Federal Register Vol. 80, No.61,

The Commission published a document in the Federal Register of March 23, 2015 (80 FR 15157), revising certain of its rules of practice. The document contained an incorrect paragraph reference in amendatory instruction 17 that referenced “(a)(10)(viii)” instead of “(b)(10)(viii).” This document corrections the erroneous paragraph reference.

For the reasons set forth in the preamble, the Federal Trade Commission amends title 16, chapter I, subchapter A of the Code of Federal Regulations as follows:

I. Background

The Children's Gasoline Burn Prevention Act. The Children's Gasoline Burn Prevention Act was enacted on July 17, 2008. The Act establishes as a consumer product safety rule ASTM International's (ASTM) F2517-05's child-resistance requirements for closures on portable gasoline containers. All portable gasoline containers manufactured on or after January 17, 2009 for sale to consumers in the United States must conform to the 2005 ASTM standard's child-resistance requirements. By mandating closures that resist access by children under age 5, the Act seeks to reduce hazards to children, including children ingesting gasoline and inhaling gasoline fumes, and the risk of burns from fires and explosions that may occur when children access gasoline stored in portable gasoline containers. The Act did not require the Commission to take any action for the Act's provisions to take effect; rather, ASTM 2715-05's child-resistance requirements were made mandatory through operation of law, as discussed below.

ASTM F2517-05. Under ASTM F2517-05, Standard Specification for Determination of Child Resistance of Portable Fuel Containers for Consumer Use, closures on affected containers must prove adequately resistant to children as old as 4 years and 3 months.

CGBPA Provisions Regarding Updates to ASTM F2517-05. Under the Act, ASTM must notify the Commission of any revision to the child-resistance requirements for closures contained in ASTM F2517-05. Once ASTM notifies the CPSC of ASTM's revisions to the standard, the revisions will be incorporated by operation of law and will become the consumer product safety standard within 60 days after such notice unless the Commission determines that the revision does not carry out the purposes of the child-resistant requirements for closures on portable gasoline containers specified in ASTM F2517-05 and so notifies ASTM.

Under the Act, the ASTM standard for portable gasoline containers became, by operation of law, the applicable consumer product safety standard. Similarly, any revision to the child-resistance requirements of the ASTM standard becomes, by operation of law, part of the applicable consumer product safety standard unless the Commission determines, within 60 days after receiving notice from ASTM of a revised ASTM standard, that the revisions are not acceptable as provided in the Act.

On February 11, 2015, ASTM gave to CPSC notice of revisions to ASTM F2517-05. The revised standard is designated F2517-15.

The Commission has not made a determination that the revisions to ASTM F2517-05's child-resistance requirements for closures on portable gasoline containers fail to further the purposes of the CGBPA's requirements.

The rule codifies the child-resistance requirements for closures on portable gasoline containers as stated in ASTM F2517-15. As stated above, these requirements become mandatory through operation of law; the Commission is publishing this rule so that the Code of Federal Regulations will reflect the current version of the mandatory standard.

The Commission is issuing this rule as a direct final rule. Although the Administrative Procedure Act (APA) generally requires notice and comment rulemaking, section 553 of the APA provides an exception when the agency, for good cause, finds that notice and public procedure are “impracticable, unnecessary, or contrary to the public interest.” The Administrative Conference of the United States (ACUS) endorsed direct final rulemaking as an appropriate procedure to expedite promulgation of rules that are noncontroversial and that are not expected to generate significant adverse comment. See ACUS, Recommendation, 95-4, 60 FR 43108, 43110 (August 18, 1995).

This rule will codify in the Code of Federal Regulations the child-resistance requirements of a consumer product safety standard, ASTM F2517-15, that already are in full force and effect by operation of law. Codification of the rule into CPSC's regulations is intended to eliminate potential confusion as to the child-resistance standard applicable to portable gasoline containers. In these circumstances where the substantive requirements are mandated by statute and have become effective under the statute, public comment serves little purpose. Moreover, codification of existing substantive requirements is not expected to be controversial or to result in significant adverse comment. As a result, the Commission believes that issuance of a rule codifying the revised standard in these circumstances is appropriate.

Unless we receive a significant adverse comment by April 3, 2015, the rule will become effective on April 12, 2015. In accordance with ACUS's recommendation, the Commission considers a significant adverse comment to be one in which the commenter explains why the rule would be inappropriate, including an assertion challenging the rule's underlying premise or approach, or a claim that the rule would be ineffective or unacceptable without change. Should the Commission receive a significant adverse comment, the Commission would withdraw this direct final rule. Depending on the comments and other circumstances, the Commission may then incorporate the adverse comment into a subsequent direct final rule or publish a notice of proposed rulemaking providing an opportunity for public comment.

Section 1460.3 of the final rule provides that closures on portable gasoline containers must comply with the child-resistance requirements of ASTM F2517-15. The Office of the Federal Register (OFR) has regulations concerning incorporation by reference. 1 CFR part 51. The OFR recently revised these regulations to require that, for a final rule, agencies must discuss in the rule's preamble ways that the materials the agency incorporates by reference are reasonably available to interested persons and how interested parties can obtain the materials. In addition, the preamble of the rule must summarize the material. 1 CFR 51.5(b).

In accordance with the OFR's requirements, the discussion in this section summarizes the provisions of ASTM F2517-15. Interested persons may purchase a copy of ASTM F2517-15 from ASTM, either through ASTM's Web site or by mail at the address provided in the rule. One may also inspect a copy of the standard at the CPSC's Office of the Secretary, U.S. Consumer Product Safety Commission, or at the National Archives and Records Administration (NARA), as discussed in the rule.

The CPSC is incorporating by reference child-resistance requirements of ASTM F2517-15 pursuant to the Act because the Commission has determined that the revised standard carries out the purposes of the child-resistant requirements for closures on portable gasoline containers specified in ASTM F2517-05.

The revised standard, ASTM F2517-15, contains:

As discussed in the preceding section, this is a direct final rule. Unless the Commission receives a significant adverse comment by April 3, 2015, the rule will become effective on April 12, 2015.

The Regulatory Flexibility Act (RFA) generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements under the Administrative Procedure Act or any other statutes unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603 and 605. This rule merely codifies requirements that will take effect through operation of law as specified in the CGBPA. The rule does not impose any requirements beyond those put in place by the CGBPA. Thus, the rule does not create new substantive obligations for any entity, including any small entity. Accordingly, the Commission certifies that the rule will not have a significant impact on a substantial number of small entities.

The Commission's regulations provide a categorical exclusion for the Commission's rules from any requirement to prepare an environmental assessment or an environmental impact statement because they “have little or no potential for affecting the human environment.” 16 CFR 1021.5(c)(2). This rule falls within the categorical exclusion, so no environmental assessment or environmental impact statement is required.

This direct final rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) is not required.

Section 26(a) of the Consumer Product Safety Act (CPSA), 15 U.S.C. 2075(a), provides that where a “consumer product safety standard under [the CPSA]” is in effect and applies to a product, no state or political subdivision of a state may either establish or continue in effect a requirement dealing with the same risk of injury unless the state requirement is identical to the federal standard. (Section 26(c) of the CPSA also provides that states or political subdivisions of states may apply to the Commission for an exemption from this preemption under certain circumstances).

As discussed above, under the CGBPA, the child-resistance requirements of ASTM F2517-15 became a consumer product standard for CPSA purposes. Children's Gasoline Burn Prevention Act, Pub. L 110-278, Sec. 2(a) (July 17, 2008). The child-resistance requirements of ASTM F2517-15, which will be codified under this rule, will invoke the preemptive effect of section 26(a) of the CPSA.

Section 14(a) of the CPSA requires that products subject to a consumer product safety rule under the CPSA, or to a similar rule, ban, standard, or regulation under any other act enforced by the Commission, be certified as complying with all applicable CPSC requirements. 15 U.S.C. 2063(a). Such certification must be based on a test of each product, or on a reasonable testing program. Because ASTM F2517-15 is deemed a “consumer product safety rule” for CPSA purpose, portable gasoline containers manufactured on or after April 12, 2015 are subject to the testing and certification requirements of section 14 of the CPSA with respect to ASTM F2517-15.

For the reasons stated above, the Commission adds part 1460 to subchapter B of title 16 of the Code of Federal Regulations to read as follows:

A. Background

Beginning with section 318 of the Department of Housing and Urban Development Appropriations Act, 2006 (Pub. L. 109-115, 119 Stat. 2396, approved November 30, 2005), HUD appropriations acts have contained a general provision authorizing the Secretary to approve requests from project owners for the transfer of certain rental assistance, debt, and income-based use restrictions between HUD-assisted projects. For fiscal years 2014 and 2015, this transfer authority is provided under section 214 of Title II of Division L of the Consolidated Appropriations Act, 2014 (Pub. L. 113-76, 128 Stat. 5, approved January 17, 2014) (Section 214).1 Section 214(a) states that “[n]otwithstanding any other provision of law . . . the Secretary of Housing and Urban Development may authorize the transfer of some or all project-based assistance, debt held or insured by the Secretary and statutorily required low-income and very low-income use restrictions if any, associated with one or more multifamily housing project or projects to another multifamily housing project or projects.” Section 214(b) also allows for phased transfers of project-based assistance to accommodate the financing and other requirements related to rehabilitating or constructing the project or projects to which the assistance is transferred.

HUD approval of transfers is subject to the conditions enumerated in the appropriations act for the applicable fiscal year. These statutory terms and conditions have, in general, been consistent from one appropriations act to the next. The statutory criteria for fiscal years 2014 through 2016 are enumerated in Section 214(c), which provides as follows:

• The transfer authorized in subsection (a) is subject to the following conditions:

○ NUMBER AND BEDROOM SIZE OF UNITS.—

○ The transferring project shall, as determined by the Secretary, be either physically obsolete or economically nonviable.

○ The receiving project or projects shall meet or exceed applicable physical standards established by the Secretary.

○ The owner or mortgagor of the transferring project shall notify and consult with the tenants residing in the transferring project and provide a certification of approval by all appropriate local governmental officials.

○ The tenants of the transferring project who remain eligible for assistance to be provided by the receiving project or projects shall not be required to vacate their units in the transferring project or projects until new units in the receiving project are available for occupancy.

○ The Secretary determines that this transfer is in the best interest of the tenants.

○ If either the transferring project or the receiving project or projects meets the condition specified in subsection (d)(2)(A),2 any lien on the receiving project resulting from additional financing obtained by the owner shall be subordinate to any FHA-insured mortgage lien transferred to, or placed on, such project by the Secretary, except that the Secretary may waive this requirement upon determination that such a waiver is necessary to facilitate the financing of acquisition, construction, and/or rehabilitation of the receiving project or projects.

○ If the transferring project meets the requirements of subsection (d)(2),3 the owner or mortgagor of the receiving project or projects shall execute and record either a continuation of the existing use agreement or a new use agreement for the project where, in either case, any use restrictions in such agreement are of no lesser duration than the existing use restrictions.

○ The transfer does not increase the cost (as defined in section 502 of the Congressional Budget Act of 1974, as amended) of any FHA-insured mortgage, except to the extent that appropriations are provided in advance for the amount of any such increased cost.

HUD has exercised the transfer authority on a case-by-case basis, determining compliance with the statutory criteria based on the specific circumstances of the projects. Most of the statutory criteria are prescriptive, leaving little room for the exercise of agency discretion (for example, the requirement that the transfer not increase the cost of any FHA-insured mortgage). Others, however, are more generally phrased, allowing for HUD interpretation in applying the criteria (for example, the requirement that the transferring project be either physically obsolete or economically nonviable, “as determined by the Secretary”). Over time, HUD has developed uniform guidelines to facilitate the review of transfer requests and aid in determining compliance with the statutory criteria.

Section 214(e)(1) requires that HUD publish by notice in the Federal Register the terms and conditions for HUD approval of transfers, no later than 30 days before such notice takes effect. This notice is being issued in accordance with the publication requirements of Section 214(e)(1). HUD believes that publication of the criteria will assist project owners in determining whether a transfer is appropriate given the specific circumstances of their multifamily projects. Publication of the criteria will also facilitate HUD's review of transfer requests by helping owners formulate their requests in a manner that adequately address the statutory criteria.

Owners of multifamily housing projects, as defined by subsection (d)(2) of Section 214, who wish to request a transfer of rental assistance, debt, or income-based use restrictions under Section 214 should submit a package containing the relevant materials outlined below to the HUD Hub/Program Center or Regional Center/Satellite Office for review. Owners can submit packages for review on or after the effective date of this notice. HUD will issue a subsequent Housing notice detailing procedural submission requirements and will follow this notice with a proposed rule to solicit comment before regulatory codification of these criteria.

Commencing for transfer requests submitted pursuant to Section 214, HUD will evaluate the request, on a case-by-case basis, in accordance with the following criteria. The receiving property must be a multifamily housing project prior to or as a result of the Section 214 transfer. The receiving project may already be HUD-affiliated, meaning it has existing HUD project-based rental assistance, an existing use restriction, or debt (either HUD-held or FHA-insured). HUD will approve a transfer under Section 214 to a HUD-affiliated property if the receiving property is in compliance with all business agreements with the Department or has a HUD-approved plan in place to correct any identified deficiencies. The receiving property may be existing, under construction, newly constructed, undergoing substantial rehabilitation, or undergoing moderate rehabilitation. Before Section 8 project-based rental assistance is transferred to the receiving property, the property must exist and be habitable (as demonstrated by a certificate of occupancy or like documentation). The numbered items below track the statutory criteria and, where HUD has been granted flexibility, establishes requirements and guidance on how HUD will assess compliance with the statutory factors.

For occupied units in the transferring project: The number of low-income and very low-income units and the configuration (i.e. bedroom size) provided by the transferring project shall be no less than when transferred to the receiving project or projects. The receiving owner 4 must provide detailed information about the number of units and the corresponding unit size occupied by low-income and very-low income families respectively, as well as the proposed number of units for low and very-low income families and the corresponding unit configuration at the receiving project. In determining compliance with this requirement, HUD will consider the number of units occupied by low and very low-income families and their respective unit sizes, as well as whether the size of the occupied units is appropriate for the family size occupying those units. The net dollar amount of Federal assistance provided to the transferring project shall remain the same in the receiving project or projects. HUD Multifamily Hub/Program Center or Regional Center/Satellite Office staff will verify that the net dollar amount of Federal assistance transferred remains the same in the receiving project or projects.

For unoccupied units in the transferring project: HUD may authorize a reduction in the number of dwelling units in the receiving project or projects to allow for a reconfiguration of bedroom sizes to meet market demands, as demonstrated by the transferring owner, provided there is no increase in the project-based assistance budget authority. HUD Multifamily Hub/Program Center or Regional Center/Satellite Office staff will verify that the net dollar amount of Federal assistance transferred remains the same in the receiving project or projects. The transferring owner shall provide justification for a reduction in the number of dwelling units in one or more of the following ways:

a. Evidence of all efforts to market the unit type proposed for reduction and evidence of the demand within the geographic market area for the proposed new unit type. The documentation may include evidence of the transferring owner's efforts, including:

i. Property traffic reports.

ii. Advertising details.

iii. Age and/or income waivers requested.

iv. Local housing authority wait list information or other affordable housing provider contacts made demonstrating that there is minimal or no demand for the unit type.

b. Documentation that the average vacancy at the transferring property has been 25 percent or more over the past 24 months.

c. Any other documentation that a reduction in the number of dwelling units is necessary to meet market demand, and approved by HUD.

Physical obsolescence shall be shown in one or more of the following ways:

a. A Real Estate Assessment Center (REAC) physical inspection score of 30 or below.

b. Two or more consecutive REAC physical inspection scores of below 60.

c. Condemnation or other such notice by the local or state government rendering the property uninhabitable.

d. A taking through eminent domain.

e. Evidence that needed capital repairs cannot be made without the property losing financial viability.

f. Any other proof of physical obsolescence provided by the owner and approved by HUD.

Economic non-viability must be shown in one or more of the following ways:

a. A market analysis justifying the inability of the property to meet current HUD-imposed affordability restrictions.

b. A market analysis indicating limited to no market for the unit type(s).

c. A demonstrated average vacancy of 25 percent or more over the past 24 months.

d. Any other proof of economic non-viability provided by the owner and approved by HUD.

The transferring owner is required to certify in writing that the material submitted to demonstrate compliance with this criterion is true and accurate. The Multifamily Hub/Program Center will review all submitted information and verify its accuracy.

The receiving project or projects must have a REAC physical inspection score of 60 or above. If the project does not have a current REAC physical inspection score, an inspection must be conducted prior to the transfer and the project must score 60 or above or have a HUD-approved plan in place to correct any deficiencies.

The receiving project must also meet all applicable accessibility requirements, including, but not limited to the accessibility requirements of the Fair Housing Act, section 504 of the Rehabilitation Act, and Title II of the Americans with Disabilities Act. The owner must provide documentation acceptable to HUD that the receiving project is in compliance with all applicable accessibility requirements. The HUD Hub/Program Center or Regional Center/Satellite Office will review the submitted documentation and verify acceptability.

The transferring owner must give the tenants and legitimate tenant organization(s) written notification of the proposed transfer and provide a minimum 30-day comment period. HUD will not accept a Section 214 request for any project unless the transferring owner has notified the tenants of the proposed transfer and has provided the tenants with an opportunity to comment on the proposed transfer.

a. The notification should include the address and phone of the appropriate HUD office, including the specific division and/or name and phone number of a contact at the appropriate HUD office. The notification should be provided in appropriate formats as necessary to meet the needs of all, including persons with limited English proficiency and formats for persons with vision, hearing, and other communication-related disabilities (e.g., Braille, audio, and large type, sign language interpreters, assistive listening devices, etc.).

b. The notification will include a description of the impact of the request on tenants' rental assistance and tenant contributions. The notification must also explain the tenants' relocation rights and responsibilities, including the assistance that tenants may become eligible to receive under the Uniform Relocation Act if acquisition, rehabilitation or demolition are involved (see section five below). In addition, the notification must inform the tenants that if a Section 8 project-based rental assistance contract will be transferred, and it assists the unit they inhabit, they may be eligible for tenant protection vouchers if they choose not to relocate (see Section C below).

c. The notice must be delivered directly to each unit in the project or mailed to each tenant and posted in at least 3 places/common areas throughout the project, including any project office. In a project greater than 4 stories, the notice may be served either by delivery to each unit or by posting. If the posting method is used, the notice must be posted in at least three conspicuous places within each building in which the affected dwelling units are located.

i. The tenants (including any legal or other representatives acting for the tenants individually or as a group) have the right to inspect and copy the materials that the owner is required to submit to HUD for a period of 30 days from the date on which the notice is served to the tenants. Any tenant comments must be available in the project office during normal business hours for public reading and copying.

ii. The tenants have the right, during this period, to submit written comments on the transfer to the transferring owner and the appropriate HUD office. Tenant representatives may assist tenants in preparing these comments.

d. The transferring owner must hold a meeting with the tenants and legitimate tenant organizations to discuss the details of the notification and answer questions.

e. Upon completion of the tenant comment period, the transferring owner must review the comments submitted by the tenants and their representatives and prepare a written evaluation of the comments. Any negative comments must be addressed. The transferring owner must then submit the following materials to the appropriate HUD office at the time of submission of the request for transfer under Section 214:

i. A copy of the transferring owner's Notification to the tenants;

ii. A sign-in sheet from the tenant meeting;

iii. A copy of all the tenant comments;

iv. The transferring owner's evaluation of the tenant comments and any responses the owner gave to negative comments; and

v. A certification by the transferring owner that it has complied with all of the requirements of 24 CFR 245.410, 245.415, 245.416 through 245.419, as applicable, and 245.420. The transferring owner must identify any Fair Housing litigation settlement agreements, voluntary compliance agreements, or other remedial agreements signed by the owner and HUD. The Office of Fair Housing and Equal Opportunity (FHEO) will ensure there is no conflict between the agreements and the proposed transfer. If there is a conflict, the transferring owner may propose modifications to the remedial agreement as part of the transfer proposal.

The owner must also provide a certification of approval from the relevant local government officials, which may include but are not limited to the:

a. Local Mayor.

b. City Council.

c. Planning Commission.

d. Health and Human Services Commission.

e. Any other pertinent local government official or government body.

Although in some cases, a certification of approval may be required from multiple local governmental officials, there must be at least one certification of approval from at least one local government official in all cases to warrant approval of a request for transfer of assistance, debt, or use restrictions.

The tenants of the transferring project who remain eligible to receive assistance will not be required to vacate their units in the transferring project until new units in the receiving project are available for occupancy. If tenants must move as a direct result of acquisition, rehabilitation or demolition in connection with a transfer of assistance under Section 214, the Uniform Relocation Assistance and Real Property Acquisition Policies Act of 1970, as amended (URA) may apply.

HUD will review tenant relocations and protections on a case-by case-basis to ensure tenants are protected from permanent displacement. Under no circumstances shall the residents pay for any relocation costs incurred as a result of the transfer and the resulting move to the receiving property. It is within the owner's discretion whether to pay relocation costs for relocations to locations other than the receiving property. A Section 214 transaction where the tenants' relocation expenses are not paid, will not be approved by HUD.

HUD will determine that the transfer is in the best interest of the tenants based on criteria including, but not limited to, the following:

a. The transfer will preserve affordable and/or assisted housing in a market area in need of such assistance/affordability.

b. The transfer complies with section C of this notice. The site and neighborhood requirements ensure that the receiving property is in a location that affords the tenants at the transferring property the same or a better property location than the transferring site.

c. All current tenants will receive the same level of assistance they are currently receiving. Tenants that move from the transferring project to the receiving project remain subject to their existing lease requirements and all occupancy rules. The receiving owner may not seek to terminate the lease of a tenant from the transferring project for actions that occurred prior to the Section 214 transfer but the tenant will be subject to ongoing eligibility requirements for actions that occur after the transfer. Any eviction procedures currently underway at the transferring project will not be affected by the transfer of budget authority.

d. In scenarios where a Section 8 HAP contract will be transferred, and a tenant assisted by the HAP contract objects to relocating to the receiving property, the tenant may be eligible to receive a tenant protection voucher, subject to the availability of appropriations. A tenant may receive a TPV, if they meet the eligibility requirements for voucher assistance and the unit that they currently reside in is supported by a Section 8 project-based rental assistance contract that is subject to transfer as part of the Section 214 transfer. The owner will notify the tenant of their potential eligibility to receive a TPV at the time of tenant notification and subsequently notify the Multifamily Hub/PC regarding how many TPVs are requested. If TPVs are needed, the Multifamily Hub/PC should work with the Public and Indian Housing (PIH) field office to follow the procedures outlined in PIH Notice 2001-41.

e. To determine if the Section 214 transfer is in the best interest of the tenants, the transferring owner must provide documentation that all tenants residing at the property at the time of the transfer are relocating to a property of greater economic solvency or better physical condition, or accepting a tenant protection voucher to move to a property that best meets their housing needs.

f. If the transferring property is not fully assisted by a Section 8 project-based rental assistance contract, HUD will approve or disapprove the transfer based upon its review of the information submitted and all tenant comments received.

g. If the transferring property is not fully assisted by a Section 8 project-based rental assistance contract, the transfer will only be approved if:

i. There are no tenants at the transferring property; or

ii. The property is occupied but the transfer will be to an immediately adjacent property; or

iii. The unassisted tenants would have to move in the absence of the Section 214 transfer (e.g., the site is contaminated, the property is or will be condemned, the property is being taken via eminent domain, etc.); or

iv. The transfer involves a 202 Direct Loan or a 202/811 Capital Advance or PRAC contract that must be transferred as a result of a state's response to the Olmstead Decision or state Medicaid/Medicare policies on congregate housing make it economically impossible to continue operating the property as originally conceived.

h. If the tenants must be relocated, they will/did receive the protections provided under the URA, or other assistance if the URA is not triggered. No tenants will be displaced as a result of the transfer.

To demonstrate compliance, the receiving owner must submit one or more of the following as documentation:

a.Verification from the FHA lender that any lien on the receiving project is subordinate to any FHA-insured mortgage lien.

b. Other documentation as applicable.

A receiving owner may submit a waiver request if the receiving owner believes it is necessary that a lien(s) not be subordinate to the FHA insured mortgage to facilitate the financing of acquisition, construction, or rehabilitation of the receiving project or projects. Such a request must demonstrate that the waiver is necessary to finance the transaction and that there is minimal risk to the FHA as a result of the waiver. HUD must approve all waiver requests.

If a use restriction is in place at the receiving project, the receiving owner must sign a new or amended use restriction that includes all income and eligibility restrictions of the transferring use restriction and runs for the duration of the transferring project's existing use restriction or the use restriction at the receiving project, whichever is longer.

Transfers must not increase the cost (as defined in section 502 of the Congressional Budget Act of 1874) of any FHA-insured mortgage. HUD will consider the transfer of an FHA-insured mortgage, or Secretary-held formerly insured mortgage that is subsidized under either Section 221(d)(3)-(d)(5) with below market interest rates or Section 236. In addition, in order to avoid a claim against the General Insurance Fund, HUD may approve the transfer of a non-subsidized FHA-insured mortgage in combination with the transfer of a project-based rental assistance contract and/or a use restriction to a receiving project. However, HUD will only consider the transfer of a non-subsidized FHA-insured mortgage when the transferring project is in danger of imminent default on its FHA-insured mortgage due to a finding that the project is physically obsolete and/or economically nonviable in compliance with the criteria and process set forth in this notice.

1. Transfers that involve Section 202 assistance must comply with the site and neighborhood requirements at 24 CFR 891.125.

2. Transfers that involve Section 811 assistance must comply with the site and neighborhood requirements at 24 CFR 891.125 and 24 CFR 891.320.

3. All other receiving sites must comply with the site and neighborhood requirements below. The receiving owner must submit the address of the proposed property with their proposal and HUD will determine whether the site meets the following requirements:

a. The site and neighborhood is suitable from the standpoint of facilitating and furthering full compliance with the applicable provisions of Title VI of the Civil Rights Act of 1964, Title VIII of the Civil Rights Act of 1968, Executive Order 11063, and HUD regulations issued pursuant thereto.

b. The neighborhood must not be one that is seriously detrimental to family life or in which substandard dwellings or other undesirable conditions predominate, unless there is actively in progress a concerted program to remedy the undesirable conditions.

c. The housing must be accessible to social, recreational, educational, commercial, and health facilities and services, and other municipal facilities and services that are at least equivalent to those typically found in neighborhoods consisting largely of unassisted, standard housing of similar market rents.

d. If the receiving project is new construction, and is not covered by the existing regulations cited above for Section 202/811 properties, it may not be located in a racially mixed area if the project will cause a significant increase in the proportion of minority to nonminority residents in the area and may not be located in an area of minority concentration. If HUD determines that the receiving project will be located in an area of minority concentration, the receiving Owner must submit supporting data (e.g. census data, evidence of local revitalization efforts, etc.) in order for HUD to determine that they meet one of the exceptions below:

i. Sufficient, comparable opportunities exist for housing for minority households in the income range to be served by the proposed project, outside areas of minority concentration. Sufficient does not require that in every locality there be an equal number of assisted units within and outside of areas of minority concentration. Rather, application of this standard should produce a reasonable distribution of assisted units each year which over a period of several years will approach an appropriate balance of housing opportunities within and outside areas of minority concentration. An appropriate balance in any jurisdiction must be determined in light of local conditions affecting the range of housing choices available for very low-income minority households and in relation to the racial mix of the locality's population.

(A) Units may be considered to be comparable opportunities if they have the same household type and tenure type (owner/renter), require approximately the same total tenant payment, serve the same income group, are located in the same housing market, and are in standard condition.

(B) Application of this sufficient, comparable opportunities standard involves assessing the overall impact of HUD-assisted housing on the availability of housing choices for very low-income minority households, in and outside areas of minority concentration, and must take into account the extent to which the following factors are present, along with any other factor relevant to housing choice:

(1) A significant number of assisted housing units are available outside areas of minority concentration.

(2) There is significant integration of assisted housing projects constructed or rehabilitated in the past ten years, relative to the racial mix of the eligible population.

(3) There are racially integrated neighborhoods in the locality.

(4) Programs are operated by the locality to assist minority households, as applicable, that wish to find housing outside areas of minority concentration.

(5) Minority households have benefitted from local activities (e.g., acquisition and write-down of sites, tax relief programs for homeowners, acquisitions of units for use as assisted housing units) undertaken to expand choice for minority households (or families) outside of areas of minority concentration.

(6) A significant proportion of minority households, have been successful in finding units in nonminority areas under the Section 8 Certificate and Housing Voucher programs.

(7) Comparable housing opportunities have been made available outside areas of minority concentration through other programs.

ii. The project is necessary to meet overriding housing needs that cannot be met in that housing market area. Application of the overriding housing needs criterion, for example, permits approval of sites that are an integral part of an overall local strategy for the preservation or restoration of the immediate neighborhood and of sites in a neighborhood experiencing significant private investment that is demonstrably changing the economic character of the area (a “revitalizing area”). An overriding housing need, however, may not serve as the basis for determining that a site is acceptable if the only reason the need cannot otherwise be feasibly met is that discrimination on the basis of race, color, creed, sex, or national origin renders sites outside areas of minority concentration unavailable, or if the use of this standard in recent years has had the effect of circumventing the obligation to provide housing choice.

4. All Section 214 transactions (including those involving Section 202/811 properties) will be reviewed by HUD's Office of Policy Development and Research to assess whether there is sufficient demand for affordable rental housing in the receiving market area and to ensure that the transfer does not occur in neighborhoods with highly concentrated poverty.

The submission to HUD requesting a transfer under Section 214 must include the following information from the receiving owner:

1. Written confirmation of acceptance of the Housing Assistance Payments (HAP) contract, Use Agreement, and/or debt, as applicable, and confirmation that the transfer is warranted by local demand for affordable housing.

2. If the transfer involves project-based section 8 assistance, written evidence that the transfer of the HAP contract is warranted by local demands for affordable housing. Supporting documentation may include a market analysis showing eligible families in the area, a list of current tenants who are eligible for Section 8 assistance, or prospective tenants on waiting lists.

3. If applicable, a written tenant selection plan, Tenant Relocation Plan and an Affirmative Fair Housing Marketing Plan approved by HUD.

4. A narrative detailing the capacity of the proposed owner and management agent of the receiving property to own, operate, manage, and if applicable, renovate affordable housing.

5. The receiving owner must not be subject to any of the following actions that have not been resolved to HUD's satisfaction: (1) A charge from HUD concerning a systemic violation of the Fair Housing Act or a cause determination from a substantially equivalent state or local fair housing agency concerning a systemic violation of a substantially equivalent state or local fair housing law proscribing discrimination because of race, color, religion, sex, national origin, disability, or familial status; and (2) A Fair Housing Act lawsuit filed by the Department of Justice alleging a pattern or practice of discrimination or denial of rights to a group of persons raising an issue of general public interest pursuant to 42 U.S.C. 3614(a); or (3) A letter of finding identifying systemic noncompliance under Title VI of the Civil Rights Act of 1964, Section 504 of the Rehabilitation Act of 1973, or Section 109 of the Housing and Community Development Act of 1974. HUD will determine if actions to resolve the charge, cause determination, lawsuit, or letter of findings are sufficient to resolve the matter. Examples of actions that would normally be considered sufficient to resolve the matter include, but are not limited to, current compliance with:

a. A voluntary compliance agreement (VCA) signed by all the parties;

b. A HUD-approved conciliation agreement signed by all the parties;

c. A conciliation agreement signed by all the parties and approved by the state governmental or local administrative agency with jurisdiction over the matter;

d. A consent order or consent decree; or

e. A final judicial ruling or administrative ruling or decision.

6. Documentation to assist HUD in an environmental review of the transfer request in accordance with environmental regulations and requirements at 24 CFR part 50. HUD will conduct the environmental review as required by part 50 prior to approving a transfer. HUD will document compliance on Form HUD-4128, “Environmental Assessment and Compliance Findings for the Related Laws.” Applicants are responsible for submitting environmental information and reports, and should use Chapter 9 of the MAP Guide and the HUD Environmental Review Web site (available at https://www.onecpd.info/environmental-review/) for guidance on environmental review information requirements. If the transfer is to a site that is currently HUD-assisted, HUD-insured or HUD-held, a new Phase I Environmental Site Assessment (ESA) in accordance with ASTM E 1527-13 (or the most recent edition), including a Vapor Encroachment Screen in accordance with ASTM E 2600-10 (or the most recent edition), is not required, unless the transfer involves:

a. Significant ground disturbance (digging) or construction not contemplated in the original application or incompatible with current engineering or institutional controls;

b. Site expansion or addition;

c. Transfer to a site for which a Phase I ESA in accordance with ASTM E 1527-05 (or a more recent edition) has not been prepared previously; or

d. Any other activities which may result in contaminant exposure pathways not contemplated in the original application or incompatible with current engineering or institutional controls.

After a request has been submitted to HUD, the requestor and other participants in the proposed transfer, including owners and contractors on the receiving project, may not undertake or commit funds for acquisition, rehabilitation, conversion, or construction of the receiving property until HUD has completed the environmental review and notified the requestor that the transfer to the receiving property is acceptable.

Once HUD has received and reviewed the materials above and approved the transfer under Section 214, the owner of the receiving project must do the following as applicable:

1. If there is a use restriction at the transferring property, sign a new or amended use restriction that includes all income and eligibility restrictions of the transferring use restriction and runs for the duration of the transferring project's existing use restriction or the use restriction at the receiving project, whichever is longer.

2. If the transfer involves project based section 8 assistance, renew the HAP contract for a 20-year term at the time of the transfer and attach the Preservation Exhibit agreeing to the automatic renewal of the Section 8 HAP contract at the end of the 20-year term, subject to annual appropriations, for a minimum of the time remaining on the HAP contract that was in effect prior to the transfer under Section 214.

3. Receive approval through the Previous Participation Process including a 2530 review. The receiving owner must be in compliance with all business agreements for the receiving project and for any other HUD insured or assisted projects owned.

4. Comply with all Departmental statutes, regulations, policies and procedures related to any assignment or amendment of a Section 8 HAP contract or other project-based rental assistance contract, required modification of loan documents and legal descriptions, or other necessary changes as a result of a Section 214 transfer.

A Finding of No Significant Impact (FONSI) with respect to the environment has been made for this notice in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)). The FONSI is available for public inspection between 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. Due to security measures at this HUD Headquarters Building, an advance appointment to review the FONSI must be scheduled by calling the Regulations Division at 202-708-3055 (not a toll free number).

The information collection requirements contained in this document have been approved by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2502-0608. In accordance with the Paperwork Reduction Act, HUD may not conduct or sponsor, and a person is not required to respond to, a collection of information unless the collection displays a currently valid OMB control number.

This notice will become effective April 30, 2015. HUD will begin accepting requests for transfers pursuant to this notice on or after the effective date. For questions regarding the submission or status of a transfer request, interested parties should contact their HUD Multifamily Hub/Program Center. The list of HUD Multifamily Hubs and Program Centers is available at: http://portal.hud.gov/hudportal/HUD?src=/program_offices/housing/mfh/hsgmfbus/abouthubspcs.

Background

On June 24, 2011, the Treasury Department and the IRS published a notice of proposed rulemaking (proposed regulations) in the Federal Register (76 FR 37034, corrected by 76 FR 55321 on September 7, 2011) under section 162(m) of the Internal Revenue Code (Code). The proposed regulations clarified § 1.162-27(e)(2)(vi)(A) by providing that the plan under which an option or stock appreciation right is granted must specify the maximum number of shares with respect to which options or rights may be granted to any individual employee during a specified period. The proposed regulations also clarified that the general transition rule under § 1.162-27(f)(1) for a corporation that becomes a publicly held corporation applies to all compensation other than compensation specifically identified in § 1.162-27(f)(3).

The Treasury Department and the IRS received written comments in response to the proposed regulations. All comments were considered and are available for public inspection at http://www.regulations.gov or upon request. No public hearing on the proposed regulations was requested or held. After consideration of the comments received, the Treasury Department and the IRS adopt the proposed regulations, with modifications, as final regulations.

Section 162(m)(1) precludes a deduction under chapter 1 of the Code by any publicly held corporation for compensation paid to any covered employee to the extent that the compensation for the taxable year exceeds $1,000,000. Section 162(m)(4)(C) provides that the deduction limitation does not apply to qualified performance-based compensation. Section 1.162-27(e)(1) provides that qualified performance-based compensation is compensation that meets all of the requirements of § 1.162-27(e)(2) through (e)(5).

The proposed regulations clarified § 1.162-27(e)(2)(vi)(A) by providing that the plan under which an option or stock appreciation right is granted must state “the maximum number of shares with respect to which options or rights may be granted during a specified period to any individual [emphasis added] employee” (per-employee limitation requirement). The existing regulations provide that the per-employee limitation applies to “any employee” during a specified period. The proposed regulations also provided a corresponding clarification of the shareholder approval requirement under § 1.162-27(e)(4). Specifically, the proposed regulations clarified § 1.162-27(e)(4)(iv) to provide that compensation is not adequately described for purposes of the shareholder approval requirement unless the maximum number of shares on which grants may be made to any individual employee during a specified period and the exercise price of those options is disclosed to the shareholders of the corporation. The proposed regulations provided that the clarifications to § 1.162-27(e)(2)(vi)(A) and (e)(4)(iv) apply to amounts that are otherwise deductible for taxable years ending on or after June 24, 2011.

Commenters suggested that these final regulations clarify that under § 1.162-27(e)(2)(vi)(A) a plan satisfies the per-employee limitation requirement if the plan specifies the maximum number of shares with respect to which any type of equity-based compensation may be granted to any individual employee during a specified period. Commenters explained that clarification is needed on whether the per-employee limitation may apply to all types of equity-based awards, not merely stock options and stock appreciation rights, which are the two types of equity-based awards described in § 1.162-27(e)(2)(vi)(A). In addition, commenters noted that a per-employee limitation on all types of equity-based awards would have the same effect as a per-employee limitation with respect to stock options and stock appreciation rights. In response to these comments, the final regulations modify § 1.162-27(e)(2)(vi)(A) to provide that a plan satisfies the per-employee limitation requirement if the plan specifies an aggregate maximum number of shares with respect to which stock options, stock appreciation rights, restricted stock, restricted stock units and other equity-based awards may be granted to any individual employee during a specified period under a plan approved by shareholders in accordance with § 1.162-27(e)(4). This clarification is not intended as a substantive change.

One commenter suggested that the clarification to § 1.162-27(e)(2)(vi)(A) apply only to compensation attributable to stock options and stock appreciation rights granted under a plan that was submitted for shareholder approval after August 8, 2011 (that is, forty-five days after the publication of the proposed regulations) and not to grants under plans submitted for shareholder approval before August 9, 2011 (even if the grant was made after that date). Another commenter suggested that the clarification apply only after the first shareholder meeting that occurs at least 12 months after the publication of these final regulations. These commenters reasoned that a transition period is appropriate because a plan providing for an aggregate share limit (but not an explicit per-employee share limitation) arguably satisfies the per-employee limitation requirement under the existing regulations because no individual employee may receive shares in excess of the aggregate limit.

These final regulations do not adopt either of these suggestions. The clarification to § 1.162-27(e)(2)(vi)(A) is not a substantive change. The transition rule in § 1.162-27(h)(3)(i) of the regulations provides that a plan providing for an aggregate limit, but not a per-employee limit, satisfies § 1.162-27(e)(2)(vi)(A) only if the plan was approved by shareholders before December 20, 1993, and only during a limited reliance period specified in § 1.162-27(h)(3)(i). Additionally, the legislative history to section 162(m) and the preamble to the 1993 Treasury Regulations (58 FR 66310) under section 162(m) provide for a limit on the maximum number of shares for which options or stock appreciation rights may be granted to individual employees. The preamble to the 1993 Treasury Regulations explains the reason for requiring a per-employee limitation: “Some have questioned why it would be necessary for the regulations to require an individual [emphasis added] employee limit on the number of the shares for which options or stock appreciation rights may be granted, where shareholder approval of an aggregate limit is obtained for securities law purposes. The regulations follow the legislative history, which suggests that a per-employee limit be required under the terms of the plan.” The preamble further explains that “a limit on the maximum number of shares for which individual employees may receive options or other rights is appropriate because it is consistent with the broader requirement that a performance goal include an objective formula for determining the maximum amount of compensation that an individual employee could receive.” Accordingly, these final regulations provide that the clarification to § 1.162-27(e)(2)(vi)(A) applies to compensation attributable to stock options and stock appreciation rights that are granted on or after June 24, 2011 (the date of publication of the proposed regulations).

In general, § 1.162-27(f)(1) provides that when a corporation becomes publicly held, the section 162(m) deduction limitation “does not apply to any remuneration paid pursuant to a compensation plan or agreement that existed during the period in which the corporation was not publicly held.” Pursuant to § 1.162-27(f)(2), a corporation may rely on § 1.162-27(f)(1) until the earliest of: (i) The expiration of the plan or agreement; (ii) a material modification of the plan or agreement; (iii) the issuance of all employer stock and other compensation that has been allocated under the plan or agreement; or (iv) the first meeting of shareholders at which directors are to be elected that occurs after the close of the third calendar year following the calendar year in which an initial public offering (IPO) occurs or, in the case of a privately held corporation that becomes publicly held without an IPO, the first calendar year following the calendar year in which the corporation becomes publicly held. Section 1.162-27(f)(3) provides that the relief provided under § 1.162-27(f)(1) applies to any compensation received pursuant to the exercise of a stock option or stock appreciation right, or the substantial vesting of restricted property, granted under a plan or agreement described in § 1.162-27(f)(1) if the grant occurs on or before the earliest of the events specified in § 1.162-27(f)(2). The proposed regulations clarified that the transition rule in § 1.162-27(f)(1) applies to all compensation other than compensation specifically identified in § 1.162-27(f)(3). Specifically, the proposed regulations identified compensation payable under a restricted stock unit arrangement (RSU) or a phantom stock arrangement as being ineligible for the transition relief in § 1.162-27(f)(3). Therefore, the effect of the proposed regulations is that compensation payable under a RSU is eligible for transition relief only if it is paid, and not merely granted, before the earliest of the events specified in § 1.162-27(f)(2).

Commenters suggested that compensation payable under a RSU should qualify for the transition relief in § 1.162-27(f)(3) because a RSU is economically similar to restricted stock. These final regulations do not adopt this suggestion. A RSU provides a right to receive an amount of compensation based on the value of stock that is payable in cash, stock, or other property (as defined in § 1.83-3(e)) upon the satisfaction of a vesting condition (such as a period of service). Restricted stock, by contrast, is property that has been transferred to the service provider on the date of grant subject to the satisfaction of a specified vesting condition. Restricted stock and RSU's are treated differently under the Code. RSU's generally are treated as nonqualified deferred compensation and may be subject to the rules under section 409A, whereas restricted stock is treated as property and is governed by the rules under section 83. Because compensation attributable to a RSU is in the nature of nonqualified deferred compensation (unlike restricted stock), compensation attributable to a RSU is not sufficiently similar to restricted property to receive the transition relief provided under § 1.162-27(f)(3). Accordingly, these final regulations adopt the proposed clarification to § 1.162-27(f)(3) without change.

The proposed regulations provided that the clarification to § 1.162-27(f)(3) would apply on or after the date of publication of the Treasury decision adopting the proposed regulations as final regulations. Commenters suggested that the clarification to § 1.162-27(f)(3) should apply to RSU's granted after the publication of final regulations and not merely to remuneration payable under a RSU after the date of publication. These final regulations adopt this suggestion. Accordingly, these final regulations provide that the clarification to § 1.162-27(f)(3) applies to remuneration otherwise deductible under a RSU that is granted on or after April 1, 2015.

The clarifications to paragraphs (e)(2)(vi)(A), (e)(2)(vii) Example 9, and (e)(4)(iv) of this section apply to compensation attributable to stock options and stock appreciation rights that are granted on or after June 24, 2011. The clarification to § 1.162-27(f)(3) applies to any remuneration that is otherwise deductible resulting from a stock option, stock appreciation right, restricted stock (or other property), restricted stock unit, or any other form of equity-based remuneration that is granted on or after April 1, 2015.

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

The principal author of these final regulations is Ilya Enkishev, Office of the Division Counsel/Associate Chief Counsel (Tax Exempt and Government Entities). However, other personnel from the IRS and the Treasury Department participated in their development.

Accordingly, 26 CFR part 1 is amended as follows:

Paperwork Reduction Act

The collection of information contained in these regulations has been reviewed and approved by the Office of Management and Budget in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) under control number 1545-1940. The collection of information in these final regulations is in § 301.6501(c)-1(g)(5). This information is required to provide the IRS, under penalties of perjury, with the information necessary to properly determine the taxpayer's applicable period of limitations. The collection of information in these final regulations is the same as the collection of information in Revenue Procedure 2005-26 (2005-1 CB 965), which was previously reviewed and approved by the Office of Management and Budget under control number 1545-1940. The collection of information in § 301.6501(c)-1(g)(6) is the same as the collection of information required under section 6112. See § 601.601(d)(2)(ii)(b).

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

Books or records relating to a collection of information must be retained as long as their contents may become material in the administration of any internal revenue law. Generally, tax returns and tax return information are confidential, as required by 26 U.S.C. 6103.

This document contains amendments to the Procedure and Administration Regulations (26 CFR part 301) under section 6501(c) relating to exceptions to the period of limitations on assessment. Section 6501(a) provides that, except as otherwise provided, if a return is filed, tax with respect to that return must be assessed within 3 years from the later of the date the return was filed or the original due date of the return. Section 6501(c) contains several exceptions to the general three-year period of limitations on assessment.

Section 6501(c)(10) was added to the Code by section 814 of the American Jobs Creation Act of 2004, Public Law 108-357 (118 Stat. 1418, 1581 (2004)) (AJCA), enacted on October 22, 2004. Section 6501(c)(10) provides that, if a taxpayer fails to disclose a listed transaction as required under section 6011, the time to assess tax against the taxpayer with respect to that transaction will end no earlier than one year after the earlier of (A) the date on which the taxpayer furnishes the information required under section 6011, or (B) the date that the material advisor furnishes to the Secretary, upon written request, the information required under section 6112 with respect to the taxpayer related to the listed transaction. Section 6112 requires material advisors to maintain lists of advisees and other information with respect to reportable transactions, including listed transactions, and to furnish that information to the IRS upon request. The term “material advisor” is defined in § 301.6111-3(b). Section 6112 and § 301.6112-1 provide guidance relating to the preparation, content, maintenance, retention, and furnishing of lists by material advisors. Under this provision, if neither the taxpayer nor a material advisor furnishes the requisite information, the period of limitations on assessment will remain open, and the tax with respect to the listed transaction may be assessed at any time. Section 6501(c)(10) is effective for taxable years with respect to which the period of limitations on assessment did not expire prior to October 22, 2004.

Section 6501(c)(10) applies when a taxpayer does not properly disclose a listed transaction (as defined in section 6707A(c)(2)) as required under section 6011. Taxpayers are required under section 6011 and the regulations thereunder (collectively referred to as the “section 6011 disclosure rules”) to disclose certain information regarding each reportable transaction in which the taxpayer participated. See Treas. Reg. §§ 1.6011-4; 20.6011-4; 25.6011-4; 31.6011-4; 53.6011-4; 54.6011-4; and 56.6011-4. Among the transactions that are reportable are “listed transactions.” See Treas. Reg. § 1.6011-4(b)(2). Under the section 6011 disclosure rules, a listed transaction is a transaction that is the same as, or substantially similar to, a transaction that the IRS has determined to be a tax avoidance transaction and identified by notice, regulation, or other form of published guidance. Treas. Reg. § 1.6011-4(b)(2). For a list of transactions the IRS has identified as listed transactions, see Notice 2009-59, 2009-31 IRB 1. See § 601.601(d)(2).

If the section 6011 disclosure rules require a taxpayer to disclose a listed transaction, the taxpayer must complete and file a disclosure statement in accordance with the section 6011 disclosure rules. The section 6011 disclosure rules currently require that Form 8886, “Reportable Transaction Disclosure Statement” (or successor form), be used as the disclosure statement and be completed in accordance with the instructions to the form. The Form 8886 (or successor form) generally must be attached to the taxpayer's original or amended tax return for each taxable year for which a taxpayer participates in a listed transaction. Treas. Reg. § 1.6011-4(e)(1). If a listed transaction results in a loss that is carried back to a prior year, Form 8886 (or successor form) must be attached to the taxpayer's application for tentative refund or amended tax return for that prior year. The taxpayer also must send a copy of Form 8886 (or successor form) to the IRS Office of Tax Shelter Analysis (OTSA), generally at the same time that a disclosure statement pertaining to a particular listed transaction is first filed. Under the current rules, when a transaction is identified as a listed transaction after the date on which the taxpayer files a tax return (including an amended return) for a taxable year reflecting the taxpayer's participation in the listed transaction and before the end of the period of limitations for assessment of tax for any taxable year in which the taxpayer participated in the listed transaction, then the taxpayer must file Form 8886 (or successor form) with OTSA within 90 calendar days after the date the transaction became a listed transaction.

If a taxpayer does not disclose its participation in a listed transaction in accordance with all of the requirements of the section 6011 disclosure rules and section 6501(c)(10) applies, then the time to assess tax related to the listed transaction will expire no earlier than the earlier of (1) one year after the date on which the information described in section 6501(c)(10)(A) is provided, or (2) one year after the date on which the information described in section 6501(c)(10)(B) is provided.

The IRS and Treasury Department issued Rev. Proc. 2005-26 (2005-1 CB 965) on April 25, 2005, to provide interim guidance on section 6501(c)(10). The revenue procedure prescribes how taxpayers and material advisors should disclose listed transactions that were not properly disclosed under section 6011 in order to start the one-year period under section 6501(c)(10).

On October 7, 2009, a notice of proposed rulemaking (REG-160871-04) relating to the section 6501(c)(10) exception to the general three-year period of limitations on assessment that applies if a taxpayer fails to disclose a listed transaction as required under section 6011 was published in the Federal Register (74 FR 51527). The preamble of the notice of proposed rulemaking provided that taxpayers may continue to rely on the rules in Rev. Proc. 2005-26 until temporary or final regulations are issued under section 6501(c)(10). No comments were received from the public in response to the notice of proposed rulemaking. No public hearing was requested or held. The proposed regulations are adopted as revised by this Treasury decision.

These final regulations adopt the proposed regulations with four substantive clarifications. First, § 301.6501(c)-1(g)(1) is clarified with respect to the interaction of the one-year period of limitations on assessment after disclosure of a listed transaction under section 6501(c)(10) and the general three-year period of limitations on assessment under section 6501(a) (or other applicable limitations period under section 6501). The one-year period in section 6501(c)(10) serves only to extend the existing limitations period. For example, if the general section 6501(a) three-year period of limitations on assessment applies and the one-year period under section 6501(c)(10) ends prior to the expiration of the section 6501(a) three-year period, the assessment period for the tax year remains open until the expiration of the general three-year period. Proposed section 301.6501(c)-1(g)(8), Example 5 (renumbered as Example 6 in the final regulations) and Example 9, illustrated this point. However, the text of the proposed regulations did not specifically provide that in no case will the period of limitations be shorter than the period of limitations that would apply without regard to application of section 301.6501(c)-1(g). A sentence was added to the end of § 301.6501(c)-1(g)(1) to clarify this point.

Second, the final regulations revise § 301.6501(c)-1(g)(6) to clarify when a disclosure will be considered a disclosure by a material advisor for purposes of section 6501(c)(10)(B) so that the one-year period of limitations on assessment will begin. Under section 6501(c)(10)(B), if a taxpayer fails to disclose information related to a listed transaction, the time to assess tax will end no earlier than one year after the date that “a material advisor meets the requirements of section 6112 with respect to a request by the Secretary under section 6112(b) relating to such transaction with respect to such taxpayer.” This means that unless a material advisor furnishes the information with respect to the taxpayer in response to an IRS written request for the list under section 6112(b) and in accordance with section 6112, the one-year period under section 6501(c)(10)(B) will not begin. Accordingly, receipt of information from a person other than the material advisor with respect to the taxpayer will not satisfy the requirements of a disclosure for purposes of section 6501(c)(10)(B). The final regulations add § 301.6501(c)-1(g)(6)(ii)(A) to clarify that, consistent with the statutory language, except in limited circumstances related to dissolution or liquidation of an entity that is a material advisor or in the case of a designation agreement, only receipt of information furnished by the material advisor will satisfy the requirements for disclosure under § 301.6501(c)-1(g)(6).

Third, the final regulations clarify that information received by the IRS in circumstances other than in response to a section 6112 request, such as in response to an Information Document Request in a section 6700 investigation or as a result of a summons enforcement proceeding, will not begin the one-year period under § 301.6501(c)-1(g)(6). Proposed section 301.6501(c)-1(g)(8), Example 10, illustrated this point. However, the text of the proposed regulations did not specifically address this point. The final regulations have been revised to add § 301.6501(c)-1(g)(6)(ii)(B) to provide that information not furnished in response to a section 6112 request will not satisfy the requirements under § 301.6501(c)-1(g)(6) even if provided by the material advisor, unless furnished to OTSA in accordance with § 301.6112-1(d) in the case of material advisors that are liquidated or dissolved.

Fourth, the final regulations clarify that if a material advisor furnishes information described in § 301.6112-1(e), but does not furnish information identifying the taxpayer as a person who entered into the listed transaction, the requirements of section 6501(c)(10)(B) will not have been satisfied for that taxpayer. Proposed section 301.6501(c)-1(g)(8), Example 11, illustrated this point. However, the text of the proposed regulations did not specifically address this point. The final regulations have been revised to add § 301.6501(c)-1(g)(6)(ii)(C) for clarification.

In addition to the revisions described above, other minor clarifying changes have been made that are not intended to be substantive.

These final regulations apply to taxable years for which the period of limitation on assessment under section 6501, including the period of limitation set forth in section 6501(c)(10) and § 301.6510(c)-1(g), did not expire before March 31, 2015, the date these final regulations are published in the Federal Register.

Upon the publication of these final regulations under section 6501(c)(10) in the Federal Register, Rev. Proc. 2005-26 (2005-1 CB 965), is superseded for taxable years with respect to which the period of limitations on assessment under section 6501 (including section 6501(c)(10)) did not expire before March 31, 2015. Rev. Proc. 2005-26 (2005-1 CB 965) will continue to apply to taxable years with respect to which the period of limitations on assessment expired on or after April 8, 2005, and before March 31, 2015, although as provided in the proposed regulations, taxpayers could rely on the rules in the notice of proposed rulemaking (REG-160871-04) under section 6501(c)(10) published in the Federal Register (74 FR 51527) on October 7, 2009, until these final rules are published in this Treasury decision.

It has been determined that these final regulations are not a significant regulatory action as defined in Executive Order 12866, as supplemented by Executive Order 13653. Therefore, a regulatory assessment is not required. It also has been determined that section 553(b) of the Administrative Procedure Act (5 U.S.C. chapter 5) does not apply to these regulations.

It is hereby certified that the collection of information contained in these regulations will not have a significant economic impact on a substantial number of small entities. Accordingly, a regulatory flexibility analysis is not required under the Regulatory Flexibility Act (5 U.S.C. chapter 6). Section 6501(c)(10) applies when taxpayers fail to comply with the reporting requirements set forth under section 6011 with respect to listed transactions. The Treasury Department and the IRS do not know the exact number and types of taxpayers that fail to comply with those requirements. However, although the Treasury Department and the IRS are aware that many tax avoidance transactions involve pass-through entities, when pass-through entities are utilized, the entities are not ultimately liable for the tax; rather, the taxpayers subject to section 6501(c)(10) will be the individuals and corporations owning, directly or indirectly, the interests in the pass-through entities. Therefore, the Treasury Department and the IRS have determined that these final regulations will not affect a substantial number of small entities.

In addition, the Treasury Department and the IRS have determined that any impact on small entities resulting from these final regulations will not be significant. Most of the information required under these final regulations is already required by other regulations or forms, namely, § 1.6011-4, § 301.6112-1, and Form 8886, “Reportable Transaction Disclosure Statement.” The only new information required to be submitted to the IRS is a cover letter, which must contain a reference to the tax returns and taxable year(s) at issue and a statement signed under penalty of perjury. The cover letter should take minimal time and expense to prepare. Therefore, the additional requirement of the cover letter should not significantly increase the burden on taxpayers. Based on these facts, the Treasury Department and the IRS have determined that these final regulations will not have a significant economic impact on a substantial number of small entities. Pursuant to section 7805(f) of the Internal Revenue Code, the notice of proposed rulemaking preceding this regulation was submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

The principal author of these regulations is Danielle Pierce of the Office of the Associate Chief Counsel (Procedure and Administration).

Accordingly, 26 CFR part 301 is amended as follows:

The Coast Guard will enforce Special Local Regulation for the annual boat races in 33 CFR 100.801(60) on May 1, 2015, from 2 p.m. to 6 p.m. and on May 2 and 3, 2015 from 8:30 a.m. to 6 p.m.

Under the provisions of 33 CFR 100.801, a vessel may not enter the regulated area, unless it receives permission from the Captain of the Port or his designated on-scene Patrol Commander. Spectator vessels may safely transit outside the regulated area but may not anchor, block, loiter, or impede participants or official patrol vessels. The Coast Guard may be assisted by other federal, state or local law enforcement agencies in enforcing this regulation.

This notice is issued under authority of 33 CFR 100.801 and 33 U.S.C. 1233. In addition to this notice in the Federal Register, the Coast Guard will provide the maritime community with notification of this enforcement period via Local Notice to Mariners, Safety Marine Information Broadcasts, and Marine Safety Information Bulletins.

If the Captain of the Port or his designated on-scene Patrol Commander determines that the regulated area need not be enforced for the full duration stated in this notice, he or she may use a Broadcast Notice to Mariners to grant general permission to enter the regulated area.

Table of Contents for Preamble I. Abbreviations II. Regulatory History III. Background IV. Discussion of Comments and Changes V. Incorporation by Reference VI. Regulatory Analyses A. Regulatory Planning and Review B. Small Entities C. Assistance for Small Entities D. Collection of Information E. Federalism F. Unfunded Mandates Reform Act G. Taking of Private Property H. Civil Justice Reform I. Protection of Children J. Indian Tribal Governments K. Energy Effects L. Technical Standards M. Environment I. Abbreviations ABS American Bureau of Shipping ANSI American National Standards Institute ASTM ASTM International ATEX (Directive) Protective Systems Intended for use in Potentially Explosive Atmospheres BSEE Bureau of Safety and Environmental Enforcement CFR Code of Federal Regulations CSA Canadian Standards Association DHS Department of Homeland Security Ex Designation of explosion-protected electrical apparatus complying with IEC standards ExCB Ex Certification Body FR Federal Register IEC International Electrotechnical Commission IECEx IEC Certification to Standards relating to Equipment for use in Explosive Atmospheres IEEE Institute of Electrical and Electronics Engineers IMO International Maritime Organization ISA International Society of Automation ISO International Organization for Standardization MSC Marine Safety Center MODU Mobile Offshore Drilling Unit NAVSEA Naval Sea Systems Command NEC National Electrical Code NEMA National Electrical Manufacturers Association NEPA National Environmental Policy Act NFPA National Fire Protection Association NOSAC National Offshore Safety Advisory Committee NPFC Naval Publications and Forms Center NPRM Notice of Proposed Rulemaking OCS Outer Continental Shelf OMB Office of Management and Budget OSV Offshore Supply Vessel RP Recommended Practice ULS Ultra Low Sulfur U.S. United States U.S.C. United States Code II. Regulatory History Notice of Proposed Rulemaking

On June 24, 2013, we published a notice of proposed rulemaking (NPRM) in the Federal Register entitled Electrical Equipment in Hazardous Locations (78 FR 37760). The NPRM proposed requiring third-party testing and certification of electrical equipment in hazardous locations by a Coast Guard-accepted independent third-party laboratory in order to achieve uniform standards between U.S. and foreign vessels and floating facilities. We received several requests to extend the 90-day comment period until November 30, 2013. We granted these requests and announced the extension in the Federal Register (78 FR 58989) on September 25, 2013. We received 23 comment letters on the NPRM, and considered all of these comments in developing this final rule. In section VI below, we inserted a table that summarizes the changes between the NPRM and the final rule.

In April 2013, the Coast Guard tasked the National Offshore Safety Advisory Committee (NOSAC) to review and comment on a notice of policy we published in the Federal Register (77 FR 71607) on December 3, 2012. The policy recommended that electrical equipment on foreign mobile offshore drilling units (MODUs) that had never operated on the outer continental shelf (OCS), but were intended to do so, meet Chapter 6 of the 2009 MODU Code of the International Maritime Organization (IMO) and obtain equipment certification under the International Electrotechnical Commission Certification to Standards relating to Equipment for use in Explosive Atmospheres (IECEx) System. While NOSAC was reviewing the notice of policy, we published the Electrical Equipment in Hazardous Locations NPRM (78 FR 37760) in the Federal Register. The NPRM proposed regulations similar to the recommendations contained in the notice of policy. Unlike the notice of policy, however, the NPRM was not limited to foreign MODUs but applied to all vessels and facilities that had never operated on the outer continental shelf (OCS) but intended to. Further, the NPRM proposed requiring that certification under the IECEx System be conducted by Coast Guard accepted independent laboratories in order to facilitate Coast Guard oversight of those laboratories. NOSAC provided comments on the notice of policy and on the NPRM, and those comments were considered in developing this final rule.

A key finding of the Coast Guard's investigation of the MODU DEEPWATER HORIZON explosion, fire, and sinking emphasized the importance of proper electrical equipment installations in hazardous locations during oil drilling exploration on U.S. and foreign MODUs. The Coast Guard, therefore, reviewed the existing regulations for hazardous locations; specifically, the requirements for electrical equipment testing and certification and the standards applicable to U.S. and foreign MODUs, floating OCS facilities, and vessels that engage in OCS activities.

Currently, electrical equipment on U.S. vessels and floating facilities that operate on the OCS must comply with 46 CFR subpart 111.105. This subpart adopts international and national standards and requires the equipment to be tested and certified by a Coast Guard-accepted independent third-party laboratory.

In contrast, foreign vessels and floating facilities that engage in OCS activities must meet the requirements of 33 CFR subchapter N. Currently, foreign floating OCS facilities must meet the same engineering standards as U.S. floating OCS facilities, while foreign vessels engaged in OCS activities on the U.S. OCS do not meet the same engineering standards as U.S. vessels. While the Coast Guard supports the development and adoption of international vessel safety standards, the existing safety requirements of the International Convention on the Safety of Life at Sea, 1974 (SOLAS) do not completely account for the specifics of hydrocarbon production, processing, storage, and handling systems, and the 2009 IMO MODU Code, which provides a recommended SOLAS equivalency for MODUs, is not a legally binding instrument. For electrical equipment in hazardous locations, we believe this rule is necessary to ensure that all vessels engaged in OCS activities meet the same, OCS-specific safety standards. In this final rule, therefore, we require that new foreign MODUs, floating OCS facilities and vessels meet the same standards for explosion protection in hazardous areas as their U.S. counterparts before operating on the OCS. Additionally, through this final rule, we expand the list of acceptable standards for existing and new vessels and facilities.

As noted above, we received 23 comment letters in response to the NPRM. Additionally, NOSAC submitted a report to the Coast Guard that included their comments on the NPRM. We considered all of these comments in the development of this final rule. The comments and our responses have been grouped into subject-matter categories below. In cases where the comment resulted in a change to the regulations previously proposed in the NPRM, the change is specifically identified and discussed.

The NPRM's proposed implementation date was 30 days after publication of the final rule. Fourteen comments stated that was unreasonable. These commenters explained that over 200 MODUs were either under contract, under construction or due to be constructed in the next 5 years and that the costs of changing the specifications for the electrical equipment located in hazardous locations would be much greater than that indicated in Section VI of the NPRM.

We agree. While the estimates provided correspond to the global MODU population currently under construction, a majority of which have not historically sought to operate on the OCS, the associated burden on vessels under construction is real. Thus, we have delayed the implementation date of the requirements of 46 CFR subpart 111.108. The requirements of 46 CFR subpart 111.108 will apply to MODUs, floating OCS facilities, and vessels, other than offshore supply vessels regulated under 46 CFR subchapter L, that are constructed after April 2, 2018 and that engage in OCS activities. Estimates of the affected foreign flagged vessel population reside in the regulatory analysis section of this final rule. The definition of “constructed” has been added to 33 CFR 140.10 and 46 CFR 110.15-1(b). It is consistent with the existing definition for “constructed” found in 46 CFR 170.055(f). Constructed means either the date a keel is laid or the date that construction identified with the vessel or facility has begun.

Existing U.S. MODUs, floating OCS facilities, and vessels, other than offshore supply vessels (OSVs), and U.S. tank vessels that carry flammable or combustible cargoes may immediately use the expanded list of explosion protection standards and IECEx certification regime identified in this final rule in lieu of the existing requirements in §§ 111.105-1 through 111.105-15.

The NPRM proposed the adoption of a selection of explosion protection standards and certification schemes. Thirteen comments suggested that the proposed regulations were unnecessary and that compliance with the 2009 IMO MODU Code should be sufficient for all vessels. Many of these comments further noted that the 2009 IMO MODU Code already requires certification by an independent testing laboratory. We agree in part. The Coast Guard supports the development and adoption of international vessel safety standards. The Coast Guard believes the 2009 IMO MODU Code provides helpful guidance for the design and engineering of MODUs, particularly in supplementing SOLAS with standards specific to hydrocarbon production, processing, storage, and handling systems, and should be given appropriate effect by flag administrations. However, the 2009 IMO MODU Code is not a legally binding instrument and by its terms does not apply to vessels that are not MODUs. Additionally, there are differing interpretations of the “independent testing laboratory” certification contained in the 2009 MODU Code. As the coastal state with jurisdiction, we find that it is a necessary and reasonable safety measure to require that newly constructed foreign vessels and floating facilities that engage in OCS activities have uniform safety standards for explosion protection in hazardous locations.

Ten comments addressed the cost of bringing into compliance with the proposed rule existing MODUs that are currently not operated on the OCS but the owners or operators intend them to do so. Those comments stated that the cost of bringing the existing vessels into compliance would likely exceed the cost published in the NPRM. In addition to required equipment recertification and replacement costs, there would be a loss of revenue during necessary downtime for replacement of equipment that could equal or exceed all other costs.

We recognize that the costs to retrofit an existing MODU could be prohibitive depending on the design, construction and type of operation of an individual MODU. Because of this, we decided to make the final rule applicable to vessels and facilities that are constructed after April 2, 2018 and that engage in OCS activities. Existing vessels and facilities will continue to be subject to the regulations and standards effective at the time of their construction.

Similarly, one comment recommended that the Coast Guard address electrical equipment in hazardous locations on MODUs currently on the OCS. The Coast Guard disagrees. As explained earlier, this rule does not require any existing vessel or facility to meet the requirements of subpart 111.108 because the costs to retrofit existing equipment could be prohibitive depending on the design, construction and type of operation of an individual vessel or facility.

One comment stated that the Coast Guard should address electrical equipment in hazardous locations on foreign oil and chemical tankers and gas carriers entering U.S. ports. These vessels are outside the scope of this rulemaking, which is confined to vessels and facilities engaged in OCS activities. Additionally, foreign oil and chemical tankers and gas carriers are already subject to international standards and to Coast Guard inspection for compliance with those standards.

Four comments requested that the final rule not apply to sister vessels of vessels already operating on the OCS. They argued that these vessels are identical in design to those existing vessels that the Coast Guard is excluding from the requirements of this final rule.

Under the NPRM, vessels new to the OCS would have been subject to the new requirements, whereas vessels and facilities that had previously operated on the OCS would not. In this final rule, we have changed the applicability to include only those vessels and facilities that are constructed after April 2, 2018 and that engage in OCS activities. This final rule, therefore, does not place new requirements on any existing vessels or facilities nor any vessel or facility that is constructed on or before April 2, 2018. Existing vessels or facilities or those constructed on or before April 2, 2018 will remain subject to the regulations and standards effective at the time of their construction and will remain subject to Coast Guard inspection. Any vessel or facility constructed after the implementation date will be subject to the requirements of 46 CFR subpart 111.108 before operating on the OCS.

Eleven comments addressed the proposed requirement in 46 CFR 111.108-3 requiring the testing and certification of electrical equipment in hazardous locations by an independent laboratory. The definition of independent laboratory in the Coast Guard's Electrical Engineering regulations is contained in 46 CFR 110.15-1, and means a laboratory accepted by the Coast Guard using the independent laboratory criteria found in 46 CFR 159.010. Commenters stated that this requirement is burdensome and unnecessary, particularly for Ex Certification Bodies (ExCBs) and Ex Testing Laboratories operating under the IECEx System. Additionally, these commenters were concerned that there were not enough independent laboratories accepted by the Coast Guard, particularly within the IECEx System, to meet the demands for equipment certifications necessary to comply with this final rule. Further, the commenters stated that requiring Coast Guard-accepted independent laboratories undermines use of international standards, foreign flag administrations, and Recognized Organizations.

We disagree. First, there are differing interpretations of the “independent testing laboratory” certification contained in the 2009 MODU Code. U.S. MODUs, vessels and floating facilities, have been subject to independent third-party testing for over 30 years because we believe it is a critically important element in preventing accidental explosions in hazardous locations. As the coastal state with jurisdiction, we find that it is a necessary and reasonable safety measure to require that newly constructed foreign vessels and floating facilities that engage in OCS activities have uniform safety standards for explosion protection in hazardous locations. This final rule, therefore, requires compliance with uniform explosion protection standards and certification regimes. The requirement to use Coast Guard-accepted independent laboratories allows the Coast Guard reasonable oversight of laboratories located worldwide and is consistent with our existing regulations for U.S. vessels and facilities engaged in OCS activities. Currently, the majority of ExCBs are Coast Guard-accepted independent laboratories. We have contacted all ExCBs to suggest that they apply for acceptance. We expect that if the demand is present, additional ExCBs will apply for acceptance. Because this final rule applies to new vessels and facilities constructed after April 2, 2018, we expect system designers, equipment manufacturers, and independent laboratories will be able to smoothly transition from existing international standards to the requirements of this final rule. Finally, the existing SOLAS standards do not completely account for the particularities of vessels designed and constructed for OCS activities, and the 2009 IMO MODU Code is neither mandatory nor applicable to all vessels. Therefore, implementation of a domestic standard for electrical equipment in hazardous locations is necessary to ensure that all vessels engaged in U.S. OCS activities meet uniform safety standards particular to OCS activities and does not undermine international standards or organizations.

In a separate rulemaking, the Coast Guard published an interim rule on August 18, 2014 (79 FR 48894) for U.S. offshore supply vessels greater than 6,000 GT ITC. That interim rule also recognized the IECEx System for certification of electrical equipment in hazardous locations. Unlike section 111.108-3(b)(3) of this final rule, 46 CFR 111.106-3(b)(3)(iii) of the interim rule does not require certification of electrical equipment in hazardous locations to be done by a Coast Guard accepted independent laboratory. The Coast Guard recognizes the inconsistency between 46 CFR 111.106-3(b)(3)(iii) of the interim rule and 46 CFR 111.108-3(b)(3) of this final rule and intends to align 46 CFR 111.106-3(b)(3)(iii) with this final rule in a future rulemaking.

Eight comments suggested the Coast Guard accept electrical equipment with certification issued under the European Commission Directive (94/9/EC) on equipment and Protective Systems Intended for use in Potentially Explosive Atmospheres (ATEX Directive or ATEX).

We disagree. ATEX certification does not require independent third party testing for all types of equipment. It also does not ensure that electrical equipment installed in hazardous locations is fully tested to relevant standards. When foreign MODUs and vessels have electrical equipment installed in hazardous locations that is not independently tested, there is not the same level of safety for explosion protection in hazardous areas as required of U.S. vessels and floating facilities that operate on the OCS and that are required to meet 46 CFR subpart 111.105. The ATEX Directive is a European conformity assessment scheme designed to facilitate trade within Europe and is based on “Essential Health and Safety Requirements.” Additionally, the ATEX Directive is currently not applicable to seagoing vessels or MODUs and it is our experience with ATEX certification that it can be difficult to determine the extent of testing performed by the “notified body 1  ”.

It is also important to recognize that some ATEX certified electrical equipment may be acceptable under subpart 111.108 if it can be demonstrated that the electrical equipment has been fully tested and certified to the applicable standards contained in 46 CFR subchapter J by an independent laboratory as defined in 46 CFR 110.15-1. Frequently, equipment with ATEX certification also has certifications acceptable under 46 CFR 111.108-3 of this final rule.

Two comments requested that the Coast Guard clarify a statement in CG-ENG Policy Letter No. 01-13, Alternate Design and Equipment Standard for Floating Offshore Installations (FOI) and Floating Production, Storage, and Offloading (FPSO) Units on the U.S. Outer Continental Shelf, of June 26, 2013. For hazardous locations, the policy letter states that electrical equipment certified under the ATEX scheme will not be accepted by the Coast Guard. As explained above, if the equipment is also certified in accordance with one of the acceptable methods listed in 46 CFR 111.108-3, in addition to its ATEX certification, then the equipment is acceptable under 46 CFR 111.108-3 of this final rule.

Three comments said the proposed use of Class I, Special Division 1 in 46 CFR 111.108-3(e) may cause confusion as it is not a term recognized by the National Fire Protection Association's (NFPA) standard, NFPA 70, National Electrical Code (NEC), We disagree and have not revised this section. Class I, Special Division 1 is intended to be equivalent to Class I, Zone 0, and is consistent with Informational Note No. 2 of Article 500.5(B)(3) of NFPA 70. Coast Guard regulations have long recognized that certain spaces such as cargo pump rooms and cargo tanks are more hazardous than other Class I, Division 1 locations. For these hazardous locations, we limit the types of permitted electrical installations. Use of the term “Class I, Special Division 1” simplifies the designation of these locations.

Five comments recommended that the Coast Guard establish standards for the design, installation, inspection, and maintenance of electrical equipment in hazardous locations. Two comments suggested requiring an onboard electrical equipment register that contains information regarding electrical equipment and its inspection, maintenance, and operational history. The commenters also suggest this information could be reviewed by visiting Coast Guard marine inspectors or third-party inspection personnel and could become part of a company's quality system. We agree that competency and accurate recordkeeping are critical to safety, but this recommendation is outside the scope of this rulemaking.

Under the NPRM, vessels and facilities new to the OCS would be subject to the NPRM, whereas vessels and facilities that had previously operated on the OCS, would not. Two comments requested that the Coast Guard more clearly define what constitutes having “operated on the OCS.” Because this final rule now applies only to vessels and facilities constructed after April 2, 2018, that engage in OCS activities, we believe no further elaboration is needed, because the phrase “operated on the OCS” is no longer used.

Two comments requested clarification on the responsibilities of the Coast Guard and of the Bureau of Safety and Environmental Enforcement (BSEE) for electrical equipment in hazardous locations on MODUs under the USCG/BSEE Memorandum of Agreement, OCS-8, signed June 4, 2013. While the subject is outside the scope of this rulemaking because neither agency's responsibilities with regard to regulating electrical equipment located in hazardous locations are affected by this final rule, it is relevant to understanding the regulatory requirements for electrical equipment located in hazardous locations.

BSEE and Coast Guard have a shared responsibility for safety on the OCS. In general, the Coast Guard is responsible for the vessel or facility and all of its supporting systems while BSEE is responsible for systems related to the drilling and production of resources. Classification of hazardous locations and design of electrical systems is a vessel-wide or facility-wide task and the Coast Guard maintains a holistic view of the vessel or facility. The Coast Guard, in this rule, provides an expanded list of standards that are applicable to systems under the Coast Guard's jurisdiction as explained in BSEE-USCG MOA OCS-8. The electrical safety standards contained in BSEE's OCS regulations, 30 CFR part 250, are acceptable to the Coast Guard. Frequently, drilling and production components will be installed on vessels or facilities on a temporary or semi-temporary basis. In general, BSEE oversees these systems and if they find them acceptable, their installation is acceptable to the Coast Guard.

Two comments suggested that electrical equipment in Division 2 or Zone 2 locations be accepted without independent third-party certification or be accepted with ATEX certification. The Coast Guard agrees to the extent that applicable provisions of NFPA 70 and the 2009 IMO MODU Code permit. 46 CFR 111.108-3(b)(1) and (b)(2) incorporate by reference Articles 500-504 and Article 505 of the NFPA 70. Articles 501.125(B) and 505.20(C) of the NFPA 70 allow the installation of certain electrical equipment in these locations without independent identification or listing if the equipment meets specific requirements that reduce the risk of explosion. This final rule is not intended to modify these standards. 46 CFR 111.108-3(b)(3) incorporates Chapter 6 of the 2009 IMO MODU Code and requires certification under the IECEx System. The IECEx System requires independent certification for all electrical equipment in hazardous areas. This final rule is not intended to modify the IECEx System. Electrical system designers must choose an explosion protection standards regime from the list of acceptable options provided in 46 CFR 111.108-3 and comply with the standards regime they chose.

One comment requested that the Coast Guard incorporate the latest ANSI/ISA safety standards for hazardous locations. The Coast Guard agrees and notes that 46 CFR 111.108-3(b) incorporates the ANSI/ISA series of standards incorporated in NFPA 70, as it did in the NPRM.

Two comments noted that some required equipment located in hazardous locations is not available as certified for Zone 2 areas, such as search and rescue transponders. The Coast Guard agrees with this comment, and notes that several standards included in this final rule address this situation. The objective of this final rule is to provide a selection of standards for certification of electrical equipment in hazardous locations. Electrical equipment not meeting the Class I, Zone 2 or Class I, Division 2 requirements, should be installed as far as possible from hazardous locations, or if not possible, located or installed in the least hazardous location. Standards listed in 46 CFR 111.108-3 of this final rule do address equipment such as this. Section 6.3.3 of IEC 61892-7:2007,2 which is accepted by the 2009 IMO MODU Code, refers to an assessment for energy-limited equipment and circuits that is provided in IEC 60079-15, ANSI/ISA 60079-15, ANSI/ISA-12.12.01, and UL 1604. Similarly, non-third party assessment provisions are provided in Article 501 of NFPA 70 for electrical equipment without switching mechanisms, or similar arc producing devices. These standards can be used when certain required equipment is not available as certified for Zone 2 areas.

One comment asked if equipment tested to the IECEx System but not yet marked as such would be acceptable. The commenter explained that equipment is sometimes delivered before the IECEx Certificate of Compliance is issued. Another comment noted that equipment can be certified under both the ATEX Directive and the IECEx System but only have ATEX labeling. Finally, a comment requested acceptance of equipment consisting of assemblies of IECEx certified components rather than requiring a certificate for the entire assembly.

These are compliance issues that can be very simple or very complex depending on the type of equipment and will be addressed by the Marine Safety Center (MSC) or cognizant Officer-in-Charge, Marine Inspection on a case-by-case basis. When IECEx on any other Coast Guard accepted independent third party certification is unclear, documentation must be presented that demonstrates the equipment meets the applicable requirements. Any equipment or assembly of equipment must meet all the requirements of the IECEx System. It is not the Coast Guard's intent to modify the IECEx System.

One comment requested that the Coast Guard consider lowering the minimum flashpoint that defines hazardous locations, because Ultra Low Sulfur (ULS) diesel fuels are being produced against a minimum flashpoint of 52° C, rather than the 60° C minimum that has served as the basis for both Coast Guard and IMO requirements to date. We are unable to make this change in the final rule because it was not proposed in the NPRM. The minimum flashpoint of 60° C exists in numerous standards and regulations including 46 CFR 111.105-29, 46 CFR 111.105-31, 46 CFR 58.01-10, numerous locations within SOLAS, and IEC 60092-502:1999. We may consider proposing a change to the minimum flashpoint in a future rulemaking. This will provide the public the opportunity to comment on the proposal. Until that occurs, the MSC can accept arrangements that provide an equivalent level of safety in accordance with 46 CFR 110.20-1.

One commenter requested that drill floor equipment that is IECEx certified for Class I, Zone 1 or Class I, Zone 2 be permitted on drill floors classified to Class I, Division 1 or Class I, Division 2. Equipment certified using the zone classification system, regardless of whether certification was by a Coast Guard-accepted independent laboratory or IECEx ExCB, is permitted in locations that are classified using the division classification system in accordance with Article 501.5 of NFPA 70, NEC. The same commenter requested that drill floors be allowed to be classified under both systems so that both zone and division certified equipment could be used. We do not favor one classification system over the other and we are not opposed to dual classification, but we caution that great care must be taken. While both systems offer comparable levels of safety the two systems are not identical or interchangeable. Indiscriminate “mixing and matching” of systems could result in errors that result in lower levels of safety. This limits the benefit of dual classification. Article 505.7 of NFPA 70 provides details on dual classification. Any mixing of classification systems should be done in accordance with NFPA 70 to ensure that the requirements of 46 CFR subpart 111.108 are met.

The Director of the Federal Register has approved the material in § 110.10-1 for incorporation by reference under 5 U.S.C. 552 and 1 CFR part 51. Copies of the material are available from the sources listed in that section.

We developed this rule after considering numerous statutes and Executive Orders (E.O.s) related to rulemaking. Below we summarize our analyses based on these statutes or E.O.s.

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

This rule is not a significant regulatory action under section 3(f) of Executive Order 12866 as supplemented by Executive Order 13563, and does not require an assessment of potential costs and benefits under section 6(a)(3) of that Order. The Office of Management and Budget (OMB) has not reviewed it under that Order. Nonetheless, we developed an analysis of the costs and benefits of the rule to ascertain its probable impacts on industry.

A summary of the changes between the NPRM and the final rule follows:

The Coast Guard received several comments on the published NPRM. These comments have been grouped by topic, as several comments addressed similar concerns, and are discussed in the following table.

We do not anticipate any costs to be borne by the U.S.-flagged vessels that will be affected by this rule. The rule requires that all U.S. vessels, excluding OSVs that are regulated under 46 CFR subchapter L, that are constructed after April 2, 2018 and engage in OCS activity, comply with the newly created subpart 111.108. U.S. flagged vessels which fall within this scope are provided with an expanded list of standards and certification options.

Subpart 111.108 will not impose any burden on U.S. vessels due to the nature of current industry practice. Because North American certification of electrical equipment is generally to the most current edition of the published reference standards,3 we do not anticipate new equipment will be tested and certified to the standards referenced in subpart 111.105 when more current, updated editions of the standards are available.

The logic applied to U.S. vessels, excluding OSVs as discussed above, applies to U.S. MODUs and floating OCS facilities as well. We do not anticipate any cost burden associated with this rule to be imposed on this vessel class. We believe this because the affected population are those U.S. MODUs and floating OCS facilities that are constructed after April 2, 2018. These vessels will be subject to subpart 111.108, a subpart that contains the updated standards to which new equipment will be certified. As with the vessels discussed earlier, in the absence of subpart 111.108, new equipment would be built to the most current standards as a matter of industry practice. Under this final rule, this scenario will not require any costs to the vessel owner as there is no change in the regulatory environment for U.S. MODUs and floating OCS facilities.

Under this final rule, all U.S. MODUs, floating OCS facilities, vessels other than OSVs, and U.S. tank vessels may comply with this new subpart in lieu of §§ 111.105-1 through 111.105-15. We do not foresee any additional costs to the owners of these vessels and facilities by providing this option but if there are additional costs, there is expected to be equal or greater benefit to the owner driving the selection of this option. Currently, the regulations for electrical installations in hazardous locations are contained in subpart 111.105. This regulation will expand the available subparts to include subpart 111.108, while still allowing owners and operators the option to remain subject to existing subpart 111.105.

While the modification of the affected population aids us in estimating the effects of the proposed rulemaking, it does not further refine the costs which are applied to the population. As some commenters on the NPRM document have reinforced, the estimated costs associated with the rule could vary widely. Industry costs were constructed from a variety of elements, for example the cost of certifying equipment or the opportunity cost of recertification of said equipment. With the modification of the affected population we are able to drop the opportunity cost from our analysis, which allows us to further streamline our discussion of the costs for the rulemaking. What remains is the cost associated with third party certification of equipment.

Currently, foreign vessels are not required to utilize third party certified equipment in hazardous areas unless explicitly required by their flag state. Implementation of the final rule will require certification by a Coast Guard approved, independent laboratory which, in effect, changes the baseline for newly constructed foreign vessels. Foreign flagged vessels constructed 3 years after the implementation date seeking entrance to the OCS in pursuit of OCS activities will be required to utilize third party certified equipment where previously this was not explicitly required. Our analysis of this baseline change is clouded by the aggregate nature of the cost of certification. When an entity purchases equipment for use in a hazardous location on a vessel, the marginal cost of the certification element of the purchase price is not itemized for the purchaser. The certification cost is present in the purchase price as a value added component of the total price of the equipment. As such, we are not able to explicitly determine the marginal cost difference between equipment certified by a third party and those without third party certification. Additionally, the list of equipment present in these locations, and required to be third party certified, is diverse. For example, one equipment list obtained by the Coast Guard contained equipment which ranged in complexity from a fluorescent light to elements of the tank temperature monitoring system.

While the cost estimation is obtuse, it is not insurmountable. We have several elements which should allow us to construct a range for the final rule's associated costs. On the high end of the range, we have the cost to replace all of the electrical installations in a representative vessel. While not specifically applicable to a newly built vessel, it is an appropriate estimate of the costs associated with replacement of electrical installations in hazardous areas. This estimate contains the costs associated with replacement of both the equipment and the certification on a U.S. flagged vessel, which are already subject to the certification requirements in this final rule.

The $500,000 cost quote 4 for replacement of the equipment appropriate for a hazardous location on a vessel is useful as a cost ceiling. The replacement cost for this equipment, contains that which is associated with the third party certification, in addition to the price of the equipment itself. This functions well as a price ceiling as we can be sure that the marginal cost of third party certification will fall below this point estimate, as it is not likely to be above the full cost of the equipment with its associated certification.

The cost floor is a function of costs potentially accrued to a hypothetical vessel to be built in the future. In some cases these vessels would be built to the certification specifications contained in this final rule anyway, in which case they would accrue no additional costs from this rule. However, due to the probable greater cost of third-party-certified equipment, we can assume that, without this rulemaking, some equipment would be installed without third party certification. Table 3 presents the range.

The Coast Guard-maintained MISLE database, contains records of all applicable vessels operating on the OCS in pursuit of OCS activities. Historic data extracted from this database is presented below in Table 4.

Over the past 10 years, 17 foreign vessels have been built which would fall under this rule's application. The database was filtered to include foreign vessels, those vessel classes which would potentially be on the OCS in pursuit of OCS activities, and have build years within the past decade. Evaluation of this data found that on average, 2 foreign vessels are built per year which could seek entrance to the US OCS in pursuit of OCS activities.

Therefore, the range of costs associated with this rulemaking will fall between $0 (2 Vessels * $0) and $1,000,000 (2 vessels * $500,000) per year with an average per year cost of $500,000 (2 vessels * $250,000).

Burden estimates in the NPRM were $800,000 per year. With the changes that the final rule makes to the affected population, the yearly costs have been reduced, by an estimation that is upwards of 37%.

We are unable to monetize benefits. We can find no casualties that would have been prevented by these regulations. However, third-party testing and certification for critical equipment, such as electrical equipment intended for use in hazardous locations, addresses a potentially catastrophic hazard consisting of an explosive gas or vapor combined with an electrical ignition source, and is generally understood by industry as an appropriate measure that enhances safety and protects life, the environment, and property.

We considered five alternatives when evaluating the effects of this final rule. The first, abstaining from action, was rejected because it allows a regulatory imbalance and a potential safety gap to exist between foreign vessels and U.S. vessels operating on the OCS.

The second alternative we considered was to require both U.S. and foreign vessels and facilities to adhere to the existing international standards. This alternative was deemed insufficient because compliance with international standards, such as the 2009 IMO Code, is subject to the interpretation of the applicable flag administration. An example of an undesired consequence of this alternative would be the acceptance of ATEX certified equipment. The Coast Guard, however, will not accept ATEX certifications because evidence of full testing to the applicable harmonized 60079 series of standards by an independent third-party laboratory is not guaranteed. Consistent with preexisting Coast Guard practices, third-party testing and certification for critical equipment is generally required.

The third alternative we considered was to require foreign vessels and floating facilities to meet current U.S. standards. This alternative was not selected because we believe that requiring compliance with U.S. standards is unnecessary when there are comparable international standards acceptable to the Coast Guard. Because these latest editions of internationally recognized standards for explosion protection offer owners and operators greater flexibility, while also avoiding the costs of coastal state-specific requirements, we are expanding the list of international explosion protection standards deemed acceptable.

The fourth alternative, implementing the regulations in this final rule, puts in place a regulatory regime that will allow for both the U.S., as the coastal state, and industry to be confident in the certification and assessment of electrical equipment intended for use in hazardous locations. This will be achieved through the use of the most current, internationally recognized standards for explosion protection and independent third-party certification. The regulations in this final rule expand the list of national and international explosion protection standards deemed acceptable for U.S. operators.

A fifth and final alternative is that which was presented to the public in the NPRM. This alternative included the application of the NPRM regulations to existing vessels before those vessels engaged in OCS activities for the first time. This alternative would have included foreign vessels currently under contract or construction. We determined that this alternative would force an undue burden on the industry due primarily to the cost effects. Industry's comments to the docket suggest that the compliance cost per vessel could be cost prohibitive. With current estimates of 219 foreign MODUs in some stage of construction, the cost of this alternative could have potentially outpaced its benefits.

Under the Regulatory Flexibility Act, 5 U.S.C. 601-612, we have considered whether this rule will have a significant economic impact on a substantial number of small entities. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000.

We do not anticipate any effect on small entities. As noted in the previous discussion, there is no anticipated cost burden placed on U.S. entities by this rule and, as such, we do not anticipate any effect on small entities that would be addressed by this section. Therefore, the Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996, Public Law 104-121, we offered to assist small entities in understanding this rule so that they could better evaluate its effects on them and participate in the rulemaking. The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247).

This rule calls for no new collection of information under the Paperwork Reduction Act of 1995, 44 U.S.C. 3501-3520.

A rule has implications for federalism under Executive Order 13132, Federalism, if it has 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. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental principles and preemption requirements described in Executive Order 13132. Our analysis is explained below.

It is well settled that States may not regulate in categories reserved for exclusive regulation by the Coast Guard. It is also well settled that all of the categories for inspected vessels covered in 46 U.S.C. 3306, 3703, 7101, and 8101 (design, construction, alteration, repair, maintenance, operation, equipping, personnel qualification, and manning of vessels), as well as the reporting of casualties and any other category in which Congress intended the Coast Guard to be the sole source of a vessel's obligations, are within fields foreclosed from regulation by the States. (See the decision of the Supreme Court in the consolidated cases of United States v. Locke and Intertanko v. Locke, 529 U.S. 89, 120 S.Ct. 1135 (March 6, 2000).) This final rule regulates electrical equipment standards on inspected vessels. As such, States may not regulate within this category. Therefore, the rule is consistent with the principles of federalism and preemption requirements in Executive Order 13132.

The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1531-1538, requires Federal agencies to assess the effects of their discretionary regulatory actions. In particular, the Act addresses actions that may result in the expenditure by a State, local, or tribal government, in the aggregate, or by the private sector of $100,000,000 (adjusted for inflation) or more in any one year. Though this rule will not result in such an expenditure, we do discuss the effects of this rule elsewhere in this preamble.

This rule will not cause a taking of private property or otherwise have taking implications under E.O. 12630 (“Governmental Actions and Interference with Constitutionally Protected Property Rights”).

This rule meets applicable standards in sections 3(a) and 3(b)(2) of E.O. 12988, (“Civil Justice Reform”), to minimize litigation, eliminate ambiguity, and reduce burden.

We have analyzed this rule under E.O. 13045 (“Protection of Children from Environmental Health Risks and Safety Risks”). This rule is not an economically significant rule and would not create an environmental risk to health or risk to safety that might disproportionately affect children.

This rule does not have tribal implications under E.O. 13175 (“Consultation and Coordination with Indian Tribal Governments”), because it would 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.

We have analyzed this rule under E.O. 13211 (“Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use”). We have determined that it is not a “significant energy action” under that order because it is not a “significant regulatory action” under E.O. 12866 and is not likely to have a significant adverse effect on the supply, distribution, or use of energy.

The National Technology Transfer and Advancement Act, codified as a note to 15 U.S.C. 272, directs agencies to use voluntary consensus standards in their regulatory activities unless the agency provides Congress, through OMB, with an explanation of why using these standards would be inconsistent with applicable law or otherwise impractical. Voluntary consensus standards are technical standards (e.g., specifications of materials, performance, design, or operation; test methods; sampling procedures; and related management systems practices) that are developed or adopted by voluntary consensus standards bodies.

This rule uses the following voluntary consensus standards:

The sections that reference these standards and the locations where these standards are available are listed in 46 CFR 110.10-1.

This rule also uses technical standards other than voluntary consensus standards.

The section that references this standard and the locations where this standard is available are listed in 46 CFR 110.10-1.

We have analyzed this final rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (NEPA) (42 U.S.C. 4321-4370f), and have concluded that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This final rule is categorically excluded under section 2.B.2, figure 2-1, paragraphs (34)(a), (d) and (e) of the Instruction and under section 6(a) of the “Appendix to National Environmental Policy Act: Coast Guard Procedures for Categorical Exclusions, Notice of Final Agency Policy” (67 FR 48244, July 23, 2002).” This final rule involves regulations which are editorial and concern inspection and equipping of vessels and regulations concerning vessel operation safety standards. An environmental analysis checklist and a categorical exclusion determination are available in the docket where indicated under ADDRESSES.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR parts 140 and 143 and 46 CFR parts 110 and 111 as follows:

OFCCP published a final rule entitled “Implementation of Executive Order 13672 Prohibiting Discrimination Based on Sexual Orientation and Gender Identity by Contractors and Subcontractors” on December 9, 2014. This final rule amends the regulations implementing Executive Order 11246 by replacing the words “sex, or national origin” with the words “sex, sexual orientation, gender identity, or national origin” as directed by Executive Order 13672, titled “Further Amendments to Executive Order 11478, Equal Employment Opportunity in the Federal Government and Executive Order 11246, Equal Employment Opportunity.” This final rule becomes effective on April 8, 2015.

OFCCP submitted the information collection request on December 8, 2014 to OMB for approval in accordance with the Paperwork Reduction Act of 1995. On March 17, 2015 OMB approved the collections of information contained in the final rule and assigned this collection OMB Control Number 1250-0009 title “Prohibiting Discrimination Based on Sexual Orientation and Gender Identity by Contractors and Subcontractors.” The approval for the collection expires on September 30, 2015. The approved collections of information are:

• Amending the Equal Opportunity Clause: Sections 60-1.4(a) and (b) and 60-4.3(a);

• Amending the Tag Line in Job Advertisements and Solicitations: Sections 60-1.4(a)(2), and 1.4(b)(2); and

• Reporting Denied Visas to Department of State and OFCCP: Section 60-1.10.

As required by the Paperwork Reduction Act of 1995, the Federal Register Notice for the final rule stated that compliance with the collection of information requirements was not required until these requirements are approved by OMB, and the Department of Labor publishes a notice in the Federal Register announcing that OMB approved and assigned a control number to the requirements. As provided in 5 CFR 1320.5(b) and 1320.6(a), an agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs members of the public who must respond to the collection of information that they are not required to respond to the collection of information unless the agency displays a currently valid OMB control number.

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council (Council) under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The annual pollock TACs in Statistical Areas 610, 620, and 630 of the GOA are apportioned among four seasons, in accordance with § 679.23(d)(2). Regulations at § 679.20(a)(5)(iv)(B) allow the underharvest of a seasonal apportionment to be added to subsequent seasonal apportionments, provided that any revised seasonal apportionment does not exceed 20 percent of the seasonal apportionment for a given statistical area. Therefore, NMFS is increasing the B season apportionment of pollock in Statistical Areas 610, 620, and 630 of the GOA to reflect the underharvest of pollock in those areas during the A season. In addition, any underharvest remaining beyond 20 percent of the originally specified seasonal apportionment in a particular area may be further apportioned to other statistical areas. Therefore, NMFS also is increasing the B season apportionment of pollock to Statistical Area 620 based on the underharvest of pollock in Statistical Areas 610 and 630 of the GOA. These adjustments are described below.

The B seasonal apportionment of the 2015 pollock TAC in Statistical Area 610 of the GOA is 3,632 metric tons (mt) as established by the final 2015 and 2016 harvest specifications for groundfish of the GOA (80 FR 10250, February 25, 2015). In accordance with § 679.20(a)(5)(iv)(B), the Administrator, Alaska Region, NMFS (Regional Administrator), hereby increases the B season apportionment for Statistical Area 610 by 726 mt to account for the underharvest of the TAC in Statistical Area 610 in the A season. This increase is not greater than 20 percent of the B seasonal apportionment of the TAC in Statistical Area 610. Therefore, the revised B seasonal apportionment of the pollock TAC in Statistical Area 610 is 4,358 mt (3,632 mt plus 726 mt).

The B seasonal apportionment of the pollock TAC in Statistical Area 620 of the GOA is 37,820 mt as established by the final 2015 and 206 harvest specifications for groundfish of the GOA (80 FR 10250, February 25, 2015). In accordance with § 679.20(a)(5)(iv)(B), the Regional Administrator hereby increases the B seasonal apportionment for Statistical Area 620 by 5,693 mt to account for the underharvest of the TAC in Statistical Areas 610, 620, and 630 in the A season. This increase is in proportion to the estimated pollock biomass and is not greater than 20 percent of the B seasonal apportionment of the TAC in Statistical Area 620. Therefore, the revised B seasonal apportionment of the pollock TAC in Statistical Area 620 is 43,513 mt (37,820 mt plus 5,693 mt).

The B seasonal apportionment of pollock TAC in Statistical Area 630 of the GOA is 4,000 mt as established by the final 2015 and 2016 harvest specifications for groundfish of the GOA (80 FR 10250, February 25, 2015). In accordance with § 679.20(a)(5)(iv)(B), the Regional Administrator hereby increases the B seasonal apportionment for Statistical Area 630 by 800 mt to account for the underharvest of the TAC in Statistical Area 630 in the A season. This increase is not greater than 20 percent of the B seasonal apportionment of the TAC in Statistical Area 630. Therefore, the revised B seasonal apportionment of pollock TAC in Statistical Area 630 is 4,800 mt (4,000 mt plus 800 mt).

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would provide opportunity to harvest increased pollock seasonal apportionments. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of March 25, 2015.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.20 and is exempt from review under Executive Order 12866.