. 3516 note) provides for agencies to review most disseminations of information to the public under guidelines established by each agency pursuant to general guidelines issued by OMB. OMB's guidelines were published at 67 FR 8452 (February 22, 2002), and DOE's guidelines were published at 67 FR 62446 (Oct. 7, 2002). DOE has reviewed this final rule under the OMB and DOE guidelines and has concluded that it is consistent with applicable policies in those guidelines.

    K. Review Under Executive Order 13211

    Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use,” 66 FR 28355 (May 22, 2001), requires Federal agencies to prepare and submit to OMB, a Statement of Energy Effects for any significant energy action. A “significant energy action” is defined as any action by an agency that promulgated or is expected to lead to promulgation of a final rule, and that: (1) Is a significant regulatory action under Executive Order 12866, or any successor order; and (2) is likely to have a significant adverse effect on the supply, distribution, or use of energy; or (3) is designated by the Administrator of OIRA as a significant energy action. For any significant energy action, the agency must give a detailed statement of any adverse effects on energy supply, distribution, or use if the regulation is implemented, and of reasonable alternatives to the action and their expected benefits on energy supply, distribution, and use.

    This regulatory action is not a significant regulatory action under Executive Order 12866. Moreover, it would not have a significant adverse effect on the supply, distribution, or use of energy, nor has it been designated as a significant energy action by the Administrator of OIRA. Therefore, it is not a significant energy action, and, accordingly, DOE has not prepared a Statement of Energy Effects.

    L. Review Under Section 32 of the Federal Energy Administration Act of 1974

    Under section 301 of the Department of Energy Organization Act, 42 U.S.C. 7101, DOE must comply with section 32 of the Federal Energy Administration Act of 1974, as amended by the Federal Energy Administration Authorization Act of 1977. (15 U.S.C. 788; FEAA) Section 32 essentially provides in relevant part that, where a proposed rule authorizes or requires use of commercial standards, the notice of proposed rulemaking must inform the public of the use and background of such standards. In addition, section 32(c) requires DOE to consult with the Attorney General and the Chairman of the Federal Trade Commission (FTC) concerning the impact of the commercial or industry standards on competition.

    While this final rule does not require use of any commercial standards not already incorporated by reference for the relevant section of the code of federal regulations, DOE consulted with both DOJ and FTC and received no comments.

    M. Description of Materials Incorporated by Reference

    In this final rule, DOE is incorporating by reference ANSI/AHRI Standard 340/360-2007, “2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment” (including Addenda 1 and 2) into part 429 and appendix A to subpart F of part 431. This testing standard details various provisions regarding the testing and calculation of results for the equipment addressed by this rulemaking. The adoption of these provisions are necessary to ensure consistent and repeatable test results. Copies of this testing standard are readily available from the Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or through its Web site at http://www.ahrinet.org.

    DOE is also incorporating by reference ANSI/ASHRAE Standard 37-2009, “Methods of Testing for Rating Electrically Driven Unitary Air-Conditioning and Heat Pump Equipment” into appendix A to subpart F of part 431. This testing standard details test methods for the equipment addressed by this rulemaking. The adoption of these provisions are necessary to ensure consistent and repeatable test results. Copies of this testing standard are readily available from the American Society of Heating, Refrigerating, and Air-Conditioning Engineers, 1791 Tullie Circle NE., Atlanta, GA 30329, (800) 527-4723, or through its Web site at https://www.ashrae.org.

    N. Congressional Notification

    As required by 5 U.S.C. 801, DOE will report to Congress on the promulgation of this rule before its effective date. The report will state that it has been determined that the rule is not a “major rule” as defined by 5 U.S.C. 804(2).

    O. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this final rule.

    List of Subjects 10 CFR Part 429

    Commercial equipment, Confidential business information, Energy conservation, Imports, Incorporation by reference, Reporting and recordkeeping requirements.

    10 CFR Part 431

    Administrative practice and procedure, Commercial equipment, Confidential business information, Energy conservation, Imports, Incorporation by reference, Intergovernmental relations, Small businesses.

    Issued in Washington, DC, on December 11, 2015. Kathleen B. Hogan, Deputy Assistant Secretary for Energy Efficiency, Energy Efficiency and Renewable Energy.

    For the reasons stated in the preamble, DOE amends parts 429 and 431 of chapter II, subchapter D, of title 10 the Code of Federal Regulations as set forth below:

    PART 429—CERTIFICATION, COMPLIANCE, AND ENFORCEMENT FOR CONSUMER PRODUCTS AND COMMERCIAL AND INDUSTRIAL EQUIPMENT 1. The authority citation for part 429 continues to read as follows: Authority:

    42 U.S.C. 6291-6317.

    2. Amend § 429.4 by redesignating paragraph (c) as (d) and adding paragraph (c) to read as follows:
    § 429.4 Materials incorporated by reference.

    (c) AHRI. Air-Conditioning, Heating, and Refrigeration Institute, 2111 Wilson Blvd., Suite 500, Arlington, VA 22201, (703) 524-8800, or go to: http://www.ahrinet.org.

    (1) ANSI/AHRI Standard 340/360-2007, (“AHRI-340/360-2007”), 2007 Standard for Performance Rating of Commercial and Industrial Unitary Air-Conditioning and Heat Pump Equipment, with Addenda 1 and 2, ANSI approved October 27, 2011, IBR approved for § 429.43.

    (2) [Reserved]

    3. Amend § 429.43 by adding paragraph (a)(1)(iv) and revising paragraphs (a)(2), (b)(2)(i) and (ii), and (b)(4)(i) and (ii) to read as follows:
    § 429.43 Commercial heating, ventilating, air conditioning (HVAC) equipment.

    (a) * * *

    (1) * * *

    (iv) For air-cooled commercial package air-conditioning and heating equipment, the represented value of cooling capacity must be a self-declared value corresponding to the nearest appropriate Btu/h multiple according to Table 4 of ANSI/AHRI 340/360-2007 (incorporated by reference; see § 429.4) that is no less than 95 percent of the mean of the capacities measured for the units in the sample selected as described in paragraph (a)(1)(ii) of this section.

    (2) Alternative efficiency determination methods. (i) In lieu of testing, a represented value of efficiency or consumption for a basic model of commercial HVAC equipment must be determined through the application of an AEDM pursuant to the requirements of § 429.70 and the provisions of this section, where:

    (A) Any represented value of energy consumption or other measure of energy use of a basic model for which consumers would favor lower values shall be greater than or equal to the output of the AEDM and less than or equal to the Federal standard for that basic model; and

    (B) Any represented value of energy efficiency or other measure of energy consumption of a basic model for which consumers would favor higher values shall be less than or equal to the output of the AEDM and greater than or equal to the Federal standard for that basic model.

    (ii) For air-cooled commercial package air-conditioning and heating equipment, the represented value of cooling capacity must be the cooling capacity output simulated by the AEDM as described in paragraph (a)(2) of this section.

    (b) * * *

    (2) * * *

    (i) Commercial package air-conditioning equipment (except commercial package air conditioning equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h):

    (A) When certifying compliance with an EER standard: the energy efficiency ratio (EER in British thermal units per Watt-hour (Btu/Wh)), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (e.g., electric, gas, hydronic, none).

    (B) When certifying compliance with an IEER standard: the integrated energy efficiency ratio (IEER in British thermal units per Watt-hour (Btu/Wh)), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (e.g., electric, gas, hydronic, none).

    (ii) Commercial package heating equipment (except commercial package heating equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h):

    (A) When certifying compliance with an EER standard: the energy efficiency ratio (EER in British thermal units per Watt-hour (Btu/Wh)), the coefficient of performance (COP), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (e.g., electric, gas, hydronic, none).

    (B) When certifying compliance an IEER standard: the integrated energy efficiency ratio (IEER in British thermal units per Watt-hour (Btu/Wh)), the coefficient of performance (COP), the rated cooling capacity in British thermal units per hour (Btu/h), and the type(s) of heating used by the basic model (e.g., electric, gas, hydronic, none).

    (4) * * *

    (i) Commercial package air-conditioning equipment (except commercial package air conditioning equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h): rated indoor airflow in standard cubic feet per minute (SCFM) for each fan coil; water flow rate in gallons per minute (gpm) for water-cooled units only; rated external static pressure in inches of water; frequency or control set points for variable speed components (e.g., compressors, VFDs); required dip switch/control settings for step or variable components; a statement whether the model will operate at test conditions without manufacturer programming; any additional testing instructions, if applicable; and if a variety of motors/drive kits are offered for sale as options in the basic model to account for varying installation requirements, the model number and specifications of the motor (to include efficiency, horsepower, open/closed, and number of poles) and the drive kit, including settings, associated with that specific motor that were used to determine the certified rating. When certifying compliance with an IEER standard, rated indoor airflow in SCFM for each part-load point used in the IEER calculation and any special instructions required to obtain operation at each part-load point, such as frequency or control set points for variable speed components (e.g., compressors, VFDs), dip switch/control settings for step or variable components, or any additional applicable testing instructions, are also required.

    (ii) Commercial package heating equipment (except commercial package heating equipment that is air-cooled with a cooling capacity less than 65,000 Btu/h): The rated heating capacity in British thermal units per hour (Btu/h); rated indoor airflow in standard cubic feet per minute (SCFM) for each fan coil (in cooling mode); rated airflow in SCFM for each fan coil in heating mode if the unit is designed to operate with different airflow rates for cooling and heating mode; water flow rate in gallons per minute (gpm) for water cooled units only; rated external static pressure in inches of water; frequency or control set points for variable speed components (e.g., compressors, VFDs); required dip switch/control settings for step or variable components; a statement whether the model will operate at test conditions without manufacturer programming; any additional testing instructions, if applicable; and if a variety of motors/drive kits are offered for sale as options in the basic model to account for varying installation requirements, the model number and specifications of the motor (to include efficiency, horsepower, open/closed, and number of poles) and the drive kit, including settings, associated with that specific motor that were used to determine the certified rating. When certifying compliance with an IEER standard, rated indoor airflow in SCFM for each part-load point used in the IEER calculation and any special instructions required to obtain operation at each part-load point, such as frequency or control set points for variable speed components (e.g., compressors, VFDs), dip switch/control settings for step or variable components, or any additional applicable testing instructions, are also required.

    4. Amend § 429.134 by adding paragraph (g) to read as follows:
    § 429.134 Product-specific enforcement provisions.

    (g) Air-cooled small (≥65,000 Btu/h and <135,000 Btu/h), large (≥135,000 Btu/h and <240,000 Btu/h), and very large (≥240,000 Btu/h and <760,000 Btu/h) commercial package air conditioning and heating equipment—verification of cooling capacity. The cooling capacity of each tested unit of the basic model will be measured pursuant to the test requirements of part 431 of this chapter. The mean of the measurement(s) will be used to determine the applicable standards for purposes of compliance.

    PART 431—ENERGY EFFICIENCY PROGRAM FOR CERTAIN COMMERCIAL AND INDUSTRIAL EQUIPMENT 5. The authority citation for part 431 continues to read as follows: Authority:

    42 U.S.C. 6291-6317.

    6. Amend § 431.92 by adding a definition of “Integrated energy efficiency ratio, or IEER,” in alphabetical order to read as follows:
    § 431.92 Definitions concerning commercial air conditioners and heat pumps.

    Integrated energy efficiency ratio, or IEER, means a weighted average calculation of mechanical cooling EERs determined for four load levels and corresponding rating conditions, as measured in appendix A of this subpart, expressed in Btu/watt-hour.

    § 431.95 [Amended]
    7. Amend § 431.95 by: a. Removing paragraph (b)(4); b. Redesignating paragraphs (b)(5) through (8) as (b)(4) through (7), respectively; and c. Adding “and appendix A of this subpart” to the end of newly redesignated paragraphs (b)(4) and (c)(2).
    8. Amend § 431.96 by revising paragraphs (b)(1) and (c) and Table 1 to read as follows:
    § 431.96 Uniform test method for the measurement of energy efficiency of commercial air conditioners and heat pumps.

    (b) * * *

    (1) Determine the energy efficiency of each type of covered equipment by conducting the test procedure(s) listed in Table 1 of this section along with any additional testing provisions set forth in paragraphs (c) through (g) of this section and appendix A to this subpart, that apply to the energy efficiency descriptor for that equipment, category, and cooling capacity. The omitted sections of the test procedures listed in Table 1 of this section must not be used.

    Table 1 to § 431.96—Test Procedures for Commercial Air Conditioners and Heat Pumps Equipment type Category Cooling capacity Energy efficiency descriptor Use tests, conditions, and
  • procedures 1 in
  • Additional test procedure provisions as indicated in the listed paragraphs of this section
    Small Commercial Package Air-Conditioning and Heating Equipment Air-Cooled, 3-Phase, AC and HP <65,000 Btu/h SEER and HSPF AHRI 210/240-2008 (omit section 6.5) Paragraphs (c) and (e). Air-Cooled AC and HP ≥65,000 Btu/h and <135,000 Btu/h EER, IEER, and COP Appendix A to this subpart None. Water-Cooled and Evaporatively-Cooled AC <65,000 Btu/h EER AHRI 210/240-2008 (omit section 6.5) Paragraphs (c) and (e). ≥65,000 Btu/h and <135,000 Btu/h EER AHRI 340/360-2007 (omit section 6.3) Paragraphs (c) and (e). Water-Source HP <135,000 Btu/h EER and COP ISO Standard 13256-1 (1998) Paragraph (e). Large Commercial Package Air-Conditioning and Heating Equipment Air-Cooled AC and HP ≥135,000 Btu/h and <240,000 Btu/h EER, IEER and COP Appendix A to this subpart None. Water-Cooled and Evaporatively-Cooled AC ≥135,000 Btu/h and <240,000 Btu/h EER AHRI 340/360-2007 (omit section 6.3) Paragraphs (c) and (e). Very Large Commercial Package Air-Conditioning and Heating Equipment Air-Cooled AC and HP ≥240,000 Btu/h and <760,000 Btu/h EER, IEER and COP Appendix A to this subpart None. Water-Cooled and Evaporatively-Cooled AC ≥240,000 Btu/h and <760,000 Btu/h EER AHRI 340/360-2007 (omit section 6.3) Paragraphs (c) and (e). Packaged Terminal Air Conditioners and Heat Pumps AC and HP <760,000 Btu/h EER and COP Paragraph (g) of this section Paragraphs (c), (e), and (g). Computer Room Air Conditioners AC <65,000 Btu/h SCOP ASHRAE 127-2007 (omit section 5.11) Paragraphs (c) and (e). ≥65,000 Btu/h and <760,000 Btu/h SCOP ASHRAE 127-2007 (omit section 5.11) Paragraphs (c) and (e). Variable Refrigerant Flow Multi-split Systems AC <65,000 Btu/h (3-phase) SEER AHRI 1230-2010 (omit sections 5.1.2 and 6.6) Paragraphs (c), (d), (e), and (f). ≥65,000 Btu/h and <760,000 Btu/h EER AHRI 1230-2010 (omit sections 5.1.2 and 6.6) Paragraphs (c), (d), (e), and (f). Variable Refrigerant Flow Multi-split Systems, Air-cooled HP <65,000 Btu/h (3-phase) SEER and HSPF AHRI 1230-2010 (omit sections 5.1.2 and 6.6) Paragraphs (c), (d), (e), and (f). ≥65,000 Btu/h and <760,000 Btu/h EER and COP AHRI 1230-2010 (omit sections 5.1.2 and 6.6) Paragraphs (c), (d), (e), and (f). Variable Refrigerant Flow Multi-split Systems, Water-source HP <760,000 Btu/h EER and COP AHRI 1230-2010 (omit sections 5.1.2 and 6.6) Paragraphs (c), (d), (e), and (f). Single Package Vertical Air Conditioners and Single Package Vertical Heat Pumps AC and HP <760,000 Btu/h EER and COP AHRI 390-2003 (omit section 6.4) Paragraphs (c) and (e). 1 Incorporated by reference; see § 431.95.

    (c) Optional break-in period for tests conducted using AHRI 210/240-2008, AHRI 390-2003, AHRI 1230-2010, and ASHRAE 127-2007. Manufacturers may optionally specify a “break-in” period, not to exceed 20 hours, to operate the equipment under test prior to conducting the test method specified by AHRI 210/240-2008, AHRI 390-2003, AHRI 1230-2010, or ASHRAE 127-2007 (incorporated by reference; see § 431.95). A manufacturer who elects to use an optional compressor break-in period in its certification testing should record this information (including the duration) in the test data underlying the certified ratings that is required to be maintained under 10 CFR 429.71.

    9. Add appendix A to subpart F of part 431 to read as follows: Appendix A to Subpart F of Part 431—Uniform Test Method for the Measurement of Energy Consumption of Air-Cooled Small (≥65,000 Btu/h), Large, and Very Large Commercial Package Air Conditioning and Heating Equipment

    Note: Prior to December 19, 2016, representations with respect to the energy use or efficiency of air-cooled small, large, and very large commercial package air conditioning and heating equipment, including compliance certifications, must be based on testing conducted in accordance with either Table 1 to § 431.96 as it now appears or Table 1 to § 431.96 as it appeared in subpart F of this part, in the 10 CFR parts 200 through 499 edition revised as of January 1, 2015. After December 19, 2016, representations with respect to energy use or efficiency of air-cooled small, large, and very large commercial package air conditioning and heating equipment, including compliance certifications, must be based on testing conducted in accordance with Table 1 to § 431.96 as it now appears.

    (1) Cooling mode test method. The test method for cooling mode consists of the methods and conditions in AHRI 340/360-2007 sections 3, 4, and 6 (omitting section 6.3) (incorporated by reference; see § 431.95), and in ANSI/ASHRAE 37-2009 (incorporated by reference; see § 431.95). In case of a conflict between AHRI 340/360-2007 or ANSI/ASHRAE 37-2009 and the CFR, the CFR provisions control.

    (2) Heating mode test method. The test method for heating mode consists of the methods and conditions in AHRI 340/360-2007 sections 3, 4, and 6 (omitting section 6.3) (incorporated by reference; see § 431.95), and in ANSI/ASHRAE 37-2009 (incorporated by reference; see § 431.95). In case of a conflict between AHRI 340/360-2007 or ANSI/ASHRAE 37-2009 and the CFR, the CFR provisions control.

    (3) Minimum external static pressure. Use the certified cooling capacity for the basic model to choose the minimum external static pressure found in table 5 of section 6 of AHRI 340/360-2007 (incorporated by reference; see § 431.95) for testing.

    (4) Optional break-in period. Manufacturers may optionally specify a “break-in” period, not to exceed 20 hours, to operate the equipment under test prior to conducting the test method in appendix A of this part. A manufacturer who elects to use an optional compressor break-in period in its certification testing must record this information (including the duration) as part of the information in the supplemental testing instructions under 10 CFR 429.43.

    (5) Additional provisions for equipment set-up. The only additional specifications that may be used in setting up a unit for test are those set forth in the installation and operation manual shipped with the unit. Each unit should be set up for test in accordance with the manufacturer installation and operation manuals. Paragraphs (5)(i) through (ii) of this section provide specifications for addressing key information typically found in the installation and operation manuals.

    (i) If a manufacturer specifies a range of superheat, sub-cooling, and/or refrigerant pressure in its installation and operation manual for a given basic model, any value(s) within that range may be used to determine refrigerant charge or mass of refrigerant, unless the manufacturer clearly specifies a rating value in its installation and operation manual, in which case the specified rating value shall be used.

    (ii) The airflow rate used for testing must be that set forth in the installation and operation manuals being shipped to the customer with the basic model and clearly identified as that used to generate the DOE performance ratings. If a certified airflow value for testing is not clearly identified, a value of 400 standard cubic feet per minute (scfm) per ton shall be used.

    (6) Indoor airflow testing and adjustment. (i) When testing full-capacity cooling operation at the required external static pressure condition, the full-load indoor airflow rate must be within +/− 3 percent of the certified-rated airflow at full-capacity cooling operation. If the indoor airflow rate at the required minimum external pressure is outside the +/− 3-percent tolerance, the unit and/or test setup must be adjusted such that both the airflow and ESP are within the required tolerances. This process may include, but is not limited to, adjusting any adjustable motor sheaves, adjusting variable drive settings, or adjusting the code tester fan.

    (ii) When testing other than full-capacity cooling operation using the full-load indoor airflow rate (e.g., full-load heating), the full-load indoor airflow rate must be within +/− 3 percent of the certified-rated full-load cooling airflow (without regard to the resulting external static pressure), unless the unit is designed to operate at a different airflow for cooling and heating mode. If necessary, a test facility setup may be made in order to maintain airflow within the required tolerance; however, no adjustments to the unit under test may be made.

    (7) Condenser head pressure controls. Condenser head pressure controls, if typically shipped with units of the basic model by the manufacturer or available as an option to the basic model, must be active during testing.

    (8) Standard CFM. In the referenced sections of AHRI 340/360-2007 (incorporated by reference; see § 431.95), all instances of CFM refer to standard CFM (SCFM). Likewise, all references to airflow or air quantity refer to standard airflow and standard air quantity.

    (9) Capacity rating at part-load. When testing to determine EER for the part-load rating points (i.e. 75-percent load, 50-percent load, and 25-percent load), if the measured capacity expressed as a percent of full-load capacity for a given part-load test is within three percent above or below the target part-load percentage, the EER calculated for the test may be used without any interpolation to determine IEER.

    (10) Condenser air inlet temperature for part-load testing. When testing to determine EER for the part-load rating points (i.e. 75-percent load, 50-percent load, and 25-percent load), the condenser air inlet temperature shall be calculated (using the equation in Table 6 of AHRI 340/360-2007; incorporated by reference; see § 431.95) for the target percent load rather than for the percent load measured in the test. Table 1 of this appendix shows the condenser air inlet temperature corresponding with each target percent load, as calculated using the equation in Table 6 of AHRI 340/360-2007.

    Table 1 to Appendix A to Subpart F of Part 431—Condenser Air Inlet Temperatures for Part-Load Tests Target percent load
  • (%)
  • Condenser air inlet temperature
  • (°F)
  • 25 65 50 68 75 81.5
    [FR Doc. 2015-31906 Filed 12-22-15; 8:45 a.m.] BILLING CODE 6450-01-P
    FEDERAL RESERVE SYSTEM 12 CFR Part 201 [Docket No. R-1528; Regulation A] RIN 7100-AE42 Extensions of Credit by Federal Reserve Banks AGENCY:

    Board of Governors of the Federal Reserve System.

    ACTION:

    Final rule.

    SUMMARY:

    The Board of Governors of the Federal Reserve System (“Board”) has adopted final amendments to its Regulation A to reflect the Board's approval of an increase in the rate for primary credit at each Federal Reserve Bank. The secondary credit rate at each Reserve Bank automatically increased by formula as a result of the Board's primary credit rate action.

    DATES:

    The amendments to part 201 (Regulation A) are effective December 23, 2015. The rate changes for primary and secondary credit were applicable on December 17, 2015, as specified in 12 CFR 201.51, as amended.

    FOR FURTHER INFORMATION CONTACT:

    Stephanie Martin, Associate General Counsel (202/452-3198), or Clinton N. Chen, Attorney (202-452-3952), Legal Division, or Lyle Kumasaka, Senior Financial Analyst (202-452-2382); for users of Telecommunications Device for the Deaf (TDD) only, contact 202-263-4869; Board of Governors of the Federal Reserve System, 20th and C Streets NW., Washington, DC 20551.

    SUPPLEMENTARY INFORMATION:

    The Federal Reserve Banks make primary and secondary credit available to depository institutions as a backup source of funding on a short-term basis, usually overnight. The primary and secondary credit rates are the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under these programs. In accordance with the Federal Reserve Act, the primary and secondary credit rates are established by the boards of directors of the Federal Reserve Banks, subject to the review and determination of the Board.

    The Board approved requests by the Reserve Banks to increase by 1/4 percentage point the primary credit rate in effect at each of the twelve Federal Reserve Banks, thereby increasing from 0.75 percent to 1.00 percent the rate that each Reserve Bank charges for extensions of primary credit. In addition, the Board had previously approved requests by the Reserve Banks to renew the formula for the secondary credit rate, the primary credit rate plus 50 basis points. Under the formula, the secondary credit rate in effect at each of the twelve Federal Reserve Banks increased by 1/4 percentage point as a result of the Board's primary credit rate action, thereby increasing from 1.25 percent to 1.50 percent the rate that each Reserve Bank charges for extensions of secondary credit. The amendments to Regulation A reflect these rate changes.

    The 1/4 percentage point increase in the primary credit rate was associated with an increase in the target range for the federal funds rate (from a target range of 0 to 1/4 percent to a target range of 1/4 to 1/2 percent) announced by the Federal Open Market Committee (“Committee”) on December 16, 2015. A press release announcing these actions indicated that:

    Information received since the Federal Open Market Committee met in October suggests that economic activity has been expanding at a moderate pace. Household spending and business fixed investment have been increasing at solid rates in recent months, and the housing sector has improved further; however, net exports have been soft. A range of recent labor market indicators, including ongoing job gains and declining unemployment, shows further improvement and confirms that underutilization of labor resources has diminished appreciably since early this year. Inflation has continued to run below the Committee's 2 percent longer-run objective, partly reflecting declines in energy prices and in prices of non-energy imports. Market-based measures of inflation compensation remain low; some survey-based measures of longer-term inflation expectations have edged down.

    Consistent with its statutory mandate, the Committee seeks to foster maximum employment and price stability. The Committee currently expects that, with gradual adjustments in the stance of monetary policy, economic activity will continue to expand at a moderate pace and labor market indicators will continue to strengthen. Overall, taking into account domestic and international developments, the Committee sees the risks to the outlook for both economic activity and the labor market as balanced. Inflation is expected to rise to 2 percent over the medium term as the transitory effects of declines in energy and import prices dissipate and the labor market strengthens further.

    Administrative Procedure Act

    The notice, public comment, and delayed effective date requirements of 5 U.S.C. 553 is inapplicable “to the extent that there is involved . . . a matter relating to agency management or personnel or to public property, loans, grants, benefits, or contracts.” 1 This rulemaking involves a matter relating to loans, as the Board is revising the interest rates that the twelve Federal Reserve Banks charge for extensions of credit under the primary and secondary credit programs.

    1 5 U.S.C. 553(a)(2) (emphasis added).

    Furthermore, the Board has determined that delaying implementation of the changes in the primary and secondary credit rates in order to allow notice and public comment would be unnecessary and contrary to the public interest. Therefore, the Board has found good cause to not follow the provisions of 5 U.S.C. 553(b) relating to notice and public participation. The Board's revisions to these rates were taken with a view to accommodating commerce and business and with regard to their bearing upon the general credit situation of the country. Notice and public participation would prevent the Board's action from being effective as promptly as necessary in the public interest. Seeking notice and comment on the rate changes would not aid the persons affected and would otherwise serve no useful purpose. For these same reasons, the Board also has found good cause not to provide 30 days prior notice of the effective date of the rule under 5 U.S.C. 553(d).

    Regulatory Flexibility Analysis

    The Regulatory Flexibility Act (“RFA”) does not apply to a rulemaking where a general notice of proposed rulemaking is not required.2 As noted previously, a general notice of proposed rulemaking is not required if the final rule involves a matter relating to loans. Furthermore, the Board has determined that it is unnecessary and contrary to the public interest to publish a general notice of proposed rulemaking for this final rule. Accordingly, the RFA's requirements relating to an initial and final regulatory flexibility analysis do not apply.

    2 5 U.S.C. 603 and 604.

    Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act (“PRA”) of 1995 (44 U.S.C. 3506; 5 CFR part 1320 Appendix A.1), the Board reviewed the final rule under the authority delegated to the Board by the Office of Management and Budget. The final rule contains no requirements subject to the PRA.

    List of Subjects in 12 CFR Part 201

    Banks, Banking, Federal Reserve System, Reporting and recordkeeping.

    Authority and Issuance

    For the reasons set forth in the preamble, the Board is amending 12 CFR Chapter II as follows:

    PART 201—EXTENSIONS OF CREDIT BY FEDERAL RESERVE BANKS (REGULATION A) 1. The authority citation for part 201 continues to read as follows: Authority:

    12 U.S.C. 248(i)-(j), 343 et seq., 347a, 347b, 347c, 348 et seq., 357, 374, 374a, and 461.

    2. In § 201.51, paragraphs (a) and (b) are revised to read as follows:
    § 201.51 Interest rates applicable to credit extended by a Federal Reserve Bank.1

    1 The primary, secondary, and seasonal credit rates described in this section apply to both advances and discounts made under the primary, secondary, and seasonal credit programs, respectively.

    (a) Primary credit. The interest rates for primary credit provided to depository institutions under § 201.4(a) are:

    Federal reserve bank Rate Effective Boston 1.00 December 17, 2015. New York 1.00 December 17, 2015. Philadelphia 1.00 December 17, 2015. Cleveland 1.00 December 17, 2015. Richmond 1.00 December 17, 2015. Atlanta 1.00 December 17, 2015. Chicago 1.00 December 17, 2015. St. Louis 1.00 December 17, 2015. Minneapolis 1.00 December 17, 2015. Kansas City 1.00 December 17, 2015. Dallas 1.00 December 17, 2015. San Francisco 1.00 December 17, 2015.

    (b) Secondary credit. The interest rates for secondary credit provided to depository institutions under § 201.4(b) are:

    Federal reserve bank Rate Effective Boston 1.50 December 17, 2015. New York 1.50 December 17, 2015. Philadelphia 1.50 December 17, 2015. Cleveland 1.50 December 17, 2015. Richmond 1.50 December 17, 2015. Atlanta 1.50 December 17, 2015. Chicago 1.50 December 17, 2015. St. Louis 1.50 December 17, 2015. Minneapolis 1.50 December 17, 2015. Kansas City 1.50 December 17, 2015. Dallas 1.50 December 17, 2015. San Francisco 1.50 December 17, 2015.
    By order of the Board of Governors of the Federal Reserve System, December 18, 2015. Robert deV. Frierson, Secretary of the Board.
    [FR Doc. 2015-32295 Filed 12-22-15; 8:45 am] BILLING CODE 6210-02-P
    BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1003 Home Mortgage Disclosure (Regulation C) Adjustment to Asset-Size Exemption Threshold AGENCY:

    Bureau of Consumer Financial Protection.

    ACTION:

    Final rule; official commentary.

    SUMMARY:

    The Bureau of Consumer Financial Protection (Bureau) is issuing a final rule amending the official commentary that interprets the requirements of the Bureau's Regulation C (Home Mortgage Disclosure) to reflect the asset-size exemption threshold for banks, savings associations, and credit unions based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). The exemption threshold will remain at $44 million. This amendment is based on the 0.4 percent decrease in the average of the CPI-W for the 12-month period ending in November 2015. Therefore, banks, savings associations, and credit unions with assets of $44 million or less as of December 31, 2015, are exempt from collecting data in 2016.

    DATES:

    This final rule is effective January 1, 2016.

    FOR FURTHER INFORMATION CONTACT:

    James Wylie or Jaclyn Maier, Counsels, Office of Regulations, at (202) 435-7700.

    SUPPLEMENTARY INFORMATION: I. Background

    The Home Mortgage Disclosure Act of 1975 (HMDA) (12 U.S.C. 2801-2810) requires most mortgage lenders located in metropolitan areas to collect data about their housing-related lending activity. Annually, lenders must report that data to the appropriate Federal agencies and make the data available to the public. The Bureau's Regulation C (12 CFR part 1003) implements HMDA.

    Prior to 1997, HMDA exempted certain depository institutions as defined in HMDA (i.e., banks, savings associations, and credit unions) with assets totaling $10 million or less as of the preceding year-end. In 1996, HMDA was amended to expand the asset-size exemption for these depository institutions. 12 U.S.C. 2808(b). The amendment increased the dollar amount of the asset-size exemption threshold by requiring a one-time adjustment of the $10 million figure based on the percentage by which the CPI-W for 1996 exceeded the CPI-W for 1975, and it provided for annual adjustments thereafter based on the annual percentage increase in the CPI-W, rounded to the nearest multiple of $1 million dollars.

    The definition of “financial institution” in Regulation C provides that the Bureau will adjust the asset threshold based on the year-to-year change in the average of the CPI-W, not seasonally adjusted, for each 12-month period ending in November, rounded to the nearest million. 12 CFR 1003.2. For 2015, the threshold was $44 million. During the 12-month period ending in November 2015, the average of the CPI-W decreased by 0.4 percent. This results in a change of zero when rounded to the nearest million. Thus, the exemption threshold will remain at $44 million. Therefore, banks, savings associations, and credit unions with assets of $44 million or less as of December 31, 2015, are exempt from collecting data in 2016. An institution's exemption from collecting data in 2016 does not affect its responsibility to report data it was required to collect in 2015.

    II. Procedural Requirements A. Administrative Procedure Act

    Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, comment 1003.2 (Financial institution)-2 in Regulation C, supplement I is amended to update the exemption threshold. The amendment in this final rule is technical and non-discretionary, and it merely applies the formula established by Regulation C for determining any adjustments to the exemption threshold. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form.

    Section 553(d) of the APA generally requires publication of a final rule not less than 30 days before its effective date, except for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the amendments fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 1, 2016. The amendment in this final rule is technical and non-discretionary, and it applies the method previously established in the agency's regulations for determining adjustments to the threshold.

    B. Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).

    C. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

    List of Subjects in 12 CFR Part 1003

    Banking, Banks, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations.

    Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends Regulation C, 12 CFR part 1003, as set forth below:

    PART 1003—HOME MORTGAGE DISCLOSURE (REGULATION C) 1. The authority citation for part 1003 continues to read as follows: Authority:

    12 U.S.C. 2803, 2804, 2805, 5512, 5581.

    2. In Supplement I to Part 1003, under Section 1003.2—Definitions, under the definition “Financial institution”, paragraph 2 is revised to read as follows: Supplement I to Part 1003—Staff Commentary Section 1003.2—Definitions Financial Institution

    2. Adjustment of exemption threshold for banks, savings associations, and credit unions. For data collection in 2016, the asset-size exemption threshold is $44 million. Banks, savings associations, and credit unions with assets at or below $44 million as of December 31, 2015, are exempt from collecting data for 2016.

    Dated: December 16, 2015. Richard Cordray, Director, Bureau of Consumer Financial Protection.
    [FR Doc. 2015-32285 Filed 12-22-15; 8:45 am] BILLING CODE 4810-AM-P
    BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 Truth in Lending Act (Regulation Z) Adjustment to Asset-Size Exemption Threshold AGENCY:

    Bureau of Consumer Financial Protection.

    ACTION:

    Final rule; official interpretation.

    SUMMARY:

    The Bureau is amending the official commentary that interprets the requirements of the Bureau's Regulation Z (Truth in Lending) to reflect a change in the asset size threshold for certain creditors to qualify for an exemption to the requirement to establish an escrow account for a higher-priced mortgage loan based on the annual percentage change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) for the 12-month period ending in November. The exemption threshold is adjusted to decrease to $2.052 billion from $2.060 billion. The adjustment is based on the 0.4 percent decrease in the average of the CPI-W for the 12-month period ending in November 2015. Therefore, creditors with assets of less than $2.052 billion (including assets of certain affiliates) as of December 31, 2015, are exempt, if other requirements of Regulation Z also are met, from establishing escrow accounts for higher-priced mortgage loans in 2016. This asset limit will also apply during a grace period, in certain circumstances, with respect to transactions with applications received before April 1 of 2017. The adjustment to the escrows exemption asset-size threshold will also decrease a similar threshold for small-creditor portfolio and balloon-payment qualified mortgages. Balloon-payment qualified mortgages that satisfy all applicable criteria, including being made by creditors that have (together with certain affiliates) total assets below the threshold, are also excepted from the prohibition on balloon payments for high-cost mortgages.

    DATES:

    This final rule is effective January 1, 2016.

    FOR FURTHER INFORMATION CONTACT:

    James Wylie or Jaclyn Maier, Counsels, Office of Regulations, at (202) 435-7700.

    SUPPLEMENTARY INFORMATION: I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA section 129D(a) to contain a general requirement that an escrow account be established by a creditor to pay for property taxes and insurance premiums for certain first-lien higher-priced mortgage loan transactions. TILA section 129(D) also generally permits an exemption from the higher-priced mortgage loan escrow requirement for a creditor that meets certain requirements, including any asset-size threshold the Bureau may establish.

    In the 2013 Escrows Final Rule,1 the Bureau established such an asset-size threshold of $2,000,000,000, which would adjust automatically each year, based on the year-to year change in the average of the CPI-W for each 12-month period ending in November, with rounding to the nearest million dollars.2 For 2015, the threshold was $2.060 billion. The Bureau recently revised the criteria for small creditors, and rural and underserved areas, for purposes of certain special provisions and exemptions from various requirements provided to certain small creditors under the Bureau's mortgage rules. As part of this revision the Bureau made certain changes that affect how the asset-size threshold applies. The Bureau revised the rule to include in the calculation of the asset-size threshold the assets of the creditor's affiliates that regularly extended covered transactions secured by first liens during the applicable period. The Bureau also added a grace period from calendar year to calendar year to allow an otherwise eligible creditor that exceeded the asset limit in the preceding calendar year (but not in the calendar year before the preceding year) to continue to operate as a small creditor with respect to transactions with applications received before April 1 of the current calendar year.3

    1 78 FR 4726 (Jan. 22, 2013).

    2See 12 CFR 1026.35(b)(2)(iii)(C).

    3See 80 FR 59943, 59951 (Oct. 2, 2015).

    During the 12-month period ending in November 2015, the average of theCPI-W decreased by 0.4 percent. As a result, the exemption threshold is decreased to $2.052 billion for 2016. Thus, if the creditor's assets together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 are less than $2.052 billion on December 31, 2015, and it meets the other requirements of § 1026.35(b)(2)(iii) it will be exempt in 2016 from the escrow-accounts requirement for higher-priced mortgage loans and will also be exempt from the escrow-accounts requirement for higher-priced mortgage loans for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. The adjustment to the escrows exemption asset-size threshold will also decrease the threshold for small-creditor portfolio and balloon-payment qualified mortgages under Regulation Z. The requirements for small-creditor portfolio qualified mortgages at § 1026.43(e)(5)(i)(D) reference the asset threshold in § 1026.35(b)(2)(iii)(C). Likewise, the requirements for balloon-payment qualified mortgages at § 1026.43(f)(1)(vi) reference the asset threshold in § 1026.35(b)(2)(iii)(C). Balloon-payment qualified mortgages that satisfy all applicable criteria in §§ 1026.43(f)(1)(i) through (vi) and 1026.43(f)(2), or the conditions set forth in § 1026.43(e)(6) for covered transactions for which the application is received before April 1, 2016,4 including being made by creditors that have (together with certain affiliates) total assets below the threshold in § 1026.35(b)(2)(iii)(C), are also excepted from the prohibition on balloon payments for high-cost mortgages in § 1026.32(d)(1)(ii)(C).

    4 The Bureau extended the temporary provision in § 1026.43(e)(6) from covered transactions consummated on or before January 10, 2016 to covered transactions for which the application was received on or before April 1, 2016. See 80 FR 59943, 59959 (Oct. 2, 2015).

    II. Procedural Requirements A. Administrative Procedure Act

    Under the Administrative Procedure Act (APA), notice and opportunity for public comment are not required if the Bureau finds that notice and public comment are impracticable, unnecessary, or contrary to the public interest. 5 U.S.C. 553(b)(B). Pursuant to this final rule, comment 35(b)(2)(iii)-1 in Regulation Z is amended to update the exemption threshold. The amendment in this final rule is technical, and merely applies the formula previously established in Regulation Z for determining any adjustments to the exemption threshold. For these reasons, the Bureau has determined that publishing a notice of proposed rulemaking and providing opportunity for public comment are unnecessary. Therefore, the amendment is adopted in final form.

    Section 553(d) of the APA generally requires publication of a final rule not less than 30 days before its effective date, except for (1) a substantive rule which grants or recognizes an exemption or relieves a restriction; (2) interpretive rules and statements of policy; or (3) as otherwise provided by the agency for good cause found and published with the rule. 5 U.S.C. 553(d). At a minimum, the Bureau believes the amendments fall under the third exception to section 553(d). The Bureau finds that there is good cause to make the amendments effective on January 1, 2016. The amendment in this rule is technical, and applies the method previously established in the agency's regulations for automatic adjustments to the threshold.

    B. Regulatory Flexibility Act

    Because no notice of proposed rulemaking is required, the Regulatory Flexibility Act does not require an initial or final regulatory flexibility analysis. 5 U.S.C. 603(a), 604(a).

    C. Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3506; 5 CFR 1320), the agency reviewed this final rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the final rule.

    List of Subjects in 12 CFR Part 1026

    Advertising, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.

    Authority and Issuance

    For the reasons set forth in the preamble, the Bureau amends Regulation Z, 12 CFR part 1026, as set forth below:

    PART 1026—TRUTH IN LENDING (REGULATION Z) 1. The authority citation for part 1026 continues to read as follows: Authority:

    12 U.S.C. 2601, 2603-2605, 2607, 2609, 2617, 3353, 5511, 5512, 5532, 5581; 15 U.S.C. 1601 et seq.

    2. In Supplement I to Part 1026—Official Interpretations, under Section 1026.35—Requirements for Higher-Priced Mortgage Loans, 35(b)(2) Exemptions, Paragraph 35(b)(2)(iii), paragraph 1.iii.E introductory text, as amended at 80 FR 59968 (Oct. 2, 2015), is revised to read as follows: SUPPLEMENT I TO PART 1026—OFFICIAL INTERPRETATIONS Subpart E—Special Rules for Certain Home Mortgage Transactions Section 1026.35—Requirements for Higher-Priced Mortgage Loans 35(b)(2) Exemptions Paragraph 35(b)(2)(iii)

    1. * * *

    iii. * * *

    E. Under § 1026.35(b)(2)(iii)(C), the $2,000,000,000 asset threshold adjusts automatically each year based on the year-to-year change in the average of the Consumer Price Index for Urban Wage Earners and Clerical Workers, not seasonally adjusted, for each 12-month period ending in November, with rounding to the nearest million dollars. The Bureau will publish notice of the asset threshold each year by amending this comment. For calendar year 2016, the asset threshold is $2,052,000,000. A creditor that together with the assets of its affiliates that regularly extended first-lien covered transactions during calendar year 2015 has total assets of less than $2,052,000,000 on December 31, 2015, satisfies this criterion for purposes of any loan consummated in 2016 and for purposes of any loan consummated in 2017 for which the application was received before April 1, 2017. For historical purposes:

    Dated: December 16, 2015. Richard Cordray, Director, Bureau of Consumer Financial Protection.
    [FR Doc. 2015-32293 Filed 12-22-15; 8:45 am] BILLING CODE 4810-AM-P
    FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1227 RIN 2590-AA60 Suspended Counterparty Program AGENCY:

    Federal Housing Finance Agency.

    ACTION:

    Final rule.

    SUMMARY:

    This final rule establishes requirements and procedures for the Federal Housing Finance Agency's (FHFA) Suspended Counterparty Program. Under the Suspended Counterparty Program, FHFA may issue suspension orders directing the regulated entities (Fannie Mae, Freddie Mac, and the eleven Federal Home Loan Banks (Banks)) to cease doing business with an individual or institution, and any affiliate thereof, for a specified period of time where such party has committed fraud or other financial misconduct involving a mortgage transaction.

    The final rule revises the interim final rule published on October 23, 2013. The final rule excludes from the types of covered transactions that would be subject to a final suspension order any transaction involving a residential mortgage loan if the loan is secured by the respondent's own personal or household residence. The final rule provides more time than the interim final regulation provided for the regulated entities to submit reports to FHFA when they become aware that any individual or institution, and any affiliate thereof, with which they do business, has committed fraud or other financial misconduct involving a mortgage transaction. The final rule also simplifies the standard for issuing suspension orders by eliminating the requirement that FHFA demonstrate that the regulated entity has done business with the individual or institution within the past three years. Finally, the final rule clarifies the method of issuing notices of proposed suspension orders with respect to affiliates.

    DATES:

    The final rule is effective January 22, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Kevin Sheehan, Associate General Counsel, at (202) 649-3086 (not a toll-free number), Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street SW., Washington, DC 20219. The telephone number for the Hearing Impaired is (800) 877-8339 (TDD only).

    SUPPLEMENTARY INFORMATION:

    I. Background

    The Suspended Counterparty Program requires a regulated entity to submit a report to FHFA if it becomes aware that an individual or institution with which it does business has been found within the past three years to have committed fraud or other financial misconduct involving a mortgage transaction. FHFA may issue proposed and final suspension orders based on the reports it has received from the regulated entities or based on other information. FHFA offers the affected individual or institution and the regulated entities an opportunity to respond to any proposed suspension order. FHFA may issue a final suspension order if FHFA determines that the underlying misconduct is of a type that would be likely to cause significant financial or reputational harm to a regulated entity or otherwise threaten the safe and sound operation of a regulated entity. Final suspension orders direct the regulated entities to cease or refrain from doing business with the suspended individuals or institutions for a specified period of time, which may be permanent in appropriate cases.

    FHFA established the Suspended Counterparty Program in June 2012 by letter to the regulated entities. The requirements and procedures for the Suspended Counterparty Program were generally codified by the interim final rule published on October 23, 2013. 78 FR 63007. FHFA received two comment letters on the interim final rule: one from Fannie Mae; and one from eleven of the then twelve Banks 1 (the Pittsburgh Bank did not join in the comment letter). The current regulation, the comments received, and the final rule are discussed below.

    1 The Federal Home Loan Bank of Seattle merged into the Federal Home Loan Bank of Des Moines as of the close of business on May 31, 2015.

    II. Analysis of Final Rule A. Requirement to Submit Reports—§ 1227.4 1. Scope of Reporting Requirements

    Current regulation. The current regulation requires a regulated entity to submit a report to FHFA when the regulated entity becomes aware that a person or affiliate thereof with which the regulated entity is engaging or has engaged in a covered transaction within the past three years has engaged in covered misconduct. A regulated entity is aware of covered misconduct when the regulated entity has reliable information that such misconduct has occurred. 12 CFR 1227.4(a). “Covered misconduct” is defined to include convictions or administrative sanctions based on fraud or similar misconduct in connection with the mortgage business. 12 CFR 1227.2. The Federal Register notice accompanying the interim final rule states that the regulated entities are not required to conduct any independent investigation of the underlying conduct. See 78 FR at 63009.

    Comments received. The Banks supported the requirement in the current regulation for reporting to FHFA when they “become aware” of covered misconduct based on “reliable information.” However, the Banks asked that FHFA provide additional guidance on the scope of their reporting obligations with respect to “reliable information.” The Banks recommended that the rule language indicate that the regulated entities are not required to conduct any independent investigation of the conduct underlying covered misconduct. The Banks also asked that the rule language indicate that the regulated entities are not required to research possible affiliate relationships, stating that it would be difficult, if not impossible, to know the full extent of the affiliates of any given entity.

    The Banks asked FHFA to state that the regulated entities would not be required to conduct any docket searches for convictions or to monitor federal agency notices of debarment. The Banks also recommended that the reporting requirements not apply where a regulated entity becomes aware of covered misconduct through national news reporting or by an announcement or action taken by a federal agency, stating that such information would be accessible to FHFA as well as the regulated entities and all regulated entities should not have to report on the same, widely known conduct. The Banks further recommended that the reporting requirements not apply to any information about covered misconduct that a regulated entity discovers in reviewing a member's examination report. The Banks stated that their review of such reports is subject to confidentiality agreements with federal financial regulators that limit their ability to disclose any information in the reports without the express written consent of the regulator.

    Final rule. The final rule does not change the scope of the reporting requirements under the Suspended Counterparty Program. A regulated entity is required to submit a report to FHFA regarding only covered misconduct of which the regulated entity is aware. The extent of any regulated entity's efforts in evaluating counterparties or addressing potential mortgage fraud is a prudential matter for the regulated entity, subject to regular supervision by FHFA. The Suspended Counterparty Program is not intended to require additional review or investigation by a regulated entity, nor is it intended to take the place of any review or investigation that a regulated entity would otherwise engage in.

    With respect to the comment regarding confidential examination information, the Suspended Counterparty Program is limited to convictions or administrative sanctions for fraud or other financial misconduct related to mortgage transactions. Records regarding any such actions would be publicly available, so it is not necessary to revise this rule to address confidential examination information.

    2. Scope of Screening

    Current regulation. The Federal Register notice accompanying the interim final rule states that the rule does not specify the internal procedures that each regulated entity must establish to ensure compliance with the reporting requirements under the rule. See 78 FR at 63009.

    Comments received. The Banks indicated that they have existing procedures for screening against the U.S. Treasury Department's Office of Foreign Assets Control's list. The Banks requested that FHFA state that such procedures are sufficient for purposes of the Suspended Counterparty Program.

    Fannie Mae commented that screening individual purchasers of Fannie Mae-owned real estate (REO) against the FHFA suspended counterparty list would present operational challenges. Fannie Mae requested FHFA to state that such screening is not required.

    Final rule. The Suspended Counterparty Program is not intended to define the scope of a regulated entity's internal procedures to address risks presented by fraud or other financial misconduct. Each regulated entity must establish appropriate procedures to address such risks. The Suspended Counterparty Program supplements the efforts of the regulated entities; it does not replace those efforts. For example, the Suspended Counterparty Program does not by itself require a regulated entity to screen individual REO purchasers against the FHFA suspended counterparty list, but a regulated entity may still do so if the regulated entity determines that such screening would be a prudent business practice.

    3. Timing of Reports

    Current regulation. The current regulation provides that the regulated entities must submit reports to FHFA on covered misconduct no later than ten business days after the regulated entity becomes aware of such misconduct. 12 CFR 1227.4(c).

    Comments received. Fannie Mae commented that ten business days is not sufficient to complete its usual due diligence and reasonable investigation to confirm whether there is in fact covered misconduct and whether or not Fannie Mae is engaged in a covered transaction with the reported party. Fannie Mae noted that such investigations typically rely on public information that may not be available within such timeframe. Fannie Mae asked FHFA to extend the time for submitting reports to 30 calendar days.

    Final rule. FHFA recognizes that in some instances ten business days may not be sufficient to complete necessary investigation or other due diligence. Accordingly, the final rule revises the time for submitting reports to 30 calendar days.

    B. Timing Requirements for Covered Transactions—§§ 1227.4, 1227.5 and 1227.6

    Current regulation. The Suspended Counterparty Program covers situations where an individual or institution has engaged in a covered transaction with a regulated entity within the past three years. The current regulation requires a regulated entity to report to FHFA when it becomes aware that a person or affiliate thereof with which the regulated entity is engaging or has engaged in a covered transaction within the past three years has engaged in covered misconduct. 12 CFR 1227.4(a). The current regulation also provides that a proposed or final order of suspension may be issued if the suspending official determines that there is evidence that the regulated entity has engaged in a covered transaction with the person or affiliate thereof within the past three years and has engaged in covered misconduct. 12 CFR 1227.5(b)(1) and 1227.6(a)(1).

    Comments received. Both Fannie Mae and the Banks asked that the rule be limited to current counterparties, not counterparties with which they have done business within the past three years. The Banks indicated that their current procedures for identifying covered misconduct under the Suspended Counterparty Program do not address persons that have ceased doing business with the Banks and stated that requiring reports on such persons would be unduly burdensome. Fannie Mae commented that requiring reports on covered misconduct involving persons or institutions with whom Fannie Mae no longer does business would be an inefficient use of resources. Fannie Mae noted that requiring a regulated entity to research whether a contract or agreement terminated two or three or four years ago would yield very little benefit and would not fulfill the purposes of the Suspended Counterparty Program.

    Final rule. The final rule revises the standard for issuing a proposed or final suspension order to eliminate the requirement that FHFA demonstrate that the regulated entity has done business with the individual or institution within the past three years. However, the final rule maintains the requirement that a regulated entity submit reports regarding any parties with which it has done business within the past three years.

    FHFA recognizes that it may be difficult for a regulated entity to determine the exact date it ceased doing business with a particular individual or institution. In addition, documenting the exact timing of the most recent covered transaction is not necessary to accomplish the purposes of the Suspended Counterparty Program. Suspension orders reflect a determination by FHFA that doing business with an individual or institution presents a safety and soundness risk to the regulated entities. This determination is forward-looking and does not depend on whether a regulated entity has recently engaged in a covered transaction. For those reasons, the final rule eliminates the requirements in §§ 1227.5(b)(1) and 1227.6(a)(1) that FHFA demonstrate that a regulated entity has done business with the individual or institution within the past three years.

    Although the final rule revises the standard for whether FHFA may issue a proposed or final suspension order, the final rule maintains the requirement in § 1227.4(a) that the regulated entities submit reports in appropriate cases, even if they have already ceased doing business with the individual or institution. In many cases, a regulated entity may take action to terminate its relationship with a party before there has been any conviction or administrative sanction that would trigger the reporting requirement under the Suspended Counterparty Program. In some cases, a regulated entity may have stopped doing business with a counterparty that is currently doing business with another regulated entity that is not yet aware of the covered misconduct. Therefore, excluding those cases from the coverage of the rule would undermine the effectiveness of the program.

    To the extent records are available, the regulated entities are encouraged to submit reports on any individual or institution that has engaged in covered misconduct regardless of when the most recent covered transaction took place. However, recognizing the practical and operational difficulty of determining when the most recent transaction may have occurred, the final rule only requires a regulated entity to submit reports regarding any parties with which it has done business within the past three years.

    C. Definitions—§ 1227.2 1. Covered Transaction

    Current regulation. The current regulation defines “covered transaction” as “a contract, agreement, or financial or business relationship between a regulated entity and a person and any affiliates thereof.” 12 CFR 1227.2. The Federal Register notice accompanying the interim final rule invited comments on whether this definition should be revised to include more explicit standards. As an example, the notice asked whether the rule should cover “lower tier covered transactions” to address persons who may indirectly do business with a regulated entity, such as a subcontractor or other person providing services to a party that does business directly with a regulated entity. See 78 FR at 63009.

    Comments received. The Banks commented that the regulation should not cover lower tier covered transactions. The Banks indicated that it would not be possible in all cases to require their counterparties to ensure that the counterparties did not do business with any suspended party in connection with a covered transaction and that the Banks would be unable to effectively monitor such a requirement in cases where a counterparty did agree to the requirement. The Banks commented that it would be possible for the Banks to encourage their counterparties not to do business with entities that have been suspended by FHFA.

    Fannie Mae commented that the regulated entities should not be required to directly ensure that a suspended party does not do business indirectly with a regulated entity. Fannie Mae indicated that it would be operationally difficult for Fannie Mae to attempt to monitor such relationships between third parties. Fannie Mae commented that it could notify its counterparties of any limitations imposed by FHFA on such transactions, but it would not be able to directly ensure compliance.

    Fannie Mae also recommended that the definition of “covered transaction” be limited to “contract or agreement” and not include other “financial or business relationships.” Fannie Mae stated that “financial or business relationships” is redundant with “contract or agreement,” and that if it was intended to capture something beyond a contract or agreement, it is too broad and ambiguous. Fannie Mae expressed concern that “financial or business relationships” could be interpreted to include relationships with service providers such as delivery services for which Fannie Mae may have an account but not necessarily a contract or agreement, which it stated would not advance the purposes of the Suspended Counterparty Program.

    Final rule. The final rule does not revise the definition of “covered transaction.” In many cases involving mortgage fraud, a regulated entity that has purchased a mortgage loan may be directly affected by the fraud despite the fact that none of the parties that engaged in fraudulent conduct has a direct relationship with the regulated entity. However, FHFA recognizes that it would be operationally difficult at this time for the regulated entities to effectively monitor relationships between their counterparties and such lower tier service providers. For that reason, FHFA is not at this time requiring that the regulated entities report on transactions between their direct counterparties and lower tier parties, or that the regulated entities ensure that their direct counterparties cease doing business with any lower tier parties that have been suspended by FHFA.

    FHFA expects the regulated entities to take all appropriate measures to address the risks presented by mortgage fraud. The scope of those measures may depend in part on the nature of the financial or business relationship between the party and the regulated entity. Limiting the definition of “covered transaction” to only a “contract or agreement,” as recommended by Fannie Mae, would be too restrictive and, thus, contrary to the intent of the Suspended Counterparty Program. FHFA intends the definition to be flexible enough to encompass any parties who present a particular risk to the regulated entities, while still excluding generic third party service providers that are only incidentally involved in mortgage-related transactions, such as mail and package delivery vendors.

    While the final rule does not limit the general definition of “covered transaction” in response to the comments received, the final rule limits the scope of a final suspension order to exclude one category of what otherwise might be considered lower tier covered transactions. FHFA does not intend final suspension orders to prevent respondents or their households from obtaining mortgage financing for the respondent's own personal or household residence. The final rule adds a new paragraph (d) to § 1227.3 making clear that final suspension orders do not have any effect on any transaction involving a residential mortgage loan if the loan is secured by the respondent's own personal or household residence.

    2. Affiliate

    Current regulation. The current regulation defines “affiliate” as a party that controls or is controlled by another person, whether directly or indirectly, including situations where one or more persons are controlled by the same third person. 12 CFR 1227.2.

    Comments received. The Banks requested clarification of the definition of “affiliate,” particularly on what constitutes “control” for purposes of the definition. The Banks indicated that parent and subsidiary companies would appear to be covered, but expressed uncertainty over whether the definition would include executive officers of a company. The Banks also suggested that the definition of “covered misconduct” should be revised to refer to imputed conduct “among persons” rather than “among affiliates.”

    Final rule. The final rule does not change the definition of “affiliate,” and it does not replace the reference to “affiliates” in the definition of “covered misconduct.” FHFA intends the term “affiliate” to be interpreted broadly in light of the specific provisions regarding imputing conduct among affiliates in the definition of “covered misconduct.” 12 CFR 1227.2. The definition of “covered misconduct” makes clear that FHFA may impute conduct from an individual to an organization in appropriate circumstances. In those circumstances, FHFA would consider the individual and organization to be affiliates for purposes of the Suspended Counterparty Program.

    3. Covered Misconduct

    Current regulation. The current regulation defines “covered misconduct” to include convictions or administrative sanctions within the past three years based on fraud or similar misconduct in connection with the mortgage business. The definition provides that FHFA may impute conduct among individuals and organizations in appropriate circumstances as provided in the rule. 12 CFR 1227.2.

    Comments received. The Banks supported defining “covered misconduct” as limited to offenses in connection with the mortgage business. The Banks suggested restating the definition of “covered misconduct” as certain types of conduct resulting in conviction or administrative sanction rather than a conviction or administrative sanction based on certain types of conduct. The Banks suggested that this would make clear that the conduct being imputed is the conduct that gave rise to the conviction or administrative sanction and not the conviction or administrative sanction itself.

    Final rule. The final rule does not change the definition of “covered misconduct.” FHFA does not engage in independent fact-finding regarding the conduct underlying a conviction or administrative sanction covered by the rule. The current regulation reflects this approach by defining “covered misconduct” explicitly in terms of convictions and administrative sanctions. Where FHFA proceeds with a proposed or final suspension with respect to an affiliate, FHFA is imputing not just the underlying conduct, but the “covered misconduct” as defined in the rule.

    4. Administrative Sanctions

    Current regulation. The current regulation defines “administrative sanction” as a debarment, suspension, or any similar administrative sanction imposed by a Federal agency that has the effect of limiting the ability of a person to do business with a Federal agency. 12 CFR 1227.2. The definition includes any settlements of a proposed administrative sanction if the settlement has the same effect. The Federal Register notice accompanying the interim final rule requested comment on whether the definition should include other types of administrative sanctions, such as enforcement actions by other financial institution regulators. See 78 FR at 63009.

    Comments received. Fannie Mae commented that the definition in the current regulation is appropriate and sufficiently broad and, therefore, should not be expanded to include enforcement actions by other financial institution regulators.

    Final rule. The final rule does not change the definition of “administrative sanction” to include other types of administrative sanctions, such as enforcement actions by other financial regulators. The Suspended Counterparty Program is a limited measure intended to reduce the risks to the regulated entities from fraud and other financial misconduct. Other kinds of administrative actions may or may not be related to the goals of the Suspended Counterparty Program. FHFA may consider expanding the definition of “administrative sanction” in the future, but only in appropriate circumstances related to the goals of the Suspended Counterparty Program.

    5. Conviction

    Current regulation. The current regulation defines “conviction” as any judgment or other determination of guilt of a criminal offense by a court of competent jurisdiction, or any other functionally equivalent resolution. 12 CFR 1227.2. The definition includes judgments entered by verdict or based on a guilty plea. Other dispositions, such as probation before judgment or deferred prosecution, are also included if they include an admission of guilt.

    Comments received. The Banks asked that FHFA state that “a court of competent jurisdiction” is limited to courts of the United States of America and does not include courts in foreign jurisdictions.

    Final rule. The final rule does not change the definition of “conviction.” FHFA intends the definition of conviction to encompass both state and federal courts. FHFA has not received any reports to date based on a conviction from a court outside the United States. If FHFA receives any such report in the future, FHFA will further evaluate the report to determine whether any additional action is necessary or appropriate.

    D. Written Notice of Proposed Suspension

    Current regulation. The current regulation provides that if the suspending official determines that there are grounds for a proposed suspension order, the suspending official “may” issue a written notice of proposed suspension. 12 CFR 1227.5(c).

    Comments received. The Banks commented that a written notice of proposed suspension is necessary to enable affected parties to respond. The Banks, therefore, recommended that issuance of a written suspension notice should be mandatory where a suspending official finds grounds for such issuance.

    Final rule. The final rule does not change this provision of the regulation. The use of the permissive “may” rather than the mandatory “shall” in this sentence is appropriate because the decision to propose suspension is a discretionary decision by FHFA. For example, the suspending official may determine that there are grounds for a proposed suspension order but that for other reasons a proposed suspension is not appropriate. The existing provision correctly expresses the discretionary nature of the decision to propose suspension. If the suspending official decides that a written notice of proposed suspension should be issued to the affected person, the suspending official must provide notice of the proposed suspension to each of the regulated entities as well.

    While the final rule does not change the substance of this provision, the final rule clarifies the method of sending a notice of proposed suspension. Under the final rule, a notice of proposed suspension will be sent to an affiliate of a respondent only if the affiliate would be subject to the proposed suspension. The final rule also makes technical drafting changes to the language on the method of sending notices for greater clarity.

    E. Scope of Final Suspension Orders

    Current regulation. The current regulation provides that a final suspension order may be issued directing the regulated entities to cease or refrain from engaging in covered transactions “with a particular person and any affiliates thereof.” 12 CFR 1227.3(a).

    Comments received. The Banks commented that this language should be revised to clarify that each suspended affiliate will be identified in the suspension order. The Banks noted that it is difficult, if not impossible, for the regulated entities to know the full extent of the affiliates of any given entity.

    Final rule. The final rule does not change this provision of the regulation. Section 1227.6(f)(2)(ii) states that each final suspension order must identify “each person and any affiliates thereof to which the suspension applies.” It is not necessary to restate this requirement in § 1227.3(a).

    F. Status of Previous FHFA Guidance

    Comments received. The Banks requested that, in order to eliminate potential conflicts of interpretation, FHFA state that any FHFA guidance issued prior to the interim final rule has been superseded by the interim final rule. The Banks also asked whether existing FHFA reporting forms should continue to be used for submitting reports.

    Final rule. The Suspended Counterparty Program was established in June 2012 by letter to the regulated entities. Prior to publication of the interim final rule on October 23, 2013, FHFA adopted procedures for the regulated entities to submit reports and provided informal guidance on the scope of the reporting obligations. While the interim final rule generally codified the existing procedures for the Suspended Counterparty Program, to avoid unnecessary confusion, FHFA views any guidance issued prior to the effective date of the interim final rule as superseded. FHFA may respond to questions from the regulated entities about implementation and interpretation of the final rule, and FHFA may provide written guidance on specific issues as appropriate.

    III. Consideration of Differences Between the Banks and the Enterprises

    Section 1313(f) of the Federal Housing Enterprises Financial Safety and Soundness Act requires FHFA, when promulgating regulations relating to the Banks, to consider the differences between Fannie Mae and Freddie Mac (collectively, the Enterprises) and the Banks with respect to the Banks': cooperative ownership structure; mission of providing liquidity to members; affordable housing and community development mission; capital structure; joint and several liability; and any other differences FHFA considers appropriate. See 12 U.S.C. 4513(f). In preparing this final rule, FHFA considered the differences between the Banks and the Enterprises as they relate to the above factors and determined that the Banks should not be treated differently from the Enterprises for purposes of the final rule.

    IV. Paperwork Reduction Act

    The final rule does not contain any information collection requirement that requires the approval of the Office of Management and Budget (OMB) under the Paperwork Reduction Act (44 U.S.C. 3501 et seq.). Therefore, FHFA has not submitted any information to OMB for review.

    V. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that a regulation that has a significant economic impact on a substantial number of small entities, small businesses, or small organizations must include a regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 605(b). FHFA has considered the impact of this final rule under the Regulatory Flexibility Act. FHFA certifies that the final rule will not have a significant economic impact on a substantial number of small entities because the regulation applies to Fannie Mae, Freddie Mac, and the Banks, which are not small entities for purposes of the Regulatory Flexibility Act.

    List of Subjects in 12 CFR Part 1227

    Administrative practice and procedure, Federal home loan banks, Government-sponsored enterprises, Reporting and recordkeeping requirements.

    Authority and Issuance

    Accordingly, for the reasons stated in the SUPPLEMENTARY INFORMATION, under the authority of 12 U.S.C. 4513, 4513b, 4514, and 4526, FHFA is adopting as final the interim final rule published at 78 FR 63007 (October 23, 2013) with the following changes:

    PART 1227—SUSPENDED COUNTERPARTY PROGRAM 1. The authority citation for part 1227 continues to read as follows: Authority:

    12 U.S.C. 4513, 4513b, 4514, 4526.

    2. Amend § 1227.3 by adding paragraph (d) to read as follows:
    § 1227.3 Scope of suspension orders.

    (d) No effect on residential mortgage loans secured by respondent's own personal or household residence. A final suspension order issued pursuant to this part shall have no effect on any transaction involving a residential mortgage loan if the loan is secured by the respondent's own personal or household residence.

    § 1227.4 [Amended]
    3. Amend § 1227.4(c)(1) by removing the phrase “ten (10) business days” and adding in its place the phrase “thirty (30) calendar days”.
    § 1227.5 [Amended]
    4. Amend § 1227.5 by a. Removing the phrase “regulated entity is engaging or engaged in a covered transaction with the person or any affiliates thereof within the past three (3) years and the” from paragraph (b)(1). b. Revising paragraph (e) to read as follows:
    § 1227.5 Proposed suspension order.

    (e) Method of sending notice. The suspending official shall send the notice of proposed suspension to the last known street address, facsimile number, or email address of:

    (1) The person, the person's counsel, or an agent for service of process; and

    (2) Any affiliates of the person, the counsel for those affiliates, or an agent for service of process, if suspension is also being proposed for such affiliates.

    § 1227.6 [Amended]
    5. Amend § 1227.6(a)(1) by removing the phrase “regulated entity is engaging or has engaged in a covered transaction within the past three (3) years with the respondent, and the”.
    Dated: December 15, 2015. Melvin L. Watt, Director, Federal Housing Finance Agency.
    [FR Doc. 2015-32183 Filed 12-22-15; 8:45 am] BILLING CODE 8070-01-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 71 [Docket No. FAA-2015-6002; Airspace Docket No. 15-ANM-26] RIN 2120-AA66 Removal of Jet Route J-477; Northwestern United States AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule.

    SUMMARY:

    This action removes jet route J-477 in the northwest United States. The FAA is taking this action to reflect and accommodate the decommissioning of the Medicine Hat VHF omnidirectional range (VOR) in Alberta, Canada.

    DATES:

    Effective date 0901 UTC, March 31, 2016. The Director of the Federal Register approves this incorporation by reference action under title 1, Code of Federal Regulations, part 51, subject to the annual revision of FAA, Order 7400.9 and publication of conforming amendments.

    ADDRESSES:

    FAA Order 7400.9Z, Airspace Designations and Reporting Points, and subsequent amendments can be viewed online at http://www.faa.gov/air_traffic/publications/. For further information, you can contact the Airspace Policy Group, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783. The Order is also available for inspection at the National Archives and Records Administration (NARA). For information on the availability of FAA Order 7400.9Z at NARA, call (202) 741-6030, or go to http://www.archives.gov/federal_register/code_of_federal-regulations/ibr_locations.html.

    FAA Order 7400.9, Airspace Designations and Reporting Points, is published yearly and effective on September 15.

    FOR FURTHER INFORMATION CONTACT:

    Jason Stahl, Airspace Policy Group, Office of Airspace Services, Federal Aviation Administration, 800 Independence Avenue SW., Washington, DC 20591; telephone: (202) 267-8783.

    SUPPLEMENTARY INFORMATION: Authority for This Rulemaking

    The FAA's authority to issue rules regarding aviation safety is found in Title 49 of the United States Code. 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. This rulemaking is promulgated under the authority described in Subtitle VII, Part A, Subpart I, Section 40103. Under that section, the FAA is charged with prescribing regulations to assign the use of the airspace necessary to ensure the safety of aircraft and the efficient use of airspace. This regulation is within the scope of that authority as it modifies the air traffic service route structure in the northwest United States to maintain the efficient flow of air traffic.

    History

    In 1990, the FAA published in the Federal Register a rule that established J-576 in 14 CFR 75, from the Glasgow, MT, VOR navigation aid (NAVAID) to the Medicine Hat, Alberta, Canada, VOR NAVAID (55 FR 42364, October 19, 1990, FR Doc. 90-24786). This was corrected to J-477 (55 FR 46940, November 8, 1990, FR Doc. 90-26388) and finally, in 1991, part 75 was transferred to subpart M of 14 CFR 71 (56 FR 65638, December 17, 1991, FR Doc. 91-29869). The route, extending through a small portion of airspace over the northwestern United States, was established in response to a request from the Canadian Department of Transportation to support airway changes in the Canadian airspace structure.

    On September 30, 2015, the FAA was notified that Canada was decommissioning the Medicine Hat VOR and removing the portion of J-477 within Canada. Since the basis for which J-477 was originally established no longer exists, the FAA is removing the route.

    Jet routes are published in paragraph 2004 of FAA Order 7400.9Z dated August 6, 2015, and effective September 15, 2015, which is incorporated by reference in 14 CFR 71.1. The jet route listed in this document will be subsequently removed in the Order.

    Availability and Summary of Documents for Incorporation by Reference

    This document amends FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015, and effective September 15, 2015. FAA Order 7400.9Z is publicly available as listed in the ADDRESSES section of this document. FAA Order 7400.9Z lists Class A, B, C, D, and E airspace areas, air traffic service routes, and reporting points.

    The Rule

    The FAA is amending Title 14 of the Code of Federal Regulations (14 CFR) part 71 by removing jet route J-477. This action reflects and accommodates the route changes made in Canadian airspace due to the decommissioning of the Medicine Hat VOR. Therefore, notice and public procedures under 5 U.S.C. 553(b) are unnecessary.

    Regulatory Notices and Analyses

    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 Department of Transportation (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. Since this is a routine matter that only affects air traffic procedures and air navigation, it is certified that this rule, when promulgated, does not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

    Environmental Review

    The FAA has determined that this action qualifies for categorical exclusion under the National Environmental Policy Act in accordance with FAA Order 1050.1F, Environmental Impacts: Policies and Procedures, paragraph 5-6.5a. This airspace action is not expected to cause any potentially significant environmental impacts, and no extraordinary circumstances exists that warrant preparation of an environmental assessment.

    List of Subjects in 14 CFR Part 71

    Airspace, Incorporation by reference, Navigation (air).

    The Amendment

    In consideration of the foregoing, the Federal Aviation Administration amends 14 CFR part 71 as follows:

    PART 71—DESIGNATION OF CLASS A, B, C, D, AND E AIRSPACE AREAS; AIR TRAFFIC SERVICE ROUTES; AND REPORTING POINTS 1. The authority citation for part 71 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g); 40103, 40113, 40120; E.O. 10854, 24 FR 9565, 3 CFR, 1959-1963 Comp., p. 389.

    § 71.1 [Amended]
    2. The incorporation by reference in 14 CFR 71.1 of FAA Order 7400.9Z, Airspace Designations and Reporting Points, dated August 6, 2015 and effective September 15, 2015, is amended as follows: Paragraph 2004 Jet Routes J-477 [Removed]
    Issued in Washington, DC, on December 10, 2015. Gary A. Norek, Manager, Airspace Policy Group.
    [FR Doc. 2015-31992 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 15 CFR Part 922 [Docket No. 150821762-5762-01] RIN 0648-BF13 Boundary Expansion of Thunder Bay National Marine Sanctuary; Correction and Expansion of Fagatele Bay National Marine Sanctuary, Regulatory Changes, and Sanctuary Name Change; Correction AGENCY:

    Office of National Marine Sanctuaries (ONMS), National Ocean Service (NOS), National Oceanic and Atmospheric Administration (NOAA), Department of Commerce (DOC).

    ACTION:

    Final rule; correcting amendment.

    SUMMARY:

    NOAA originally published final rules expanding the boundaries of Thunder Bay National Marine Sanctuary (TBNMS) and National Marine Sanctuary of American Samoa (NMSAS), and specifying new boundary coordinates for those sanctuaries, on September 5, 2014, and July 26, 2012, respectively. Upon adding the new boundaries for both sanctuaries to NOAA nautical charts, NOAA noticed that some of the coordinates did not match the description of the boundaries in the respective final rules. This action corrects those errors in the coordinates, and updates the format of the tables of coordinates for NMSAS. This action also makes corrections to the boundary description for the Swains Island unit of NMSAS and makes a correction to the use of the term “mean high high water”. This correcting amendment will ensure proper mapping and enforcement of TBNMS and NMSAS. This action makes no substantive change to the regulations and does not expand or otherwise alter the size or geographic boundaries of the sanctuaries.

    DATES:

    Effective December 23, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Helene Scalliet, phone: (301) 713-3125 x281, or email: [email protected]

    SUPPLEMENTARY INFORMATION: Background and Need for Correction Thunder Bay National Marine Sanctuary

    On September 5, 2014, NOAA issued final regulations expanding the boundary of Thunder Bay National Marine Sanctuary (TBNMS) (79 FR 52960). At that time, NOAA published incorrect coordinates for Point 7 in the description of the new boundary for TBNMS, which inadvertently placed the point a few hundred feet into Canadian waters. NOAA does not have the authority to include any foreign waters into a national marine sanctuary, and did not intend to do so. This error was discovered when NOAA began to revise the nautical charts corresponding to that area. The new coordinates for Point 7 now correspond with the textual description of the boundary in the preamble and the regulations for TBNMS at 15 CFR 922.190. This change corrects the coordinates for Point 7 in appendix A to subpart R of 15 CFR part 922. This is a technical change and makes no substantive change to the regulations.

    National Marine Sanctuary of American Samoa

    On July 26, 2012, NOAA issued final regulations expanding the boundary of National Marine Sanctuary of American Samoa (NMSAS) (77 FR 43942), with three technical errors in the boundary descriptions. This correcting amendment addresses the three technical errors, and also updates the format of the tables of coordinates for NMSAS, as follows:

    1. In the NMSAS regulations describing the boundary of the sanctuary (15 CFR 922.101), the description of the boundaries of the various units that comprise NMSAS used the term “mean high high water.” However, the correct term should have been “mean higher high water line”. This term is defined by NOAA as “the average of the higher high water height of each tidal day observed over the National Tidal Datum Epoch. For stations with shorter series, comparison of simultaneous observations with a control tide station is made in order to derive the equivalent datum of the National Tidal Datum Epoch,” as described online at http://tidesandcurrents.noaa.gov/datum_options.html. There is no such term as “mean high high water” in the list of definitions of various tidal datums commonly used by NOAA. Accordingly, this rule replaces the phrase used in the regulation, “mean high high water,” with the correct phrase, “mean higher high water.” This change corrects an error and does not make a substantive change to the location or scope of the sanctuary boundary.

    2. For two of the five units that comprise NMSAS, an error was made in the tables of coordinates in the appendix to subpart J. The textual descriptions of the boundary for Zone B of the Aunu'u Unit (§ 922.101(c)(2)) and for the Muliāva Unit (§ 922.101(e)) state that the last point is identical to the first point. However, in the tables of coordinates the longitude for the last points referenced in the textual descriptions—Point 6 in Table 2 and Point 9 in Table 4—are incorrect. As a result, the points in the tables of coordinates in the appendix do not match the textual descriptions in § 922.101(c)(2) and (e). To correct these errors in the tables, NOAA is inserting the correct coordinates. Specifically, NOAA is replacing the figure “170.551 W” with “-170.496” for Point 6 in Table 2, and replacing the figure “169.12” with “-169.012” for Point 9 in Table 4. These are technical corrections and do not make substantive changes to the regulations.

    3. NOAA found that the textual description of the boundary for the Swains Island Unit (15 CFR 922.101(d)) was unclear in describing the two discrete excluded areas in the Swains Island Unit. Therefore, NOAA is correcting that description to ensure that the sanctuary boundary is clearly described. In doing so, NOAA is using a different method of laying out the coordinates, which resulted in a larger number of boundary coordinates in Table 3 in the appendix for subpart J, and a need for a new textual description of the boundaries. The new textual description and new coordinates do not change the location or size of the unit or of the two discrete excluded areas. This is a technical correction, as the area included in the sanctuary remains the same as the one promulgated in the 2012 final rule.

    4. Lastly, NOAA is also revising the format of all of the tables of coordinates in the appendix to subpart J in order to update and conform them to the latest standards for presenting boundary coordinates for national marine sanctuaries. Previously, latitude coordinates were listed followed by “S” for “south”, and longitude coordinates were listed followed by “W” for “west”. Under the new standard, latitude coordinates are preceded by “-” for “south”, and longitude coordinates are preceded by “-” for “west”. These revisions to the format of the tables are consistent with NOAA's current efforts to standardize the format for coordinates across the National Marine Sanctuary System. The revisions would lessen confusion arising from the current use of different standards across the various sites and make the geographic coordinates easier for navigators to write, plot, and read. This is a technical correction, as the shape, size, and location of each of the units of NMSAS described in the tables are not changed by these revisions and remain the same as when they were promulgated in the 2012 final rule.

    Accordingly, NOAA is publishing this correcting amendment without notice and comment. This rule amends: Appendix A to subpart R for TBNMS; Tables 1, 2, 3, 4 and 5 in the appendix to subpart J for NMSAS; and 15 CFR 922.101.

    Classification A. Executive Order 12866: Regulatory Impact

    This final rule has been determined to be not significant for purposes of the meaning of Executive Order 12866.

    B. Administrative Procedure Act

    The Assistant Administrator of NOS finds good cause pursuant to 5 U.S.C. 553(b)(B) to waive the notice and comment requirements of the Administrative Procedure Act because this amendment is technical in nature, having no substantive impact. This rule corrects errors in the description of sanctuary boundaries for two national marine sanctuaries in rules previously submitted to notice and comment review. The substance of the underlying regulations remains unchanged. Therefore, providing notice and opportunity for public comment under the Administrative Procedure Act would serve no useful purpose. The clarification provided by this correction will also enable NOAA to fully implement its statutory responsibilities under the NMSA to protect resources of a national marine sanctuary. It would be contrary to the public interest to delay implementation of the technical corrections because they will reduce any confusion that may exist regarding the exact coordinates. For the reasons above, the Assistant Administrator also finds good cause under 5 U.S.C. 553(d) to waive the 30-day delay in effectiveness and make this rule effective immediately upon publication.

    C. National Environmental Policy Act

    This correcting amendment contains only non-substantive, technical corrections to national marine sanctuary regulations. NOAA previously conducted environmental analyses under NEPA as part of the rulemaking process leading to the regulations being corrected by this action. Since this correcting amendment is technical in nature, and will not have a significant effect on the human environment, NOAA has determined that the requirements for an environmental analysis under NEPA do not apply to this action.

    Dated: December 17, 2015. W. Russell Callender, Acting Assistant Administrator for Ocean Services and Coastal Zone Management. List of Subjects in 15 CFR Part 922

    Administrative practice and procedure, Coastal zone, Education, Environmental protection, Fishing gear, Marine resources, Natural resources, Penalties, Recreation and recreation areas, Reporting and recordkeeping requirements, Research, Wildlife.

    Accordingly, for the reasons set out in the preamble, 15 CFR part 922 is corrected by making the following correcting amendments:

    PART 922—NATIONAL MARINE SANCTUARY PROGRAM REGULATIONS 1. The authority citation for part 922 continues to read as follows: Authority:

    16 U.S.C. 1431 et seq.

    2. In § 922.101: a. Amend paragraphs (a), (b), (c)(1) and (2), and (f) by removing the words “mean high high water line” and adding in their place “mean higher high water line” wherever they appear; and b. Revise paragraph (d).

    The revision reads as follows:

    § 922.101 Boundary.

    (d) Swains Island Unit. The Swains Island Unit boundary is defined by the coordinates in Table 3 and the following textual description. The seaward boundary of the Swains Island Unit approximates the three nautical mile territorial sea boundary from the mean higher high water line (shoreline) of the island. The seaward boundary begins south of the island at Point 1 and continues initially to the west in sequential order clockwise around the island to Point 33. The landward boundary of the Swains Island Unit is the mean higher high water line and begins on the northern shoreline of the island and follows the shoreline counterclockwise initially to the west until it intersects the line segment between Point 34 and 35. From this intersection the boundary continues offshore to the northwest to Point 35 and then to Point 36 and Point 37. From Point 37 the boundary continues east-northeast towards Point 38 until it intersects the shoreline. From this intersection the boundary follows the shoreline southeast around the southernmost part of the island and then to the northeast until it intersects the line segment between Point 39 and Point 40. From this intersection the boundary continues offshore to the southeast to Point 40 and then to the northeast to Point 41. From Point 41 the boundary continues to the northwest towards Point 42 until it intersects the shoreline. From this intersection the boundary follows the shoreline initially to the northeast around the island counterclockwise and then to the northwest back to where it began on the northern shoreline.

    3. Revise appendix to subpart J of part 922 to read as follows: Appendix to Subpart J of Part 922—American Samoa National Marine Sanctuary Boundary Coordinates

    [Coordinates listed in this appendix are unprojected (Geographic) and based on the North American Datum of 1983.]

    (a) Fagatele Bay

    No coordinates are needed in addition to those described in § 922.101(a).

    (b) Fagalua/Fogama'a

    No coordinates are needed in addition to those described in § 922.101(b).

    (c) Aunu'u (Zones A, B)

    The Aunu'u Unit is comprised of two adjacent zones, described in § 922.101(c), for which the point coordinates are provided in following tables 1 and 2.

    Table 1—Coordinates for the Aunu'u Unit, Zone A Point ID Latitude
  • (south)
  • Longitude
  • (west)
  • 1 −14.286 −170.577 2 −14.304 −170.577 3 −14.302 −170.566 4 −14.286 −170.533 5 −14.286 −170.546 6 −14.286 −170.562 7 −14.286 −170.577
    Table 2—Coordinates for the Aunu'u Unit, Zone B Point ID Latitude
  • (south)
  • Longitude
  • (west)
  • 1 −14.270 −170.496 2 −14.286 −170.496 3 −14.286 −170.546 4 −14.280 −170.550 5 −14.270 −170.550 6 −14.270 −170.496
    (d) Swains Island

    The Swains Island Unit boundary is defined by the coordinates provided in Table 3 and the textual description in § 922.101(d).

    Table 3—Coordinates for the Swains Island Unit Point ID Latitude
  • (south)
  • Longitude
  • (west)
  • 1 −11.11457 −171.06870 2 −11.11565 −171.07980 3 −11.11422 −171.09248 4 −11.11005 −171.10445 5 −11.10388 −171.11445 6 −11.09533 −171.12392 7 −11.08375 −171.13272 8 −11.07268 −171.13775 9 −11.06112 −171.14042 10 −11.04880 −171.14067 11 −11.03618 −171.13800 12 −11.02673 −171.13367 13 −11.01853 −171.12773 14 −11.01010 −171.11828 15 −11.00402 −171.10710 16 −11.00083 −171.09728 17 −10.99817 −171.08305 18 −10.99783 −171.06825 19 −10.99983 −171.05732 20 −11.00373 −171.04790 21 −11.00955 −171.03862 22 −11.01752 −171.02985 23 −11.02703 −171.02290 24 −11.03763 −171.01805 25 −11.04812 −171.01558 26 −11.05860 −171.01527 27 −11.06860 −171.01695 28 −11.07957 −171.02133 29 −11.08850 −171.02727 30 −11.09637 −171.03502 31 −11.10637 −171.04840 32 −11.11122 −171.05753 33 −11.11457 −171.06870 34 −11.05188 −171.08921 35 −11.04856 −171.09269 36 −11.05487 −171.09445 37 −11.06024 −171.09283 38 −11.05848 −171.08824 39 −11.06369 −171.07618 40 −11.06741 −171.07364 41 −11.06217 −171.06622 42 −11.05836 −171.06879
    (e) Muliāva

    The Muliāva Unit boundary is defined by the coordinates provided in Table 4 and the textual description in § 922.101(e).

    Table 4—Coordinates for the Muliāva Unit Point ID Latitude
  • (south)
  • Longitude
  • (west)
  • 1 −15.387 −169.012 2 −14.271 −169.012 3 −14.271 −169.121 4 −14.150 −169.121 5 −14.150 −169.012 6 −13.698 −169.012 7 −13.698 −167.283 8 −15.387 −167.283 9 −15.387 −169.012

    (f) Ta'u Unit

    The Ta'u Unit boundary is defined by the coordinates provided in Table 5 and the textual description in § 922.101(f).

    Table 5—Coordinates for the Ta'u Unit Point ID Latitude
  • (south)
  • Longitude
  • (west)
  • 1 −14.24889 −169.503056 2 −14.273056 −169.488056 3 −14.277222 −169.488056 4 −14.261111 −169.429167 5 −14.293889 −169.429167 6 −14.293889 −169.519722 7 −14.24889 −169.519722 8 −14.24889 −169.503056
    Appendix A to Subpart R of Part 922 [Amended]
    4. In appendix A to subpart R of part 922, amend the table by removing the figure “−83.584432” for the longitude of Point 7 and adding in its place “−83.586892”.
    [FR Doc. 2015-32265 Filed 12-22-15; 8:45 am] BILLING CODE 3510-NK-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [TD 9746] RIN 1545-BL44 Payout Requirements for Type III Supporting Organizations That Are Not Functionally Integrated AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Final regulations and removal of temporary regulations.

    SUMMARY:

    This document contains final regulations regarding the distribution requirement for non-functionally integrated Type III supporting organizations. The regulations reflect changes to the law made by the Pension Protection Act of 2006. The regulations will affect non-functionally integrated Type III supporting organizations and their supported organizations.

    DATES:

    Effective Date: These regulations are effective on December 21, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Jonathan Carter at (202) 317-4394 or Mike Repass at (202) 317-6176 (not toll-free numbers).

    SUPPLEMENTARY INFORMATION: Background 1. Overview

    This document contains amendments to the Income Tax Regulations (26 CFR part 1) regarding organizations described in section 509(a)(3) of the Internal Revenue Code (Code). An organization described in section 501(c)(3) is classified as either a private foundation or a public charity. To be classified as a public charity, an organization must be described in section 509(a)(1), (2), or (3). Organizations described in section 509(a)(3) are known as “supporting organizations.” Supporting organizations achieve their public charity status by supporting one or more organizations described in section 509(a)(1) or (2), which in this context are referred to as “supported organizations.”

    To be described in section 509(a)(3), an organization must satisfy (1) an organizational test, (2) an operational test, (3) a relationship test, and (4) a disqualified person control test. The organizational and operational tests require that a supporting organization be organized and at all times thereafter operated exclusively for the benefit of, to perform the functions of, or to carry out the purposes of one or more supported organizations. The relationship test requires a supporting organization to establish one of three types of relationships with one or more supported organizations. Finally, the disqualified person control test requires that a supporting organization not be controlled directly or indirectly by certain disqualified persons.

    Each of the described tests is a necessary requirement for an organization to establish that it qualifies as a supporting organization. These final regulations, however, focus primarily on the relationship test for supporting organizations that are “operated in connection with” their supporting organization(s), otherwise known as “Type III” supporting organizations. Specifically, the final regulations reflect statutory changes enacted by the Pension Protection Act of 2006, Public Law 109-280 (120 Stat. 780 (2006) (PPA)). Section 1241(d)(1) of the PPA directed the Secretary of the Treasury to promulgate regulations under section 509 that establish a new distribution requirement for Type III supporting organizations that are not “functionally integrated” to ensure that a “significant amount” is paid to supported organizations. For this purpose, the term “functionally integrated” means a Type III supporting organization that is not required under Treasury regulations to make payments to supported organizations because the supporting organization engages in activities that relate to performing the functions of, or carrying out the purposes of, its supported organization(s). These final regulations address the amount that a Type III supporting organization that is not functionally integrated (a non-functionally integrated (NFI) Type III supporting organization) must annually distribute to its supported organization(s).

    2. Prior Rulemaking

    On August 2, 2007, the Treasury Department and the IRS published in the Federal Register (72 FR 42335) an advance notice of proposed rulemaking (ANPRM) (REG-155929-06) in response to the PPA. The ANPRM described proposed rules to implement the changes made by the PPA to the Type III supporting organization requirements and solicited comments regarding those proposed rules.

    On September 24, 2009, the Treasury Department and the IRS published in the Federal Register (74 FR 48672) a notice of proposed rulemaking (the 2009 NPRM) (REG-155929-06). The 2009 NPRM contained proposed regulations (the 2009 proposed regulations) setting forth the requirements to qualify as a Type III supporting organization under the PPA.

    On December 28, 2012, the Treasury Department and the IRS published in the Federal Register (77 FR 76382) a Treasury decision (TD 9605) containing final and temporary regulations (the 2012 TD) regarding the requirements to qualify as a Type III supporting organization. Based on the comments received, the 2012 TD made certain changes to the rules proposed in the 2009 NPRM, included in the temporary regulations significant changes to the distribution requirement, and reserved certain topics for further consideration. The 2012 TD was effective and applicable on December 28, 2012. The applicability of the temporary regulations expires on or before December 21, 2015. On December 28, 2012, the Treasury Department and the IRS also published in the Federal Register (77 FR 76426) a notice of proposed rulemaking (the 2012 NPRM) (REG-155929-06) that incorporated the text of the temporary regulations in the 2012 TD by cross-reference. The IRS received five comments on the 2012 NPRM. The comments were considered in developing these final regulations and are available for public inspection at www.regulations.gov or upon request. No public hearing was requested.

    Under the 2012 TD, an NFI Type III supporting organization must annually distribute to or for the use of one or more supported organizations an amount equaling or exceeding the supporting organization's “distributable amount” for the taxable year. See § 1.509(a)-4(i)(5)(ii). The temporary regulations contained in the 2012 TD defined an NFI Type III supporting organization's “distributable amount” as equal to the greater of (1) 85 percent of the supporting organization's adjusted net income or (2) its “minimum asset amount,” in each case for the immediately preceding taxable year. The temporary regulations defined “minimum asset amount” as 3.5 percent of the excess of the aggregate fair market value of the supporting organization's non-exempt-use assets over the acquisition indebtedness with respect to such nonexempt use assets. Additionally, the temporary regulations provided that the determination of the aggregate fair market value of an NFI Type III supporting organization's non-exempt-use assets would be made using the valuation methods generally applicable to private foundations under § 53.4942(a)-2(c). The temporary regulations also provided that, consistent with the private foundation rules, the “non-exempt use” assets of a supporting organization do not include certain investment assets described in § 53.4942(a)-2(c)(2) or assets used (or held for use) to carry out the exempt purposes of the supported organization(s) (as determined by applying the principles described in § 53.4942(a)-2(c)(3)).

    After consideration of all the comments received in response to the 2012 NPRM, this Treasury decision adopts the 2012 NPRM without change, except to (1) conform the provision regarding the valuation of non-exempt-use assets to the section 4942 regulation provision that it cross-references (§ 53.4942(a)-2(c)(2)), and (2) replace references in § 1.509(a)-4 to the temporary regulations with references to these final regulations. Thus, other than the change conforming the provision in the final regulations regarding the valuation of non-exempt-use assets to the provision in the section 4942 regulations, these final regulations are the same as the temporary regulations that have been applicable to Type III supporting organizations since December 28, 2012. Additionally, this Treasury decision removes the temporary regulations.

    The Treasury Department and the IRS intend to publish a notice of proposed rulemaking for Type III supporting organizations in the near future. Among other proposals, the new proposed regulations would make one change to these final regulations. Specifically, the new proposed regulations will propose removal of the provision in these final regulations that reduces the distributable amount by the amount of taxes subtitle A of the Code imposes on a supporting organization during the immediately preceding taxable year. In addition, the new proposed regulations will propose specific rules regarding the requirements for Type III supporting organizations that support governmental supported organizations to be treated as functionally integrated Type III supporting organizations. In addition, the new proposed regulations would provide transition relief beyond the period provided in Notice 2014-4, 2014-2 IRB 274. Supporting organizations may continue to rely on the transitional rule described in Section 3.01 of Notice 2014-4 until the date that the notice of proposed rulemaking prescribing the new proposed regulations under § 1.509(a)-4(i)(4)(iv) is published in the Federal Register. In the notice of proposed rulemaking publishing the new proposed regulations, the Treasury Department and the IRS will request comments on all proposed changes.

    Explanation of Provisions and Summary of Comments

    This section discusses the comments received in response to the 2012 NPRM.

    1. Distributable Amount

    The PPA directed the promulgation of Treasury regulations requiring NFI Type III supporting organizations to make distributions of a percentage of either income or assets to their supported organizations to ensure that a significant amount is paid to those supported organizations. Under the Treasury regulations in effect when PPA was enacted, certain Type III supporting organizations were required to distribute “substantially all” of their income to one or more publicly supported organizations. For this purpose, “substantially all” had the same meaning of 85 percent or more that it had in § 53.4942(b)-1(c) (defining “substantially all” for purposes of the income test for private operating foundations). See Rev. Rul. 76-208, 1976-1 C.B. 161.

    The 2009 NPRM had proposed to replace the income-based distribution requirement with an asset-based distribution requirement of 5 percent of the fair market value of an organization's non-exempt-use assets. In response to comments, the 2012 NPRM instead proposed to keep the historic income-based distribution requirement, and proposed to combine it with a reduced percentage-of-assets distribution requirement. Therefore, the temporary and proposed distributable amount for NFI Type III supporting organizations was the greater of 85 percent of adjusted net income or 3.5 percent of the net fair market value of non-exempt-use assets, in each case as determined for the immediately preceding taxable year.

    One commenter stated that a distribution requirement based on 3.5 percent of assets is sufficient to achieve the goals of Congress and that the distribution requirement based on 85 percent of income should be removed. The commenter stated that a distribution requirement based on income would prevent a supporting organization from smoothing its returns in high-earning years with low-earning years, and could result in organizations shifting investments away from income-producing assets toward appreciating assets to avoid erosion of an endowment even if that investment strategy results in forgoing higher returns. The commenter also said that having two tests increases administrative costs for a supporting organization by requiring it to make two calculations rather than one to determine its distributable amount, thus reducing the amount distributed for true charitable purposes. Another commenter suggested that organizations that were not previously identified as avoiding the prior substantially-all-of-income distribution requirement should be exempted from the asset-based distribution requirement because it potentially harms entities that are invested primarily in non-liquid assets.

    The Treasury Department and the IRS believe that a distribution requirement equal to the greater of 85 percent of adjusted net income or 3.5 percent of the net fair market value of an organization's non-exempt-use assets strikes an appropriate balance. It ensures that NFI Type III supporting organizations distribute significant amounts to their supported organizations, as Congress directed in the PPA. Further, the 85 percent of income test will make it more likely that supported organizations will timely benefit from higher returns received by their supporting organizations. Conversely, in years with lower returns or for organizations that invest in assets that produce largely appreciation rather than income, a 3.5-percent of assets distribution requirement will apply, which is less than the 5-percent of assets distribution requirement that applies to private non-operating foundations. With respect to the suggestion that certain organizations be permitted to comply only with the income-based distribution requirement, the Treasury Department and the IRS believe it would be inequitable and administratively difficult to apply one requirement to some NFI Type III supporting organizations but another requirement to others.

    Therefore, the final regulations adopt the annual distributable amount rule of the 2012 NPRM without changes.

    2. Income From Distributions From Subsidiary

    The 2012 NPRM provided that, for purposes of the calculation of the annual distributable amount, a supporting organization's adjusted net income would be determined using the principles of section 4942(f) and § 53.4942(a)-2(d). These provisions apply the principles of subtitle A of the Code.

    One commenter requested that the definition of adjusted net income exclude dividend income resulting from a distribution of long-term capital gain property to a supporting organization by a corporate subsidiary. The commenter noted that without this exclusion, the receipt of distributed property could result in a much higher distribution requirement for that one year, but without producing any liquid assets to satisfy the higher distribution requirement.

    The 2012 NPRM provided that adjusted net income be determined by applying the principles that apply in calculating the adjusted net income of private operating foundations under sections 4942(d) and 4942(j)(3) and are generally based on long-standing principles under subtitle A of the Code. The Treasury Department and the IRS believe that the rules for calculating adjusted net income should be applied consistently for all taxpayers and do not believe that there is a justification for the rules to be altered solely for supporting organizations. Therefore, the final regulations do not adopt this comment.

    3. Real Property Valuations

    The 2012 NPRM provided that for purposes of determining the distributable amount for a taxable year, non-exempt-use assets would be valued using the principles generally applicable to private foundations under § 53.4942(a)-2(c). One commenter suggested allowing the use of state property tax valuations for purposes of valuing real property under § 53.4942(a)-2(c).

    Section 53.4942(a)-2(c) applies the principles of regulations under section 2031, which generally apply for estate tax purposes, to the valuation of real property. Section 20.2031-1(b) provides that the value at which property is assessed for local tax purposes may be considered only if that value represents the fair market value as of the valuation date. Section 20.2031-3 further provides that if real property is leased or otherwise used in a business, special valuation rules may apply. The Treasury Department and the IRS continue to believe that the same valuation principles that apply to private foundations should apply to NFI Type III supporting organizations. Therefore, the final regulations do not adopt this comment.

    Effective Date

    These regulations are effective on December 21, 2015.

    Statement of Availability of IRS Documents

    The IRS Notice 2014-4 cited in this preamble is published in the Internal Revenue Bulletin and is available from the Superintendent of Documents, U.S. Government Printing Office, Washington, DC 20402, or by visiting the IRS Web site at http://www.irs.gov.

    Special Analyses

    Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact 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 regulations, and because these regulations do not impose a collection of information on small entities, a Regulatory Flexibility Analysis under the Regulatory Flexibility Act (5 U.S.C. chapter 6) is not required. Pursuant to section 7805(f) of the Code, the temporary and proposed regulations preceding these final regulations were submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on their impact on small business, and no comments were received.

    Drafting Information

    The principal authors of these regulations are Mike Repass and Jonathan Carter, Office of Associate Chief Counsel (Tax-Exempt and Government Entities). However, other personnel from the Treasury Department and the IRS participated in their development.

    List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

    Adoption of Amendments to the Regulations

    Accordingly, 26 CFR part 1 is amended as follows:

    PART 1—INCOME TAXES Paragraph 1. The authority citation for part 1 continues to read in part as follows: Authority:

    26 U.S.C. 7805 * * *

    Par. 2. Section 1.509(a)-4 is amended by: 1. Amending the second sentence of paragraph (i)(4)(ii)(C) to remove the language “§ 1.509(a)-4T(i)(8)(ii)” and adding “paragraph (i)(8)(ii) of this section” in its place. 2. Amending paragraph (i)(5)(ii)(A) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 3. Revising paragraph (i)(5)(ii)(B). 4. Revising paragraph (i)(5)(ii)(C). 5. Amending the last sentence of paragraph (i)(5)(ii)(D) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 6. Amending the first sentence of Example 1 of paragraph (i)(5)(iii)(D) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 7. Amending the first sentence of Example 2 of paragraph (i)(5)(iii)(D) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 8. Amending the third sentence of Example 3 of paragraph (i)(5)(iii)(D) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 9. Amending the fourth sentence of Example 4 of paragraph (i)(5)(iii)(D) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 10. Amending paragraph (i)(6)(iv) to remove the language “§ 1.509(a)-4T(i)(8)(ii)” and adding “paragraph (i)(8)(ii) of this section” in its place. 11. Amending paragraph (i)(7)(ii) to remove the language “§ 1.509(a)-4T(i)(5)(ii)(B)” and adding “paragraph (i)(5)(ii)(B) of this section” in its place. 12. Revising paragraph (i)(8). 13. Revising paragraph (l).

    The revisions and additions read as follows:

    § 1.509(a)-4 Supporting organizations.

    (i) * * *

    (5) * * *

    (ii) * * *

    (B) Distributable amount. Except as provided in paragraphs (i)(5)(ii)(D) and (E) of this section, the distributable amount for a taxable year is an amount equal to the greater of 85 percent of the supporting organization's adjusted net income (as determined by applying the principles of section 4942(f) and § 53.4942(a)-2(d) of this chapter) for the taxable year immediately preceding the taxable year of the required distribution (immediately preceding taxable year) or its minimum asset amount (as defined in paragraph (i)(5)(ii)(C) of this section) for the immediately preceding taxable year, reduced by the amount of taxes imposed on the supporting organization under subtitle A of the Internal Revenue Code during the immediately preceding taxable year.

    (C) Minimum asset amount. For purposes of this paragraph (i)(5), a supporting organization's minimum asset amount for the immediately preceding taxable year is 3.5 percent of the excess of the aggregate fair market value of all of the supporting organization's non-exempt-use assets (determined under paragraph (i)(8) of this section) in that immediately preceding taxable year over the acquisition indebtedness with respect to such non-exempt-use assets (determined under section 514(c)(1) without regard to the taxable year in which the indebtedness was incurred), increased by—

    (1) Amounts received or accrued during the immediately preceding taxable year as repayments of amounts which were taken into account by the organization to meet the distribution requirement imposed in this paragraph (i)(5)(ii) for any taxable year;

    (2) Amounts received or accrued during the immediately preceding taxable year from the sale or other disposition of property to the extent that the acquisition of such property was taken into account by the organization to meet the distribution requirement imposed in this paragraph (i)(5)(ii) for any taxable year; and

    (3) Any amount set aside under paragraph (i)(6)(v) of this section to the extent it is determined during the immediately preceding taxable year that such amount is not necessary for the purposes for which it was set aside and such amount was taken into account by the organization to meet the distribution requirement imposed in this paragraph (i)(5)(ii) for any taxable year.

    (8) Valuation of non-exempt-use assets. For purposes of determining its distributable amount for a taxable year, a supporting organization determines its minimum asset amount, as defined in paragraph (i)(5)(ii)(C) of this section, by determining the aggregate fair market value of all of its non-exempt-use assets in the immediately preceding taxable year. For these purposes, the determination of the aggregate fair market value of all non-exempt-use assets shall be made using the valuation methods described in § 53.4942(a)-2(c) of this chapter. The aggregate fair market value of the supporting organization's non-exempt-use assets shall not be reduced by any amount that is set aside under paragraph (i)(6)(v) of this section. For these purposes, the non-exempt use assets of the supporting organization are all assets of the supporting organization other than—

    (i) Assets described in § 53.4942(a)-2(c)(2)(i) through (iv) of this chapter (with the term “supporting organization” being substituted for “foundation” or “private foundation” and the date “August 17, 2006” being substituted for “December 31, 1969”); and

    (ii) Exempt-use assets, which are assets that are used (or held for use) directly in carrying out the exempt purposes of the supporting organization's supported organization(s) (determined by applying the principles described in § 53.4942(a)-2(c)(3) of this chapter) by either—

    (A) The supporting organization; or

    (B) One or more supported organizations, but only if the supporting organization makes the asset available to the supported organization(s) at no cost (or nominal rent) to the supported organization(s).

    (l) Effective/applicability dates. Paragraphs (a)(6), (f)(5), (i)(1) through (i)(4)(ii)(B), (i)(4)(ii)(D) through (i)(5)(i), (i)(5)(ii)(E) through (i)(5)(iii)(C), (i)(6)(i) through (iii), (i)(6)(v) through (i)(7)(i), and (i)(9) through (11) of this section are applicable on December 28, 2012. Paragraphs (i)(4)(ii)(C), (i)(5)(ii)(A) through (i)(5)(ii)(D), (i)(5)(iii)(D), (i)(6)(iv), (i)(7)(ii) and (i)(8) of this section are applicable on December 21, 2015. See paragraphs (i)(5)(ii)(B), (i)(5)(ii)(C), and (i)(8) of § 1.509(a)-4T contained in 26 CFR part 1, revised as of April 1, 2015, for certain rules regarding non-functionally integrated Type III supporting organizations effective before December 21, 2015.

    § 1.509(a)-4T [Removed].
    Par. 3. Section 1.509(a)-4T is removed.
    John Dalrymple, Deputy Commissioner for Services and Enforcement. Approved: December 14, 2015. Mark J. Mazur, Assistant Secretary of the Treasury (Tax Policy).
    [FR Doc. 2015-32146 Filed 12-21-15; 4:15 pm] BILLING CODE 4830-01-P
    PENSION BENEFIT GUARANTY CORPORATION 29 CFR Part 4233 RIN 1212-AB29 Partitions of Eligible Multiemployer Plans AGENCY:

    Pension Benefit Guaranty Corporation.

    ACTION:

    Final rule.

    SUMMARY:

    On June 19, 2015, PBGC published an interim final rule to implement the application process and notice requirements for partitions of eligible multiemployer plans under title IV of the Employee Retirement Income Security Act of 1974 (ERISA), as amended by the Multiemployer Pension Reform Act of 2014 (MPRA). PBGC is making minor changes to the interim final regulation in response to public comments received on the interim final rule.

    DATES:

    Effective January 22, 2016. See Applicability in SUPPLEMENTARY INFORMATION.

    FOR FURTHER INFORMATION CONTACT:

    Joseph J. Shelton ([email protected]), Assistant General Counsel, Office of the General Counsel, Pension Benefit Guaranty Corporation, 1200 K Street NW., Washington, DC 20005-4026; 202-326-4400, ext. 6559.

    SUPPLEMENTARY INFORMATION:

    Executive Summary Purpose of the Regulatory Action

    This final rule makes minor changes to part 4233 of PBGC's regulations, which was added by PBGC's interim final rule on Partitions of Eligible Multiemployer Plans (80 FR 35220, June 19, 2015). Many of the changes respond to public comments.1

    1 The interim final rule and comments available at http://www.pbgc.gov/prac/pg/other/guidance/final-rules.html.

    PBGC's legal authority for this action comes from section 4002(b)(3) of ERISA, which authorizes PBGC to issue regulations to carry out the purposes of title IV of ERISA, and section 4233 of ERISA, as amended by MPRA, which requires that the partition process be conducted in accordance with regulations prescribed by PBGC.

    Major Provisions of the Regulatory Action

    Part 4233 prescribes the statutory conditions and the information and notice requirements that must be met before PBGC may partition an eligible multiemployer plan under section 4233 of ERISA. This final rule makes minor revisions to part 4233 with respect to information requirements, the time period for PBGC's initial review of an application for partition, and the coordinated application process for partition and benefit suspension.

    Background

    In December 2014, Congress enacted and the President signed the Consolidated and Further Continuing Appropriations Act, 2015, Public Law 113-235 (128 Stat. 2130 (2014)), of which MPRA is a part. MPRA contains a number of statutory reforms intended to help financially troubled multiemployer plans and to improve the financial condition of PBGC's multiemployer insurance program. In addition to increasing PBGC premiums, sections 121 and 122 of MPRA provide PBGC with new statutory authority to assist financially troubled multiemployer plans under certain conditions if doing so would reduce potential future costs to PBGC and PBGC can certify that its ability to meet existing financial assistance to other plans will not be impaired.2

    2 This final rule implements section 122 of MPRA. PBGC expects to publish a proposed rule on facilitated mergers involving critical and declining status plans under section 121 of MPRA in a separate rulemaking.

    Section 122 of MPRA replaced the existing partition rules with a new framework of rules. As amended by MPRA, section 4233(a)(1) of ERISA provides that, upon application by the plan sponsor of an eligible multiemployer plan, PBGC may order a partition of the plan in accordance with that section. As under prior law, PBGC's decision to order a partition is discretionary.3 Unlike prior law, however, MPRA requires PBGC to make a determination on a partition application not later than 270 days after the date such application was filed (or, if later, the date such application was completed), in accordance with regulations promulgated by PBGC.

    3 For additional background on the statutory rules governing multiemployer plans under title IV of ERISA, including the statutory rule for partitions under section 4233 of ERISA before MPRA's changes, see the preamble to the interim final rule.

    In addition, section 4233(a)(2) states that not later than 30 days after submitting an application for partition, the plan sponsor shall notify the participants and beneficiaries of such application in the form and manner prescribed by regulations issued by PBGC.

    Eligibility Criteria for Partition

    Section 4233(b) of ERISA contains five statutory conditions that must be satisfied before PBGC may order a partition:

    Critical and declining status. In accordance with section 4233(b)(1), the plan must be in critical and declining status as defined in section 305(b)(6) of ERISA.4

    4 Section 305(b)(6) provides that a plan is in critical and declining status if (1) it satisfies the criteria for critical status under section 305(b)(2), and (2) it is projected to become insolvent within the meaning of section 4245 during the current plan year or any of the 14 succeeding plan years (or 19 succeeding plan years if the plan has a ratio of inactive participants to active participants that exceeds two to one, or if the funded percentage of the plan is less than 80 percent). Treasury has interpretative jurisdiction over the subject matter in section 305 of ERISA.

    PBGC determination on reasonable measures. Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Participant and Plan Sponsor Advocate (Advocate), that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable.

    Long-term loss and plan solvency. In accordance with section 4233(b)(3) of ERISA, PBGC must reasonably expect that—

    • Partition will reduce PBGC's expected long-term loss with respect to the plan; and

    • Partition is necessary for the plan to remain solvent.

    Certification to Congress. In accordance with section 4233(b)(4) of ERISA, PBGC must certify to Congress that its ability to meet existing financial assistance obligations to other plans (including any liabilities associated with multiemployer plans that are insolvent or that are projected to become insolvent within 10 years) will not be impaired by the partition.

    Source of funding. In accordance with section 4233(b)(5) of ERISA, the cost to PBGC arising from the partition must be paid exclusively from the PBGC fund for basic benefits guaranteed for multiemployer plans.

    PBGC Partition Order

    Upon PBGC's approval of an application for partition, section 4233(c) of ERISA provides that PBGC's partition order shall provide for a transfer to the plan created by the partition order (the successor plan) the minimum amount of the original plan's liabilities necessary for the original plan to remain solvent.

    Sections 4233(d)(1) and (2) of ERISA describe the nature of the successor plan, and assign responsibility for its management. Specifically, section 4233(d)(1) provides that the plan created by the partition order is a successor plan to which section 4022A applies. Section 4233(d)(2) provides that the plan sponsor of the original plan and the administrator of such plan shall be the plan sponsor and administrator, respectively, of the successor plan.

    Partition Withdrawal Liability Rule

    Section 4233(d)(3) of ERISA prescribes a new withdrawal liability rule that applies for 10 years following the date of the partition order. Under the new rule, if an employer withdraws from the original plan within 10 years following the date of the partition, withdrawal liability is computed under section 4201 with respect to the original plan and the successor plan. If, however, the withdrawal occurs more than 10 years after the date of the partition order, withdrawal liability is computed under section 4201 only with respect to the original plan (and not with respect to the successor plan). In either case, withdrawal liability is payable to the original plan (and not the successor plan).

    Continuing Payment Obligation

    Section 4233(e)(1) imposes an ongoing benefit payment obligation on the original plan with respect to each participant or beneficiary of the original plan whose guarantee amount was transferred to the successor plan pursuant to a partition order. With respect to these individuals, the original plan must pay a monthly benefit for each month in which such benefit is in pay status following the effective date of the partition in an amount equal to the excess of—

    • The monthly benefit that would be paid to such participant or beneficiary for such month under the terms of the plan (taking into account benefit suspensions under section 305(e)(9) and any plan amendments following the effective date of such partition) if the partition had not occurred, over

    • The monthly benefit for such participant or beneficiary that is guaranteed under section 4022A.5

    5 Because the benefit payment obligation under section 4233(e)(1) is based, in part, on the monthly benefit that is guaranteed under section 4022A, the amount of this benefit payment obligation is subject to change under section 4022A(f)(2)(C).

    Benefit Improvement Premium Payments to PBGC

    Section 4233(e)(2) of ERISA provides that in any case in which a plan provides a benefit improvement, as defined in section 305(e)(9)(E)(vi), that takes effect after the effective date of the partition, the original plan shall pay to PBGC for each year during the 10-year period following the partition effective date, an annual amount equal to the lesser of—

    • The total value of the increase in benefit payments for such [plan] year that is attributable to the benefit improvement, or

    • The total benefit payments from the successor plan for such [plan] year.

    This payment must be made at the time of, and in addition to, any other premium imposed by PBGC under title IV of ERISA.6

    6 Section 305(e)(9)(E)(vi) defines the term “benefit improvement” as a resumption of suspended benefits, an increase in benefits, an increase at the rate at which benefits accrue, or an increase in the rate at which benefits become nonforfeitable under the plan. As previously noted, Treasury has interpretative jurisdiction over the subject matter in section 305 of ERISA.

    Special Premium Rule

    Section 4233(e)(3) of ERISA imposes a special premium rule on the original plan, which requires it to pay the premiums for participants whose guarantee amounts were transferred to the successor plan for each year during the 10-year period following the partition effective date.

    Notice of Partition Order

    In addition to the initial notice requirement under section 4233(a)(2) of ERISA, which applies to the plan sponsor, section 4233(f) imposes a notice requirement on PBGC. It states that not later than 14 days after the issuance of a partition order, PBGC must provide notice of the order to the Committee on Education and the Workforce of the House of Representatives; the Committee on Ways and Means of the House of Representatives; the Committee on Finance of the Senate; the Committee on Health, Education, Labor, and Pensions of the Senate; and any affected participants or beneficiaries.

    Interim Final Rule and Regulatory Changes

    As noted above, on June 19, 2015, PBGC published an interim final rule on Partitions of Eligible Multiemployer Plans. PBGC had earlier published a Request for Information (RFI) to solicit information on issues PBGC should consider in the rulemaking; PBGC received 20 comments in response to the RFI.7

    7 80 FR 8712, Feb. 18, 2015. The RFI and comments are available at http://www.pbgc.gov/prac/pg/other/guidance/multiemployer-notices.html.

    The regulatory provisions in the interim final rule were effective upon publication. PBGC provided a 60-day comment period and received nine comments, four from organizations (Pension Rights Center, U.S. Chamber of Commerce, National Coordinating Committee for Multiemployer Plans, and AARP), and five from individuals. The comments, PBGC's responses to the comments, and a summary of changes made to the interim final rule are discussed below. For a summary of the rules that remain unchanged, see the preamble to the interim final rule.

    Discussion of Public Comments Application Requirements

    Section 4233.4 of the interim final rule provides guidance on the information needed to determine whether an application for partition is complete, and states that an application will not be considered complete unless the application includes the information specified in §§ 4233.5 (plan information), 4233.6 (partition information), 4233.7 (actuarial and financial information), 4233.8 (participant census data), 4233.9 (financial assistance information).

    One commenter stated that the rule on completeness in § 4233.4 is “inappropriately strict,” and that “[t]here may be instances where not every document listed is required for PBGC to make a determination.” The commenter noted, as an example, the requirement under § 4233.5(g) for the most recent IRS determination letter for the plan. The commenter expressed the view that determination letters may become increasingly difficult to obtain due to recently announced changes to the IRS determination letter program for qualified plans,8 and that “the lack of a determination letter would undo the entire application even though it has little direct impact on the partition itself.” The same commenter suggested that rather than stating that an application for partition will not be considered complete if the information required under §§ 4233.5-4233.9 is not included with the application, § 4233.4(a) should instead provide that an application with missing information may require additional time for PBGC to determine if the application is complete.

    8See IRS Announcement 2015-19, available at https://www.irs.gov/pub/irs-drop/a-15-19.pdf.

    PBGC believes that the regulation's information requirements are reasonable, necessary, and, in most instances, based on information that plans are already required to prepare and retain under ERISA and the Internal Revenue Code (“Code”). Turning to the commenter's concern about IRS determination letters, PBGC notes that to be covered under title IV of ERISA, a plan must either have received a favorable determination letter from the IRS, or have otherwise met the tax-qualification requirements under the Code. Because the requirement in § 4233.5(g) is limited to the plan's most recent IRS determination letter (regardless of the date), IRS Announcement 2015-19 should not impact this requirement.

    In the case of a multiemployer plan that had never in its history obtained a determination letter (which is rare in PBGC's experience) but, in practice, operated in accordance with the qualification rules under the Code, the failure to submit a determination letter under § 4233.5(g) would not, as the commenter suggested, “undo the entire partition application.” Under that scenario, the inability to submit the plan's most recent determination letter is not due to an oversight or a refusal to provide the information. Rather, the document simply does not exist. In that case, nothing in the regulation would constrain PBGC from exercising its discretion to determine that the application was nevertheless complete.

    PBGC is amending § 4233.4(a) to clarify this point by substituting the word “may” in place of “will.” Therefore, as revised, § 4233.4(a) will provide that if any of the information required under part 4233 is not included with an application for partition, “the application may not be considered complete.”

    Plan Information

    Section 4233.5 of the regulation identifies plan-related information items that must be submitted for an application to be complete, including a requirement under § 4233.5(i) to provide a current listing of contributing employers to the plan and the approximate number of participants for whom each employer is required to contribute.

    One commenter suggested that in addition to the information required under § 4233.5(i), plan sponsors should be required to submit information on the specific dollar amount contributed by each employer, whether the employer is current or delinquent in making its contributions to the plan, and if delinquent, the specific dollar amount of the delinquency. Finally, the commenter suggested that PBGC should “look back at least ten years, especially given that the economic crisis from 2008 through 2013 may not be an accurate measure, and sufficient pre- and post-crisis data is needed to fairly evaluate a plan and its funding capabilities.”

    For a number of reasons, PBGC did not adopt the commenter's suggestions. First, based on its partition experience under prior law, PBGC decided that § 4233.5(i) already provides PBGC with all of the employer contribution information it needs to make a determination on an application for partition.

    Second, if, based on the facts of a particular case, PBGC determines that additional information relating to a plan's contribution base is needed to make a determination on partition, PBGC retains the discretion to request such information under § 4233.4(b).9

    9 Section 4233.4(b) of the regulation provides that PBGC may require a plan sponsor to submit additional information necessary to make a determination on an application under this part, and any information PBGC may need to calculate or verify the amount of financial assistance necessary for partition.

    Third, in addition to the employer contribution information already required under the interim final rule, § 4233.5(h) requires a copy of the most recent Form 5500 and schedules for the plan. Schedule R of the Form 5500 requires, among other things, information on any employer that contributed more than five percent of the plan's total contributions for the plan year. In addition, § 4233.7(a)(1) requires a plan sponsor to submit the most recent actuarial report for the plan and those for the two preceding plan years. These actuarial reports generally include information on actual contributions received for the plan year, and expected contributions for the following plan year.

    In sum, PBGC has determined that the existing information requirements under the regulation provide PBGC with the information it needs relating to employer contributions to make a determination on an application for partition. Furthermore, as previously stated, if additional information relating to employer contributions is needed to make a determination in a particular case, PBGC retains the discretion to request that information under § 4233.4(b). Accordingly, for the reasons stated above, PBGC did not make any changes to § 4233.5(i).

    PBGC Determination on Reasonable Measures

    Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable.

    Consistent with this requirement, § 4233.6(e) requires a detailed description of all measures the plan sponsor has taken (or is taking) to avoid insolvency, as well as those measures the plan sponsor considered but did not take. The regulation also requires the plan sponsor to identify the factor(s) it considered in making those determinations, and to submit all relevant documentation relating to the determinations.

    One commenter expressed concern that the interim final rule did not require “objective factual evidence” and predicted that PBGC (and plan participants) would be “treated to self-serving platitudes.” The commenter suggested that plan sponsors should be required to “document the efforts they have taken, and should likewise document why they have not taken other steps . . . to remedy the plan's financial situation.”

    As a preliminary matter, PBGC agrees that unsupported assertions concerning the measures a plan sponsor has taken (or is taking) to avoid insolvency would not provide a sufficient basis for PBGC, in consultation with the Advocate, to make a determination under section 4233(b)(2) of ERISA. PBGC disagrees, however, that unsupported assertions would satisfy the requirements of § 4233.6(e).

    In addition to requiring a detailed description of the measures taken to avoid insolvency, including the measures the plan sponsor considered but did not take, § 4233.6(e) requires the plan sponsor to submit “all relevant documentation” relating to those determinations. Furthermore, to the extent the information and documentation provided under § 4233.6(e) is not sufficient to reach a determination, PBGC has the authority under § 4233.4(b) to require a plan sponsor to submit any additional information necessary to make a determination under section 4233 of ERISA.

    Finally, it is also important to note that § 4233.3(b) requires that an application for partition must be signed and dated by an authorized trustee and must include a statement under penalties of perjury that the “application contains all the relevant facts relating to the application, and such facts are true, correct, and complete.”

    Based on the foregoing, PBGC believes that the existing information and certification requirements under the regulation address the concerns raised by the commenter relating to unsupported assertions, and that no additional changes are required.

    Actuarial and Financial Information

    Section 4233.7 of the interim final rule identifies the actuarial and financial information requirements for an application for partition. Although there were no comments from the public on § 4233.7, PBGC is amending the regulation to clarify that the benefit payment information required under §§ 4233.7(a)(3)(iii), (a)(5)(iii), and (a)(8) must be organized by participant status (e.g., active, retiree, terminated vested, beneficiary). PBGC determined that organizing benefit payment information in this manner is necessary to determine the aggregate amount of benefits subject to transfer under section 4233(c) of ERISA. PBGC is also amending the information requirements under § 4233.7 to require long-term projections of pre-partition benefit disbursements at the PBGC-guarantee level and, if applicable, maximum benefit suspensions under section 305(e)(9) of ERISA.

    Participant Census Data

    Section 4233.8 of the interim final rule identifies the types of participant census data to include with an application for partition. PBGC has determined that information about gender is needed to accurately determine the present value of plan liabilities and is, therefore, amending the regulation to clarify that gender must be included in the census data elements under § 4233.8.

    Initial Review Process

    Section 4233.10 of the interim final rule prescribes an initial review process for the purpose of determining whether an application is complete under section 4233(a)(1) of ERISA.10 PBGC received two comments expressing concern that the interim final rule does not impose a time limit on PBGC for making an initial determination on whether an application is complete. One commenter stated that while it understood PBGC may need time to ensure it has the necessary information to make a determination, it was concerned that the 270-day review period could be unreasonably extended if there were no time limit for making a determination on completeness. Expressing a similar view, another commenter stated that the regulation “provides no time frame for this initial determination which could go on indefinitely.” Both commenters suggested that PBGC include a time limit on its completeness review, with one commenter suggesting that PBGC adopt the two business day limit that applies to Treasury for benefit suspensions under Treas. Temp. Reg. § 1.432(e)(9)-1T(g)(1)(ii).

    10 Section 4233(a)(1) of ERISA provides, in relevant part, that PBGC shall make a determination regarding an application for partition not later than 270 days after the date such application was filed (or, if later, the date such application was completed) in accordance with regulations promulgated by PBGC.

    PBGC notes that although the partition rule under section 4233 of ERISA and the suspension of benefits rule under section 305(e)(9) work in tandem, there are important differences. One difference relates to the commencement of the review period. Unlike the suspension of benefit rule, which requires Treasury, in consultation with PBGC and the Department of Labor, to approve or deny an application for suspension of benefits within 225 days after the submission of such application, section 4233(a)(1) requires PBGC to issue a determination on partition not later than 270 days after the date such application was filed (or, if later, the date such application was completed). Thus, section 4233 provides that the 270-day review period does not begin on the date of submission, but rather on the date the application for partition was filed or, if later, the date such application was completed.

    Another important difference is that under section 305(e)(9), notice of the proposed suspension must be given concurrently with the submission of an application for suspension of benefits.11 In contrast, under section 4233(a)(2) of ERISA, the plan sponsor must provide notice not later than 30 days after submitting an application for partition.12

    11 The temporary Treasury regulation provides that such notice must be given no earlier than four business days before the date on which an application is submitted, and no later than two business days after Treasury notifies the plan sponsor that it has submitted a complete application. Temp. Treas. Reg. § 1.432(e)(9)-1T(f)(3)(i)(A).

    12 The interim final rule states that the date of PBGC's written notice of completeness under § 4233.10 will mark the beginning of PBGC's 270-day review period under section 4233(a)(1), and the plan sponsor's 30-day notice period under section 4233(a)(2) of ERISA.

    Given these differences, PBGC is not adopting the two-business-day review period under Treas. Temp. Reg. § 1.432(e)(9)-1T(g)(1)(ii). However, having considered the concerns raised by commenters relating to the lack of a specified time limit on PBGC's initial review process, PBGC believes that a 14 calendar day review period provides sufficient time to complete the initial review of an application under § 4233.10. Importantly, this addition will provide plan sponsors, participants, and beneficiaries with more certainty on when the 270-day statutory review period under section 4233(a)(1) of ERISA, and the 30-day notice period under section 4233(a)(2) will begin.13

    13 As noted in the preamble to the interim final rule, PBGC's determination on whether an application is complete under § 4233.10(c) will mark the beginning of the 270-day statutory review period under section 4233(a)(1) and the 30-day notice period under 4233(a)(2).

    Notice Requirements

    Section 4233.11 of the interim final rule describes the notice requirements for an application for partition, and provides optional model notices. Section 4233.11(d) of the regulation states that the purpose of the model notices is to assist plan sponsors in discharging their notice obligations under section 4233(a)(2) of ERISA. The regulation does not require use of the model notices, but states that a properly completed model notice will be deemed to satisfy the notice requirements under the regulation.

    One commenter expressed concern that plan sponsors would be free to alter, amend, or even discard the text in the model notices in favor of their own, which, in the commenter's view, would provide “too much latitude to plan trustees and professionals who may well have steered the plan into `critical and declining' status in the first place.” The commenter suggested that PBGC require a plan sponsor to “highlight” and explain any deviations from the model notice text. The same commenter also suggested that deviations from the model notices should require advance approval from PBGC and the Advocate.

    PBGC considered the commenter's suggestions but did not incorporate them into the final regulation. In PBGC's view, requiring plan sponsors to highlight and explain any deviations from the model notice (which is not required under section 4233(a)(2)) 14 would be inconsistent with the purpose of the notice—to assist plan sponsors in meeting their notice obligations under section 4233(a)(2) of ERISA. Furthermore, PBGC believes that § 4233.6(g) addresses the commenter's concern about incorrect or misleading notices by requiring the plan sponsor to include a copy of the draft notice at the same time it submits its application for partition to PBGC. Submission of a notice that fails to satisfy the content requirements set forth in § 4233.11(c) may result in a determination that the application is incomplete under § 4233.4(a). For these reasons, PBGC did not make any changes to § 4233.11.

    14 In contrast, section 305(e)(9)(F)(v) requires that Treasury “establish a model notice that a plan sponsor may use to meet the [form and notice] requirements.” Importantly, even where Congress required a model notice, it did not require use of that notice by plan sponsors.

    Conditional Determination Process

    Section 4233.13 of the interim final rule describes a conditional approval process for plan sponsors who file applications for partition and suspension of benefits. Under the special rule, PBGC may, in its discretion, approve an application for partition conditioned on Treasury's final authorization to suspend benefits under section 305(e)(9) of ERISA. As noted in § 4233.12(c), however, a partition will only become effective upon satisfaction of the required conditions and the issuance of a partition order.

    PBGC received one comment on the conditional approval process. The commenter stated that it was not clear if a conditional approval under § 4233.12(c) would satisfy the requirement in Temp. Treas. Reg. § 1.432(e)(9)-1T(d)(7), which states that in order to satisfy the requirement that a suspension of benefits not take effect prior to the effective date of a partition, the partition order must be provided to the Secretary of Treasury by the last day of the 225-day period described in Temp. Treas. Reg. § 1.432(e)(9)-1T(g)(3)(i). The commenter suggested that PBGC and Treasury clarify this point in the agencies' respective regulations.

    Having consulted with Treasury on this comment, PBGC agrees that additional clarification relating to the effect of a conditional approval of partition under the agencies' regulations is needed. First, with respect to part 4233, PBGC is amending §§ 4233.6 and 4233.13 to clarify that in any case in which an application for partition is made in combination with a suspension of benefits, the effective date of the proposed partition must satisfy the requirements of ERISA section 305(e)(9)(D)(v).15 Second, with respect to the effect of a conditional approval of a partition under the Treasury rule, PBGC has been advised by Treasury that PBGC's issuance of a conditional approval within the 225-day period under section 305(e)(9)(G) will be deemed to satisfy the requirement set forth in Temp. Treas. Reg. § 1.432(e)(9)-1T(d)(7).

    15 Section 305(e)(9)(D)(v) states, in relevant part, that “[i]n any case in which a suspension of benefits with respect to a plan is made in combination with a partition of the plan under section 4233, the suspension of benefits may not take effect prior to the effective date of such partition.” Treasury has interpretative jurisdiction over the subject matter in section 305 of ERISA.

    Nature and Operation of Successor Plan

    PBGC received one comment on § 4233.15, which describes the nature and operation of the successor plan created by the partition order. The commenter asked whether certain legal requirements under title I and the Code would apply to a successor plan in a partition.

    While a discussion of the legal requirements under title I and the Code is not within PBGC's jurisdiction and, therefore, beyond the scope of this rulemaking, all title I and Code requirements that would otherwise apply to a terminated, insolvent multiemployer plan apply to a successor plan in a partition absent a statutory, regulatory, or administrative exemption.

    Continuing Jurisdiction

    Section 4233.17 of the interim final rule describes PBGC's continuing jurisdiction over the original plan and the successor plan. In the preamble to the interim final rule, PBGC explained that although commenters on the RFI expressed differing views on the need for additional post-partition oversight, PBGC determined that additional oversight is necessary to ensure compliance with the post-partition requirements under MPRA and proper stewardship of PBGC financial assistance.

    PBGC received one comment that did not specifically refer to § 4233.17 but did relate to post-partition oversight. The commenter suggested that when a plan is insolvent, regulating and assessing administrative costs (including salaries and professional fees) should be the first priority, and that in some cases it may be appropriate to appoint an independent legal representative and trustee to administer the plan. Finally, the commenter suggested that the trustees, employees, and service providers of an insolvent plan should be required to disclose sources of income and conflicts of interest.

    The commenter did not suggest any changes to § 4233.17, and PBGC determined that none are necessary. Nevertheless, in response to the comment, PBGC notes that it will retain continuing jurisdiction over the original plan and successor plan in a partition to ensure compliance with the post-partition requirements under MPRA and proper stewardship of PBGC financial assistance.

    In addition, although section 4233(d)(2) of ERISA assigns responsibility for the management of the successor plan to the plan sponsor and administrator of the original plan, PBGC continues to have authority under sections 4041A and 4281 to prescribe such rules and standards for the administration of terminated multiemployer plans (and authority under section 4042 to institute proceedings for the appointment of a new trustee to administer the plan) that PBGC considers appropriate to protect the interests of plan participants and beneficiaries, or to prevent unreasonable loss to PBGC.

    Finally, as noted above, absent a statutory, regulatory, or administrative exemption, all of the title I requirements that would otherwise apply to a terminated, insolvent multiemployer plan (e.g., the fiduciary rules under section 404 and the prohibited transaction rules under section 406) would also apply to the successor plan in a partition under section 4233 of ERISA.

    Other Comments

    In addition to comments on specific sections of the interim final rule, PBGC received two comments objecting to PBGC's interpretation of the term “maximum benefit suspensions” in section 4233(b)(2) of ERISA.16 As noted in the preamble to the interim final rule, the term “maximum benefit suspensions” is not defined in sections 305(e)(9) and 4233 of ERISA. The statute, however, limits the maximum amount of a suspension so that a post-suspension benefit can be no less than 110 percent of the PBGC guarantee under section 4022A, limits or exempts suspensions for certain categories of individuals based on their age, and exempts pension benefits based on disability from any reductions. Based on the structure and operation of these provisions, PBGC interprets the term “maximum benefit suspensions” in section 4233(b)(2) to mean the maximum benefit suspensions permissible under section 305(e)(9).

    16 Under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Participant and Plan Sponsor Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable.

    One commenter stated that it “does not believe plans should have to apply for maximum benefit suspensions to be eligible for partition” and that “[i]f PBGC believes it has no flexibility on the level of retiree cuts, it should ask Congress to modify this element of MPRA.” Expressing a similar view, the other commenter stated that PBGC's interpretation is “not consistent with the full text of section 4233” and that “the statute does not require trustees to impose unreasonable cutbacks, and absolutely disallows some categories of benefits (e.g., disability) even if the cutback would be otherwise reasonable.” That same commenter asked a number of hypothetical questions relating to the maximum benefit suspension requirement, such as whether the requirement would apply to a plan that had only a few participants with suspendable benefits, or a plan in which maximum benefit suspensions were rejected by a vote of participants and beneficiaries under section 432(e)(9)(H). The commenter suggested that if maximum benefit cuts are required, “partition would only be available in situations in which maximum benefit suspensions were sufficient to meet the plan's long-term solvency.”

    As a preliminary matter, PBGC disagrees that a partition would only be available in situations in which maximum benefit suspensions were sufficient to meet the plan's long-term solvency. In fact, if maximum benefit suspensions were sufficient to meet a plan's long-term solvency, partition would not be available because it would not be necessary for the plan to remain solvent, which is a statutory requirement under section 4233(b)(3)(B). In other words, partition is only an option when maximum benefit suspensions are not sufficient to ensure long-term solvency.

    In those situations where partition would be needed, PBGC's interpretation of maximum benefit suspension reflects the statutory and regulatory limitations on suspensions under section 305(e)(9)(D). For example, as explained in the preamble to the interim final rule, the maximum benefit suspension permissible for an individual with a plan benefit based on disability would be zero, because benefits based on disability may not be suspended under section 305(e)(9)(iii). The same would be true for a participant older than age 80.

    The commenter's hypothetical questions regarding a plan with a de minimis number of participants whose benefits would be subject to suspension under 305(e)(9)(D) and a plan in which participants and beneficiaries vote to reject benefit suspensions are beyond the scope of this rulemaking. However, PBGC notes that each application for partition will be decided on a case-by-case basis in accordance with the statutory criteria in section 4233(b).

    PBGC's interpretation of section 4233(b)(2) of ERISA is also consistent with the other conditions for partition under section 4233, which show Congress's intent to balance the need to protect multiemployer plans from insolvency with the need to improve the financial health of the title IV multiemployer insurance program. Section 4233(b)(3)(A) of ERISA, for example, provides that PBGC must reasonably expect that a partition of the plan will reduce PBGC's expected long-term loss with respect to the plan, and under section 4233(b)(4), PBGC must certify to Congress that its ability to meet existing financial assistance obligations to other plans (including any liabilities associated with multiemployer plans that are insolvent or that are projected to become insolvent within 10 years) will not be impaired by a partition. Finally, because a partition results in the creation of a newly insolvent successor plan that will require financial assistance under section 4261 of ERISA, the amount of liabilities that can be transferred to the successor plan is limited under section 4233(c) to the minimum amount of liabilities necessary for the original plan to remain solvent.

    Role of the Participant and Plan Sponsor Advocate

    As previously discussed, under section 4233(b)(2) of ERISA, PBGC must determine, after consultation with the Advocate, that the plan sponsor has taken (or is taking concurrently with an application for partition) all reasonable measures to avoid insolvency, including maximum benefit suspensions under section 305(e)(9) of ERISA, if applicable. In the preamble to the interim final rule, PBGC stated that it would not define by regulation the Advocate's consultative role under section 4233(b)(2); rather, the Advocate's role under the new law would be allowed to develop on a case-by-case basis.

    PBGC received one comment on the Advocate's role under section 4233(b)(2). The commenter asserted that plan sponsors and PBGC suffer from conflicts of interest—plan sponsors due to the composition of boards of trustees, and PBGC because it will only approve a partition if, among other things, it reduces PBGC's expected long-term loss—and that the Advocate “is the only party who reaps no financial advantage from imposing benefit cuts on retirees.” Based on this view, the commenter stated that the final rule should clarify that the Advocate is “responsible solely for representing the plan's retirees and deferred vested participants,” and that the Advocate should be “offered the opportunity to participate in all meetings between the plan sponsor and PBGC.” The commenter also suggested that the rule should require PBGC to provide the Advocate with adequate accounting, actuarial, and legal resources, and that the Advocate should have unfettered access to all plan records, actuarial worksheets, and databases.

    PBGC disagrees with the commenter's assertion relating to conflicts of interest. With respect to multiemployer plan sponsors, the Taft-Hartley Act, 29 U.S.C. 141 et seq., requires that employer and employees be equally represented in the administration of such plans. With respect to PBGC, MPRA requires, among other things, that PBGC analyze the impact of partition on PBGC's long term loss, and certify to Congress that its ability to meet existing financial assistance obligations to other plans will not be impaired by a partition. These requirements are imposed by statute.

    Although PBGC carefully considered the commenter's suggestions about defining the Advocate's consultative role, it decided not to make any changes in response. Given that the Advocate's consultative role in a partition is new, PBGC continues to believe that the better approach is to allow that role to evolve on a case-by-case basis. Finally, it is important to note that the role of the Advocate is defined by statute in section 4004(b) of ERISA, and while MPRA created additional duties, it did not change or modify the Advocate's existing duties under the statute.

    Applicability

    The amendments in this final rule will apply to applications for partition submitted to PBGC on or after January 22, 2016.

    Compliance With Rulemaking Guidelines Executive Orders 12866 “Regulatory Planning and Review” and 13563 “Improving Regulation and Regulatory Review”

    Having determined that this rulemaking is a “significant regulatory action” under Executive Order 12866, the Office of Management and Budget has reviewed this final rule under Executive Order 12866.

    Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. Executive Orders 12866 and 13563 require a comprehensive regulatory impact analysis be performed for any economically significant regulatory action, defined as an action that would result in an annual effect of $100 million or more on the national economy or which would have other substantial impacts.

    Pursuant to section 1(b)(1) of Executive Order 12866 (as amended by Executive Order 13422), PBGC has determined that regulatory action is required in this area. Principally, this regulatory action is necessary to implement the application and notice requirements under section 4233 of ERISA as amended and restated by MPRA. In accordance with OMB Circular A-4, PBGC also has examined the economic and policy implications of this final rule and has concluded that the action's benefits justify its costs.

    Under Section 3(f)(1) of Executive Order 12866, a regulatory action is economically significant if “it is likely to result in a rule that may * * * [h]ave an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities.” OMB has determined that this final rule does not cross the $100 million threshold for economic significance and is not otherwise economically significant. Most of the economic effect relating to partitions will be attributable to benefit suspensions.

    Based on a review of financial resources available for partition, PBGC expects that fewer than 20 plans would be approved for partition over the next three years (about six plans per year), and that the total financial assistance PBGC will provide to those plans will be less than $60 million per year.

    Regulatory Flexibility Act

    Because PBGC did not publish a general notice of proposed rulemaking under 5 U.S.C. 553, the regulatory flexibility analysis requirements of the Regulatory Flexibility Act do not apply.

    Paperwork Reduction Act

    The information requirements under this final regulation—information to be reported to PBGC and information to be disclosed to participants—are being submitted to OMB under the Paperwork Reduction Act (OMB control number 1212-0068, expires December 31, 2015). An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

    PBGC estimates that over the next three years about six plans per year will apply for partition and that the total annual burden of this information collection will be about 78 hours and $58,800.

    List of Subjects in 29 CFR Part 4233

    Employee benefit plans, Pension insurance, Reporting and recordkeeping requirements.

    For the reasons given above, the interim rule amending 29 CFR part 4233 published at 80 FR 35220 on June 19, 2015, is adopted as a final rule with the following changes:

    PART 4233—PARTITIONS OF ELIGIBLE MULTIEMPLOYER PLANS 1. The authority citation for part 4233 continues to read as follows: Authority:

    29 U.S.C. 1302(b)(3), 1413.

    § 4233.4 [Amended]
    2. In § 4233.4, the last sentence in paragraph (a) is amended by removing the word “will” and adding in its place the word “may”.
    3. In § 4233.6, a sentence is added to the end of paragraph (a) to read as follows:
    § 4233.6 Partition information.

    (a) * * * With respect to coordinated applications for partition and suspension of benefits, proposed effective dates for both transactions must satisfy the requirements of section 305(e)(9)(D)(v) of ERISA.

    4. In § 4233.7, paragraphs (a)(3)(iii), (a)(5)(iii), and (a)(8) are revised and paragraphs (a)(9) and (10) are added to read as follows:
    § 4233.7 Actuarial and financial information.

    (a) * * *

    (3) * * *

    (iii) Benefit payments organized by participant status (e.g., active, retiree, terminated vested, beneficiary).

    (5) * * *

    (iii) Benefit payments organized by participant status (e.g., active, retiree, terminated vested, beneficiary).

    (8) A long-term projection reflecting benefit disbursements from the successor plan (organized by participant status (e.g., active, retiree, terminated vested, beneficiary)), and a statement of the present value of all future financial assistance to be paid as a result of a partition (using the interest and mortality assumptions applicable to the valuation of plans terminated by mass withdrawal as specified in § 4281.13 of this chapter and other reasonable actuarial assumptions, including retirement age, form of benefit payment, and administrative expenses, certified by an enrolled actuary).

    (9) A long-term projection of pre-partition benefit disbursements from the original plan reflecting reduced benefit disbursements at the PBGC-guarantee level beginning on the proposed effective date of the partition (using a closed group valuation and no accruals after the proposed effective date of partition, and organized separately by participant status groupings (e.g., active, retiree, terminated vested, beneficiary)).

    (10) A long-term projection of pre-partition benefit disbursements from the original plan reflecting the maximum benefit suspensions permissible under section 305(e)(9) of ERISA beginning on the proposed effective date of the partition (using an open group valuation and organized separately by participant status groupings (e.g., active, retiree, terminated vested, beneficiary)).

    5. Section 4233.8 is revised to read as follows:
    § 4233.8 Participant census data.

    An application for partition must include a copy of the census data used for the projections described in § 4233.7(a)(3) and (5), including:

    (a) Participant type (retiree, beneficiary, disabled, terminated vested, active, alternate payee).

    (b) Date of birth.

    (c) Gender.

    (d) Credited service for guarantee calculation (i.e., number of years of participation).

    (e) Vested accrued monthly benefit before benefit suspension under section 305(e)(9) of ERISA.

    (f) Vested accrued monthly benefit after benefit suspension under section 305(e)(9) of ERISA.

    (g) Monthly benefit guaranteed by PBGC (determined under the terms of the original plan without respect to benefit suspensions).

    (h) Benefit commencement date (for participants in pay status and others for which the reported benefit is not payable at Normal Retirement Date).

    (i) For each participant in pay status—

    (1) Form of payment, and

    (2) Data relevant to the form of payment, including:

    (i) For a joint and survivor benefit, the beneficiary's benefit amount (before and after suspension) and the beneficiary's date of birth;

    (ii) For a Social Security level income benefit, the date of any change in the benefit amount, and the benefit amount after such change;

    (iii) For a 5-year certain or 10-year certain benefit (or similar benefit), the relevant defined period.

    (iv) For a form of payment not otherwise described in this section, the data necessary for the valuation of the form of payment, including the benefit amount before and after suspension.

    (j) If an actuarial increase for postponed retirement applies or if the form of annuity is a Social Security level income option, the monthly vested benefit payable at normal retirement age in normal form of annuity.

    6. In § 4233.10, paragraphs (b) and (c) are revised to read as follows:
    § 4233.10 Initial review.

    (b) Incomplete application. If the application is incomplete, PBGC will issue a written notice to the plan sponsor describing the information missing from the application no later than 14 calendar days after the submission of such application.

    (c) Complete application. Upon making a determination that an application is complete (i.e., the application includes all the information specified in §§ 4233.5 through 4233.9), PBGC will issue a written notice to the plan sponsor no later than 14 calendar days after the submission of such application. The date of the written notice will mark the beginning of PBGC's 270-day review period under section 4233(a)(1) of ERISA, and the plan sponsor's 30-day notice period under 4233(a)(2) of ERISA.

    7. In § 4233.12, paragraph (c) is revised to read as follows:
    § 4233.12 PBGC action on application for partition.

    (c) Conditional determination on application. At the request of a plan sponsor, PBGC may, in its discretion, issue an approval of an application conditioned on Treasury issuing a final authorization to suspend under section 305(e)(9)(H)(vi) of ERISA and any other terms and conditions set forth in the conditional approval. The conditional approval will include a written statement of preliminary findings, conclusions, and conditions. The conditional approval is not a final agency action. The proposed partition will only become effective upon satisfaction of the required conditions, and the issuance of an order of partition under section 4233(c) of ERISA.

    8. In § 4233.13, paragraphs (a)(3) and (4) are revised to read as follows:
    § 4233.13 Coordinated application process for partition and benefit suspension.

    (a) * * *

    (3) If Treasury does not issue the final authorization to suspend, PBGC's conditional approval under § 4233.12(c) will be null and void.

    (4) If Treasury issues a final authorization to suspend, PBGC will issue a final partition order under § 4233.14 and section 4233(c) of ERISA. The effective date of a final partition order must satisfy the requirements of section 305(e)(9)(D)(v) of ERISA.

    Issued in Washington, DC, this 18th day of December 2015. W. Thomas Reeder, Director, Pension Benefit Guaranty Corporation.
    [FR Doc. 2015-32309 Filed 12-22-15; 8:45 am] BILLING CODE 7709-02-P
    DEPARTMENT OF HOMELAND SECURITY Coast Guard 33 CFR Part 117 [Docket No. USCG-2015-1102] Drawbridge Operation Regulation; Mill Neck Creek, Oyster Bay, NY AGENCY:

    Coast Guard, DHS.

    ACTION:

    Notice of deviation from drawbridge regulation.

    SUMMARY:

    The Coast Guard has issued a temporary deviation from the operating schedule that governs the Bayville Bridge across the Mill Neck Creek, mile 0.1, at Oyster Bay, New York. The deviation is necessary to perform electrical and mechanical upgrades. This deviation allows the bridge to remain in the closed position for approximately 5 days.

    DATES:

    This deviation is effective from 7:00 a.m. on January 11, 2016 to 3:30 p.m. on January 15, 2016.

    ADDRESSES:

    The docket for this deviation, [USCG-2015-1102] is available at http://www.regulations.gov. Type the docket number in the “SEARCH” box and click “SEARCH”. Click on Open Docket Folder on the line associated with this deviation.

    FOR FURTHER INFORMATION CONTACT:

    If you have questions on this temporary deviation, call or email Ms. Judy K. Leung-Yee, Project Officer, First Coast Guard District, telephone (212) 514-4330, email [email protected]

    SUPPLEMENTARY INFORMATION:

    Nassau County Department of Public Works requested this temporary deviation from the normal operating schedule to perform electrical and mechanical upgrades.

    The Bayville Bridge, mile 0.1, across the Mill Neck Creek has a vertical clearance in the closed position of 9 feet at mean high water and 16 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.800.

    The waterway is transited by one commercial user and recreation vessel traffic.

    Under this temporary deviation, the Bayville Bridge may remain in the closed position from 7:00 a.m. on January 11, 2016 to 3:30 p.m. on January 15, 2016.

    Vessels able to pass through the bridge in the closed position may do so at any time. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass.

    The Coast Guard will also inform the users of the waterways through our Local and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessels can arrange their transits to minimize any impact caused by the temporary deviation.

    In accordance with 33 CFR 117.35(e), the drawbridge must return to its regular operating schedule immediately at the end of the effective period of this temporary deviation. This deviation from the operating regulations is authorized under 33 CFR 117.35.

    Dated: December 17, 2015. C.J. Bisignano, Supervisory Bridge Management Specialist, First Coast Guard District.
    [FR Doc. 2015-32254 Filed 12-22-15; 8:45 am] BILLING CODE 9110-04-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R08-OAR-2015-0429; FRL-9939-87-Region 8] Air Plan Approval; SD; Update to Materials Incorporated by Reference AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule; administrative change.

    SUMMARY:

    The Environmental Protection Agency (EPA) is updating the materials that are incorporated by reference (IBR) into the South Dakota State Implementation Plan (SIP). The Regulations affected by this update have been previously submitted by the South Dakota Department of Environment and Natural Resources (SD DENR) and approved by the EPA. In this action, the EPA is also notifying the public of corrections to typographical errors and minor formatting changes to the IBR tables. This update affects the SIP materials that are available for public inspection at the EPA Regional Office.

    DATES:

    This action is effective December 23, 2015.

    ADDRESSES:

    The EPA has established a docket for this action under Docket Identification Number EPA-R08-OAR-2015-0429. All documents in the docket are listed on the http://www.regulations.gov Web site. Although listed in the index, some information may not be publicly available, i.e., Confidential Business Information or other information the disclosure of which is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in the hard copy form. Publicly available docket materials are available either electronically through http://www.regulations.gov or in hard copy at EPA Region 8, Office of Partnerships and Regulatory Assistance, Air Program, 1595 Wynkoop Street, Denver, Colorado, 80202-1129. The EPA requests that you contact the individual listed in the FOR FURTHER INFORMATION CONTACT section to view the hard copy of the docket. An electronic copy of the State's SIP compilation is also available at http://www.epa.gov/region8/air/sip.html.

    FOR FURTHER INFORMATION CONTACT:

    Kathy Ayala, Air Program, U.S. Environmental Protection Agency (EPA), Region 8, Mailcode 8P-AR, 1595 Wynkoop Street, Denver, Colorado 80202-1129, (303) 312-6142, [email protected]

    SUPPLEMENTARY INFORMATION: I. Background

    The SIP is a living document which a state revises as necessary to address its unique air pollution problems. Therefore, the EPA, from time to time, must take action on SIP revisions containing new and/or revised regulations as being part of the SIP. On May 22, 1997 (62 FR 27968), the EPA revised the procedures for incorporating by reference Federally-approved SIPs, as a result of consultation between the EPA and the Office of the Federal Register (OFR). The description of the revised SIP document, IBR procedures and “Identification of Plan” format are discussed in further detail in the May 22, 1997, Federal Register document. On March 8, 2005 (70 FR 11125) the EPA published the revised format of the IBR material for South Dakota as of November 15, 2004. Today's action is an update to the March 8, 2005 document.

    II. EPA Action

    In this action, the EPA is announcing the update to the IBR material as of October 1, 2015. The EPA is also correcting typographical errors, including omission and other minor errors in subsection 52.2170, paragraphs (c), (d), and (e).

    III. Incorporation by Reference

    In this action, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the South Dakota regulations described in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

    IV. Good Cause Exemption

    EPA has determined that today's action falls under the “good cause” exemption in section 553(b)(3)(B) of the Administrative Procedure Act (APA) which, upon a finding of “good cause” authorizes agencies to dispense with public participation, and section 553(d)(3), which allows an agency to make a rule effective immediately (thereby avoiding the 30-day delayed effective date otherwise provided for in the APA). Today's action simply updates the codification of provisions which are already in effect as a matter of law.

    Under section 553 of the APA, an agency may find good cause where procedures are “impractical, unnecessary, or contrary to the public interest.” Public comment is “unnecessary” and “contrary to the public interest” since the codification only reflects existing law. Likewise, there is no purpose served by delaying the effective date of this action.

    V. Statutory and Executive Order Reviews A. General Requirements

    Under Executive Order 12866 (58 FR 51735, October 4, 1993), this action is not a “significant regulatory action” and is therefore not subject to review by the Office of Management and Budget. This rule is not subject to Executive Order 13211, “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) because it is not a significant regulatory action under Executive Order 12866. Because the agency has made a “good cause” finding that this action is not subject to notice-and-comment requirements under the Administrative Procedure Act or any other statute as indicated in the SUPPLEMENTARY INFORMATION section, it is not subject to the regulatory flexibility provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), or to sections 202 and 205 of the Unfunded Mandates Reform Act of 1995 (UMRA) (Pub. L. 104-4). In addition, this action does not significantly or uniquely affect small governments or impose a significant intergovernmental mandate, as described in sections 203 and 204 of UMRA. This rule also does not have a substantial direct effect on one or more Indian tribes, on the relationship between the federal government and Indian tribes, or on the distribution of power and responsibilities between the federal government and Indian tribes, as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), 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, as specified in Executive Order 13132 (64 FR 43255, August 10, 1999). This rule also is not subject to Executive Order 13045 (62 FR 19885, April 23, 1997), because it is not economically significant. This rule does not involve technical standards; thus the requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) do not apply. The rule also does not involve special consideration of environmental justice related issues as required by Executive Order 12898 (59 FR 7629, February 16, 1994). This rule does not impose an information collection burden under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). EPA's compliance with these statutes and Executive Orders for the underlying rules are discussed in previous actions taken on the state's rules.

    B. Submission to Congress and the Comptroller General

    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 808 allows the issuing agency to make a rule effective sooner than otherwise provided by the CRA if the agency makes a good cause finding that notice and public procedure is impracticable, unnecessary or contrary to the public interest. This action simply codifies provisions which are already in effect as a matter of law in federal and approved state programs. 5 U.S.C. 808(2). As stated previously, EPA has made such a good cause finding and established an effective date of December 23, 2015. EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This change to the identification of plan for South Dakota is not a “major rule” as defined by 5 U.S.C. 804(2).

    In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of the South Dakota regulations described in the amendments to 40 CFR part 52 set forth below. EPA has made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the appropriate EPA office (see the ADDRESSES section of this preamble for more information).

    C. Petitions for Judicial Review

    EPA has also determined that the provisions of section 307(b)(1) of the Clean Air Act pertaining to petitions for judicial review are not applicable to this action. Prior EPA rulemaking actions for each individual component of the South Dakota SIP compilation had previously afforded interested parties the opportunity to file a petition for judicial review in the United States Court of Appeals for the appropriate circuit within 60 days of such rulemaking action. Thus, EPA sees no need in this action to reopen the 60-day period for filing such petitions for judicial review for this “Identification of plan” update action for South Dakota.

    List of Subjects in 40 CFR Part 52

    Environmental protection, Air pollution control, Carbon monoxide, Incorporation by reference, Intergovernmental relations, Lead, Nitrogen dioxide, Ozone, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides, Volatile organic compounds.

    Dated: December 4, 2015. Shaun L. McGrath, Regional Administrator, Region 8.

    40 CFR part 52 is amended as follows:

    PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS 1. The authority citation for part 52 continues to read as follows: Authority:

    42 U.S.C. 7401 et seq.

    Subpart QQ—South Dakota 2. In § 52.2170 paragraphs (b), (c), (d) and (e) are revised to read as follows:
    § 52.2170 Identification of plan.

    (b) Incorporation by reference. (1) Material listed in paragraphs (c) and (d) of this section with an EPA approval date prior to October 1, 2015, was approved for incorporation by reference by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Material is incorporated as it exists on the date of the approval, and notice of any change in the material will be published in the Federal Register. Entries in paragraphs (c) and (d) of this section with EPA approval dates after October 1, 2015, will be incorporated by reference in the next update to the SIP compilation.

    (2) EPA Region 8 certifies that the rules/regulations provided by EPA in the SIP compilation at the addresses in paragraph (b)(3) of this section are an exact duplicate of the officially promulgated state rules/regulations which have been approved as part of the SIP as of October 1, 2015.

    (3) Copies of the materials incorporated by reference may be inspected at the EPA Region 8 Office, Office of Partnerships and Regulatory Assistance (OPRA), Air Program, 1595 Wynkoop Street, Denver, Colorado 80202-1129.

    (c) EPA-approved regulations.

    Rule No. Rule title State effective date EPA effective date Final rule citation, date Comments Statewide 74:09:01. Procedures—Board of Minerals and Environment, Contested Case Procedure 74:09:01:20 Board member conflict of interest 5/29/14 3/2/15 80 FR 4799, 1/29/15 74:09:01:21 Board member potential conflict of interests 5/29/14 3/2/15 80 FR 4799, 1/29/15 74:36:01. Definitions 74:36:01:01 Definitions 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:01:03 Administrative permit amendment defined 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:01:04 Affected states defined 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:01:05 Applicable requirements of Clean Air Act defined 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:01:06 Complete application defined 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:01:08 Major source defined 4/4/99 5/19/14 79 FR 21852, 4/18/14 74:36:01:09 Categories of sources defined 1/2/05 10/13/06 71 FR 46403, 8/14/06 74:36:01:10 Modification defined 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:01:11 National ambient air quality standard (NAAQS) 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:01:12 Potential to emit defined 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:01:13 Process weight rate defined 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:01:15 Regulated air pollutant defined 1/5/95 5/19/14 79 FR 21852, 4/18/14 74:36:01:16 Responsible official defined 1/2/05 10/13/06 71 FR 46403, 8/14/06 74:36:01:18 Municipal solid waste landfill defined 12/29/96 12/18/98 63 FR 55804, 10/19/98 74:36:01:19 Existing municipal solid waste landfill defined 12/29/96 12/18/98 63 FR 55804, 10/19/98 74:36:01:20 Physical change or change in the method of operation defined 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:01:21 Commence construction defined 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:02. Ambient Air Quality 74:36:02:01 Air quality goals 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:02:02 Ambient air quality standards 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:02:03 Methods of sampling and analysis 6/25/13 11/2/15 80 FR 59620,10/2/15 74:36:02:04 Air quality monitoring network 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:02:05 Air quality monitoring requirements 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:03. Air Quality Episodes 74:36:03:01 Air pollution emergency episode 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:03:02 Episode emergency contingency plan 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04. Operating Permits for Minor Sources 74:36:04:01 Applicability 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:04:02 Minor source operating permit required 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:02.01 Minor source operating permit exemption 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:03 Emission unit exemptions 6/28/10 7/28/14 79 FR 36419, 6/28/14 74:36:04:04 Standard for issuance of a minor source operating permit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:04:05 Time period for operating permits and renewals 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:04:06 Timely and complete application for operating permit required 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:07 Required contents of complete application for operating permit 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:08 Applicant required to supplement or correct application 1/5/95 12/18/98 63 FR 55804, 10/19/98 74:36:04:09 Permit application—Completeness review 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:10 Time period for department's recommendation 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:11 Department's recommendation on operating permit 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:04:12 Public participation in permitting process 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:04:12.01 Public review of department's draft permit 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:13 Final permit decision—Notice to interested persons 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:04:14 Right to petition for contested case hearing 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:04:15 Contents of operating permit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:04:16 Operating permit expiration 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:17 Renewal of operating permit 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:18 Operating permit revision 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:19 Administrative permit amendment 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:04:20 Procedures for administrative permit amendments 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:20.01 Minor permit amendment required 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:20.02 Requirements for minor permit amendment 1/5/95 12/18/98 63 FR 55804, 10/19/98 74:36:04:20.03 Application for minor permit amendment 1/5/95 12/18/98 63 FR 55804, 10/19/98 74:36:04:20.04 Department deadline to approve minor permit amendment 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:21 Permit modifications 1/5/95 12/18/98 63 FR 55804, 10/19/98 74:36:04:22 Source status change—new permit required 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:04:23 Reopening operating permit for cause 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:24 Procedures to reopen operating permit 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:04:27 Operating permit termination, revision, and revocation 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:28 Notice of operating noncompliance—Contents 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:04:29 Petition for contested case on alleged violation 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:04:31 Circumvention of emissions not allowed 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:04:32 General permits 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:04:33 Secretary may require an individual permit 9/1/03 7/9/04 69 FR 25839, 5/10/04 74:36:06. Regulated Air Pollutant Emissions 74:36:06:01 Applicability 1/5/95 12/18/98 63 FR 55804, 10/19/98 74:36:06:02 Allowable emissions for fuel-burning units 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:06:03 Allowable emissions for process industry units 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:06:04 Particulate emission restrictions for incinerators and waste wood burners 1/2/05 10/13/06 71 FR 46403,8/14/06 74:36:06:05 Most stringent interpretation applicable 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:06:06 Stack performance test 1/2/05 10/13/06 71 FR 46403, 8/14/06 74:36:06:07 Open burning practices prohibited 4/4/99 5/7/03 68 FR 16726, 4/7/03 74:36:07. New Source Performance Standards 74:36:07:08 Ash disposal requirements 12/29/96 6/21/00 65 FR 32033, 5/22/00 74:36:07:29 Operating requirements for wire reclamation furnaces 4/22/93 11/6/95 60 FR 46222, 9/6/95 74:36:07:30 Monitoring requirements for wire reclamation furnaces 4/22/93 11/6/95 60 FR 46222, 9/6/95 74:36:09. Prevention of Significant Deterioration 74:36:09:01 Applicability 9/18/06 1/22/08 72 FR 72617, 12/21/07 74:36:09:01.01 Prevention of significant deterioration permit required 9/18/06 1/22/08 72 FR 72617, 12/21/07 74:36:09:02 Prevention of significant deterioration 6/25/13 3/2/15 80 FR 4799, 1/29/15 74:36:09:03 Public participation 6/25/13 3/2/15 80 FR 4799, 1/29/15 74:36:10. New Source Review 74:36:10:01 Applicability 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:10:02 Definitions 6/25/13 7/28/14 79 FR 36419, 6/27/14 74:36:10:03.01 New source review preconstruction permit required 6/25/13 7/28/14 79 FR 36419, 6/27/14 74:36:10:05 New source review preconstruction permit 6/25/13 7/28/14 79 FR 36419, 6/27/14 74:36:10:06 Causing or contributing to violation of any national ambient air quality standard 9/1/03 7/9/04 69 FR 25839, 5/10/04 74:36:10:07 Determining credit for emission offsets 6/25/13 7/28/14 79 FR 36419, 6/27/14 74:36:10:08 Projected actual emissions 6/25/13 7/28/14 79 FR 36419, 6/27/14 74:36:10:09 Clean unit test for emission units subject to lowest achievable emission rate 1/2/05 10/13/06 71 FR 46403, 8/14/06 74:36:10:10 Clean unit test for emission units comparable to lowest achievable emission rate 1/2/05 10/13/06 71 FR 46403, 8/14/06 74:36:11. Performance Testing 74:36:11:01 Stack performance testing or other testing methods 6/25/13 11/2/15 80 FR 59620,10/2/15 74:36:11:02 Secretary may require performance tests 12/29/96 12/18/98 63 FR 55804, 10/19/98 74:36:11:03 Notice to department of performance test 12/29/96 12/18/98 63 FR 55804, 10/19/98 74:36:11:04 Testing new fuels or raw materials 4/4/99 4/3/00 65 FR 5264, 2/3/00 74:36:12. Control of Visible Emissions 74:36:12:01 Restrictions on visible emissions 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:12:02 Exceptions to restrictions 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:12:03 Exceptions granted to alfalfa pelletizers or dehydrators 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:13. Continuous Emission Monitoring Systems 74:36:13:01 Secretary may require continuous emission monitoring systems (CEMS) 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:13:02 Minimum performance specifications for all continuous emission monitoring systems 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:13:03 Reporting requirements 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:13:04 Notice to department of exceedance 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:13:05 Compliance determined by data from continuous emission monitor 4/22/93 12/18/98 63 FR 55804, 10/19/98 74:36:13:06 Compliance certification 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:13:07 Credible evidence 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:13:08 Compliance assurance monitoring 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:17. Rapid City Street Sanding and Deicing 74:36:17:01 Applicability 2/11/96 8/9/02 67 FR 39619, 6/10/02 74:36:17:02 Reasonable available control technology 2/11/96 8/9/02 67 FR 39619, 6/10/02 74:36:17:03 Street sanding specifications 2/11/96 8/9/02 67 FR 39619, 6/10/02 74:36:17:04 Street deicing and maintenance plan 2/11/96 8/9/02 67 FR 39619, 6/10/02 74:36:17:05 Street sanding and sweeping recordkeeping 2/11/96 8/9/02 67 FR 39619, 6/10/02 74:36:17:06 Inspection authority 2/11/96 8/9/02 67 FR 39619, 6/10/02 74:36:18. Regulations for State Facilities in the Rapid City Area 74:36:18:01 Definitions 7/1/02 3/22/04 69 FR 2671,1/20/04 74:36:18:02 Applicability 7/1/02 3/22/04 69 FR 2671, 1/20/04 74:36:18:03 Permit required 7/1/02 3/22/04 69 FR 2671, 1/20/04 74:36:18:04 Time period for permits and renewals 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:18:05 Required contents of a complete application for a permit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:18:06 Contents of permit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:18:07 Permit expiration 7/1/02 3/22/04 69 FR 2671, 1/20/04 74:36:18:08 Renewal of permit 7/1/02 3/22/04 69 FR 2671, 1/20/04 74:36:18:09 Reasonably available control technology required 7/1/02 3/22/04 69 FR 2671, 1/20/04 74:36:18:10 Visible emission limit for construction and continuous operation activities 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:18:11 Exception to visible emission limit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:18:12 Notice of operating noncompliance—Contents 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:20. Construction Permits for New Sources or Modifications 74:36.20.01 Applicability 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:02 Construction permit required 4/20/11 7/28/14 79 FR 36419, 6/27/14 74:36:20:03 Construction permit exemption 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:04 Emission unit exemptions 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:05 Standard for issuance of construction permit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:20:06 Timely and complete application for a construction permit required 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:07 Required contents of complete application for a construction permit 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:08 Applicant required to supplement or correct application 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:09 Permit application—Completeness review 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:10 Time period for department's recommendation 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:11 Public participation in permitting process 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:20:12 Public review of department's draft permit 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:13 Final permit decision—Notice to interested persons 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:20:14 Right to petition for contested case hearing 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:20:15 Contents of construction permit 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:20:16 Administrative permit amendment 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:17 Procedures for administrative permit amendments 6/28/10 7/28/14 79 FR 36149, 6/27/14 74:36:20:18 Reopening construction permit for cause 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:19 Procedures to reopen construction permit 6/28/10 7/28/14 79 FR 36149, 6/27/14 74:36:20:20 Construction permit does not exempt from other requirements 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:21 Expiration of a construction permit 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:22 Notice of constructing or operating noncompliance—Contents 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:23 Petition for contested case on alleged violation 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:20:24 Circumvention of emissions not allowed 6/28/10 7/28/14 79 FR 36419, 6/27/14 74:36:21. Regional Haze Program 74:36:21:01 Applicability 12/7/10 5/29/12 77 FR 24845, 4/26/12 74:36:21:02 Definitions 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:21:03 Existing stationary facility defined 12/7/10 5/29/12 77 FR 24845, 4/26/12 74:36:21:04 Visibility impact analysis 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:21:05 BART determination 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:21:06 BART determination for a BART-eligible coal-fired power plant 9/19/11 5/29/12 77 FR 24845, 4/26/12 74:36:21:07 Installation of controls based on visibility impact analysis or BART determination 12/7/10 5/29/12 77 FR 24845, 4/26/12 74:36:21:08 Operation and maintenance of controls 12/7/10 5/29/12 77 FR 24845, 4/26/12 74:36:21:09 Monitoring, recordkeeping, and reporting 6/25/13 11/2/15 80 FR 59620, 10/2/15 74:36:21:10 Permit to construct 12/7/10 5/29/12 77 FR 24845, 4/26/12 74:36:21:11 Permit required for BART determination 12/7/10 5/29/12 77 FR 24845, 4/26/12 74:36:21:12 Federal land manager notification and review 12/7/10 5/29/12 77 FR 24845, 4/26/12 Pennington Ordinance #12—Fugitive Dust Regulation—1.0 Control of Fugitive Dust 1.1 Applicability 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.2 Definitions 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.3 Standard of compliance 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.4 Reasonably available control technology required 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.5 Fugitive dust control permits required for construction activities, i.e., temporary operations 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.6 Compliance plans and schedules required, i.e., continuous operations 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.7 Enforcement procedures 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.8 Establishment of administrative mechanisms 12/12/78 7/13/79 44 FR 44494, 7/30/79 1.9 Separability 12/12/78 7/13/79 44 FR 44494, 7/30/79

    (d) EPA-approved source specific requirements.

    Rule No. Rule title State effective date EPA effective date Final rule citation, date Comments (AQ 79-02.) South Dakota State University steam generating plant 3/18/82 8/7/83 48 FR 31199, 7/7/83

    (e) EPA-approved nonregulatory provisions.

    Rule title State effective date EPA effective date Final rule citation, date Comments I.A. Introduction 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.B. Legal Authority 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.C. Control Strategy 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.D. Compliance Schedule 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.E. Prevention of Air Pollution Emergency Episodes 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.F. Air Quality Surveillance 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.G. Review of New Sources and Modifications 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.H. Source Surveillance 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.I. Resources 1/17/72 7/13/72 37 FR 15080, 7/27/72 I.J. Intergovernmental Cooperation 1/17/72 7/13/72 37 FR 15080, 7/27/72 I. Appendix A. South Dakota Compiled Laws 1/17/72 7/13/72 37 FR 15080, 7/27/72 II. Part D Plan for Total Suspended Particulate 12/27/78 8/30/79 44 FR 44494, 7/30/79 III. SIP to meet Air Quality Monitoring and public notification requirements 1/21/80 10/4/80 45 FR 58528, 9/4/80 IV. Lead (Pb) SIP 5/4/84 10/26/84 49 FR 37752, 9/26/84 V. Stack Height Demonstration Analysis 8/20/86 7/7/89 54 FR 24334, 6/7/89 VI. Commitment to revise stack height rules 5/11/88 10/2/88 53 FR 34077, 9/2/88 VII. PM10 Committal SIP 7/12/88 11/5/90 55 FR 40831, 10/5/90 VIII. Small Business Technical and Environmental Compliance Program 1/12/94 12/27/94 59 FR 53589, 10/25/94 IX. Commitment regarding permit exceedances of the PM10 standard in Rapid City 11/16/95 7/10/02 67 FR 39619, 6/10/02 X. CAA 110(a)(D)(2)(i) Interstate Transport Requirements for the 1997 8-hr Ozone and PM2.5 NAAQS 4/19/07 7/7/08 73 FR 26019, 5/8/08 XI. 1997 Ozone NAAQS Infrastructure Certification 2/1/08 8/22/11 76 FR 43912, 7/22/11 XII. South Dakota Regional Haze State Implementation Plan, Amended 4/26/12 5/29/12 77 FR 24845, 4/26/12 XIII. Section 110(a)(2) Infrastructure Requirements for the 1997 and 2006 PM2.5 NAAQS 3/4/11 3/2/15 80 FR 4799, 1/29/15 XIV. Section 110(a)(2) Infrastructure Requirements for the 2008 Lead NAAQS 10/10/12 3/2/15 80 FR 4799, 1/29/15 XV. Section 110(a)(3) Infrastructure Requirements for the 2008 8-hour Ozone NAAQS 5/21/13 3/2/15 80 FR 4799, 1/29/15 XVI. Section 110(a)(2) Infrastructure Requirements for the 2010 NO2 NAAQS 10/23/13 3/2/15 80 FR 4799, 1/29/15 XVII. SDCL (South Dakota Codified Laws), 1-40-25.1 3/2/15 3/2/15 80 FR 4799, 1/29/15 XVIII. South Dakota Codified Laws, 34-A-1-57, 34-A-1-58, 34-A-1-59, and 34-A-1-60 7/1/93 12/27/94 59 FR 53589, 10/25/94
    [FR Doc. 2015-32216 Filed 12-22-15; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2013-0700; FRL-9939-39] Ammonium Acetate; Exemption From the Requirement of a Tolerance AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes an exemption from the requirement of a tolerance for residues of ammonium acetate (CAS No. 631-61-8) when used as an inert ingredient (buffering agent) limited to 15% in pesticide formulations applied to pre-harvested crops. Exponent Inc., 1150 Connecticut Ave., Suite 1100, Washington, DC 20036 on behalf of the Gowan Company LLC., 370 South Main Street, Yuma, AZ 85364 submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting establishment of an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of ammonium acetate.

    DATES:

    This regulation is effective December 23, 2015. Objections and requests for hearings must be received on or before February 22, 2016, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

    ADDRESSES:

    The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2013-0700, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory Public Docket (OPP Docket) in the Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPP Docket is (703) 305-5805. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

    FOR FURTHER INFORMATION CONTACT:

    Susan Lewis, Registration Division (7505P), Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

    I. General Information A. Does this action apply to me?

    You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

    B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of 40 CFR part 180 through the Government Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

    C. How can I file an objection or hearing request?

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2013-0700 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 22, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

    In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2013-0700, by one of the following methods:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

    Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001.

    Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html. Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets.

    II. Petition for Exemption

    In the Federal Register of December 30, 2013 (78 FR79359) (FRL-9903-69), EPA issued a document pursuant to FFDCA section 408, 21 U.S.C. 346a, announcing the filing of a pesticide petition (PP IN-10604) by Exponent Inc., 1150 Connecticut Ave., Suite 1100, Washington, DC 20036, on behalf of the Gowan Company LLC., 370 South Main Street, Yuma, AZ 85364. The petition requested that 40 CFR 180.920 be amended by establishing an exemption from the requirement of a tolerance for residues of ammonium acetate (CAS No. 631-61-8) when used as an inert ingredient in pesticide formulations applied to crops pre-harvest and limited to 15% in pesticide formulations. That document referenced a summary of the petition prepared by Exponent Inc., on behalf of the Gowan Company LLC, the petitioner, which is available in the docket, http://www.regulations.gov. No comments were received on the notice of filing. EPA's response to these comments is discussed in Unit V.C.

    III. Inert Ingredient Definition

    Inert ingredients are all ingredients that are not active ingredients as defined in 40 CFR 153.125 and include, but are not limited to, the following types of ingredients (except when they have a pesticidal efficacy of their own): Solvents such as alcohols and hydrocarbons; surfactants such as polyoxyethylene polymers and fatty acids; carriers such as clay and diatomaceous earth; thickeners such as carrageenan and modified cellulose; wetting, spreading, and dispersing agents; propellants in aerosol dispensers; microencapsulating agents; and emulsifiers. The term “inert” is not intended to imply nontoxicity; the ingredient may or may not be chemically active. Generally, EPA has exempted inert ingredients from the requirement of a tolerance based on the low toxicity of the individual inert ingredients.

    IV. Aggregate Risk Assessment and Determination of Safety

    Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

    EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be clearly demonstrated that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

    Consistent with FFDCA section 408(c)(2)(A), and the factors specified in FFDCA section 408(c)(2)(B), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for ammonium acetate including exposure resulting from the exemption established by this action. EPA's assessment of exposures and risks associated with ammonium acetate follows.

    A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered their validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. Specific information on the studies received and the nature of the adverse effects caused by ammonium acetate as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies.

    Ammonium acetate is an ammonium salt of acetic acid. In aqueous solutions acetic acid and its salt ammonium acetate dissociate into the acetate anion (CH3COO-) and the respective cations (H+ and NH4+). The cations and ammonia (also a human metabolite) are physiological components of the human body. The chemical structures, physical-chemical properties, environmental fate behavior, and aquatic and mammalian toxicity of ammonium acetate and acetic acid are similar. Since limited data are available on ammonium acetate, toxicity data on acetic acid were used to represent toxicity due to exposure to ammonium acetate.

    Acetic acid is of low acute dermal and inhalation toxicity in rats. It causes dermal irritation in mice and is corrosive in rabbits. It was also irritating in the eyes of rabbits. Although reduced body weight was observed at 390 mg/kg/day in a 90-day oral toxicity study in the rat, the reduction in weight gain was likely attributed to reduced appetite and food consumption observed in the study. Therefore, this is not considered an adverse effect. Although increased spleen weight was observed at 23-31 ppm (equivalent to 15-19 mg/kg/day) of acetic acid in a toxicity study in rats via the inhalation route of exposure, there is no concern for potential immunotoxicity. The Agency considers that this effect is due to red blood cell destruction rather than an immunotoxic response. Fetal susceptibility was not observed in several developmental studies in rats, mice and rabbits. Neither maternal nor developmental toxicity was not observed up to 1,600 mg/kg/day. It is not mutagenic in an Ames test nor is it clastogenic in a cytogenetic assay with Chinese hamster ovary K1 cells. It is not carcinogenic. In an eight month cancer study, tumors were not observed in rats at 60 mg/kg/day. While evidence of potential neurotoxicity was observed in a literature study in rats conducted by Sapute et al.1 , a second study in rats showed no indication of systemic toxicity, neurotoxicity, neuropathological or histological lesions at the same dose that was previously tested, 100 mg/kg/day. Since the second study (MRID 49703201) 2 was conducted according to the Organization for Economic Co-operation and Development (OECD) and good laboratory practice (GLP) guidelines, it was considered to accurately represent the neurotoxic potential for ammonium acetate.

    1 Satpute, R.M., Lomash, V., Hariharakrishnan, J., Roa, P., Singh, P., Gujar, N., and Bhattacharya, R. (2014). Oxidative Stress and Tissue Pathology Caused By Subacute Exposure To Ammonium Acetate In Rats And Their Response To Treatments With Alpha-Ketoglutarate And N-Acetyl Cysteine. Toxicology and Industrial Health: 30(1) 12-14. MRID. 49507001.

    2 Barnett, Jr., John F. (2015). A 28-Day Oral (Gavage) Repeated Dose Study of Ammonium Acetate in Adult Rats. Laboratory Project ID 20073669. Unpublished study prepared by Charles River Laboratories. MRID 49703201.

    As noted above, acetic acid undergoes dissociation to the acetate anion and the H+ cations in aqueous media at pHs commonly found in the environment. Also, it is a naturally-occurring substance in plants and animals. In aerobic metabolism, acetic acid (as acetate) is a metabolite that combines with Co-enzyme A to form acetyl Co-A which subsequently enters into the Citric Acid Cycle, a common metabolic pathway in which food molecules are broken down to form energy. A major function of the Citric Acid Cycle is the oxidation of acetate. In animals, acetate is obtained from the breakdown of glucose molecules.

    Specific information on the studies received and the nature of the adverse effects caused by acetic acid as well as the no observed adverse effect level (NOAEL) and the lowest observed adverse effect level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document “Ammonium Acetate; Human Health Risk Assessment and Ecological Effects Assessment to Support Proposed Exemption from the Requirement of a Tolerance When Used as Inert Ingredients in Pesticide Formulations” in docket ID number EPA-HQ-OPP-2013-0700.

    B. Toxicological Points of Departure/Levels of Concern

    In an aqueous environment, ammonium acetate dissociates to acetic acid and its salt. Therefore, it is appropriate to expect toxicity due to exposure to ammonium acetate to be similar to that of acetic acid. Therefore, based on the absence of a toxicological endpoint of concern via dietary route of exposure for acetic acid, its regulatory history, and no new toxicological data to indicate concern regarding previous decisions, a qualitative assessment was appropriate for ammonium acetate for all pathways of human exposure (food, drinking water, and residential). A potential endpoint of concern for the inhalation route of exposure was identified in a toxicity study. Increased spleen weight due to red blood cell destruction was observed at 23-31 ppm (equivalent to 15-19 mg/kg/day) of acetic acid in rats. However, according to the American Conference of Governmental Industrial Hygenists, Inc. (ACGIH), the threshold limit value (TLV) for occupational exposure to acetic acid is 10 ppm via inhalation. Residential exposure to the proposed use of ammonium acetate via inhalation is not expected to exceed the TLV limit of 10 ppm because the residential use pattern would result in drastically lower opportunities for inhalation exposure than allowed occupational use patterns, which are limited to 10 ppm. In addition, residential exposure will be much lower because exposure is expected to occur for shorter periods to diluted acetic acid as compared to workers who are exposed for 8 hours continuously, to more concentrated acetic acid. Therefore, a qualitative assessment was conducted with regard to inhalation exposure.

    C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary exposure to ammonium acetate, EPA considered exposure under the proposed exemption from the requirement of a tolerance. EPA assessed dietary exposures from ammonium acetate in food as follows:

    Under this exemption from the requirement of a tolerance, residues of this ammonium acetate may be found on foods from crops that were treated with pesticide formulations containing ammonium acetate. However, a quantitative dietary exposure assessment was not conducted since an endpoint for risk assessment was not identified.

    2. Dietary exposure from drinking water. Since a hazard endpoint of concern was not identified for the acute and chronic dietary assessment, a quantitative dietary exposure risk assessment for drinking water was not conducted, although exposures may be expected from use on food crops.

    3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., textiles (clothing and diapers), carpets, swimming pools, and hard surface disinfection on walls, floors, tables).

    Ammonium acetate may be used in pesticide products and non-pesticide products that may be used around the home. Based on the discussion in Unit IV.B., a quantitative residential exposure assessment for ammonium acetate was not conducted.

    4. Cumulative effects from substances with a common mechanism of toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

    EPA has not found ammonium acetate to share a common mechanism of toxicity with any other substances, and ammonium acetate does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that ammonium acetate does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

    D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the FQPA Safety Factor (SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

    As part of its qualitative assessment, the Agency did not use safety factors for assessing risk, and no additional safety factor is needed for assessing risk to infants and children. Based on an assessment of ammonium acetate and its chemical properties, EPA has concluded that there are no toxicological endpoints of concern for the U.S. population, including infants and children.

    E. Aggregate Risks and Determination of Safety

    Because no toxicological endpoints of concern were identified, EPA concludes that aggregate exposure to residues of ammonium acetate will not pose a risk to the U.S. population, including infants and children, and that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to ammonium acetate residues.

    V. Analytical Enforcement Methodology

    An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance. EPA is establishing a limitation on the amount of ammonium acetate that may be used in pesticide formulations. The limitation will be enforced through the pesticide registration process under the Federal Insecticide, Fungicide, and Rodenticide Act (FIFRA), 7 U.S.C. 136 et seq. EPA will not register any pesticide formulation used on crops for sale or distribution containing ammonium acetate at ready for use end-use concentrations exceeding 15%.

    VI. Conclusions

    Therefore, an exemption from the requirement of a tolerance is established under 40 CFR 180.920 for ammonium acetate (CAS No. 631-61-8) when used as an inert ingredient (buffering agent) in pesticide formulations applied to crops pre-harvest and limited to 15% in the end use formulation.

    VII. Statutory and Executive Order Reviews

    This action establishes a tolerance exemption under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

    Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

    This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.).

    This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

    VIII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

    List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.

    Dated: December 11, 2015. Susan Lewis, Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

    PART 180—[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority:

    21 U.S.C. 321(q), 346a and 371.

    2. In § 180.920, add alphabetically the following inert ingredient to the table to read as follows:
    § 180.920 Inert ingredients used pre-harvest; exemptions from the requirement of a tolerance. Inert ingredients Limits Uses *         *         *         *         *         *         * Ammonium acetate (CAS No. 631-61-8) 15% Buffering Agent. *         *         *         *         *         *         *
    [FR Doc. 2015-32170 Filed 12-22-15; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2015-0630; FRL-9939-71] 2-Propenoic Acid, Homopolymer, Ester With α-[2,4,6-Tris(1-Phenylethyl)Phenyl]-ω-Hydroxypoly(Oxy-1,2-Ethanediyl), Compd. With 2,2′,2″-Nitrilotris[Ethanol]; Tolerance Exemption AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes an exemption from the requirement of a tolerance for residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] (CAS Reg. No. 1477613-46-9) when used as an inert ingredient in a pesticide chemical formulation. Spring Trading Company on behalf of Lamberti USA, Incorporated submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] on food or feed commodities.

    DATES:

    This regulation is effective December 23, 2015. Objections and requests for hearings must be received on or before February 22, 2016, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

    ADDRESSES:

    The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2015-0630, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory Public Docket (OPP Docket) in the Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPP Docket is (703) 305-5805. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

    FOR FURTHER INFORMATION CONTACT:

    Susan Lewis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION: I. General Information A. Does this action apply to me?

    You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

    B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of 40 CFR part 180 through the Government Publishing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

    C. Can I file an objection or hearing request?

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2015-0630 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 22, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

    In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2015-0630, by one of the following methods.

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

    Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001.

    Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html.

    Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets. II. Background and Statutory Findings

    In the Federal Register of October 21, 2015 (80 FR 63731) (FRL-9934-29), EPA issued a document pursuant to FFDCA section 408, 21 U.S.C. 346a, announcing the receipt of a pesticide petition (PP IN-10836) filed by Spring Trading Company, 203 Dogwood Trail, Magnolia, Texas 77354-5201 on behalf of Lamberti USA, Inc., 14622 Exxon Road, Conroe, Texas 77302. The petition requested that 40 CFR 180.960 be amended by establishing an exemption from the requirement of a tolerance for residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] (CAS Reg. No. 1477613-46-9). That document included a summary of the petition prepared by the petitioner and solicited comments on the petitioner's request. The Agency did not receive any comments in response to the notice of filing.

    Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and use in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing an exemption from the requirement of a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue . . .” and specifies factors EPA is to consider in establishing an exemption.

    III. Risk Assessment and Statutory Findings

    EPA establishes exemptions from the requirement of a tolerance only in those cases where it can be shown that the risks from aggregate exposure to pesticide chemical residues under reasonably foreseeable circumstances will pose no appreciable risks to human health. In order to determine the risks from aggregate exposure to pesticide inert ingredients, the Agency considers the toxicity of the inert in conjunction with possible exposure to residues of the inert ingredient through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings. If EPA is able to determine that a finite tolerance is not necessary to ensure that there is a reasonable certainty that no harm will result from aggregate exposure to the inert ingredient, an exemption from the requirement of a tolerance may be established.

    Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. In the case of certain chemical substances that are defined as polymers, the Agency has established a set of criteria to identify categories of polymers expected to present minimal or no risk. The definition of a polymer is given in 40 CFR 723.250(b) and the exclusion criteria for identifying these low-risk polymers are described in 40 CFR 723.250(d). 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] conforms to the definition of a polymer given in 40 CFR 723.250(b) and meets the following criteria that are used to identify low-risk polymers.

    1. The polymer is not a cationic polymer nor is it reasonably anticipated to become a cationic polymer in a natural aquatic environment.

    2. The polymer does contain as an integral part of its composition the atomic elements carbon, hydrogen, and oxygen.

    3. The polymer does not contain as an integral part of its composition, except as impurities, any element other than those listed in 40 CFR 723.250(d)(2)(ii).

    4. The polymer is neither designed nor can it be reasonably anticipated to substantially degrade, decompose, or depolymerize.

    5. The polymer is manufactured or imported from monomers and/or reactants that are already included on the TSCA Chemical Substance Inventory or manufactured under an applicable TSCA section 5 exemption.

    6. The polymer is not a water absorbing polymer with a number average molecular weight (MW) greater than or equal to 10,000 daltons.

    7. The polymer does not contain certain perfluoroalkyl moieties consisting of a CF3- or longer chain length as specified in 40 CFR 723.250(d)(6).

    Additionally, the polymer also meets as required the following exemption criteria specified in 40 CFR 723.250(e).

    8. The polymer's minimum number average MW is greater than or equal to 10,000 daltons. The polymer contains less than 2% oligomeric material below MW 500 and less than 5% oligomeric material below MW 1,000.

    Thus, 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] meets the criteria for a polymer to be considered low risk under 40 CFR 723.250. Based on its conformance to the criteria in this unit, no mammalian toxicity is anticipated from dietary, inhalation, or dermal exposure to 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol].

    IV. Aggregate Exposures

    For the purposes of assessing potential exposure under this exemption, EPA considered that 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] could be present in all raw and processed agricultural commodities and drinking water, and that non-occupational non-dietary exposure was possible. The number average MW of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] is 10,000 daltons. Generally, a polymer of this size would be poorly absorbed through the intact gastrointestinal tract or through intact human skin. Since 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] conform to the criteria that identify a low-risk polymer, there are no concerns for risks associated with any potential exposure scenarios that are reasonably foreseeable. The Agency has determined that a tolerance is not necessary to protect the public health.

    V. Cumulative Effects From Substances With a Common Mechanism of Toxicity

    Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

    EPA has not found 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] to share a common mechanism of toxicity with any other substances, and 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

    VI. Additional Safety Factor for the Protection of Infants and Children

    Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the data base unless EPA concludes that a different margin of safety will be safe for infants and children. Due to the expected low toxicity of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol], EPA has not used a safety factor analysis to assess the risk. For the same reasons the additional tenfold safety factor is unnecessary.

    VII. Determination of Safety

    Based on the conformance to the criteria used to identify a low-risk polymer, EPA concludes that there is a reasonable certainty of no harm to the U.S. population, including infants and children, from aggregate exposure to residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol].

    VIII. Other Considerations A. Existing Exemptions From a Tolerance

    There are no existing tolerance exemptions 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol]).

    B. Analytical Enforcement Methodology

    An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation.

    C. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

    The Codex has not established a MRL for 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol].

    IX. Conclusion

    Accordingly, EPA finds that exempting residues of 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol] from the requirement of a tolerance will be safe.

    X. Statutory and Executive Order Reviews

    This action establishes a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

    Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

    This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.).

    This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

    XI. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

    List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.

    Dated: December 11, 2015. Susan Lewis, Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

    PART 180—[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority:

    21 U.S.C. 321(q), 346a and 371.

    2. In § 180.960, add alphabetically the following polymer to the table to read as follows:
    §  180.960 Polymers; exemptions from the requirement of a tolerance. Polymer CAS No. *    *    *    *    * 2-propenoic acid, homopolymer, ester with α-[2,4,6-tris(1-phenylethyl)phenyl]-ω-hydroxypoly(oxy-1,2-ethanediyl), compd. with 2,2′,2″-nitrilotris[ethanol]), minimum number average molecular weight (in amu), 10,000 1477613-46-9 *    *    *    *    *
    [FR Doc. 2015-32176 Filed 12-22-15; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2014-0788; FRL-9939-83] Propiconazole; Pesticide Tolerances AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes tolerances for residues of propiconazole in or on multiple commodities which are identified and discussed later in this document. Interregional Research Project Number 4 (IR-4) requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).

    DATES:

    This regulation is effective December 23, 2015. Objections and requests for hearings must be received on or before February 22, 2016, and must be filed in accordance with the instructions provided in 40 CFR part 178 (see also Unit I.C. of the SUPPLEMENTARY INFORMATION).

    ADDRESSES:

    The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2014-0788, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory Public Docket (OPP Docket) in the Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPP Docket is (703) 305-5805. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

    FOR FURTHER INFORMATION CONTACT:

    Susan Lewis, Registration Division (7505P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

    I. General Information A. Does this action apply to me?

    You may be potentially affected by this action if you are an agricultural producer, food manufacturer, or pesticide manufacturer. The following list of North American Industrial Classification System (NAICS) codes is not intended to be exhaustive, but rather provides a guide to help readers determine whether this document applies to them. Potentially affected entities may include:

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

    B. How can I get electronic access to other related information?

    You may access a frequently updated electronic version of EPA's tolerance regulations at 40 CFR part 180 through the Government Printing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl.

    C. How can I file an objection or hearing request?

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2014-0788 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before February 22, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

    In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2014-0788, by one of the following methods:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Do not submit electronically any information you consider to be CBI or other information whose disclosure is restricted by statute.

    Mail: OPP Docket, Environmental Protection Agency Docket Center (EPA/DC), (28221T), 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001.

    Hand Delivery: To make special arrangements for hand delivery or delivery of boxed information, please follow the instructions at http://www.epa.gov/dockets/contacts.html.

    Additional instructions on commenting or visiting the docket, along with more information about dockets generally, is available at http://www.epa.gov/dockets. II. Summary of Petitioned-for Tolerance

    In the Federal Register of October 21, 2015 (80 FR 63731) (FRL-9935-29), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 4E8321) by IR-4, IR-4 Project Headquarters, Rutgers, The State University of New Jersey, 500 College Road East, Suite 201 W, Princeton, NJ 08540. The petition requested that 40 CFR 180.434 be amended by establishing tolerances for residues of the fungicide, propiconazole, 1-[[2-(2,4-dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl] methyl]-1H-1,2,4-triazole and its metabolites determined as 2,4,-dichlorobenzoic acid (2,4-DCBA), expressed as the stoichiometric equivalent of propiconazole, in or on the following raw agricultural commodities: Dill, dried at 80 parts per million (ppm); dill, fresh at 30 ppm; dill, seed at 15 ppm; fruit, stone, group 12-12, except plum at 4 ppm and nut, tree, group 14-12 at 0.1 ppm; leafy Brassica greens, subgroup 5B at 20 ppm; quinoa, grain, at 3.0 ppm; radish, roots at 0.04 ppm; radish, tops at 0.2 ppm; ti palm, leaves at 10 ppm; ti palm, roots at 0.3 ppm, and watercress at 6 ppm. IR-4 also requested that upon establishment of the above tolerances, that the existing tolerances for “fruit, stone, group 12, except plum” and “nut, tree, group 14” be removed. That document referenced a summary of the petition prepared by Syngenta, the registrant, which is available in the docket, http://www.regulations.gov. The October 21, 2015 notice supersedes a notice of filing published in the Federal Register on February 11, 2015 (80 FR 7559) (FRL-9921-94). The October 21, 2015 notice includes the commodity “quinoa, grain” as well as the other commodities that were originally requested in the February 11, 2015 notice. Two comments were received in response to the October 21, 2015 notice of filing. EPA's response to these comments is discussed in Unit IV.C.

    Based upon review of the data supporting the petition, EPA has modified some of the commodity vocabulary and rounded the significant figures of some of the tolerances. The reason for these changes are explained in Unit IV.D.

    III. Aggregate Risk Assessment and Determination of Safety

    Section 408(b)(2)(A)(i) of FFDCA allows EPA to establish a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the tolerance is “safe.” Section 408(b)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Section 408(b)(2)(C) of FFDCA requires EPA to give special consideration to exposure of infants and children to the pesticide chemical residue in establishing a tolerance and to “ensure that there is a reasonable certainty that no harm will result to infants and children from aggregate exposure to the pesticide chemical residue. . . .”

    Consistent with FFDCA section 408(b)(2)(D), and the factors specified in FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action. EPA has sufficient data to assess the hazards of and to make a determination on aggregate exposure for propiconazole including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with propiconazole follows.

    A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

    The primary target organ for propiconazole toxicity in animals is the liver. Increased liver weights were seen in mice after subchronic or chronic oral exposures to propiconazole. Liver lesions such as vacuolation of hepatocytes, ballooned liver cells, foci of enlarged hepatocytes, hypertrophy, and necrosis are characteristic of propiconazole toxicity in rats and mice. Decreased body weight gain was also seen in subchronic, chronic, developmental and reproductive studies in animal studies. Dogs appeared to be more sensitive to the localized toxicity of propiconazole as manifested by stomach irritations at 6 milligram/kilogram/day (mg/kg/day) and above.

    In rabbits, developmental toxicity occurred at a higher dose than the maternally toxic dose, while in rats, developmental toxicity occurred at lower doses than maternal toxic doses. Increased incidences of rudimentary ribs occurred in rat and rabbit fetuses. Increased cleft palate malformations were noted in two studies in rats. In one published study in rats, developmental effects (malformations of the lung and kidneys, incomplete ossification of the skull, caudal vertebrae and digits, extra rib (14th rib) and missing sternbrae) were reported at doses that were not maternally toxic. In the two generation reproduction study in rats, offspring toxicity occurred at a higher dose than the parental toxic dose suggesting lower susceptibility of the offspring to the toxic doses of propiconazole.

    The acute neurotoxicity study produced severe clinical signs of toxicity (decreased activity, cold, pale, decreased motor activity, etc.) in rats at the high dose of 300 milligram/kilogram (mg/kg). Limited clinical signs (piloerection, diarrhea, tip toe gait) were observed in the mid-dose animals (100 mg/kg), while no treatment related signs were observed at 30 mg/kg. The current acute dietary assessment for the general population is based on the NOAEL of 30 mg/kg from the acute neurotoxicity study. A subchronic neurotoxicity study in rats did not produce neurotoxic signs at the highest dose tested that was associated with decreased body weight.

    Propiconazole was negative for mutagenicity in the in vitro BALB/3T3 cell transformation assay, bacterial reverse mutation assay, Chinese hamster bone marrow chromosomal aberration assay, unscheduled DNA synthesis studies in human fibroblasts and primary rat hepatocytes, mitotic gene conversion assay, and the dominant lethal assay in mice. It caused proliferative changes in the rat liver with or without pretreatment with an initiator, like phenobarbital, a known liver tumor promoter. Liver enzyme induction studies with propiconazole in mice demonstrated that propiconazole is a strong phenobarbital type inducer of xenobiotic metabolizing enzymes. Hepatocellular proliferation studies in mice suggest that propiconazole induces cell proliferation followed by treatment-related hypertrophy in a manner similar to the known hypertrophic agent phenobarbital.

    Propiconazole was carcinogenic to male mice but was not carcinogenic to rats or to female mice. The Agency classified propiconazole as a possible human carcinogen and recommended that, for the purpose of risk characterization, the reference dose (RfD) approach be used for quantification of human risk. Propiconazole is not genotoxic and this fact, together with special mechanistic studies, indicates that propiconazole is a threshold carcinogen. Propiconazole produced liver tumors in male mice only at a high dose that was toxic to the liver. At doses below the RfD, liver toxicity is not expected; therefore, tumors are also not expected.

    Specific information on the studies received and the nature of the adverse effects caused by propiconazole as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in the document titled, “Propiconazole Human Health Risk Assessment for the New Uses of Propiconazole on dill, leafy brassicas crop subgroup 5B, ti palm, watercress, and quinoa, along with expansion to fruit, stone, group 12-12; except plum, and nut, tree, group 14-12” on pp. 37 in docket ID number EPA-HQ-OPP-2014-0788.

    B. Toxicological Points of Departure/Levels of Concern

    Once a pesticide's toxicological profile is determined, EPA identifies toxicological points of departure (POD) and levels of concern to use in evaluating the risk posed by human exposure to the pesticide. For hazards that have a threshold below which there is no appreciable risk, the toxicological POD is used as the basis for derivation of reference values for risk assessment. PODs are developed based on a careful analysis of the doses in each toxicological study to determine the dose at which the NOAEL and the LOAEL are identified. Uncertainty/safety factors are used in conjunction with the POD to calculate a safe exposure level—generally referred to as a population-adjusted dose (PAD) or a RfD—and a safe margin of exposure (MOE). For non-threshold risks, the Agency assumes that any amount of exposure will lead to some degree of risk. Thus, the Agency estimates risk in terms of the probability of an occurrence of the adverse effect expected in a lifetime. For more information on the general principles EPA uses in risk characterization and a complete description of the risk assessment process, see http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/assessing-human-health-risk-pesticides.

    A summary of the toxicological endpoints for propiconazole used for human risk assessment is shown in Table 1 of this unit.

    Table 1—Summary of Toxicological Doses and Endpoints for Propiconazole for Use in Human Health Risk Assessment Exposure/scenario Point of departure and uncertainty/safety factors RfD, PAD, LOC for risk assessment Study and toxicological effects Acute dietary (Females 13-50 years of age) NOAEL = 30 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • Acute RfD = 0.3 mg/kg/day
  • aPAD = 0.3 mg/kg/day
  • Developmental Study—Rat
  • LOAEL = 90 mg/kg/day based on increased incidence of rudimentary ribs, un-ossified sternebrae, as well as increased incidence of shortened and absent renal papillae and increased cleft palate.
  • Acute dietary (General population including infants and children) NOAEL = 30 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • Acute RfD = 0.3 mg/kg/day
  • aPAD = 0.3 mg/kg/day
  • Acute neurotoxicity study—Rat
  • LOAEL = 100 mg/kg/day based on clinical signs of toxicity (piloerection in one male, diarrhea in one female, tip toe gait in 3 females).
  • Chronic dietary (Adult Males and Females 50+ yrs) NOAEL= 10 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • Chronic RfD = 0.1 mg/kg/day
  • cPAD = 0.1 mg/kg/day
  • 24-Month carcinogenicity study on CD-1 mice. MRID 00129918
  • LOAEL = 50 mg/kg/day based on non-neoplastic liver effects (increased liver weight in males and increase in liver lesions: Masses/raised areas/swellings/nodular areas mainly).
  • Incidental oral short-term (1 to 30 days) NOAEL= 30 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 Acute Neurotoxicity Study—Rats
  • LOAEL = 100 mg/kg/day based on clinical signs of toxicity (piloerection in one male, diarrhea in one female, tip toe gait in 3 females).
  • Incidental oral intermediate-term (1 to 6 months) NOAEL= 10 mg/kg/day
  • UFA= 10x
  • UFH= 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 24-Month carcinogenicity Study—Mice
  • LOAEL = 50 mg/kg/day based on non-neoplastic liver effects (increased liver weight in males and increase in liver lesions: Masses/raised areas/swellings/nodular areas mainly).
  • Dermal short-term (1 to 30 days) Oral study NOAEL = 30 mg/kg/day (dermal absorption rate = 40%)
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 Acute Neurotoxicity Study—Rats
  • LOAEL = 100 mg/kg/day based on clinical signs of toxicity (piloerection in one male, diarrhea in one female, tip toe gait in 3 females).
  • Dermal intermediate-term (1 to 6 months) Oral study NOAEL= 10 mg/kg/day (dermal absorption rate = 40%)
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 24-Month carcinogenicity Study—Mice
  • LOAEL = 50 mg/kg/day based on non-neoplastic liver effects (increased liver weight in males and increase in liver lesions: Masses/raised areas/swellings/nodular areas mainly).
  • Inhalation short-term (1 to 30 days) Oral study NOAEL= 30 mg/kg/day (inhalation absorption rate = 100%)
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 Acute Neurotoxicity Study—Rats
  • LOAEL = 100 mg/kg/day based on clinical signs of toxicity (piloerection in one male, diarrhea in one female, tip toe gait in 3 females).
  • Cancer (Oral, dermal, inhalation) Classification: Group C, possible human carcinogen, RfD approach for risk characterization. FQPA SF = Food Quality Protection Act Safety Factor. LOAEL = lowest-observed-adverse-effect-level. LOC = level of concern. mg/kg/day = milligram/kilogram/day. MOE = margin of exposure. NOAEL = no-observed-adverse-effect-level. PAD = population adjusted dose (a = acute, c = chronic). RfD = reference dose. UF = uncertainty factor. UFA = extrapolation from animal to human (interspecies). UFH = potential variation in sensitivity among members of the human population (intraspecies).
    C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary exposure to propiconazole, EPA considered exposure under the petitioned-for tolerances as well as all existing propiconazole tolerances in 40 CFR 180.434. EPA assessed dietary exposures from propiconazole in food as follows:

    i. Acute exposure. Quantitative acute dietary exposure and risk assessments are performed for a food-use pesticide, if a toxicological study has indicated the possibility of an effect of concern occurring as a result of a 1-day or single exposure.

    Such effects were identified for propiconazole. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) National Health and Nutrition Examination Survey, What We Eat in America, (NHANES/WWEIA). This dietary survey was conducted from 2003 to 2008. As to residue levels in food, EPA conducted an acute dietary analysis for propiconazole residues of concern using tolerance levels and 100 percent crop treated (PCT) for all existing and proposed uses.

    ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA's NHANES/WWEIA. This dietary survey was conducted from 2003 to 2008. As to residue levels in food, EPA conducted a chronic dietary analysis for propiconazole residues of concern using tolerance levels for some commodities, average field trial residues for the remaining commodities, and 100 PCT for all existing and proposed uses.

    iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that a nonlinear RfD approach is appropriate for assessing cancer risk to propiconazole. Cancer risk was assessed using the same exposure estimates as discussed in Unit III.C.1.ii., chronic exposure.

    iv. Anticipated residue information. Section 408(b)(2)(E) of FFDCA authorizes EPA to use available data and information on the anticipated residue levels of pesticide residues in food and the actual levels of pesticide residues that have been measured in food. If EPA relies on such information, EPA must require pursuant to FFDCA section 408(f)(1) that data be provided 5 years after the tolerance is established, modified, or left in effect, demonstrating that the levels in food are not above the levels anticipated. For the present action, EPA will issue such data call-ins as are required by FFDCA section 408(b)(2)(E) and authorized under FFDCA section 408(f)(1). Data will be required to be submitted no later than 5 years from the date of issuance of these tolerances.

    2. Dietary exposure from drinking water. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for propiconazole in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of propiconazole. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/about-water-exposure-models-used-pesticide.

    Based on the Surface Water Concentration Calculator (SWCC) and Pesticide Root Zone Model—Ground Water (PRZM-GW) models, the estimated drinking water concentrations (EDWCs) of propiconazole for acute exposures are estimated to be 35.2 parts per billion (ppb) for surface water and 37.9 ppb for ground water, and for chronic exposures are estimated to be 18.6 ppb for surface water and 35.1 ppb for ground water.

    Modeled estimates of drinking water concentrations were directly entered into the dietary exposure model. For acute dietary risk assessment, the water concentration value of 37.9 ppb was used to assess the contribution to drinking water. For chronic dietary risk assessment, the water concentration of value 35.1 ppb was used to assess the contribution to drinking water.

    3. From non-dietary exposure. The term “residential exposure” is used in this document to refer to non-occupational, non-dietary exposure (e.g., for lawn and garden pest control, indoor pest control, termiticides, and flea and tick control on pets).

    Propiconazole is currently registered for the following uses that could result in residential exposures: Turf, ornamentals, and in paint. The highest incidental oral and dermal exposure scenarios are expected from residential use on turf. EPA assessed short-term risk to toddlers from incidental oral and dermal exposure and short-term risk to adults from dermal and inhalation residential handler exposure as well as from post-application dermal exposure. The highest post-application exposure from residential use on turf was used to assess risk to short-term aggregate exposures.

    The only residential use scenario that will result in potential intermediate term exposure to propiconazole is wood treatment, which the Agency assumes may result in dermal and incidental oral post-application exposures to children. No chronic exposures are expected. Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/standard-operating-procedures-residential-pesticide.

    4. Cumulative effects from substances with a common mechanism of toxicity. Section 408(b)(2)(D)(v) of FFDCA requires that, when considering whether to establish, modify, or revoke a tolerance, the Agency consider “available information” concerning the cumulative effects of a particular pesticide's residues and “other substances that have a common mechanism of toxicity.”

    Propiconazole is a member of the triazole-containing class of pesticides. Although conazoles act similarly in plants (fungi) by inhibiting ergosterol biosynthesis, there is not necessarily a relationship between their pesticidal activity and their mechanism of toxicity in mammals. Structural similarities do not constitute a common mechanism of toxicity. Evidence is needed to establish that the chemicals operate by the same, or essentially the same, sequence of major biochemical events (EPA, 2002). In conazoles, however, a variable pattern of toxicological responses is found; some are hepatotoxic and hepatocarcinogenic in mice. Some induce thyroid tumors in rats. Some induce developmental, reproductive, and neurological effects in rodents. Furthermore, the conazoles produce a diverse range of biochemical events including altered cholesterol levels, stress responses, and altered DNA methylation. It is not clearly understood whether these biochemical events are directly connected to their toxicological outcomes. Thus, there is currently no evidence to indicate that conazoles share common mechanisms of toxicity and EPA is not following a cumulative risk approach based on a common mechanism of toxicity for the conazoles. For information regarding EPA's procedures for cumulating effects from substances found to have a common mechanism of toxicity, see EPA's Web site at http://www2.epa.gov/pesticide-science-and-assessing-pesticide-risks/cumulative-assessment-risk-pesticides.

    Propiconazole is a triazole-derived pesticide. This class of compounds can form the common metabolite 1,2,4-triazole and two triazole conjugates (triazolylalanine and triazolylacetic acid). To support existing tolerances and to establish new tolerances for triazole-derivative pesticides, including propiconazole, EPA conducted a human health risk assessment for exposure to 1,2,4-triazole, triazolylalanine, and triazolylacetic acid resulting from the use of all current and pending uses of any triazole-derived fungicide. The risk assessment is a highly conservative, screening-level evaluation in terms of hazards associated with common metabolites (e.g., use of a maximum combination of uncertainty factors) and potential dietary and non-dietary exposures (i.e., high end estimates of both dietary and non-dietary exposures). The Agency retained a 3X for the LOAEL to NOAEL safety factor when the reproduction study was used. In addition, the Agency retained a 10X for the lack of studies including a DNT. The assessment includes evaluations of risks for various subgroups, including those comprised of infants and children. The Agency's complete risk assessment is found in the propiconazole reregistration docket at http://www.regulations.gov, Docket ID Number EPA-HQ-OPP-2005-0497.

    An updated dietary exposure and risk analysis for the common triazole metabolites 1,2,4-triazole (T), triazolylalanine (TA), triazolylacetic acid (TAA), and triazolylpyruvic acid (TP) was completed on April 9, 2015, in association with registration requests for several triazole fungicides, propiconazole, difenoconazole, and flutriafol. That analysis concluded that risk estimates were below the Agency's level of concern for all population groups. This assessment may be found on http://www.regulations.gov by searching for the following title and docket number: “Common Triazole Metabolites: Updated Aggregate Human Health Risk Assessment to Address The New Section 3 Registrations For Use of Propiconazole on Tea, Dill, Mustard Greens, Radish, and Watercress; Use of Difenoconazole on Globe Artichoke, Ginseng and Greenhouse Grown Cucumbers and Conversion of the Established Foliar Uses/Tolerances for Stone Fruit and Tree Nut Crop Groups to Fruit, Stone, Group 12-12 and the Nut, Tree, Group 14-12.; and Use of Flutriafol on Hops” (located in docket ID number EPA-HQ-OPP-2014-0788).

    D. Safety Factor for Infants and Children

    1. In general. Section 408(b)(2)(C) of FFDCA provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines based on reliable data that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act Safety Factor (FQPA SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

    2. Prenatal and postnatal sensitivity. In the developmental toxicity study in rats, fetal effects observed in this study at a dose lower than that evoking maternal toxicity are considered to be quantitative evidence of increased susceptibility of fetuses to in utero exposure to propiconazole. Neither quantitative nor qualitative evidence of increased susceptibility was observed in utero or postnatally in either the rabbit developmental or 2-generation reproduction rat study. There is no evidence of neuropathology or abnormalities in the development of the fetal nervous system from the available toxicity studies conducted with propiconazole. In the rat acute neurotoxicity study, there was evidence of clinical toxicity at the high dose of 300 mg/kg, but no evidence of neuropathology from propiconazole administration.

    Although there was quantitative evidence of increased susceptibility of the young following exposure to propiconazole in the developmental rat study, the Agency determined there is a low degree of concern for this finding and no residual uncertainties because the increased susceptibility was based on minimal toxicity at high doses of administration, clear NOAELs and LOAELs have been identified for all effects of concern, and a clear dose-response has been well defined.

    3. Conclusion. EPA has determined that reliable data show the safety of infants and children would be adequately protected if the FQPA SF were reduced to 1x. That decision is based on the following findings:

    i. The toxicity database for propiconazole is complete.

    ii. Other than the mild effects seen at 300 mg/kg in the acute neurotoxicity study, neurotoxicity and neurobehavioral effects were not seen in the propiconazole toxicity database. The liver, not the nervous system, is the primary target organ of propiconazole toxicity.

    iii. Although an apparent increased quantitative susceptibility was observed in fetuses and offspring, for the reasons noted in this Unit residual uncertainties or concerns for prenatal and/or postnatal toxicity are minimal.

    iv. There are no residual uncertainties identified in the exposure databases. The acute dietary food exposure assessments were performed based on 100 PCT and tolerance-level residues, while the chronic used a combination of tolerance-level residues and reliable data on average field trial residues and 100 PCT. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to propiconazole in drinking water. EPA used similarly conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. A turf transferable residue study is unavailable but being requested from the registrant for registration review of propiconazole. In all probability this study will reduce exposure estimates for both the incidental oral and post-application exposure to children. These assessments will not underestimate the exposure and risks posed by propiconazole.

    E. Aggregate Risks and Determination of Safety

    EPA determines whether acute and chronic dietary pesticide exposures are safe by comparing aggregate exposure estimates to the acute PAD (aPAD) and chronic PAD (cPAD). For linear cancer risks, EPA calculates the lifetime probability of acquiring cancer given the estimated aggregate exposure. Short-, intermediate-, and chronic-term risks are evaluated by comparing the estimated aggregate food, water, and residential exposure to the appropriate PODs to ensure that an adequate MOE exists.

    1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to propiconazole will occupy 84% of the aPAD for children 1-2 years old, the population group receiving the greatest exposure.

    2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to propiconazole from food and water will utilize 25% of the cPAD for children 1-2 years old, the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of propiconazole is not expected.

    3. Short-term risk. Short-term aggregate exposure takes into account short-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level). Propiconazole is currently registered for uses that could result in short-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with short-term residential exposures to propiconazole.

    Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs from post-application activities (the highest exposure scenario) of 200 for adults and 96 for children 1-2 years old. Although the MOE for children 1-2 years old is slightly below the target MOE of 100, the Agency does not believe that propiconazole poses short-term risks of concern because the difference is small and more than offset by the use of conservative endpoints and conservative exposure assumptions. This assessment is considered conservative since the short-term endpoints are based on a conservative LOAEL that is 3x higher than the NOAEL. Therefore, the true NOAEL is likely higher and would result in MOEs greater than 100. Further, the assessment combines conservative assumptions by using tolerance-level residues and reliable data on average field-trial residues and 100 PCT, conservative assumptions in the ground and surface water modeling, and conservative assumptions to assess post-application exposure of children as well as incidental oral exposure of toddlers. Refining any one of these conservatisms would result in MOEs for this age group that are not of concern. Although dietary (food and water) is not the aggregate exposure driver, incorporating PCT would likely increase the aggregate MOE further above 100. For example, using the Agency's highest average PCT reported for propiconazole residues on crops (i.e., 55%), which is approximately half the currently assumed dietary exposure, the MOE for this age group would exceed the target MOE of 100 and not be of concern. Therefore, the Agency has determined that there is no short-term risk of concern from exposure to propiconazole.

    4. Intermediate-term risk. Intermediate-term aggregate exposure takes into account intermediate-term residential exposure plus chronic exposure to food and water (considered to be a background exposure level).

    Propiconazole is currently registered for use as a wood treatment that could result in intermediate-term residential exposure, and the Agency has determined that it is appropriate to aggregate chronic exposure through food and water with intermediate-term residential exposures to propiconazole.

    Using the exposure assumptions described in this unit for intermediate-term exposures, EPA has concluded that the combined intermediate-term food, water, and residential exposures result in an aggregate MOE of 110 for children 1-2 years old. Because EPA's level of concern for propiconazole is a MOE of 100 or below, this MOE is not of concern.

    5. Aggregate cancer risk for U.S. population. Based on the discussion in Unit III.A., EPA considers the chronic aggregate risk assessment to be protective of any aggregate cancer risk. As there is no chronic risk of concern, EPA does not expect any cancer risk to the U.S. population from aggregate exposure to propiconazole.

    6. Determination of safety. Based on these risk assessments, EPA concludes that there is a reasonable certainty that no harm will result to the general population, or to infants and children from aggregate exposure to propiconazole residues.

    IV. Other Considerations A. Analytical Enforcement Methodology

    Adequate enforcement methodology, a high performance liquid chromatography with ultraviolet detection method (HPLC/UV Method AG-671A) is available to enforce the tolerance expression. The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: [email protected]

    B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level.

    There are no Codex MRLs for dillweed (fresh or dried), dill seed, the brassica leafy greens subgroup 5B, ti palm, watercress, quinoa or radish.

    Codex does have MRLs in place for peach and plums (part of the U.S. stone fruit group), and pecans (part of the U.S. tree nut group) that are different than the U.S. tolerances. The U.S. tolerance expression is not harmonized with the Codex expression, which is expressed in terms of propiconazole per se, and therefore, the U.S. tolerance level for stone fruit and tree nuts cannot be harmonized with the Codex MRLs that are currently established.

    C. Response to Comments

    Two comments were received in response to the October 21, 2015 notice of filing. The first comment asserted that no residues should be allowed and that the pesticide should not be approved for sale or use. The Agency understands the commenter's concerns and recognizes that some individuals believe that pesticides should be banned on agricultural crops. However, the existing legal framework provided by section 408 of the FFDCA states that tolerances may be set when persons seeking such tolerances or exemptions have demonstrated that the pesticide meets the safety standard imposed by that statute. The comment appears to be directed at the underlying statute and not EPA's implementation of it; the citizen has made no contention that EPA has acted in violation of the statutory framework.

    The second comment was from the Center for Biological Diversity and concerned endangered species; specifically stating that EPA cannot approve this new use prior to completion of consultations with the U.S. Fish and Wildlife Service and the National Marine Fisheries Service (“the Services”). This comment is not relevant to the Agency's evaluation of safety of the propiconazole tolerances; section 408 of the FFDCA focuses on potential harms to human health and does not permit consideration of effects on the environment.

    D. Revisions to Petitioned-for Tolerances

    The Agency is revising the petitioned-for tolerance requests for “dill, fresh” and “dill, dried” to “dillweed, fresh leaves” and “dillweed, dried leaves”, respectively, for consistency with the Agency's commodity vocabulary for those commodities. For the same reason, the Agency is revising the petitioned-for tolerance request for “leafy Brassica greens, subgroup 5B” to “Brassica leafy greens, subgroup 5B”. In addition, EPA is revising the tolerance values for radish, tops; ti palm, roots; and watercress to be consistent with EPA's policy on significant figures for tolerances.

    V. Conclusion

    Therefore, tolerances are established for residues of propiconazole, 1-[[2-(2,4-dichlorophenyl)-4-propyl-1,3-dioxolan-2-yl] methyl]-1H-1,2,4-triazole and its metabolites determined as 2,4,-dichlorobenzoic acid (2,4-DCBA), expressed as the stoichiometric equivalent of propiconazole, in or on brassica leafy greens, subgroup 5B at 20 ppm; dill seed at 15 ppm; dillweed, dried leaves at 80 ppm; dillweed, fresh leaves at 30 ppm; quinoa, grain at 3.0 ppm; radish, roots at 0.04 ppm; radish, tops at 0.20 ppm; ti palm, leaves at 10 ppm; ti palm, roots at 0.30 ppm; and watercress at 6.0 ppm. In addition, the existing fruit, stone, group 12, except plum and nut, tree, group 14 tolerances are modified to read “fruit, stone, group 12-12, except plum” and “nut, tree, group 14-12,” respectively.

    VI. Statutory and Executive Order Reviews

    This action establishes tolerances under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this action has been exempted from review under Executive Order 12866, this action is not subject to Executive Order 13211, entitled “Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use” (66 FR 28355, May 22, 2001) or Executive Order 13045, entitled “Protection of Children from Environmental Health Risks and Safety Risks” (62 FR 19885, April 23, 1997). This action does not contain any information collections subject to OMB approval under the Paperwork Reduction Act (PRA) (44 U.S.C. 3501 et seq.), nor does it require any special considerations under Executive Order 12898, entitled “Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations” (59 FR 7629, February 16, 1994).

    Since tolerances and exemptions that are established on the basis of a petition under FFDCA section 408(d), such as the tolerance in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

    This action directly regulates growers, food processors, food handlers, and food retailers, not States or tribes, nor does this action alter the relationships or distribution of power and responsibilities established by Congress in the preemption provisions of FFDCA section 408(n)(4). As such, the Agency has determined that this action will not have a substantial direct effect on States or tribal governments, on the relationship between the national government and the States or tribal governments, or on the distribution of power and responsibilities among the various levels of government or between the Federal Government and Indian tribes. Thus, the Agency has determined that Executive Order 13132, entitled “Federalism” (64 FR 43255, August 10, 1999) and Executive Order 13175, entitled “Consultation and Coordination with Indian Tribal Governments” (65 FR 67249, November 9, 2000) do not apply to this action. In addition, this action does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act (UMRA) (2 U.S.C. 1501 et seq.).

    This action does not involve any technical standards that would require Agency consideration of voluntary consensus standards pursuant to section 12(d) of the National Technology Transfer and Advancement Act (NTTAA) (15 U.S.C. 272 note).

    VII. Congressional Review Act

    Pursuant to the Congressional Review Act (5 U.S.C. 801 et seq.), EPA will submit a report containing this rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

    List of Subjects in 40 CFR Part 180

    Environmental protection, Administrative practice and procedure, Agricultural commodities, Pesticides and pests, Reporting and recordkeeping requirements.

    Dated: December 14, 2015. Susan Lewis, Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

    PART 180—[AMENDED] 1. The authority citation for part 180 continues to read as follows: Authority:

    21 U.S.C. 321(q), 346a and 371.

    2. In § 180.434: a. Revise the entries for “Fruit, stone, group 12, except plum” and “Nut, tree, group 14.” b. Add alphabetically the following commodities to the table in paragraph (a).

    The revisions and additions read as follows:

    § 180.434 Propiconazole; tolerances for residues.

    (a) * * *

    Commodity Parts per million *    *    *    *    * Brassica leafy greens, subgroup 5B 20 *    *    *    *    * Dill, seed 15 Dillweed, dried leaves 80 Dillweed, fresh leaves 30 *    *    *    *    * Fruit, stone, group 12-12, except plum 4.0 *    *    *    *    * Nut, tree, group 14-12 0.10 *    *    *    *    * Quinoa, grain 3.0 Radish, roots 0.04 Radish, tops 0.20 *    *    *    *    * Ti palm, leaves 10 Ti palm, roots 0.30 *    *    *    *    * Watercress 6.0 *    *    *    *    *
    [FR Doc. 2015-32327 Filed 12-22-15; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF TRANSPORTATION National Highway Traffic Safety Administration 49 CFR Parts 591 and 592 [Docket No. NHTSA-2015-0076] RIN 2127-AL63 Allowing Importers To Provide Information to U.S. Customs and Border Protection in Electronic Format AGENCY:

    National Highway Traffic Safety Administration (NHTSA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    On September 2, 2015, the National Highway Traffic Safety Administration (NHTSA) published an interim final rule and request for comment entitled “Allowing Importers to Provide Information to U.S. Customs and Border Protection in Electronic Format.” No comments were received in response to the interim final rule. Accordingly, this final rule confirms that the September 2, 2015 interim final rule will not be changed and its effective date is September 2, 2015.

    DATES:

    Effective December 23, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Arija Flowers, Trial Attorney, Office of the Chief Counsel, National Highway Traffic Safety Administration, 1200 New Jersey Avenue SE., Washington, DC 20590 (telephone: 202-366-5263).

    SUPPLEMENTARY INFORMATION:

    As NHTSA received no comments on its interim final rule published on September 2, 2015 (80 FR 53011), the agency is making no changes to the rule and its effective date is September 2, 2015. For regulatory analyses and notices associated with this action, please see the interim final rule published at 80 FR 53011.

    Accordingly, the interim rule amending 49 CFR parts 591 and 592, published at 80 FR 53011 on September 2, 2015, is adopted as final without change.

    Issued in Washington, DC, on December 17, 2015 under authority delegated in 49 CFR part 1.95. Mark R. Rosekind, Administrator.
    [FR Doc. 2015-32260 Filed 12-22-15; 8:45 am] BILLING CODE 4910-59-P
    80 246 Wednesday, December 23, 2015 Proposed Rules FEDERAL HOUSING FINANCE AGENCY 12 CFR Part 1217 RIN 2590-AA76 Implementation of the Program Fraud Civil Remedies Act of 1986 AGENCY:

    Federal Housing Finance Agency.

    ACTION:

    Proposed rule; request for comment.

    SUMMARY:

    The Federal Housing Finance Agency (FHFA) proposes this rule to implement the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.), by establishing administrative procedures for imposing civil penalties and assessments against persons who make false, fictitious, or fraudulent claims or written statements to FHFA in the context of its contracting or employment activities, where the amount of money or the value of property or services involved or requested from FHFA is $150,000 or less.

    DATES:

    Comments must be received on or before February 22, 2016.

    ADDRESSES:

    You may submit your comments, identified by regulatory information number (RIN) 2590-AA76, by any of the following methods:

    Agency Web site: www.fhfa.gov/open-for-comment-or-input.

    Federal eRulemaking Portal: http://www.regulations.gov.

    Follow the instructions for submitting comments. If you submit your comments to the Federal eRulemaking Portal, please also send it by email to FHFA at [email protected] to ensure timely receipt by the agency. Please include “RIN 2590-AA76” in the subject line of the message.

    Hand Delivery/Courier: The hand delivery address is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA76, Federal Housing Finance Agency, Constitution Center, (OGC) Eighth Floor, 400 Seventh Street SW., Washington, DC 20219. The package should be delivered to the Seventh Street entrance Guard Desk, First Floor, on business days between 9 a.m. and 5 p.m.

    U.S. Mail, United Parcel Service, Federal Express, or Other Mail Service: The mailing address for comments is: Alfred M. Pollard, General Counsel, Attention: Comments/RIN 2590-AA76, Federal Housing Finance Agency, Constitution Center, (OGC) Eighth Floor, 400 Seventh Street SW., Washington, DC 20219.

    FOR FURTHER INFORMATION CONTACT:

    Laura Ayoud, Assistant General Counsel, Office of the General Counsel, (202) 649-3069, [email protected], or Ellen Bailey, Managing Associate General Counsel, (202) 649-3056, [email protected], 400 Seventh Street SW., Eighth Floor, Washington, DC 20219 (not toll free numbers). The telephone number for the Telecommunications Device for the Hearing Impaired is (800) 877-8339.

    SUPPLEMENTARY INFORMATION: I. General Information A. Comments

    FHFA invites comments on all aspects of the proposed rule and will revise the language of the proposed rule as appropriate after taking all comments into consideration. Copies of all comments will be posted without change, including any personal information you provide, such as your name, address, or phone number, on the FHFA Internet Web site at http://www.fhfa.gov. In addition, copies of all comments received will be available for examination by the public on business days between the hours of 10 a.m. and 3 p.m., at the Federal Housing Finance Agency, Eighth Floor, 400 Seventh Street, SW., Washington, DC 20219. To make an appointment to inspect comments, please call the Office of General Counsel at (202) 649-3804.

    B. Background

    The Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.) (PFCRA) requires FHFA, as an “authority,” to establish by rule procedures for imposing civil penalties and assessments on any person who makes a false claim for property, services, or money from FHFA, or makes a false material statement to FHFA in connection with a claim, where the amount involved does not exceed $150,000.1 A “claim” as defined in the Act includes a request, demand, or submission for property, services, or money from FHFA or a party to a contract with FHFA, including money representing benefits.2 A “statement” is any representation, certification, affirmation, document, record, or accounting or bookkeeping entry with respect to a claim, a contract or a bid or proposal for a contract with FHFA, or a benefit from FHFA.3 For covered claims and statements, PFCRA provides an administrative remedy as an alternative to judicial action, where the Department of Justice (DOJ) has declined to prosecute under the civil False Claims Act, 31 U.S.C. 3729.4

    1See 31 U.S.C. 3801(a)(1)(C) and 3803(g); see also 5 U.S.C., App. 3, 11(2).

    2Id., section 3801(a)(3).

    3Id., section 3801(a)(9).

    4See S.Rep. No. 99-212, 99th Cong., 1st Sess. 6 (1985) (“[E]xisting remedies are not adequate to cope with the problem of fraud in Federal programs. The Committee [of Governmental Affairs of the Senate], therefore, believes that an alternative administrative remedy is needed to adjudicate small-dollar false claim and statement cases that otherwise would not be initiated civilly.”).

    PFCRA establishes a process of (a) investigation by the “investigating official,” who, by statute, is the Inspector General (IG) of the agency or a designee of the IG; (b) review by the agency's “reviewing official,” designated by the agency head,5 to determine if adequate evidence of liability exists; and (c) review by DOJ. If the Attorney General approves use of the PFCRA process, PFCRA authorizes the reviewing official to initiate an action by providing notice to the person alleged to be liable; if a hearing on the record is requested, it is before a “presiding official,” which by statute is an Administrative Law Judge (ALJ) appointed or detailed for such purpose.6 PFCRA also establishes appeal rights to the agency head by any person determined by an ALJ to be liable; further review is available by the U.S. District Court.7

    5 31 U.S.C. 3801(a)(8)(A) and 3803. With publication of this proposed rule, the Director of FHFA designates the General Counsel of FHFA as FHFA's reviewing official.

    6Id. section 3803.

    7Id., see also section 3805.

    A civil penalty may be imposed for making a false claim or statement to an agency even if the agency did not provide any money, property, services or benefits to any person as a result. Where money, property, services or benefits were provided as a result of the person's false claim or statement, an assessment may also be imposed as the administrative equivalent of “damages.” The maximum amount of any civil penalty is established by PFCRA, subject to periodic adjustments for inflation, and PFCRA also caps any assessment at an amount equal to twice the value of the money, property, services or benefits provided.8

    8Id. section 3802(a)(1) and (3).

    Following PFCRA's enactment in 1986, an interagency task force was established under the leadership of the Department of Health and Human Services to develop model implementing regulations by all affected agencies and departments. This action was consistent with the expectation that “regulations would be substantively uniform throughout the government, except as necessary to meet the specific needs of a particular agency or program.” 9 For that reason, FHFA reviewed the PFCRA rules of other departments and agencies and has modeled its proposed rule on final rules of the Federal Deposit Insurance Corporation (FDIC) and Department of Housing and Urban Development (HUD).10 The FDIC rule was employed because, like FHFA, FDIC is a federal financial safety and soundness regulator. FHFA's supervisory, regulatory, enforcement and resolution powers are similar to FDIC's, and both FDIC and FHFA have express independent litigating authority and authority to bring administrative actions for civil money penalties for false claims or statements made to them by their regulated institutions or entities and affiliated parties apart from authority provided by PFCRA. The HUD rule provided a structural model and an established operational approach.

    9See S. Rep. No. 99-212 at 12; see also 52 FR 27423 (July 21, 1987).

    10See 12 CFR part 308, subpart T (FDIC) and 24 CFR part 28 (HUD) (2015).

    II. Analysis of Proposed Rule

    Scope. As does the FDIC's PFCRA rule, FHFA's proposed rule states that it applies to FHFA's employment and contracting activities and does not apply to FHFA's supervisory, regulatory, enforcement, conservatorship, or receivership activities because other civil and administrative remedies available to FHFA are adequate to redress fraud in the areas not covered. FHFA intends that the PFCRA administrative process not be confused with ordinary Agency procedures available in regulatory or conservatorship situations. There FHFA exercises its broad and comprehensive supervisory, regulatory, enforcement, conservatorship, or receivership authorities, as appropriate, with regard to its regulated entities (Fannie Mae, Freddie Mac (collectively, the “Enterprises”), any affiliate of an Enterprise and the Federal Home Loan Bank System and the Office of Finance of the Federal Home Loan Bank System (OF), or any other entity-affiliated party. This statement of scope is almost identical to limitations imposed by the FDIC in its PFCRA rule, at 12 CFR 308.500(c), and reflects the broad enforcement authorities provided to FHFA in the Federal Housing Enterprise Financial Safety and Soundness Act, 12 U.S.C. 4501 et seq. (Safety and Soundness Act).

    FHFA has determined this approach is appropriate for several reasons. Through the Safety and Soundness Act, FHFA has other available administrative remedies and independent litigating authority that it could use in the event a regulated entity, any affiliate of an Enterprise, the OF, or any other entity-affiliated party made a false claim on or provided false information to FHFA in its supervisory, regulatory, enforcement, conservatorship, or receivership activities. See generally 12 U.S.C. 4513, 4514, 4585, and 4636. As a result, even without PFCRA, FHFA could pursue administrative or judicial remedies for these false claims or statements on its own behalf with similar or greater effect. The statement of scope also recognizes that PFCRA provides the reviewing official discretion to pursue a false claim or statement through the PFCRA process and acknowledges that where FHFA has determined that another available action or remedy would be more appropriate, an administrative action will not be brought under PFCRA. Finally, the statement of scope serves congressional intent that the FHFA Office of the Inspector General be independent and objective in its oversight of FHFA, which could be compromised if the IG were able to initiate administrative actions against a regulated entity, including any affiliate of an Enterprise, or the OF or any other entity-affiliated party based on false claims or statements to FHFA made when FHFA was engaged in supervisory, regulatory, enforcement, conservatorship, or receivership activities.11

    11 FHFA's statement of scope in the proposed rule is nearly identical to the scope provision adopted by the FDIC in its PFCRA rule, which applies to FDIC's employment and contracting activities but does not apply to false claims or statements made in connection with FDIC's regulatory, supervision, enforcement, insurance, receivership, or liquidation responsibilities. See 12 CFR 308.500(c). FDIC explained that, as so limited, its rule was consistent with PFCRA's underlying purpose “to provide federal agencies with an administrative remedy for `small dollar fraud' cases for which there is no other remedy because the cases are too small for the [DOJ] to prosecute,” and distinguished FDIC's circumstances from those of other agencies based on its other available administrative remedies and on its independent litigating authority. 65 FR 52352 (Aug. 29, 2000) (proposed rule); see also 66 FR 9187, 9188 (Feb. 7, 2001) (final rule).

    Finally, FHFA also notes that its PFCRA rule would not apply to false claims or statements made by any person to any regulated entity, an affiliate of an Enterprise, or the OF. PFCRA generally does not apply to false claims or statements made to private companies conducting private business activities, but instead creates an administrative remedy for false claims or statements for money, property, services, or benefits provided by the United States government through an agency. Thus, PFCRA would apply to a private company only where that company is acting on behalf of an agency and allocating money, property, services, or benefits for which the actual provider is the United States government. The regulated entities, including any affiliate of an Enterprise, and the OF do not provide United States government money, property, services, or benefits on FHFA's behalf to any person. Therefore, FHFA's proposed rule does not apply to any false claim or statement by any person to any regulated entity, including any affiliate of an Enterprise, or the OF.12

    12 If a regulated entity, an affiliate of an Enterprise, or the OF were to act on behalf of another agency in providing United States government money, property, services, or benefits to any person, then any PFCRA rule of that other agency may be applicable.

    Process. Pursuant to PFCRA and the proposed rule, FHFA's “investigating official” (under PFCRA, the FHFA IG or the IG's designee) would initiate an investigation of any claim or statement believed to be false.13 The investigating official would submit a report containing information about the case (including exculpatory information), the potential violation, and other relevant information relating to liability to FHFA's “reviewing official” (the General Counsel of FHFA, as designated by the Director of FHFA).14 The reviewing official, or the designee thereof, would then be required to make a determination of whether there is adequate evidence of liability. If so, the reviewing official would provide written notice to the Attorney General of the intent to refer the allegations to an ALJ as presiding officer. Under the terms of PFCRA and the authority of the Attorney General, DOJ could elect to bring an action for civil relief under other applicable law, or the FHFA action may be deferred or postponed to avoid interference with a criminal investigation or prosecution by the Attorney General.

    13See 31 U.S.C. 3801(a)(4)(A).

    14See 31 U.S.C. 3801(a)(8)(A), requiring the agency head to designate a reviewing official; see also footnote 5, supra.

    If the Attorney General approves the use of PFCRA, FHFA's reviewing official may refer the case to an ALJ as presiding officer. To initiate the action, the reviewing official must provide notice to any person who is subject to the allegation of liability. That person may then request a formal hearing on the record and is entitled to all exculpatory information in the possession of the investigating official or the reviewing official. If a hearing is requested, the ALJ would determine liability based on the preponderance of the evidence and the amount of any penalty (and, if appropriate, any assessment) to be imposed. The proposed rule implements statutory provisions for an appeal of the ALJ's decision to the Director of FHFA as the “authority head” and then to the appropriate U.S. District Court.

    The proposed rule provides for hearing and appeal rights of persons subject to allegations of liability for any penalty or assessment under PFCRA. FHFA currently has Rules of Practice and Procedure in place at title 12 of the Code of Federal Regulations, Part 1209, which establish evidentiary, hearing, and appeals procedures and processes for hearings on the record at FHFA. Similar to the HUD rule, FHFA's proposed rule cross-references its existing administrative enforcement procedures for purposes of PFCRA actions. FHFA's existing rules of procedure were issued subject to a notice and comment rulemaking process and, by proposing to use them for purposes of any PFCRA action, FHFA seeks to ensure due process and procedural consistency.

    Maximum Penalty Amount. PFCRA establishes a maximum civil penalty of $5,000 for each violation of the Act.15 That amount is required to be adjusted for inflation by the Federal Civil Penalties Inflation Adjustment Act of 1990, which limits the first such adjustment to not more than 10% of the original statutory penalty.16 As a result, the proposed rule provides for the imposition of a civil penalty of not more than $5,500 for each fraudulent claim or statement, a 10% increase over the statutory amount. In the case of a false, fictitious, or fraudulent claim on which payment was made by the United States government, PFCRA also authorizes an assessment in lieu of damages of up to twice the amount of the claim.17 PFCRA civil penalties and assessments are in addition to any other remedy prescribed by law.18 Therefore, commenters should be aware that any final rule adopted by FHFA would not preclude imposition of other authorized actions or sanctions currently employed by FHFA, including debarment and suspension of contractors.

    15See 31 U.S.C. 3802(a).

    16See 28 U.S.C. 2461 note.

    17 31 U.S.C. 3802(a)(1).

    18See 31 U.S.C. 3802(a).

    III. Paperwork Reduction Act

    The proposed rule does not contain any collections of information pursuant to the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). Therefore, FHFA has not submitted any information to the Office of Management and Budget for review.

    IV. Regulatory Flexibility Act

    The Regulatory Flexibility Act (5 U.S.C. 601 et seq.) requires that a regulation that has a significant economic impact on a substantial number of small entities, including small businesses and or small organizations, must include an initial regulatory flexibility analysis describing the regulation's impact on small entities. Such an analysis need not be undertaken if the agency has certified that the regulation will not have a significant economic impact on a substantial number of small entities.19 FHFA has considered the impact of the proposed rule under the Regulatory Flexibility Act. The General Counsel of FHFA certifies that the proposed rule, if adopted as a final rule, is not likely to have a significant economic impact on a substantial number of small entities, because the regulation would merely fulfill a statutory requirement under PFCRA to establish procedures for imposing civil penalties and assessments against those persons who have violated existing prohibitions against making fraudulent claims or statements to FHFA in its contracting and employment activities, and does not alter any underlying requirements or prohibitions or impose any new requirements or prohibitions on persons subject to regulation by FHFA.

    19See 5 U.S.C. 605(b).

    List of Subjects in 12 CFR Part 1217

    Civil remedies, Program fraud.

    Authority and Issuance

    Accordingly, for the reasons stated in the preamble, and under the authority of 12 U.S.C. 4511, 4513, 4514, 4526, 4585 and 4636 and 31 U.S.C. 3803, FHFA proposes to amend subchapter A of Chapter XII of Title 12 of the Code of Federal Regulations by adding a new Part 1217 to read as follows:

    CHAPTER XII—FEDERAL HOUSING FINANCE AGENCY SUBCHAPTER A—ORGANIZATION AND OPERATIONS 1. Add part 1217 to subchapter A to read as follows: PART 1217—PROGRAM FRAUD CIVIL REMEDIES ACT Sec. 1217.1 Purpose and scope. 1217.2 Definitions. 1217.3 Basis for civil penalties and assessments. 1217.4 Investigation. 1217.5 Request for approval by the Department of Justice. 1217.6 Notice. 1217.7 Response. 1217.8 Statute of Limitations. 1217.9 Hearings. 1217.10 Settlements. Authority:

    12 U.S.C. 4501; 12 U.S.C. 4526, 28 U.S.C. 2461 note; 31 U.S.C. 3801-3812.

    § 1217.1 Purpose and scope.

    (a) Purpose. This part:

    (1) Establishes administrative procedures for imposing civil penalties and assessments against persons who make, submit, or present, or cause to be made, submitted, or presented, false, fictitious, or fraudulent claims or written statements to FHFA or to its agents; and

    (2) Specifies the hearing and appeal rights of persons subject to allegations of liability for such penalties and assessments. Hearings under this part shall be conducted in accordance with the Administrative Procedure Act pursuant to part 1209, subpart C, of this chapter.

    (b) Scope. This part applies only to persons who make, submit, or present or cause to be made, submitted, or presented false, fictitious, or fraudulent claims or written statements to FHFA or to those acting on its behalf in connection with FHFA employment matters and FHFA contracting activities. It does not apply to false claims or statements made in connection with matters or activities related to FHFA's supervisory, regulatory, enforcement, conservatorship, or receivership responsibilities, as other civil and administrative actions available to FHFA to redress fraud in such areas provide for remedies that are equal to or exceed those available through this part.

    § 1217.2 Definitions.

    Ability to pay is determined based on a review of the respondent's resources available both currently and prospectively, from which FHFA could ultimately recover the total penalty, and as appropriate, assessment, which may be predicted based on historical evidence.

    Assessment means a monetary penalty that is in addition to a civil penalty and may be imposed if FHFA has made any payment, transferred property, or provided services for a claim that is determined to be in violation of paragraph (a)(1) of § 1217.3. An assessment may not exceed an amount that is twice the amount of the claim or portion of the claim determined to be in violation of paragraph (a)(1) of § 1217.3. A civil penalty other than an assessment may be imposed whether or not FHFA has made a payment, transferred property, or provided services in response to the false claim or statement.

    Benefit means anything of value, including, but not limited to, any advantage, preference, privilege, license, permit, favorable decision, ruling, or status.

    Claim means any request, demand, or submission:

    (1) Made to FHFA for property, services, or money (including money representing benefits);

    (2) Made to a recipient of property, services, or money from FHFA or to a party to a contract with FHFA:

    (i) For property or services, if FHFA:

    (A) Provided such property or services;

    (B) Provided any portion of the funds for the purchase of such property or services; or

    (C) Will reimburse such recipient or party for the purchase of such property or services; or

    (ii) For the payment of money (including money representing benefits) if the United States:

    (A) Provided any portion of the money requested or demanded; or

    (B) Will reimburse such recipient or party for any portion of the money paid on such request or demand; or

    (3) Made to FHFA, which has the effect of decreasing an obligation to pay or account for property, services, or money.

    Investigating official means the FHFA Inspector General, or an officer or employee of the FHFA Office of Inspector General designated by the FHFA Inspector General.

    Knows or has reason to know. (1) For purposes of establishing liability under 31 U.S.C. 3802 and this part, means that a person, with respect to a claim or statement:

    (i) Has actual knowledge that the claim or statement is false, fictitious, or fraudulent;

    (ii) Acts in deliberate ignorance of the truth or falsity of the claim or statement; or

    (iii) Acts in reckless disregard of the truth or falsity of the claim or statement.

    (2) No proof of specific intent to defraud is required for purposes of establishing liability under 31 U.S.C. 3802 or this part.

    Makes a claim or statement includes making, presenting, or submitting the claim or statement and causing the claim or statement to be made, presented, or submitted.

    Notice means the charging document served by FHFA to commence an administrative proceeding to impose a civil penalty and, if appropriate, an assessment under chapter 38 of subtitle III of title 31, U.S.C., and this part.

    Person means any individual, partnership, corporation, association, or private organization.

    Presiding officer means an administrative law judge appointed under 5 U.S.C. 3105 or detailed to FHFA under 5 U.S.C. 3344.

    Reasonable prospect of collecting an appropriate amount of penalties and assessments is determined based on a generalized analysis made by the reviewing official, based on the limited information available in the report of investigation for purposes of determining whether the allocation of FHFA's resources to any particular action is appropriate.

    Report of investigation means a report containing the findings and conclusions of an investigation under chapter 38 of subtitle III of title 31, U.S.C., by the investigating official, as described in § 1217.4.

    Respondent means any person alleged to be liable for a civil penalty or assessment under § 1217.3.

    Reviewing official means the General Counsel of FHFA, as so designated by the Director pursuant to 31 U.S.C. 3801(a)(8)(A).

    Statement means, unless the context indicates otherwise, any representation, certification, affirmation, document, record, or accounting or bookkeeping entry made:

    (1) With respect to a claim or to obtain the approval or payment of a claim (including relating to eligibility to make a claim); or

    (2) With respect to (including relating to eligibility for) a contract with, or a bid or proposal for a contract with, or benefit from, FHFA or any State, political subdivision of a State, or other party, if FHFA provides any portion of the money or property under such contract or benefit, or if FHFA will reimburse such State, political subdivision, or party for any portion of the money or property under such contract or for such benefit.

    § 1217.3 Basis for civil penalties and assessments.

    (a) False, Fictitious or Fraudulent Claims. (1) A civil penalty of not more than $5,500 may be imposed upon a person who makes a claim to FHFA for property, services, or money where the person knows or has reason to know that the claim:

    (i) Is false, fictitious, or fraudulent;

    (ii) Includes or is supported by a written statement that:

    (A) Asserts a material fact which is false, fictitious, or fraudulent; or

    (B) Omits a material fact and, as a result of the omission, is false, fictitious, or fraudulent, where the person making, presenting, or submitting such statement has a duty to include such material fact; or

    (iii) Is for payment for the provision of property or services to FHFA which the person has not provided as claimed.

    (2) Each voucher, invoice, claim form, or other individual request or demand for property, services, or money constitutes a separate claim for purposes of this part.

    (3) A claim shall be considered made to FHFA, a recipient, or party when the claim is actually made to an agent, fiscal intermediary, or other entity, acting for or on behalf of FHFA, the recipient, or the party.

    (4) Each claim for property, services, or money is subject to a civil penalty, without regard to whether the property, services, or money actually is delivered or paid.

    (5) There is no liability under this part if the amount of money or value of property or services claimed exceeds $150,000 as to each claim that a person submits. For purposes of this paragraph (a), a group of claims submitted simultaneously as part of a single transaction shall be considered a single claim.

    (6) If the FHFA has made any payment, transferred property, or provided services for a claim, then FHFA may make an assessment against a person found liable in an amount of up to twice the amount of the claim or portion of the claim that is determined to be in violation of paragraph (a)(1) of this section. This assessment is in addition to the amount of any civil penalty imposed.

    (b) False, Fictitious or Fraudulent Statements. (1) A civil penalty of up to $5,500 may be imposed upon a person who makes a written statement to FHFA with respect to a claim, contract, bid or proposal for a contract, or benefit from FHFA that:

    (i) The person knows or has reason to know:

    (A) Asserts a material fact which is false, fictitious, or fraudulent; or

    (B) Omits a material fact and is false, fictitious, or fraudulent as a result of such omission, where the person making, presenting, or submitting such statement has a duty to include such material fact; and

    (ii) Contains or is accompanied by an express certification or affirmation of the truthfulness and accuracy of the contents of the statement.

    (2) Each written representation, certification, or affirmation constitutes a separate statement.

    (3) A statement shall be considered made to FHFA when the statement is actually made to an agent, fiscal intermediary, or other entity acting for or on behalf of FHFA.

    (c) Joint and several liability. A civil penalty or assessment may be imposed jointly and severally if more than one person is determined to be liable.

    § 1217.4 Investigation.

    (a) General. FHFA may initiate an action under chapter 38 of subtitle III of title 31, U.S.C., and this part against a respondent only upon an investigation by the investigating official.

    (b) Subpoena. Pursuant to 31 U.S.C. 3804(a), the investigating official may require by subpoena the production of records and other documents. The subpoena shall state the authority under which it is issued, identify the records sought, and name the person designated to receive the records. The recipient of the subpoena shall provide a certification that the documents sought have been produced, that the documents are not available and the reasons they are not available, or that the documents, suitably identified, have been withheld based upon the assertion of an identified privilege.

    (c) Investigation report. If the investigating official concludes that an action under chapter 38 of subtitle III of title 31, U.S.C., and this part may be warranted, the investigating official shall prepare a report containing the findings and conclusions of the investigation, including:

    (1) A description of the claim or statement at issue;

    (2) The evidence supporting the allegations;

    (3) An estimate of the amount of money or the value of property, services, or other benefits requested or demanded in violation of § 1217.3; and

    (4) Any exculpatory or mitigating circumstances that may relate to the claim or statement.

    (d) Referrals to the Attorney General. The investigating official may refer allegations directly to the Department of Justice for civil relief under other applicable law, as appropriate, or may defer or postpone submitting a report to the reviewing official to avoid interference with a criminal investigation or prosecution.

    § 1217.5 Request for approval by the Department of Justice.

    (a) General. If the reviewing official determines that the report of investigation supports an action under this part, the reviewing official must submit a written request to the Department of Justice for approval to issue a notice under § 1217.6.

    (b) Content of request. A request under this section shall include:

    (1) A description of the claim or statement at issue;

    (2) The evidence supporting the allegations;

    (3) An estimate of the amount of money or the value of property, services, or other benefits requested or demanded in violation of § 1217.3;

    (4) Any exculpatory or mitigating circumstances that may relate to the claim or statement; and

    (5) A statement that there is a reasonable prospect of collecting an appropriate amount of penalties and assessments. Determining there is a reasonable prospect of collecting an appropriate amount of penalties and assessments is separate from determining ability to pay, and may not be considered in determining the amount of any penalty or assessment in any particular case.

    § 1217.6 Notice.

    (a) Commencement of action; notice. Upon obtaining approval from the Department of Justice, the reviewing official may commence an action to establish liability of the respondent under the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801 et seq.) and this part. To commence an action, the reviewing official must issue a notice to the respondent of the allegations of liability against the respondent. The notice shall be mailed, by registered or certified mail, or shall be delivered through such other means by which delivery may be confirmed.

    (b) Notice contents. The notice required under this section shall include:

    (1) The allegations of liability against the respondent, including the statutory basis for liability, the claim or statement at issue, and the reasons why liability arises from that claim or statement;

    (2) A statement that the required approval to issue the notice was received from the Department of Justice;

    (3) The amount of the penalty and, if applicable, any assessment for which the respondent may be held liable;

    (4) A statement that the respondent may request a hearing by submitting a written response to the notice;

    (5) The addresses to which a response must be sent in accordance with § 1209.15 of this chapter;

    (6) A statement that failure to submit an answer within 30 days of receipt of the notice may result in the imposition of the maximum amount of penalties and assessments sought, without right of appeal;

    (7) A statement that the respondent must preserve and maintain all documents and data, including electronically stored data, within the possession or control of the respondent that may relate to the allegations; and

    (8) A copy of this part 1217 and part 1209, subpart C of this chapter.

    (c) Obligation to preserve documents. Upon the issuance of a notice under this section, FHFA and the respondent shall each preserve and maintain all documents and data, including electronically stored data, within their respective possession or control that may relate to the allegations in the complaint.

    § 1217.7 Response.

    (a) General. (1) To obtain a hearing, the respondent must file a written response to a notice under § 1217.6:

    (i) In accordance with § 1209.24 of this chapter; and

    (ii) Not later than 30 days after the date of service of the notice.

    (2) A timely filed response to a notice under § 1217.6 shall be deemed to be a request for a hearing.

    (3) A response to a notice under § 1217.6 must include:

    (i) The admission or denial of each allegation of liability made in the notice;

    (ii) Any defense on which the respondent intends to rely;

    (iii) Any reasons why the penalty and, if appropriate, any assessment should be less than the amount set forth in the notice; and

    (iv) The name, address, and telephone number of the person who will act as the respondent's representative, if any.

    (b) Failure to respond. If no response to a notice under this part is timely submitted, FHFA may file a motion for default judgment in accordance with § 1209.24(c) of this chapter.

    § 1217.8 Statute of Limitations.

    The statute of limitations for commencing a hearing under this part shall be tolled:

    (a) If the hearing is commenced in accordance with 31 U.S.C. 3803(d)(2)(B) within 6 years after the date on which the claim or statement is made; or

    (b) If the parties agree to such tolling.

    § 1217.9 Hearings.

    (a) General. Hearings under this part shall be conducted in accordance with the procedures in subpart B of part 1209 of this chapter, governing actions in accordance with subchapter II of chapter 5, U.S.C. (commonly known as the Administrative Procedure Act).

    (b) Factors to consider in determining amount of penalties and assessments. In determining an appropriate amount of any civil penalty and, if appropriate, any assessment, the presiding officer and, upon appeal, the Director or designee thereof, shall consider and state in his or her opinion any mitigating or aggravating circumstances. The amount of penalties and assessments imposed shall be based on the presiding officer's and the Director's or designee's consideration of evidence in support of one or more of the following factors:

    (1) The number of false, fictitious, or fraudulent claims or statements;

    (2) The time period over which such claims or statements were made;

    (3) The degree of the respondent's culpability with respect to the misconduct;

    (4) The amount of money or the value of the property, services, or benefit falsely claimed;

    (5) The value of the actual loss to FHFA as a result of the misconduct, including foreseeable consequential damages and the cost of investigation;

    (6) The relationship of the civil penalties to the amount of the loss to FHFA;

    (7) The potential or actual impact of the misconduct upon public health or safety or public confidence in the management of FHFA programs and operations, including particularly the impact on the intended beneficiaries of such programs;

    (8) Whether the respondent has engaged in a pattern of the same or similar misconduct;

    (9) Whether the respondent attempted to conceal the misconduct;

    (10) The degree to which the respondent has involved others in the misconduct or in concealing it;

    (11) If the misconduct of employees or agents is imputed to the respondent, the extent to which the respondent's practices fostered or attempted to preclude the misconduct;

    (12) Whether the respondent cooperated in or obstructed an investigation of the misconduct;

    (13) Whether the respondent assisted in identifying and prosecuting other wrongdoers;

    (14) The complexity of the program or transaction, and the degree of the respondent's sophistication with respect to it, including the extent of the respondent's prior participation in the program or in similar transactions;

    (15) Whether the respondent has been found, in any criminal, civil, or administrative proceeding, to have engaged in similar misconduct or to have dealt dishonestly with the Government of the United States or of a State, directly or indirectly;

    (16) The need to deter the respondent and others from engaging in the same or similar misconduct;

    (17) The respondent's ability to pay; and

    (18) Any other factors that in any given case may mitigate or aggravate the seriousness of the false claim or statement.

    (c) Stays ordered by the Department of Justice. If at any time the Attorney General or an Assistant Attorney General designated by the Attorney General notifies the Director in writing that continuation of FHFA's action may adversely affect any pending or potential criminal or civil action related to the claim or statement at issue, the presiding officer or the Director shall stay the FHFA action immediately. The FHFA action may be resumed only upon receipt of the written authorization of the Attorney General.

    § 1217.10 Settlements.

    (a) General. The reviewing official, on behalf of FHFA, and the respondent may enter into a settlement agreement under § 1209.20 of this chapter at any time prior to the issuing of a notice of final decision under § 1209.55 of this chapter.

    (b) Failure to comply. Failure of the respondent to comply with a settlement agreement shall be sufficient cause for resuming an action under this part, or for any other judicial or administrative action.

    Dated: December 16, 2015. Melvin L. Watt, Director, Federal Housing Finance Agency.
    [FR Doc. 2015-32182 Filed 12-22-15; 8:45 am] BILLING CODE 8070-01-P
    DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Chapter I [Docket ID FFIEC-2014-0001] FEDERAL RESERVE SYSTEM 12 CFR Chapter II [Docket No. R-1510] FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Chapter III Regulatory Publication and Review Under the Economic Growth and Regulatory Paperwork Reduction Act of 1996 AGENCY:

    Office of the Comptroller of the Currency (“OCC”), Treasury; Board of Governors of the Federal Reserve System (“Board”); and Federal Deposit Insurance Corporation (“FDIC”).

    ACTION:

    Notice of regulatory review; request for comments.

    SUMMARY:

    The OCC, Board, and FDIC (each an “Agency”; together “we” or “Agencies”) are conducting a review of the regulations we have issued in order to identify outdated or otherwise unnecessary regulatory requirements imposed on insured depository institutions, as required by the Economic Growth and Regulatory Paperwork Reduction Act of 1996 (EGRPRA). EGRPRA requires the Agencies to organize the regulations into categories and publish groups of categories for comment. In this notice, the Agencies are seeking public comment on regulations in the following categories: Rules of Procedure; Safety and Soundness; and Securities. We have listed these rules on a chart included with this notice.

    In addition, as we previously announced, the Agencies have expanded the scope of the EGRPRA review to include the Agencies' recently issued final rules. Accordingly, in this notice, the Agencies invite the public to comment on any Agency final rule not included in a previous EGRPRA Federal Register notice. To facilitate identification of these recently issued rules, we have included with this notice a separate chart that lists these rules.

    Finally, in order to be as inclusive as possible, the Agencies also invite comment during the comment period for this notice on any Agency rule that is issued in final form on or before December 31, 2015. We will list these rules on the EGRPRA Web site, http://egrpra.ffiec.gov/. The public may also comment on any other Agency rule, including rules covered by the three prior notices during the open comment period for this notice.

    DATES:

    Written comments must be received by no later than March 22, 2016.

    ADDRESSES:

    Any interested individual may submit comments through the EGRPRA Web site during open comment periods at: http://egrpra.ffiec.gov/submit-comment/submit-comment-index.html. On this site, click “Submit a Comment” and follow the instructions. Alternatively, comments also may be submitted through the Federal eRulemaking Portal “Regulations.gov” at: http://www.regulations.gov. Enter “Docket ID FFIEC-2014-0001” in the Search Box, click “Search,” and click “Comment Now.” Those who wish to submit their comments by an alternate means may do so as indicated by each Agency below.

    OCC

    The OCC encourages commenters to submit comments through the Federal eRulemaking Portal, Regulations.gov, in accordance with the previous paragraph. Alternatively, comments may be emailed to [email protected] or sent by mail to Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, Mail Stop 9W-11, 400 7th Street SW., Washington, DC 20219. Comments also may be faxed to (571) 465-4326 or hand delivered or sent by courier to 400 7th Street SW., Washington, DC 20219. For comments submitted by any means other than Regulations.gov, you must include “OCC” as the Agency name and “Docket ID FFIEC-2014-0001” in your comment.

    In general, the OCC will enter all comments received into the docket and publish them without change on Regulations.gov. Comments received, including attachments and other supporting materials, as well as any business or personal information you provide, such as your name and address, email address, or phone number, are part of the public record and subject to public disclosure. Therefore, please do not include any information with your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

    You may inspect and photocopy in person all comments received by the OCC at 400 7th Street SW., Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect or photocopy comments. You may make an appointment by calling (202) 649-6700 or, for persons who are deaf or hard of hearing, TTY (202) 649-5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to a security screening.

    Board

    The Board encourages commenters to submit comments regarding the Board's regulations by any of the following methods:

    Agency Web site: http://www.federalreserve.gov/apps/foia/proposedregs.aspx. Follow the instructions for submitting comments on the Agency Web site.

    Federal eRulemaking Portal, in accordance with the directions above.

    Email: [email protected] Include “EGRPRA” and Docket No. R-1510 in the subject line of the message.

    FAX: (202) 452-3819.

    Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.

    In general, the Board will enter all comments received into the docket and publish them without change on the Board's public Web site www.federalreserve.gov; Regulations.gov; and http://egrpra.ffiec.gov. Comments received, including attachments and other supporting materials, as well as any business or personal information you provide, such as your name and address, email address, or phone number, are part of the public record and subject to public disclosure. Therefore, please do not enclose any information with your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

    You may inspect and photocopy in person all comments received by the Board in Room 3515, 1801 K Street NW., (between 18th and 19th Street NW.,) Washington, DC 20006, between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the Board requires that visitors make an appointment to inspect comments. You may make an appointment by calling (202) 452-3000. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to a security screening.

    FDIC

    The FDIC encourages commenters to submit comments through the Federal eRulemaking Portal, “Regulations.gov,” in accordance with the directions above. Alternatively, you may submit comments by any of the following methods:

    Agency Web site: http://www.fdic.gov/regulations/laws/federal. Follow instructions for submitting comments on the Agency Web site.

    Email: [email protected] Include “EGRPRA” in the subject line of the message.

    Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.

    Hand Delivery/Courier: Guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m. (EDT).

    The FDIC will post all comments received to http://www.fdic.gov/regulations/laws/federal without change, including any personal information provided. Comments may be inspected and photocopied in the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226, between 9:00 a.m. and 5:00 p.m. (EDT) on business days. Paper copies of public comments may be ordered from the Public Information Center by calling (877) 275-3342.

    FOR FURTHER INFORMATION CONTACT:

    OCC: Karen McSweeney, Counsel (202) 649-6295; Heidi M. Thomas, Special Counsel (202) 649-5490; Rima Kundnani, Attorney (202) 649-5545; for persons who are deaf or hard of hearing, TTY (202) 649-5597.

    Board: Claudia Von Pervieux, Counsel (202) 452-2552; Brian Phillips, Attorney (202) 452-3321; for persons who are deaf or hard of hearing, TTY (202) 263-4869.

    FDIC: Ruth R. Amberg, Assistant General Counsel (202) 898-3736; Ann Taylor, Supervisory Counsel (202) 898-3573; for persons who are deaf or hard of hearing, TTY 1-800-925-4618.

    SUPPLEMENTARY INFORMATION: I. Introduction

    Section 2222 of EGRPRA 1 requires that, not less frequently than once every 10 years, the Federal Financial Institutions Examination Council (FFIEC),2 along with the Agencies,3 conduct a review of their regulations to identify outdated or otherwise unnecessary requirements imposed on insured depository institutions.4 The EGRPRA regulatory review provides an opportunity for the public and the Agencies to look at groups of related regulations and to identify opportunities for burden reduction. For example, the EGRPRA review may facilitate the identification of statutes and regulations that share similar goals or complementary methods where one or more Agencies could eliminate overlapping requirements. Alternatively, commenters may identify regulations or statutes that impose requirements that are no longer consistent with the way that business is conducted and that the Agencies should eliminate or revise.

    1 Public Law 104-208 (1996), codified at 12 U.S.C. 3311.

    2 The FFIEC is an interagency body empowered to prescribe uniform principles, standards, and report forms for the Federal examination of financial institutions and to make recommendations to promote uniformity in the supervision of financial institutions. The FFIEC does not issue regulations that impose burden on financial institutions and, therefore, we have not separately captioned the FFIEC in this notice.

    3 The FFIEC is comprised of the OCC, Board, FDIC, National Credit Union Administration (NCUA), Consumer Financial Protection Bureau (CFPB), and State Liaison Committee. Of these, only the OCC, Board, and FDIC are statutorily required to undertake the EGRPRA review. The NCUA elected to participate in the first EGRPRA review 10 years ago, and the NCUA Board again has elected to participate in this review process. Consistent with its approach during the first EGRPRA review, the NCUA will separately issue notices and requests for comment on its rules. The CFPB is required to review its significant rules and publish a report of its review no later than five years after they take effect. See 12 U.S.C. 5512(d). This process is separate from the EGRPRA process.

    4 Insured depository institutions also are subject to regulations that are not required to be reviewed under the EGRPRA process. Examples include rules for which rulemaking authority has transferred to the CFPB and anti-money laundering regulations issued by the Department of the Treasury's Financial Crimes Enforcement Network, among others. If, during the EGRPRA review, the Agencies receive a comment about a regulation that is not subject to the EGRPRA review, we will forward that comment to the appropriate agency.

    In addition to providing an opportunity to consider burden reduction generally, the EGRPRA review also provides the Agencies and the public with an opportunity to consider burden reduction on community banks and other small, insured depository institutions or holding companies. We are keenly aware of the role that these institutions play in providing consumers and businesses across the nation with essential financial services and access to credit, and we are concerned about the impact of regulatory burden on these smaller institutions. We understand that when an Agency issues a new regulation or amends a current regulation, smaller institutions may have to devote considerable resources to determine if and how the regulation will affect them. Through the public comment process, the EGRPRA review can help the Agencies identify and target regulatory changes to reduce unnecessary burden on these smaller institutions.

    Burden reduction must, however, be consistent with the Agencies' statutory mandates, many of which require the issuance of regulations. These mandates include ensuring the safety and soundness of insured depository institutions, their affiliates, and the financial system as a whole. EGRPRA recognizes that effective burden reduction may require legislative change. Accordingly, as part of this review, we specifically ask the public to comment on the relationships among burden reduction, regulatory requirements, and statutory mandates.

    In addition, we note that the Agencies consider potential regulatory burden each time we propose, adopt, or amend a rule. For example, under the Paperwork Reduction Act of 1995 and the Regulatory Flexibility Act, the Agencies assess each rulemaking with respect to the burdens the rule might impose. Furthermore, we invite the public to comment on every rule we propose, as required by the Administrative Procedure Act (APA).

    II. The EGRPRA Review Process

    Taken together for purposes of EGRPRA, the Agencies' regulations covering insured depository institutions encompass more than 100 subjects.5 Consistent with the EGRPRA statute, the Agencies grouped these regulations into the following 12 regulatory categories: Applications and Reporting; Banking Operations; Capital; Community Reinvestment Act; Consumer Protection; 6 Directors, Officers and Employees; International Operations; Money Laundering; Powers and Activities; Rules of Procedure; Safety and Soundness; and Securities. To determine these categories, we divided the regulations by type and sought to have no category be too large or broad.

    5 Consistent with EGRPRA's focus on reducing burden on insured depository institutions, the Agencies have not included their internal, organizational, or operational regulations in this review.

    6 As we have previously noted, the Agencies are seeking comment only on those consumer protection regulations for which we retain rulemaking authority for insured depository institutions and regulated holding companies following passage of section 1061 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, Public Law 111-203 (2010) (Dodd-Frank Act), codified at 12 U.S.C. 5581(b).

    To carry out the EGRPRA review, the Agencies have published three Federal Register notices, each addressing one or more categories of rules. Each Federal Register notice provided a 90-day comment period. On June 4, 2014, the Agencies published the first such notice, seeking comment on three categories of rules: Applications and Reporting; Powers and Activities; and International Operations.7 On February 13, 2015, the Agencies published the second notice, seeking comment on three additional categories of rules: Banking Operations; Capital; and the Community Reinvestment Act.8 On June 5, 2015, the Agencies published the third notice, seeking comment on three additional categories: Consumer Protection; Directors, Officers and Employees; and Money Laundering (Third Notice).9 The comment period for the Third Notice closed on September 3, 2015.

    7 79 FR 32172.

    8 80 FR 7980.

    9 80 FR 32046. Together, the three EGRPRA notices are referred to as the “Prior Notices.”

    In the Third Notice, the Agencies also announced their decision to expand the scope of the EGRPRA review to include recently issued rules, such as those issued pursuant to the Dodd-Frank Act and the recently promulgated domestic capital and liquidity rules. The Agencies identified these rules, referred to as “Newly Listed Rules,” on a chart included with the Third Notice. The Third Notice stated that the public could comment on the Newly Listed Rules during the comment period for the final EGRPRA notice.

    Today, we are publishing the fourth and final EGRPRA notice, addressing the categories of Rules of Procedure; Safety and Soundness; and Securities. We invite the public to identify outdated, unduly burdensome, or otherwise unnecessary regulatory requirements imposed on insured depository institutions and their holding companies in these three categories. Chart A in Section IV contains the Agencies' rules in these three categories, including the Newly Listed Rules in these three categories. In addition, consistent with the expanded scope of the EGRPRA review, we invite the public to identify outdated, unduly burdensome, or otherwise unnecessary regulatory requirements imposed on insured depository institutions and their holding companies by the Newly Listed Rules in the nine categories covered by the Prior Notices. Chart B in Section IV contains the Newly Listed Rules in these nine categories, including rules issued in final form since the Third Notice.

    Finally, in order to be as inclusive as possible, the Agencies invite comment on any other rule issued in final form on or before December 31, 2015, which will be listed on the EGRPRA Web site, http://egrpra.ffiec.gov/. Furthermore, as has been the practice of the Agencies, we invite comment on any of the Agencies' final rules included in this EGRPRA review during the open comment period for this notice.

    As part of the EGRPRA review, the Agencies have held a series of outreach meetings around the country to provide an opportunity for bankers, consumer and community groups, and other interested persons to present their views directly to Agency senior management and staff on any of the regulations in the EGRPRA review. The Agencies held a final outreach meeting on December 2, 2015, in the Washington, DC area. Transcripts from and other information about the outreach meetings can be found on the Agencies' EGRPRA Web site, http://egrpra.ffiec.gov.

    Following the close of the comment period for this final notice, the Agencies will review all of the comments we have received and decide whether further action is appropriate with respect to the regulations. The Agencies will make this decision jointly in the case of rules that we have issued on an interagency basis. For rules issued by one Agency, the issuing Agency will review the comments received and independently determine whether amendments to or repeal of its rules are appropriate. If so, that Agency will initiate a rulemaking to effect such change.

    Finally, EGRPRA also requires the FFIEC or the Agencies to publish in the Federal Register a summary of the comments received, identifying significant issues raised and commenting on these issues. It also directs the Agencies to eliminate unnecessary regulations to the extent that such action is appropriate. The statute additionally requires the FFIEC to submit to Congress a report that summarizes any significant issues raised in the public comments and the relative merits of such issues. The report also must include an analysis of whether the Agencies are able to address the regulatory burdens associated with such issues or whether these burdens must be addressed by legislative action.

    III. Request for Burden Reduction Comments on Regulations in the Rules of Procedure, Safety and Soundness, and Securities Categories; on Newly Listed Rules in the Other Categories of Regulations; and on Any Other Final Rule Issued by December 31, 2015

    As stated previously in this notice, the Agencies are asking the public to comment on regulations in the Rules of Procedure; Safety and Soundness; and Securities categories. Chart A in Section IV contains the Agencies' rules that are in these three categories. The Agencies are also asking the public to comment on the Newly Listed Rules in the nine categories covered by the Prior Notices. Chart B in Section IV contains the Newly Listed Rules. Both charts include any rules issued on or before December 23, 2015. The Agencies will also accept comment during the open comment period of this notice on any other Agency rule issued in final form by December 31, 2015. In addition, we will accept comments on any of the Agencies' rules, including those rules in categories covered in the Prior Notices.

    Where possible, we ask commenters to cite specific regulatory language or provisions. We also welcome suggested alternative provisions or language in support of a comment, where appropriate. Where implementation of a suggestion would require modification of a statute, we ask the commenter to identify the statute and the needed change, where possible.

    Specific issues for commenters to consider. The Agencies specifically invite comment on the following issues as they pertain to (a) the Agencies' Rules of Procedure; Safety and Soundness rules; and Securities rules, on Chart A; (b) any of the Newly Listed Rules on Chart B; and (c) any other Agency rule that is issued in final form by December 31, 2015.

    Need for statutory change. (1) Do any statutory requirements underlying the rules in these categories impose outdated or otherwise unnecessary regulatory requirements? (2) If so, please identify the statutes and indicate how they should be amended.

    Need and purpose of the regulations. (1) Have there been changes in the financial services industry, consumer behavior, or other circumstances that cause any regulations in these categories to be outdated or otherwise unnecessary? (2) If so, please identify and indicate how they should be amended. (3) Do any of these regulations impose burdens not required by their underlying statutes? (4) If so, please identify the regulations and indicate how they should be amended.

    Overarching approaches/flexibility. (1) With respect to the regulations in these categories, could an Agency use a different approach to lessen the burden imposed by the regulations and achieve statutory intent? (2) Do any of these rules impose unnecessarily inflexible requirements? (3) If so, please identify the regulations and indicate how they should be amended.

    Effect on competition. (1) Do any of the regulations or underlying statutes create competitive disadvantages for one part of the financial services industry compared to another or for one type of insured depository institution compared to another? (2) If so, please identify the regulations and indicate how they should be amended.

    Reporting, recordkeeping and disclosure requirements. (1) Do any of the regulations or underlying statutes in these categories impose outdated or otherwise unnecessary reporting, recordkeeping, or disclosure requirements on insured depository institutions or their holding companies? (2) Could a financial institution fulfill any of these requirements electronically (if it is not already permitted to do so) and experience burden reduction? (3) If so, please identify the regulations and indicate how they should be amended.

    Unique characteristics of a type of institution. (1) Do any of the regulations or underlying statutes in these categories impose requirements that are unwarranted by the unique characteristics of a particular type of insured depository institution or holding company? (2) If so, please identify the regulations and indicate how they should be amended.

    Clarity. (1) Are the regulations in these categories clear and easy to understand? (2) Are there specific regulations for which clarification is needed? (3) If so, please identify the regulations and indicate how they should be amended.

    Burden on community banks and other smaller, insured depository institutions. (1) Are there regulations or underlying statutes in these categories that impose outdated or otherwise unnecessary requirements on a substantial number of community banks or other smaller, insured depository institutions or holding companies? (2) Have the Agencies issued regulations pursuant to a common statute that, as applied by the Agencies, create redundancies or impose inconsistent requirements? (3) Should any of these regulations be amended or repealed in order to minimize this impact? (4) If so, please identify the regulations and indicate how they should be amended.

    Scope of rules. (1) Is the scope of each rule in these categories consistent with the intent of the underlying statute(s)? (2) Could we amend the scope of a rule to clarify its applicability or reduce burden, while remaining faithful to statutory intent? (3) If so, please identify the regulations and indicate how they should be amended.

    Subject National
  • banks
  • State
  • member banks
  • State
  • non-member banks
  • Federal savings associations State savings
  • associations
  • BHCs & FHCs
  • SLHCs
  • 10. Rules of Procedure Interagency Regulations Uniform Rules of Practice and Procedure 12 CFR Part 19, Subpart A. 12 CFR Part 263 12 CFR Part 308 12 CFR Part 109, Subpart A. 12 CFR Part 390.30. 12 CFR Part 263. OCC Regulations National Bank Voluntary Liquidation 12 CFR 5.48. Federal Savings Association—Investigative Proceedings and Formal Examinations 12 CFR Part 112. Federal Savings Association—Possession by Conservators and Receivers for Federal and State Savings Associations 12 CFR Part 158. Federal Savings Association—Removals, Suspensions and Prohibitions Where a Crime is Charged or Proven 12 CFR Part 108. Rules of Practice and Procedure 12 CFR Part 19, Subparts B-P. 12 CFR Part 109, Subpart B. FDIC Regulations Orderly Liquidation Authority 12 CFR Part 380.
  • 12 CFR Part 380.
  • Resolution and Receivership Rules 12 CFR Part 360 12 CFR Part 360 12 CFR Part 360 12 CFR Part 360 12 CFR Part 360. Recordkeeping Requirements for Qualified Financial Contracts 12 CFR Part 371 12 CFR Part 371 12 CFR Part 371 12 CFR Part 371 12 CFR Part 371. Restrictions on Sale of Assets by the Federal Deposit Insurance Corporation 12 CFR Part 340 12 CFR Part 340 12 CFR Part 340 12 CFR Part 340 12 CFR Part 340. 11. Safety and Soundness Interagency Regulations Appraisals: Higher-priced Mortgages 12 CFR Part 34, Subpart G. 12 CFR 226.43; 12 CFR Part 226, Appx. N and O, and Supp. I [Reg. Z]. 12 CFR Part 1026 [Reg. Z]. 12 CFR Part 34, Subpart G. 12 CFR 226.43; 12 CFR Part 226, Appx. N and O, and Supp. I [Reg. Z].
  • 12 CFR 226.43; 12 CFR Part 226, Appx. N and O, and Supp. I [Reg. Z].
  • Appraisals: Minimum Requirements for Appraisal Management Companies 12 CFR part 34, Subpart H. 12 CFR 208.50 [Reg. H]; 12 CFR Part 225, Subpart M [Reg. Y]. 12 CFR Part 323, Subpart B. 12 CFR part 34, Subpart H. 12 CFR Part 323 Subpart B. 12 CFR Part 225, Subpart M [Reg. Y]. Appraisals: Standards for Federally-Related Transactions 12 CFR Part 34, Subpart C. 12 CFR 208.50 [Reg. H]; 12 CFR Part 225, Subpart G [Reg. Y]. 12 CFR Part 323 12 CFR Part 34, Subpart C. 12 CFR Part 323 12 CFR Part 225, Subpart G [Reg. Y]. Credit Risk Retention 12 CFR Part 43 12 CFR Part 244 [Reg. RR]. 12 CFR Part 373 12 CFR Part 43 12 CFR Part 373 12 CFR Part 244 [Reg. RR].
  • 12 CFR Part 244 [Reg. RR].
  • Frequency of Safety and Soundness Examination 12 CFR 4.6-.7 12 CFR 208.64 [Reg. H]. 12 CFR 337.12 12 CFR 4.6 (See also, 12 CFR 163.170). 12 CFR 390.351. Lending Limits 12 CFR Part 32 12 CFR Part 215, Subpart A [Reg. O]. 12 CFR 337.3 12 CFR Part 32 12 CFR 390.338. Liquidity Risk 12 CFR Part 50 12 CFR Part 249 [Reg. WW]. 12 CFR Part 329 12 CFR Part 50 12 CFR Part 329 12 CFR Part 249 [Reg. WW].
  • 12 CFR Part 249 [Reg. WW].
  • Real Estate Lending Standards 12 CFR Part 34, Subpart D. 12 CFR Part 208, Subpart E and Appx. C [Reg. H]. 12 CFR Part 365 12 CFR 160.100; 12 CFR 163.101 12 CFR Part 390, Subpart P. 12 CFR Part 225, Subpart G [Reg. Y]. Resolution Plans 12 CFR Part 381; 12 CFR Part 243 [Reg. QQ]. Security Devices and Procedures 12 CFR Part 21, Subpart A. 12 CFR 208.61 [Reg. H]. 12 CFR Part 326, Subpart A. 12 CFR Part 168 12 CFR Part 391, Subpart A. Standards for Safety and Soundness 12 CFR Part 30 12 CFR Part 208, Appx. D-1 [Reg. H]. 12 CFR Part 364 12 CFR Part 30 12 CFR Part 364. Transactions with Affiliates 12 CFR Part 223 [Reg. W]; 12 CFR Part 31. 12 CFR Part 223 [Reg. W]. 12 CFR Part 223 [Reg. W]. 12 CFR 163.41 12 CFR 390.337. OCC Regulations Heightened Expectations Guidelines 12 CFR Part 30, Appx. D. 12 CFR Part 30, Appx. D. National Bank—Other Real Estate Owned 12 CFR Part 34, Subpart E. Federal Savings Association—Financial Management Policies 12 CFR Part 163, Subpart F (See also 12 CFR 5.59(e)(7) (service corporations only)). Savings Association—Lending and Investment Additional Safety and Soundness Limitations 12 CFR Part 160 12 CFR Part 160 (Lending and Investment). Savings Associations and Savings Association Holding Companies Audits 12 CFR 162.4; See also, 12 CFR Part 363. Board Regulations Appraisals: Appraiser Independence 12 CFR 226.42; 12 CFR Part 226, Supp. I [Reg. Z]. 12 CFR Part 1026 [Reg. Z]. 12 CFR 226.42; 12 CFR Part 226, Supp. I [Reg. Z].
  • 12 CFR 226.42; 12 CFR Part 226, Supp. I [Reg. Z].
  • Definitions related to the Financial Stability Oversight Council 12 CFR Part 242 [Reg. PP]. Enhanced Prudential Standards Risk Committee Requirement (for certain BHCs) Standards for BHCs with consolidated assets $50 billion or more 12 CFR Part 252, Subparts B and C [Reg. YY]. Extensions of Credit by Federal Reserve Banks 12 CFR Part 201 [Reg. A]. 12 CFR Part 201 [Reg. A]. 12 CFR Part 201 [Reg. A]. 12 CFR Part 201 [Reg. A]. 12 CFR Part 201 [Reg. A]. Financial Market Utilities 12 CFR Part 234 [Reg. HH] Limitations on Interbank Liabilities 12 CFR Part 206 [Reg. F]. 12 CFR Part 206 [Reg. F]. 12 CFR Part 206 [Reg. F]. 12 CFR Part 206 [Reg. F]. 12 CFR Part 206 [Reg. F]. Securities Holding Companies 12 CFR Part 241 [Reg. OO] FDIC Regulations Annual Independent Audits and Reporting Requirements 12 CFR Part 363 12 CFR Part 363 12 CFR Part 363 12 CFR Part 363; See also, 12 CFR 162.4. 12 CFR Part 363; See also, 12 CFR 390.322. Resolution Plans 12 CFR Part 360.10 12 CFR Part 360.10 12 CFR Part 360.10 12 CFR Part 360.10. 12 CFR Part 360.10. Unsafe and Unsound Banking Practices Standby Letters of Credit 12 CFR 337.2. Unsafe and Unsound Banking Practices Brokered Deposits 12 CFR 337.6 12 CFR 337.6 12 CFR 337.6 12 CFR 337.6 12 CFR 337.6. 12. Securities Interagency Regulations Banks as Registered Clearing Agencies 12 CFR 19.135 12 CFR 208.32-33 [Reg. H]. 12 CFR Part 308, Subpart S. Banks as Securities Transfer Agents 12 CFR 9.20 12 CFR 208.31 [Reg. H]. 12 CFR Part 341. Government Securities Sales Practices 12 CFR Part 13 12 CFR 208.37 [Reg. H]. 12 CFR Part 368. Recordkeeping and Confirmation of Securities Transactions Effected by Banks 12 CFR Part 12 12 CFR 208.34 [Reg. H]. 12 CFR Part 344 12 CFR Part 151 12 CFR Part 344. Reporting Requirements for Reported Securities Under the Securities Exchange Act of 1934 12 CFR Part 11 12 CFR 208.36 [Reg. H] 12 CFR Part 335 12 CFR Part 194 12 CFR Part 335. Securities Offerings 12 CFR Part 16 12 CFR Part 197 12 CFR Part 390, Subpart W. Swaps Margin 12 CFR Part 45 12 CFR Part 237 12 CFR Part 349 12 CFR Part 45 12 CFR Part 349. OCC Regulations National Bank—Municipal Securities Dealer Activities of Banks 12 CFR Part 10. Federal Savings Association—Accounting Requirements and Financial Statements 12 CFR Part 193. Savings Association—Proxies 12 CFR Part 169 12 CFR Part 169. Federal Savings Association—Rules on the Issuance and Sale of Institution Securities 12 CFR 163.5; 12 CFR Part 163, Subpart C. Board Regulations Credit by Banks and Persons Other than Brokers or Dealers for the Purpose of Purchasing or Carrying Margin Stock 12 CFR Part 221 [Reg. U]. 12 CFR Part 221 [Reg. U]. 12 CFR Part 221 [Reg. U]. 12 CFR Part 221 [Reg. U]. 12 CFR Part 221 [Reg. U]. 12 CFR Part 221 [Reg. U].
  • 12 CFR Part 221 [Reg. U].
  • 1. Applications and Reporting Interagency Regulations Bank Merger Act 12 CFR 5.33 12 CFR 5.33. Change in Bank Control 12 CFR Part 5.50 12 CFR Part 303 Subpart E. 12 CFR Part 5.50 12 CFR Part 303 Subpart E. Notice of Addition or Change of Directors 12 CFR 5.51 12 CFR 5.51. OCC Regulations Rules, Policies, and Procedures for Corporate Activities 12 CFR Part 5 12 CFR Part 5 (Generally). Federal Savings Association Capital Distribution 12 CFR 5.55. Federal Mutual Savings Associations—Incorporation, Organization and Conversion; or Merger, Dissolution, Reorganization and Conversion 12 CFR 5.20; 12 CFR 5.21; 12 CFR 5.23; 12 CFR 5.25; 12 CFR 5.33; 12 CFR 5.48. Federal Stock Savings Associations-Incorporation, Organization and Conversion 12 CFR 5.20; 12 CFR 5.22; 12 CFR 5.23; 12 CFR 5.25; 12 CFR 5.33; 12 CFR 5.48. Federal Savings Association Offices 12 CFR 5.31; 12 CFR 5.40; 12 CFR 5.52. Board Regulations Concentration Limits 12 CFR Part 251 [Reg. XX]. 12 CFR Part 251 [Reg. XX]. 12 CFR Part 251 [Reg. XX]. 12 CFR Part 251 [Reg. XX]. 12 CFR Part 251 [Reg. XX]. 12 CFR Part 251 [Reg. XX].
  • 12 CFR Part 251 [Reg. XX].
  • 2. Powers and Activities Interagency Regulations Proprietary Trading and Relationships with Covered Funds 12 CFR Part 44 12 CFR Part 248 [Reg. VV]. 12 CFR Part 351 12 CFR Part 44 12 CFR Part 351 12 CFR Part 248 [Reg. VV].
  • 12 CFR Part 248 [Reg. VV].
  • Retail Foreign Exchange Transactions 12 CFR Part 48 12 CFR Part 240 [Reg. NN]. 12 CFR Part 349 12 CFR Part 48 12 CFR Part 349 12 CFR Part 240 [Reg. NN]. OCC Regulations Federal Savings Association Fiduciary Powers 12 CFR 5.26; 12 CFR Part 150. Federal Savings Association General See also Federal Stock Associations provisions on chartering, organization and bylaws at 12 CFR 5.20; 12 CFR 5.21.
  • See also Federal Mutual Savings Associations provisions on chartering, organization and bylaws at 12 CFR 5.20; 12 CFR 5.22
  • Federal Savings Association Lending and Investment 12 CFR Part 160.32; 12 CFR 160.35.
  • See also 12 CFR 5.37; 12 CFR 5.58; 12 CFR 7.1000; 12 CFR 7.3001
  • Federal Savings Association Subordinate Organizations 12 CFR 5.38; 12 CFR 5.59. Board Regulations Proprietary Trading and Relationships with Covered Funds 12 CFR Part 225, Subpart K [Reg. Y].
  • 12 CFR Part 225, Subpart K [Reg. Y].
  • 3. International Operations Board Regulations Foreign Banking Organizations: Stress Tests, Risk Committee Requirements, and Enhanced Prudential Standards 12 CFR Part 252 Subparts L-O and U [Reg. YY]. Swaps Entities 12 CFR Part 237 [Reg. KK]. 12 CFR Part 237 [Reg. KK]. 4. Banking Operations Board Regulations Assessment of Fees 12 CFR Part 246 [Reg. TT].
  • 12 CFR Part 246 [Reg. TT].
  • Debit Card Interchange Fees 12 CFR Part 235 [Reg. II]. 12 CFR Part 235 [Reg. II]. 12 CFR Part 235 [Reg. II]. 12 CFR Part 235 [Reg. II]. 12 CFR Part 235 [Reg. II]. Reserve Requirements of Depository Institutions 12 CFR Part 204 [Reg. D]. 12 CFR Part 204 [Reg. D]. 12 CFR Part 204 [Reg. D]. 12 CFR Part 204 [Reg. D]. 12 CFR Part 204 [Reg. D]. 5. Capital Interagency Regulations Capital Adequacy: General Ratio and Buffers Definition of Capital Transition 12 CFR Part 3, Subparts A-C, G-J. 12 CFR Part 217, Subparts A-C, G [Reg. Q]. 12 CFR Part 324, Subparts A-C, G [Previously found in 12 CFR Part 325]. 12 CFR Part 3, Subparts A-C, G-J. 12 CFR Part 324, Subparts A-C, G [Previously found in 12 CFR Part 390, Subpart Z]. 12 CFR Part 217, Subparts A-C, G [Reg. Q]. 12 CFR Part 217, Subparts A-C, G [Reg. Q]. Capital Adequacy: Risk-based Capital Surcharge for Global Systemically Important Bank Holding Companies 12 CFR Part 3, Subpart H. 12 CFR Part 217, Subpart H [Reg. Q]. 12 CFR Part 324, Subpart H. 12 CFR Part 3, Subpart H. 12 CFR Part 324, Subpart H. 12 CFR Part 217, Subpart H [Reg. Q]. 12 CFR Part 217, Subpart H [Reg. Q]. Capital Adequacy: Risk-Weighted Assets—Standardized Approach 12 CFR Part 3, Subpart D. 12 CFR Part 217, Subpart D [Reg. Q]. 12 CFR Part 324, Subpart D [Previously found in 12 CFR Part 325 Appx. A]. 12 CFR Part 3, Subpart D. 12 CFR Part 324, Subpart D [Previously found in 12 CFR Part 390, Subpart Z, Appx. A]. 12 CFR Part 217, Subpart D [Reg. Q]. 12 CFR Part 217, Subpart D [Reg. Q]. Capital Adequacy: Risk-Weighted Assets—Advanced Measurement Approaches 12 CFR Part 3, Subpart E. 12 CFR Part 217, Subpart E [Reg. Q]. 12 CFR Part 324, Subpart E [Previously found in 12 CFR Part 325 Appx. D]. 12 CFR Part 3, Subpart E. 12 CFR Part 324, Subpart E [Previously found in 12 CFR Part 390, Subpart Z, Appx. A]. 12 CFR Part 217, Subpart E [Reg. Q]. 12 CFR Part 217, Subpart E [Reg. Q]. Capital Adequacy: Risk-Weighted Assets—Market Risk 12 CFR Part 3, Subpart F. 12 CFR Part 217, Subpart F [Reg. Q]. 12 CFR Part 324, Subpart F [Previously found in 12 CFR Part 325 Appx. C]. 12 CFR Part 3, Subpart F. 12 CFR Part 324, Subpart F [Previously found in 12 CFR Part 390, Subpart Z, Appx. A]. 12 CFR Part 217, Subpart F [Reg. Q]. 12 CFR Part 217, Subpart F [Reg. Q]. Capital Adequacy Guidelines 12 CFR Part 3, Appx. A and B. 12 CFR Part 208, Appx. A, B, and E [Reg. H]. 12 CFR Part 324 [Previously found in 12 CFR Part 325 Appx. A-D]. 12 CFR Part 3, Appx. A and B. 12 CFR Part 324 [Previously found in 12 CFR Part 390, Subpart Z, Appx. A]. 12 CFR Part 225, Appx. A, B, D, and E [Reg. Y]. Prompt Corrective Action 12 CFR Part 6 12 CFR Part 208, Subpart D [Reg. H]; 12 CFR Part 263, Subpart H 12 CFR Part 324, Subpart H [Previously found in 12 CFR Part 325, Subpart B] 12 CFR Part 6; 12 CFR Part 324, Subpart H [Previously found in 12 CFR Part 390, Subpart Y]. 12 CFR Part 208, Subpart D [Reg. H]; 12 CFR Part 263, Subpart H. Small Bank Holding Company and Savings and Loan Holding Company Policy Statement 12 CFR Part 225, Appx. C [Reg. Y]. 12 CFR Part 225, Appx. C [Reg. Y]. OCC Regulations Annual Stress Tests 12 CFR Part 46 12 CFR Part 46. Board Regulations Capital Planning 12 CFR Part 225.8 [Reg. Y]. Domestic Banking Organizations: Stress Tests, Risk Committee Requirements, Company Run and Supervisory, and Enhanced Prudential Standards 12 CFR Part 252, Subparts B-F and U [Reg. YY]. 12 CFR Part 252, Subparts B-F and U [Reg. YY]. 12 CFR Part 252, Subpart B [Reg. YY]. FDIC Regulations Annual Stress Tests 12 CFR Part 325, Subpart C. 12 CFR Part 325, Subpart C. 6. Community Reinvestment Act All rules under this category were included in the charts published in the First Notice 7. Consumer Protection Interagency Regulations Loans in Areas Having Special Flood Hazards 12 CFR Part 22. 12 CFR Part 208.25, 208.25 Appx. A, B [Reg. H]. 12 CFR Part 339 12 CFR Part 22 12 CFR Part 339. 8. Directors, Officers, and Employees FDIC Regulations Management Official Interlocks 12 CFR Part 348. 9. Money Laundering All rules under this category were included in the charts published in the First Notice 10. Rules of Procedure All rules under this category are included in Chart A above 11. Safety and Soundness All rules under this category are included in Chart A above 12. Securities All rules under this category are included in Chart A above
    Dated: December 16, 2015. Thomas J. Curry, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, December 11, 2015. Robert deV. Frierson, Secretary of the Board. Dated: December 16, 2015.

    By order of the Board of Directors.

    Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary.
    [FR Doc. 2015-32312 Filed 12-22-15; 8:45 am] BILLING CODE P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-7525; Directorate Identifier 2015-NM-064-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 747-400, 747-400D, and 747-400F series airplanes; Model 757 airplanes; and Model 767 airplanes. This proposed AD was prompted by reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. This proposed AD would require, depending on the model/configuration for Model 747 airplanes, installing an on-ground stabilizer autotrim inhibit system, doing routine functional testing of the automatic stabilizer trim inhibit system and corrective actions if necessary; for Model 757 airplanes and Model 767 airplanes, installing relays and related wiring to open and close the flight control computer (FCC) analog output that controls the stabilizer trim adjustment, doing routine functional testing of the automatic stabilizer trim inhibit system, and corrective actions if necessary; and for Model 767-300, and -300F series airplanes, installing new operational program software (OPS) into the FCCs. We are proposing this AD to prevent stabilizer mistrim, which could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.

    DATES:

    We must receive comments on this proposed AD by February 8, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone: 206-544-5000, extension 1; fax: 206-766-5680; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7525.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7525; 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 proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Fnu Winarto, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6659; fax: 425-917-6590; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-7525; Directorate Identifier 2015-NM-064-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    We have received reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. The current configuration of affected airplanes allows engagement of the autopilot while on the ground. This engagement can result in the stabilizer trim being positioned to a trim setting outside of the acceptable takeoff setting range. The root cause is unknown, but the erroneous autopilot engage request is believed to have come from the mode control panel (MCP) and to have been caused by contamination within the MCP. Incorrect stabilizer trim adjustment during takeoff, if not corrected, could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.

    Related Service Information Under 1 CFR Part 51

    We reviewed the following service information.

    • Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015. This service information describes procedures for installing an on-ground stabilizer autotrim inhibit system, and doing functional testing.

    • Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.

    • Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015. This service information describes procedures for modifying relays and wiring to open and close the FCC analog output that controls the stabilizer trim adjustment, and doing functional testing.

    • Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015. This service information describes procedures for installing new OPS into the FCCs.

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

    FAA's Determination

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

    Proposed AD Requirements

    This proposed AD would require accomplishing the actions specified in the service information described previously. For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7525.

    Differences Between This Proposed AD and the Service Information

    For Model 747 airplanes, this proposed AD would require doing post-modification routine functional testing of the automatic stabilizer trim inhibit system, and corrective actions if necessary, at intervals not to exceed 1,500 flight hours. The service information does not require these actions.

    Explanation of “RC” Steps in Service Information

    The FAA worked in conjunction with industry, under the Airworthiness Directive Implementation Aviation Rulemaking Committee (ARC), to enhance the AD system. One enhancement was a new process for annotating which steps in the service information are required for compliance with an AD. Differentiating these steps from other tasks in the service information is expected to improve an owner's/operator's understanding of crucial AD requirements and help provide consistent judgment in AD compliance. The steps identified as Required for Compliance (RC) in any service information identified previously have a direct effect on detecting, preventing, resolving, or eliminating an identified unsafe condition.

    For service information that contains steps that are labeled as RC, the following provisions apply: (1) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD, and an AMOC is required for any deviations to RC steps, including substeps and identified figures; and (2) steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    Costs of Compliance

    We estimate that this proposed AD affects 1,220 airplanes of U.S. registry.

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

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on
  • U.S. operators
  • Model 747 series airplane modification (136 airplanes) 123 work-hours × $85 per hour = $10,455 $2,714 $13,169 $1,790,984. Model 747 series airplane functional test (136 airplanes) 4 work-hours × $85 per hour = $340 0 $340 per test $46,240 per test. Model 757 series airplane modification (678 airplanes) 83 work-hours × $85 per hour = $7,055 3,236 $10,291 $6,977,298. Model 757 series airplane functional test (678 airplanes) 3 work-hours × $85 per hour = $255 per test 0 $255 per test $172,890 per test. Model 767 series airplane modification (406 airplanes) 121 work-hours × $85 per hour = $10,285 6,076 $16,361 $6,642,566. Model 767 series airplane software modification (23 airplanes) 1 work-hour × $85 per hour = $85 0 $85 $1,955. Model 767 series airplane functional test (406 airplanes) 5 work-hours × $85 per hour = $425 per test 0 $425 per test $172,550 per test.

    According to the manufacturer, some of the costs of this proposed 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 available costs in our cost estimate.

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

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

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

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

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

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

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): The Boeing Company: Docket No. FAA-2015-7525; Directorate Identifier 2015-NM-064-AD. (a) Comments Due Date

    We must receive comments by February 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to certain The Boeing Company airplanes, certificated in any category, identified in paragraphs (c)(1) through (c)(4) of this AD.

    (1) Model 747-400, 747-400D, and 747-400F series airplanes, as identified in Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015.

    (2) Model 757-200, -200PF, -200CB, and -300 series airplanes, as identified in Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015.

    (3) Model 767-200, -300, -300F, and -400ER series airplanes, as identified in Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015.

    (4) Model 767-300, and -300F series airplanes, as identified in Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015.

    (d) Subject

    Air Transport Association (ATA) of America Code 22, Auto flight.

    (e) Unsafe Condition

    This AD was prompted by reports of uncommanded autopilot engagement events resulting in incorrect stabilizer trim adjustment during takeoff. We are issuing this AD to prevent stabilizer mistrim, which could result in a high-speed rejected takeoff and runway overrun, or reduced controllability of the airplane after takeoff due to insufficient pitch control.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Model 747 Airplane Modification and Repetitive Functional Testing

    For airplanes identified in paragraph (c)(1) of this AD: Within 24 months after the effective date of this AD, install new wiring and relays to reroute the four autotrim arm signals through new or existing air/ground determination source select switches, and do functional testing, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015. If the functional test fails, before further flight, do corrective actions, repeat the test, and do all applicable corrective actions until the functional test is passed, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015. Repeat the functional test of the automatic stabilizer trim system specified in step 250. of paragraph 3.B. of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015, thereafter at intervals not to exceed 1,500 flight hours. If any functional test fails, before further flight, do corrective actions, repeat the test, and do all applicable corrective actions until the functional test is passed, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 747-22-2256, dated March 6, 2015.

    (h) Model 757 Airplane Modification and Repetitive Functional Testing

    For airplanes identified in paragraph (c)(2) of this AD: Within 24 months after the effective date of this AD, install wiring to inhibit the automatic stabilizer trim arm discrete when the airplane is on ground, install a two-position momentary contact test switch in the main equipment center, and do the functional test and all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015. Repeat the functional test of the automatic stabilizer trim system and all applicable corrective actions specified in step 11. of paragraph 3.B. of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 757-22-0096, dated March 23, 2015, thereafter at intervals not to exceed 1,500 flight hours.

    (i) Model 767-200, -300, -300F, and -400ER Series Airplane Modification and Repetitive Functional Testing

    For airplanes identified in paragraph (c)(3) of this AD: Within 24 months after the effective date of this AD, install relays and wiring to open and close the flight control computer (FCC) analog output that controls the stabilizer trim adjustment, install a momentary action ground test switch, and do the functional testing and all applicable corrective actions, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015. Repeat the functional test of the automatic stabilizer trim system and all applicable corrective actions specified in steps 5.a. through 5.g. of Paragraph 3.B. of the Accomplishment Instructions of Boeing Special Attention Service Bulletin 767-22-0143, Revision 1, dated July 6, 2015, thereafter at intervals not to exceed 1,500 flight hours.

    (j) Model 767-300 and -300F Series Airplane Modification

    For airplanes identified in paragraph (c)(4) of this AD: Within 16 months after the effective date of this AD, install new operational program software into the FCCs, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 767-22-0146, Revision 1, dated June 25, 2015.

    (k) Credit for Actions Accomplished in Accordance With Previous Service Information

    (1) This paragraph provides credit for actions required by paragraph (i) of this AD, if those actions were performed before the effective date of this AD using Boeing Special Attention Service Bulletin 767-22-0143, dated March 6, 2015.

    (2) This paragraph provides credit for actions required by paragraph (j) of this AD, if those actions were performed before the effective date of this AD using Boeing Special Attention Service Bulletin 767-22-0146, dated March 24, 2015.

    (l) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (m)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

    (4) For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (l)(4)(i) and (l)(4)(ii) apply.

    (i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. An AMOC is required for any deviations to RC steps, including substeps and identified figures.

    (ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    (m) Related Information

    (1) For more information about this AD, contact Fnu Winarto, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office (ACO), 1601 Lind Avenue SW., Renton, WA 98057-3356; phone: 425-917-6659; fax: 425-917-6590; email: [email protected]

    (2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone: 206-544-5000, extension 1; fax: 206-766-5680; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 8, 2015. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-32055 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2014-0006; Directorate Identifier 2013-NM-147-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Supplemental notice of proposed rulemaking (NPRM); reopening of comment period.

    SUMMARY:

    We are revising an earlier proposed airworthiness directive (AD) for all Airbus Model A330-200, A330-200 Freighter, A330-300, A340-200, and A340-300 series airplanes. The NPRM proposed to require inspecting certain trimmable horizontal stabilizer actuators (THSAs) to determine the number of total flight cycles the THSA has accumulated, and replacing the THSA if necessary. The NPRM was prompted by the results of endurance qualification tests on the THSA, which revealed a partial loss of the no-back brake (NBB) efficiency in specific load conditions. This action revises the NPRM by adding airplanes to the proposed applicability, reducing the proposed compliance times for replacing affected THSAs, and revising the definition of a serviceable THSA. We are proposing this supplemental NPRM (SNPRM) to detect and correct premature wear of the carbon friction disks on the NBB of the THSA, which could lead to reduced braking efficiency in certain load conditions, and, in conjunction with the inability of the power gear train to keep the ball screw in its last commanded position, could result in uncommanded movements of the trimmable horizontal stabilizer and loss of control of the airplane. Since these actions impose an additional burden over those proposed in the NPRM, we are reopening the comment period to allow the public the chance to comment on these proposed changes.

    DATES:

    We must receive comments on this SNPRM by February 8, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this proposed AD, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2014-0006; 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 proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1138; fax 425-227-1149.

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2014-0006; Directorate Identifier 2013-NM-147-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A330-200, A330-200 Freighter, A330-300, A340-200, and A340-300 series airplanes. The NPRM published in the Federal Register on February 3, 2014 (79 FR 6104). The NPRM was prompted by the results of endurance qualification tests on the THSA, which revealed a partial loss of the NBB efficiency in specific load conditions. The NPRM proposed to require inspecting certain THSAs to determine the number of total flight cycles the THSA had accumulated, and replacing the THSA if necessary.

    Actions Since Previous NPRM (79 FR 6104, February 3, 2014) was Issued

    Since we issued the NPRM (79 FR 6104, February 3, 2014), we have determined that additional airplanes are affected by the unsafe condition, the proposed compliance times for replacing affected THSAs should be reduced, and the definition of a serviceable THSA should be revised. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0257R1, dated May 29, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition on all Airbus Model A330-200, A330-200 Freighter, A330-300, A340-200, and A340-300 series airplanes; and Model A340-500 and A340-600 series airplanes. The MCAI states:

    During endurance qualification tests on Trimmable Horizontal Stabilizer Actuator (THSA) of another Airbus aeroplane type, a partial loss of the no-back brake (NBB) efficiency was experienced. Due to THSA design similarity on the A330/A340 fleet, a similar partial loss of the NBB efficiency was identified on THSA Part Number (P/N) 47147 as installed on A330-300 and A340-200/-300 aeroplanes, on THSA P/N 47172 as installed on A330-200/-300 and A340-200/-300 aeroplanes, and on THSA P/N 47175 as installed on A340-500/600 aeroplanes.

    Investigation results concluded that this partial loss of braking efficiency in some specific aerodynamic load conditions was due to polishing and auto-contamination of the NBB carbon friction disks.

    This condition, if not detected and corrected and in conjunction with the power gear train not able to keep the ball screw in its last commanded position, could lead to uncommanded movements of the THS, possibly resulting in loss of control of the aeroplane.

    To address this potential unsafe condition, EASA issued AD 2013-0144 [http://ad.easa.europa.eu/blob/easa_ad_2013_0144.zip/AD_2013-0144R1_2] to require replacement of each THSA that has exceeded 16,000 flight cycles (FC) in service, to be sent in shop for NBB carbon disk replacement.

    Since that AD was issued, a need for clarification has been demonstrated, regarding the identification of the THSA `affected' by this requirement.

    For this reason, EASA AD 2013-0144 [http://ad.easa.europa.eu/blob/easa_ad_2013_0144.zip/AD_2013-0144R1_2] was revised, confirming that this AD only affected those THSA identified by Part Number (P/N) in Airbus Alert Operator Transmission (AOT) A27L005-13. In addition, a note was added to make clear that the life limits as specified in the current revision of ALS Part 4 are still relevant for the affected THSA, as applicable to aeroplane model and THSA P/N.

    Since EASA AD 2013-0144R1 [http://ad.easa.europa.eu/ad/2013-0144R1] was issued, further assessment of the ageing/endurance issue has resulted in the conclusion that there is a need to replace the NBB installed on the THSA.

    Consequently, EASA issued AD 2014-0257 [http://ad.easa.europa.eu/blob/EASA_AD_2014_0257_R1.pdf/AD_2014-0257R1_1] which retained the requirements of EASA AD 2013-0144R1, which was superseded, and required removal from service of affected THSA. THSA should be sent in shop for NBB carbon disk replacement. This [EASA] AD affected additional THSA P/Ns when compared to EASA AD 2013-0144R1 and Airbus AOT A27L005-13.

    Since that [EASA] AD was issued, it was determined that it is necessary to consider that the THSA removal for NBB disks replacement could also be calculated since last NBB disk replacement which was done in-shop.

    This proposed AD also adds Model A340-541 and A340-642 airplanes to the applicability. You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2014-0006-0002.

    Related Service Information Under 1 CFR part 51

    Airbus has issued the following service information, dated July 15, 2014.

    • Service Bulletin A330-27-3199 (for Model A330 series airplanes);

    • Service Bulletin A340-27-4190 (for Model A340-200 and -300 series airplanes); and

    • Service Bulletin A340-27-5062 (for Model A340-500 and -600 series airplanes).

    The service information describes procedures for inspecting the THSA to determine the part number and replacing THSAs having certain part numbers with a new or serviceable part. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this NPRM.

    Comments

    We gave the public the opportunity to participate in developing this AD. We have considered the comments received. The following presents the comments received on the NPRM (79 FR 6104, February 3, 2014) and the FAA's response to each comment.

    One commenter, Chris Vargas, supported the intent of the NPRM (79 FR 6104, February 3, 2014). Another commenter, Cameron Lane, restated the proposed costs and unsafe condition. We infer that this commenter supported the intent of the NPRM.

    Request To Revise THSA Life Limits

    US Airways stated that there is a conflict between the THSA life limits included in the NPRM (79 FR 6104, February 3, 2014) and the life limits included in the A330 Airworthiness Limitations. The commenter conveyed that it is concerned that operators would be unsure which life limits to follow. We infer that the commenter is requesting that the THSA life limits specified in the NPRM match those specified in the A330 Airworthiness Limitations.

    The THSA life limits specified in this SNPRM are more restrictive than the life limits specified in the A330 Airworthiness Limitations for the parts identified in paragraphs (g)(1) and (g)(2) of this proposed AD. This SNPRM proposes to require a one-time replacement of an affected THSA with a serviceable part. Serviceable parts identified in paragraphs (g)(1) and (g)(2) of this proposed AD must not exceed the limits proposed in this SNPRM. Any serviceable part not identified in paragraph (g)(1) or (g)(2) of this proposed AD is subject to the life limits and maintenance tasks in the A330 Airworthiness Limitations. We have been notified by Airbus that the NBB life limits will be reduced in a revised Airworthiness Limitation. We might consider further rulemaking if new airworthiness limitations are issued. No change was made to this proposed AD regarding this issue.

    Request To Assign Life Limit to Only the NBB Disks

    US Airways requested that a life limit be assigned only to the NBB disks (part number FE194-031) and not the entire THSA. The commenter stated that the NBB disks are replaceable in the shop and the AD should not limit the life of the entire THSA.

    We partially agree with the commenter's request. EASA has revised MCAI 2014-0257, dated November 27, 2014, to include life limit computations for an affected THSA from the most recent NBB inspection, in addition to the accumulated total flight cycles since the THSA's first installation on an airplane. The revised MCAI is 2014-0257R1, dated May 29, 2015. We have revised paragraphs (g), (h)(1), (h)(2), and (h)(3) of this proposed AD accordingly.

    Request To Reduce the Compliance Time

    Jennifer Paramski stated that the proposed compliance time in the NPRM (79 FR 6104, February 3, 2014) should be reduced because failure of the THSA is a substantial safety concern. The commenter stated that once the THSA has accumulated 16,000 total flight cycles, the airline has 30 months or 4,000 flight cycles to replace the part, and a lot can happen during that time because the part is sensitive to load conditions. The commenter interpreted the compliance time to replace the THSA as tiered and suggested that some airlines might try to extend the timeframe for THSA replacement because after 4,000 flight cycles from the initial 16,000 flights reached, an airline could argue that it should get an additional 1,500 flight cycles or 12 months to replace the part because of the second tier. The commenter explained that airlines would try to maximize the current part on all airplanes to try to maximize profit. The commenter emphasized that maximizing profits could jeopardize the safety of others, which, if there was an accident, would cause more monetary losses in the long run from lawsuits.

    We do not agree that the compliance time should be reduced. The thresholds for THSA replacement are not tiered, as stated by the commenter. The replacement threshold is based on the accumulation of total flight cycles as of the effective date of the final rule. An airline cannot exceed the thresholds mandated in a final rule unless it requests an alternative method of compliance, issued by the FAA, using the procedures specified in paragraph (n)(1) of this proposed AD. However, we have clarified the compliance times in this SNPRM by revising paragraph (h) of this proposed AD and including a new paragraph (i). The subsequent paragraphs were redesignated accordingly.

    FAA's Determination and Requirements of This SNPRM

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

    Certain changes described above expand the scope of the proposed AD (79 FR 6104, February 3, 2014). As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.

    Explanation of Compliance Times

    The MCAI requires operators to replace certain THSAs by certain dates. The replacements are done for THSAs exceeding a certain flight cycle limit corresponding to each date. EASA determined that accomplishing the replacements by these dates is necessary in order to address the identified unsafe condition. Therefore, we are also specifying compliance dates in this proposed AD.

    Explanation of “RC” Procedures and Tests in Service Information

    The FAA worked in conjunction with industry, under the Airworthiness Directive Implementation Aviation Rulemaking Committee (ARC), to enhance the AD system. One enhancement was a new process for annotating which procedures and tests in the service information are required for compliance with an AD. Differentiating these procedures and tests from other tasks in the service information is expected to improve an owner's/operator's understanding of crucial AD requirements and help provide consistent judgment in AD compliance. The procedures and tests identified as RC (required for compliance) in any service information have a direct effect on detecting, preventing, resolving, or eliminating an identified unsafe condition.

    As specified in a NOTE under the Accomplishment Instructions of the specified service information, procedures and tests that are identified as RC in any service information must be done to comply with the proposed AD. However, procedures and tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an alternative method of compliance (AMOC), provided the procedures and tests identified as RC can be done and the airplane can be put back in a serviceable condition. Any substitutions or changes to procedures or tests identified as RC will require approval of an AMOC.

    Costs of Compliance

    We estimate that this proposed AD affects 94 airplanes of U.S. registry.

    We also estimate that it would take about 3 work-hours per product to comply with the new basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $0 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $23,970, or $255 per product.

    In addition, we estimate that any necessary follow-on actions would take about 23 work-hours and would require parts costing up to $722,556, for a cost of up to $724,511 per product. We have no way of determining the number of aircraft that might need this action.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

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

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus: Docket No. FAA-2014-0006; Directorate Identifier 2013-NM-147-AD. (a) Comments Due Date

    We must receive comments by February 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to the Airbus airplanes identified in paragraphs (c)(1) through (c)(7) of this AD, certificated in any category, all manufacturer serial numbers.

    (1) Model A330-201, -202, -203, -223, and -243 airplanes.

    (2) Model A330-223F and -243F airplanes.

    (3) Model A330-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes.

    (4) Model A340-211, -212, and -213 airplanes.

    (5) Model A340-311, -312, and -313 airplanes.

    (6) Model A340-541 airplanes.

    (7) Model A340-642 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 27, Flight Controls.

    (e) Reason

    This AD was prompted by the results of endurance qualification tests on the trimmable horizontal stabilizer actuator (THSA), which revealed a partial loss of the no-back brake (NBB) efficiency in specific load conditions. We are issuing this AD to detect and correct premature wear of the carbon friction disks on the NBB of the THSA, which could lead to reduced braking efficiency in certain load conditions, and, in conjunction with the inability of the power gear train unable to keep the ball screw in its last commanded position, could result in uncommanded movements of the trimmable horizontal stabilizer and loss of control of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Inspection To Determine THSA Part Number and Accumulated Total Flight Cycles

    Within 90 days after the effective date of this AD: Inspect the THSA to determine if it has a part number that is specified in paragraph (g)(1) or (g)(2) of this AD, and to determine the total number of flight cycles accumulated since the THSA's first installation on an airplane, or since the most recent NBB replacement. A review of airplane delivery or maintenance records is acceptable in lieu of this inspection if the part number of the THSA can be conclusively determined from that review.

    (1) For Model A330-200 Freighter, A330-200, A330-300, A340-200 and A340-300 series airplanes: Part number (P/N) 47147-500, 47147-700, 47172-300, 47172-500, 47172-510, or 47172-520.

    (2) For Model A340-500 and -600 series airplanes: P/N 47175-200, 47175-300, 47175-500, or 47175-520.

    (h) THSA Replacement for Airbus Model A330-200 Freighter, A330-200, A330-300, A340-200, and A340-300 Series Airplanes

    For Airbus Model A330-200 Freighter, A330-200, A330-300, A340-200, and A340-300 series airplanes having a THSA with a part number specified in paragraph (g)(1) of this AD: At the applicable time specified in paragraph (h)(1), (h)(2), or (h)(3) of this AD, replace each affected THSA with a serviceable THSA, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-27-3199, dated July 15, 2014; or Airbus Service Bulletin A340-27-4190, dated July 15, 2014; as applicable.

    Note 1 to paragraphs (h), (i), and (j) of this AD:

    The THSA life limits specified in Part 4—Aging System Maintenance of the Airbus A330 and A340 Airworthiness Limitations Sections are still relevant, as applicable to airplane model and THSA part number.

    (1) For a THSA that has accumulated or exceeded 20,000 total flight cycles since the THSA's first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD: Within 6 months after the effective date of this AD.

    (2) For a THSA that has accumulated or exceeded 16,000 total flight cycles, but less than 20,000 total flight cycles since the THSA's first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD: At the applicable time specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD.

    (i) For Model A330-200 Freighter, A330-200, and A330-300 series airplanes: Within 12 months after the effective date of this AD but without exceeding 20,000 total flight cycles.

    (ii) For Model A340-200, and A340-300 series airplanes: Within 12 months after the effective date of this AD but without exceeding 20,000 total flight cycles.

    (3) For a THSA that has accumulated less than 16,000 total flight cycles since first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD: At the applicable time specified in paragraph (i) of this AD.

    (i) Replacement Times for Airbus Model A330-200 Freighter, A330-200, A330-300, A340-200, and A340-300 Series Airplanes With THSAs Having Less Than 16,000 Total Flight Cycles as of the Effective Date of This AD

    The requirements of this paragraph apply to Airbus Model A330-200 Freighter, A330-200, A330-300, A340-200, and A340-300 series airplanes having a THSA with a part number specified in paragraph (g)(1) of this AD that has accumulated less than 16,000 total flight cycles since first installation on an airplane, or since the most recent NBB replacement, whichever is later, as of the effective date of this AD. Not later than the date specified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD, as applicable: For any THSA having reached or exceeded on that date the corresponding number of total flight cycles as specified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD, as applicable, replace the THSA with a serviceable unit in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-27-3199, dated July 15, 2014; or Airbus Service Bulletin A340-27-4190, dated July 15, 2014; as applicable.

    (1) As of 12 months after the effective date of this AD: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 16,000 total flight cycles.

    (2) As of July 31, 2017: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 14,000 total flight cycles.

    (3) As of July 31, 2018: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 12,000 total flight cycles.

    (j) THSA Replacement for Airbus Model A340-500 and -600 Series Airplanes

    For Airbus Model A340-500 and A340-600 series airplanes having a THSA with a part number specified in paragraph (g)(2) of this AD: Not later than the date specified in paragraphs (j)(1), (j)(2), (j)(3), and (j)(4) of this AD, as applicable: For any THSA having reached or exceeded on that date the corresponding number of total flight cycles as specified in paragraphs (j)(1), (j)(2), (j)(3), and (j)(4) of this AD, as applicable, replace each affected THSA with a serviceable THSA, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A340-27-5062, dated July 15, 2014.

    (1) As of the effective date of this AD: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 6,000 total flight cycles.

    (2) As of April 30, 2017: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 5,200 total flight cycles.

    (3) As of April 30, 2018: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 4,400 total flight cycles.

    (4) As of April 30, 2019: The THSA flight-cycle limit (since first installation on an airplane, or since last NBB replacement, whichever occurs later) is 3,500 total flight cycles.

    (k) THSA Replacement Intervals for All Airbus Airplanes Identified in Paragraph (c) of This AD

    For any part installed as required by this AD having a part number identified in paragraph (g)(1) or (g)(2) of this AD: From the dates specified in paragraphs (i) and (j) of this AD, as applicable, and prior to exceeding the accumulated number of total flight cycles corresponding to each time, replace each affected THSA with a serviceable part, in accordance with the Accomplishment Instructions of the applicable service information identified in paragraphs (k)(1), (k)(2), and (k)(3) of this AD.

    (1) Airbus Service Bulletin A330-27-3199, dated July 15, 2014.

    (2) Airbus Service Bulletin A340-27-4190, dated July 15, 2014.

    (3) Airbus Service Bulletin A340-27-5062, dated July 15, 2014.

    (l) Definition of Serviceable THSA

    For the purposes of this AD a serviceable THSA is a THSA:

    (1) Having a part number identified in paragraph (g)(1) or (g)(2) of this AD that has not exceeded any of the total accumulated flight cycles identified in paragraphs (i)(1) through (i)(3) of this AD, or paragraphs (j)(1) through (j)(4) of this AD, as applicable; or

    (2) Having a part number that is not identified in paragraph (g)(1) or (g)(2) of this AD.

    (m) Parts Installation Limitation

    From each date specified in paragraphs (i)(1), (i)(2), and (i)(3) of this AD, and paragraphs (j)(1) through (j)(4) of this AD, as applicable, a THSA having a part number identified in paragraph (g)(1) or (g)(2) of this AD may be installed on any airplane, provided the THSA has not exceeded the corresponding number of accumulated total flight cycles.

    (n) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1138; fax 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished 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 (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (3) Required for Compliance (RC): If any service information contains procedures or tests that are identified as RC, those procedures and tests must be done to comply with this AD; any procedures or tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC require approval of an AMOC.

    (o) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0257R1, dated May 29, 2015, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov/#!documentDetail;D=FAA-2014-0006-0002.

    (2) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 45 80; email [email protected]; Internet http://www.airbus.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on October 30, 2015. Jeffrey E. Duven, Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-30822 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-7526; Directorate Identifier 2014-NM-217-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all Airbus Model A318, A319, A320, and A321 series airplanes. This proposed AD was prompted by the discovery of corroded circlips in fuel vent protectors (FVP) having a certain part number. This proposed AD would require an inspection to determine the part number and serial number of the FVP, and replacement if necessary. We are proposing this AD to detect and correct corroded circlips. Corroded circlips could lead to failure of the circlips and consequent movement of the FVP, resulting in a reduction of the flame protector capability of the FVP cartridge, which could result in damage to the airplane in case of lightning impact or fire on the ground.

    DATES:

    We must receive comments on this proposed AD by February 8, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this proposed AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7526; 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 proposed 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. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-1149.

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-7526; Directorate Identifier 2014-NM-217-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0234R1, dated December 11, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A318, A319, A320, and A321 series airplanes. The MCAI states:

    On each aeroplane wing, a NACA [National Advisory committee for Aeronautics] duct assembly is installed, including a Fuel Vent Protector (FVP) which is used as flame arrestor. This FVP is maintained in its NACA duct assembly by a circlip (also known as C-clip). Following a wing water pressure test, the FVP is removed and dried with heat. During an inspection after this test, several circlips were reported to be discoloured. Investigation revealed that a batch of circlips fitted on some FVP Part Number (P/N) 786073-1-0 have an increased risk of corrosion due to a manufacturing quality issue.

    This condition, if not detected and corrected, could lead to circlip failure and consequent FVP movement, reducing the flame protector capability of the FVP cartridge, possibly resulting in damage to the aeroplane in case of lightning impact or fire on ground.

    For the reason described above, EASA issued AD 2014-0234 to require identification by serial number (s/n) of the affected FVP P/N 786073-1-0 and removal from service [and replacement with a serviceable part].

    This [EASA] AD is revised to clarify that only maintenance records since August 2012 should be consulted to demonstrate, as required by paragraph (2), that not replacement FVP has been installed.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7526.

    Related Service Information Under 1 CFR Part 51

    Airbus has issued Service Bulletin A320-28-1221, dated July 21, 2014. The service information describes procedures for inspecting the FVP to determine the part number, and replacing the FVP 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 NPRM.

    FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

    Costs of Compliance

    We estimate that this proposed AD affects 7 airplanes of U.S. registry.

    We also estimate that it would take about 5 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Parts would cost $25,640. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be up to $182,455, or $26,065 per product.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

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

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus: Docket No. FAA-2015-7526; Directorate Identifier 2014-NM-217-AD. (a) Comments Due Date

    We must receive comments by February 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to the airplanes specified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD, certificated in any category, all manufacturer serial numbers.

    (1) Airbus Model A318-111, -112, -121, and -122 airplanes.

    (2) Airbus Model A319-111, -112, -113, -114, -115,-131, -132, and -133 airplanes.

    (3) Airbus Model A320-211, -212, -214, -231, -232, and -233 airplanes.

    (4) Airbus Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 28, Fuel.

    (e) Reason

    This AD was prompted by the discovery of corroded circlips in fuel vent protectors (FVP) having a certain part number. We are issuing this AD to detect and correct corroded circlips. Corroded circlips could lead to failure of the circlips and consequent movement of the FVP, resulting in a reduction of the flame protector capability of the FVP cartridge, which could result in damage to the airplane in case of lightning impact or fire on the ground.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Inspection of FVP and Corrective Action

    For airplanes having a manufacturer serial number specified in figure 1 to paragraphs (g) and (i) of this AD: At the earliest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD, do an inspection to determine the part number and serial number of the FVP. If the FVP has part number (P/N) 786073-1-0 with a serial number that is specified in figure 2 to paragraphs (g) and (i) of this AD, and the FVP is not marked “Amdt B,” replace the FVP with a serviceable part, at the earliest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-28-1221, dated July 21, 2014. A review of airplane maintenance records is acceptable in lieu of this inspection if the part number and serial number of the FVP can be conclusively determined from that review.

    Figure 1 to Paragraphs (g) and (i) of This AD—Affected Airplane Manufacturer Serial Numbers 5438 5461 5485 through 5488 inclusive 5536 5441 5463 5490 through 5493 inclusive 5539 5444 5464 5495 through 5505 inclusive 5541 5445 5469 5507 through 5515 inclusive 5544 5447 5473 through 5478 inclusive 5517 5547 5457 5481 5518 5551 5459 5482 5520 through 5527 inclusive 5553 5460 5483 5530 5556 Figure 2 to Paragraphs (g) and (i) of This AD—Affected Serial Numbers for Part Number 786073-1-0 [Manufactured during August 2012] Serial number 786073IN0xxxx (xxxx indicates the last four digits) 3752 3821 3868 3911 3966 4010 3753 3826 3871 3914 3967 4011 3754 3827 3874 3922 3969 4013 3755 3829 3877 3925 3971 4017 3756 3830 3878 3927 3972 4019 3757 3833 3882 3930 3977 4023 3758 3834 3893 3937 3978 4024 3759 3836 3897 3938 3980 4025 3760 3839 3898 3940 3981 4026 3761 3840 3899 3945 3982 4039 3787 3848 3900 3946 3983 4048 3788 3849 3901 3947 3984 4065 3810 3850 3904 3948 3985 4066 3812 3851 3905 3951 3986 4068 3814 3853 3906 3961 3987 4070 3817 3859 3907 3962 3996 4184 3819 3860 3908 3964 3997 4187 3820 3867 3910 3965 4009 None (h) Compliance Times for the Requirements of Paragraph (g) of This AD

    Do the actions required by paragraph (g) of this AD at the earliest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD.

    (1) Before the accumulation of 5,000 total flight cycles after the date of manufacture of the airplane.

    (2) Before the accumulation of 7,500 total flight hours after the date of manufacture of the airplane.

    (3) Within 30 months after the date of manufacture of the airplane.

    (i) Exclusion From Actions Required by Paragraph (g) of This AD

    An airplane that does not have a manufacturer serial number specified in figure 1 to paragraphs (g) and (i) of this AD is excluded from the requirements of paragraph (g) of this AD, provided that, a FVP having P/N 786073-1-0 with a serial number specified in figure 2 to paragraphs (g) and (i) of this AD has not been installed on that airplane after July 2012. If a FVP having P/N 786073-1-0 with a serial number specified in figure 2 to paragraphs (g) and (i) of this AD is installed, or the serial number cannot be identified: Within 12 months after the effective date of this AD, replace the FVP with a serviceable part, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-28-1221, dated July 21, 2014. A review of airplane maintenance records is acceptable if it can be conclusively determined from that review that a FVP having a serial number specified in figure 2 to paragraphs (g) and (i) of this AD has not been installed on that airplane after July 2012.

    (j) Parts Installation Limitation

    As of the effective date of this AD, a FVP having P/N 786073-1-0 and a serial number listed in figure 2 to paragraphs (g) and (i) of this AD may be installed on any airplane, provided the FVP is marked with “Amdt B.”

    (k) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished 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 (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (l) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0234R1, dated December 11, 2014, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7526.

    (2) For service information identified in this AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 11, 2015. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-32082 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-7528; Directorate Identifier 2015-NM-004-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Model A310 series airplanes. This proposed AD was prompted by reports of premature aging of certain passenger chemical oxygen generators that resulted in the generators failing to activate. This proposed AD would require an inspection to determine if certain passenger chemical oxygen generators are installed and replacement of affected passenger chemical oxygen generators. We are proposing this AD to prevent failure of the passenger chemical oxygen generator to activate and consequently not deliver oxygen during an emergency, possibly resulting in injury to airplane occupants.

    DATES:

    We must receive comments on this proposed AD by February 8, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For Airbus service information identified in this proposed AD, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email: [email protected]; Internet http://www.airbus.com.

    For B/E Aerospace service information identified in this proposed AD, contact B/E Aerospace Inc., 10800 Pflumm Road, Lenexa, KS 66215; telephone: 913-338-9800; fax: 913-469-8419; Internet http://beaerospace.com/home/globalsupport.

    You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7528; 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 proposed 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. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Dan Rodina, Aerospace Engineer, International Branch, ANM-116 Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-2125; fax: 425-227-1149.

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-7528; Directorate Identifier 2015-NM-004-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2015-0118, dated June 24, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Model A310 series airplanes. The MCAI states:

    Reports have been received indicating premature ageing of certain chemical oxygen generators, Part Number (P/N) 117042-XX (XX representing any numerical value), manufactured by B/E Aerospace. Some operators reported that when they tried to activate generators, some older units failed to activate. Given the number of failed units reported, all generators manufactured in 1999, 2000 and 2001 were considered unreliable.

    This condition, if not corrected, could lead to failure of the generator to activate and consequently not deliver oxygen during an emergency, possibly resulting in injury to aeroplane occupants.

    To address this potential unsafe condition, Airbus issued Alert Operators Transmission (AOT) A35W008-14, making reference to B/E Aerospace Service Information Letter (SIL) D1019-01 (currently at Revision 1) and B/E Aerospace Service Bulletin (SB) 117042-35-001. Consequently, EASA issued AD 2014-0280 [http://ad.easa.europa.eu/ad/2014-0280] to require identification and replacement of the affected oxygen generators.

    Since EASA AD 2014-0280 was issued, and following new investigation results, EASA [has] decided to introduce a life limitation concerning all P/N 117042-XX chemical oxygen generators, manufactured by B/E Aerospace.

    For the reason described above, this [EASA] AD retains the requirements of EASA AD 2014-0280, which is superseded, expands the scope of the [EASA] AD to include chemical oxygen generators manufactured after 2001, and requires their removal from service before exceeding 10 years since date of manufacture.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7528.

    Related Service Information Under 1 CFR Part 51

    Airbus has issued Alert Operators Transmission (AOT) A35W008-14, dated December 18, 2014.

    B/E Aerospace has issued Service Bulletin 117042-35-001, dated December 10, 2014.

    This service information describes procedures to replace certain passenger chemical oxygen generators. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this NPRM.

    FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

    Costs of Compliance

    We estimate that this proposed AD affects 166 airplanes of U.S. registry.

    We also estimate that it would take about 2 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $390 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $92,960, or $560 per product.

    Paperwork Reduction Act

    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 proposed AD is 2120-0056. The paperwork cost associated with this proposed 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 proposed 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.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

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

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus: Docket No. FAA-2015-7528; Directorate Identifier 2015-NM-004-AD. (a) Comments Due Date

    We must receive comments by February 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to the airplanes identified in paragraphs (c)(1), (c)(2), (c)(3), (c)(4), and (c)(5) of this AD, certificated in any category, all manufacturer serial numbers.

    (1) Airbus Model A300 B4-601, B4-603, B4-620, and B4-622 airplanes.

    (2) Airbus Model A300 B4-605R and B4-622R airplanes.

    (3) Airbus Model A300 F4-605R and F4-622R airplanes.

    (4) Airbus Model A300 C4-605R Variant F airplanes.

    (5) Airbus Model A310-203, -204, -221, -222, -304, -322, -324, and -325 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 35, Oxygen.

    (e) Reason

    This AD was prompted by reports of premature aging of certain passenger chemical oxygen generators that resulted in the generators failing to activate. We are issuing this AD to prevent failure of the passenger chemical oxygen generator to activate and consequently not deliver oxygen during an emergency, possibly resulting in injury to airplane occupants.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Part Number Inspection

    Within 30 days after the effective date of this AD, do a one-time inspection of passenger chemical oxygen generators, part numbers (P/N) 117042-02 (15 minutes (min)—2 masks), 117042-03 (15 min—3 masks), 117042-04 (15 min—4 masks), 117042-22 (22 min—2 masks), 117042-23 (22 min—3 masks), or 117042-24 (22 min—4 masks), to determine the date of manufacture as specified in Airbus Alert Operators Transmission (AOT) A35W008-14, dated December 18, 2014. Refer to Figure 1 to paragraph (g) of this AD and Figure 2 to paragraph (g) of this AD for the location of the date. A review of airplane maintenance records is acceptable for the inspection required by this paragraph, provided the date of manufacture can be conclusively determined by that review.

    EP23DE15.003 EP23DE15.004 (h) Replacement of Passenger Chemical Oxygen Generators Manufactured in 1999, 2000, and 2001

    If, during any inspection required by paragraph (g) of this AD, any passenger chemical oxygen generator having a date of manufacture in 1999, 2000, or 2001 is found: At the applicable time specified in paragraph (h)(1), (h)(2), or (h)(3) of this AD, remove and replace the affected passenger chemical oxygen generator with a serviceable unit, in accordance with the Accomplishment Instructions of B/E Aerospace Service Bulletin 117042-35-001, dated December 10, 2014 (for 15 minute passenger chemical oxygen generators); or Airbus AOT A35W008-14, dated December 18, 2014 (for 22 minute passenger chemical oxygen generators); as applicable.

    (1) For passenger chemical oxygen generators that have a date of manufacture in 1999: Remove and replace within 30 days after the effective date of this AD.

    (2) For passenger chemical oxygen generators that have a date of manufacture in 2000: Remove and replace within 6 months after the effective date of this AD.

    (3) For passenger chemical oxygen generators that have a date of manufacture in 2001: Remove and replace within 12 months after the effective date of this AD.

    (i) Replacement of Passenger Chemical Oxygen Generators Manufactured in 2002 and Later

    If, during any inspection required by paragraph (g) of this AD, any passenger chemical oxygen generator having a date specified in Table 1 to paragraph (i) of this AD is found: At the applicable time specified in Table 1 to paragraph (i) of this AD, remove and replace the affected passenger chemical oxygen generator with a serviceable unit, in accordance with the Accomplishment Instructions of B/E Aerospace Service Bulletin 117042-35-001, dated December 10, 2014 (for 15 minute passenger chemical oxygen generators); or Airbus AOT A35N006-14, dated December 10, 2014, including Appendix 01 (for 22 minute passenger chemical oxygen generators); as applicable.

    Table 1 to Paragraph (i) of This AD—Replacement Compliance Times Year of
  • manufacture
  • Compliance time
    2002 Within 12 months after the effective date of this AD. 2003 Within 16 months after the effective date of this AD. 2004 Within 20 months after the effective date of this AD. 2005 Within 24 months after the effective date of this AD. 2006 Within 28 months after the effective date of this AD. 2007 Within 32 months after the effective date of this AD. 2008 Within 36 months after the effective date of this AD. 2009 Before exceeding 10 years since date of manufacture of the passenger chemical oxygen generator.
    (j) Definition of Serviceable

    For the purpose of this AD, a serviceable unit is a passenger chemical oxygen generator having P/N 117042-XX (XX represents any numerical value) with a manufacturing date not older than 10 years, or any other approved part number, provided that the generator has not exceeded the life limit established for that generator by the manufacturer.

    (k) Reporting

    At the applicable time specified in paragraph (k)(1) or (k)(2) of this AD, submit a report of the findings (both positive and negative) of the inspection required by paragraph (g) of this AD, in accordance with paragraph 7, “Reporting,” of Airbus AOT A35W008-14, dated December 18, 2014. The report must include the information specified in Appendix 1 of Airbus AOT A35W008-14, dated December 18, 2014.

    (1) If the inspection was done on or after the effective date of this AD: Submit the report within 30 days after the inspection.

    (2) If the inspection was done before the effective date of this AD: Submit the report within 30 days after the effective date of this AD.

    (l) Parts Installation Limitation

    As of the effective date of this AD, no person may install a passenger chemical oxygen generator, unless it is determined, prior to installation, that the oxygen generator is a serviceable unit (as defined in paragraph (j) of this AD).

    (m) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Dan Rodina, Aerospace Engineer, International Branch, ANM-116 Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-2125; fax: 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished 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 (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (3) Reporting Requirements: A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to a 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 OMB Control Number for this information collection is 2120-0056. Public reporting for this collection of information is estimated to be approximately 5 minutes per response, including the time for reviewing instructions, completing and reviewing the collection of information. All responses to this collection of information are 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.

    (n) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2015-0118, dated June 24, 2015, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7528.

    (2) For Airbus service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email: [email protected]; Internet http://www.airbus.com. For B/E service identified in this AD, contact B/E Aerospace Inc., 10800 Pflumm Road, Lenexa, KS 66215; telephone: 913-338-9800; fax: 913-469-8419; Internet http://beaerospace.com/home/globalsupport. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 11, 2015. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-32084 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-0250; Directorate Identifier 2014-NM-216-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Supplemental notice of proposed rulemaking (NPRM); reopening of comment period.

    SUMMARY:

    We are revising an earlier proposed airworthiness directive (AD) for all Airbus Model A318, A319, A320, and A321 series airplanes. The NPRM proposed to require replacing certain pitot probes on the captain, first officer, and standby sides with certain new pitot probes. The NPRM was prompted by reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. This action revises the NPRM by reducing the proposed compliance time for replacing certain pitot probes based on a risk assessment due to additional reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. We are proposing this supplemental NPRM (SNPRM) to prevent airspeed indication discrepancies during inclement weather, which, depending on the prevailing altitude, could lead to unknown accumulation of ice crystals and consequent reduced controllability of the airplane. Since these actions impose an additional burden over those proposed in the NPRM, we are reopening the comment period to allow the public the chance to comment on these proposed changes.

    DATES:

    We must receive comments on this SNPRM by January 22, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this proposed AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW. Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-0250; 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 proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-1149.

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-0250; Directorate Identifier 2014-NM-216-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A318, A319, A320, and A321 series airplanes. The NPRM published in the Federal Register on March 6, 2015 (80 FR 12094) (“the NPRM”). The NPRM was prompted by reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. The NPRM proposed to require replacing certain pitot probes on the captain, first officer, and standby sides with certain new pitot probes.

    Actions Since Previous NPRM (80 FR 12094, March 6, 2015) Was Issued

    Since we issued the NPRM (80 FR 12094, March 6, 2015), we have determined it is necessary to reduce the compliance time for replacing certain pitot probes based on a risk assessment due to additional reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, issued EASA Airworthiness Directive 2015-0205, dated October 9, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition on all Airbus Model A318, A319, A320, and A321 series airplanes. The MCAI states:

    Occurrences have been reported on A320 family aeroplanes of airspeed indication discrepancies while flying at high altitudes in inclement weather conditions. Investigation results indicated that A320 aeroplanes equipped with Thales Avionics Part Number (P/N) 50620-10 or P/N C16195AA pitot probes appear to have a greater susceptibility to adverse environmental conditions that aeroplanes equipped with certain other pitot probes.

    Prompted by earlier occurrences, DGAC [Direction Générale de l'Aviation Civile] France issued [DGAC] AD 2001-362 [http://ad.easa.europa.eu/blob/easa_ad_2001_362.pdf/AD_2001-362] [which corresponds to paragraph (f) of FAA AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004)] to require replacement of Thales (formerly known as Sextant) P/N 50620-10 pitot probes with Thales P/N C16195AA probes.

    Since that [DGAC] AD was issued, Thales pitot probe P/N C15195BA was designed, which improved airspeed indication behavior in heavy rain conditions, but did not demonstrate the same level of robustness to withstand high-altitude ice crystals. Based on these findings, EASA have decided to implement replacement of the affected Thales [pitot] probes as a precautionary measure to improve the safety level of the affected aeroplanes.

    Consequently, EASA issued AD 2014-0237 (later revised) [http://ad.easa.europa.eu/blob/easa_ad_2014_0237.pdf/AD_2014-0237], retaining the requirements of DGAC France AD 2001-362, which was superseded, and cancelling two other DGAC ADs, to require replacement of Thales Avionics pitot probes P/N C16195AA and P/N C16195BA.

    Since EASA issued AD 2014-0237R1 [http://ad.easa.europa.eu/ad/2014-0237R1] was issued, results of further analyses have determined that the compliance time (48 months) of that AD has to be reduced in relation to the risk assessment.

    For the reasons described above, this [EASA] AD retains the requirements of EASA AD 2014-0237R1, which is superseded, but reduces the compliance time.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-0250.

    Related Rulemaking

    On February 4, 2004, we issued AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004), applicable to certain Airbus Model A300 B2 and B4 series airplanes; Model A300 B4-600, A300 B4-600R, and A300 F4-600R series airplanes; Model A310 series Airplanes; Model A319, A320, and A321 series airplanes; Model A330-301, -321, -322, -341, and -342 airplanes; and Model A340 series airplanes. That AD requires, among other actions, replacement of certain pitot probes with certain new pitot probes. That AD was issued to prevent loss or fluctuation of indicated airspeed, which could result in misleading information being provided to the flightcrew. Accomplishing the replacement specified in paragraph (g) of this SNPRM would terminate the requirements of paragraph (f) of AD 2004-03-33, for that airplane only.

    Related Service Information Under 1 CFR Part 51

    Airbus has issued the following service information:

    • Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015.

    • Service Bulletin A320-34-1456, Revision 01, dated May 15, 2012.

    • Service Bulletin A320-34-1463, Revision 01, dated May 15, 2012.

    The service information describes procedures for replacing certain Thales Avionics pitot probes on the captain, first officer, and standby sides. 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 SNPRM.

    Comments

    We gave the public the opportunity to participate in developing this SNPRM. We considered the comments received.

    American Airlines supports the proposed compliance time of 48 months for retrofit.

    Request To Refer To Revised Service Information

    United Airlines (UAL) and Virgin America asked that the NPRM be revised to refer to Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015. (The NPRM (80 FR 12094, March 6, 2015) referred to Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, as the appropriate source of service information for replacing the pitot probes.) UAL stated that Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015, includes UAL effectivity, as well as all A320 family airplanes fitted with Thales Pitot Probes. Virgin America stated that Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, is available only to select operators who previously purchased the change; Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015, is available to all operators with airplanes having Thales pitot probes installed. American Airlines (AAL) asked that we refer to Airbus Service Bulletin A320-34-1170, Revision 30, which is scheduled for release in the near future. AAL added that the effectivity in Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, is incomplete.

    We agree to refer to Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015, for the pitot probe replacement. Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015, was issued to update the operator list and related information in the effectivity, and does not include additional work. We have changed paragraph (g) of this SNPRM to refer to Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015. In addition, to give credit for using Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014, and Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015, we added new paragraphs (i)(1)(xxv) and (i)(1)(xxvi) to this SNPRM.

    Request To Reduce the Compliance Time

    The Airline Pilots Association International (ALPA) asked that the compliance time for replacement of the pitot probes, as specified in paragraph (g) of the proposed AD (80 FR 12094, March 6, 2015), be reduced to 24 months or less. ALPA stated that it recognizes the potential flight safety risk of operating an airplane with reduced controllability characteristics, which justifies reducing the compliance time.

    We agree with the request to reduce the compliance time for replacement of the pitot probes. As specified under “Actions Since Previous NPRM was Issued,” we have reduced the proposed compliance time for replacing certain pitot probes based on a risk assessment due to additional reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. EASA has issued Airworthiness Directive 2015-0205, dated October 9, 2015, to reduce the compliance time for replacement of the pitot probes to 24 months. We have changed the compliance time in paragraph (g) of this SNPRM accordingly.

    Request for Clarification

    AAL stated the use of a pitot probe which meets the current icing specification, as specified in the NPRM (80 FR 12094, March 6, 2015), should note that a new icing specification is forthcoming. In addition, the UTAS (formerly Goodrich) pitot probe having part number 0851HL is built to the current specification. AAL noted that the data available today shows that pitot probes on which the new icing requirement is met should be available for retrofit in 2016.

    We acknowledge the commenter's statement about the NPRM proposing the use of a pitot probe that meets the current icing airworthiness requirements and not the new icing airworthiness requirements of Amendment 25-140 (79 FR 65508, November 4, 2014) to 14 CFR part 25. Since we are currently not aware of any pitot probes certified to the new icing airworthiness requirements, this SNPRM would mandate Goodrich pitot probes having part number 0851HL, which meet the icing airworthiness requirements in effect at the time of establishing the certification basis for Airbus Model A318, A319, A320, and A321 series airplanes. AAL may request approval for an alternative method of compliance for the installation of pitot probes that meet the new certification standards once the pitot probes are available for installation, under the provisions of paragraph (k)(1) of this proposed AD.

    AAL also asked the following related questions and we have provided a response to each comment:

    • What FAA activities are scheduled with suppliers to meet the expectations of the new icing requirement? FAA activities associated with the new icing requirements are related to new design modifications. At this time we are not mandating installation of pitot probes which meet the new icing certification standards.

    • Does the FAA anticipate issuing a new AD mandating a retrofit/forward fit to the new icing requirement? We do not plan to issue further rulemaking mandating a retrofit/forward fit to the new icing requirement at this time.

    • Would the FAA extend the compliance time if another pitot probe supplier demonstrates compliance to the new icing requirement? We would not extend the compliance time because this SNPRM does not require installing pitot probes that meet the new icing requirement; therefore, the compliance time for the installation is considered adequate to address the unsafe condition.

    FAA's Determination and Requirements of This SNPRM

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of these same type designs.

    Certain changes described above expand the scope of the proposed AD (80 FR 12094, March 6, 2015). As a result, we have determined that it is necessary to reopen the comment period to provide additional opportunity for the public to comment on this SNPRM.

    Explanation of “RC” Procedures and Tests in Service Information

    The FAA worked in conjunction with industry, under the Airworthiness Directive Implementation Aviation Rulemaking Committee (ARC), to enhance the AD system. One enhancement was a new process for annotating which procedures and tests in the service information are required for compliance with an AD. Differentiating these procedures and tests from other tasks in the service information is expected to improve an owner's/operator's understanding of crucial AD requirements and help provide consistent judgment in AD compliance. The procedures and tests identified as RC (required for compliance) in any service information have a direct effect on detecting, preventing, resolving, or eliminating an identified unsafe condition.

    As specified in a NOTE under the Accomplishment Instructions of Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015, procedures and tests that are identified as RC in any service information must be done to comply with the proposed AD. However, procedures and tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an alternative method of compliance (AMOC), provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC will require approval of an AMOC.

    Costs of Compliance

    We estimate that this proposed AD affects 953 airplanes of U.S. registry.

    We also estimate that it would take about 4 work-hours per product to comply with the new basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $21,930 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $21,223,310, or $22,270 per product.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

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

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Airbus: Docket No. FAA-2015-0250; Directorate Identifier 2014-NM-216-AD. (a) Comments Due Date

    We must receive comments by January 22, 2016.

    (b) Affected ADs

    This AD affects AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004).

    (c) Applicability

    This AD applies to the airplanes identified in paragraphs (c)(1), (c)(2), (c)(3), and (c)(4) of this AD, certificated in any category, all manufacturer serial numbers.

    (1) Airbus Model A318-111, -112, -121, and -122 airplanes.

    (2) Airbus Model A319-111, -112, -113, -114, -115, -131, -132, and -133 airplanes.

    (3) Airbus Model A320-211, -212, -214, -231, -232, and -233 airplanes.

    (4) Airbus Model A321-111, -112, -131, -211, -212, -213, -231, and -232 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 34, Navigation.

    (e) Reason

    This AD was prompted by reports of airspeed indication discrepancies while flying at high altitudes in inclement weather. We are issuing this AD to prevent airspeed indication discrepancies during inclement weather, which, depending on the prevailing altitude, could lead to unknown accumulation of ice crystals and consequent reduced controllability of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Replacement of Certain Pitot Probes on the Captain, First Officer, and Standby Sides

    Within 24 months after the effective date of this AD: Replace any Thales pitot probe having part number (P/N) C16195AA or P/N C16195BA, with a Goodrich pitot probe having P/N 0851HL, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-34-1170, Revision 30, dated June 18, 2015. Accomplishing the replacement in this paragraph terminates the requirements of paragraph (f) of AD 2004-03-33, Amendment 39-13477 (69 FR 9936, March 3, 2004), for that airplane only.

    (h) Optional Methods of Compliance for Replacement Required by Paragraph (g) of This AD

    (1) Replacement of the pitot probes in accordance with the Accomplishment Instructions of Airbus Service Bulletin A320-34-1456, Revision 01, dated May 15, 2012 (pitot probes on the captain and standby sides); and Airbus Service Bulletin A320-34-1463, Revision 01, dated May 15, 2012 (pitot probes on the first officer side); is an acceptable method of compliance with the requirements of paragraph (g) of this AD.

    (2) Airplanes on which Airbus Modification 25578 was embodied in production, except for post-modification 25578 airplanes on which Airbus Modification 155737 (installation of Thales pitot probes) was also embodied in production, are compliant with the requirements of paragraph (g) of this AD, provided it can be conclusively determined that no Thales pitot probe having P/N C16195AA, P/N C16195BA, or P/N 50620-10 has been installed since the date of issuance of the original certificate of airworthiness or the date of issuance of the original export certificate of airworthiness. Post-modification 25578 airplanes on which Airbus Modification 155737 (installation of Thales pitot probes) was also embodied in production must be in compliance with the requirements of paragraph (g) of this AD.

    (i) Credit for Previous Actions

    (1) This paragraph provides credit for the actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using the service information identified in paragraph (i)(1)(i) through (i)(1)(xxvi) of this AD. This service information is not incorporated by reference in this AD.

    (i) Airbus Service Bulletin A320-34-1170, Revision 04, dated May 24, 2000.

    (ii) Airbus Service Bulletin A320-34-1170, Revision 05, dated September 11, 2000.

    (iii) Airbus Service Bulletin A320-34-1170, Revision 06, dated October 18, 2001.

    (iv) Airbus Service Bulletin A320-34-1170, Revision 07, dated December 4, 2001.

    (v) Airbus Service Bulletin A320-34-1170, Revision 08, dated January 15, 2003.

    (vi) Airbus Service Bulletin A320-34-1170, Revision 09, dated February 17, 2003.

    (vii) Airbus Service Bulletin A320-34-1170, Revision 10, dated November 21, 2003.

    (viii) Airbus Service Bulletin A320-34-1170, Revision 11, dated August 18, 2004.

    (ix) Airbus Service Bulletin A320-34-1170, Revision 12, dated December 2, 2004.

    (x) Airbus Service Bulletin A320-34-1170, Revision 13, dated January 18, 2005.

    (xi) Airbus Service Bulletin A320-34-1170, Revision 14, dated April 21, 2005.

    (xii) Airbus Service Bulletin A320-34-1170, Revision 15, dated July 19, 2005.

    (xiii) Airbus Service Bulletin A320-34-1170, Revision 16, dated November 23, 2006.

    (xiv) Airbus Service Bulletin A320-34-1170, Revision 17, dated February 14, 2007.

    (xv) Airbus Service Bulletin A320-34-1170, Revision 18, dated October 9, 2009.

    (xvi) Airbus Service Bulletin A320-34-1170, Revision 19, dated November 9, 2009.

    (xvii) Airbus Service Bulletin A320-34-1170, Revision 20, dated December 1, 2010.

    (xviii) Airbus Service Bulletin A320-34-1170, Revision 21, dated March 24, 2011.

    (xix) Airbus Service Bulletin A320-34-1170, Revision 22, dated July 19, 2011.

    (xx) Airbus Service Bulletin A320-34-1170, Revision 23, dated February 3, 2012.

    (xxi) Airbus Service Bulletin A320-34-1170, Revision 24, dated April 12, 2012.

    (xxii) Airbus Service Bulletin A320-34-1170, Revision 25, dated September 4, 2012.

    (xxiii) Airbus Service Bulletin A320-34-1170, Revision 26, dated September 16, 2013.

    (xxiv) Airbus Service Bulletin A320-34-1170, Revision 27, dated March 18, 2014.

    (xxv) Airbus Service Bulletin A320-34-1170, Revision 28, dated September 1, 2014.

    (xxvi) Airbus Service Bulletin A320-34-1170, Revision 29, dated February 16, 2015.

    (2) This paragraph provides credit for the replacement of pitot probes on the captain and standby sides specified in paragraph (h)(1) of this AD, if the replacement was performed before the effective date of this AD using Airbus Service Bulletin A320-34-1456, dated December 2, 2009, which is not incorporated by reference in this AD.

    (3) This paragraph provides credit for the replacement of pitot probes on the first officer side as specified in paragraph (h)(1) of this AD, if those actions were performed before the effective date of this AD using Airbus Service Bulletin A320-34-1463, dated March 9, 2010, which is not incorporated by reference in this AD.

    (j) Parts Installation Limitations

    (1) At the applicable time specified in paragraph (j)(1)(i) or (j)(1)(ii) of this AD: No person may install on any airplane a Thales pitot probe having P/N C16195AA or P/N C16195BA.

    (i) For airplanes with a Thales pitot probe having P/N C16195AA or P/N C16195BA installed: After accomplishing the replacement required by paragraph (g) of this AD.

    (ii) For airplanes without a Thales pitot probe having P/N C16195AA or P/N C16195BA installed: As of the effective date of this AD.

    (2) As of the effective date of this AD, no person may install on any airplane a Thales pitot probe having part number P/N 50620-10.

    (k) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Sanjay Ralhan, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished 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 (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (3) Required for Compliance (RC): If any service information contains procedures or tests that are identified as RC, those procedures and tests must be done to comply with this AD; any procedures or tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC require approval of an AMOC.

    (l) Related Information

    (1) Refer to EASA Airworthiness Directive 2015-0205, dated October 9, 2015, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-0250.

    (2) For service information identified in this AD, contact Airbus, Airworthiness Office—EIAS, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email [email protected]; Internet http://www.airbus.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on November 25, 2015. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-30821 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-7527; Directorate Identifier 2015-NM-094-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain The Boeing Company Model 777-200, -200LR, -300, and -300ER series airplanes. This proposed AD was prompted by a report indicating that the manufacturer discovered locations where the control components and wiring of the left and right engine fuel spar valves do not have adequate physical separation to meet the redundant system separation requirements. This proposed AD would require modifying the wiring, and installing a new relay bracket and new location for the relay on the left and right engine fuel spar valves. This proposed AD would also require an inspection to identify the part number of the motor operated valve (MOV) actuators for the left and right engine fuel spar valves; replacement of specified MOV actuators with new MOV actuators; certain bonding resistance measurements; and applicable corrective actions. We are proposing this AD to prevent loss of control of both the left and right engine fuel spar valves during a single event, such as local wire bundle damage or a wire bundle fire, which could cause both engines to shut down or result in the inability to control an engine fire.

    DATES:

    We must receive comments on this proposed AD by February 8, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: 202-493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this proposed AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P.O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone 206-544-5000, extension 1; fax 206-766-5680; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7527.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-7527; 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 proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Georgios Roussos, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-917-6482; fax: 425-917-6590; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-7527; Directorate Identifier 2015-NM-094-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    We have received a report indicating that the manufacturer discovered locations where the control components and wiring of the left and right engine fuel spar valve do not have adequate physical separation to meet the redundant system separation requirements. The control relays for both the left and right engine fuel spar valves are located in the same panel, and the left and right fuel spar valve control wiring is routed in common wire bundles and share the same electrical connectors. This condition, if not corrected, could result in loss of control of both the left and right engine fuel spar valves during a single event, such as local wire bundle damage or a wire bundle fire, which could cause both engines to shut down or result in the inability to control an engine fire.

    Related Service Information Under 1 CFR Part 51

    We reviewed Boeing Special Attention Service Bulletin 777-28-0061, Revision 2, dated May 4, 2015. The service information describes procedures for modifying the wiring, and installing a new relay bracket and new location for the relay on the left and right engine fuel spar valves.

    We have also reviewed Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015. The service information describes procedures for an inspection of the MOV actuators of the left and right engine fuel spar valves for part number (P/N) MA20A1001-1, replacement of MOV actuators, measurement of the electrical resistance of the bond from the adapter plate to the airplane structure, and applicable corrective actions.

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

    Other Relevant Rulemaking

    AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013), was issued for certain Model 777-200, -200LR, -300, and -300ER series airplanes. AD 2013-05-03 requires an inspection to identify the part number of the MOV actuators of the main and center fuel tanks; replacing certain MOV actuators with new MOV actuators; and measuring the electrical resistance of the bond from the adaptor plate to the airplane structure, and doing corrective actions if necessary. AD 2013-05-03 refers to Boeing Service Bulletin 777-28A0034, Revision 2, dated September 20, 2010, as the appropriate source of service information for accomplishing the required actions.

    In addition, AD 2015-19-01, Amendment 39-18264 (80 FR 55521, September 16, 2015), requires revising the maintenance or inspection program to add a new airworthiness limitation for a repetitive inspection of the fuel spar valve.

    FAA's Determination

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

    Proposed AD Requirements

    This proposed AD would require accomplishing the actions specified in the service information described previously.

    Costs of Compliance

    We estimate that this proposed AD affects 133 airplanes of U.S. registry.

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

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators Installation and modification 119 work-hours × $85 per hour = $10,115 Up to $3,780 depending on airplane configuration Up to $13,895 depending on airplane configuration Up to $1,848,035 depending on airplane configuration. Inspection of MOV Actuators [concurrent requirements] 1 work-hour × $85 per hour = $85 $0 $85 $11,305.

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

    On-Condition Costs Action Labor cost Parts cost Cost per product Replacement of MOV actuators for the left and right engine fuel spar valves Up to 105 work-hours × $85 per hour =$8,925 Up to $10,954 Up to $19,879. Bonding resistance measurements 1 work-hour × $85 per hour = $85 $0 $85.

    We have received no definitive data on the costs of the corrective actions for the bonding resistance measurement in this proposed AD.

    Authority for This Rulemaking

    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.

    Regulatory Findings

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

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

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

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

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

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): The Boeing Company: Docket No. FAA-2015-7527; Directorate Identifier 2015-NM-094-AD. (a) Comments Due Date

    We must receive comments by February 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    The Boeing Company Model 777-200, -200LR, -300, and -300ER series airplanes, certificated in any category, as identified in Boeing Special Attention Service Bulletin 777-28-0061, Revision 2, dated May 4, 2015.

    (d) Subject

    Air Transport Association (ATA) of America Code 2822, Fuel Boost Pump.

    (e) Unsafe Condition

    This AD was prompted by a report indicating that the manufacturer discovered locations where the control components and wiring of the left and right engine fuel spar valves do not have adequate physical separation to meet the redundant system separation requirements. We are issuing this AD to prevent loss of control of both the left and right engine fuel spar valves during a single event, such as local wire bundle damage or a wire bundle fire, which could cause both engines to shut down or result in the inability to control an engine fire.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Installation and Modification

    Within 60 months after the effective date of this AD, modify the wiring and install a new relay bracket and new location for the relay on the left and right engine fuel spar valves, in accordance with the Accomplishment Instructions of Boeing Special Attention Service Bulletin 777-28-0061, Revision 2, dated May 4, 2015.

    (h) Concurrent Requirements

    (1) Prior to or concurrently with accomplishing the requirements of paragraph (g) of this AD: Do an inspection of the motor operated valve (MOV) actuators of the left and right engine fuel spar valves for part number (P/N) MA20A1001-1, in accordance with the Accomplishment Instructions of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015. A review of airplane maintenance records is acceptable in lieu of this inspection if the part number can be conclusively determined from that review.

    (2) If any MOV actuator having P/N MA20A1001-1 is found during the inspection required by paragraph (h)(1) of this AD, prior to or concurrently with accomplishing the requirements of paragraph (g) of this AD, replace the MOV actuator with either a new or serviceable MOV actuator having P/N MA30A1001, MA30A1017, MA20A2027, or with an MOV actuator that meets the criteria specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD; and, as applicable, measure the electrical resistance of the bond from the adapter plate to the airplane structure and, before further flight, do all applicable corrective actions. All actions specified in this paragraph for the left and right engine fuel spar valves must be done in accordance with the Accomplishment Instructions of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015.

    (i) The replacement MOV actuator must be a Boeing part that is approved after the issuance of Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015, by the Manager, Seattle Aircraft Certification Office (ACO), FAA; or the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to approve the part.

    (ii) The replacement MOV actuator must be fully interchangeable with the part specified in Boeing Service Bulletin 777-28A0034, Revision 3, dated September 25, 2015.

    (i) Credit for Previous Actions

    (1) This paragraph provides credit for the requirements of paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Boeing Special Attention Service Bulletin 777-28-0061, dated October 25, 2010; or Boeing Special Attention Service Bulletin 777-28-0061, Revision 1, dated January 26, 2012; as applicable; which are not incorporated by reference in this AD.

    (2) This paragraph provides credit for the requirements of paragraph (h) of this AD, if those actions were performed before April 25, 2013 (the effective date of AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013), using Boeing Alert Service Bulletin 777-28A0034, dated August 2, 2007; or Boeing Alert Service Bulletin 777-28A0034, Revision 1, dated May 20, 2010; except that the replacement of MOV actuators of the left and right engine fuel spar valves must also include cap sealing the bonding jumper, as described in Boeing Service Bulletin 777-28A0034, Revision 2, dated September 20, 2010; and provided that the replacement is an MOV actuator identified in paragraph (i)(2)(i) or (i)(2)(ii) of this AD. Boeing Alert Service Bulletin 777-28A0034, dated August 2, 2007; and Boeing Alert Service Bulletin 777-28A0034, Revision 1, dated May 20, 2010; are not incorporated by reference in this AD.

    (i) An MOV actuator that has P/N MA30A1001, MA30A1017, or MA20A2027.

    (ii) An MOV actuator that has a part number other than P/N MA20A1001-1 and meets the criteria specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD.

    (3) This paragraph provides credit for the requirements of paragraph (h) of this AD, if those actions were performed before the effective date of this AD using Boeing Service Bulletin 777-28A0034, Revision 2, dated September 20, 2010, which was incorporated by reference in AD 2013-05-03, Amendment 39-17375 (78 FR 17290, March 21, 2013).

    (j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Seattle Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (k)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Seattle ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane and the approval must specifically refer to this AD.

    (k) Related Information

    (1) For more information about this AD, contact Georgios Roussos, Aerospace Engineer, Systems and Equipment Branch, ANM-130S, FAA, Seattle Aircraft Certification Office, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-917-6482; fax: 425-917-6590; email: [email protected]

    (2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Data & Services Management, P. O. Box 3707, MC 2H-65, Seattle, WA 98124-2207; telephone 206-544-5000, extension 1; fax 206-766-5680; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on December 11, 2015. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-32081 Filed 12-22-15; 8:45 am] BILLING CODE 4910-13-P
    SECURITIES AND EXCHANGE COMMISSION 17 CFR Part 240 [Release No. 34-76624; File No. S7-26-15] RIN 3235-AL72 Establishing the Form and Manner with which Security-Based Swap Data Repositories Must Make Security-Based Swap Data Available to the Commission AGENCY:

    Securities and Exchange Commission.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Securities and Exchange Commission (“SEC” or “Commission”) is publishing for comment a proposed amendment to specify the form and manner with which security-based swap data repositories (“SDRs”) will be required to make security-based swap (“SBS”) data available to the Commission under Exchange Act Rule 13n-4(b)(5). The Commission is proposing to require SDRs to make these data available according to schemas that will be published on the Commission's Web site and that will reference the international industry standards Financial products Markup Language (“FpML”) and Financial Information eXchange Markup Language (“FIXML”).

    DATES:

    Comments should be received on or before February 22, 2016.

    ADDRESSES:

    Comments may be submitted by any of the following methods:

    Electronic Comments

    • Use the Commission's Internet comment form (http://www.sec.gov/rules/proposed.shtml); or

    • Send an email to [email protected] Please include File Number S7-26-25 on the subject line; or

    • Use the Federal eRulemaking Portal (http://www.regulations.gov). Follow the instructions for submitting comments.

    Paper Comments

    • Send paper comments to Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090.

    All submissions should refer to File Number S7-26-15. This file number should be included on the subject line if email is used. To help us process and review your comments more efficiently, please use only one method. The Commission will post all comments on the Commission's Internet Web site (http://www.sec.gov/rules/proposed.shtml). Comments are also available for Web site viewing and printing in the Commission's Public Reference Room, 100 F Street NE., Washington, DC 20549 on official business days between the hours of 10:00 a.m. and 3:00 p.m. All comments received will be posted without change; the Commission does not edit personal identifying information from submissions. You should submit only information that you wish to make available publicly.

    Studies, memoranda, or other substantive items may be added by the Commission or staff to the comment file during this rulemaking. A notification of the inclusion in the comment file of any such materials will be made available on the SEC's Web site. To ensure direct electronic receipt of such notifications, sign up through the “Stay Connected” option at www.sec.gov to receive notifications by email.

    FOR FURTHER INFORMATION CONTACT:

    Narahari Phatak, Branch Chief, at (202) 551-6693; Walter Hamscher, IT Project Manager, at (202) 551-5397; Yee Cheng Loon, Financial Economist, at (202) 551-3077; Hermine Wong, Attorney-Adviser, at (202) 551-4038; Christian Sabella, Associate Director, at (202) 551-5997; Michael Gaw, Assistant Director, at (202) 551-5602.

    SUPPLEMENTARY INFORMATION:

    The Commission is proposing to amend Rule 13n-4(a)(5) under the Exchange Act (defining “Direct electronic access” to data stored by an SDR).

    I. Introduction

    On February 11, 2015, the Commission adopted Rules 13n-1 to 13n-11 under the Exchange Act (collectively, the “SDR Rules”),1 which govern SDR registration, duties, and core principles.2 On the same day, the Commission adopted Rules 900 to 909 under the Exchange Act (collectively, “Regulation SBSR”),3 which govern the reporting to registered SDRs of SBS data and public dissemination by registered SDRs of a subset of that data.4 In combination, these rules represent a significant step forward in providing a regulatory framework to promote transparency and efficiency in the OTC derivatives markets and assist relevant authorities in performing their market oversight functions.

    1 17 CFR 240.13n-1 to 240.13n-11.

    2See Securities Exchange Act Release No. 74246 (February 11, 2015), 80 FR 14437 (March 19, 2015) (“SDR Adopting Release”).

    3 17 CFR 242.900 to 242.909.

    4See Securities Exchange Act Release No. 74244 (February 11, 2015), 80 FR 14563 (March 19, 2015) (“Regulation SBSR Adopting Release”).

    Today, the Commission is proposing to amend the SDR Rules to specify the form and manner with which SDRs would be required to make SBS data available to the Commission. This rulemaking constitutes an important next step in the development of the SBS transaction reporting regime mandated by the Dodd-Frank Act.5 The proposed rule would require that SBS data made available by SDRs be formatted and structured consistently to allow the Commission to accurately analyze the data made available by a single SDR, and to aggregate and analyze data made available by multiple SDRs.

    5 Public Law 111-203, 124 Stat. 1376 (2010). The Dodd-Frank Act was enacted, among other reasons, to promote the financial stability of the United States by improving accountability and transparency in the financial system. See Public Law 111-203, Preamble. The 2008 financial crisis highlighted significant issues in the over-the-counter (“OTC”) derivatives markets, which experienced dramatic growth in the years leading up to the financial crisis and are capable of affecting significant sectors of the U.S. economy. Title VII of the Dodd-Frank Act provides for a comprehensive new regulatory framework for swaps and security-based swaps, by, among other things: (1) Providing for the registration and comprehensive regulation of swap dealers, security-based swap dealers, major swap participants, and major security-based swap participants; (2) imposing clearing and trade execution requirements on swaps and security-based swaps, subject to certain exceptions; (3) creating recordkeeping, regulatory reporting, and public dissemination requirements for swaps and security-based swaps; and (4) enhancing the rulemaking and enforcement authorities of the Commission and the Commodity Futures Trading Commission (“CFTC”).

    A. Background

    Rule 13n-4(b)(5) under the Exchange Act 6 requires an SDR to provide direct electronic access to the Commission (or any designee of the Commission, including another registered entity). Under Rule 13n-4(a)(5),7 “direct electronic access” means “access, which shall be in a form and manner acceptable to the Commission, to data stored by a security-based swap data repository in an electronic format and updated at the same time as the security-based swap data repository's data is updated so as to provide the Commission or any of its designees with the ability to query or analyze the data in the same manner that the security-based swap data repository can query or analyze the data” (emphasis added). As discussed in detail below, the Commission is proposing to set out the form and manner for direct electronic access to SDRs that is acceptable to the Commission.

    6 17 CFR 240.13n-4(b)(5).

    7 17 CFR 240.13n-4(a)(5).

    As the Commission noted in the SDR Adopting Release, a significant portion of the benefits of an SDR will not be realized if the Commission obtains direct electronic access to the data stored at an SDR in a form or manner that cannot be easily utilized by the Commission.8 Furthermore, the form and manner with which an SDR provides the data to the Commission should not only permit the Commission to accurately analyze the data maintained by a single SDR, but also allow the Commission to aggregate and analyze data received from multiple SDRs.9 The form and manner that will be acceptable to the Commission for an SDR to provide direct electronic access may vary on a case-by-case basis and may change over time, depending on a number of factors.10 These factors could include the development of new types of security-based swaps or variations of existing security-based swaps that require additional data to accurately describe them.11 Additionally, the extent to which the Commission encounters difficulty in standardizing and aggregating SBS data across multiple SDRs would be a factor in considering the nature of the direct access provided by an SDR to the Commission.12

    8See 80 FR at 14474.

    9See id.

    10See id.

    11See id.

    12See id.

    In the SDR Adopting Release, the Commission also stated that, until such time as the Commission adopts specific formats and taxonomies, SDRs “may provide direct electronic access to the Commission to data in the form in which the SDRs maintain such data.” 13 Under this guidance, an SDR could provide direct electronic access to data in a form and manner that is not conducive to the Commission's ability to analyze the data or surveil the SBS market. For example, a particular SDR might provide direct electronic access to data in the same format in which the data were received from its participants. If participants report data to the SDR using different conventions, inconsistencies in data formats within the SDR might limit or impair the Commission's ability to accurately aggregate positions within the SDR or to compare the features of one market participant's transactions or positions to those of another market participant.

    13See id. at 14475.

    B. Overview of Proposed Amendment

    The Commission proposes to amend Rule 13n-4(a) to specify the form and manner with which SDRs must provide direct electronic access to the Commission by requiring SDRs to comply with an appropriate schema as will be published on the Commission's Web site.

    In the SDR Adopting Release, the Commission stated that it believed it was in the best position to aggregate data across multiple SDRs.14 The Commission also stated that if it were to propose a particular format for the direct electronic access, it would propose detailed specifications of acceptable formats and taxonomies that would facilitate an accurate interpretation, aggregation, and analysis of SBS data by the Commission.15 Any proposed format also would maximize the use of any applicable current industry standards for the description of SBS data.16

    14Id.

    15Id. at 14474-75.

    16Id. at 14475.

    The Commission is currently aware of only two industry standards for representing SBS data: FpML 17 and FIXML.18 The Commission is proposing to accommodate both industry standards by specifying that either of two distinct schemas 19 would satisfy the requirements of Rule 13n-4. One schema would rely on the FpML standard and the other schema would rely on the FIXML standard. Both schemas would articulate the same common data model, which is the logical representation of the data elements required to be reported under Regulation SBSR. The Commission preliminary believes that each schema would facilitate the consistent reporting of SBS transaction characteristics, such as the counterparties, associated other parties (e.g., brokers), and corresponding terms of payments. In addition, validations associated with the schemas would help SDRs ensure that the data they make available to the Commission adhere to the common data model.

    17 FpML is a registered trademark of the International Swaps and Derivatives Association, Inc.

    18 FIXML is a registered trademark of Fix Protocol Limited.

    19 The term “schema” is generally applied to formal representations of data models.

    As discussed below in more detail, the Commission preliminarily believes that both industry standards already cover many of the data elements that must be reported to registered SDRs under Regulation SBSR. In the appendix, the Commission has highlighted clear cases where the schemas require additional elements that do not yet exist in FpML or FIXML to represent all data elements that must be reported under Regulation SBSR and that registered SDRs must accept and store.

    This release solicits comment on the Commission's proposal concerning the form and manner with which SDRs provide the Commission with direct electronic access, including whether the Commission should accept both the FpML and FIXML standards, whether the Commission should accept only one or the other, whether the Commission should accept other protocols or standards, and whether the Commission's incorporation of validations into the schemas supports completeness of the SBS data.

    II. Discussion of the Proposed Amendment A. Discussion of Existing Industry Standards

    Industry standards have evolved to enable participants in the SBS market to capture and communicate certain trade information. As discussed in more detail below, these standards have evolved for use in different contexts but inherently share features that are relevant for SBS data standardization and aggregation.

    1. Background of Existing Industry Standards

    The Commission is aware of two existing industry standards which are used by market participants to capture trade-related information: FpML and FIXML. FpML and FIXML are both international open industry standards, meaning that they are technological standards that are widely available to the public, royalty-free, and at no cost. In addition, they are both independent of the software and hardware used by participants, thus facilitating interoperability. Both FpML and FIXML have evolved for use in different contexts and they share features that are relevant for rendering SBS data compatible for the purposes of normalization, aggregation, and comparison.

    FpML was developed under the auspices of the International Swaps and Derivatives Association (ISDA),20 using the ISDA derivatives documentation as its basis. FpML maintenance and continued development is undertaken by the FpML Standards Committee, which operates under the auspices of ISDA and is made up of representatives from a range of financial market participants, including banks, brokers, central counterparties (CCPs), and other financial infrastructure providers. FpML was designed for the OTC derivatives industry to capture data elements that provide a complete and accurate representation of the contractual provisions of a trade in derivatives or structured products. FpML is used by market participants to communicate OTC transaction details to counterparties and post-trade processors, and is designed to facilitate validation of message contents. FpML is also designed to be useful within firms for the purposes of sharing OTC transaction information across systems.21 The FpML Standards committee maintains FpML and updates it from time to time.22

    20 ISDA is a global organization of derivatives market participants. ISDA has developed standardized Master Agreements underlying derivatives transactions and manages the development of FpML. See http://www2.isda.org/ (last visited Dec. 8, 2015).

    21See FpML® Information, https://dedicated.fpml.org/about/factsheet.html (last visited Dec. 8, 2015).

    22See infra note 82.

    In contrast to FpML's focus on post-trade communication of standardized derivatives contracts, Financial Information eXchange (FIX) is a messaging protocol developed for pre-trade communication and trade execution of standardized and bespoke contracts for multiple asset classes and markets. The FIX protocol enables electronic communication between broker-dealers and their institutional clients to deliver quotes, submit orders, and execute trades. Since its inception in 1992 as a standard used to trade equities, the use of FIX was further developed to include fixed income, derivatives, and foreign exchange, and the scope of FIX has been extended to include pre-trade, trade, and post-trade business processes 23 using FIXML, an eXtensible Markup Language (XML) based implementation of the FIX messaging standard. FIXML embeds FIX messages in an XML document that includes structures that are specific to the FIX protocol. The FIX messaging standard is owned, maintained, and developed through the collaborative efforts of the FIX Trading Community.24

    23 Oxera Consulting Ltd., What are the benefits of the FIX Protocol? Standardising messaging protocols in the capital markets, at 5 (2009), available at http://www.oxera.com/Oxera/media/Oxera/Benefits-of-the-FIX-Protocol.pdf?ext=.pdf.

    24 FIX Trading Community is a non-profit, industry-driven standards body comprised of over 270 member firms from the global financial services industry. See Letter from FIX Trading Community to Commodity Futures Trading Commission (May 27, 2014), available at http://comments.cftc.gov/PublicComments/ViewComment.aspx?id=59866& SearchText=.

    Both FpML and FIXML were derived from the XML standard. Each standard uses an XML-based schema to impose structure on the order and content of, and relationships among, data elements, including the particular data types that correspond to each data element. FpML and FIXML mark up or “structure” data using standard but distinct definitions. These data element definitions establish a consistent structure of identity and context so that the reported data can be recognized and processed by standard computer code or software (i.e., made machine readable). For example, under Regulation SBSR, the title and date of agreements incorporated by reference in a SBS contract must be reported to a registered SDR for certain transactions.25 To convey this information electronically, the data must be structured with the role of the agreement (such as master, collateral, or margin), the title of the agreement, and the date of the agreement.

    25 17 CFR 242.901(d)(4).

    The Commission notes that the bodies responsible for the maintenance of both FpML and FIXML have experience engaging with the regulatory community and have made enhancements specifically to support regulatory requirements. FpML currently supports several regulatory reporting requirements other than those imposed by the Commission as part of Regulation SBSR,26 and has a working group currently considering SBS data reporting requirements.27 The FIX Trading Community has enhanced FIXML to support the trade capture requirements of the CFTC.28 FIXML is used for asset- and mortgage-backed securities trade reporting to FINRA.29 The Australian Securities and Investments Commission published FIXML requirements for the disclosure and reporting of short sales.30 The Investment Industry Regulatory Organization of Canada adopted FIXML for market surveillance and transactional reporting.31

    26See FpML Global Regulatory Reporting Mapping 2014 v9 (Feb 27) (Working Draft), available at http://www.fpml.org/asset/40388bcb/6a20cde6.xlsx.

    27See Reporting/Regulatory Reporting Working Group Charter, http://www.fpml.org/wgroup/rptwg/rptwgcharter.doc.

    28See Letter from FIX Protocol Limited to SEC (August 5, 2010), available at http://www.sec.gov/comments/s7-11-10/s71110-32.pdf.

    29Id.

    30Id.

    31Id.

    The Commission preliminarily believes that both standards have been implemented by market participants and are widespread in use, and that the taxonomies for both standards for SBS reporting have developed sufficient coverage such that the Commission does not need to develop its own standard for the required data elements.32 If the Commission were to adopt a rule that required SDRs to make SBS data available to the Commission using the FpML or FIXML standards, the Commission anticipates that its staff would keep apprised of relevant advances and developments with those standards and engage with each standard's working group regarding such developments, as appropriate.

    32See Appendix.

    2. Interoperability and Acceptance of Existing Standards

    Interoperability is the ability of two or more systems to exchange data and for the data to be automatically interpreted. While FpML and FIXML both rely on XML to exchange data, they are not interoperable unless a common data model is built that allows a translation between the two standards. As a result, the Commission has developed a common data model that uses as a basis the existing overlap of the standards' current coverages of SBS data. The Commission's common data model is a representation of the SBS data elements required to be made available to the Commission. The Commission preliminarily believes that requiring SDRs to use either the FpML or FIXML schema will help achieve one of the key objectives of Regulation SBSR, which is to have a complete and intelligible record of all SBS transactions for oversight purposes. The common data model is represented by two separate schemas, one each for the FIXML and FPML standards. Accordingly, under the proposed amendment, SDRs can make SBS data available to the Commission using either the FIXML or FpML schema. The Commission describes both the common data model and the two schemas in greater detail below.

    The Commission notes that ISDA and the FIX Community formed the FpML Collaboration Working Group in 2004 to support certain aspects of interoperability between FpML and FIXML.33 For example, the group addressed the question of how swap execution facilities would handle the transformation of a FIX message into an FpML message for use in post-trade confirmation, clearing, and trade reporting with a solution that supports detailed FpML messages contained within a compact FIX message. The group also facilitated a common approach to data items for capture of interest rate and credit default swaps during the pre-trade and trade lifecycles. To date, the Commission's understanding is that this group has not generated a common data model as proposed in this release.

    33See 2012 FIX-FpML Collaboration WG Charter, http://www.fixtradingcommunity.org/mod/file/download.php?file_guid=46484.

    3. Proposed Amendment to Rule 13n-4(a)(5) To Specify the Format for Direct Electronic Access

    The Commission is proposing to amend Rule 13n-4(a)(5) to specify the form and manner with which SDRs must provide direct electronic access to the Commission. In particular, under the proposal, SDRs must provide direct electronic access using either the FpML schema or the FIXML schema as published on the Commission's Web site. The Commission is also proposing to require that the SDRs use the most recent schema as published on the Web site as the Commission anticipates that the schemas will be updated periodically to reflect changes in the FpML and FIXML standards, or to reflect changes in industry practice or financial products covered by Regulation SBSR. As with the Commission's updates to other taxonomies and schemas,34 Commission staff will post draft schemas on the Commission's Web site for the public to review and provide comment before posting any final schemas.

    34See, e.g., Rating History Files Publication Guide, http://xbrl.sec.gov/doc/rocr-publication-guide-draft-2014-12-15.pdf, and Release Notes for SEC Taxonomies 2015-Draft, http://xbrl.sec.gov/doc/releasenotes-2015-draft.pdf.

    B. Commission Schemas

    As mentioned above, the Commission has developed a common data model, which is the logical arrangement of the data elements that comprise a transaction report as described under Regulation SBSR and how those data elements relate to each other. The purpose of the common data model is to improve the consistency and reliability of the data made available to the Commission for analysis and aggregation along various dimensions, such as across SDRs, within an SDR, by counterparty, or by product. The Commission's common data model reflects the reporting requirements under Regulation SBSR. The Commission's schemas for SBS data are formal representations of the Commission's common data model.

    For example, a schema representing the common data model would require that a transaction record made available to the Commission include the terms of any standardized fixed or floating rate payments that correspond exactly to Rule 901(c)(1)(iv). However, consistent with Regulation SBSR, such a schema would allow flexibility in how information may be reported to a registered SDR. For example, consistent with Rule 901(c)(1), a schema that represents the common data model would not require data elements to satisfy Rules 901(c)(1)(iv) if a product ID reported under Rule 901(c)(1) already includes the information that would be captured by data elements associated with Rules 901(c)(1)(iv) data elements.

    To implement the common data model into an electronic format according to which SDRs could provide direct electronic access to the Commission, the Commission has developed two distinct schemas (computer code representations of the common data model), one based on the FpML standard, and the other based on the FIXML standard. Under the proposed amendment, an SDR could provide the Commission with direct electronic access by using either schema or both schemas. SBS transaction records structured according to one of the schemas could be immediately aggregated, compared, and analyzed by the Commission.

    At this time, the Commission is aware of only the FpML and FIXML standards for representing SBS data. In its evaluation of the potential applicability of these two standards for the purpose of regulatory reporting of SBS transactions, Commission staff undertook a mapping exercise, the results of which are reported in the appendix, to determine how much of the Commission's common data model could be represented using the existing reporting elements within the two standards. Commission staff found that there exists significant overlap between the FpML and FIXML standards in their descriptions of SBS data, and that almost all concepts of the common data model can be represented with existing FpML and FIXML reporting elements.35 In light of this and the SBS industry's current familiarity with and acceptance of these widely-used standards, the Commission believes that using FpML and FIXML schemas is an efficient and effective approach for satisfying the necessary form and manner of direct electronic access. Moreover, in light of prior engagement with the regulatory community and prior efforts to support regulatory requirements by the bodies that maintain both FpML and FIXML,36 the Commission anticipates that the bodies responsible for maintaining each industry standard are likely to update these standards to incorporate any remaining data elements needed for the purpose of reporting under SBSR. In particular, Commission staff has identified concepts within the proposed common data model that do not currently have equivalent data elements in FpML or FIXML. As discussed further below, in cases where concepts within the common data model do not yet have equivalents in FpML or FIXML, the Commission's schemas use extensions of existing FpML and FIXML reporting elements that accommodate the kind of data required by the common data model's concept.

    35See Appendix.

    36See 0.

    Both FpML and FIXML employ data models to logically arrange and organize their respective data elements in specific ways. These data models reflect each's' decisions regarding how to represent their data elements for reporting and communication purposes. The Commission's schemas would not require alteration of the standards' data models, but rather would incorporate each standard's data models as they are used to represent one of their data elements. As a result, the mapping of FpML and FIXML to the common data model does not necessarily reflect a one-to-one mapping between named data elements. In some instances, a single concept in the Commission's common data model maps to a group of data elements within FpML or FIXML. For example, FIXML models the terms of any standardized fixed rate payments by arranging multiple FIXML data elements that each represent a different attribute of a payment stream, including settlement currency, day count convention, and fixed rate. This FIXML data model composed of multiple data elements maps to a single concept in the common data model that corresponds to Rule 901(c)(1)(iv).37

    37See Appendix.

    1. Common Data Model Treatment of Broad Categories of Transaction Information

    Below, we describe how Regulation SBSR provides the basis for the requirements of the common data model by examining how the schemas representing the common data model would treat broad categories of transaction information and how they would define relationships between specific data elements within those broad categories by placing restrictions on SBS data. The Commission notes that the concepts within the common data model are limited to those required to be reported to registered SDRs under Rules 901, 905, and 906 and required to be assigned by registered SDRs under Rule 907. The common data model also relies on definitions provided by Rule 900.

    a. Primary Trade Information

    Rule 901(c) sets forth the data elements of a security-based swap that must be reported to a registered SDR and will then be publicly disseminated by the registered SDR pursuant to Rule 902(a) (unless an exception applies). These data elements generally encompass the means of identifying the contract and the basic economic terms of the contract and include any standardized payment streams associated with a contract, the notional value of the contract, the transaction price, and other information necessary for interpreting transaction prices such as a variable that would indicate the intent to clear a transaction.

    In order for the Commission to aggregate and analyze SBS data, Regulation SBSR requires reporting participants to report certain information about each security-based swap transaction. To provide a standardized means for identifying security-based swaps that share certain material economic terms, the Commission requires reporting participants to utilize a product ID of a security-based swap when one is available.38 If the security-based swap has no product ID, or if the product ID does not include the information enumerated in Rules 901(c)(1)(i)-(v) of Regulation SBSR, then the information specified in subparagraphs (i)-(v) of Rule 901(c)(1) must be reported separately.39 The FpML and FIXML schemas would allow these data elements described in Rules 901(c)(1)(i)-(v) to supplement product IDs, and validations in each schema would indicate an error if the product ID is not provided and none of these supplementary data elements are included. In addition, as contemplated by Rule 901(c)(1)(v), the common data model would include a “custom swap flag” that would indicate when the information provided pursuant to Rules 901(c)(1)(i)-(iv) does not provide all of the material information necessary to calculate the price of a security-based swap.

    38See Regulation SBSR Adopting Release, 80 FR at 14570.

    39 Subparagraph (i) requires information that identifies the security-based swap, including the asset class of the security-based swap and the specific underlying reference asset(s), reference issuer(s), or reference index. Subparagraph (ii) requires the effective date. Subparagraph (iii) requires the scheduled termination date. Subparagraph (iv) requires the terms of any standardized fixed or floating rate payments, and the frequency of any such payments. Subparagraph (v) requires a bespoke condition flag if the security-based swap is customized to the extent that the information provided in subparagraphs (i)-(iv) of Rule 901(c)(1) does not provide all of the material information necessary to identify the customized security-based swap or does not contain the data elements necessary to calculate the price.

    Rule 901(c) also requires reporting of certain details about an SBS transaction, including the execution time, price, and notional amount. The precise formats in which these elements can be provided have been determined by each industry standard. For example, the various FIXML data elements that express execution time are all expressed in coordinated universal time (UTC). Similarly, currencies that denominate price and notional amount are expressed using ISO 4217 currency codes.40

    40See ISO 4217—Currency Codes, http://www.iso.org/iso/home/standards/currency_codes.htm (last visited Dec. 8, 2015).

    Finally, the common data model would include concepts that correspond to requirements in Rules 901(c)(5) and 901(c)(6) for flags that indicate inter-dealer transactions and transactions that counterparties intend to clear. In addition to these required flags, Rule 901(c)(7) requires that the person with a duty to report include any additional transaction flags as specified in the policies and procedures of the registered SDR to which they report.

    b. Reportable Events and Transaction Identifiers

    Rule 901(a) assigns reporting duties for the security-based swaps described in Rule 908(a), including new security-based swaps and those that result from the allocation, termination, novation, or assignment of other security-based swaps. Rule 901(e) requires reporting of life cycle events. Rule 901(i) requires reporting, to the extent the information is available, of security-based swaps entered into before the date of enactment of the Dodd-Frank Act and security-based swaps entered into after the date of enactment but before Rule 901 becomes fully operative. Finally, Rule 905 sets out procedures for correcting errors to previously submitted transaction information. The schemas would include requirements for all of these event types. Both FIXML and FpML currently support the reporting of both new transactions as well as most of the other types of events required to be reported under Regulation SBSR, and so the schemas would include explicit mappings between existing FIXML and FpML events and those included in the common data model as a result of reporting requirements under Regulation SBSR.

    Under Rule 901(g), a registered SDR must assign a transaction ID to each new security-based swap that is reported to it or establish a methodology for doing so. Further, Rule 901(d)(10) requires reports of allocations, termination, novation, or assignment of one or more existing security-based swaps to include the transaction ID of the security-based swap that is allocated, terminated, novated, or assigned, while Rule 901(e)(2) requires reports of life cycle events to include the transaction ID of the original transaction. As the Commission discussed in the Regulation SBSR Adopting Release, requiring the use of a transaction ID in these instances would enable the Commission to update a transaction record to incorporate the life cycle event and map a new security-based swap to a corresponding prior transaction, even if the prior transaction was reported to a different registered SDR.41 To ensure consistency in the use of transaction IDs and enable the Commission to link together related transactions even if stored at different SDRs, the schemas that represent the common data model would stipulate how transaction reporting would link new trade activity and life cycle events to existing transactions through the use of the transaction ID. Further, the schemas would stipulate how an SDR would include the original transaction ID on records that involve allocations, terminations, novations, or assignments.

    41See Regulation SBSR Adopting Release, 80 FR at 14589.

    c. Market Participant Identifiers

    Rules 901(d)(1), 901(d)(2), 901(d)(9), 906(a), and 906(b) require reporting of the identity of each counterparty to a security-based swap as well as certain other persons who are affiliated with the counterparties or are otherwise involved in the transaction but who are not counterparties of that specific transaction. Because the Commission has recognized the Global Legal Entity Identifier System (GLEIS) as an Internationally Recognized Standard Setting System (IRSS) that assigns unique identification codes (“UICs”) to persons, these types of persons are required to obtain an LEI and registered SDRs are required to use these LEIs to identify these persons. Because the requirement to obtain an LEI does not apply to all persons enumerated in Rules 901(d)(1), 901(d)(2), 901(d)(9), 906(a), and 906(b), the schemas would accommodate identifiers that are not LEIs.42

    42See id. at 14632.

    Similarly, the schemas would accommodate LEI and non-LEI identifiers for execution agent IDs and broker IDs, since such persons might not have an LEI. Further, because no IRSS meeting the requirements of 903(a) has assigned or developed a methodology for assigning branch IDs, trader IDs, and trading desk IDs, the schemas would accommodate the identifiers or methodologies developed by the registered SDRs.

    d. Cash Flows for Customized Contracts

    Rule 901(d)(3) requires reporting of details regarding the payment terms, frequencies, and contingencies for non-standard, or bespoke, contracts. The schemas would accommodate these as separate data elements by including restrictions so that these data elements would be permitted only if the custom swap flag discussed in Section II.B.1.a is set by the registered SDR based on the transaction data that it receives from the reporting participant.

    e. Agreements

    Rule 901(d)(4) requires, for transactions that are not clearing transactions, the title and date of any master agreement, collateral agreement, margin agreement, or any other agreement incorporated by reference into the SBS contract. For example, to reflect these reporting requirements the schemas would include a flag to identify clearing transactions. For purposes of validation, if the clearing transaction flag is not set by the registered SDR, the registered SDR would be required to provide the agreement information provided by a reporting side under Rule 901(d)(4), if applicable, as separate data elements as well as provide the settlement details provided by reporting participants under Rule 901(d)(8). If instead the clearing transaction flag identifies a security-based swap as a clearing transaction, the associated transaction record would be valid even in the absence of the title and date of any master agreement, collateral agreement, margin agreement, or any other agreement incorporated by reference into the SBS contract because the Commission believes it could obtain this information from the registered clearing agency as necessary.43 Additionally, if the clearing transaction flag is not set because of the exception in Section 3C(g) of the Exchange Act (15 U.S.C. 78c-3(g)) has been invoked, then an indication would be provided by the SDR.

    43See Regulation SBSR Adopting Release, 80 FR at 14586.

    f. Clearing

    Under Rule 901(c)(6), the person with the duty to report must indicate with a flag whether there is an intent to clear a transaction. The schemas would include such a flag. Rule 901(d)(6) also requires reporting of the name of the clearing agency to which the swap will be submitted for clearing. Therefore, if the reporting participant 44 has included an “intent to clear” flag, then expression of the intent to clear within the common data model would require the registered SDR to also include the name of the clearing agency to which the security-based swap will be submitted for clearing.

    44See § 242.901(a).

    2. Required Reporting Elements That Do Not Exist in FpML or FIXML

    As mentioned earlier, some concepts within the common data model do not currently have existing equivalents within FpML or FIXML. These include:

    • Custom swap flag; 45

    45See § 242.901(c)(1)(v).

    • the currencies of any upfront payment,46 if applicable;

    46See § 242.901(c)(3).

    • a description of the settlement terms; 47

    47See § 242.901(d)(8).

    • inter-dealer swap flag; 48

    48See § 242.901(c)(5).

    • the title of any margin agreement; 49 and

    49See § 242.901(d)(4).

    • the date of any margin agreement.50

    50See id.

    In these cases, the schemas would require specific extensions of existing FpML and FIXML reporting elements. For flags required by Rule 901(c)(7), the Commission's schemas would require registered SDRs to populate the section with the flags identified within their own policies and then to select from those. As we discuss in Section III.C.2, both FpML and FIXML undergo regular updates. To the extent that the FpML and FIXML standards address the common data model as part of their periodic updates, the Commission expects that the standards will create defined elements to replace the initial use of extensions. When the Commission periodically updates its schemas, each schema will reflect the most recent version of each standard.

    3. Validations

    As mentioned above, the schemas would incorporate validations. These validations are restrictions placed on the form and manner of the reported SBS data that help ensure that the data SDRs make available to the Commission adhere to the appropriate schema. In particular, the validations test for completeness of the data and for appropriate format. As a result, the validations will enhance the Commission's ability to normalize and aggregate the data. These validations are effective at testing for whether the SBS data conforms to the technical specifications of the schema. However, these validations will not test for whether the SBS data accurately reflects the transaction that took place. By using the incorporated validations, SDRs will help ensure that their stored data adheres to the appropriate schema, thereby providing the Commission with direct electronic access pursuant to Rule 13n-4(b)(5).

    4. Regulatory and Technical Coordination

    In developing these proposed rules, we have consulted and coordinated with the CFTC and the prudential regulators 51 in accordance with the consultation mandate of the Dodd-Frank Act.52 We have also incorporated the past experiences of the CFTC regarding their swap data collection efforts, and consulted with both the CFTC and U.S. Department of the Treasury's Office of Financial Research regarding draft technical documentation, including the FIXML and FpML schemas. More generally, as part of the Commission's coordination efforts, Commission staff continue to participate in bilateral and multilateral discussions, task forces, and working groups on data harmonization and the regulation of OTC derivatives.

    51 The term “prudential regulator” is defined in section 1a(39) of the Commodity Exchange Act, 7 U.S.C. 1a(39), and that definition is incorporated by reference in section 3(a)(74) of the Exchange Act, 15 U.S.C. 78c(a)(74). Pursuant to the definition, the Board of Governors of the Federal Reserve System (“Federal Reserve Board”), the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration, or the Federal Housing Finance Agency (collectively, the “prudential regulators”) is the “prudential regulator” of a security-based swap dealer or major security-based swap participant if the entity is directly supervised by that regulator.

    52 Section 712(a)(2) of the Dodd-Frank Act provides in part that the Commission shall “consult and coordinate to the extent possible with the Commodity Futures Trading Commission and the prudential regulators for the purposes of assuring regulatory consistency and comparability, to the extent possible.”

    C. Request for Comment

    • The Commission has developed two interoperable schemas so that SDRs can make SBS transaction data available to the Commission using already existing standards in a form and manner that can be easily utilized by the Commission for analysis and aggregation. Are there other ways to provide for the representation of SBS transactions that could be easily utilized by the Commission? If so, what are they? What are their strengths and weaknesses?

    • Should the Commission require direct electronic access be provided by SDRs using only an FpML schema? Should the Commission require direct electronic access be provided by SDRs using only an FIXML schema? Is there another standard that the Commission should consider as acceptable? If so, which characteristics about that standard should make it acceptable to the Commission and how does that standard affect the Commission's ability to normalize, aggregate, and analyze the SBS data?

    • Does the Commission's approach to providing for direct electronic access using either the FpML or FIXML schemas allow for the accurate representation of SBS transactions as described in Regulation SBSR? If not, why not?

    • Are the FpML and FIXML standards sufficiently developed to require either one of them to be used by SDRs to provide access to the required SBS data? What factors or indicators should the Commission use to determine when an SBS-related standard has become sufficiently developed to require its use for providing the Commission with direct electronic access to SBS data?

    • Should the Commission allow SDRs to develop their own standards or leverage other standards to provide access to the Commission? How would the Commission's ability to normalize, aggregate, and analyze the data be affected if SDRs used different standards and developed different schemas for representing the SBS data?

    • Instead of leveraging industry standards, such as FIXML and FpML, should the Commission create a new standard or contract with a third-party to create a new standard? Why or why not?

    • Are there other approaches to developing or using a standard that the Commission should consider? Please explain in detail.

    • What would be the costs to an SDR to provide data in either FpML or FIXML standard? Are there other ways that SBS data should be provided to the Commission? Are there other standards that would cost less but still allow the Commission to similarly normalize, aggregate, and analyze the data?

    • Should the Commission institute a test phase for providing this information in either an FpML or FIXML standard? If so, how long should this test phase last?

    • Other than using schemas, is there another effective mechanism for SDRs to provide direct electronic access to the Commission that still achieves similar or better aggregation and consistency results?

    • The Commission intends to incorporate validations into its schemas to help ensure the quality and completeness of the SBS data that SDRs make available to the Commission. Is there another effective mechanism that would help ensure completeness and still achieve similar or better aggregation and consistency results?

    • How should the common data model support reporting requirements that do not yet have equivalents in FpML or FIXML, while preserving the ability to normalize, aggregate, and analyze the data? As discussed in Section II.B.2, the Commission's schemas would require specific extensions of existing FpML and FIXML reporting elements. Is there a better alternative? Specifically, how would the alternative affect SDRs, the Commission, and market participants?

    III. Economic Analysis

    On February 11, 2015, the Commission adopted the SDR Rules,53 which govern SDR registration, duties, and core principles,54 and Regulation SBSR, which governs the reporting to registered SDRs of SBS data and public dissemination by registered SDRs of a subset of that data.55 In combination, these rules represent a significant step forward in providing a regulatory framework to promote transparency and efficiency in the OTC derivatives markets and assist relevant authorities in performing their market oversight functions. As noted earlier in Section I.A, the Commission is concerned that SDRs might provide direct electronic access to data in a form and manner that is not conducive to the Commission's ability to analyze the data or surveil the SBS market. Under the proposed amendment, the Commission would specify the form and manner with which SDRs must provide direct electronic access to the Commission by requiring SDRs to comply with the appropriate schema as will be published on the Commission's Web site.

    53See supra note 1.

    54See supra note 2.

    55See supra notes 3-4.

    The Commission is sensitive to the economic effects of the rules that it proposes, including implications for efficiency, competition, and capital formation. The Commission preliminarily believes that the proposed rule would provide a number of benefits and result in certain costs. Section 23(a)(2) of the Exchange Act 56 requires the Commission, when making rules under the Exchange Act, to consider the impact that any new rule would have on competition. In addition, Section 23(a)(2) prohibits the Commission from adopting any rule that would impose a burden on competition not necessary or appropriate in furtherance of the purposes of the Exchange Act. Furthermore, Section 3(f) of the Exchange Act 57 requires the Commission, when engaging in rulemaking pursuant to the Exchange Act where it is required to consider or determine whether an action is necessary or appropriate in the public interest, to consider, in addition to the protection of investors, whether the action will promote efficiency, competition, and capital formation.

    56 15 U.S.C. 78w(a)(2).

    57 15 U.S.C. 78c(f).

    In many instances the potential benefits and costs of the proposed amendment are difficult to quantify. In particular, the Commission does not have precise estimates of the monetary benefits arising from the anticipated improvement in the Commission's ability to accurately analyze data made available by a single SDR, and the anticipated improvement in the Commission's ability to aggregate and analyze data made available by multiple SDRs. Benefits may arise from these improvements indirectly to the extent that facilitating the Commission's oversight of SBS market activity reduces the likelihood of abuse in the SBS market and risks to financial stability emanating from the SBS market, however the Commission does not have data that would enable it to estimate the magnitude of either of these effects.

    Similarly, the Commission also does not have the data to estimate the potential costs that might be associated with reduced competition in the SDR industry that could result from the proposed approach. As we discuss in more detail below, a potential result of reduced competition among SDRs is that SDRs increase prices for their services or decrease the quantity or quality of their services. While the Commission acknowledges these potential costs, it does not have information about SDR services that would be necessary to estimate changes in prices, quality of service, or quantity of service that might result from reduced competition. One reason for this lack of information is that, to date, no SDRs have registered with the Commission. Where possible, we provide quantitative estimates of the potential costs of the proposed amendments. We provide discussions of a qualitative nature when quantification is not possible.

    A. Economic Baseline

    To examine the potential economic effects of the proposed amendments, our analysis considers as a baseline the rules adopted by the Commission that affect regulatory reporting and public dissemination, particularly those rules adopted as part of Regulation SBSR and the SDR Rules. The baseline includes our current understanding of international industry standards and market practices, including how those standards and practices have been influenced by the actions of other regulators. This section begins by summarizing the economic implications of regulatory reporting and public dissemination under the Commission's current regulatory framework for the SBS market and describing the data currently made available to the Commission on a voluntary basis. Following this discussion, the section describes the number of SDRs likely to be affected by the proposed amendments before examining the current state of the FIXML and FpML standards.

    1. The SDR Rules and Regulation SBSR

    As mentioned above, the Commission recently adopted the SDR Rules and Regulation SBSR. Together, the rules seek to provide improved transparency to regulators and the markets through comprehensive regulations for SBS transaction data and SDRs.58 As the Commission envisioned in the SDR Adopting Release, SDRs will become an essential part of the infrastructure of the SBS market.59 Persons that meet the definition of an SDR will be required by the SDR Rules to maintain policies and procedures relating to data accuracy and maintenance, and will be further required by Regulation SBSR to publicly disseminate transaction-level data, thereby promoting post-trade transparency in the SBS market.

    58See SDR Adopting Release, 80 FR at 14440.

    59See id. at 14528.

    Additionally, as a result of the SDR Rules and Regulation SBSR, increased quality and quantity of pricing and volume information and other information available to the Commission about the SBS market may enhance the Commission's ability to respond to market developments. To help inform its understanding of the SBS market, the Commission currently relies upon data on individual CDS transactions voluntarily provided by the Depository Trust and Clearing Corporation (“DTCC”) Trade Information Warehouse (“TIW”). This information is made available to the Commission in accordance with an agreement between the DTCC-TIW and the OTC Derivatives Regulators' Forum (“ODRF”), of which the Commission is a member.

    The DTCC-TIW data provides sufficient information to identify the types of market participants active in the SBS market and the general pattern of dealing within that market. However, as the Commission noted in the SDR Adopting Release, the DTCC-TIW data does not encompass CDS transactions that both: (i) do not involve any U.S. counterparty, and (ii) are not based on a U.S. reference entity.60 Furthermore, because counterparties to CDS transactions voluntarily submit data to DTCC-TIW to support commercial activities, the data are not necessarily suited to support the Commission's needs, the legal requirements underlying the rules (e.g., the Dodd-Frank Act) or regulatory needs. For example, the transaction records captured by DTCC-TIW allow the Commission to identify trade execution dates but do not provide data to determine trade execution times.61 Both Regulation SBSR and the SDR Rules will assist the Commission in fulfilling its regulatory mandates such as detecting market manipulation, fraud, and other market abuses by providing it with access to more detailed SBS information than that provided under the voluntary reporting regime.

    60See SDR Adopting Release, 80 FR at 14445.

    61See Memorandum by the Staffs of the Division of Trading and Markets and the Division of Economic and Risk Analysis of the U.S. Securities and Exchange Commission, Inventory risk management by dealers in the single-name credit default swap market (Oct. 17, 2014), available at http://www.sec.gov/comments/s7-34-10/s73410-184.pdf.

    2. Swap Data Repositories

    In the SDR Adopting Release, the Commission estimated that 10 persons may register with the Commission as SDRs.62 The Commission notes that in the swap market, only four persons have been provisionally registered with the CFTC for regulatory reporting in the swap market as SDRs thus far: BSDR LLC, Chicago Mercantile Exchange, Inc., DTCC Data Repository, and ICE Trade Vault.63 BSDR LLC and DTCC Data Repository currently allow reporting participants to submit transaction data using FpML.64 Intercontinental Exchange, the parent of ICE Trade Vault, uses FpML,65 while Chicago Mercantile Exchange, Inc. allows reporting participants to submit transaction data using FIXML.66 Accordingly, the Commission continues to preliminarily believe that approximately 10 persons would register with the Commission as SDRs.

    62See SDR Adopting Release, 80 FR at 14521.

    63See U.S. Commodity Futures Trading Commission, Swap Data Repository Organizations, http://sirt.cftc.gov/sirt/sirt.aspx?Topic=DataRepositories (last visited Dec. 8, 2015).

    64See Bloomberg Swap Data Repository, BDSR APIs, http://www.bloombergsdr.com/api (describing trade submission methods available to participants reporting to BDSR) (last visited Dec. 8, 2015). See also DTCC, US DDR SDR, http://www.dtcc.com/data-and-repository-services/global-trade-repository/gtr-us.aspx (describing submission formats supported by DTCC Data Repository) (last visited Dec. 8 2015).

    65See ISDA FpML Survey Annex 1 (January 2011), http://www.isda.org/media/press/2011/pdf/isda-fpml-user-survey.pdf (listing ICE as an FpML user).

    66See CME Group, Submitting Trades to the CME Swap Data Repository, http://www.cmegroup.com/trading/global-repository-services/submitting-trades-to-cme-repository-service.html (detailing data submission requirements for the CME Swap Data Repository) (last visited Dec. 8, 2015).

    3. FIXML and FpML

    As previously discussed in Section II.A, there are two international industry standards for representing SBS data: FpML and FIXML.67 Both are open standards, meaning that they are technological standards that are widely available to the public at no cost. In addition, both standards are independent of the software and hardware used by market participants, thus facilitating interoperability. Representatives from the financial industry, including those in the SBS market, and market participants are involved in maintaining, developing, and updating both standards to support, among other things, market practices and regulatory reporting requirements. FpML maintenance is undertaken by the FpML Standards Committee, which is made up of representatives from a range of financial market participants including banks, brokers, CCPs, and other financial infrastructure providers. FIX is owned, maintained, and developed through the collaborative efforts of the FIX Trading Community, which is a non-profit, industry-driven standards body comprised of over 270 member firms from the global financial services industry.68

    67 The Commission is aware that market participants may also use proprietary XML representations of transactions data.

    68 Updates to FpML are regularly announced at www.fpml.org, while updates to the FIX protocol, including updates to FIXML are regularly announced at http://www.fixtradingcommunity.org/pg/structure/tech-specs/fix-protocol (last visited Dec. 8, 2015).

    Based on the fact that there is substantial industry involvement in the development of both standards, the Commission preliminarily believes that the majority of transactions reportable under Regulation SBSR would include at least one counterparty that is familiar with communicating transaction details using FpML or FIXML or currently supports such communication. Further, most market participants will have familiarity with using FpML and/or FIXML for transaction reporting, including reporting to meet reporting obligations under the rules of other jurisdictions. For example, the FpML Regulatory Reporting Working Group has developed a draft mapping document that relates data elements required by seven regulators other than the Commission, in various jurisdictions, to corresponding FpML fields.69 The FIX Community has similarly provided documentation to show how data represented in FIX corresponds to certain regulatory reporting requirements.70 These efforts provide evidence that the groups responsible for developing FIX and FpML are already responding to regulatory reporting requirements by updating their reporting elements, and that market participants that use these standards would likely be able to use these standards to discharge reporting obligations.

    69See supra note 26.

    70See, e.g., FIX Protocol, Limited, Global Technical Committee and Futures Industry Association, CFTC Part 43 & 45 Gap Analysis III Foreign Exchange, (Jan. 3, 2013), available at http://www.fixtradingcommunity.org/mod/file/view.php?file_guid=46985.

    As noted in Section II.B.1, the schemas would include data elements that correspond to concepts defined in Rule 900 and required to be reported to registered SDRs by Rule 901. It would also include certain data elements derived from obligations of registered SDRs under Rule 907. Based on a mapping exercise conducted by Commission staff, the Commission preliminarily believes that both the FpML and FIMXL reporting standards already include defined data elements that can be used to cover many of the concepts in the common data model. However, the Commission staff has identified several instances of concepts within the proposed common data model that do not yet have equivalently defined data elements in FpML or FIXML. In those cases, the schemas published on the Commission's Web site would provide extensions of existing FpML and FIXML reporting elements. To the extent that the FpML and FIXML standards address the common data model as part of their periodic updates, the Commission expects that the standards will create defined elements to replace the initial use of extensions. If the Commission were to adopt a rule that required SDRs to make SBS data available to the Commission using the FpML or FIXML standards, the Commission anticipates that its staff would keep apprised of relevant advances and developments with those standards and engage with each standard's working group regarding such developments, as appropriate.

    B. Benefits

    The Commission preliminarily believes that the proposed amendment, by specifying the form and manner with which SDRs would be required to make SBS data available to the Commission, provide for the accurate analysis of data made available by a single SDR, and the aggregation and analysis of data made available by multiple SDRs. In particular, the proposed amendment would enable the aggregation of SBS data by the Commission.

    In the SDR Adopting Release, the Commission recognized that the benefits associated with SDR duties, data collection and maintenance, and direct electronic access may be reduced to the extent that SBS market data are fragmented across multiple SDRs.71 Fragmentation of SBS market data may impose costs on any user of this data associated with consolidating, reconciling, and aggregating this data. Without a common data model expressed in specific formats, SDRs might, for example, make available to the Commission SBS data that are formatted using a variety of standards including FpML, FIXML, or other distinct proprietary standards or methods. Such an outcome could significantly increase the complexity of data aggregation, or perhaps even render data aggregation impractical because the Commission would have to map each standard to the common data model and might need to transform data from each SDR to meaningfully aggregate data across SDRs. Adding to the complexity of data aggregation, the Commission would have to repeat the mapping exercise and update data transformations each time an SDR chooses to update its standard, which could be disruptive to the Commission's monitoring and surveillance efforts.

    71See SDR Adopting Release, 80 FR at 14538.

    By limiting SDRs' flexibility to a choice between FpML and FIXML, the Commission seeks to facilitate data aggregation and analysis by specifying the form and manner with which SDRs would be required to make SBS data available to the Commission. Adherence by SDRs to the schemas when providing direct electronic access should enhance the Commission's ability to analyze the data maintained by a single SDR, and allow the Commission to more effectively aggregate and analyze data received from multiple SDRs. Furthermore, the proposed amendment also simplifies the aggregation task because the Commission would determine the permitted formatting standards and schemas, not the SDRs. As a result, the process of data aggregation will not be complicated or disrupted by SDRs' decisions to update their formatting standards for reasons unrelated to regulatory requirements. The proposed amendment affords a simpler data aggregation process compared to an alternative in which SDRs exercise full discretion over the choice of formatting standard for providing direct electronic access and the timing for using the chosen standard.

    As discussed above, the schemas would incorporate validations.72 These validations are restrictions placed on the form and manner of the SBS data made available by SDRs to the Commission that help ensure that the data SDRs make available to the Commission adhere to the appropriate schema. In particular, the validations test whether the data are complete and appropriately formatted and will likely enhance the Commission's ability to normalize and aggregate the data. While validations incorporated into the schemas will be effective for checking data completeness and appropriate formatting, schema validations will not test for whether the SBS data accurately reflects the transaction that took place.

    72See Section II.C.3 of this release.

    The proposed amendment may also indirectly improve the quality of regulatory reporting in a number of ways. First, by specifying the form and manner with which SDRs must make SBS data available to the Commission, the proposed amendment might provide SDRs an incentive to limit the range of ways that their participants can report SBS transaction data to them. If the proposed amendment results in clearer policies and procedures of registered SDRs, then the result could be more efficient reporting. Second, by leveraging existing industry standards, the proposed amendment may indirectly improve SBS data quality by eliminating the need for SDRs to reformat data already structured in FpML or FIXML in some different Commission specific format, thus reducing the likelihood that SDRs introduce errors in the process of reformatting data.

    C. Costs

    The Commission has preliminarily identified three potential sources of costs associated with the proposed amendment. The first potential source is SDRs' implementation of the proposed amendment, the second potential source is the extension of existing standards to meet the Commission's reporting requirements and the updating of those standards if necessary, and the third potential source arises from limiting the flexibility of SDRs in making SBS data available to the Commission.

    1. Implementation Cost to SDRs

    As the Commission noted in the SDR Adopting Release, the cost imposed on SDRs to provide direct electronic access to the Commission should be minimal as SDRs likely have or will establish comparable electronic access mechanisms to enable market participants to provide data to SDRs and review transactions to which such participants are parties.73 Further, as the Commission noted in Section III.A, many of the entities likely to register with the Commission as SDRs already accept transactions data from reporting persons who submit trade information using the FpML and FIXML standards.

    73See SDR Adopting Release, 80 FR at 14539.

    Nevertheless, the Commission acknowledges that, as a result of the proposed amendment, SDRs may decide to implement policies, procedures, and information systems to ensure that SBS data made available to the Commission is in a form and manner that satisfies the requirements laid out in the schemas. The Commission preliminarily believes that the costs of implementing such policies, procedures, and information systems are likely to be related to conforming their data models to one of the Commission's schemas and are likely to be smaller for those SDRs that already employ FIXML or FpML. The Commission preliminarily believes that these costs, which are in addition to the internal costs related to information technology systems, policies, and procedures the Commission estimated in the SDR Adopting Release,74 would be approximately $127,000 in one-time costs per SDR, on average,75 for an expected aggregate one-time cost of approximately $1,270,000.76 To arrive at these estimates, we assume that each SDR will first compare the data model it currently employs to the common data model represented by the schemas and subsequently make necessary modifications to information technology systems and policies and procedures.

    74See id.

    75 The Commission preliminarily estimates that an SDR will assign responsibilities for modifications of information technology systems to an Attorney, a Compliance Manager, a Programmer Analyst and a Senior Business Analyst and responsibilities for policies and procedures to an Attorney, a Compliance Manager, a Senior Systems Analyst and an Operations Specialist. Data from SIFMA's Management & Professional Earnings in the Securities Industry 2013, modified by Commission staff to account for an 1800-hour work-year and multiplied by 5.35 to account for bonuses, firm size, employee benefits, and overhead, suggest that the cost of a Compliance Manager is $283 per hour, a Programmer Analyst is $220 per hour, a Senior Systems Specialist is $260 per hour, a Senior Business Analyst is $251 per hour, and an Operations Specialist is $125 per hour. Thus, the total initial estimated dollar cost will be $126,736.50 per SDR. This reflects the sum of the costs of modifying information technology systems ($110,810) and the cost of modifying policies and procedures ($15,926.50). Costs of modifying information technology systems are calculated as follows: (Attorney at $380 per hour for 70 hours) + (Compliance Manager at $283 per hour for 80 hours) + (Programmer Analyst at $220 per hour for 200 hours) + (Senior Business Analyst at $251 per hour for 70 hours) = $110,810. Costs of modifying policies and procedures are calculated as follows: (Attorney at $380 per hour for 21.75 hours) + (Compliance Manager at $283 per hour for 19.25 hours) + (Senior Systems Analyst at $260 per hour for 5.75 hours) + (Operations Specialist at $125 per hour for 5.75 hours) = $15,926.50.

    76 Aggregate costs are calculated as $126,736.50 x 10 SDRs = $1,267,365.

    To the extent that SDRs decide to modify their policies, procedures, and information technology systems, the Commission preliminarily believes that modifications that would be needed to support compliance with the proposed amendment are unlikely to change the marginal burden of providing direct electronic access to transaction records to the Commission. This is because the only additional costs would be costs incurred by SDRs to use policies, procedures, and information systems they would have already established to ensure that each additional transaction record that is made available to the Commission is in a form and manner that meets the requirements of the schemas.

    The Commission also preliminarily believes that certain of these costs may be mitigated to the extent that the proposed amendment promotes enhancements to FpML and FIXML in support of regulatory reporting to registered SDRs. If the schemas, by identifying and closing gaps between reporting requirements and existing standards, encourage the use of FpML and FIXML by reporting persons instead of other formatting standards, then SDRs could incur a lower burden of conforming SBS data to one of the Commission's schemas because SDRs will be limited to FpML or FIXML when making the data available to the Commission.

    The Commission recognizes that while SDRs may directly bear the implementation costs discussed above, these costs may be shared among market participants other than SDRs in several ways and will likely be passed through to SBS market participants, potentially in the form of higher costs for participants of registered SDRs, which in turn could result in higher transactions costs for counterparties, potentially impairing, albeit indirectly, efficiency in the SBS market and capital formation by SBS market participants. For example, the implementation costs incurred by registered SDRs could be passed on to reporting participants in the form of higher fees for reporting transactions. Consider the situation in which a registered SDR takes on reporting participants as clients before it implements the policies, procedures, and information systems needed to ensure that SBS data made available to the Commission is in a form and manner that satisfies the requirements laid out in the schemas. This registered SDR could offset this implementation cost by levying higher service charges on its participant base.

    The ability of SDRs to pass through costs to their participants depends in part on the market power of SDRs. As discussed in the economic baseline, the Commission preliminarily believes that a limited number of persons would register with the Commission as SDRs. If there is only one registered SDR serving all reporting participants, then this SDR would have a greater ability to shift implementation costs that could arise as a consequence of the proposed amendment to its users. By contrast, a competitive SDR industry would likely mean that registered SDRs had less market power, rendering them less able to pass through such costs to reporting participants.

    As an alternative to imposing higher fees on participants, registered SDRs could pass through a portion of the implementation costs to their participants by requiring reporting parties to report SBS data using FpML or FIXML in the same manner that the Commission is proposing to require that SDRs utilize for making data accessible to the Commission under the Commission's schemas. Under Rule 907(a)(2), a registered SDR is required to establish and maintain written policies and procedures that specify one or more acceptable data formats (each of which must be an open-source structured data format that is widely used by participants), connectivity requirements, and other protocols for submitting information. In response to the proposed amendment, registered SDRs might elect to establish policies and procedures that would facilitate conforming transaction data submitted by reporting participants to the schemas, pursuant to which the registered SDRs would be required to make the data accessible to the Commission. In particular, a registered SDR might elect to establish policies and procedures that mandate reporting of data elements under Rules 901(c) and 901(d) in the same form and manner that the Commission is proposing to require of registered SDRs, or levy fees for reformatting SBS transaction data reported in other formats to conform to one of the schemas. In this scenario, the registered SDR's participants could incur costs associated with: (i) modifying their reporting systems to transmit data to the registered SDR in a FIXML or FpML format that conforms to one of the schemas; or (ii) the registered SDR's reformatting of data to conform to one of the schemas. The registered SDR could subsequently make the data available to the Commission with minimal resources in ensuring that the data conforms to one of the schemas.

    Efficiency in the SBS market and capital formation by SBS market participants may be impaired, albeit indirectly, by registered SDRs' decisions to require reporting parties to report SBS data using FpML or FIXML under the Commission's schemas. If the technologies required to implement the proposed amendment have scale economies, then an outcome in which reporting participants independently modify their reporting systems potentially represents an inefficient use of resources for the SBS market as a whole, even if it results in lower costs to SDRs, and particularly if reporting participants that do not otherwise have a frequent duty to report also modify their reporting systems. While acknowledging the potential for these inefficiencies, the Commission preliminarily believes they are unlikely to manifest for a number of reasons. First, because FpML and FIXML are currently international industry standards,77 it is likely that a significant proportion of reporting participants already use either FpML or FIXML. Participants with reporting obligations include SBS dealers; the Commission has also proposed reporting obligations for clearing agencies.78 Commission staff has determined that all four clearing agencies currently clearing index and single name CDS use either FpML or FIXML,79 and at least fourteen of the fifteen major dealers recognized by ISDA use either FpML or FIXML 80 . Reporting participants that already use FpML or FIXML could potentially adapt policies, procedures, and information systems to report transactions using one of the schemas at a lower cost than reporting participants that use a standard other than FpML or FIXML. Second, the potential inefficiencies may be muted if there are multiple SDRs that accept SBS data in each asset class. To the extent that multiple SDRs compete within an asset class, one potential competitive outcome is that one or more SDRs may strive to attract business from reporting participants by exploiting the scale economies associated with implementation and offering to accept data in whatever formats they currently accept from reporting participants and reformatting this data to conform to the common data model. In the case of a registered SDR that chooses to levy a fee for reformatting SBS data to conform to one of the schemas, competition between SDRs may limit the fees an SDR has the ability to charge.

    77See Sections II.A.1 and III.A of this release.

    78See Regulation SBSR Adopting Release, 80 FR at 14730. See also Securities Exchange Act Release No. 74245 (February 11, 2015), 80 FR 14740, 14802 (March 19, 2015) (“SBSR Amendments Proposing Release”).

    79 ICE Clear Credit, ICE Clear Europe, CME, and LCH.Clearnet currently clear index and single name CDS. See SBSR Amendments Proposing Release 80 FR at 14775. Section III.A.2 of this release discusses the formatting standards used by ICE and CME. LCH.Clearnet allows reporting participants to submit transactions data using FpML. See LCH.Clearnet Ltd, ClearLink Messaging Specification 4 (June 2013), available at http://www.lchclearnet.com/documents/515114/515787/Clearlink+Technical+Requirements/004bb402-1b77-4561-88d7-c0e7e90b7363.

    80 The fifteen major derivatives dealers identified in the 2013 ISDA Operations Benchmarking Survey are Barclays Capital, BNP Paribas, Bank of America-Merrill Lynch, Citigroup, Credit Suisse, Deutsche Bank, Goldman Sachs, HSBC, JP Morgan, Morgan Stanley, Nomura, Royal Bank of Scotland, Societe Generale, UBS, Wells Fargo. See International Swaps and Derivatives Association, Inc., 2013 ISDA Operations Benchmarking Survey 29 (Apr. 2013), available at https://www2.isda.org/attachment/NTUzOQ==/OBS%202013%20FINAL%200425.pdf.

    We use the FIX Trading Community Membership listing to identify dealers that use FIXML. See Premier Global Members, http://www.fixtradingcommunity.org/pg/group-types/sellside-broker-dealers-public (last visited Dec. 8, 2015). We rely on a dealer's membership in the FpML Standards Committee as an indication of the dealer's use of FpML. See Standards Committee, http://www.fpml.org/committees/standards/ (last visited Dec. 8, 2015). Because both the FIX Membership listing and FpML Standards Committee participation are voluntary, our estimates present a lower bound of the number of major dealers that use either FpML or FIXML.

    Taken together, scale economies for implementation and competition among SDRs might compel all SDRs to permit reporting participants to submit SBS data to SDRs using a variety of formats, thereby eliminating the inefficiencies associated with modification of systems by reporting parties.

    Finally, participants that report infrequently or do not use FpML or FIXML could reduce their burden by engaging with third-party entities to carry out reporting duties incurred under Regulation SBSR as well as satisfy data formatting requirements specified by registered SDRs.81 Third-party entities may offer reporting services if they are able to make SBS data available in a form and manner consistent with the schemas at a lower cost than SDRs and SDR participants. Such a cost advantage might arise if a third-party entity uses FpML or FIXML to process SBS data as part of its existing business activities and has acquired technical expertise in using FpML or FIXML. Further, the availability of third-party entities that can convert SBS data to meet formatting requirements specified by registered SDRs may place an upper limit on the fees levied by SDRs to reformat data to conform to a Commission schema.

    81 The Commission acknowledged in Regulation SBSR that reporting requirements could present a barrier to entry for smaller firms but noted that firms that are reluctant to acquire and build reporting infrastructure could engage with third-party service providers to carry out reporting duties under Regulation SBSR. See Regulation SBSR Adopting Release, 80 FR at 14702.

    2. Costs of Extending and Updating Standards

    At present, FpML and FIXML do not have a complete set of defined reporting elements that address all Regulation SBSR reporting requirements. Market participants may choose to extend these standards to fully reflect Regulation SBSR reporting requirements through the industry bodies that maintain FpML and FIXML (working groups).82 As discussed earlier, both standards undergo regular updates.

    82 The FIX Protocol is updated by actions of its Global Technical Committee via a formal process in which working groups formulate a gap analysis and technical proposal. The gap analysis and proposal documents are posted on the FIX Web site and accessible to the public prior to Global Technical Committee review. Approved proposals are published to the technical specification page as an “extension” or “errata/service” release, depending on their scope. Extensions to the FIX protocol apply to both FIX's native format and FIXML. See FIX Protocol, Limited, FPL Technical Gap Analysis Approval Process (Jan. 20, 2006), available at http://www.fixtradingcommunity.org/pg/file/fplpo/read/1437402/gap-analysis-specification-proposal-process.

    FpML is updated by actions of its Standards Committee via a formal process in which working groups produce documents that define extensions or other technical matters which must proceed through stages as working drafts, last call working drafts, trial recommendations and recommendations. Extensions to FpML that reach trial recommendation status are assigned an incremented version number, so that the latest recommendation may be FpML 5.7 while the trial recommendation is FpML 5.8. All public specifications are published on the FpML Web site. See FpML Standards Committee, Standards Approval Process—Version 2.1—June 2009, available at http://www.fpml.org/asset/49a6b038/7545553a.pdf.

    While the Commission acknowledges the costs of extending and updating these standards, these are indirect costs, in that they are not costs required to be incurred by the proposed amendment, but costs that may be incurred voluntarily by industry bodies. Further, the Commission preliminarily believes that extension costs would be modest. An analysis undertaken by Commission staff suggests that each standard currently has the defined reporting elements required to capture almost all of the data elements contemplated by Regulation SBSR.83 The Commission also preliminarily believes that the update costs would be limited because any update needed to support possible future changes in Regulation SBSR reporting requirements would likely be implemented as part of the routine updates undertaken by the working groups. The Commission reviewed the time taken to revise both FpML and FIXML and estimated that a revision requires on average 304 days.84 A working group is estimated to be 29-member strong based on the size of the working group charged with revising FpML to define data elements to be used for reporting OTC derivative positions between market participants and to regulators.85 The Commission assumes that the one-time extension and a periodic update of each standard will require only a fraction of the time required for a revision of a standard, with an extension requiring more time than a periodic update. Thus, the one-time cost of extending each standard is estimated to be $1,410,560 for a total cost of $2,821,120 for both standards, while the cost of a periodic update to one standard is estimated to be $282,112 for a total cost of $564,224 for both standards.86 The Commission preliminarily believes that, while these costs would be directly incurred by working group members, they would likely be passed through to market participants, potentially in the form of higher transactions costs.

    83See Section II.C and Appendix.

    84 Using the release dates for versions 4.1 through 5.7 of FpML, we estimate the average time taken to update each version to be 154 days. Using the release dates for versions 4.0 through 5.0 of FIXML, we estimate the average update time to be 454 days. We take the average of these two estimates to arrive at the final estimate of 304 days. The Commission preliminarily believes that these estimates are upper bounds on the time required to make extensions as a result of the proposed amendment because they represent an average of major and minor changes and because these changes likely represent a mix of changes in response to market practice and changes in response to regulatory requirements.

    85See Section III.A.3 of this release. See also FpML, Regulatory Reporting Working Group, http://www.fpml.org/wgroup/rptwg/ (last visited Dec. 8, 2015).

    86 Because members of a working group are professionals from various organizations, we treat each member as an outside professional for this analysis and use a $400 per hour cost. We assume an eight hour work day for each member of the working group. For the one-time extension of a standard, we assume a workload of 5% of each working group member's work day. Given these assumptions, the cost of extending one standard = 304 × 29 × 8 × 400 × 0.05 = $1,410,560. The cost of extending both standards is = 1,410,560 × 2 = $2,821,120. For the periodic update of a standard, we assume a workload of 1% of each working group member's work day due to the incremental and limited nature of a periodic update. Thus, the cost of a periodic update to one standard = 304 × 29 × 8 × 400 × 0.01 = $282,112, and the cost for both standards is = 282,112 × 2 = $564,224.

    3. Limiting Formatting Flexibility of SDRs

    In the SDR Adopting Release, the Commission required SDRs to provide direct electronic access, but did not specify the form and manner of the direct electronic access. As the Commission noted in the SDR Adopting Release, until such time as the Commission adopts specific formats and taxonomies, “SDRs may provide direct electronic access to the Commission to data in the form in which the SDRs maintain such data.” 87 The proposed amendment, by specifying the form and manner of direct electronic access, potentially curtails the flexibility in formatting choices that SDRs enjoy in the absence of the proposed amendment. The Commission is aware that such curtailment potentially represents a cost of the proposed amendment, but does not believe it can quantify this cost with any degree of precision as it depends on the different means by which each SDR could potentially make data available to the Commission electronically in the absence of the proposed amendment.

    87See SDR Adopting Release, 80 FR at 14475.

    Additionally, the proposed amendment could entail costs if FpML and FIXML no longer reflect SBS market conventions. As the SBS market evolves, FpML and FIXML may cease to reflect SBS market practices or products. If more efficient standards other than FpML or FIXML emerge, the proposed amendment would not permit SDRs to take advantage of those standards in providing direct electronic access to the Commission, though the proposed amendment would not preclude SDRs from using those standards for other purposes. The magnitude of this economic effect is difficult to estimate as we would require information about future SBS market practices and products, as well as efficiency improvements in currently existing and new formatting standards. Moreover, the Commission preliminarily believes that potential reductions in future flexibility will be limited for a number of reasons. First, as previously discussed in Section II.A, representatives from the financial industry, including those in the SBS market, are involved in maintaining, developing, and updating FpML and FIXML to support, among other things, market practices and regulatory reporting requirements. Periodic updating reduces the likelihood that FpML and FIXML will fail to reflect changes to SBS market practices or products. Further, the Commission preliminarily believes that industry involvement and periodic updating make it less likely that a more efficient alternative to FpML or FIXML will emerge. Second, by specifying schemas based on both FpML and FIXML, the proposed amendment provides redundancy in case one standard falls into disuse and no longer reflects SBS market practices or products.

    D. Competition Among SDRs

    The Commission is also sensitive to the effects on competition among SDRs that might arise as a result of the proposed amendment. The Commission preliminarily believes that the impact of the proposed amendment is likely to be limited. The Commission views the effect of the proposed amendment as further specifying the form and manner of data already required to be made available to the Commission under Rule 13n-4(b)(5). The Commission understands that the implementation costs associated with meeting minimum requirements for form and manner under the proposed amendment could represent a barrier to entry for entrants into the SDR industry that, in the absence of the proposed amendment, would choose to make data available to the Commission in a lower cost form and manner.

    To the extent that the proposed amendment deters new firms from entering the SDR industry, competition between SDRs could be reduced. A less competitive SDR industry could see incumbent registered SDRs increasing fees charged to reporting participants, reducing the quantity and quality of services provided to reporting participants, or both. Further, a less competitive SDR industry could make it easier for incumbent registered SDRs to shift a bigger portion of their implementation cost to reporting participants. As noted above, such a shift could represent an inefficient allocation of implementation costs if it results in duplicative investment in software and systems by a large number of reporting parties to conform data to the schemas.88

    88See Section III.C.1 of this release.

    The Commission preliminarily believes that any deleterious effect on competition that results from the proposed amendment might be limited for a number of reasons. First, because the Commission is selecting the FpML and FIXML standards which are widely available to the public at no cost, new entrants would not incur any cost associated with the creation of new standards. Second, should extension and updating costs be necessary, such costs are expected to be modest and would likely be shared among various market participants, including SDRs. Thus, the actual portion of these costs incurred by a new entrant would be limited.

    E. Alternative Approaches

    The Commission has considered two alternatives to the approach contemplated in the proposed amendment. In this section, we discuss each alternative in turn and the reasons why each alternative approach was not proposed.

    1. Developing a New Standard

    The first alternative would involve development of a new information formatting standard specifically designed to support regulatory reporting of SBS data. The Commission could implement this alternative in one of two ways. First, the Commission could develop a new standard on its own and require SDRs to use this standard. The key advantage of such an approach is that it would give the Commission the ability to tailor definitions of data elements to precisely match those in Regulation SBSR. However, this approach suffers from a number of drawbacks. The Commission would likely expend significant resources to (i) develop an information formatting standard for SBS data, (ii) stay informed of the various practices of the SDRs, (iii) provide guidance on the standard's use, and (iv) update the standard on a regular basis to incorporate innovations in the SBS market and additional reporting requirements as determined by future Commission action. Further, under this approach market participants could incur costs associated with supporting an additional information formatting standard that is not useful except for purposes of satisfying Title VII requirements.

    In the absence of an existing standard for SBS data, it would be appropriate for the Commission to develop a new standard specifically designed to support regulatory reporting of SBS data. However, because FpML and FIXML are existing standards that are widely used by market participants, the Commission preliminarily believes it would be more efficient to leverage these standards that have been designed with input from market participants, that communicate information about financial contracts, and that can be updated and maintained with the assistance of dedicated industry working groups. Further, the Commission preliminarily believes that the proposed approach reduces the likelihood that SDRs introduce errors to SBS data in the process of reformatting data structured in FpML or FIXML to conform to a new standard developed specifically for regulatory reporting. Thus, the Commission has not chosen to develop its own standard in the proposed amendment.

    2. FpML or FIXML as the Sole Schema Standard

    A second alternative would be to use either FpML or FIXML as the sole schema standard. The Commission preliminarily believes that using only a single standard would impose an additional burden on an SDR that currently uses a standard other than the selected standard. Because FpML and FIXML are both widely used and accepted in the financial industry, it is possible that some SDRs use FpML while others use FIXML. As noted in the economic baseline, among the persons that could potentially register as SDRs for security-based swaps, BSDR LLC, DTCC Data Repository, and ICE are FpML users, while Chicago Mercantile Exchange, Inc. is a FIXML user. By selecting either FpML or FIXML as the sole standard, the Commission would be requiring an SDR that did not use the proposed standard to incur costs to change its policies, procedures, and information systems to accommodate the proposed standard. In addition, selecting a sole standard could increase the likelihood of introducing errors to SBS data caused by an SDR that uses the non-permissible standard when reformatting its data to conform to the selected standard. A greater likelihood of errors could potentially reduce the quality of SBS data made available to the Commission. Further, allowing both FpML and FIXML instead of allowing just one of these standards would afford some measure of redundancy in case one standard falls into disuse (due, for example, to the cessation of industry support) and no longer reflects current market practices.

    F. Request for Comment

    The Commission seeks commenters' views and suggestions on all aspects of its economic analysis of the proposed amendment. In particular, the Commission asks commenters to consider the following questions:

    • What additional information sources can the Commission use to calibrate the cost of setting up and implementing policies, procedures, and information systems to format and submit SBS transaction data in accordance with the Commission's schemas?

    • What fraction of reporting participants already use FpML or FIXML to format SBS data?

    • What fraction of reporting participants use proprietary XML representations of SBS?

    • What additional information sources can the Commission use to calibrate (a) the cost of extending FpML and FIXML and (b) the cost of periodically updating these standards?

    • Are there costs associated with the proposed amendment that the Commission has not identified? If so, please identify them and if possible, offer ways of estimating these costs.

    IV. Paperwork Reduction Act

    The Commission is required to take into account those provisions of any proposed amendments that contain “collection of information requirements” within the meaning of the Paperwork Reduction Act of 1995 (“PRA”).89 In this release, the Commission is proposing to specify the form and manner with which SDRs will be required to make SBS data available to the Commission under Exchange Act Rule 13n-4(b)(5). Specifically, the Commission is proposing to amend Rule 13n-4(a)(5) to require SDRs to provide direct electronic access using either the FpML schema or the FIXML schema as published on the Commission's Web site. The Commission is also requiring that the SDRs use the most recent schema published on the Web site, as the Commission may make periodic updates to reflect changes in the FpML and FIXML standards or changes in industry practice.

    89 44 U.S.C. 3501 et seq.

    As is discussed in greater detail below, the Commission preliminarily believes that the proposed amendments to Rule 13n-4(a)(5) would result in a collection of information burden. To the extent that this collection of information burden has not already been accounted for in the adoption of the SDR Adopting Release and Regulation SBSR,90 such burden is discussed below. The purpose of the proposed amendments to Rule 13n-4(a)(5) is to specify the form and manner with which SDRs would be required to make SBS data available to the Commission. By doing so, the Commission seeks to ensure that the SBS data made available by SDRs are formatted and structured consistently so that the Commission can accurately analyze the data maintained by a single SDR, and so that the Commission can also aggregate and analyze data maintained by multiple SDRs. Collection of the underlying data, however, is already covered by existing collections.

    90See SDR Adopting Release, 80 FR 14437; Regulation SBSR Adopting Release, 80 FR 14673.

    The Commission's SDR Rules (OMB Control Number 3235-0719) consist of Rules 13n-1 to 13n-12 under the Exchange Act governing SDRs, and a new form, Form SDR, for registration as a security-based swap data repository. Among other things, Rule 13n-4(b) sets forth requirements for collecting and maintaining transaction data that each SDR will be required to follow. The SDR Adopting Release described the relevant burdens and costs that complying with Rule 13n-4(b), as well as the other companion rules, will entail. The Commission estimated that the one-time start-up burden relating to establishing the systems necessary to comply to the SDR Rules (including Rule 13n-4(b)) would be 42,000 hours and $10 million in information technology costs for each SDR, for a total one-time start-up burden of 420,000 hours and $100 million.91 The Commission further estimated that the average ongoing annual burden of these systems would be 25,200 hours and $6 million per SDR, for a total annual ongoing annual burden of 252,000 hours and $60 million.92 The Commission preliminarily believes that there would be additional burdens on top of those already discussed in connection with the SDR Rules as a result of the proposed amendments. The Commission is submitting the collection of information to the Office of Management and Budget for review in accordance with 44 U.S.C. 3507 and 5 CFR 1320.11. The title of the collection of information the Commission is proposing to amend is “Form SDR and Security-Based Swap Data Repository Registration, Duties, and Core Principles.” An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

    91See 80 FR at 14523.

    92Id.

    Regulation SBSR (OMB Control No. 3235-0718), among other things, sets forth the primary and secondary SBS trade information that must be reported to a registered SDR and, with some exceptions, disseminated by a registered SDR to the public. The burdens associated with the reporting and dissemination of SBS trade information are discussed in Regulation SBSR. These burdens include those related to a registered SDR to time-stamping information that it receives, assigning a unique transaction ID to each security-based swap it receives (or establishing or endorsing a methodology for transaction IDs to be assigned by third parties), disseminating transaction reports related to SBSs, issuing notifications regarding closing hours and system availability, establishing protocols for correcting errors in SBS information, obtaining UICs as necessary, establishing and maintaining compliance with certain policies and procedures, and registering as a securities information processor. In this release, the Commission has not proposed changes to the information that must be reported to a registered SDR or the information that must be disseminated by a registered SDR to the public. The Commission therefore preliminarily believes that there would be no additional burden beyond those already discussed in connection with Regulation SBSR.

    The Commission believes, as is discussed in greater detail above in Section II.A., that the participants in the SBS market generally already employ two industry standard formats: FpML and FIXML. The Commission expects, but Regulation SBSR does not require, that registered SDRs will accept SBS trade information in one or both of these industry standard formats. In preparation for compliance with Regulation SBSR and the SDR Adopting Release, the Commission expects that registered SDRs will have established systems capable of collecting—and indeed likely have already collected SBS trade information—in one of these two industry standards formats. However, the Commission does acknowledge that, as a result of the proposed amendment, SDRs may incur burdens associated with implementing policies, procedures, and information systems to ensure that SBS data made available to the Commission is in the form and manner that satisfies the requirements laid out in the schema.

    A. Summary of Collection of Information

    Rule 13n-4(b)(5) requires SDRs to provide direct electronic access to the Commission or its designees. Rule 13n-4(a)(5), as proposed to be amended, requires “direct electronic access” to be made using “the most recent version of either the FpML schema or the FIXML schema for security-based swap data repositories as published on the Commission's Web site.” The proposed amendments do not alter or amend the information that must be collected and maintained by a registered SDR, but do impact the manner in which such information is made available to the Commission.

    B. Use of Information

    Rules 13n-4(b)(5) requires that an SDR provide the Commission, or any designee of the Commission, with direct electronic access. The information made available to the Commission, or its designee, will help ensure an orderly and transparent SBS market as well as provide the Commission with tools to help oversee this market.

    C. Respondents

    The direct electronic access requirements of Rule 13n-4(b)(5) apply to all SDRs, absent an exemption. Thus, for these provisions, the Commission continues to estimate that there will be 10 respondents.

    D. Total Initial and Annual Reporting and Recordkeeping Burden

    As discussed above, Rule 13n-5(b)(5) requires SDRs to provide direct electronic access to the Commission or its designees. Rule 13n-4(a)(5), as proposed to be amended, would require “direct electronic access” to be made available to the Commission using “the most recent version of either the FpML schema or the FIXML schema for security-based swap data repositories as published on the Commission's Web site.”

    The Commission preliminarily believes that registered SDRs are likely to already accept transaction data from reporting persons who submit trade information using FpML and FIXML reporting standards. However, the Commission preliminarily believes that, as a result of the proposed amendment, registered SDRs may incur certain burdens associated with implementing policies, procedures, and information systems to ensure that SBS data made available to the Commission is in a form and manner that satisfies the requirements laid out in the schemas. The Commission preliminarily believes that these incremental burdens are likely to be related to ensuring that the data elements that constitute the common data model are represented using the appropriate FIXML or FpML reporting elements and are likely to be smaller for those SDRs that already employ FIXML or FpML. The Commission preliminarily estimates that each registered SDR will incur an initial, one-time burden of 472.5 hours,93 for an aggregate one-time burden of 4,725 hour for all registered SDRs.94 The Commission expects that each SDR will comply with the proposed rule by first comparing the data model it currently employs to the common data model represented by the schemas and subsequently making necessary modifications to information technology systems and policies and procedures.

    93 The Commission preliminarily estimates that an SDR will assign responsibilities for modifications of information technology systems to an Attorney, a Compliance Manager, a Programmer Analyst and a Senior Business Analyst and responsibilities for policies and procedures to an Attorney, a Compliance Manager, a Senior Systems Analyst and an Operations Specialist. The Commission estimates the burden of modifying information technology systems to be as follows: 70 hours (Attorney) + 80 hours (Compliance Manager + 200 hours (Programmer Analyst) + 70 hours (Senior Business Analyst) = 420 burden hours. The Commission estimates the burden of modifying policies and procedures to be as follows: 21.75 hours (Attorney) + 19.25 (Compliance Manager) + 5.75 hours (Senior Systems Analyst) + 5.75 hours (Operations Specialist) = 52.5 burden hours.

    94 The aggregate burden is calculated as follows: (420 hours + 52.5 hours) × 10 registered SDRs = 4,725 burden hours

    Once the policies, procedures, and information systems required to comply with the proposed amendment are in place, the Commission preliminarily does not believe that there will be any additional paperwork burden placed upon SDRs to make transaction records accessible in a form and manner that satisfies the requirements of the schemas. The Commission preliminarily believes that the burdens related to SDRs using their policies, procedures, and information systems they would have already established have been accounted for in the previously adopted SDR Rules. Furthermore, the Commission preliminarily believes that the annual burdens associated with maintaining the SDRs policies and procedures, as well as the annual burdens associated with modifications of information technology systems have already been accounted for in the previously approved SDR Rules.

    E. Collection of Information Is Mandatory

    The collection of information relating to direct electronic access is mandatory for all SDRs, absent an exemption.

    F. Confidentiality

    Because these proposed amendments do not impact the scope or nature of the information required to be made available to the Commission, the Commission does not expect to receive confidential information as a result of these proposed amendments. However, to the extent that the Commission does receive confidential information pursuant to this collection of information, such information will be kept confidential, subject to the provisions of applicable law.

    G. Recordkeeping Requirements

    Rule 13n-7(b) under the Exchange Act requires an SDR to keep and preserve at least one copy of all documents, including all documents and policies and procedures required by the Exchange Act and the rules or regulations thereunder, correspondence, memoranda, papers, books, notices, accounts, and other such records as shall be made or received by it in the course of its business as such, for a period of not less than five years, the first two years in a place that is immediately available to representatives of the Commission for inspection and examination. This requirement encompasses any documents and policies and procedures established as a result of the proposed amendments.

    H. Request for Comments

    Pursuant to 44 U.S.C. 3505(c)(2)(B), the Commission solicits comment to:

    • Evaluate whether the proposed collection of information is necessary for the proper performance of our functions, including whether the information will have practical utility;

    • Evaluate the accuracy of our estimate of the burden of the proposed collection of information;

    • Determine whether there are ways to enhance the quality, utility, and clarity of the information to be collected; and

    • Evaluate whether there are ways to minimize the burden of collection of information on those who are to respond, including through the use of automated collection techniques or other forms of information technology.

    Persons submitting comments on the collection of information requirements should direct them to the Office of Management and Budget, Attention: Desk Officer for the Securities and Exchange Commission, Office of Information and Regulatory Affairs, Washington, DC 20503, and should also send a copy of their comments to Brent J. Fields, Secretary, Securities and Exchange Commission, 100 F Street NE., Washington, DC 20549-1090, with reference to File Number S7-26-15. Requests for materials submitted to OMB by the Commission with regard to this collection of information should be in writing, with reference to File Number S7-26-15 and be submitted to the Securities and Exchange Commission, Office of FOIA/PA Operations, 100 F Street NE., Washington, DC 20549-2736. As OMB is required to make a decision concerning the collections of information between 30 and 60 days after publication, a comment to OMB is best assured of having its full effect if OMB receives it within 30 days of publication. V. Regulatory Flexibility Act Certification

    Section 3(a) of the Regulatory Flexibility Act of 1980 (“RFA”) 95 requires the Commission to undertake an initial regulatory flexibility analysis of the proposed amendment on “small entities.” Section 605(b) of the RFA 96 provides that this requirement shall not apply to any proposed rule or proposed rule amendment which, if adopted, would not have a significant economic impact on a substantial number of small entities. Pursuant to 5 U.S.C. 605(b), the Commission hereby certifies that the proposed amendment to Rule 13n-4(a)(5) would not, if adopted, have a significant economic impact on a substantial number of small entities. In developing this proposed amendment the Commission has considered its potential impact on small entities. For purposes of Commission rulemaking in connection with the RFA, a small entity includes: (1) When used with reference to an “issuer” or a “person,” other than an investment company, an “issuer” or “person” that, on the last day of its most recent fiscal year, had total assets of $5 million or less; 97 or (2) a broker-dealer with total capital (net worth plus subordinated liabilities) of less than $500,000 on the date in the prior fiscal year as of which its audited financial statements were prepared pursuant to Rule 17a-5(d) under the Exchange Act,98 or, if not required to file such statements, a broker-dealer with total capital (net worth plus subordinated liabilities) of less than $500,000 on the last day of the preceding fiscal year (or in the time that it has been in business, if shorter); and is not affiliated with any person (other than a natural person) that is not a small business or small organization.99

    95 5 U.S.C. 603(a).

    96 5 U.S.C. 605(b).

    97 17 CFR 240.0-10(a).

    98 17 CFR 240.17a-5(d).

    99 17 CFR 240.0-10(c).

    The Commission believes, based on input from SBS market participants and its own information, that persons that are likely to register as SDRs would not be small entities. Based on input from SBS market participants and its own information, the Commission believes that most if not all registered SDRs would be part of large business entities, and that all registered SDRs would have assets exceeding $5 million and total capital exceeding $500,000.

    The Commission encourages written comments regarding this certification. The Commission solicits comment as to whether the proposed amendment to Rule 13n-4(a)(5) could have an effect on small entities that has not been considered. The Commission requests that commenters describe the nature of any impact on small entities and provide empirical data to support the extent of such impact.

    VI. Small Business Regulatory Enforcement Fairness Act

    For purposes of the Small Business Regulatory Enforcement Fairness Act of 1996 (“SBREFA) 100 the Commission must advise the OMB whether the proposed regulation constitutes a “major” rule. Under SBREFA, a rule is considered “major” where, if adopted, it results or is likely to result in: (1) An annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers or individual industries; or (3) significant adverse effect on competition, investment or innovation.

    100 Public Law 104-121, Title II, 110 Stat. 857 (1996) (codified in various sections of 5 U.S.C. and 15 U.S.C. and as a note to 5 U.S.C. 601).

    The Commission requests comment on the potential impact of the proposed amendment on the economy on an annual basis. Commenters are requested to provide empirical data and other factual support for their views to the extent possible.

    Pursuant to the Exchange Act, and particularly Sections 13(n) and 23(a) thereof, 15 U.S.C. 78m(n) and 78w(a), the Commission is proposing to amend rule 13n-4(a)(5), under the Exchange Act.

    List of Subjects in 17 CFR Part 240

    Reporting and recordkeeping requirements.

    Text of Proposed Amendment

    For the reasons stated in the preamble, the SEC is proposing to amend Title 17, Chapter II of the Code of the Federal Regulations as follows:

    PART 240—GENERAL RULES AND REGULATIONS, SECURITIES EXCHANGE ACT OF 1934 1. The general authority citation for part 240 continues to read as follows: Authority:

    15 U.S.C. 77c, 77d, 77g, 77j, 77s, 77z-2, 77z-3, 77eee, 77ggg, 77nnn, 77sss, 77ttt, 78c, 78c-3, 78c-5, 78d, 78e, 78f, 78g, 78i, 78j, 78j-1, 78k, 78k-1, 78l, 78m, 78n, 78n-1, 78o, 78o-4, 78o-10, 78p, 78q, 78q-1, 78s, 78u-5, 78w, 78x, 78ll, 78mm, 80a-20, 80a-23, 80a-29, 80a-37, 80b-3, 80b-4, 80b-11, 7201 et seq.; and 8302; 7 U.S.C. 2(c)(2)(E); 12 U.S.C. 5221(e)(3); 18 U.S.C. 1350; and Pub. L. 111-203, 939A, 124 Stat. 1376 (2010), unless otherwise noted.

    2. Amend § 240.13n-4(a)(5) by adding a second sentence to read as follows:
    § 240.13n-4 Duties and core principles of security-based swap data repository.

    (a) * * *

    (5) * * * Direct electronic access must be made available to the Commission using the most recent version of either the FpML schema or the FIXML schema for security-based swap data repositories as published on the Commission's Web site.

    By the Commission.

    Brent J. Fields, Secretary.

    The following will not appear in the CFR.

    Appendix Mapping of Common Data Model Concepts to FIXML and FpML Data Elements

    The common data model is informed by the current versions of the FpML and FIXML standards. Commission staff has mapped concepts in the common data model to existing data elements in both FpML and FIXML. Table 1 depicts the result of this mapping exercise for FpML version 5.9, which is considered current for the purposes of this proposal. Table 2 repeats this exercise for FIX version 5.0, Service Pack 2, which shall be considered current for the purposes of this proposal.

    Table 1—Mapping of Common Data Model Data Concepts to FpML Data Elements [When the FpML column includes a list of terms, this means that FpML expresses the concept as a combination of data elements from that list. Blank entries mean that the concept does not presently have an exact equivalent in FpML.] § 901 ref. Common data model concept FpML data elements (c)(1) Product ID productId. primaryAssetClass. secondaryAssetClass. productType. embeddedOptionType. (c)(1)(i) Asset Class primaryAssetClass. secondaryAssetClass. (c)(1)(i) Underlying Reference Asset(s) underlyingAsset. (c)(1)(i) Underlying Reference Issuer(s) referenceEntity. (c)(1)(i) Underlying Reference Index index. (c)(1)(ii) Effective Date effectiveDate. (c)(1)(iii) Scheduled Termination Date scheduledTerminationDate. (c)(1)(iv) Terms of any standardized fixed rate payments calculationPeriodAmount or
  • fixedAmountCalculation.
  • paymentDates. (c)(1)(iv) Frequency of any fixed rate payments calculationPeriodFrequency. (c)(1)(iv) Terms of any standardized floating rate payments calculationPeriodAmount. paymentDates. resetDates. (c)(1)(iv) Frequency of any floating rate payments calculationPeriodFrequency. (c)(1)(v) Custom Swap Flag nonStandardTerms. (c)(2) The date and time, to the second, of execution, expressed using Coordinated Universal Time (UTC); executionDateTime. (c)(3) The price quote. value. (c)(3) The currency in which the price is expressed currency. (c)(3) The amount(s) of any up-front payments additionalPayment. paymentType. (c)(3) The currenc(ies) of any up-front payments currency. (c)(4) The notional amount(s) notional. amount. (c)(4) The currenc(ies) in which the notional amount(s) is expressed currency. (c)(5) Inter-Dealer Swap Flag (c)(6) Intention To Clear Flag intentToClear. (c)(7) If applicable, any flags pertaining to the transaction that are specified in the policies and procedures of the registered SDR to which the transaction will be reported (d)(1) The counterparty ID [on the reporting side] onBehalfOf. partyId. (d)(1) The execution agent ID [on the reporting side], as applicable partyId. partyRole. (d)(1) The counterparty ID [on the non-reporting side] partyId. partyRole. (d)(1) The execution agent ID of each counterparty, as applicable partyId. partyRole. (d)(1) [As applicable] the branch ID of the direct counterparty on the reporting side relatedBusinessUnit. role. (d)(1) [As applicable] the broker ID of the direct counterparty on the reporting side relatedBusinessUnit. role. (d)(1) [As applicable] the execution agent ID of the direct counterparty on the reporting side relatedBusinessUnit. role. (d)(2) [As applicable] the trader ID of the direct counterparty on the reporting side relatedBusinessUnit. role. (d)(2) [As applicable] the trading desk ID of the direct counterparty on the reporting side relatedBusinessUnit. role. (d)(3) the terms of any fixed or floating rate payments, or otherwise customized or non-standard payment streams genericProduct. (d)(3) the frequency of any fixed or floating rate payments, or otherwise customized or non-standard payment streams paymentFrequency. resetFrequency. (d)(3) the contingencies of any fixed or floating rate payments, or otherwise customized or non-standard payment streams feature. (d)(4) title of any master agreement masterAgreement. masterAgreementId. (d)(4) the date of any master agreement masterAgreement. masterAgreementDate. (d)(4) the title of any collateral agreement creditSupportAgreement. identifier. (d)(4) the date of any collateral agreement creditSupportAgreement. date. (d)(4) the title of any margin agreement (d)(4) the date of any margin agreement (d)(4) the title of any other agreement contractualTermsSupplement, et al. identifier. (d)(4) the date of any other agreement contractualTermsSupplement, et al. date. (d)(5) any additional data elements included in the agreement between the counterparties that are necessary for a person to determine the market value of the transaction; (d)(6) the name of the clearing agency to which the security-based swap will be submitted for clearing partyId. partyRole. (d)(7) whether they have invoked the exception in Section 3C(g) of the Exchange Act (15 U.S.C. 78c-3(g)); endUserException. (d)(8) a description of the settlement terms cashSettlementTerms. (d)(8) whether the security-based swap is cash-settled or physically settled physicalSettlementTerms. (d)(8) the method for determining the settlement value valuationMethod. (d)(9) The platform ID, if applicable partyId. partyRole. (d)(10) the transaction ID of an allocated security-based swap originatingEvent. originatingTradeId. allocationTradeId. (d)(10) the transaction ID of a terminated security-based swap terminatingEvent. originatingTradeId. (d)(10) the transaction ID of a novated security-based swap novation. originatingTradeId. (d)(10) the transaction ID of an assigned security-based swap novation. originatingTradeId. (e)(1)(i) A life cycle event, and any adjustment due to a life cycle event, that results in a change to information previously reported pursuant to paragraph (c), (d), or (i) of this section shall be reported by the reporting side [except that the reporting side shall not report whether or not a security-based swap has been accepted for clearing] originatingEvent. trade. (e)(1)(ii) Acceptance for clearing (e)(2) All reports of life cycle events and adjustments due to life cycle events shall, within the timeframe specified in paragraph (j) of this section, be reported to the entity to which the original security-based swap transaction will be reported or has been reported and shall include the transaction ID of the original transaction originatingTradeId. (f) Time stamp, to the second, its receipt of any information submitted to it pursuant to paragraph (c), (d), (e), or (i) of this section timestamps. nonpubliclyReported. (g) A transaction ID to each security-based swap, or establish or endorse a methodology for transaction IDs to be assigned by third parties originatingTradeId.
    Table 2—Mapping of Common Data Model Data Concepts to FIXML Data Elements [When the FIXML column includes a list of terms, this means that FIXML expresses the concept as a combination of data elements from that list. Blank entries mean that the concept does not presently have an exact equivalent in FIXML.] § 901 ref. Common data model concept FIXML data elements (c)(1) Product ID Prod. SecTyp. PxDtrmnMeth. SettlMeth. SwapClss. SwapSubClss. (c)(1)(i) Asset Class CFI. (c)(1)(i) Underlying Reference Asset(s) Undly. (c)(1)(i) Underlying Reference Issuer(s) Issr. (c)(1)(i) Underlying Reference Index NdxSeries. (c)(1)(ii) Effective Date EfctvDt. (c)(1)(iii) Scheduled Termination Date TrmntDt. (c)(1)(iv) Terms of any standardized fixed rate payments PmtStrm. CalcDts. Rt. Amt. Ccy. (c)(1)(iv) Frequency of any fixed rate payments PmtDts. (c)(1)(iv) Terms of any standardized floating rate payments ResetDts. (c)(1)(iv) Frequency of any floating rate payments PmtDts. (c)(1)(v) Custom Swap Flag (c)(2) The date and time, to the second, of execution, expressed using Coordinated Universal Time (UTC) TrdRegTS. TS. Typ. Src. (c)(3) The price Px. (c)(3) The currency in which the price is expressed Ccy. (c)(3) The amount(s) of any up-front payments UpfrontPx. (c)(3) The currenc(ies) of any up-front payments (c)(4) The notional amount(s) Strm. Notl. (c)(4) The currenc(ies) in which the notional amount(s) is expressed Ccy. (c)(5) Inter-Dealer Swap Flag Pty. Typ. (c)(6) Intention To Clear Flag ClrIntn. (c)(7) If applicable, any flags pertaining to the transaction that are specified in the policies and procedures of the registered security-based swap data repository to which the transaction will be reported (d)(1) The counterparty ID [on the reporting side] Pty. ID. Src. R. R. Sub. ID. Typ. (d)(1) The execution agent ID [on the reporting side], as applicable R. (d)(1) The counterparty ID [on the non-reporting side] R. (d)(1) The execution agent ID of each counterparty, as applicable R. (d)(1) [As applicable] the branch ID of the direct counterparty on the reporting side R. (d)(1) [As applicable] the broker ID of the direct counterparty on the reporting side R. (d)(1) [As applicable] the execution agent ID of the direct counterparty on the reporting side R. (d)(2) [As applicable] the trader ID of the direct counterparty on the reporting side R. (d)(2) [As applicable] the trading desk ID of the direct counterparty on the reporting side R. (d)(3) the terms of any fixed or floating rate payments, or otherwise customized or non-standard payment streams (d)(3) the frequency of any fixed or floating rate payments, or otherwise customized or non-standard payment streams PmtDts. PmtDts. (d)(3) the contingencies of any fixed or floating rate payments, or otherwise customized or non-standard payment streams ContingencyType. (d)(4) title of any master agreement FinDetls. AgmtDesc. (d)(4) date of any master agreement AgmtDt. (d)(4) title of any collateral agreement CrdSuprtDesc. (d)(4) date of any collateral agreement CrdSuprtDt. (d)(4) title of any margin agreement (d)(4) date of any margin agreement (d)(4) title of any any other agreement CnfmDesc. BrkrCnfmDesc. (d)(4) date of any any other agreement CnfmDt. (d)(5) any additional data elements included in the agreement between the counterparties that are necessary for a person to determine the market value of the transaction (d)(6) the name of the clearing agency to which the security-based swap will be submitted for clearing R. ID. (d)(7) whether they have invoked the exception in Section 3C(g) of the Exchange Act (15 U.S.C. 78c-3(g)) ClrReqmtExcptn. (d)(8) a description of the settlement terms (d)(8) whether the security-based swap is cash-settled or physically settled SettlMeth. the method for determining the settlement value SettlNdx. SettlNdxLctn. (d)(9) The platform ID, if applicable R. ID. Src. (d)(10) the transaction ID of an allocated security-based swap AllExc. TransTyp. TrdID. (d)(10) the transaction ID of a terminated security-based swap RegTrdID. TrmTyp. TrdID. (d)(10) Novation transaction ID TrdContntn. TrdContntn. OrigTrdID. Side. (d)(10) the transaction ID of an assigned security-based swap AsgnTyp. TrdID. (e)(1)(i) A life cycle event, and any adjustment due to a life cycle event, that results in a change to information previously reported pursuant to paragraph (c), (d), or (i) of this section shall be reported by the reporting side [except that the reporting side shall not report whether or not a security-based swap has been accepted for clearing] TrdContntn. TrdContntn. (e)(1)(ii) Acceptance for clearing RskLmitChkStat. (e)(2) All reports of life cycle events and adjustments due to life cycle events shall, within the timeframe specified in paragraph (j) of this section, be reported to the entity to which the original security-based swap transaction will be reported or has been reported and shall include the transaction ID of the original transaction OrigTrdID. (f) Time stamp, to the second, its receipt of any information submitted to it pursuant to paragraph (c), (d), (e), or (i) of this section TrdRegTS. TS. Typ. Src. (g) A transaction ID to each security-based swap, or establish or endorse a methodology for transaction IDs to be assigned by third parties TrdID.
    [FR Doc. 2015-31703 Filed 12-22-15; 8:45 am] BILLING CODE 8011-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 300, 330, and 610 [Docket No. FDA-2015-N-1260] Fixed-Combination and Co-Packaged Drugs: Applications for Approval and Combinations of Active Ingredients Under Consideration for Inclusion in an Over-the-Counter Monograph AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Food and Drug Administration (FDA or the Agency) is proposing to revise its regulations on prescription fixed-combination drugs to apply the regulations to both prescription and nonprescription fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an over-the-counter (OTC) monograph. These products must meet specific evidentiary requirements for approval. The proposed revisions would harmonize the requirements for prescription and nonprescription products and make them consistent with long-standing Agency policy.

    DATES:

    Submit either electronic or written comments on this proposed rule by March 22, 2016. Submit comments on information collection issues under the Paperwork Reduction Act of 1995 (the PRA) by January 22, 2016 (see the “Paperwork Reduction Act of 1995” section of this document). See section IX of this document for the proposed effective date of a final rule based on this document.

    ADDRESSES:

    You may submit comments by any of the following methods, except that comments on information collection issues under the PRA must be submitted to the Office of Information and Regulatory Affairs, Office of Management and Budget (OMB) (see the “Paperwork Reduction act of 1995” section of this document):

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Written Submissions

    Submit written submissions in the following ways:

    Mail/Hand delivery/Courier (for paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    Instructions: All submissions received must include the Docket No. FDA-2015-N-1260 for this rulemaking. All comments received may be posted without change to http://www.regulations.gov, including any personal information provided. For additional information on submitting comments, see the “Request for Comments” heading of the SUPPLEMENTARY INFORMATION section of this document.

    Docket: For access to the docket to read background documents or comments received, go to http://www.regulations.gov and insert the docket number(s), found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    FOR FURTHER INFORMATION CONTACT:

    Diana Pomeranz, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, rm. 6208, Silver Spring, MD 20993, [email protected], 240-402-4654; or Stephen Ripley, Center for Biologics Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 71, Rm. 7301, Silver Spring, MD 20993, [email protected], 240-402-7911.

    SUPPLEMENTARY INFORMATION: Table of Contents I. Executive Summary Purpose of the Regulatory Action Summary of the Major Provisions of the Regulatory Action Costs and Benefits II. Background A. Regulatory History B. Advantages and Disadvantages of Fixed-Combinations and Co-Packaged Drugs III. Description of the Proposed Rule A. Definitions (Proposed § 300.50) B. Applicability of the Proposed Rule (Proposed § 300.51) C. Requirements of the Proposed Rule (Proposed § 300.53) D. Combining One or More Active Ingredients With a Natural-Source Drug, a Waived Product, or a Combination Already Included in an OTC Monograph (Proposed § 300.55) E. Waiver (Proposed § 300.60) F. Revision of OTC Combination Drug Provision (Proposed § 330.10(a)(4)(iv)) G. Changes to Regulations on Fixed-Combination Biological Products (Proposed § 610.17) IV. Legal Authority V. Analysis of Impacts A. Introduction B. Summary of Benefits and Costs of the Proposed Rule VI. Paperwork Reduction Act of 1995 VII. Environmental Impact VIII. Federalism IX. Proposed Effective Date X. Request for Comments XI. References I. Executive Summary Purpose of the Regulatory Action

    We are proposing to revise our existing regulations in subpart B of part 300 (21 CFR part 300) on prescription fixed-combination drugs and establish new provisions applicable to prescription and nonprescription fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an OTC monograph. Although current regulations exist for prescription fixed-combination drugs (current § 300.50 (21 CFR 300.50)) and combinations of active ingredients under consideration for inclusion in an OTC monograph (current § 330.10(a)(4)(iv) (21 CFR 330.10(a)(4)(iv)), they use slightly different language to state the same requirements. In addition, current § 300.50 does not mention co-packaged drugs even though the Agency's long-standing policy has been to apply the requirements to co-packaged drugs. The proposed revisions would harmonize the requirements for prescription and OTC products and make them consistent with long-standing Agency policy.

    Fixed-combination or co-packaged drugs are intended to provide greater effectiveness (either by having a greater effect for a single indication or by treating more than one indication) than either ingredient alone, or by having one active ingredient enhance the safety or effectiveness of another active ingredient. Under the Federal Food, Drug, and Cosmetic Act (the FD&C Act) and related regulations, FDA has the authority to require specific types of evidence demonstrating that prescription fixed-combination or co-packaged drugs and OTC ingredients used in combination provide enhanced safety or effectiveness and can be labeled as such. This proposed rule describes the requirements applicants must meet to demonstrate that their fixed-combination or co-packaged drugs are safe and effective.

    Under section 502(a) of the FD&C Act (21 U.S.C. 352(a)), prescription and OTC drugs are deemed “misbranded” if their labeling is false or misleading “in any particular.” Section 201(n) of the FD&C Act (21 U.S.C. 321(n)) states that labeling is misleading if it fails to reveal facts that are material with respect to the consequences which may result not only from the use of the product as labeled but from the use of the product under such conditions of use as are customary or usual. Information on how each ingredient in a combination contributes to the effect of the combination is a fact “material” to the consequences that may result from customary use of that product. Thus, it is within FDA's authority to require such testing as is necessary to establish the safety and effectiveness of ingredients used in combination.

    Summary of the Major Provisions of the Regulatory Action

    The proposed rule would apply to both prescription and OTC fixed-combination and co-packaged drugs that are subject to approval under a new drug application (NDA) under section 505 of the FD&C Act (21 U.S.C. 355), or a biologics license application (BLA) under section 351 of the Public Health Service Act (PHS Act) (42 U.S.C. 262), and to combinations of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330. It does not apply to individual natural-source drugs, which are drugs derived from natural raw materials, even though those drugs may contain multiple ingredients derived from the same source.

    Proposed § 300.53 sets forth the requirements for combinations of active ingredients under consideration for inclusion in an OTC monograph and prescription and OTC fixed-combination and co-packaged drugs. Under proposed § 300.53, two or more active ingredients may be combined in a fixed-combination or co-packaged drug or included as a combination in an OTC monograph when two requirements are met.

    First, under proposed § 300.53(a)(1), each active ingredient must make a contribution to the effect(s) of the combination, enhance the safety or effectiveness of an active ingredient, or minimize the potential for abuse of an active ingredient. Second, under proposed § 300.53(a)(2), the dosage of each active ingredient (amount, frequency of administration, and duration of use) must be such that the combination is safe and effective and provides rational concurrent therapy.

    Under proposed § 300.53(b)(1), applicants and “interested persons” (persons seeking a change in an OTC monograph) who seek approval of a combination must state the intended use of each active ingredient in the combination. This requirement ensures that the therapeutic purpose of all active ingredients, even those that might not be considered active ingredients in other contexts, is claimed.

    Under proposed § 300.53(b)(2), applicants and interested persons must provide sufficient evidence to demonstrate that their products meet the requirements of § 300.53(a), including evidence demonstrating the contribution of each active ingredient to the effect(s) of the combination. The amount and type of data and information needed may vary depending on a number of factors, including the therapeutic intent of the combination.

    Because there are some products for which it would be infeasible or medically unreasonable or unethical to meet the requirements of this proposed rule, proposed § 300.60 would give FDA the authority to grant a waiver of some or all of the requirements of the proposed rule at the request of an applicant or interested person or on its own initiative. In addition, FDA may grant a waiver for products that contain a subset of the components contained in a natural-source drug or a product that has already received a waiver under the proposed rule. FDA may grant a waiver of any of the requirements of proposed § 300.53 depending on the evidence submitted.

    Costs and Benefits

    The Agency has determined that this proposed rule is not a significant regulatory action as defined by Executive Order 12866.

    II. Background

    We are proposing to revise our existing regulations in subpart B of part 300 on prescription fixed-combination drugs and establish new provisions applicable to prescription and nonprescription fixed-combination and co-packaged drugs and combinations of active ingredients under consideration for inclusion in an OTC monograph.

    The proposed rule would apply to fixed-combinations (two or more active ingredients are combined at a fixed dosage in a single dosage form) of drugs (Refs. 1 to 5),1 as well as to co-packaged drugs (two or more separate drugs in their final dosage forms that are intended to be used together for a common or related therapeutic purpose and that are contained in a single package or unit) and combinations of active ingredients not already described in an OTC monograph.2

    1 For purposes of this proposed rule, we will use the term “drug” to include all products that fall under the definition of “drug” in section 201(g) of the FD&C Act, which includes biological products that meet that definition, but does not include products that meet the definition of “device” under the FD&C Act (21 U.S.C. 301, et seq.). We also consider dietary supplements that are combined into a single dosage form with, or co-packaged with, a drug to meet the definition of “drug” under section 201(g) of the FD&C Act. This proposed rule does not otherwise address nor affect FDA policy on dietary supplements.

    2 For ease of reference, the term “combination” is used throughout this preamble to refer to these types of products collectively.

    A. Regulatory History

    Current FDA regulations contain requirements applicable to fixed-combination drugs. The provisions on “fixed-combination prescription drugs for humans” are set forth in § 300.50. The requirements for fixed-combination drugs that are marketed without a prescription and that are included in the OTC Drug Review are described in § 330.10(a)(4)(iv).

    1. Fixed-Combination Drugs

    In the Federal Register of February 18, 1971 (36 FR 3126), FDA issued a “proposed statement” on fixed-combination prescription drugs. In this document, we said that the proposed statement on fixed-combination drugs was intended as amplification of the requirement that an NDA or antibiotic drug application for a fixed-combination drug must be supported by substantial evidence that each ingredient designated as active makes a contribution to the total effect that the drug combination is represented to have and purports to possess. The proposed statement was issued as a regulation and it represented the logical application of the statutory and regulatory requirements for demonstrating effectiveness to the special case of fixed-combination drug products. The proposed statement noted experts' agreement that a fixed-combination drug product must have an advantage to the patient over and above that obtained when one of the individual components is used in the usual safe and effective dose. In the Federal Register of October 15, 1971 (36 FR 20037), we adopted a revised statement on these drugs in the form of 21 CFR 3.86, which later became § 300.50 (40 FR 13494, March 27, 1975).

    Current § 300.50 explains how the requirements for demonstrating the safety and effectiveness of a drug submitted under section 505(b)(1) or (2) of the FD&C Act and subject to FDA's implementing regulations in part 314 (21 CFR part 314) apply to prescription fixed-combination drugs. Under current § 300.50(a), two or more drugs may be combined in a single dosage form when each component makes a contribution to the claimed effects and the dosage of each component (amount, frequency, duration) is such that the combination is safe and effective for a significant patient population requiring such concurrent therapy as defined in the labeling for the drug. “Special cases” of this general rule are when a component is added to enhance the safety or effectiveness of the principal active ingredient or to minimize the potential for abuse of the principal active ingredient.

    2. Drug Efficacy Study Implementation Review of Fixed-Combination Drugs

    Paragraphs (b) and (c) of current § 300.50 relate to Agency determinations about the effectiveness of drugs under the Drug Efficacy Study Implementation (DESI) review, which FDA initiated in response to the Kefauver-Harris Drug Amendments to the FD&C Act (Pub. L. 87-781). The Kefauver-Harris Drug Amendments required FDA to assess the effectiveness of drugs that the Agency had previously approved for safety under the FD&C Act between 1938 and 1962. When the fixed-combination drug regulations in § 300.50 were established in 1971 (36 FR 20037), the DESI review was ongoing for many DESI drugs. A significant number of the drugs undergoing DESI review were fixed-combination drugs. According to current § 300.50(b), if a fixed-combination drug that is the subject of an NDA approved before 1962 has not been recognized as effective by FDA based on the Agency's evaluation of the appropriate National Academy of Sciences-National Research Council (NAS-NRC) panel report,3 or if substantial evidence of its effectiveness has not otherwise been presented, changes in formulation, labeling, or dosage may be proposed, and any resulting formulation must meet the criteria in current § 300.50(a). Under current § 300.50(c), a fixed-combination prescription drug for humans is considered to be in compliance with § 300.50 if FDA has determined the drug to be effective based on evaluation of an NAS-NRC report on the fixed-combination drug.

    3 Under DESI, FDA contracted with NAS-NRC to make an initial evaluation of the effectiveness of over 3,400 products that were approved only for safety between 1938 and 1962. NAS-NRC created panels to review these drug products; the panels' reports were submitted to FDA, which reviewed and reevaluated the finding of each panel and published its findings in Federal Register notices.

    Because most of the few, still-pending DESI proceedings are in advanced stages, we do not believe that it is necessary to maintain provisions in the fixed-combination drug regulations that address the DESI review. Therefore, current § 300.50(b) and (c) are omitted from this proposed regulation. Under this proposed rule, the manufacturer of a DESI drug could still propose a change in formulation, labeling, or dosage to meet the requirements of this proposed rule, and any DESI proceeding that is still pending when the final rule publishes will be subject to the requirements of the final rule.

    3. OTC Combination Drugs

    In FDA's consideration of OTC combinations under the OTC Drug Review, the Agency has applied a standard similar to § 300.50(a) under § 330.10(a)(4)(iv) in the development of OTC monographs. An OTC drug that combines two or more safe and effective active ingredients may be generally recognized as safe and effective (GRASE) when the following criteria are met: (1) Each active ingredient makes a contribution to the claimed effect(s); (2) combining the active ingredients does not decrease the safety or effectiveness of any of the individual active ingredients; and (3) the fixed-combination, when used in accordance with labeling that provides adequate directions for use and warnings against unsafe use, provides rational concurrent therapy for a significant proportion of the target population. Combinations of active ingredients described in an OTC drug monograph may be marketed without prior Agency approval. Those combinations that are not described in a proposed tentative final monograph (TFM) or OTC monograph must either be added to the applicable OTC monograph or be approved under the NDA or abbreviated new drug application (ANDA) provisions in section 505 of the FD&C Act before they may be marketed in the United States.

    4. Requirements for Fixed Combination Drugs and OTC Combination Drugs

    Current §§ 300.50 and 330.10(a)(4)(iv) are not identical. Section 330.10(a)(4)(iv) refers to combinations of “active ingredients” rather than “components,” the term used in the prescription fixed-combination drug regulations; however, we do not believe this is a substantive difference because we have interpreted “component” in § 300.50 to mean active ingredient. Section 330.10(a)(4)(iv) specifically states that the combining of active ingredients must not decrease the safety or effectiveness of any individual active ingredient, whereas, § 300.50 does not specifically address this point. A prescription fixed-combination drug must be “safe and effective for a significant patient population requiring such concurrent therapy,” (§ 300.50(a)), while an OTC combination of active ingredients must provide “rational concurrent therapy for a significant proportion of the target population” (§ 330.10(a)(4)(iv)).

    In addition, unlike the prescription fixed-combination drug regulations, the OTC combination standard does not specifically refer to the addition of a component to enhance the safety or effectiveness, or minimize the potential for abuse, of the principal active ingredient. However, FDA's guidance document entitled “General Guidelines for OTC Drug Combination Products” (OTC combination guidance), issued in 1978 (available at http://www.fda.gov/Drugs under “Guidances (Drugs)”), states that an ingredient claimed to be a pharmacological adjuvant (i.e., to enhance or otherwise alter the effect of another active ingredient) will be considered an active ingredient and may be included as part of a combination only if it meets the requirements of § 330.10(a)(4)(iv). Because of the similarities between § 330.10(a)(4)(iv) and proposed § 300.50, we believe that combinations currently described in TFMs (which will have been proposed under the requirements of § 330.10(a)(4)(iv)) will meet the requirements of proposed § 300.50, if this proposed rule is finalized prior to the TFMs.

    This proposed rule aims to create uniform requirements for prescription and nonprescription fixed-combination and co-packaged drugs and combinations under consideration for inclusion in an OTC monograph by incorporating the concepts described in the OTC combination guidance, as well as those set forth in current § 330.10(a)(4)(iv) with those described in current § 300.50.

    B. Advantages and Disadvantages of Fixed-Combinations and Co-Packaged Drugs

    Most approved drugs contain a single active ingredient 4 that has been demonstrated to be safe and effective in treating a particular disease or condition. However, sometimes two or more active ingredients are combined to provide greater effectiveness (either as a greater effect for a single indication, such as pain, or by treating more than one indication such as pain and insomnia) than either ingredient alone, or to enhance the safety or effectiveness of one of the active ingredients. Although it is almost always possible to take the ingredients separately, the combination might be advantageous in one or more ways. For example, it might be more convenient for patients or might facilitate compliance with a prescribed regimen.

    4 As defined in § 210.3.(b)(7) (21 CFR 210.3(b)(7)) and section III.A of this proposed rule, “active ingredient” is any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body of man or other animals. The term includes those components that may undergo chemical change during the manufacture of the drug product and be present in the drug product in a modified form intended to furnish the specified activity or effect.

    Although fixed-combination drugs can provide convenience, therapeutic benefit, and even economic benefit to patients, they also have potential disadvantages. These include the lack of flexibility in adjusting the dosage of each active ingredient to an individual patient's needs, the related possibility of overexposure, or unnecessary exposure to a particular active ingredient.

    Co-packaged drugs raise similar concerns to those associated with fixed-combination drugs, including whether each product contributes to the effect of the combination, whether there is a particular patient population that requires or can benefit from such a combination, and whether the co-packaged drugs can be used together safely and effectively (i.e., the use of the products together does not raise new safety concerns or interfere with the effectiveness of any active ingredient). For example, a drug manufacturer might co-package a lipid-lowering drug with an antihypertensive drug because patients with high cholesterol often also have high blood pressure. In this case, there is an identifiable patient population that needs both drugs. Although there are existing data on the safety and effectiveness of these products individually, before approving their use in combination, FDA would want to be sure that they can be used together safely and that each does not interfere with the effectiveness of the other. It would also be possible for a monograph to allow the marketing of a co-packaged drug in which the individual drugs have been determined to be generally recognized as safe and effective and also meet the requirements of this proposed rule.5 Co-packaged day-night cough-cold products might, for example, be included in the monograph for OTC cough-cold drug products in § 341.40 (21 CFR 341.40), and the monograph could specify the appropriate labeling for the co-packaged drug, if needed.

    5 An applicant or interested person may seek to modify a final OTC drug monograph to include a co-packaged drug through a citizen petition filed in accordance with 21 CFR 10.30, or, if applicable, through a time and extent application provided for in § 330.14. Co-packaged OTC products not covered by a final monograph (or covered by a TFM pending issuance of a final monograph) or included in the OTC Drug Review would require NDA approval.

    Co-packaged drugs might also pose certain concerns that differ from those of fixed-combination drugs. These include potential confusion regarding labeling and misuse, abuse, or diversion of one of the products. An example of possible misuse is the development of drug-resistant organisms when a patient fails to properly take co-packaged anti-tuberculosis drugs. Labeling confusion could also occur where information on individual product labels is inconsistent with labeling for use of the co-packaged drugs together. Furthermore, there is concern that abuse or diversion of an active ingredient may be easier with a co-packaged drug than with a fixed-combination drug because the desired active ingredient does not need to be chemically separated from the combination. We believe that the requirements in proposed § 300.53 are sufficiently broad to encompass evaluation of these and similar concerns, and it is appropriate to apply the same requirements to co-packaged and fixed-combination drugs.

    III. Description of the Proposed Rule

    We are proposing to revise our existing regulations on prescription fixed-combination drugs and establish new provisions applicable to prescription and nonprescription fixed-combination and co-packaged drugs approved under a new drug application and to combinations of active ingredients under consideration for inclusion in an OTC monograph, in subpart B of part 300, as discussed in this document. The following is a description of the proposed regulation.

    A. Definitions (Proposed § 300.50)

    In revised § 300.50, we propose to define the following terms used in subpart B (entitled “Combination Drugs”) of part 300:

    1. Active Ingredient

    We propose to define “active ingredient” as having the meaning consistent with that used in § 210.3(b)(7), namely: Any component that is intended to furnish pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease, or to affect the structure or any function of the body of man or other animals. The term includes those components that may undergo chemical change in the manufacture of the drug product and be present in the drug product in a modified form intended to furnish the specified activity or effect (see § 210.3(b)(7)). Whether an ingredient is active or not may depend on its function in the product (e.g., human serum albumin can be a therapeutic product or can be an excipient for a protein therapeutic). The term “component” in this definition is intended to mean “any ingredient,” and FDA has consistently interpreted it in this manner in the context of fixed-combination drugs.6 We note, however, that the term “active ingredient” does not encompass adjuvants incorporated into a vaccine to enhance the antigenic response to the vaccine, since the adjuvant does not furnish independent pharmacological activity or other direct effect in the diagnosis, cure, mitigation, treatment, or prevention of disease. For combinations that include large molecules (macromolecules), each individual molecular entity would generally be considered one active ingredient. In other words, a single active ingredient may consist of one macromolecule made up of two or more different chemical entities that are covalently linked. Even if each chemical entity has a distinct activity, such macromolecules would usually be considered a single active ingredient because the covalent bond generally renders the chemical entities inseparable. Naturally derived mixtures are usually considered to contain a single active ingredient because they generally include components whose contribution to the activity of the active ingredient is not known. For the purpose of fixed-combination biological product requirements, a single molecular entity is generally considered one active ingredient.

    6 See 36 FR 3126, Feb. 18, 1971 (this statement is intended as amplification of the requirement that “a new drug . . . application for a combination drug may be refused unless there is substantial evidence that each component designated as active makes a contribution to the total effect which the drug combination is represented to have and purports to possess”).

    FDA also has long interpreted the term “other direct effect” in the definition of “active ingredient” to include nutritional effects of dietary supplements. When used as part of a fixed-combination or co-packaged drug, dietary supplements are considered to be an active ingredient in that product and subject to the requirements of this proposed rule. See footnote 1 for additional discussion of the treatment of dietary supplements as drugs when used in combination with a drug.

    2. Applicant

    We proposed to define “applicant” as any person who, to obtain approval of a fixed-combination or co-packaged drug, submits an NDA under section 505 of the FD&C Act or a BLA under section 351 of the PHS Act.

    3. Botanical Raw Material

    We propose to define “botanical raw material” as a fresh or physically processed material derived from a single part of a single species of plant,7 or a fresh or physically processed alga or macroscopic fungus that has not been genetically modified using recombinant DNA technology or any other process that deliberately changes the genome. Examples of traditional medicines derived from a single part of a single species of plant are isatis leaf (Isatis indigotica Fort.), used in traditional Chinese medicine to treat diseases with high fever and skin eruptions, tanghen root (Codonopsis pilosula (Franch.) Nannf.), used to treat diabetes; and Rauwolfia serpentine for the treatment of hypertension.

    7 If the plant from which the botanical raw material is derived is microscopic, the entire plant may be used and would be considered one part.

    We encourage the study and development of botanical substances as botanical drug products. In 2004, we issued guidance for industry, “Botanical Drug Products,” on conducting clinical studies of and submitting marketing applications for such products (69 FR 32359, June 9, 2004). The guidance is available on the Internet at http://www.fda.gov/Drugs under “Guidances (Drugs).” Using the principles explained in this guidance, we approved sinecatechin in 2006 and crofelemer in 2012, both of which are botanical new drugs.

    4. Co-Packaged Drug

    We propose to define “co-packaged drug” as a product that contains two or more separate drugs in their final dosage forms that are intended to be used together for a common or related therapeutic purpose and that are contained in a single package or unit.

    Co-packaging two or more drugs might involve, for example, putting these products into the same blister pack, carton, or box, or in separate boxes that are shrink-wrapped together. Some co-packaged drugs have separate labeling for each of the individual products; whereas, other co-packaged drugs have joint labeling. For example, co-packaged Sodium Nitrite Injection and Sodium Thiosulfate Injection (Nithiodote) are marketed for the sequential treatment of acute cyanide poisoning that is judged to be life-threatening. When sodium thiosulfate is sold as a single entity, it is labeled for sequential use with sodium nitrite for treatment of acute cyanide poisoning that is judged to be life-threatening. When sodium thiosulfate is co-packaged with sodium thiosulfate, it is singly labeled for treatment of acute cyanide poisoning that is judged to be life-threatening. The Monistat 3 Combination Pack for treatment of vaginal yeast infection is an example of a co-packaged OTC product the individual components of which are also sold individually (cool wipes, miconazole nitrate vaginal inserts, and miconazole nitrate cream). Miconazole nitrate vaginal inserts are sold separately as Monistat outside of a combination pack and are labeled for treatment of vaginal yeast infections. Similarly, miconazole nitrate cream is sold individually for treatment of vaginal itching. However, when these products are packaged together in the Monistat 3 Combination Pack, the co-packaged drug has one label for both products.

    In recent years, we have reviewed and approved several applications to market co-packaged drugs. Examples include Pravigard PAC (co-packaged pravastatin sodium tablets and buffered aspirin tablets) for reducing the occurrence of serious cardiovascular and cerebrovascular events; co-packaged peginterferon alfa-2a and ribavirin for the treatment of hepatitis C; and co-packaged bismuth subsalicylate (gastrointestinal agent), metronidazole (antiprotozoal and antibacterial agent), and tetracycline hydrochloride (antibiotic) for the treatment of patients with active duodenal ulcer associated with Helicobacter pylori infection. Because our fixed-combination drug regulations in current §§ 300.50 and 330.10(a)(4)(iv) do not specifically address the approval of co-packaged drugs, we have been responding to these applications on a case-by-case basis by applying the statutory standards for safety and effectiveness, as well as applicable regulations for new drugs.

    The Agency interprets the act of shrink-wrapping or otherwise packaging two products together, in the absence of any alternative explanation for the packaging such as “convenience” or “value” pack, to be an implied claim that the products are intended to be used together for a common or related therapeutic purpose. In the case of a dietary supplement co-packaged with a drug, the co-packaging implies that the dietary supplement is intended to be used for a therapeutic purpose, and the dietary supplement will be considered a drug under the FD&C Act (see footnote 1 for additional discussion of the treatment of dietary supplements as drugs when used in combination with a drug).

    In the absence of another explanation (such as the “convenience kit” discussed later in this section), packaging two products together makes an implied claim that they are safe and effective when used together. Without proper approval, these products are considered unapproved drugs under section 505(a) of the FD&C Act. Without approved labeling, such products would also be considered misbranded under section 502 of the FD&C Act, including under section 502(n).

    In some cases, however, OTC drugs are packaged together for convenience, such as a “travel kit” or “convenience kit” that includes an antiperspirant, an internal analgesic, toothpaste, sunscreen, and/or a sleep aid. In other cases, OTC drugs might be packaged together as two or more shrink-wrapped cartons to be sold as one unit identified as a “special value” or “value pack.” These individual drugs are not intended to be used together for a common or related therapeutic purpose. Therefore, these types of kits do not meet the proposed definition of co-packaged drug and would not be subject to the requirements of this proposed rule.

    5. Drug

    We propose to define “drug” as having the same meaning given this term in section 201(g) of the FD&C Act and including biological products as defined in section 351 of the PHS Act that also meet the definition of “drug” in section 201(g) of the FD&C Act, but not including any product that meets the definition of “device” under the FD&C Act (21 U.S.C. 301, et seq.).

    6. Fixed-Combination Drug

    We propose to define “fixed-combination drug” to mean a drug in which two or more active ingredients are combined at a fixed dosage in a single dosage form.

    We are not proposing to include individual natural-source drugs under the definition of “fixed-combination drug,” even when they may contain more than one active component. We do not believe that the current fixed-combination drug regulations were intended to or should apply to a drug that is derived from a single, naturally occurring raw material. Fixed-combination drugs involve deliberate combinations of distinct, single active ingredients, either produced synthetically or isolated and purified from a natural source.

    Examples of prescription fixed-combination drugs include the following: ARTHROTEC (diclofenac sodium and misoprostol tablets) for the treatment of osteoarthritis or rheumatoid arthritis in patients at high risk of developing nonsteroidal anti-inflammatory drug (NSAID)-induced gastric or duodenal ulcers; COMBIVIR (lamivudine and zidovudine tablets) for the treatment of HIV infection; and LOTREL (amlodipine besylate and benazepril capsules) for the treatment of hypertension (one of a large number of antihypertensive fixed-combination drugs). Examples of fixed-combination OTC drug products marketed in accordance with OTC drug monographs include, a wide variety of “cough/cold” fixed-combination drugs (containing analgesics-antipyretics, cough suppressants, decongestants, and antihistamines). Fixed-combination OTC drug products marketed under an NDA include Imodium Multi-Symptom Relief (loperamide hydrochloride and simethicone tablets), to relieve diarrhea and gas, and Pepcid Complete (famotidine, calcium carbonate, and magnesium hydroxide chewable tablets), to relieve heartburn.

    There are also certain products that, although they are composed of or derived from a single animal, botanical, prokaryotic, fungal, or viral raw material, combine two or more separated and purified active ingredients and therefore would be regarded as fixed-combination drugs subject to the requirements of proposed § 300.53. These include any products made by inducing and/or copurifying, and then combining, two or more different macromolecules derived from the same raw material where each macromolecule in the fixed-combination drug is necessary to achieve the claimed effect(s).

    Our current and long-standing policy is to apply the requirements of current § 300.50 to fixed-combination drugs that are created by combining two or more macromolecules that are separate active ingredients. It should be noted, however, that products such as whole blood, individual or pooled transfusible blood components (e.g., pooled platelets), pooled plasma products, and plasma derivatives from human or animal sources (e.g., immune globulins of general or particular specificity) would not be regarded as fixed-combination drugs, which also would be consistent with our current and long-standing policy.

    We also have a current and long-standing policy of applying the requirements of current § 300.50 to products formed by inducing and then purifying two or more macromolecules (proteins or other macromolecules) derived from the same raw material where each induced and purified protein or other macromolecule is necessary to achieve the claimed effect(s) of the product. Inducing macromolecules usually involves treating a source material to elicit the production of two or more macromolecules from a single raw material source. For example, a single animal (raw material source) might be immunized with multiple antigens to induce antibodies of multiple specificities. Another example is combining two treatments that enhance production of different proteins in one cell line, with both sets of proteins contributing to the claimed effect of the product. Even for a product created using a process in which the raw material is not manipulated, if an applicant makes claims about different specific macromolecules contained in the product, it would be considered a fixed-combination drug and the applicant would be required to demonstrate the contribution of each active ingredient to the claimed effect.

    Similarly, a product derived from the purification of an entire set of macromolecules, such as immunoglobulin derived from human plasma, would not be regarded as a fixed-combination drug.

    Copurifying macromolecules involves selective purification and extraction of multiple macromolecules away from the rest of the raw material, such as that which occurs during the development of the fibrinogen component of a fibrin/thrombin sealant product. The fibrinogen component can be isolated from plasma in such a way that it contains both fibrinogen and Factor XIII. If the copurified fibrinogen and Factor XIII are isolated and measured to determine whether each improves the performance of the other, and it is determined that they both make a contribution to the fibrin sealant (e.g., hemostatic) activity of the product, such a product would be considered a fixed-combination drug with three active ingredients: Thrombin, fibrinogen, and Factor XIII.

    7. Fungal Raw Material

    We propose to define “fungal raw material” as a physically processed culture of a single-cell or multicellular organism, including yeasts, molds, and smut.

    8. Interested Person

    We propose to define “interested person” to mean, with regard to a combination of two or more active ingredients under consideration for inclusion in an OTC monograph, any person who makes a submission under part 330 regarding safety or effectiveness.

    9. Natural-Source Drug

    We propose to define “natural-source drug” as a drug composed of one single animal, botanical, prokaryotic, fungal, or viral raw material, or derived from one such material using a manufacturing process that involves only physical steps (e.g., solvent extraction, condensation, column purification), and does not involve a chemical reaction (other than esterification, viral inactivation, or prokaryote inactivation) that would modify the covalent bonds of any substance in the original material. This would be true even though the natural-source drug may be considered to contain multiple components that may contribute meaningfully to the drug's pharmacological or therapeutic activity.

    The composition of a natural-source drug may be adjusted for assuring quality (e.g., for assuring consistency or purity), but may not be changed in a way that would affect the product's activity (e.g., by selectively increasing or decreasing the concentration of particular components). In this way, we mean to distinguish natural-source drugs from synthetic substances, including synthetic mixtures.

    Examples of natural-source drugs include the following:

    • Menotropins derived from the urine of postmenopausal women for the induction of ovulation in anovulatory infertile patients.

    • Extract from porcine thyroid glands for treating hypothyroidism.

    • Extract from porcine pancreas glands for treating pancreatic enzyme deficiency.

    • Heparin sodium derived from porcine intestinal mucosa for anticoagulant therapy in prophylaxis and treatment of venous thrombosis.

    • Psyllium husk fiber for treatment of constipation.

    • Bermuda grass pollen allergenic extract.

    • Catechins in green tea extract for treatment of genital warts.

    • Polyclonal immunoglobulin to provide protection against infectious diseases.

    • Prothrombin complex concentrate products used for urgent reversal of acquired coagulation factor deficiency induced by vitamin K antagonist therapy.

    Natural-source drugs differ from the drugs for which current § 300.50 was established in that they do not involve an intentional “combining” of active ingredients. There is no discussion of this type of drug in the regulatory history of § 300.50 or § 330.10(a)(4)(iv), and historically we have not applied the fixed-combination drug requirements to products that contain active ingredients derived from a single, naturally-occurring source. Therefore, we believe that it is appropriate to make clear in the regulations that individual natural-source drugs are not fixed-combination drugs and are not subject to this proposed rule.

    In addition, we contemplate that the raw materials contained in natural-source drugs exist in nature or result from a traditional breeding practice or a conventional laboratory gene modification technique such as ultraviolet radiation or non-targeted chemical mutagenesis. Plants or animals that are genetically modified in these ways result from a process that can produce multiple, unpredictable variants of the genome of an organism, similar to the process that occurs in nature. In contrast, genetic modification by a process involving recombinant DNA technology or any other gene modification technology produces a deliberate change to the genome of an organism. Thus, plants, animals, or microorganisms whose genetic structure has been modified by recombinant DNA technology would not be appropriate sources for natural-source drugs because the intent is to produce a particular gene product with well-defined active ingredients. Included among such products are transgenic plants, transgenic animals, and recombinant DNA-derived microorganisms and other cells.

    Similarly, we assume that the components of natural-source drugs have not been altered or deliberately mixed in a way that would change the activity or effect of the product. We understand that, for certain products, such as fish-oil mixtures or conjugated estrogens, it is important to adjust the levels of the individual components to maintain uniformity of effect and overall product quality. This kind of adjustment would not be expected to alter the effect or activity of the product and is an acceptable practice for maintaining quality. However, a product that is the result of a deliberate, selective extraction and mixing of components, even if derived from a naturally occurring raw material, does not meet the definition of natural-source drug, but rather would be considered a fixed-combination drug. These products are further described in the discussion of inducing and/or copurifying two or more different macromolecules under the definition of “fixed-combination drug” in section III.A.6.

    In addition, drugs made from multiple raw materials (such as a product made from parts of different plants) would not be considered natural-source drugs because they involve an intentional combining of multiple different raw materials, each of which might contain a separate active ingredient, for the purpose of treating a particular disease, condition, or set of symptoms. One example of such a drug is botulinum antitoxin, which is made by immunizing several horses with one of seven distinct botulinum toxins and blending the plasma from the animals to make a single product that is active against seven toxins. Mixed (multiple source) allergenic products are another example of a drug made by intentionally combining more than one raw material. Stallergenes' ORALAIR, a sublingual allergen extract, contains a mixture of freeze-dried extracts from the pollens of five grasses, including Kentucky bluegrass, orchard, perennial rye, sweet vernal, and timothy. These types of products would be subject to this proposed rule, but may be eligible for a waiver under proposed § 300.60 on the grounds that clinical trials to show that each component contributes to the effect of the combination would be scientifically infeasible.

    Finally, it is important to note that, although the requirements of proposed § 300.53 would not be applied to natural-source drugs, to obtain marketing approval of these products, an applicant would still need to provide evidence demonstrating that the natural-source drug meets the requirements for approval under section 505 of the FD&C Act or section 351 of the PHS Act, or is appropriate for inclusion in an OTC monograph.

    10. Prokaryotic Raw Material

    We propose to define “prokaryotic raw material” as a physically processed culture of bacteria or other cellular organism lacking a true nucleus and nuclear membrane. Prokaryotes are composed of bacteria and blue-green bacteria (formerly referred to as blue-green algae).

    11. Rational Concurrent Therapy

    We propose to define “rational concurrent therapy” as medically appropriate treatment for a patient population defined in the drug's labeling. That is, the defined patient population can benefit from all of the active ingredients at the specific doses present, given for a similar duration of treatment, and not be adversely affected by receiving them in combination.

    When we refer to a “defined patient population” in this definition, we mean that there is an easily identifiable patient population for the combination in question that will be specifically described in the drug's labeling. When we say that the defined patient population will not be adversely affected, we mean, for example, not adversely affected by being exposed to drugs that interact harmfully, being restricted to particular doses of a drug when a wider range of doses is needed for proper administration, and having to take two or more active ingredients as extended treatment when one or more of these ingredients may be needed only for a short period of time. Rational concurrent therapy does allow for the treatment of more than one indication, as long as there is a defined patient population for which the combination provides medically appropriate treatment.

    The requirement that the patient population be identified in the label is currently required under § 300.50, but is not currently in § 330.10. However, identifying the patient population has been the practice in circumstances when an OTC drug is only appropriate for certain patient populations, so we do not believe this proposed requirement will require a change in existing labeling for OTC monograph drugs.

    12. Single Animal Raw Material

    We propose to define “single animal raw material” as a single organ, human cell, tissue, cellular- and tissue-based product, or bodily fluid collected from any human or nonhuman animal species that has not been genetically modified using recombinant DNA technology or any other process that deliberately changes the genome. In certain cases, multiple parts of an animal may be used in a single animal raw material. For example, a drug that is derived from an invertebrate animal species (including multiple parts or all of an invertebrate animal) may be considered a single animal raw material. The organs and tissues of invertebrate species (e.g., insects) tend to be much smaller than those of most vertebrates. Consequently, with invertebrates, it is much more likely that a combination of more than one organ, tissue, or fluid—or an entire organism—will be used for various therapeutic indications.

    13. Viral Raw Material

    We propose to define “viral raw material” as a minimally processed culture of a virus. The virus in culture may exist in nature or may have been attenuated or inactivated through selection or by physical and/or chemical means.

    14. Waived Product

    We propose to define “waived product” to mean: (1) An approved fixed-combination or co-packaged product for which a waiver has been granted under § 300.60 or (2) a combination of active ingredients included in an OTC monograph that has been GRASE for which a waiver has been granted under § 300.60.

    B. Applicability of the Proposed Rule (Proposed § 300.51)

    Proposed § 300.51 states that subpart B of part 300 (currently containing the provisions on prescription fixed-combination drugs for humans) applies to both prescription and OTC fixed-combination and co-packaged drugs that are subject to approval under an NDA under section 505 of the FD&C Act, or a BLA under section 351 of the PHS Act, and to combinations of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330. It does not apply to individual natural-source drugs.

    This proposed rule applies to prescription or OTC fixed-combination or co-packaged drugs that require an NDA or a BLA for marketing approval. In addition, OTC combinations cannot be GRASE under § 330.10 unless they meet the requirements in proposed § 300.53. This means that, consistent with our current regulations, compliance with proposed § 300.53 would be necessary to add a new combination of active ingredients to an OTC monograph in accordance with § 330.10(a)(12). Or, to obtain approval of a combination of two active ingredients that are each contained in a different final monograph, an applicant may submit an NDA deviation under § 330.11, which would also have to comply with proposed § 300.53.

    The proposed rule would not apply to combination products 8 involving devices (e.g., drug/medical device or biological product/medical device combinations) and does not alter determination of primary jurisdiction for combination products under part 3 (21 CFR part 3). Part 3, entitled “Product Jurisdiction,” governs the determination of what organizational component within FDA will be designated to have primary jurisdiction for premarket review and regulation of combination products (i.e., any combination of a drug and device; a device and a biological product; a biological product and a drug; or a drug, biological product, and a device). A fixed-combination or co-packaged drug may also meet the definition of a “biological product” and be assigned to either the Center for Drug Evaluation and Research or the Center for Biologics Evaluation and Research for FDA organizational jurisdiction purposes. This does not affect the applicability of this proposed rule.

    8 As stated in this section of the document, under § 3.2 (21 CFR 3.2), a “combination product” involves a combination, under specified circumstances, of two or more regulated components in one of the following combinations: Drug/device, biological product/device, drug/biological product, or drug/device/biological product (see § 3.2(e)(1) through (4)).

    C. Requirements of the Proposed Rule (Proposed § 300.53)

    Proposed § 300.53 sets forth the requirements for combinations of active ingredients under consideration for inclusion in an OTC monograph and prescription and OTC fixed-combination and co-packaged drugs. Under proposed § 300.53, two or more active ingredients may be combined in a fixed-combination or co-packaged drug or included as a combination in an OTC monograph when the proposed requirements are met.

    First, under proposed § 300.53(a)(1), each active ingredient must make a contribution to the effect(s) of the combination, enhance the safety or effectiveness of an active ingredient, or minimize the potential for abuse of an active ingredient. Most often, two or more active ingredients are combined in a single dosage form or are co-packaged so that patients or consumers who are taking both active ingredients can more conveniently obtain the therapeutic benefits of each active ingredient. In this case, an applicant or interested person would be required to show that each active ingredient contributes to the effect(s) of the combination. In other cases, active ingredients are combined to enhance the safety or effectiveness of one or more of the active ingredients or to minimize the potential for abuse of one of the active ingredients. In these cases, an applicant or interested person would be required to demonstrate that the active ingredients perform as claimed.

    Second, under proposed § 300.53(a)(2), the dosage of each active ingredient (amount, frequency of administration, and duration of use) must be such that the combination is safe and effective and provides rational concurrent therapy. We note that, in the context of the OTC monograph, some monographs indicate that dosing for combinations should not “exceed any maximum dosage limits established for the individual ingredients in the applicable OTC drug monograph,” but remain silent on minimum dosage limits. For a combination under a monograph or proposed to be included in a monograph, to satisfy the requirements of either this proposed rule or current § 330.10(a)(4)(iv), the dosing for the individual active ingredients in the combination must not exceed the maximum dosage limits for the single entities (if these are marketed separately) and must meet the minimum effective dosage established in the monograph. For example, if the monograph specifies that an individual active ingredient is to be dosed every 4 hours, that active ingredient could not be combined with another active ingredient that is to be dosed every 6 to 8 hours because there is no way to write directions for use with a dosing interval that would achieve the minimum effective dose for both ingredients without exceeding the maximum dose for one of them.

    We note that, under section 351(d)(1) of the PHS Act, a BLA must demonstrate that the product is “safe, pure, and potent” to be approvable; whereas, section 505(d) of the FD&C Act requires proof of safety and substantial evidence of effectiveness for approval of an NDA. Nevertheless, we believe that referring to effectiveness in proposed § 300.53(a) is appropriate and consistent with statutory and regulatory provisions regarding biological products. This is because the Agency has long interpreted “potency” to include effectiveness.9

    9 21 CFR 600.3(s); see also guidance for industry on “Providing Clinical Evidence of Effectiveness for Human Drug and Biological Products,” available at http://www.fda.gov/Drugs under “Guidances (Drugs).”

    Under proposed § 300.53(b)(1), we explain that applicants or interested persons must state the intended use of each active ingredient in the combination. This requirement ensures that the therapeutic purpose of all active ingredients, even those that might not be considered active ingredients in other contexts, is claimed. As noted in footnote 1 and under the definition of “active ingredient” in section III.A.l., FDA considers a dietary supplement to be a drug and considers it to be intended to furnish a therapeutic effect when it is combined with a drug in a prescription or OTC fixed-combination or co-packaged drug or is part of a combination under consideration for inclusion in an OTC monograph.

    Under proposed § 300.53(b)(2), we explain that applicants and interested persons must provide sufficient evidence to demonstrate that their products meet the requirements of proposed § 300.53(a), including evidence demonstrating the contribution of each active ingredient to the effect(s) of the combination. The amount and type of data and information needed to demonstrate such a contribution may vary depending on a range of factors, including the types and number of active ingredients, the nature of the therapeutic intent of the product (e.g., a combination of active ingredients intended to treat the same sign or symptom; a combination of active ingredients intended to treat different, but concurrently occurring, signs or symptoms; or a combination in which one ingredient is intended only to potentiate the other ingredient that is active against the disease or condition), and whether the individual active ingredients are already approved as single agents for the same indication(s) as are sought for the fixed-combination or co-packaged drug.

    The most common scenario for development of fixed-combination or co-packaged drugs involves combining two or more drugs that are already approved for use as single agents. In these types of fixed-combination or co-packaged drugs, the drugs to be combined may be directed at the same sign or symptom of the same disease or condition, at different signs or symptoms of the same disease or condition, or at different diseases or conditions. Less often, a fixed-combination or co-packaged drug will include one approved drug and an additional active ingredient that is intended to enhance its safety or effectiveness but that has no independent therapeutic effect. For fixed-combination or co-packaged drugs that are made up of already-approved drugs, the individual drugs in the combination are generally well-characterized and development is focused primarily on characterizing the safety and effectiveness of the combination and the contribution of each component. In these cases, the data needed to demonstrate the contribution of each active ingredient to the effect of the combination could include some or all of the following: Controlled clinical trials showing a contribution of each active ingredient to the claimed effect; controlled studies showing an effect of each active ingredient on a pharmacologic parameter or biomarker considered predictive of the therapeutic effect; clinical pharmacology data; in vitro data; and/or animal model data.

    FDA is also aware of a growing interest in the development of two or more new investigational drugs (i.e., drugs that have not been previously developed) for use in combination, either as individual agents labeled for use with one another or as a fixed-combination or co-packaged drug. There is particular interest in such development for targeted cancer and anti-infective therapies. In contrast to fixed-combinations or co-packages of previously approved drugs, new investigational products are not well-characterized. Therefore, this type of development is inherently more complex and requires studies to characterize not only the combination, but also the individual agents to the extent necessary and feasible. Because of the complexity involved in development of two new investigational drugs, FDA has provided guidance to assist sponsors (see guidance for industry on “Codevelopment of Two or More New Investigational Drugs for Use in Combination,” available at http://www.fda.gov/Drugs under “Guidances (Drugs)”).

    Proposed § 300.53(c) states that the statement and evidence specified in proposed § 300.53(b) must be provided in an NDA or a BLA or, if an interested person seeks to include the combination in an OTC monograph, in a submission under part 330. The information showing that a fixed-combination or co-packaged drug meets the requirements of § 300.53 would be included in the data on effectiveness that is needed for the approval of an NDA under § 314.50(d)(5) (21 CFR 314.50(d)(5)), for the approval of a BLA under § 601.2(a) (21 CFR 601.2(a)), or for inclusion of the combination in an OTC monograph under part 330. Regarding NDAs, this would include an NDA requesting approval of an OTC combination that deviates in some respect from a final monograph in accordance with § 330.11. During the development of a fixed-combination or co-packaged drug, we may generally discuss with the sponsor what clinical trial data or other information might be needed to demonstrate that the product meets these requirements.

    In the following subsections of this document, we discuss the data and information that might be needed to demonstrate the contribution of each active ingredient to the effect of a combination. As this discussion illustrates, there is considerable flexibility in the amount and types of new or existing data that would be needed, and applicants and interested persons should provide scientific justification for the testing and data that might be needed to discuss the matter with FDA. We also understand that, in some cases, it may be medically unreasonable or unethical or scientifically infeasible to conduct new clinical studies, and existing data may not be adequate to fulfill the requirements of proposed § 300.53. In these cases, a waiver from the requirement to demonstrate the contribution of each active ingredient to the claimed effect may be an option (see proposed § 300.60).

    Finally, it is important to note that it is not always a requirement that a fixed-combination formulation be used in a factorial study. The data from a factorial study in which the individual active ingredients are administered separately can be relied upon to support an application for a fixed-combination drug if the study data is linked to a fixed-combination formulation by a bioavailability study.

    1. Combinations in Which the Individual Active Ingredients Are Directed at the Same Sign, Symptom, or Condition

    Active ingredients that have different mechanisms of action may be combined to treat the same sign, symptom, or condition if the active ingredients, when used together, can be proven to provide a benefit greater than each of the active ingredients used alone at its therapeutic dose. For such combinations, in which the effect of each active ingredient is directed at the same sign or symptom of a disease or condition, a factorial study is typically used to demonstrate that the combination has a larger treatment effect than one or more of the active ingredients alone. A factorial study for a combination of n active ingredients would ordinarily be designed to show that the n active ingredient combination is more effective than all possible n-1 active ingredient combinations. Thus, for a combination with two active ingredients, a factorial study would have three arms—the combination (AB) and the individual drugs contained within it (A) and (B)—and would be designed to demonstrate that AB has a larger effect than A alone and B alone (AB versus A and AB versus B). For a combination with four active ingredients, a factorial design would compare the combination (ABCD) to all possible three-drug combinations of the four active ingredients (ABC, ABD, ACD, and BCD).

    If a factorial study is needed to demonstrate the contribution of each active ingredient in a combination, and the individual active ingredients are all previously approved and the magnitude and duration of effect of each active ingredient is well characterized, it may be possible to conduct a study of shorter duration than was required for initial approval. It also may be possible to study the effect of the combination on a subset of the endpoints used for approval of the active ingredients, or even a different endpoint such as a pharmacological endpoint, if the active ingredient is well understood.

    In certain cases, a new factorial study may not be needed. For example, FDA guidance for industry on the development of combinations of antiretrovirals for the treatment of HIV describes situations in which existing data can be used to demonstrate the contribution of the individual active ingredients, including clinical data on use of the individual ingredients in a combination, in clinical pharmacologic data, and in nonclinical data (Ref. 6). As discussed in that guidance, for a fixed combination of two previously approved drugs in this class, new clinical data would ordinarily be needed only to demonstrate that the bioavailability of the fixed-combination drug is comparable to that of the active ingredients administered individually. The same would be true for a co-packaged drug developed for the treatment of HIV.

    The guidance also points out that, in some cases, it may be possible to use data from a previously approved fixed-combination drug to partially support an application for a new fixed-combination drug if the previously approved product is similar to the new product. Similarly, FDA guidance on demonstrating efficacy of fibrin sealant products recommends that overall efficacy of a fixed-combination fibrin sealant drug be demonstrated in clinical trials, but provides that the contribution of each active ingredient may be demonstrated using nonclinical methods (Ref. 7).

    In some cases, it may not be possible to conduct a factorial study because the study would be unethical. For example, it would be unethical to conduct a factorial study with a mortality or heart attack outcome comparing a fixed-combination drug with two active ingredients to its individual active ingredients if both active ingredients have established beneficial effects on mortality or major morbidity endpoints (e.g., an antiplatelet drug and a lipid-lowering drug that each reduce the risk of death, stroke, and heart attack). In that case, subjects randomized to the single-drug groups would be denied therapy that is known to decrease the incidence of major cardiovascular events and death. On the other hand, a short-term study of the platelet-inhibiting and lipid-lowering effects of the combination would be ethical and might support outcome claims, depending on available data or concomitant use of the drugs. Similarly, it may not be possible to compare an antiviral fixed-combination drug to the individual active ingredients if there is known rapid development of resistance to monotherapy. It also may not be needed if the studies of the single entities used together show improved long-term effectiveness.

    In the case of combinations for which a factorial design is not possible, different approaches could be used to satisfy the requirement to demonstrate the contribution of each active ingredient to the effect of the combination by identifying an existing population in which the added effect of one of the active ingredients could be established. For example, for a fixed-combination drug containing an older antiplatelet active ingredient and a newer lipid-lowering active ingredient, existing studies of the lipid-lowering active ingredient may have included substantial subsets of subjects who were all receiving the antiplatelet active ingredient and who were randomized to the lipid-lowering active ingredient or placebo. These subsets could potentially be used to demonstrate the added contribution of the lipid-lowering active ingredient. Or, if there were a newer antiplatelet drug (approved after the lipid-lowering active ingredient), there may be studies in which its effect when added to the lipid-lowering active ingredient had been established. In theory, the data from these studies may be adequate to support a general conclusion that a lipid-lowering active ingredient and an antiplatelet active ingredient can be expected to have independent and additive effects when used in combination.

    There are also practical constraints on the use of a factorial design as the number of active ingredients in a combination increases. The greater number of active ingredients in a combination, the greater number of comparisons must be performed to demonstrate that each active ingredient contributes to the effect of the combination. At some point, a factorial study design becomes infeasible. The approximate overall power of a factorial study equals the power of the individual comparisons raised to the nth power (exponent) where n is the total number of comparisons. So, demonstrating the contribution of each active ingredient of a five-ingredient combination requires five pair-wise comparisons—the full combination (ABCDE) compared to each of the possible combinations of the individual active ingredients (ABCD, ABCE, ABDE, ACDE, and BCDE). If each of the comparisons is powered at 90 percent, there is a 90 percent probability that any given comparison will reject the null (no-difference) hypothesis assuming the alternative hypothesis is true (i.e., there is a difference), but only about a 60 percent probability that all five null hypotheses will be simultaneously rejected (i.e., a 40 percent chance that one of the five comparisons will be an erroneous result). In general, for combinations with multiple active ingredients, each individual comparison in a factorial study should be sufficiently powered so that the overall power is at least 80 percent. However, it may not be feasible to enroll the number of subjects needed to provide sufficient power. If the number of active ingredients in a combination renders a factorial design infeasible, it may be possible to use data from studies evaluating combinations that contain only some of the active ingredients. It also may be possible to use, other types of clinical and nonclinical data and mechanistic information may be available to demonstrate the contributions of the individual active ingredients to the effect of the combination.

    Active ingredients that have the same mechanism of action and are directed at the same sign or symptom of a disease or condition should not ordinarily be combined unless there is some advantage over the individual active ingredients in terms of enhanced effectiveness, safety, patient acceptance, or quality of formulation. Thus, simply using half-doses of two pharmacologically similar drugs would not overcome the disadvantages of putting them in a fixed-combination unless the lower doses of the drugs had some advantages, such as fewer or different adverse events or greater effectiveness.

    2. Combinations in Which One Active Ingredient Is Intended To Provide a Direct Effect That Enhances the Safety or Effectiveness of Another Active Ingredient

    For combinations in which one active ingredient is intended to: (1) Provide a direct effect that either potentiates or makes another active ingredient more tolerable (e.g., using carbidopa to provide a lower dose of levodopa to minimize side effects), (2) minimize an adverse reaction associated with another active ingredient (e.g., using pyridoxine to minimize the toxicity of isoniazid), or (3) reduce the abuse potential associated with another active ingredient (e.g., using an opioid antagonist to reduce the abuse potential of an oral opioid product following manipulation for purposes of abuse), a clinical trial comparing the combination to the disease-active ingredient alone would usually be necessary to demonstrate the contribution of each active ingredient. The trial would have to establish enhanced safety or effectiveness of the combination versus the disease-active ingredient alone. This would be true whether or not the disease-active ingredient has already been proven to be effective.

    3. Combinations in Which Active Ingredients Are Directed at Different Signs or Symptoms of a Disease or Condition

    A factorial study is unlikely to be needed to demonstrate the contribution of each active ingredient in a combination where the active ingredients are directed at different signs or symptoms of a disease or condition. Instead, evidence that demonstrates that the active ingredients are effective individually and do not interfere with one another (e.g., pharmacokinetic data) is likely to be adequate to demonstrate the contribution of each active ingredient in this case. However, if there is a real possibility that an active ingredient could affect the safety or effectiveness of another active ingredient (e.g., an active ingredient intended to treat cough might interfere with the effect of a nasal decongestant), a factorial study or other data would probably be needed to demonstrate that the safety or effectiveness of any of the active ingredients is not diminished by combining them.

    Many OTC drug monographs, such as the cold cough, allergy, bronchodilator, and anti-asthmatic drug products monograph (part 341), describe acceptable combinations of active ingredients directed at different symptoms arising from a single condition, such as a cold. One example of this would be a fixed-combination drug containing an antipyretic, an antitussive, and a nasal decongestant directed at fever, cough, and congestion, respectively. Combinations such as this, directed at different signs or symptoms of the same disease or condition, would generally not need a factorial study because each active ingredient would be expected to have its usual, independent effect on a particular symptom, and would not be expected to affect the other symptoms.

    4. Combinations in Which the Active Ingredients Are Directed at Different Diseases or Conditions

    For combinations in which the active ingredients are directed at different diseases or conditions (e.g., common comorbid diseases), it would also generally be expected that each active ingredient would have its usual and independent effect on the disease or condition. Thus, for these types of combinations, it would usually be possible to rely on data demonstrating that the active ingredients are safe and effective when used independently and that no active ingredient interferes with the effect of another. This requirement can usually be satisfied by pharmacokinetic data.

    D. Combining One or More Active Ingredients With a Natural-Source Drug, a Waived Product, or a Combination Already Described in an OTC Monograph (Proposed § 300.55)

    Proposed § 300.55(a) states that, when a natural-source drug is combined with any other type of active ingredient, the natural-source drug will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53. This section is intended to make clear that, for a combination of a natural-source drug and any other active ingredient, proposed § 300.53 would not be interpreted to apply to the components of the natural-source drug.

    Proposed § 300.55(b) states that, when a natural-source drug is combined with one or more additional natural-source drugs, each natural-source drug in the combination will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53. This is intended to clarify that, when a natural-source drug is combined with another such product, proposed § 300.53 would not be interpreted to apply to the components in the natural-source drugs.

    Proposed § 300.55(c) states that, when a waived product is combined with any other type of active ingredient, the waived product will be considered a single active ingredient for the purposes of fulfilling the requirements of § 300.53. This is intended to clarify that, when a waived product is combined with any other active ingredient, proposed § 300.53 would not be interpreted to apply to the components of the waived product. Waived products are discussed in section III.E.

    It is likely that many of these types of combinations would be eligible for a waiver under § 300.60, as discussed in section III.E.

    E. Waiver (Proposed § 300.60)

    Proposed § 300.60(a) states that “FDA may, at the request of an applicant or interested person or on its own initiative, grant a waiver of any of the requirements under § 300.53 with regard to a fixed-combination or co-packaged drug that is the subject of a pending application under section 505 of the FD&C Act or section 351 of the PHS Act, or a combination of active ingredients under consideration for inclusion in an OTC monograph in accordance with part 330, if it finds one of the following: (1) There is a reasonable rationale for the combination of the individual active ingredients, and compliance with any of the requirements of § 300.53 would be infeasible or medically unreasonable or unethical; or (2) the product contains all or a subset of the known or probable components in the same ratio as a natural-source drug or a waived product, provided the product is intended for the same conditions of use as the natural-source drug or the waived product; there is a reasonable basis to conclude that the product would provide a comparable clinical effect to the natural-source drug or the waived product; and, for products containing large molecules (macromolecules), the ingredients have the same principal molecular structural features and overall mechanism of action.”

    Applicants or interested persons may be granted a waiver from some or all of the requirements of proposed § 300.53, depending on the evidence submitted.

    1. Reasonable Rationale

    Proposed § 300.60(a) requires that there be a reasonable rationale for the combination of the individual active ingredients in the proposed combination. This requirement ensures that all of the active ingredients in combinations that receive a waiver are appropriate and not extraneously added to the combination in the hope of receiving a waiver. Applicants might fulfill this requirement by referring to existing knowledge or providing data from in vitro or in vivo studies in animals or humans.

    2. Infeasibility

    Compliance with the requirements of § 300.53 might be infeasible if a proposed combination has so many active ingredients that a factorial study