Federal Register Vol. 80, No.77,

Federal Register Volume 80, Issue 77 (April 22, 2015)

Page Range22357-22616
FR Document

80_FR_77
Current View
Page and SubjectPDF
80 FR 22611 - Sunshine Act Meetings; Unified Carrier Registration Plan Board of DirectorsPDF
80 FR 22503 - Sunshine Act MeetingsPDF
80 FR 22548 - Certain Opaque Polymers; Commission Decision Affirming Grant of Default and Sanctions; Finding a Violation of Section 337; Issuing Remedial Orders and Terminating the InvestigationPDF
80 FR 22564 - Records Schedules; Availability and Request for CommentsPDF
80 FR 22564 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
80 FR 22545 - Connecticut; Major Disaster and Related DeterminationsPDF
80 FR 22539 - Public Availability of the Department of Health and Human Services FY 2014 Service Contract InventoryPDF
80 FR 22534 - Ebola Virus Disease TherapeuticsPDF
80 FR 22434 - Enhanced Security of Special Nuclear MaterialPDF
80 FR 22403 - Indian Education Discretionary Grants Program; Professional Development Program and Demonstration Grants for Indian Children ProgramPDF
80 FR 22418 - Saflufenacil; Pesticide TolerancesPDF
80 FR 22524 - ECM BioFilms, Inc., et al. Oral Argument Before the CommissionPDF
80 FR 22434 - Office of Women Owned Business: Women's Business Center ProgramPDF
80 FR 22477 - Supercalendered Paper From Canada: Postponement of Preliminary Determination in the Countervailing Duty InvestigationPDF
80 FR 22473 - Codex Alimentarius Commission: Meeting of the Codex Alimentarius CommissionPDF
80 FR 22475 - Light-Walled Rectangular Pipe and Tube From Turkey; Preliminary Results of Antidumping Duty Administrative Review; 2013-2014PDF
80 FR 22421 - Final Action Regarding “Other Relevant Criteria” for Consideration When Evaluating the Economic Soundness of Title XI Maritime Loan Guarantee Program ApplicationsPDF
80 FR 22546 - Massachusetts; Major Disaster and Related DeterminationsPDF
80 FR 22449 - Tax on Certain Foreign ProcurementPDF
80 FR 22606 - Grand Canyon National Park Quiet Aircraft Technology Incentive: Seasonal Relief From Allocations in the Dragon and Zuni Point CorridorsPDF
80 FR 22605 - In the Matter of the Designation of Ahmed Diriye, Also Known as Ahmad Umar Abu Ubaidah, Also Known as Mahad Diriye, Also Known as Abu Ubaidah, Also Known as Ahmad Umar, Also Known as Ahmed Omar Abu Ubaidah, Also Known as Sheikh Ahmad Umar Abu Ubaidah, Also Known as Sheikh Ahmed Umar Abu Ubaidah, Also Known as Sheikh Omar Abu Ubaidaha, Also Known as Sheikh Ahmed Umar, Also Known as Sheikh Mahad Omar Abdikarim, Also Known as Abu Diriye, as a Specially Designated Global Terrorist Pursuant to Section 1(b) of Executive Order 13224, as AmendedPDF
80 FR 22605 - In the Matter of the Designation of Mahad “Karate”; Also Known as Mahad Mohamed Ali “Karate”; Also Known as Mahad Warsame Qalley Karate; Also Known as Abdirahim Mohamed Warsame as a Specially Designated Global Terrorist Pursuant to Section 1(b) of Executive Order 13224, as AmendedPDF
80 FR 22604 - 60-Day Notice of Proposed Information Collection: Statement of Claim Related to Deportation During the HolocaustPDF
80 FR 22475 - First Responder Network Authority Board Special MeetingPDF
80 FR 22603 - Issuance of a Presidential Permit To Replace, Expand, Operate and Maintain the Existing Columbus Land Port of EntryPDF
80 FR 22606 - Department of State FY 2014 Service Contract InventoryPDF
80 FR 22611 - Application of Cargo Preference Requirements to the Federal Ship Financing ProgramPDF
80 FR 22523 - Notice of Agreements FiledPDF
80 FR 22541 - Submission for OMB Review; 30-day Comment Request; STAR METRICS® (Science and Technology for America's Reinvestment: Measuring the Effects of Research on Innovation, Competitiveness and Science) (OD)PDF
80 FR 22566 - Agency Information Collection Activities: Proposed Collection, Comment RequestPDF
80 FR 22542 - Proposed Collection; 60-Day Comment Request; Generic Clearance To Conduct Voluntary Customer/Partner Surveys (NLM)PDF
80 FR 22516 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Ferroalloys Production Area Sources (Renewal)PDF
80 FR 22613 - Ace Express Coaches, LLC, et al.; Acquisition and Control; Certain Properties of Evergreen Trails, Inc. d/b/a Horizon Coach LinesPDF
80 FR 22543 - Proposed Collection; 60-Day Comment Request: National Children's Study (NCS) Data Archive and Repository (NICHD)PDF
80 FR 22468 - Listing Endangered or Threatened Species; 90-Day Finding on a Petition To Delist the Snake River Fall-Run Chinook Salmon Evolutionarily Significant UnitPDF
80 FR 22511 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; NESHAP for Natural Gas Transmission and Storage (Renewal)PDF
80 FR 22422 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Fishery of the Gulf of Mexico; Amendment 40PDF
80 FR 22525 - Office of Child Support Enforcement; Notice of ConsultationPDF
80 FR 22553 - Manufacturer of Controlled Substances Registration: Cedarburg Pharmaceuticals, Inc.PDF
80 FR 22561 - Importer of Controlled Substances Registration: Actavis Pharma, Inc.PDF
80 FR 22507 - Physical Characterization of Grid-Connected Commercial and Residential Buildings End-Use Equipment and AppliancesPDF
80 FR 22506 - Environmental Management Site-Specific Advisory Board, Savannah River SitePDF
80 FR 22615 - Open Meeting of the Federal Advisory Committee on InsurancePDF
80 FR 22543 - Quarterly IRS Interest Rates Used in Calculating Interest on Overdue Accounts and Refunds on Customs DutiesPDF
80 FR 22552 - Importer of Controlled Substances Application: Sigma-Aldrich International GMBH, Sigma Aldrich Co., LLCPDF
80 FR 22553 - Importer of Controlled Substances Application: Meridian Medical TechnologiesPDF
80 FR 22561 - Importer of Controlled Substances Application: Stepan CompanyPDF
80 FR 22524 - Formations of, Acquisitions by, and Mergers of Bank Holding CompaniesPDF
80 FR 22524 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding CompanyPDF
80 FR 22554 - Importer of Controlled Substances Application: Actavis Laboratories FL, Inc.PDF
80 FR 22556 - Importer of Controlled Substances Application: Rhodes TechnologiesPDF
80 FR 22552 - Importer of Controlled Substances Application: Unither Manufacturing, LLCPDF
80 FR 22561 - Importer of Controlled Substances Application: Siegfried USA, LLCPDF
80 FR 22559 - Importer of Controlled Substances Application: Johnson Matthey, Inc.PDF
80 FR 22554 - Bulk Manufacturer of Controlled Substances Application: Pharmacore, Inc.PDF
80 FR 22556 - Importer of Controlled Substances Application: Almac Clinical Services Inc. (ACSI)PDF
80 FR 22553 - Importer of Controlled Substances Application: PHARMACOREPDF
80 FR 22555 - Bulk Manufacturer of Controlled Substances Application: Noramco, Inc.PDF
80 FR 22559 - Bulk Manufacturer of Controlled Substances Application; Johnson Matthey Pharmaceutical Materials, Inc.PDF
80 FR 22557 - Bulk Manufacturer of Controlled Substances Application: Cayman Chemicals CompanyPDF
80 FR 22557 - Bulk Manufacturer of Controlled Substances Application: Sigma Aldrich Research Biochemicals, Inc.PDF
80 FR 22555 - Bulk Manufacturer of Controlled Substances Application: Stepan CompanyPDF
80 FR 22560 - Bulk Manufacturer of Controlled Substances Application: Cody Laboratories, Inc.PDF
80 FR 22555 - Bulk Manufacturer of Controlled Substances Application: Cambrex Charles CityPDF
80 FR 22560 - Bulk Manufacturer of Controlled Substances Application: AMRI Rensselaer, Inc.PDF
80 FR 22559 - Bulk Manufacturer of Controlled Substances Application: National Center for Natural Products Research (NIDA MPROJECT), Inc.PDF
80 FR 22550 - Notice Pursuant To The National Cooperative Research And Production Act Of 1993-Network Centric Operations Industry Consortium, Inc.PDF
80 FR 22551 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Cooperative Research Group on High Efficiency Dilute Gasoline Engine IIIPDF
80 FR 22551 - Notice Pursuant to the National Cooperative Research And Production Act of 1993-Cooperative Research Group on Advanced Engine FluidsPDF
80 FR 22551 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Opendaylight Project, Inc.PDF
80 FR 22562 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-IMS Global Learning Consortium, Inc.PDF
80 FR 22503 - Privacy Act of 1974; System of RecordsPDF
80 FR 22501 - Marine Protected Areas Federal Advisory Committee; Public MeetingPDF
80 FR 22548 - Utah Resource Advisory Council/Recreation Resource Advisory Council MeetingPDF
80 FR 22546 - Agency Information Collection Activities: Extension, Without Change, of an Existing Information Collection; Comment RequestPDF
80 FR 22521 - Information Collection Being Submitted for Review and Approval to the Office of Management and BudgetPDF
80 FR 22547 - Notice of Filing of Plat of Survey; AlaskaPDF
80 FR 22522 - Information Collection Being Submitted for Review and Approval to the Office of Management and BudgetPDF
80 FR 22519 - Information Collections Being Submitted for Review and Approval to the Office of Management and BudgetPDF
80 FR 22518 - Information Collections Being Reviewed by the Federal Communications Commission Under Delegated AuthorityPDF
80 FR 22522 - Information Collection Being Reviewed by the Federal Communications CommissionPDF
80 FR 22520 - Information Collection Being Reviewed by the Federal Communications CommissionPDF
80 FR 22526 - Clinical Trial Endpoints for the Approval of Non-Small Cell Lung Cancer Drugs and Biologics; Guidance for Industry; AvailabilityPDF
80 FR 22528 - Determination of Regulatory Review Period for Purposes of Patent Extension; COMETRIQPDF
80 FR 22403 - Administrative Detention of Drugs Intended for Human or Animal Use; CorrectionPDF
80 FR 22532 - Interim Assessment of the Program for Enhanced Review Transparency and Communication; Public Meeting and Establishment of DocketPDF
80 FR 22529 - Determination That OXYTOCIN in 5% Dextrose Injection Products Were Not Withdrawn From Sale for Reasons of Safety or EffectivenessPDF
80 FR 22527 - Medical Devices; Availability of Safety and Effectiveness Summaries for Premarket Approval ApplicationsPDF
80 FR 22529 - Providing Regulatory Submissions in Electronic and Non-Electronic Format-Promotional Labeling and Advertising Materials for Human Prescription Drugs, Draft Guidance for Industry; AvailabilityPDF
80 FR 22602 - Agency Information Collection Activities: Comment RequestPDF
80 FR 22602 - Regulatory Fairness Hearing; U.S. Small Business Administration; Region X-Spokane, WashingtonPDF
80 FR 22566 - Quarterly Public MeetingPDF
80 FR 22361 - Honey Packers and Importers Research, Promotion, Consumer Education and Information Order; Assessment Rate IncreasePDF
80 FR 22431 - Cranberries Grown in States of Massachusetts, et al.; Revising Determination of Sales HistoryPDF
80 FR 22359 - Irish Potatoes Grown in Colorado and Imported Irish Potatoes; Relaxation of the Handling Regulation for Area No. 2 and Import RegulationsPDF
80 FR 22357 - Avocados Grown in South Florida and Imported Avocados; Change in Maturity RequirementsPDF
80 FR 22473 - Submission for OMB Review; Comment RequestPDF
80 FR 22417 - Cost of Living Adjustment to Satellite Carrier Compulsory License Royalty RatesPDF
80 FR 22467 - Migratory Bird Permits; Abatement Permit Regulations; CorrectionPDF
80 FR 22433 - Cranberries Grown in States of Massachusetts, et. al.; Continuance ReferendumPDF
80 FR 22563 - Determination of Royalty Rates for Secondary Transmissions of Broadcasts by Satellite Carriers and Distributors: WithdrawalPDF
80 FR 22549 - Certain Crawler Cranes and Components Thereof; Commission's Final Determination; Issuance of a Limited Exclusion Order and Cease and Desist Order; Termination of the InvestigationPDF
80 FR 22505 - Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Magnet Schools Assistance Program-Government Performance and Results Act (GPRA) Table FormPDF
80 FR 22580 - Self-Regulatory Organizations; BATS Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 3.5 (Advertising Practices) and Repeal Exchange Rule 3.20 (Initial or Partial Payments)PDF
80 FR 22584 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Approving a Proposed Rule Change, as Modified by Amendments No. 1 and No. 2, To List and Trade the Shares of the First Trust Strategic Floating Rate ETF of First Trust Exchange-Traded Fund IVPDF
80 FR 22593 - Self-Regulatory Organizations; ICE Clear Europe Limited; Notice of Designation of Longer Period for Commission Action on Proposed Rule Change Relating to CDS Procedures for CDX North America Index CDS ContractsPDF
80 FR 22594 - Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 3.5 (Advertising Practices) and Repeal Exchange Rule 3.20 (Initial or Partial Payments)PDF
80 FR 22567 - Self-Regulatory Organizations; BATS Y-Exchange, Inc.; Order Granting Approval of a Proposed Rule Change To Amend Rules 11.9, 11.12, and 11.13 of BATS Y-Exchange, Inc.PDF
80 FR 22600 - Self-Regulatory Organizations; BATS Exchange, Inc.; Order Granting Approval of a Proposed Rule Change To Amend Rules 11.9, 11.12, and 11.13 of BATS Exchange, Inc.PDF
80 FR 22591 - Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change Concerning the Execution of an Agreement for Clearing and Settlement Services Between OCC and NASDAQ Futures, Inc.PDF
80 FR 22569 - Self-Regulatory Organizations; NASDAQ OMX PHLX LLC; Notice of Filing of Amendment No. 2 and Designation of Longer Period for Commission Action on Proceedings To Determine Whether To Approve or Disapprove Proposed Rule Change, as Modified by Amendment No. 2, To Adopt New Exchange Rule 1081, Solicitation Mechanism, To Introduce a New Electronic Solicitation MechanismPDF
80 FR 22588 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Establish Distributor and Managed Data Solution Distributor Fees for an Optional Hardware-Based Version of NASDAQ ITCH to Trade OptionsPDF
80 FR 22598 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend Exchange Rule 500PDF
80 FR 22511 - McClellan Air Force Base Superfund Site; Proposed Notice of Administrative Order on ConsentPDF
80 FR 22563 - Advisory Committee on Increasing Competitive Integrated Employment for Individuals With Disabilities; Notice of MeetingPDF
80 FR 22477 - Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to a Wharf Maintenance ProjectPDF
80 FR 22501 - Proposed Information Collection; Comment Request; Observer Programs' Information That Can Be Gathered Only Through Questions.PDF
80 FR 22502 - Submission for OMB Review; Comment RequestPDF
80 FR 22449 - E. & J. Gallo Winery; Filing of Color Additive PetitionPDF
80 FR 22545 - Agency Information Collection Activities: Submission for OMB Review; Comment Request; Ready PSA Campaign Creative Testing Research.PDF
80 FR 22465 - Request for Information To Improve the Health and Safety of Miners and To Prevent Accidents in Underground Coal MinesPDF
80 FR 22418 - Control of Emissions From Nonroad Spark-Ignition Engines at or Below 19 KilowattsPDF
80 FR 22562 - Notice of Lodging of Proposed Consent Decree Under the Clean Water ActPDF
80 FR 22517 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; Exchange Network Grants Progress Reports (Renewal)PDF
80 FR 22540 - Center for Scientific Review; Notice of Closed MeetingsPDF
80 FR 22539 - National Cancer Institute; Notice of Closed MeetingsPDF
80 FR 22541 - National Institute on Alcohol Abuse and Alcoholism; Notice of Closed MeetingsPDF
80 FR 22444 - Protection System, Automatic Reclosing, and Sudden Pressure Relaying Maintenance Reliability StandardPDF
80 FR 22395 - Real Power Balancing Control Performance Reliability StandardPDF
80 FR 22366 - Cost Recovery Mechanisms for Modernization of Natural Gas FacilitiesPDF
80 FR 22385 - Communications Reliability StandardsPDF
80 FR 22508 - East Valley Water District; Notice of Preliminary Determination of a Qualifying Conduit Hydropower Facility and Soliciting Comments and Motions To IntervenePDF
80 FR 22510 - AEP Generation Resources Inc.; Notice of Request for WaiverPDF
80 FR 22509 - Merced Irrigation District, Pacific Gas and Electric Company; Notice of Availability of the Draft Environmental Impact Statement for the Merced River and Merced Falls Hydroelectric Projects and Intention To Hold Public MeetingsPDF
80 FR 22510 - Gulf South Pipeline Company, LP; Notice of Request Under Blanket AuthorizationPDF
80 FR 22507 - Columbia Gas Transmission, LLC; Notice of ApplicationPDF
80 FR 22441 - Disturbance Monitoring and Reporting Requirements Reliability StandardPDF
80 FR 22466 - Receipt of Several Pesticide Petitions Filed for Residues of Pesticide Chemicals in or on Various CommoditiesPDF
80 FR 22512 - Certain New Chemicals; Receipt and Status InformationPDF
80 FR 22438 - Airworthiness Directives; Zodiac Aerotechnics (Formerly Intertechnique Aircraft Systems)PDF
80 FR 22436 - Airworthiness Directives; Sikorsky Aircraft Corporation (Type Certificate Previously Held by Schweizer Aircraft Corporation)PDF

Issue

80 77 Wednesday, April 22, 2015 Contents Agricultural Marketing Agricultural Marketing Service RULES Handling and Import Regulations: Irish Potatoes Grown in Colorado and Imported Irish Potatoes, 22359-22361 2015-09289 Maturity Requirements: Avocados Grown in South Florida and Imported Avocados, 22357-22358 2015-09287 Research, Promotion, Consumer Education and Information Orders: Honey Packers and Importers; Assessment Rate Increase, 22361-22366 2015-09292 PROPOSED RULES Determinations of Sales History: Cranberries Grown in Massachusetts, et al., 22431-22433 2015-09291 Referendum Order: Cranberries Grown in Massachusetts, et al., 22433-22434 2015-09282 Agriculture Agriculture Department See

Agricultural Marketing Service

See

Food Safety and Inspection Service

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 22473 2015-09286
Antitrust Division Antitrust Division NOTICES Changes under the National Cooperative Research and Production Act: Cooperative Research Group on Advanced Engine Fluids, 22551 2015-09319 Cooperative Research Group on High Efficiency Dilute Gasoline Engine III, 22551 2015-09321 Network Centric Operations Industry Consortium, Inc., 22550 2015-09322 Opendaylight Project, Inc., 22551-22552 2015-09317 Children Children and Families Administration NOTICES Tribal Consultation; Office of Child Support Enforcement, 22525-22526 2015-09351 Commerce Commerce Department See

First Responder Network Authority

See

International Trade Administration

See

National Oceanic and Atmospheric Administration

See

National Telecommunications and Information Administration

Commodity Futures Commodity Futures Trading Commission NOTICES Meetings; Sunshine Act, 22503 2015-09455 Copyright Royalty Board Copyright Royalty Board RULES Cost of Living Adjustment to Satellite Carrier Compulsory License Royalty Rates, 22417-22418 2015-09284 NOTICES Petitions: Royalty Rates for Secondary Transmissions of Broadcasts by Satellite Carriers and Distributors; Withdrawal, 22563-22564 2015-09281 Defense Department Defense Department NOTICES Privacy Act; Systems of Records, 22503-22505 2015-09314 Disability Disability Employment Policy Office NOTICES Meetings: Advisory Committee on Increasing Competitive Integrated Employment for Individuals with Disabilities, 22563 2015-09254 Drug Drug Enforcement Administration NOTICES Importers of Controlled Substances; Applications: Actavis Laboratories FL, Inc., Davie, FL, 22554-22555 2015-09339 Almac Clinical Services Inc., (ACSI), Souderton, PA, 22556-22557 2015-09333 Johnson Matthey, Inc., West Deptford, NJ, 22559 2015-09335 Meridian Medical Technologies, St. Louis, MO, 22553-22554 2015-09343 Pharmacore, High Point, NC, 22553 2015-09332 Rhodes Technologies, Coventry, RI, 22556 2015-09338 Siegfried USA, LLC, Pennsville, NJ, 22561 2015-09336 Sigma-Aldrich International GMBH, Sigma Aldrich Co., LLC, St. Louis, MO, 22552-22553 2015-09344 Stepan Co., Maywood, NJ, 22561 2015-09342 Unither Manufacturing, LLC, Rochester, NY, 22552 2015-09337 Importers of Controlled Substances; Registrations: Actavis Pharma, Inc., Corona, CA, 22561-22562 2015-09349 Cedarburg Pharmaceuticals, Inc., Grafton, WI, 22553 2015-09350 Manufacturer of Controlled Substances; Applications: Johnson Matthey, Devens, MA, 22559-22560 2015-09330 Manufacturers of Controlled Substances; Applications: AMRI Rensselaer, Inc., Renssalaer, NY, 22560 2015-09324 Cambrex Charles City, Charles City, IA, 22555-22556 2015-09325 Cayman Chemicals Co., Ann Arbor, MI, 22557-22558 2015-09329 Cody Laboratories, Inc., Cody, WY, 22560-22561 2015-09326 National Center for Natural Products Research NIDA MPROJECT, Inc., University, MS, 22559 2015-09323 Noramco, Inc., Wilmington, DE, 22555 2015-09331 Pharmacore, Inc., High Point, NC, 22554 2015-09334 Sigma Aldrich Research Biochemicals, Inc., Natick, MA, 22557 2015-09328 Stepan Co., Maywood, NJ, 22555 2015-09327 Education Department Education Department RULES Indian Education Discretionary Grants Program: Professional Development Program and Demonstration Grants for Indian Children Program, 22403-22417 2015-09396 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Magnet Schools Assistance Program—Government Performance and Results Act Table Form, 22505-22506 2015-09276 Energy Department Energy Department See

Energy Efficiency and Renewable Energy Office

See

Federal Energy Regulatory Commission

NOTICES Meetings: Environmental Management Site-Specific Advisory Board, Savannah River Site, 22506-22507 2015-09347
Energy Efficiency Energy Efficiency and Renewable Energy Office NOTICES Physical Characterization of Grid-Connected Commercial and Residential Buildings End-Use Equipment and Appliances, 22507 2015-09348 Environmental Protection Environmental Protection Agency RULES Control of Emissions From Nonroad Spark-Ignition Engines at or Below 19 Kilowatts; CFR Correction, 22418 2015-09241 Pesticide Tolerances: Saflufenacil, 22418-22420 2015-09394 PROPOSED RULES Pesticide Petitions: Residues of Pesticide Chemicals in or on Various Commodities, 22466-22467 2015-09209 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Exchange Network Grants Progress Reports, 22517-22518 2015-09238 NESHAP for Ferroalloys Production Area Sources (Renewal), 22516-22517 2015-09361 NESHAP for Natural Gas Transmission and Storage (Renewal), 22511-22512 2015-09357 Certain New Chemicals; Receipt and Status Information, 22512-22516 2015-09204 Proposed Administrative Consent Orders under CERCLA: McClellan Air Force Base Superfund Site, 22511 2015-09260 Federal Aviation Federal Aviation Administration PROPOSED RULES Airworthiness Directives: Sikorsky Aircraft Corporation; Type Certificate Previously Held by Schweizer Aircraft Corp., 22436-22438 2015-09098 Zodiac Aerotechnics; Formerly Intertechnique Aircraft Systems, 22438-22440 2015-09103 NOTICES Grand Canyon National Park Quiet Aircraft Technology Incentive: Seasonal Relief from Allocations in the Dragon and Zuni Point Corridors, 22606-22611 2015-09380 Federal Communications Federal Communications Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 22518-22523 2015-09304 2015-09305 2015-09306 2015-09307 2015-09308 2015-09310 Federal Emergency Federal Emergency Management Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Ready PSA Campaign Creative Testing Research, 22545-22546 2015-09247 Major Disaster and Related Determinations: Massachusetts, 22546 2015-09384 Major Disaster Declarations: Connecticut, 22545 2015-09420 Federal Energy Federal Energy Regulatory Commission RULES Communications Reliability Standards, 22385-22395 2015-09225 Cost Recovery Mechanisms for Modernization of Natural Gas Facilities, 22366-22385 2015-09226 Real Power Balancing Control Performance Reliability Standard, 22395-22403 2015-09227 PROPOSED RULES Disturbance Monitoring and Reporting Requirements Reliability Standard, 22441-22444 2015-09219 Protection System, Automatic Reclosing, and Sudden Pressure Relaying Maintenance Reliability Standard, 22444-22449 2015-09228 NOTICES Applications: Columbia Gas Transmission, LLC, 22507-22508 2015-09220 East Valley Water District; Qualifying Conduit Hydropower Facility, 22508-22509 2015-09224 Environmental Impact Statements; Availability, etc.: Merced River Hydroelectric Project; Merced Irrigation District, Pacific Gas and Electric Co., 22509-22510 2015-09222 Requests for Blanket Authorizations: Gulf South Pipeline Company, LP, 22510 2015-09221 Requests for Waivers: AEP Generation Resources Inc., 22510-22511 2015-09223 Federal Maritime Federal Maritime Commission NOTICES Agreements Filed, 22523-22524 2015-09369 Federal Motor Federal Motor Carrier Safety Administration NOTICES Meetings; Sunshine Act, 22611 2015-09462 Federal Reserve Federal Reserve System NOTICES Changes in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Company, 22524 2015-09340 Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 22524 2015-09341 Federal Trade Federal Trade Commission NOTICES Meetings: ECM BioFilms, Inc., et al.; Oral Argument Before the Commission, 22524-22525 2015-09392 FIRSTNET First Responder Network Authority NOTICES Meetings: First Responder Network Authority Board, 22475 2015-09376 Fish Fish and Wildlife Service PROPOSED RULES Migratory Bird Permits: Abatement Permit Regulations; Correction, 22467-22468 2015-09283 Food and Drug Food and Drug Administration RULES Administrative Detention of Drugs Intended for Human or Animal Use; Correction, 22403 2015-09301 PROPOSED RULES Color Additive Petitions: E. and J. Gallo Winery, 22449 2015-09248 NOTICES Determinations that Products Were Not Withdrawn from Sale for Reasons of Safety or Effectiveness: OXYTOCIN in 5 Percent Dextrose Injection, 22529 2015-09299 Guidance: Clinical Trial Endpoints for the Approval of Non-Small Cell Lung Cancer Drugs and Biologics, 22526-22527 2015-09303 Providing Regulatory Submissions in Electronic and Non-Electronic Format—Promotional Labeling and Advertising Materials for Human Prescription Drugs, 22529-22532 2015-09297 Medical Devices: Safety and Effectiveness Summaries for Premarket Approval Applications, 22527-22528 2015-09298 Meetings: Interim Assessment of the Program for Enhanced Review Transparency and Communication, 22532-22534 2015-09300 Patent Extension Regulatory Review Periods: COMETRIQ, 22528 2015-09302 Food Safety Food Safety and Inspection Service NOTICES Meetings: Codex Alimentarius Commission, 22473-22475 2015-09387 Health and Human Health and Human Services Department See

Children and Families Administration

See

Food and Drug Administration

See

National Institutes of Health

NOTICES Ebola Virus Disease Therapeutics, 22534-22539 2015-09412 Service Contract Inventories; FY 2014, 22539 2015-09415
Homeland Homeland Security Department See

Federal Emergency Management Agency

See

U.S. Customs and Border Protection

See

U.S. Immigration and Customs Enforcement

Interior Interior Department See

Fish and Wildlife Service

See

Land Management Bureau

See

National Park Service

Internal Revenue Internal Revenue Service PROPOSED RULES Tax on Certain Foreign Procurement, 22449-22465 2015-09383 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Light-Walled Rectangular Pipe and Tube from Turkey, 22475-22477 2015-09386 Supercalendered Paper from Canada, 22477 2015-09389 International Trade Com International Trade Commission NOTICES Investigations; Determinations, Modifications, and Rulings, etc.: Certain Crawler Cranes and Components Thereof, 22549-22550 2015-09280 Opaque Polymers; Commission Decision Affirming Grant of Default and Sanctions, 22548-22549 2015-09444 Justice Department Justice Department See

Antitrust Division

See

Drug Enforcement Administration

NOTICES National Cooperative Research and Production Act of 1993: IMS Global Learning Consortium, Inc., 22562 2015-09316 Proposed Consent Decrees under the Clean Water Act, 22562-22563 2015-09239
Labor Department Labor Department See

Disability Employment Policy Office

See

Mine Safety and Health Administration

Land Land Management Bureau NOTICES Meetings: Utah Resource Advisory Council/Recreation Resource Advisory Council, 22548 2015-09312 Plats of Survey: Alaska, 22547 2015-09309 Library Library of Congress See

Copyright Royalty Board

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80 77 Wednesday, April 22, 2015 Rules and Regulations DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Parts 915 and 944 [Doc. No. AMS-FV-14-0051; FV14-915-1 FIR] Avocados Grown in South Florida and Imported Avocados; Change in Maturity Requirements AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Affirmation of interim rule as final rule.

SUMMARY:

The Department of Agriculture (USDA) is adopting, as a final rule, without change, an interim rule that changed the maturity requirements prescribed under the Florida avocado marketing order (order) and avocado import regulation. The interim rule changed the maturity shipping schedule to allow certain sizes and weights of the Choquette avocado variety to be shipped to the fresh market earlier. With this change, the maturity schedule better reflects the current maturity rate for the Choquette variety, facilitating the shipment of this variety as it matures.

DATES:

Effective April 27, 2015.

FOR FURTHER INFORMATION CONTACT:

Doris Jamieson, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 291-8614, or Email: [email protected] or [email protected]

Small businesses may request information on complying with this and other marketing order and agreement regulations by viewing a guide at the following Web site: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide; or by contacting Jeffrey Smutny, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected]

SUPPLEMENTARY INFORMATION:

This rule is issued under Marketing Agreement No. 121 and Marketing Order No. 915, both as amended (7 CFR part 915), regulating the handling of avocados grown in South Florida, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

This rule is also issued under section 8e of the Act, which provides that whenever certain specified commodities, including avocados, are regulated under a Federal marketing order, imports of these commodities into the United States are prohibited unless they meet the same or comparable grade, size, quality, or maturity requirements as those in effect for the domestically produced commodities.

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175.

The handling of avocados grown in South Florida is regulated by 7 CFR part 915. Prior to this change, the B date for the Choquette variety listed on the maturity schedule was October 17, the C date was October 31, and the D date was November 14. Three years of testing by Avocado Administrative Committee (Committee) staff indicated that some weights and sizes were maturing earlier, prompting the Committee to recommend moving the B, C, and D dates each up one week, respectively. Therefore, this rule continues in effect the rule that changed the B date for Choquettes listed on the maturity schedule from October 17 to October 10, the C date from October 31 to October 24, and the D date from November 14 to November 7. The corresponding sizes and weights associated with these dates remain unchanged. The dates on the maturity schedule are the basis for calculating the actual shipping dates (A, B, C, D dates) for each individual season. The actual shipping dates for an individual year are established as the Monday nearest to the date specified in the maturity schedule as specified in § 915.332.

Imported avocados are subject to regulations specified in 7 CFR part 944. Under those regulations, imported avocados must meet the same minimum size requirements as specified for domestic avocados under the order. Therefore, the B date for Choquette variety listed on the maturity schedule was also changed from October 17 to October 10, the C date changed from October 31 to October 24, and the D date changed from November 14 to November 7.

In an interim rule published in the Federal Register on September 16, 2014, and effective on September 19, 2014, (79 FR 55351, Doc. No. AMS-FV-14-0051, FV14-915-1 IR), §§ 915.332 and 944.31 were amended by changing the B date for the Choquette variety listed on the maturity schedule from October 17 to October 10, the C date from October 31 to October 24, and the D date from November 14 to November 7.

Final Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and the rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

There are approximately 30 handlers of Florida avocados subject to regulation under the order and approximately 300 producers of avocados in the production area. There are approximately 70 importers of West Indian- and Guatemalan-type avocado varieties like those grown in Florida. Small agricultural service firms, which include avocado handlers and importers, are defined by the Small Business Administration (SBA) as those whose annual receipts are less than $7,000,000, and small agricultural producers are defined as those having annual receipts less than $750,000 (13 CFR 121.201).

According to Committee data and information from the National Agricultural Statistical Service, the average price for Florida avocados during the 2011-12 season was approximately $20.79 per 55-pound bushel container and total shipments were slightly higher than 1.2 million 55-pound bushels. Using the average price and shipment information, the majority of avocado handlers could be considered small businesses under SBA's definition. In addition, based on avocado production, producer prices, and the total number of Florida avocado producers, the average annual producer revenue is less than $750,000. Information from the Foreign Agricultural Service, USDA, indicates that the dollar value of imported West Indian- and Guatemalan-type avocados was $15.5 million in 2013. Using these values, most importers would have annual receipts of less than $7,000,000 for avocados. Consequently, the majority of avocado handlers, producers, and importers may be classified as small entities.

The Dominican Republic, Peru, and Costa Rica, are the major production areas exporting avocado varieties other than Hass to the United States. In 2013, shipments of these type of avocados imported into the United States totaled around 14,500 metric tons. Of that amount, 14,400 metric tons were imported from the Dominican Republic, 63 metric tons were imported from Peru, and 21 metric tons were imported from Costa Rica. Mexico, Chile, and Peru are the major countries producing and exporting Hass-type avocados to the United States. In 2013, shipments of Hass-type avocados imported into the United States totaled around 548,000 metric tons. Mexico accounted for 500,000 metric tons, with 23,400 metric tons from Chile, and 21,500 metric tons from Peru.

This rule continues in effect the action that changed the maturity requirements prescribed under the order's rules and regulations. This rule changed the maturity shipping schedule to allow certain sizes and weights of the Choquette avocado variety to be shipped to the fresh market earlier and made a corresponding change to the avocado import regulation. With this change, the maturity schedule better reflects the current maturity rate for the Choquette variety, facilitating the shipment of this variety as it matures. Authority for this change is provided in §§ 915.51 and 915.52. This rule amends the provisions in §§ 915.332 and 944.31. The change in the import regulation is required under section 8e of the Act.

This action is not expected to increase the costs associated with the order's requirements or the avocado import regulation. Rather, it is anticipated that this action will have a beneficial impact. Based on several seasons of maturity testing, the Committee recommended moving the B, C, and D dates on the maturity schedule forward one week, respectively, for the Choquette variety, allowing the associated sizes and weights to be shipped to the fresh market earlier. The revised dates better reflect the current maturity rate for Choquettes, and will facilitate the shipment of this variety as it matures, while continuing to ensure that only mature fruit is shipped to the fresh market. The benefits of this rule are expected to be equally available to all fresh avocado growers, handlers, and importers, regardless of this size.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189, “Generic Fruit Crops.” No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

This rule will not impose any additional reporting or recordkeeping requirements on either small or large avocado handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

Further, the Committee's meeting was widely publicized throughout the Florida avocado industry and all interested persons were invited to attend the meeting and participate in Committee deliberations. Like all Committee meetings, the April 9, 2014, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue.

Comments on the interim rule were required to be received on or before November 17, 2014. Two comments were received.

One comment expressed support for the change. The second commenter asked if there were health risks to the consumer if these avocados are consumed too early. The avocado maturity schedule is designed to ensure only mature avocados that will ripen properly are shipped to consumers. Immaturity can negatively affect the taste and quality of the fruit. Accordingly, no changes will be made to the rule based on the comments received, and we are adopting the interim rule as a final rule, without change for the reasons given in the interim rule.

To view the interim rule, go to: http://www.regulations.gov/#!documentDetail;D=AMS-FV-14-0051-0001

This action also affirms information contained in the interim rule concerning Executive Orders 12866, 12988, 13563, and 13175; the Paperwork Reduction Act (44 U.S.C. Chapter 35); and the E-Gov Act (44 U.S.C. 101).

In accordance with section 8e of the Act, the United States Trade Representative has concurred with the issuance of this final rule.

After consideration of all relevant material presented, it is found that finalizing the interim rule, without change, as published in the Federal Register (79 FR 55351, September 16, 2014) will tend to effectuate the declared policy of the Act.

List of Subjects 7 CFR Part 915

Avocados, Marketing agreements, Reporting and recordkeeping requirements.

7 CFR Part 944

Avocados, Food grades and standards, Grapefruit, Grapes, Imports, Kiwifruit, Limes, Olives, Oranges.

PARTS 915 and 944—[AMENDED] Accordingly, the interim rule that amended 7 CFR parts 915 and 944 and that was published at 79 FR 55351 on September 16, 2014, is adopted as a final rule, without change. Dated: April 16, 2015. Rex A. Barnes, Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2015-09287 Filed 4-21-15; 8:45 am] BILLING CODE P
DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Parts 948 and 980 [Doc. No. AMS-FV-13-0073; FV13-948-3 FR] Irish Potatoes Grown in Colorado and Imported Irish Potatoes; Relaxation of the Handling Regulation for Area No. 2 and Import Regulations AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule revises the minimum quantity exception for potatoes handled under the Colorado potato marketing order, Area No. 2 (order). The order regulates the handling of Irish potatoes grown in Colorado and is administered locally by the Colorado Potato Administrative Committee, Area No. 2 (Committee). This action increases the quantity of potatoes that may be handled under the order without regard to the order's handling regulation requirements from 1,000 to 2,000 pounds. The change in the import regulation is required under section 8e of the Agricultural Marketing Agreement Act of 1937. This action allows for the importation which, in the aggregate, does not exceed 2,000 pounds for all other round type potatoes, except red skinned, round type or long type potatoes that continue to remain at a 500 pound limit, to be imported without regard to the import regulations. This action is expected to benefit producers, handlers, and importers.

DATES:

Effective date: April 27, 2015.

FOR FURTHER INFORMATION CONTACT:

Sue Coleman, Marketing Specialist, or Gary D. Olson, Regional Director, Northwest Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA; Telephone: (503) 326-2724, Fax: (503) 326-7440, or Email: [email protected] or [email protected]

Small businesses may request information on complying with this regulation by contacting Jeffrey Smutny, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected]

SUPPLEMENTARY INFORMATION:

This final rule is issued under Marketing Agreement No. 97 and Order No. 948, both as amended (7 CFR part 948), regulating the handling of Irish potatoes grown in Colorado, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

This final rule is also issued under section 8e of the Act, which provides that whenever certain specified commodities, including Irish potatoes, are regulated under a Federal marketing order, imports of these commodities into the United States are prohibited unless they meet the same or comparable grade, size, quality, or maturity requirements as those in effect for the domestically produced commodities.

The Department of Agriculture (USDA) is issuing this rule in conformance with Executive Orders 12866, 13563, and 13175.

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect.

The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

There are no administrative procedures which must be exhausted prior to any judicial challenge to the provisions of import regulations issued under section 8e of the Act.

This final rule revises the minimum quantity exception currently prescribed in the handling regulation for potatoes handled under Marketing Order No. 948. This rule increases the quantity of potatoes that may be handled without regard to the order's handling regulation from 1,000 to 2,000 pounds. Relaxing the minimum quantity exception is expected to benefit producers, handlers, and importers. The rule was unanimously recommended by the Committee at a meeting on July 18, 2013.

Section 948.4 of the order divides the State of Colorado into three areas of regulation for marketing order purposes. These areas include: Area No. 1, commonly known as the Western Slope; Area No. 2, commonly known as San Luis Valley; and, Area No. 3, which consists of the remaining producing areas within the State of Colorado not included in the definition of Area No. 1 or Area No. 2. Currently, the order only regulates the handling of potatoes produced in Area No. 2 and Area No. 3. Regulation for Area No. 1 has been suspended.

Section 948.50 of the order establishes committees as administrative agencies for each of the areas set forth under § 948.4. Section 948.22(a) of the order authorizes the issuance of grade, size, quality, maturity, pack, and container regulations for potatoes grown in the order's production area. Further, § 948.22(b)(2) of the order provides authority for each area committee to recommend modification of regulations to provide for minimum quantities that should be relieved of regulatory or administrative obligations.

Section 948.386 of the order's administrative rules prescribes grade, size, maturity, and inspection requirements for Colorado Area No. 2 potatoes. Paragraph (f) of that section prescribes the minimum quantity of potatoes that are exempt from regulation. Currently, each person may handle up to 1,000 pounds of potatoes without regard to the order's grade, size, maturity, and inspection requirements.

At its meeting on July 18, 2013, the Committee unanimously recommended increasing the order's minimum quantity exception from 1,000 to 2,000 pounds. The recommendation was made at the request of producers and handlers who wanted greater flexibility in distributing smaller quantities of potatoes. In its deliberations, the Committee commented that 2,000 pounds is consistent with the current weight of a pallet of potatoes. One pallet is typically the smallest lot of potatoes distributed, since most delivery vehicles are now capable of transporting at least 2,000 pounds.

Handlers also feel that the value of one pallet of potatoes does not warrant the cost of complying with the order's regulations. Based on an estimated average f.o.b. price of $12.60, the value of one pallet of potatoes is approximately $252.00. Increasing the minimum quantity exception from 1,000 to 2,000 pounds of potatoes allows a handler to ship one pallet of potatoes without regard to the order's grade, size, maturity, and inspection requirements. Relaxing the minimum quantity is expected to benefit producers, handlers, and importers.

Section 8e of the Act provides that when certain domestically produced commodities, including Irish potatoes, are regulated under a Federal marketing order, imports of that commodity must meet the same or comparable grade, size, quality, and maturity requirements. Whenever two or more marketing orders regulating the same commodity produced in different areas of the United States are concurrently in effect, the importation into the United States of any such commodity shall be prohibited unless it complies with the grade, size, quality and maturity provisions of the order which, as determined by the Secretary of Agriculture, regulates the commodity produced in the area with which the imported commodity is in most direct competition (7 U.S.C. 608e-1(a)). Section 980.1(a)(2)(ii) of the Vegetable Import Regulations specifies that imported round-type potatoes, except red-skinned, round type potatoes, are in most direct competition with potatoes of the same type produced in the area covered by Marketing Order 948. Since this action increases the minimum quantity exemption under the domestic handling regulations, a corresponding change to the import regulations must also be considered.

Minimum grade, size, quality, and maturity requirements for Irish potatoes imported into the United States are currently in effect under § 980.1 (7 CFR 980.1). The minimum quantity exemption is specified in § 980.1(c). The exemption for red skinned, round type or long type potatoes will remain at a 500 pound limit as provided in Marketing Orders 946 and 945, respectively. This rule increases the quantity for all other round type potatoes that may be imported without regard to the import regulation requirements from 1,000 to 2,000 pounds. The metric equivalent for 1,000 pounds is 453.592 kilograms and 2,000 pounds is 907.185 kilograms. The increase in the minimum quantity exemption for imports of potatoes will have a beneficial impact on importers. This rule will provide flexibility in the importation and distribution of smaller quantities of potatoes.

Final Regulatory Flexibility Analysis

Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this final regulatory flexibility analysis.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf. Import regulations issued under the Act are based on those established under Federal marketing orders.

There are approximately 80 handlers of Colorado Area No. 2 potatoes subject to regulation under the order and approximately 180 producers in the regulated production area. There are approximately 240 importers of potatoes. Small agricultural service firms (handlers and importers) are defined by the Small Business Administration (SBA) as those having annual receipts of less than $7,000,000, and small agricultural producers are defined as those having annual receipts of less than $750,000 (13 CFR 121.201).

During the 2011-2012 fiscal period, the most recent for which statistics are available, 15,072,963 hundredweight of Colorado Area No. 2 potatoes were inspected under the order and sold into the fresh market. Based on an estimated average f.o.b. price of $12.60 per hundredweight, the Committee estimates that 66 Area No. 2 handlers, or about 83 percent, had annual receipts of less than $7,000,000. In view of the foregoing, the majority of Colorado Area No. 2 potato handlers may be classified as small entities.

In addition, based on information provided by the National Agricultural Statistics Service, the average producer price for the 2011 Colorado fall potato crop was $10.70 per hundredweight. Multiplying $10.70 by the shipment quantity of 15,072,963 hundredweight yields an annual crop revenue estimate of $161,280,704. The average annual fresh potato revenue for each of the 180 Colorado Area No. 2 potato producers is therefore calculated to be approximately $896,000 ($161,280,704 divided by 180), which is greater than the SBA threshold of $750,000. Consequently, on average, many of the Colorado Area No. 2 potato producers may not be classified as small entities.

Information from the Foreign Agricultural Service, USDA, indicates that the dollar value of imports of the type of potatoes affected by this rule ranged from approximately $55.8 million in 2009 to $ 56.5 million in 2013. Using these values, the majority of importers of the type of potatoes affected by this rule would have annual receipts of less than $7,000,000 and may be classified as small entities.

Canada is the major potato-producing country exporting potatoes to the United States. In 2013, affected shipments of potatoes imported into the United States totaled around 3,479,468 hundredweight. Of that amount, 3,479,383 hundredweight were imported from Canada, 59 hundredweight were imported from Ecuador, and 26 hundredweight were imported from Peru.

This final rule revises the quantity of potatoes that may be handled without regard to the requirements of § 948.386(a), (b), and (c) of the order from 1,000 to 2,000 pounds and makes a corresponding change to the potato import regulation. At the July 18, 2013 meeting, the Committee unanimously recommended increasing the minimum quantity exception to be consistent with the approximate weight of one pallet of potatoes. Authority for the establishment and modification of a minimum quantity exception is provided in § 948.22(b)(2) of the order. This final rule amends the provisions in §§ 948.386(f) and 980.1(c). The change in the import regulation is required under section 8e of the Act.

This action is not expected to increase the costs associated with the order's requirements or the potato import regulation. Rather, it is anticipated that this change will have a beneficial impact. The Committee believes it will provide greater flexibility in the distribution of small quantities of potatoes. Currently, the distribution of potatoes between 1,000 and 2,000 pounds requires an inspection and certification that the product conforms to the grade, size, and maturity requirements of the order. This translates into a cost for handlers and importers of both time and inspection fees, which is high in relation to the small value (approximately $252.00 per pallet) of these transactions. This action will allow shipments up to 2,000 pounds of potatoes without regard to the order's grade, size, maturity, and inspection requirements and the related costs. The benefits for this final rule are expected to be equally available to all fresh potato producers, handlers, and importers, regardless of their size.

As an alternative to the proposal, the Committee discussed leaving the handling regulation unchanged. The Committee rejected this idea because a pallet of potatoes weighs approximately 2,000 pounds and the 1,000 pound minimum quantity exception did not accommodate this size shipment. No other alternatives were discussed.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0178 (Generic Vegetable and Specialty Crops). No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

This final rule relaxes the minimum quantity exception under the order from 1,000 to 2,000 pounds. Accordingly, this action will not impose any additional reporting or recordkeeping requirements on either small or large Colorado Area No. 2 potato handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

As noted in the initial regulatory flexibility analysis, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this final rule.

AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

In addition, the Committee's meeting was widely publicized throughout the Colorado Area No. 2 potato industry and all interested persons were invited to attend the meeting and participate in Committee deliberations on all issues. Like all Committee meetings, the July 18, 2013, meeting was a public meeting and all entities, both large and small, were able to express views on this issue.

A proposed rule concerning this action was published in the Federal Register on October 6, 2014 (79 FR 60117). Copies of the rule were made available to all interested Colorado potato producers and handlers. Finally, the rule was made available through the Internet by USDA and the Office of the Federal Register. A 60-day comment period ending December 5, 2014, was provided to allow interested persons to respond to the proposal. No comments were received.

A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to Jeffrey Smutny at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

In accordance with section 8e of the Act, the United States Trade Representative has concurred with the issuance of this final rule.

After consideration of all relevant matter presented, including the information and recommendation submitted by the Committee and other available information, it is hereby found that this rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

It is further found that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register (5 U.S.C. 553) because handlers are already shipping potatoes from the 2014-2015 crop and handlers want to take advantage of the relaxation as soon as possible. Further, handlers are aware of this rule, which was recommended at a public meeting. Also, a 60-day comment period was provided for in the proposed rule and no comments were received.

List of Subjects 7 CFR Part 948

Marketing agreements, Potatoes, Reporting and recordkeeping requirements.

7 CFR Part 980

Food grades and standards, Imports, Marketing agreements, Onions, Potatoes, Tomatoes.

For the reasons set forth above, 7 CFR parts 948 and 980 are amended as follows:

PART 948—IRISH POTATOES GROWN IN COLORADO 1. The authority citation for 7 CFR part 948 continues to read as follows: Authority:

7 U.S.C. 601-674.

2. Amend § 948.386(f) to read as follows:
§ 948.386 Handling regulation.

(f) Minimum quantity. For purposes of regulation under this part, each person may handle up to but not to exceed 2,000 pounds of potatoes without regard to the requirements of paragraphs (a), (b), and (c) of this section, but this exception shall not apply to any shipment which exceeds 2,000 pounds of potatoes.

PART 980—VEGETABLES; IMPORT REGULATIONS 3. The authority citation for 7 CFR part 980 continues to read as follows: Authority:

7 U.S.C. 601-674.

4. In § 980.1, paragraph (c) is revised to read as follows:
§ 980.1 Import regulations; Irish potatoes.

(c) Minimum quantities. Any importation which, in the aggregate, does not exceed 500 pounds of red skinned, round type or long type potatoes, or 2,000 pounds for all other round type potatoes, may be imported without regard to the provisions of this section.

Dated: April 16, 2015. Rex A. Barnes, Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2015-09289 Filed 4-21-15; 8:45 am] BILLING CODE 3410-02-P
DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 1212 [Document Number AMS-FV-14-0045] Honey Packers and Importers Research, Promotion, Consumer Education and Information Order; Assessment Rate Increase AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule amends the Honey Packers and Importers Research, Promotion, Consumer Education and Information Order (Order) to increase the assessment rate from $0.01 per pound to $0.015 per pound on honey and honey products, over a two-year period. The Order limits an increase in the assessment rate to no more than one-quarter cent per pound per year. Thus, the rate will increase to $0.0125 per pound for the period January 1 through December 31, 2015, and to $0.015 per pound on and after January 1, 2016. This increase was unanimously recommended by the Honey Packers and Importers Board (Board) which administers the Order with oversight by the U.S. Department of Agriculture (USDA). Under the program, assessments are collected from first handlers (packers) and importers and used for research and promotion projects designed to maintain and expand the market for honey and honey products in the United States and abroad. Additional funds will allow the Board to expand its production research activities and promotional efforts. The Board's production research focuses on maintaining the health of honey bee colonies. Increasing demand for honey and honey products will benefit the honey industry as a whole. This action also makes three additional changes to: Clarify that the assessment rate applies not only to the Harmonized Tariff Schedule numbers but to any other numbers used to identify honey; change the length of time that books and records are to be held; and change the exemption requirements.

DATES:

Effective: May 22, 2015.

FOR FURTHER INFORMATION CONTACT:

Patricia A. Petrella, Marketing Specialist, Promotion and Economics Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., Room 1406-S, Stop 0244, Washington, DC 20250-0244; telephone: (202) 720-9915; facsimile: (202) 205-2800; or electronic mail: [email protected]

SUPPLEMENTARY INFORMATION:

This rule is issued under the Order (7 CFR part 1212). The Order is authorized under the Commodity Promotion, Research, and Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).

Executive Order 12866 and Executive 13563

Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules and promoting flexibility. This action has been designated as a “non-significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the Office of Management and Budget has waived the review process.

Executive Order 13175

This action has been reviewed in accordance with the requirements of Executive Order 13175, Consultation and Coordination with Indian Tribal Governments. The review reveals that this regulation will not have substantial and direct effects on Tribal governments and will not have significant Tribal implications.

Executive Order 12988

This rule has been reviewed under Executive Order 12988, Civil Justice Reform. Section 524 of the 1996 Act (7 U.S.C. 7423) provides that it shall not affect or preempt any other Federal or State law authorizing promotion or research relating to an agricultural commodity.

Under the Order now in effect, honey first handlers and importers are subject to assessments. Funds to administer the Order are derived from such assessments. It is intended that the assessment rate of $0.0125 per pound will be applicable for all assessable honey for the period from January 1 through December 31, 2015, and that the rate of $0.015 per pound will be applicable to all assessable honey beginning on January 1, 2016, and continue until amended, suspended, or terminated.

Under section 519 of the 1996 Act (7 U.S.C. 7418), a person subject to an order may file a written petition with USDA stating that an order, any provision of an order, or any obligation imposed in connection with an order, is not established in accordance with the law, and request a modification of an order or an exemption from an order. Any petition filed challenging an order, any provision of an order, or any obligation imposed in connection with an order, shall be filed within two years after the effective date of an order, provision, or obligation subject to challenge in the petition. The petitioner will have the opportunity for a hearing on the petition. Thereafter, USDA will issue a ruling on the petition. The 1996 Act provides that the district court of the United States for any district in which the petitioner resides or conducts business shall have the jurisdiction to review a final ruling on the petition, if the petitioner files a complaint for that purpose not later than 20 days after the date of the entry of USDA's final ruling.

Background

This rule amends the Order to increase the assessment rate from $0.01 to $0.015 per pound on honey and honey products over a two-year period. The Order limits an increase in the assessment rate to no more than one-quarter cent per pound per year. Thus, the rate will increase to $0.0125 per pound for the period January 1 through December 31, 2015, and to $0.015 per pound on and after January 1, 2016. The Order is administered by the Board with oversight by USDA. Under the program, assessments are collected from first handlers and importers and used for research and promotion projects designed to maintain and expand the market for honey and honey products in the United States and abroad. Additional funds will enable the Board to expand its production research activities and promotional efforts. The Board's production research focuses on maintaining the health of honey bee colonies. Promotional efforts focus on the innovative ways to market, promote, and utilize honey and honey products. Increasing demand for honey and honey products will benefit the honey industry as a whole. This action was unanimously recommended by the Board.

The Order specifies that the funds to cover the Board's expenses shall be paid from assessments on first handlers and importers, donations from persons not subject to assessments, and from other funds available to the Board. First handlers are required to file reports and maintain records on the total quantity of honey and honey products acquired during the reporting period, the quantity of honey processed for sale from the handler's own production, and the quantity of honey purchased from a handler or importer responsible for paying the assessment due. Importers are required to report the total quantity of honey and honey products imported during each reporting period, and keep a record of each lot of honey and honey products imported during such period, including the quantity, date, country of origin, and port of entry. Importers are responsible for paying assessments to the Board on honey and honey products imported into the United States through the U.S. Customs and Border Protection (Customs). The Order also provides for two exemptions. First handlers who handle less than 250,000 pounds and importers who import less than 250,000 pounds of honey and honey products annually, and first handlers and importers of 100 percent organic honey and honey products are exempt from the payment of assessments.

Section 1212.52 of the Order specifies that assessments shall be levied at a rate of $0.01 per pound on all honey and honey products. The Board may recommend to the Secretary an increase or decrease in the assessment as it deems appropriate by at least a two-thirds vote of members present at a meeting of the Board. The Board may not recommend an increase in the assessment of more than $0.02 per pound of honey or honey products and may not increase the assessment by more than $0.0025 in any single fiscal year.

The $0.01 per pound assessment rate has been in effect since the Order's inception in 2008. The Board's fiscal year runs from January 1 through December 31. Board expenditures have ranged from $4,157,250 for its first full year in 2009 to $4,556,490 in 2013. Expenditures for research have ranged from $465,579 in 2009 (11 percent of total expenses) to $231,234 in 2013 (5 percent of total expenses). Board expenditures for health messaging and promotion activities have ranged from $2,311,370 in 2009 (56 percent of total expenses) to $2,859,743 in 2013 (63 percent of total expenses). Pursuant to section 1212.50(h) of the Order, administrative expenditures have been less than 15 percent of the assessments and other income received by the Board annually.

Board assessment income has ranged from $3,345,543 in 2009 ($2,085,204 in domestic assessments and $1,260,339 in import assessments) to $4,443,798 in 2013 ($1,122,390 in domestic assessments and $3,321,408 in import assessments). Additionally, pursuant to section 1212.54 of the Order, the Board maintains a monetary reserve with funds that do not exceed one fiscal period's budget.

Board 2014 Recommendation

The Board held a teleconference on January 23, 2014, and unanimously recommended increasing its assessment rate from $0.01 to $0.015 per pound on honey and honey products over a two-year period. The Order limits an increase in the assessment rate to no more than one-quarter cent per pound per year. Thus, the rate will increase to $0.0125 per pound for the period January 1 through December 31, 2015, and to $0.015 per pound on and after January 1, 2016. Additional funds will enable the Board to expand its production research activities and promotional efforts. Since the program's inception, the Board has funded several production research projects focused on maintaining the health of honey bee colonies. The honey industry continues to experience considerable production challenges associated with the Colony Collapse Disorder. The honey industry has attempted to halt the long term decline in the numbers of honeybees (over 30 percent in the past twenty years) through treatment, colony development, maintenance, and replacement. The funds generated by an assessment increase will be spent on conducting research activities designed to address these critical issues. Per section 1212.50(a) of the Order, five percent (5 percent) of the Board's anticipated revenue from assessments each fiscal period is to be allocated towards production research and research related to the production of honey. A possible one to two million dollar increase in assessment revenue would generate an additional $50,000 to $100,000 for production research.

Furthermore, the Board also conducts research relating to various health and beauty issues, including alternative uses for honey. However, most of these preliminary findings have been done under laboratory conditions. Additional funds will allow the Board to incorporate specific areas of research into expanded clinical (human) trials. Clinical trials are important for the industry to be able to make health claims consistent with Federal Trade Commission and Food and Drug Administration requirements.

The Board uses health information in its promotion messaging to help build demand for honey and honey products. Worldwide honey production has grown from 357 million pounds in 2009 to 487 million pounds in 2013. Increasing demand will help move the growing supply of honey, which in turn will assist the Board in reaching its goal to continually increase consumption among existing honey and honey product consumers and to attract new honey and honey product users.

At the increased assessment rate on honey and honey products, with assessable pounds averaging 450 million per year, assessment income could reach $5.6 million in 2015 and $6.8 million in 2016. This increase could be used for research and promotion projects designed to maintain and expand the market for honey and honey products in the United States and abroad. As an example, if 5 percent of the budget was allocated to production research and 60 percent was allocated to promotion, funds available for production research could average approximately $340,000 annually, up from $231,234 in 2013, and funds available for health messaging and promotion could average $4.0 million annually, up from $2.8 million in 2013.

In light of the need to allocate more funds towards production and health research activities and build demand for honey, the Board recommended increasing the assessment rate under the Order from $0.01 to $0.015 per pound on honey and honey products over a two-year period. The Order limits an increase in the assessment rate to no more than one-quarter cent per year. Thus, the rate will increase to $0.0125 per pound for the period January 1 through December 31, 2015, and to $0.015 per pound on and after January 1, 2016. Section 1212.52 of the Order is amended accordingly.

Paragraph (e) of section 1212.52 is also revised to clarify that the assessment rate applies not only to the listed Harmonized Tariff Schedule of the United States (HTSUS) numbers, but also any other numbers that may be used to identify honey or honey products in the event the HTSUS numbers change; this change has no impact on the assessment rate.

Section 1212.71 of the Order is also revised to change the length of time that books and records are to be held from two years to three years. This change conforms with the Board's compliance procedures, which provide that the Board conduct audit reviews every three years. Section 1212.53 of the Order is revised to state that exemptions from assessments for a calendar year are effective on the date approved by the Board. This change is being made to clarify exemption requirements. These changes pose no additional information collection burden on honey first handlers and importers.

Final Regulatory Flexibility Act Analysis

In accordance with the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-612), AMS is required to examine the impact of this rule on small entities. Accordingly, AMS has considered the economic impact of this action on such entities.

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be disproportionately burdened. The Small Business Administration defines, in 13 CFR part 121, small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (first handlers and importers) as those having annual receipts of no more than $7.0 million.

There are 661 importers and 42 first handlers of honey and honey products covered under the program. Seventeen out of the 42 first handlers (40 percent) and 21 out of the 661 importers (3 percent) accounted for 90 percent of the assessments in their respective categories. Total assessments for 2013 were $4.44 million, of which $1.12 million (25 percent) came from first handlers and $3.32 million (75 percent) was paid by importers. This data can be used to compute an estimate of average annual revenue from honey sales from each of these categories, which in turn helps to estimate the number of large and small first handlers and importers. As mentioned above, 17 first handlers account for 90 percent of the domestic assessments. Multiplying first handler assessments in 2013 of $1,122,390 by 0.9 and then dividing by 17 yields an average annual assessment of $59,421 for the first handlers in this category. Dividing the assessment rate of one cent per pound yields an average quantity per first handler of 5.942 million pounds. Multiplying 5.942 million pounds by the average 2013 U.S. domestic price 1 of $2.12 per pound yields an average, annual honey revenue per packer of $12.60 million, which is well above the SBA threshold of $7.0 million. It should be noted that this revenue estimate is based on the average price at the producer level, and the $12.6 million is an estimate of the total value at which the average size packer acquired the honey from producers. Therefore most of the 17 first handlers that pay 90 percent of the domestic assessments are likely to be large firms according to the SBA definition.

1 Honey, March 2014, USDA, National Agricultural Statistics Service, p. 3

An equivalent computation can be made for the 21 importers who paid 90 percent of the $3,321,408 in assessments in 2013. Of the 21 importers, the average assessment per importer was $142,346. Dividing the average assessment per importer by the assessment rate of $0.01 per pound yield an average quantity per importer estimate of 14.235 million pounds.

For honey imports, the equivalent of the season average price for domestic honey is referred to as a “unit value.” The unit value of $1.42 per pound is computed by dividing annual imported honey value of $480.25 million by average quantity of 337.05 million pounds (import data from the U.S. Census Bureau). Multiplying the $1.42 unit value by the average quantity of 14.235 million pounds yields average annual honey revenue per importer figure of $20.21 million, nearly three times the SBA threshold figure of $7.0 million for a large firm. Therefore the majority of the 21 importers that pay 90 percent of the assessments are large firms, according to the SBA definition.

Comparable computations can be made to determine the average 2013 honey revenue for the 25 first handlers and 640 importers that paid 10 percent of the assessments in the first handler and importer categories. The first handler and importer average annual honey revenue figures are approximately $950,000 and $75,000, respectively, indicating that the vast majority are small businesses (in terms of honey sales), under the SBA large business threshold of $7.0 million in annual sales.

Based on the foregoing, the majority of first handlers and importers may be classified as small entities.

This final rule amends section 1212.52 of the Order to increase the assessment rate from $0.01 to $0.015 per pound (an increase of $0.0025 per pound per year over a two-year period). The Order is administered by the Board with oversight by USDA. Under the program, assessments are collected from first handlers and importers and used for research and promotion projects designed to maintain and expand the market for honey and honey products in the United States and abroad. Additional funds will enable the Board to expand its production research activities and promotional efforts. The Board uses its health information in its promotion messaging to help build demand. Increasing demand will help move the growing supply of honey and honey products, which will benefit producers, importers, first handlers, and consumers. Authority for this action is provided in section 1212.52(f) of the Order and section 517 of the 1996 Act.

Two additional sections of the Order are also revised. Section 1212.71 of the Order is revised to change the length of time that books and records are to be held from two years to three years. This change conforms to the Board's compliance procedures, which instructs the Board to conduct audit reviews every three years. Section 1212.53 of the Order is revised to state that exemptions from assessments for a calendar year are effective on the date approved by the Board. This change is being made to clarify exemption requirements. These changes pose no additional information collection burden on honey first handlers and importers.

Regarding the economic impact of the final rule on affected entities, this action increases the assessment obligation on first handlers and importers. While assessments impose additional costs on first handlers and importers, the costs are minimal and uniform on all. The costs will also be offset by the benefits derived from the operation of the program. It is estimated that 42 first handlers and 661 importers pay assessments under the program.

There has been one economic study conducted since the Order's inception that evaluated the effectiveness of the Board's promotion program. The study was conducted by Dr. Ronald M. Ward at the University of Florida in 2014 and titled “Honey Demand and the Impact of the National Honey Board's Generic Promotion Program.” This study may be obtained from http://www.ams.usda.gov/. The 2014 study included data from 1987 through 2012, and evaluated the effectiveness of the former Honey Research, Promotion, and Consumer Information Order, and the current honey marketing program. The earlier honey program operated from 1986 through 2008, as a producer program. The earlier program was replaced in 2008 with the current packer and importer program; producers are no longer directly subject to the mandatory assessment. Otherwise, the two programs are similar, including the administrative and operational oversight.

The purpose of the economic study was twofold: (1) To determine the market implications of the Board's promotion program and (2) to determine a return-on-investment (rate of return) for the promotion activities conducted by the Board.

To evaluate the effectiveness of the Board's domestic promotion activities, econometric models were developed for each of two distinct honey market segments: manufacturing (honey used as an ingredient) and non-manufacturing (table honey). The models measured the impact of the Board's annual promotion expenditures while taking into account the impact of other factors that influence demand.

For the non-manufacturing model, the other factors were domestic supplies of honey, personal income, and the historical support price for honey. For the manufacturing model, the other factors were the quantity of sugar used in food manufacturing (as a proxy measure of the overall demand for sweeteners, including honey), and a variable which captured the structural change in the honey market that began in 2007, when the market share of honey imports began to increase significantly. The manufacturing model using Board expenditure lagged one year because Board promotion expenditure in the prior year was found to have the most significant impact on honey manufacturing demand in the current year.

Due to differences in data availability, the manufacturing model covered the time period of 1965 through 2012 and the non-manufacturing model spanned 1987 through 2012.

The econometric models used statistical methods to analyze annual data over these time periods and measure how strongly the various honey demand factors affect (a) the quantity of honey as an ingredient (manufacturing model) and (b) the price for table honey (non-manufacturing model). In both models, Board program expenditures were found to have a positive and statistically significant impact on demand. The models had reasonably strong explanatory power, with 80 percent of the variation in quantity demanded explained by the independent variables in the manufacturing model, and 89 percent of the variation in price explained by the non-manufacturing model variables.

The return on investment (ROI) for honey promotion was obtained by dividing the increased value of honey sales (for the two market segments combined) by Board program expenditures. The ROI for Board programs for the period 1987 to 2012 was 14.12, meaning $14.12 in returns (increased honey value) for every $1 spent on promotion. The results were similar for 2008 through 2012, the period covered by the new program funded by honey first handlers and importers.

An additional step in assessing promotional program effectiveness was to analyze the potential impact of alternative honey promotion spending levels. The two demand models were used to simulate gains for various percentages of actual 2012 promotional expenditures. The results show a range of increased honey demand impacts from increased spending, depending on alternative assumptions about the level of honey price and honey quantity. The simulation results suggest that a 50 percent increase in Board promotional expenditure would yield an additional $29 million in honey sales, if quantity demanded increased, but prices stayed the same. Alternatively, crop value would increase $44 million if prices went up, but quantity stayed the same. Returns on investment were 14 to 1 or higher over this range of alternative assumptions about market conditions. These results were similar to the ROI cited earlier. Focusing on 2012 illustrates the effectiveness of the program under the funding mechanism that began in 2008.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements that are imposed by the Order have been approved previously under OMB control number 0581-0093. This final rule does not change the information collection and recordkeeping requirements previously approved and imposes no additional reporting and recordkeeping burden on honey first handlers and importers.

As with all Federal promotion programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies. Finally, USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this final rule.

AMS is committed to complying with the E-Government Act, to promote the use of the Internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

The Board has been considering an increase in the assessment rate since 2011. The Board explored the need and justification for an increase as well as obtained feedback from the Board's stakeholders. Additionally, beginning in 2011, the Board has done extensive outreach to include presentations, handouts, and industry meeting attendance. As an alternative to an assessment rate increase, the Board considered cutting programs. The Board reduced honey research in order to maintain marketing programs and considered cutting additional marketing programs. However, after further analysis, it was determined that additional cuts would hurt the program. In late 2013, the Board presented the proposed assessment increase to the various honey associations. Ultimately, at its January 2014 meeting, the Board unanimously recommended increasing the assessment rate to $0.0125 per pound for the first year (January 1 through December 31, 2015) and to $0.015 per pound for the second year and beyond (on and after January 1, 2016).

A proposed rule concerning this action was published in the Federal Register on November 18, 2014 (79 FR 68636). The Board included notifications about the proposed rule in its newsletters and also mailed related information to honey packers and importers. Finally, the proposal was made available through the Internet by USDA and the Office of the Federal Register. A 30-day comment period ending December 18, 2014, was provided to allow interested persons to submit comments.

Analysis of Comments

Three comments were received in response to the proposed rule; two supported the increase, and one opposed the action. The two comments which supported increasing the assessment rate stated that the additional funds would allow the Board to expand its programs to promote the benefits of honey and honey products and develop new products that contain honey as a key ingredient. A commenter further stated that honey and honey bees are important to agriculture and the environment.

The commenter in opposition to the proposal did not see the need to increase the assessment rate by 50 percent. The commenter stated that honey assessments have increased over the years because honey consumption has increased. The commenter opined that any increase in the honey budget should come from increased honey sales rather than increasing the assessment rate. USDA concurs that an increase in honey sales and consumption will increase Board income. However, maintaining the current $0.01 per pound assessment rate will not generate the amount of funds necessary to fund additional production research, human clinical trials, and conduct promotion activities needed to continue to build demand to move the growing supply of honey and honey products. Thus, no changes have been made to the rule based on this comment.

After consideration of all relevant matters presented, including the information and recommendation submitted by the Board and other available information, it is hereby found that this rule, as hereinafter set forth, is consistent with and will effectuate the purposes of the 1996 Act.

List of Subjects in 7 CFR Part 1212

Administrative practice and procedure, Advertising, Consumer information, Honey Packer and importer promotion, Marketing agreements, Reporting and recordkeeping requirements.

For the reasons set forth in the preamble, part 1212, Chapter XI of Title 7 is amended as follows:

PART 1212—HONEY PACKERS AND IMPORTERS RESEARCH, PROMOTION, CONSUMER EDUCATION AND INDUSTRY INFORMATION ORDER 1. The authority citation for 7 CFR part 1212 continues to read as follows: Authority:

7 U.S.C. 7411-7425; 7 U.S.C. 7401.

2. In § 1212.52, paragraphs (a), (b), (c), (d), and (e) are revised to read as follows:
§ 1212.52 Assessments.

(a) The Board will cover its expenses by levying in a manner prescribed by the Secretary an assessment on first handlers and importers. For the period January 1 through December 31, 2015, the assessment rate shall be $0.0125 per pound of assessable honey and honey products. On and after January 1, 2016, the assessment rate shall be $0.015 per pound of assessable honey and honey products.

(b) Each first handler shall pay the assessment to the Board on all domestically produced honey or honey products the first handler handles. A producer shall pay the Board the assessment on all honey or honey products for which the producer is the first handler.

(c) Each first handler responsible for remitting assessments shall remit the amounts due to the Board's office on a monthly basis no later than the fifteenth day of the month following the month in which the honey or honey products were marketed.

(d) Each importer shall pay an assessment to the Board on all honey or honey products the importer imports into the United States. An importer shall pay the assessment to the Board through the United States Customs and Border Protection (Customs) when the honey or honey products being assessed enters the United States. If Customs does not collect an assessment from an importer, the importer is responsible for paying the assessment to the Board.

(e) The import assessment recommended by the Board and approved by the Secretary shall be uniformly applied to imported honey or honey products that are identified as HTS heading numbers 0409.00.00 and 2106.90.9988 by the Harmonized Tariff Schedule of the United States or any other numbers used to identify honey or honey products.

3. In § 1212.53, paragraph (d) is revised to read as follows:
§ 1212.53 Exemption from assessment.

(d) Upon receipt of an application, the Board shall determine whether an exemption may be granted. The Board will then issue, if deemed appropriate, a certificate of exemption to each person who is eligible to receive one. The exemption is effective when approved by the Board. It is the responsibility of these persons to retain a copy of the certificate of exemption.

4. Section 1212.71 is revised to read as follows:
§ 1212.71 Book and records.

Each first handler and importer, including those who are exempt under this subpart, must maintain any books and records necessary to carry out the provisions of this part, and any regulations issued under this part, including the books and records necessary to verify any required reports. Books and records must be made available during normal business hours for inspection by the Board's or Secretary's employees or agents. A first handler or importer must maintain the books and records for three years beyond the fiscal period to which they apply.

Dated: April 16, 2015. Rex A. Barnes, Associate Administrator.
[FR Doc. 2015-09292 Filed 4-21-15; 8:45 am] BILLING CODE 3410-02P
DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 2 [Docket No. PL15-1-000] Cost Recovery Mechanisms for Modernization of Natural Gas Facilities AGENCY:

Federal Energy Regulatory Commission, Energy.

ACTION:

Policy statement.

SUMMARY:

In this Policy Statement, the Commission provides greater certainty regarding the ability of interstate natural gas pipelines to recover the costs of modernizing their facilities and infrastructure to enhance the efficient and safe operation of their systems. The Policy Statement explains the standards the Commission will require interstate natural gas pipelines to satisfy in order to establish simplified mechanisms, such as trackers or surcharges, to recover certain costs associated with replacing old and inefficient compressors and leak-prone pipes and performing other infrastructure improvements and upgrades to enhance the efficient and safe operation of their pipelines.

DATES:

This Policy Statement will become effective October 1, 2015.

FOR FURTHER INFORMATION CONTACT: Monique Watson (Technical information), Office of Energy Markets Regulation, Federal Energy Regulatory Commission, 888 First Street NE., 20426, Telephone: (202) 502-8384, [email protected]. David E. Maranville (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., 20426, Telephone: (202) 502-6351, [email protected]. TABLE OF CONTENTS Paragraph
  • Nos.
  • I. Background 4 A. Safety and Environmental Initiatives 4 B. Existing Policy 11 C. Proposed Policy Statement 19 D. Comments 22 II. Discussion 25 A. Adoption of Policy Statement 25 B. Standards for Modernization Cost Trackers or Surcharges 44 1. Review of Existing Rates 45 2. Defined Eligible Costs 54 3. Avoidance of Cost Shifting 72 4. Periodic Review of the Surcharge 83 5. Shipper Support 90 C. Additional Questions on Which the Commission Sought Comments 95 1. Accelerated Amortization 96 2. Reservation Charge Crediting 101 3. Other Issues 110 III. Information Collection Statement 119 IV. Document Availability 132 V. Effective Date and Congressional Notification 135

    1. On November 20, 2014, the Commission issued a Proposed Policy Statement and sought comments regarding potential mechanisms for interstate natural gas pipelines to use to recover the costs of modernizing their facilities and infrastructure to enhance the efficient and safe operation of their systems.1 The Commission proposed standards that interstate natural gas pipelines would be required to satisfy to establish simplified mechanisms, such as trackers or surcharges, to recover such costs. Historically, the Commission has required interstate natural gas pipelines to design their transportation rates based on projected units of service. Recently, however, governmental safety and environmental initiatives have raised the probability that interstate natural gas pipelines will soon face increased costs to enhance the safety and reliability of their systems. The Commission issued the Proposed Policy Statement in an effort to address these potential costs and to ensure that existing Commission ratemaking policies do not unnecessarily inhibit interstate natural gas pipelines' ability to expedite needed or required upgrades and improvements, such as replacing old and inefficient compressors and leak-prone pipelines.

    1Cost Recovery Mechanisms for Modernization of Natural Gas Facilities, Proposed Policy Statement, 104 FERC ¶ 61,147 (2014) (Proposed Policy Statement).

    2. After review of the comments on the Proposed Policy Statement, the Commission has determined to establish a policy allowing interstate natural gas pipelines to seek to recover certain capital expenditures made to modernize system infrastructure through a surcharge mechanism, subject to conditions intended to ensure that the resulting rates are just and reasonable and protect natural gas consumers from excessive costs. The Commission recognizes, as many commenters note, that permitting pipelines to recover these expenditures through a surcharge or tracker departs from the requirement that interstate natural gas pipelines design their transportation rates based on projected units of service. We find on balance, however, that consideration of such mechanisms is justified if they are properly designed to limit a pipeline's recovery of such costs to those shown to modernize the pipeline's system infrastructure in a manner that enhances system safety, reliability and regulatory compliance, and are subject to conditions that ensure that the resulting rates are just and reasonable and protect natural gas consumers from excessive costs. Accordingly, we are adopting this Policy Statement to provide guidance and a framework as to how the Commission will evaluate pipeline proposals for recovery of infrastructure modernization costs. The Policy Statement adopts the five guiding principles from the Proposed Policy Statement as the standards a pipeline would have to satisfy for the Commission to approve a proposed modernization cost tracker or surcharge. Those criteria are (1) Review of Existing Base Rates; (2) Defined Eligible Costs; (3) Avoidance of Cost Shifting; (4) Periodic Review of the Surcharge and Base Rates; and (5) Shipper Support.

    3. Below we review the background that led to the development of the Proposed Policy Statement and this Policy Statement, summarize the comments on the Proposed Policy Statement, and discuss the applicability of the Policy Statement in general, and of the five conditions under the new Policy Statement, in light of those comments. As discussed below, the Commission intends that the standards a pipeline must satisfy to implement a cost modernization tracker or surcharge to be sufficiently flexible so as not to require any specific form of compliance but to allow pipelines and their customers to reach reasonable accommodations based on the specific circumstances of their systems. The Commission will thus evaluate any proposal for a modernization cost surcharge against those five standards on a case-by-case basis.

    I. Background A. Safety and Environmental Initiatives

    4. As we noted in the Proposed Policy Statement, there have been several recent legislative actions, and resulting regulatory initiatives, to address natural gas pipeline infrastructure safety and reliability. In 2012, Congress passed the Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011.2 That act includes requirements for the United States Department of Transportation (DOT) to take various actions to reduce the risk of future pipeline failures. Among other things, the Pipeline Safety Act requires the DOT to (1) consider expansion and strengthening of its integrity management regulations, (2) consider requiring automatic shut-off valves on new pipeline construction, (3) require pipelines to reconfirm their Maximum Allowable Operating Pressures, and (4) conduct surveys to measure progress in plans for safe management and replacement of cast iron pipelines.

    2 Pipeline Safety, Regulatory Certainty, and Job Creation Act of 2011, 49 U.S.C.S. 60101 (2012) (Pipeline Safety Act).

    5. The Pipeline and Hazardous Materials Safety Administration (PHMSA) is in the process of implementing a multi-year Pipeline Safety Reform Initiative to comply with the Pipeline Safety Act's mandate to enhance the agency's ability to reduce the risk of future pipeline failures.3 Prior to the Pipeline Safety Act's enactment, on August 25, 2011, PHMSA published an Advance Notice of Proposed Rulemaking (ANOPR) titled “Pipeline Safety: Safety of Gas Transmission Pipelines,” which asked all stakeholders whether PHMSA should modify its existing integrity management and other pipeline safety regulations for interstate natural gas pipelines.4 The ANOPR requested public comment on a range of topics related to current industry practices, the effects of enhanced regulations on safety and cost, and the best method to implement proposed regulations. For example, PHMSA sought comments on shut-off valves and remote controlled shut-off valves. In addition, PHMSA held a public leak detection and valve workshop on March 28, 2012.

    3 Written Statement of Cynthia Quarterman, Administrator, PHSMA, before the U.S. House of Representatives, Committee on Transportation and Infrastructure, Subcommittee on Railroads, Pipelines, and Hazardous Materials (May 20, 2014), available at http://transportation.house.gov/uploadedfiles/2014-05-20-quarterman.pdf (Quarterman Testimony) at 3.

    4Pipeline Safety: Safety of Gas Transmission Pipelines, (RIN: 2137-AE72), 76 FR 53,086 (August 25, 2011).

    6. Also as part of the ANOPR process, PHSMA is considering expanding the definition of a High Consequence Area (HCA) so that more miles of pipeline may become subject to integrity management requirements.5 PHMSA is also considering potential new rules related to repair criteria, including applying the integrity management repair criteria to non-HCAs; reassessing the repair criteria in areas where the population has grown since the pipeline was constructed; requiring methods to validate in-line inspection tool performance and qualifications of personnel; and implementing risk tiering such that repairs in an HCA have priority over repairs in a non-HCA. PHMSA held a Class Location Methodology workshop on April 16, 2014. Based on the comments from the ANOPR and the workshop, PHMSA “has started drafting a report to Congress on this issue.” 6

    5 An HCA is a location which is defined in the pipeline safety regulations as an area where pipeline releases have greater consequences to the safety, health and environment. Basically, these are areas with greater population density.

    6 Quarterman Testimony at 10.

    7. PHMSA is also considering changes to its requirements that pipelines perform baseline and periodic assessments of pipeline segments in an HCA through one or a combination of in-line inspection, pressure testing, direct assessment of external and internal corrosion, or other technology demonstrated to accurately assess the condition of a pipe. In June 2013, as updated in September 2013, PHMSA issued a flow chart reflecting its draft Integrity Verification Process for natural gas pipelines.7 To this end, PHMSA seeks information as to what anomalies have been detected using the various assessment methods, and proposes to include criteria in the regulations that would require more rigorous corrosion control.

    7 78 FR 56,268 (Sept. 12, 2013).

    8. As we further noted in the Proposed Policy Statement, in addition to pipeline safety issues, there have been growing concerns about the emissions of greenhouse gases (GHG) in the production and transportation of natural gas. On April 15, 2014, the United States Environmental Protection Agency (EPA) issued a series of technical white papers, for which it has requested input from peer reviewers and the public, to determine how to best pursue reductions of emissions from, inter alia, natural gas compressors.8 The EPA Compressor White Paper discusses the most prevalent types of compressors (reciprocating and centrifugal) and compressor emission data. As relevant to this Policy Statement, the EPA lays out several “mitigation options for reciprocating compressors involve[ing] techniques that limit the leaking of natural gas past the piston rod packing, including replacement of the compressor rod packing, replacement of the piston rod, and the refitting or realignment of the piston rod.” 9 The EPA also describes several mitigation options for centrifugal compressors to limit the leaking of natural gas “across the rotating shaft using a mechanical dry seal, or capture the gas and route it to a useful process or to a combustion device.” 10 If the EPA's white papers result in the agency imposing mitigation requirements on natural gas pipelines, the cost of such controls could be significant.11

    8 See EPA, Oil and Natural Gas Air Pollution Standards, White Papers on Methane and VOC Emission (Apr. 15, 2014), available at http://www.epa.gov/airquality/oilandgas/whitepapers.html.

    9 EPA Compressor White Paper at 29.

    10Id. at 29-42.

    11 For example, the Interstate Natural Gas Association of America (INGAA) comments that one of its member companies “reported capital costs of $865,000 for replacement of a wet seal” on a centrifugal compressor. See INGAA Comments on EPA Compressor White Paper at 13 (filed June 16, 2014). INGAA also commented on the EPA's Leaks White Paper and noted that many factors could affect leak repair costs and that “the cost of the repair may far exceed the benefit of eliminating a small leak.” See INGAA Comments on EPA Leaks White Paper at 12-13 (filed June 16, 2014).

    9. In 2009, the EPA published a rule for mandatory reporting of GHG from sources that, in general, emit 25,000 metric tons or more of carbon dioxide equivalent per year in the United States.12 This initiative, commonly referred to as the Greenhouse Gas Reporting Program (GHGRP), collects greenhouse gas data from facilities that conduct Petroleum and Natural Gas Systems activities, including production, processing, transportation and distribution of natural gas. Moreover, on November 14, 2014, the EPA issued a prepublication version of a final rule revising the Petroleum and Natural Gas Systems source category (Subpart W) and the General Provisions (Subpart A) of the GHGRP.13 The final rule, which was effective January 1, 2015, imposes new requirements for the natural gas industry to monitor methane emissions and report them annually. On that same day, the EPA issued a prepublication version of a proposed rule to add calculation methods and reporting requirements for greenhouse gas emissions, as relevant here, from blow downs of natural gas transmission pipelines between compressor stations. The EPA also proposed confidentiality determinations for new data elements contained in the proposed amendments.14

    12 Mandatory Reporting of Greenhouse Gases Rule, 74 FR 56,260 (Oct. 30, 2009). See also 40 CFR Pt. 98 (2014).

    13 Greenhouse Gas Reporting Rule: 2014 Revisions and Confidentiality Determinations for Petroleum and Natural Gas Systems, Docket Nos. EPA-HQ-OAR-2011-0512 and FR 9918-95-OAR (Nov. 14, 2014).

    14See Greenhouse Gas Reporting Rule: 2015 Revisions and Confidentiality Determination for Petroleum and Natural Gas Systems, Docket ID No. EPA-HQ-OAR-2014-0831 (issued Nov. 14. 2014).

    10. As we recognized in the Proposed Policy Statement, one likely result of the Pipeline Safety Act and PHMSA's rulemaking proceedings is that interstate natural gas pipelines will soon face new safety standards requiring significant capital costs to enhance the safety and reliability of their systems. Moreover, pursuant to EPA's initiatives, pipelines may in the future face increased environmental monitoring and compliance costs, as well as potentially having to replace or repair existing natural gas compressors or other facilities.15

    15 On July 29, 2014, the Department of Energy (DOE) announced steps to help modernize natural gas infrastructure. Moreover, on July 31, 2014, Secretary of Energy Ernest Moniz sent a letter to the Chairman of the Commission recommending the Commission explore efforts to provide greater certainty for cost recovery for new investments in modernization of natural gas transmission infrastructure as part of the FERC's work to ensure just and reasonable natural gas pipeline transportation rates.

    B. Existing Policy

    11. The Commission's regulations generally require that interstate natural gas pipelines design their open access natural gas transportation rates to recover their costs based on projected units of service.16 This requirement means that the pipeline is at risk for under-recovery of its costs between rate cases but may retain any over-recovery. As the Commission explained in Order No. 436, this requirement gives the pipeline an incentive both to (1) “minimize costs in order to provide services at the lowest reasonable costs consistent with reliable long-term service” 17 and (2) “provide the maximum amount of service to the public.” 18

    16 18 CFR 284.10(c)(2) (2014).

    17Regulation of Natural Gas Pipelines After Partial Wellhead Decontrol, Order No. 436, FERC Stats. & Regs., Regulations Preambles 1982-1985 ¶ 30,665, at 31,534 (1985).

    18Id. at 31,537.

    12. Before the Pipeline Safety Act, the Commission held that capital costs incurred to comply with the requirements of pipeline safety legislation or with environmental regulations should not be included in surcharges,19 except in the context of an uncontested settlement.20 Noting that pipelines commonly incur capital costs in response to regulatory requirements intended to benefit the public interest, the Commission stated that recovering those costs in a tracking mechanism was contrary to the requirement to design rates based on estimated units of service because the use of cost-trackers undercuts the referenced incentives by guaranteeing the pipeline a set revenue recovery.

    19See Granite State Gas Transmission, Inc., 132 FERC ¶ 61,089, at P 11 (2010) (Granite State); Florida Gas Transmission Co., 105 FERC ¶ 61,171, at PP 47-48 (2003) (Florida Gas).

    20See e.g., Granite State Gas Transmission, Inc., 136 FERC ¶ 61,153 (2011); Florida Gas Transmission Co., 109 FERC ¶ 61,320 (2004). In 2012, the Commission again rejected a protested proposal that would allow a pipeline to recover regulatory safety costs through a tracker, but noted that PHSMA was in the early stages of developing regulations to implement the Pipeline Safety Act, and that the Commission would consider the need for further action as PHMSA's implementation process moved forward. CenterPoint Energy—Mississippi River Transmission, LLC, 140 FERC ¶ 61,253, at P 65 (2012) (MRT).

    13. As we stated in the Proposed Policy Statement, however, the Commission recently approved, as part of a contested settlement, a tracker mechanism to recover substantial pipeline modernization costs that Columbia Gas Transmission, LLC (Columbia Gas) demonstrated were necessary to ensure the safety and reliability of its pipeline system.21 The Columbia Gas settlement outlined significant operational and safety issues resulting from the age and condition of Columbia Gas' system and the corresponding inability to monitor and maintain the system using efficient modern techniques.22 The Commission found that approving the settlement would facilitate Columbia Gas' ability to make substantial capital investments necessary to correct significant infrastructure problems, and thus provide more reliable service while minimizing public safety concerns.

    21Columbia Gas Transmission, LLC, 142 FERC ¶61,062 (2013) (Columbia Gas).

    22 Columbia Gas stated in that proceeding that over fifty percent of its regulated pipeline system was over 50 years old, that a significant portion of its system contained dangerous bare steel pipeline, that many of its compressors were also outdated, that many of its control systems were running on obsolete platforms, and that it was only able to inspect a small percentage of its system using modern in-line inspection tools.

    14. The Commission's determination in Columbia Gas thus established general parameters for pipelines to consider when seeking recovery of pipeline investments for modernization costs related to improving system safety and reliability. The tracker approved in that case was designed to recover pipeline modernization capital costs of up to $300 million annually over a five-year period. The Commission found that Columbia Gas' settlement included numerous positive characteristics that distinguished its cost tracking mechanism from those the Commission had previously rejected and that work to maintain the pipeline's incentives for innovation and efficiency. The key aspects of the settlement upon which the Commission relied to approve the tracker included the following.

    15. First, Columbia Gas worked collaboratively with its customers to ensure that its existing base rates, to which the tracker would be added, were updated to be just and reasonable. This included a reduction in Columbia Gas' base rates and a refund to its customers.

    16. Second, the settlement specifically delineated and limited the amount of capital costs that may go into the cost recovery mechanism. Moreover, the eligible facilities for which costs would be recovered through that mechanism were specified by pipeline segment and compressor station. Further, the pipeline agreed to spend $100 million in annual capital costs as part of its ordinary system maintenance during the initial term of the tracker, which would not be recovered through the tracker. The Commission found that these provisions should assure that the projects whose costs are recovered through the tracker go beyond the regular capital maintenance expenditures the pipeline would make in the ordinary course of business and are critical to assuring the safe and reliable operation of Columbia Gas' system.

    17. Third, the Commission found that a critically important factor to its approval of the settlement was the pipeline's agreement to a billing determinant floor for calculating the cost recovery mechanism, together with an agreement to impute the revenue it would achieve by charging the maximum rate for service at the level of the billing determinant floor before it trues up any cost underrcoveries. The Commission found these provisions should alleviate its historic concern that surcharges, which guarantee cost recovery, diminish a pipeline's incentive to be efficient and to maximize the service provided to the public. The Commission also found that these provisions protect the pipeline's shippers from significant cost shifts if the pipeline loses shippers or must provide increased discounts to retain business.

    18. Fourth, the surcharge was temporary and would terminate automatically on a date certain unless the parties agreed to extend it and the Commission approved the extension. Finally, the tracker was broadly supported by the pipeline's customers.

    C. Proposed Policy Statement

    19. In the Proposed Policy Statement, the Commission found that the ultimate implementation of the recent initiatives described above, to improve natural gas infrastructure safety and reliability and to address environmental issues related to the operation of natural gas pipelines, is likely to lead to the need for interstate natural gas pipelines to make significant capital investments to modernize their systems. The Commission stated that in light of these developments, the Commission has a duty to ensure that interstate natural gas pipelines are able to recover the costs of these system upgrades in a just and reasonable manner that does not undercut their incentives to provide service in an efficient manner and protects ratepayers from unreasonable cost shifts.

    20. Accordingly, the Commission proposed to establish a policy outlining the analytical framework for evaluating pipeline proposals for special rate mechanisms to recover infrastructure modernization costs necessary for the efficient and safe operation of the pipeline's system and compliance with new regulations. The Commission proposed to base the policy on the guiding principles established in Columbia Gas. Pursuant to the Proposed Policy Statement, a pipeline proposal for a cost recovery tracker to recover pipeline modernization costs would need to satisfy five standards:

    (1) Review of Existing Rates—the pipeline's base rates must have been recently reviewed, either by means of an NGA general section 4 rate proceeding or through a collaborative effort between the pipeline and its customers; (2) Eligible Costs—the eligible costs must be limited to one-time capital costs incurred to modify the pipeline's existing system to comply with safety or environmental regulations issued by PHMSA, EPA, or other federal or state government agencies, and other capital costs shown to be necessary for the safe or efficient operation of the pipeline, and the pipeline must specifically identify each capital investment to be recovered by the surcharge; (3) Avoidance of Cost Shifting—the pipeline must design the proposed surcharge in a manner that will protect the pipeline's captive customers from cost shifts if the pipeline loses shippers or must offer increased discounts to retain business; (4) Periodic Review of the Surcharge and Base Rates—the pipeline must include some method to allow a periodic review of whether the surcharge and the pipeline's base rates remain just and reasonable; and (5) Shipper Support—the pipeline must work collaboratively with shippers to seek shipper support for any surcharge proposal.

    21. The Commission sought comments on the Proposed Policy Statement in general and on the five standards noted above. We also sought comments on several related issues, including whether if the Commission were to implement the instant modernization cost recovery policy, it should revise its policy on reservation charge crediting.23

    23 Other questions included whether the costs of modifications to compressors for the purpose of waste heat recovery should be eligible for recovery under a modernization surcharge, whether there are any capital costs associated with the expansion of the pipeline's existing capacity or its extension to serve new markets that may reasonably be included in the surcharge as necessary one-time capital expenditures to comply with safety and environmental regulations, whether capital costs incurred to minimize pipeline facility emissions be considered for inclusion in the surcharge, even if those costs are not expressly required to comply with environmental regulations, whether non-capital maintenance costs associated with environmentally sound operation of a compressor be considered for inclusion in the surcharge, and under what circumstances should the Commission permit a pipeline to include in the tracking mechanism the costs of additional projects not identified in the pipeline's original filing to establish the tracking mechanism?

    D. Comments

    22. The Commission received a variety of comments in response to the Proposed Policy Statement.24 Generally, interstate pipelines and other natural gas facility owners and operators favor the proposed policy, commenting that the criteria for collecting modernization costs through a surcharge should be more flexible than contemplated in the Proposed Policy Statement. Shippers varied in supporting or opposing the proposal, with LDCs conditionally supporting it provided that surcharges are tailored to the individual circumstances of the pipeline, and are designed so as not to impose unreasonable cost burdens or risks on natural gas customers. Some marketers also favored a program allowing the implementation of surcharges for modernization costs. Other shippers, however, including industrials, municipals and supply end entities, oppose the proposed policy statement. Producers are especially opposed to the recovery of any modernization costs through a surcharge mechanism, claiming that to allow such recovery is contrary to the NGA and longstanding Commission policy. The individuals filing comments also oppose the Proposed Policy Statement for varying reasons.

    24 See Appendix for a list of those entities and persons that filed comments and/or reply comments to the Proposed Policy Statement.

    23. Numerous entities from a wide spectrum of industry interests filed in favor of the Proposed Policy Statement, supporting properly limited tracker or surcharge mechanisms to recover modernization costs.25 Some advocate granting pipelines added flexibility to comply with the five standards necessary to establish such trackers.26 Others filing in favor of the Commission's proposed policy state that pipeline cost recovery mechanisms must be tailored to the individual circumstances of the pipeline, and be designed so as not to impose unreasonable cost burdens or risks on natural gas customers.27 Various pipeline customers generally support the development of simplified mechanisms for the recovery of costs of modernizing pipeline assets to enhance safety and reliability subject to conditions, commenting that the costs to be recovered should be limited to capital improvements for safety purposes and for compliance with environmental regulations.28 Others state that modernization cost recovery trackers should include safeguards to ensure that pipelines are not permitted to pass through costs while evading shipper protections traditionally afforded by NGA section 4 rate review.29 Others support the Proposed Policy Statement as a method for enhancing certainty and the ability of interstate pipelines to recover costs for augmenting the efficient and safe operation of their respective systems.30

    25 Those commenting in favor include the DOE; PHMSA; the Interstate Natural Gas Association of America (INGAA); Kinder Morgan Interstate Pipelines (Kinder Morgan); Southern Star Central Gas Pipeline, Inc. (Southern Star); Boardwalk Pipeline Partners, LP (Boardwalk); American Midstream (AlaTenn), LLC (American Midstream); the American Gas Association (AGA); the North Carolina Public Utility Commission (NCUC); the Kansas Corporation Commission (KCC); the Michigan Public Service Commission (Michigan PSC); the Tennessee Valley Authority (TVA); and the Environmental Defense Fund, the Conservation Law Foundation, and Sustainable FERC Project (collectively Environmental Commenters).

    26See, e.g., INGAA Comments at 2, Boardwalk Comments at 4, Kinder Morgan Comments at 5.

    27See, e.g., AGA Comments at 1 Laclede Comments at 1.

    28 Xcel Energy Services (XES) Comments at 2; Wisconsin Electric and Wisconsin Gas Comments at 4.

    29 Calpine Corporation (Calpine) Comments at 1.

    30 Environmental Commenters Comments at 3-5.

    24. In contrast to the pipelines' and other comments in support of the proposed policy, other commenters, particularly those representing producers, marketers, municipal gas companies, and industrial users of natural gas, expressed strong opposition to the recovery of modernization costs through a tracker.31 Opponents' claims that additional cost-recovery guarantees to incentivize compliance with mandatory environmental and safety laws is misplaced, and that cost trackers are inconsistent with section 284.10(c)(2) of the Commission's regulations, which requires that transportation rates be based on estimated units of service so that the pipeline is at risk for cost under-recovery.32 Opponents also claim that a cost modernization surcharge would be contrary to longstanding Commission policy and precedent, noting that the Commission has consistently rejected maintenance, compliance, and safety cost trackers, because they guarantee cost recovery without taking into account the benefits of cost reductions in other areas and/or increases in throughput affecting base rate revenues.33 Those opposing the Proposed Policy Statement further claim that the five standards do not provide the consumer protections afforded under section 4 of the Natural Gas Act (NGA), and that the record lacks a showing that pipelines cannot recover such costs though NGA section 4 rate cases.34 Opponents also claim that the Proposed Policy Statement is premature, because PHMSA and the EPA have not yet issued new regulations.35

    31 Those filing comments opposing the Proposed Policy Statement include the Natural Gas Supply Association (NGSA), Industrial Energy Consumers of America (IECA), the American Forest and Paper Association (AF&PA), Process Gas Consumers (PGC), the American Public Gas Association (APGA), the Independent Petroleum Association of America (IPAA), Indicated Shippers (Anadarko Energy Services Company, Apache Corporation, BP Energy Company, Chevron U.S.A. Inc., ConocoPhillips Company, Cross Timbers Energy Services, Inc., Direct Energy Business, LLC, ExxonMobil Gas & Power Marketing Company, a division of Exxon Mobil Corporation, Fieldwood Energy LLC, Hess Corporation, Marathon Oil Company, Noble Energy, Inc., Occidental Energy Marketing, Inc., Shell Energy North America (US), L.P., SWEPI LP, and WPX Energy Marketing, LLC), the El Paso Municipal Customer Group (EPMCG), Western Tennessee Municipal Group, the Jackson Energy Authority, City of Jackson, Tennessee, and Kentucky Cities (together, Cities), Independent Oil & Gas Association of West Virginia, Inc. (IOGA), the Municipal Defense Group (MDG), Deep Gulf Energy LP (Deep Gulf), Energy XXI (Bermuda) Ltd. (Energy XXI), EPL Oil & Gas, Inc. (EPL), and M21K, LLC (M21K) (collectively Energy XXI), and Helis Oil & Gas, LLC (Helis) and Walter Oil & Gas Corporation (Walter).

    32See, e.g., NGSA Comments at 3.

    33 NGSA Comments at 10-11, APGA Comments at 2-4, Indicated Shippers Comments at 5-18 .

    34 APGA Comments at 2-4, NGSA Comments at 7-8.

    35 NGSA Comments at 8-9.

    II. Discussion A. Adoption of Policy Statement

    25. After reviewing the comments filed on the Proposed Policy Statement, the Commission has determined to establish a policy allowing interstate natural gas pipelines to seek to recover certain capital expenditures made to modernize system infrastructure in a manner that enhances system reliability, safety and regulatory compliance through a surcharge mechanism, subject to conditions intended to ensure that the resulting rates are just and reasonable and protect natural gas consumers from excessive costs. While we recognize that allowing pipelines to recover these expenditures through a surcharge or tracker departs from the requirement that interstate natural gas pipelines design their transportation rates based on projected units of service, we find on balance that consideration of such mechanisms is justified in order to provide an enhanced opportunity to recover the substantial capital costs some pipelines are likely to incur to replace aging, unsafe and leak-prone facilities. The Policy Statement provides a framework for how the Commission will evaluate pipeline proposals for recovery of infrastructure modernization costs, and guidance as to how it will evaluate such proposals in accordance with the five adopted standards.

    26. As the comments in support of the Commission's Proposed Policy Statement indicate, establishment of a policy to permit enhanced recovery of modernization costs is in the public interest and necessary to address concerns regarding the safety of the Nation's natural gas infrastructure and the safe operation of natural gas pipelines, as well as environmental issues related to emissions. With regard to safety and reliability, as OPS comments, recent pipeline accidents, including the September 2010 pipeline rupture in San Bruno, California, demonstrate the potential consequence of aging pipeline facilities that are not properly repaired, rehabilitated or replaced. OPS states that 59 percent of existing natural gas pipelines were built before 1970 and 69 percent of existing natural gas pipelines were built before 1980. DOE notes that more than half of the country's natural gas transmission and gathering infrastructure is over 40 years old. As OPS points out, while aging pipelines are not inherently risky, older facilities have been exposed to more threats and were likely constructed without the benefit of today's safety standards or quality materials.

    27. To address these concerns, Congress passed the Pipeline Safety Act mandating that DOT take various actions to improve the safety of interstate natural gas pipelines, including requiring testing to verify natural gas pipelines' maximum allowable operating pressure, considering expansion and strengthening of its integrity management regulations, and considering requiring automatic shut-off valves on new pipeline construction. The need to address pipeline safety is also supported by OPS' comments that multiple recommendations from the National Transportation Safety Board and the General Accounting Office reinforce the need to ensure that the Nation's pipeline infrastructure is sound and reliable. The DOE states in its comments that the Commission's proposal is “aligned with goals of DOE's Initiative to Help Modernize Natural Gas Transmission and Distribution Infrastructure as well as government-wide efforts to improve pipeline safety and enhance the resilience of our nation's critical infrastructure.36 DOE asserts that offering streamlined cost recovery options will provide an overdue incentive for pipelines to invest in new equipment and upgrades that will improve safety, boost energy efficiency and reduce emissions.

    36 DOE Comments at 1.

    28. In addition to pipeline safety issues, there have been growing concerns about the emissions of GHG in the production and transportation of natural gas. As we noted in the Proposed Policy Statement, in 2014, the EPA issued a series of technical white papers to determine how to best pursue reductions of emissions from, inter alia, natural gas compressors. The EPA Compressor White Paper lays out several “mitigation options for reciprocating compressors and centrifugal compressors to limit the leaking of natural gas. . . .” 37 Further, in 2009, the EPA published its rule for mandatory reporting of greenhouse gas emissions. The resulting GHGRP collects greenhouse gas data from facilities that conduct Petroleum and Natural Gas Systems activities, including production, processing, transportation and distribution of natural gas. Moreover, the EPA issued a final rule effective January 1, 2015, imposing new requirements for the natural gas industry to monitor methane emissions and report them annually.

    37 EPA Oil and Natural Gas Sector Compressors (Apr. 2014) at 29, available at http://www.epa.gov/airquality/oilandgas/2014papers/20140415compressors.pdf at 29.

    29. Further, the use of natural gas as a fuel for compressors adds to the amount of carbon dioxide emissions.38 DOE also estimates that over 110 Bcf of natural gas is lost annually through routing venting and equipment leaks. DOE states that a streamlined cost recovery mechanism such as that proposed here for voluntary emissions reductions can benefit pipelines and their customers. According to DOE, infrastructure improvements that will increase compressor efficiency and reduce venting and leaking of methane emissions will also result in product conservation and thus cost savings.39

    38 See DOE Comments at 4, stating that EIA estimates that 728 billion cubic feet (Bcf) of natural gas was used as fuel by compressor stations operating at natural gas transmission and storage facilities in the United States in 2012, resulting in 39 million metric tons of CO2 emissions.

    39 DOE Comments at 5.

    30. The safety and reliability of the nation's natural gas infrastructure, and the operation of those facilities in an efficient manner that minimizes environmental impact, are issues of public interest, and the development of mechanisms to encourage investments in infrastructure improvements and upgrades to enhance the efficient and safe operation of natural gas pipeline furthers that interest. As we recognized in the Proposed Policy Statement, one likely result of the recent regulatory safety and environmental initiatives is that interstate natural gas pipelines will face increased costs related to those rules and programs. Notably, while the opponents of the policy assert its implementation is premature because the amount of those costs is still unknown, they do not dispute that pipelines are likely to incur substantial costs to address these issues. In light of the referenced regulatory developments, the Commission has a duty to ensure that interstate natural gas pipelines are able to recover the costs of these required system upgrades in a just and reasonable manner that does not undercut their incentives to provide service in an efficient manner and also protects ratepayers from unreasonable cost shifts.

    31. In an effort to ensure that consumers are protected against potential effects of any modernization cost trackers or surcharges, the Final Policy adopts the five guiding principles proposed in the Proposed Policy Statement as the standards a pipeline would have to satisfy for the Commission to approve a proposed modernization cost tracker or surcharge. Those standards are (1) a requirement for a review of the pipeline's existing base rates by means of an NGA general section 4 rate proceeding, a cost and revenue study, or through a collaborative effort between the pipeline and its customers; (2) a requirement that the costs eligible for recovery through the tracker or surcharge must generally be limited to one-time capital costs incurred to modify the pipeline's existing system to comply with safety or environmental regulations or other federal or state government agencies, or other capital costs shown to be necessary for the safe, reliable, and/or efficient operation of the pipeline, and the pipeline must specifically identify each projects' costs or capital investment to be recovered by the surcharge; 40 (3) a prohibition against cost shifting, requiring that the pipeline design any proposed surcharge in a manner that will protect the pipeline's captive customers from cost shifts if the pipeline loses shippers or must offer increased discounts to retain business; (4) a requirement that the pipeline must include some method to allow a periodic review of whether the surcharge and the pipeline's base rates remain just and reasonable; and (5) a requirement that the pipeline work collaboratively with shippers to seek shipper support for any surcharge proposal. These standards will act as protections against pipelines unilaterally recovering costs through a tracker that do qualify as the type intended to meet the goals of the policy. They will also require any pipeline seeking a modernization cost tracker to demonstrate to the Commission and its customers that its current base rates are just and reasonable, and provide flexibility for the parties to pursue options to reach agreement on processes to ensure that those rates and the surcharge rate remain just and reasonable. They will also prevent shifting of additional costs to captive customers.

    40 As discussed below, the Commission may consider pipeline proposals to include certain limited non-capital maintenance costs in a modernization cost tracker.

    32. Opponents of the proposed policy argue that adopting the Proposed Policy Statement would be contrary to the NGA, longstanding Commission policy and rate regulation principles, and that the Commission has neither justified this departure from current policy nor demonstrated why it is necessary. NGSA, Indicated Shippers, the IPAA and others argue that the NGA requires that pipelines be afforded an “opportunity” to recover their reasonable costs but that trackers guarantee cost recovery in violation of that principle.41 They assert this guaranteed cost recovery, absent any accounting of cost savings, is the reason Commission has for years disfavored cost recovery trackers, because it eliminates the pipeline's risk and correspondingly any incentive for the pipeline to be efficient and to provide effective service. They note that the Commission's rejections of such mechanisms include proposals addressing circumstances very similar to those that would be covered under the new policy, and that the Commission itself has stated that it has only approved the use of trackers that were agreed to in settlements.42 They further claim that there has been no change in the law or the rationale underlying the Commission's longstanding position that would warrant the policy modification proposed.

    41See, e.g., NGSA Comments at 10, Indicated Shippers' Comments at 3.

    42See, e.g., Indicated Shippers' Comments at 5-11, and cases cited therein.

    33. As we stated above, the Commission acknowledges that the policy adopted in this Policy Statement departs from the general rate policy in our regulations that interstate natural gas pipelines design their transportation rates based on projected units of service. We disagree, however, that there have been no changes that may result in tracker mechanisms being just and reasonable in certain circumstances and subject to appropriate controls.43 As discussed above, the increased concerns with pipeline safety reflected in the Pipeline Safety Act, together with the recent DOE, PHMSA, and EPA initiatives to improve natural gas infrastructure safety and reliability and to address environmental issues will result in certain increased capital and compliance costs for pipelines. In light of these developments the Commission has a duty to ensure that interstate natural gas pipelines are able to recover the reasonable cost of these system upgrades in a just and reasonable manner that does not undercut their incentives to provide service in an efficient manner and protects ratepayers from unreasonable cost shifts.

    43 Proposed Policy Statement, PP 18-20.

    34. We also disagree with commenters' contentions that allowing modernization cost trackers will eliminate the pipeline's risk of cost under-recovery and thereby reduce pipelines' incentives to be efficient and to provide effective service, contrary to goals of our general policy of requiring that rates be based on projected units of service. As discussed in more detail below, the costs included in a modernization cost tracker will generally be limited to one-time capital costs to improve the safe, reliable, and/or efficient operation of the pipeline. Thus, pipelines will continue to recover all other costs in their base rates pursuant to the Commission's ordinary ratemaking policies. Therefore, pipelines will continue to be at risk between rate cases for recovery of their operating and maintenance (O&M) costs, the overall return on non-modernization capital costs, the depreciation allowance related to those costs, and all other costs included in their base rates.44 This will give pipelines an incentive to operate their systems as efficiently as possible, consistent with Commission policy. Moreover, the pipelines will have the burden of showing that all costs included in a modernization cost tracker are prudent and consistent with the Commission's eligibility standards for including costs in such a tracker. This will give the Commission and all interested parties an opportunity to review whether the subject capital investments are prudent and required for the safe and efficient operation of the pipeline.

    44 This fact distinguishes surcharges that may be approved under the Policy Statement from ANR Pipeline Co., 70 FERC ¶ 61,143 (1995), where we rejected ANR's proposed base rate cost-of-service tracker, which sought to recover all of the pipeline's cost of service, as contrary to our regulations.

    35. Several commenters, including Indicated Shippers, contend that the Proposed Policy Statement is contrary to Commission precedent prohibiting tracker mechanisms for regulatory obligations, and discuss a number of cases where we had rejected pipeline proposals for regulatory compliance cost trackers.45 As noted above, the Commission does not disagree that we have previously rejected proposed tariff provisions that would establish trackers to recover costs not wholly dissimilar to those contemplated by the Policy Statement. None of those proposals, however, included conditions and safeguards to protect shippers and consumers of the sort that the Columbia settlement did, and which we adopt here as conditions for a modernization cost tracker.

    45See, e.g., Indicated Shippers' Comments at 5- 11.

    36. As we noted in our order approving Columbia Gas' surcharge, Columbia Gas' proposal contained numerous benefits and protections agreed to with its shippers that distinguished it from our orders rejecting tracker proposals.46 Notably the development of Columbia Gas' tracker for costs to make necessary improvements and upgrades to its system began with Columbia Gas and its shippers engaging in a collaborative effort to review Columbia Gas' current base rates, leading to Columbia Gas' agreement to make significant reductions to its base rates and to provide refunds to its shippers.47 Further the settlement identified by pipeline segment and compressor station, the specific Eligible Facilities for which costs may be recovered, and limited the amount of capital costs and expenses for each such project.48 It also established a billing determinant floor for calculating the surcharge imputing the revenue it would achieve by charging the maximum rate for service at the level of billing determinant floor before it trues up any cost under-recoveries.49 Further, Columbia Gas' tracker is temporary, and terminates by its terms subject to extension requiring the consent of all parties, and thus will not become a permanent part of Columbia Gas' rates. Finally, the tracker settlement was supported or not opposed by virtually all of Columbia Gas' shippers.

    46Columbia Gas, 142 FERC ¶ 61,062 at PP 22-27.

    47Id. P 22.

    48 We noted that this distinguished Columbia Gas from the surcharge mechanisms we rejected in Florida Gas, 105 FERC ¶ 61,171 at PP 47-48 and MRT, 140 FERC ¶ 61,253, which contained only general definitions of what type of costs would be eligible for recovery, leaving the pipeline considerable discretion as to what projects it would subsequently propose to include in the surcharge and creating the potential for significant disputes concerning the eligibility of particular projects.

    49 As we also noted, the surcharge mechanisms proposed in Florida Gas, MRT, and Granite State Gas Transmission, Inc., 132 FERC ¶ 61,089 (2011), did not include a comparable mechanism to protect captive customers from significant cost shifts. The surcharges proposed in the other cases cited by Indicated Shippers as examples of the Commission's policy against surcharges and trackers, including ANR Pipeline Company, 70 FERC ¶ 61,143, and El Paso Natural Gas Co., 112 FERC ¶ 61,150 (2005), also did not contain the safeguards or customer protections included in the Columbia Gas settlement and implemented for the Final Policy. Similarly, the greenhouse gas cost recovery mechanism we rejected as premature in Southern Natural Gas Co., 127 FERC ¶ 61,003 (2009), did not provide safeguards of the type required by this Policy Statement. Likewise, our rejection in Tennessee Gas Pipeline Co., LLC and Kinetica Energy Express, LLC, 143 FERC ¶ 61,196 (2013) of a proposed hurricane surcharge that we found to be overly broad because it sought to recover costs outside those caused by hurricanes, storms or other natural disasters, did not include any of the referenced protections. Id. P 225.

    37. The Commission's approval of any modernization cost tracker or surcharge will require a showing by the pipeline of the same types or benefits that distinguished Columbia Gas' tracker from those we had rejected, and thus comments that the Policy Statement would represent a complete reversal of Commission policy are exaggerated. This Policy Statement does not provide pipelines with any ability to establish a modernization surcharge other than in the manner and with the same protections Commission has already approved in Columbia Gas. The analysis to be performed under this Policy Statement will be substantially similar to that undertaken to find that Columbia Gas' modernization cost recovery mechanism was just and reasonable and benefitted all interested parties. It will be incumbent on a pipeline requesting a modernization cost tracker to demonstrate that its proposal includes the types of benefits that the Commission found maintained the pipeline's incentives for innovation and efficiency, and distinguished Columbia Gas' modernization cost tracking mechanism from those the Commission had previously rejected.

    38. Further, the requirements that a pipeline proposing a tracker mechanism must establish that its base rates are just and reasonable and that there be provision for a periodic review of surcharge and base rates should alleviate concerns that the Final Policy will result in pipelines not filing NGA section 4 rate proceedings and thus being insulated from rate review. APGA points to examples of interstate pipelines having not filed NGA section 4 rate cases in over a decade and asserts that pipelines generally file rate cases very infrequently, thus depriving customers of an opportunity to review all the pipeline's rates for lengthy periods. However, the fact that a pipeline desiring a modernization cost surcharge must establish that its existing base rates are just and reasonable should increase customer opportunities to obtain review of all the pipeline's rates. As discussed in more detail below, if a pipeline's shippers protest a filing to establish a modernization cost tracker on the ground that the pipeline has not shown that its base rates are just and reasonable, the Commission will establish appropriate procedures to enable it to make a finding, based on substantial evidence, whether the base rates are just and reasonable. Moreover, while offsetting decreases in cost items will not be reflected in rates during the time between the effective date of the surcharge and the first periodic review, that periodic review will provide an opportunity for any offsetting cost reductions to be reflected in rates in order to assure that the base rates and any continued surcharge are just and reasonable.

    39. Accordingly, given the heightened sensitivity to pipeline safety and environmental related concerns, and based on the benefits realized from the Columbia Gas settlement, which enabled the pipeline to efficiently make necessary upgrades and repairs to maintain the safety and reliability of its system while ensuring that its shippers were protected against cost shifts and other potential pitfalls commonly associated with trackers, the Commission has determined to modify its policy to permit the use of a tracker mechanism in the limited circumstances provided for under the Policy Statement, which will inure to the public interest.

    40. As noted, several commenters advocate that the Commission's modernization cost recovery policy contain narrowly drawn conditions and require strict adherence to those conditions to obtain approval for such a mechanism. As many others comment, however, the Policy Statement will be most effective and efficient if designed according to flexible parameters that will allow for accommodation of the particular circumstances of each pipeline's circumstances. Maintaining a transparent policy with flexible standards will best allow pipelines and their customers to negotiate just and reasonable, and potentially mutually agreeable, cost recovery mechanisms to address the individual safety, reliability, regulatory compliance and other infrastructure issues facing that pipeline. For example, while we will require that any pipeline seeking a modernization cost tracker demonstrate that its existing base rates are just and reasonable, as some commenters point out, there may not be a need in all circumstances for a pipeline to file and litigate an NGA section 4 rate proceeding to make such a showing. There may be less costly and less time consuming alternatives. As we stated in the Proposed Policy Statement, the Commission proposed the new policy to “ensure that existing Commission ratemaking policies do not unnecessarily inhibit interstate natural gas pipelines' ability to expedite needed or required upgrades and improvements.” 50 Thus, while we are imposing specific conditions on the approval of any proposed modernization cost tracker, leaving the parameters of those conditions reasonably flexible will be more productive in addressing needed and required system upgrades in a timely manner. Further, consistent with this approach, the Commission will be able to evaluate any proposals in the context of the specific facts relevant to the particular pipeline system at issue.

    50 Proposed Policy Statement at P 9.

    41. Accordingly, the Commission finds that modification of our previous policy is warranted to allow for consideration of pipeline proposals for modernization cost tracking mechanisms as a way for pipelines to recover those costs in a timely manner while maintaining the safe and efficient operation of pipeline systems. As we discuss more fully below, however, the Commission's approval of any such mechanism will be subject to the Commission's scrutiny of the proposal and its evaluation of the stated conditions, which will work to protect the pipeline's customers and ratepayers against potential adverse effects of any tracker. That analysis will be on a case-by-case basis, and thus will take into account the specific circumstances of the individual pipeline and its customers. Any shippers opposing the pipeline's proposal will have a full opportunity to express their position on specific aspects of the proposed mechanism at that time, and the pipeline will need to engage in a collaborative effort to garner significant shipper support before the Commission will approve a tracker proposal.

    42. Opponent commenters also claim that there is no need for the Proposed Policy Statement because there are sufficient longstanding procedural options and mechanisms in place to achieve the Commission's cost recovery goals in this initiative, including NGA rate cases and the Commission's settlement process. Again, the Commission does not dispute that there are existing procedures that provide pipelines an opportunity to recover their just and reasonable costs. The instant Policy Statement, however, is meant to address imminent and foreseeable developments related to the safety and reliability of the natural gas interstate pipeline system. Thus, we find it warranted in the limited circumstances under which the Commission would approve a modernization cost surcharge, to allow recovery through a tracker of those costs expended to replace old and inefficient compressors and leak-prone pipes and performing other infrastructure upgrades and improvements to enhance efficient and safe operation of their pipeline systems.

    43. We disagree with comments that the Policy Statement is premature because the regulatory initiatives prompting the new policy are not yet finalized, and thus the projected increased costs are unknown and speculative. Although the commenters are correct that the regulatory initiatives that are the impetus for the Final Policy are not final, there is little debate that some form of them will be in place eventually, and that they will result in increased costs to pipelines. It will take pipelines a significant amount of time to review and analyze their systems to determine if there are portions that need immediate attention, and whether the projects they identify in their review are of the sort that would be eligible for a cost modernization tracker. It is reasonable for the Commission to establish this policy in advance of the final initiatives to provide guidance to the industry as to how the Commission will analyze pipeline's proposals to address these questions. Further, this Policy Statement will be beneficial to those pipelines that decide to take a proactive approach to ensuring system safety and reliability by conducting system and rate reviews prior to governmental mandates requiring them to do so.51

    51 For the same reasons, we decline to adopt NGSA's suggestion in its reply comments that we defer issuing this Policy Statement until after PHMSA and EPA issue final regulations.

    B. Standards for Modernization Cost Trackers or Surcharges

    44. As discussed, this Policy Statement permits pipelines to seek Commission approval of modernization cost trackers or surcharges to recover costs associated with performing infrastructure upgrades and replacements in a manner that will enhance the efficient and safe operation of their pipelines. The Commission's evaluation and approval of any proposed modernization cost tracker will require the proposing pipeline to satisfy the five standards from the Proposed Policy Statement. We discuss the application of those standards under the Policy Statement below.

    1. Review of Existing Rates

    45. Under the first standard proposed by Commission, a pipeline proposing a tracker mechanism must establish that the base rates to which any surcharges would be added are just and reasonable and reflect the pipeline's current costs and revenues as of the date of the initial approval of the tracker mechanism. The Commission proposed that the pipeline could do this in various ways, including (1) making a new NGA general section 4 rate filing, (2) filing a cost and revenue study in the form specified in section 154.313 of the Commission's regulations showing that its existing rates are just and reasonable, or (3) through a collaborative effort between the pipeline and its customers. The Commission sought input on these or other acceptable approaches for pipelines to demonstrate that existing base rates are just and reasonable.

    a. Comments

    46. Some commenters suggested that the Commission require pipelines to file an NGA section 4 rate case as part of any proposed capital cost tracker. IPAA and the NGSA argue that adoption of a capital cost tracker must require a comprehensive review of the pipeline's base rates and cost of service through an NGA general section 4 rate filing with hearing procedures that include discovery and the Commission's Office of Administrative Litigation staff. TVA states that it feels strongly that any such review would be best accomplished through the thorough and objective analysis of a section 4 rate filing. PEG argues that pipelines should be required to restate all of their rates under NGA section 4 within three years prior to a surcharge. Laclede also argues that a cost and revenue study is not a reasonable substitute for an NGA section 4 filing.

    47. The NYPSC, the NCUC and the KCC agree that a pipeline's base rates must be reviewed through a full NGA general section 4 rate proceeding or through a collaborative effort between the pipeline and its customers, and oppose allowing pipelines to only file a cost and revenue study. Cities and Municipals commented that the collaborative effort standard should be abandoned in favor of a clear standard based on a section 4 general rate case where all the pipeline's costs can be reviewed. Others comment that the pipeline's rates should have been reviewed and approved within a certain time-frame (3 or 4 years) prior to the implementation of a surcharge, and that the Commission should require pipelines with such surcharges to file rate cases on a regular basis (every 3 years).

    48. Others comment, however, that a full NGA section 4 rate case review would be too cumbersome for the purpose of efficiently implementing appropriate cost modernization surcharges. INGAA argues that the Commission should remain open to alternative approaches to justifying existing base rates. Recognizing that rate cases, cost and revenue studies and recent rate settlements are all appropriate methods for determining that existing base rates are just and reasonable, INGAA asserts that these are not the only circumstances in which relevant rates may be reviewed and approved by the Commission, and that the Commission should remain open to other possibilities. For example, INGAA argues that the Commission should allow a pipeline to introduce a cost recovery mechanism when such a proposal is broadly supported by shippers, regardless of whether the settlement addresses other rate issues, or when the pipeline has an upcoming obligation to file a general NGA section 4 rate filing, a cost and revenue study, or restatement or re-justification of its rates as the result of a settlement provision. INGAA further states that a recent review of a pipeline's base rates may be irrelevant to the analysis of a cost tracker when all, or the vast majority, of a pipeline's shippers have entered into long-term negotiated rate agreements accepted by the Commission. INGAA asserts that a cost recovery mechanism also may be appropriate when the Commission recently has reviewed and approved a pipeline's base rates in an NGA section 7 proceeding to ensure that new pipelines are not placed at a disadvantage.

    49. Calpine recommends the review of a pipeline's base rates occur through an informal collaborative process and not a general section 4 rate case. APGA argues that permitting the rate review to occur through a new NGA general section 4 rate filing or a cost and revenue study, as opposed to requiring a pre-negotiated base rate settlement, would eliminate the benefit of the Columbia Gas case, namely negotiations among the pipeline and its customers regarding substantial rate reductions and refunds, which led to agreement on a just and reasonable rate level. XES suggests having pipelines file a cost and revenue study because it would allow pipeline to file an `unadjusted' report so that current costs and revenues may be determined. The Environmental Commenters express concern that requiring a general section 4 rate filing as a prerequisite could be inapposite to the regulatory efficiency purposes of a cost tracker.

    50. American Midstream requests that the Commission clarify that to be eligible for the special cost recovery mechanism through a limited section 4 filing, pipelines or at least small pipelines like American Midstream need only demonstrate that they are not recovering their reasonable costs under their existing recourse rates, and will not be required to file testimony specifically supporting and explaining each of the schedules required by section 154.313 of the Commission's regulations.

    b. Determination

    51. Under this Policy Statement, any pipeline seeking a modernization cost recovery tracker must demonstrate that its current base rates to which the surcharge would be added are just and reasonable. This is necessary to ensure that the overall rate produced by the addition of the surcharge to the base rate is just and reasonable, and does not reflect any cost over-recoveries that may have been occurring under the preexisting base rates.

    52. In the Proposed Policy Statement, we stated that the pipeline could demonstrate its base rates are just and reasonable by filing a NGA section 4 general rate proceeding, a cost and revenue study in the form specified in section 154.313 of the Commission's regulations, or through some other collaborative effort between the pipeline and its customers. In applying the Final Policy we decline to require that such rate review be conducted only through an NGA section 4 rate proceeding. The type of rate review necessary to determine whether a pipeline's existing rates are just and reasonable is likely to vary from pipeline to pipeline. For example, it may be possible for some pipelines to demonstrate that their existing base rates are under-recovering their full cost of service and that a section 4 rate filing would likely lead to an increase in their base rates through a showing short of filing an NGA section 4 rate proceeding. Therefore, we remain open to considering alternative approaches for a pipeline to justify its existing rates.

    53. We note, however, that any pipeline seeking a modernization cost surcharge will need to satisfy the Commission that its current base rates are no higher than a just and reasonable level. To that end, we encourage any pipeline seeking approval of a modernization cost tracker to engage in a full exchange of information with its customers to facilitate that process. If a voluntary exchange of information fails to satisfy interested parties that a pipeline's base rates are just and reasonable, the Commission will establish appropriate procedures to enable resolution of any issues of material fact raised with respect to the justness and reasonableness of the pipeline's base rates based upon substantial evidence on the record. In this regard, the Commission notes that, if the pipeline files a contested settlement concerning its base rates, the Commission would consider whether to approve the settlement pursuant to the approaches discussed in Trailblazer Pipeline Co. 52

    52 87 FERC ¶ 61,110, at 61,438-41 (1999). See e.g., Texas Gas Transmission, LLC, 126 FERC¶ 61,235 (2009); Devon Power LLC, 117 FERC ¶ 61,133 (2006).

    2. Defined Eligible Costs

    54. In the Proposed Policy Statement, we stated that to qualify as “eligible costs” for recovery under a cost modernization tracker, costs must be limited to one-time capital costs incurred to modify the pipeline's existing system or to comply with safety or environmental regulations issued by PHMSA, EPA, or other federal or state government agencies, and other capital costs shown to be necessary for the safe or efficient operation of the pipeline. The Commission also recognized that interstate natural gas pipelines routinely make capital investments related to system maintenance in the ordinary course of business, and the Commission stated that such routine capital costs could not be included in a cost modernization tracker.

    55. The Commission also proposed to require that each pipeline specifically identify each capital investment to be recovered by the surcharge, the facilities to be upgraded or installed by those projects, and an upper limit on the capital costs related to each project to be included in the surcharge. The Commission stated that this would allow an upfront determination that the costs are eligible for recovery through the tracker and avoid later disputes about which costs or facilities qualify for such recovery.

    56. The Commission also asked several questions concerning what costs should be eligible for recovery in a tracker.

    a. Comments

    57. The majority of commenters agree that proponents of a modernization cost recovery tracking mechanism should specify the costs and identity of projects to be recovered pursuant to any such mechanism and limit the recovery of those costs. AGA argues that pipelines should be required to clearly specify the investments which will be recovered through the tracking mechanism, and that shippers should have the ability to challenge the inclusion of projects or costs as part of the collaborative process. Several commenters, including NGSA, IOGA, XES, and Environmental Commenters note that facilities eligible for cost recovery under a capital cost tracker should be limited to modification of the pipeline's existing system for reliability, safety, or environmental compliance, and that there be a strict distinction between such facilities and maintaining the pipeline system in the ordinary course of business. NGSA argues that eligible tracked costs for recovery in a surcharge should be strictly limited to one-time capital costs related solely to compliance with the incremental requirements of future PHMSA and EPA regulations, as opposed to the inclusion of ordinary capital maintenance costs. EPMCG states the Proposed Policy fails to explain how the Commission could distinguish between such normal expenditures and those “necessary to address, safety, efficiency or similar concerns.” Southern Companies suggests using an Eligible Facilities Plan, comparable to that used in the Columbia Gas settlement.

    58. Wisconsin Electric and Wisconsin Gas suggest that pipelines be required to specify the regulation that resulted in the requirement to construct each project and to either file for approval of each project under the NGA section 7(c) certificate application process or in the event that a section 7(c) certificate application is not required, then provide all information about the project in a manner similar to a section 7(c) application. Wisconsin Electric and Wisconsin Gas also suggest the Commission establish clear criteria for an “eligible modernization project” and create a clear distinction between routine maintenance projects versus modernization projects undertaken to comply with safety and/or environmental regulations.

    59. Those opposed to the Policy Statement in general advocate strict limits on the “eligibility” of modernization costs that can be recovered through a surcharge. The AF&PA for example, opposes recovery of modernization costs through a surcharge and states that the costs the pipeline seeks to recover through the tracker/surcharge must be one time capital costs incurred to comply with safety or environment regulation issued by a governmental entity and such costs are necessary for the safe or efficient operations of the pipeline. AF&PA states to the extent that the Commission allows trackers, the Commission should only permit trackers related to costs that are specifically tied to laws that have already been enacted or regulations that are currently effective. AF&PA comments that the pipeline should be required to demonstrate that the costs are incremental to the costs imposed under existing laws and regulations. Laclede, who also opposes the Proposed Policy Statement, echoes the notion that modernization costs should only be recoverable through rate trackers if the costs are tied to new safety or health requirements. Additionally, the Industrial Energy Consumers of America (IECA) opposes surcharges and trackers as a way for pipeline companies to recover regulatory safety and environmental costs, arguing that it should be a requirement for pipeline companies to file a new tariff that includes regulatory costs. IECA recommends strict guidelines as to what costs pertain to eligible facilities for special cost recovery.

    60. Several commenters stated that the Commission needs to ensure that pipelines do not recover costs related to the safe and efficient operation of their systems that they should have already been spending. NCUC states that pipelines should not be provided incentives to make the investments it already should have made. Calpine also states pipelines should already be complying with safety and reliability requirements imposed by existing regulations and should not be incented to recover such costs through a modernization cost mechanism. PEG opposes the Commission's involvement in the mandates of other agencies such as EPA and PHMSA. According to PEG, “it is presumptuous of the Commission to describe such expenditures as being in `advancement of the public interest' when first, the public interest is yet to be defined by regulatory action and second, such actions are outside of the Commission's purview.” 53 PEG fails to see any reason to provide an incentive for pipelines to take actions that they must take under penalty of law.

    53 PEG Comments at 7.

    61. Other commenters found the Commission's proposal with regard to eligible facilities too restrictive, and stated that costs should not be limited to “one-time, capital costs.” INGAA argues that limiting the tracker mechanism only to capital costs is an unnecessary limitation on the type of costs that should be eligible for inclusion into the tracker mechanism, and urge expansion of the scope of the definition of eligible facilities. WBI Energy likewise comments that a one-time capital cost limitation may preclude a pipeline from recovering non-routine non-capital expenses which were prudently incurred to address system safety or efficiency. WBI Energy thus argues the final policy should be flexible enough to address each pipeline's situation.

    62. Boardwalk states that the policy should be flexible so that if as a result of the modification process a pipeline discovers other actions that need to be taken in order for a pipeline to be in compliance with the new PHMSA rules, the costs of those activities may be included in the tracker. Boardwalk states the Commission should provide clear and rational guidance as to categories of costs eligible for inclusion in the tracker. Columbia Gas argues that the Commission should allow pipelines and shippers to include the cost of projects intended to increase the reliability or safety of existing facilities, including those facilities not necessarily impacted by regulations, provided that pipelines make a clear showing of net benefits to its stakeholders. Columbia Gas suggests such potential benefits may include improved safety, reduced emissions, increased efficiency or reliability, reduced costs, improved fuel, or reduced lost-and-unaccounted-for quantities.

    b. Determination

    63. Consistent with the Proposed Policy Statement, costs proposed to be recovered through a modernization cost surcharge (Eligible Costs) should generally be limited to (1) one-time capital costs incurred to modify or replace existing facilities on the pipeline's system to comply with safety or environmental regulations issued by PHMSA, EPA, or other federal or state government agencies, or (2) other one-time capital costs shown to be necessary for the safe or efficient operation of the pipeline.54 The Commission does not intend that capital costs the pipeline incurs as part of its ordinary, recurring system maintenance requirements should be eligible for inclusion in a modernization cost tracker. The Commission is modifying its rate policies to permit modernization cost trackers primarily for the purpose of allowing pipelines to recover capital costs incurred to upgrade the older parts of their systems (1) to comply with new, more stringent regulatory requirements and/or (2) take advantage of new technologies that reasonably increase safety and/or efficiency, such as reductions in methane leaks, system modifications to allow the use of advanced in-line inspection tools in lieu of hydrostatic testing, or replacement of old compressors with newer more energy efficient ones.55

    54 In the Proposed Policy Statement, at P 23, the Commission proposed to define eligible costs as “one-time capital costs to modify the pipeline's existing system . . .” (emphasis supplied). Some commenters have interpreted our use of the word “modify” to exclude the costs of facility replacement projects from eligibility. We clarify that capital costs to replace existing facilities, such as old compressors that do not comply with new EPA emission requirements, are eligible for inclusion in a modernization cost tracker.

    55See, e.g., INGAA Comments at 13.

    64. By contrast, the Commission believes that pipelines should continue to recover in their base rates ordinary capital costs of the type they routinely incur as part of their regular system maintenance. The Commission recognizes the potential difficulty in distinguishing between ordinary capital costs for system maintenance, which should be excluded from a modernization cost tracker, and capital costs for system upgrades, which are reasonably included in such a tracker. In order to address this concern, the parties may, as INGAA and others suggest,56 consider including in a modernization cost tracker a mechanism for ensuring that a representative level of ordinary system maintenance capital costs are excluded from the tracker. For example, the Columbia Gas settlement includes a provision that Columbia Gas will continue to make capital expenditures of $100 million annually for system maintenance and those expenditures will not be included in its modernization cost tracker. If Columbia Gas spends less than that amount in any year, the difference must be used to reduce the plant investment included in the modernization cost tracker.57 In developing such a mechanism, the parties could use the pipeline's recent history of capital expenditures incurred for routine maintenance as a basis for determining a representative level of ordinary system maintenance capital costs to be excluded from the modernization cost tracker.

    56 INGAA reply comments at 18-19. Environmental Commenters at 12-13.

    57 Section 7.3 of the Columbia Gas settlement.

    65. Some commenters have suggested that the Commission should permit certain non-capital expenses to be included in a modernization cost tracker, if they are non-routine and required by regulation or a voluntary program adopted by a pipeline as a best practice.58 Commenters cite as examples the costs of in-line inspections by running smart tools through various pipeline segments or programs to detect and repair leaks on parts of the system most prone to leaks. To the extent such testing uncovers the need to incur one-time capital costs that satisfy the eligibility standards described above, such capital costs could be included in the modernization cost tracker. However, the Commission is reluctant to permit non-capital testing costs of the type described by the commenters to be recovered through a modernization cost tracker. The cost of service reflected in a pipeline's existing base rates presumably includes a projection of the pipeline's recurring costs of routine testing as part of the pipeline's O&M costs. The testing described by the commenters would appear to be a best practice for pipeline maintenance that the Commission would expect pipelines to conduct on an ongoing basis. As such it would appear difficult to distinguish any particular type of testing from the testing whose costs are already included in the O&M costs reflected in the pipeline's base rates. Therefore, while the Commission will not impose a blanket prohibition on the inclusion of such non-capital costs in a modernization cost tracker, particularly where supported by the pipeline's shippers, any proposal to include such non-capital costs in the tracker would need to demonstrate that such non-capital costs are special non-recurring costs not reflected in the O&M costs included in the pipeline's base rates and are directly related to the modernization projects whose costs are included in the modernization cost tracker. Furthermore, when determining whether a cost is a capital or non-capital cost, a pipeline's determination must be consistent with the Commission's accounting regulations and precedent.59

    58See, e.g., INGAA Comments at 5-7, AGA Comments at 7.

    59See, e.g., 18 CFR part 201 (2014); see also, Jurisdictional Public Utilities and Licensees Natural Gas Companies, and Oil Pipeline Companies, order on accounting for pipeline assessment costs, 111 FERC ¶ 61,501 (2005).

    66. Some commenters also suggest that the Commission should allow eligible costs to include a portion of the capital costs incurred in a pipeline expansion project, if the project not only expands the pipeline's system but also modifies or replaces existing facilities to comply with safety or environmental regulations or make other improvements necessary for the safe and efficient operation of the pipeline.60 The Commission recognizes that some expansion projects may include modifications to a pipeline's existing system that would be eligible for recovery in a modernization cost tracker if not done in conjunction with an expansion. In such circumstances, the Commission will consider reasonable proposals for a method of cost allocation between the expansion project and the modifications eligible for inclusion in such a tracker.61

    60See, e.g., INGAA Comments at 11-12, Columbia Gas Comments at 14-16, Berkshire Hathaway Comments at 11, Wisconsin Electric and Wisconsin Gas Comments at 9,

    61 The Columbia Gas settlement includes such a provision at section 7.5 of that settlement.

    67. Some commenters state that the costs of modifications to compressors for the purpose of waste heat recovery should be eligible for recovery under a modernization surcharge subject to conditions,62 while others oppose the inclusion of such costs because they assert that investments in modifications of compressors for purpose of waste heat recovery are discretionary and within control of the pipeline and should thus be subject to the normal rate review process.63 According to the DOE, expanded use of waste heat recovery by natural gas compressors could be beneficial to overall system efficiency, and while there is a general lack of good information on the scale of heat losses from many sectors of the economy, research published in 2008 and 2009 found substantial opportunities for additional waste heat recovery investment at natural gas compressor stations. Accordingly, the Commission will consider proposals for recovery of such costs in a modernization cost tracker proposal, subject to the standards of this Policy Statement.

    62See, e.g., DOE Comments at 3, Wisconsin Electric and Wisconsin Gas Comments at 8, Michigan PSC Comments at 15.

    63See, e.g., PGC Comments at 17-18, NGSA Comments at 18-19, KCC Comments at 12.

    68. The Commission rejects the proposals of some commenters that eligible costs be limited to those costs which the pipeline demonstrates are specifically tied to laws that have already been enacted or regulations that are currently effective. The Commission sees no reason for pipelines to wait to make needed improvements to their systems until a regulation is adopted requiring them to do so. In fact, the Department of Transportation has encouraged pipeline operators to undertake voluntary initiatives to improve pipeline safety.64 Permitting pipelines to recover in a modernization cost tracker the costs of voluntary initiatives to improve safety, as well as minimize methane emissions, will help encourage such initiatives and thereby benefit the public. Accordingly, the Commission finds that all prudent one-time capital costs that satisfy the eligibility requirements may be included in a cost modernization tracker, regardless of whether PHMSA, EPA or some other government agency has adopted a regulation requiring the incurrence of the cost.

    64 United States Department of Transportation Call to Action to Improve the Safety of the Nation's Energy Pipeline System (Apr. 2011), available at http://www.phmsa.dot.gov/staticfiles/PHMSA/DownloadableFiles/110404%20Action%20Plan%20Executive%20Version%20_2.pdf.

    69. In the Proposed Policy Statement, the Commission proposed to require a pipeline proposing a modernization cost tracker to identify each capital investment to be recovered by the surcharge, the facilities to be upgraded or installed by those projects, and an upper limit on the capital costs related to each project to be included in the surcharge. INGAA requests that the Commission permit pipelines either to propose a list of eligible projects or a list of categories of future projects that would be considered eligible for recovery. Other commenters also contend that, even if the pipeline includes an upfront list of specific projects to be included in the modernization cost tracker, the Commission should permit subsequent modifications, additions, or subtractions to the listed projects. They state that this is necessary so that the tracking mechanism can adapt to changing circumstances including newly adopted regulations.

    70. The Commission expects that, before the pipeline makes a tariff filing with the Commission proposing a modernization cost tracking mechanism, it will conduct a comprehensive review of its existing system to determine what capital investments it believes are needed to ensure the safe and efficient operation of its system, based on the information available to it at the time of the review. Such a review should be comparable to the comprehensive review conducted by Columbia Gas before it submitted its Settlement. The Commission continues to find that the pipeline must include in its filing a description of the facilities which its review of its system has identified as needing upgrading and/or replacement, together an upper limit on the capital costs projected to be spent and a schedule for completing the projects. This detailed information will allow for a more transparent and upfront determination of the project costs that are eligible for recovery through the tracker so as to avoid later disputes on which facilities qualify, than any description of general categories of eligible costs could. This requirement will also help ensure that normal capital or other expenditures to maintain the pipeline's system in the ordinary course of business are not eligible for recovery through a surcharge mechanism. Consistent with this requirement, the filing should also include the accounting controls and procedures that the pipeline will use to ensure that only identified eligible costs are included in the tracker.

    71. At the same time, however, the Commission recognizes the need for flexibility to make changes in the projects whose costs will be included in the tracker, after the modernization cost tracking mechanism is adopted. For example, the pipeline may discover unanticipated problems with certain facilities during the course of its modernization activities or may discover more effective solutions to existing problems. Also, changes in its shippers' utilization of its system may cause certain projects to become more critical to the safe and efficient operation of the pipeline than originally anticipated. Therefore, the Commission will be open to considering proposals to include in a modernization cost tracker a mechanism pursuant to which the parties could later modify the list of eligible projects, or the schedule for those projects, or the cost limits, based on changing priorities and other reasons.65 The Commission also recognizes that pipelines may wish to begin modernizing their systems before PHMSA, EPA, and other Federal or state agencies complete their various ongoing regulatory initiatives. Therefore, the Commission will be open to considering proposals to add new projects to a tracking mechanism which may be required by new regulations adopted after the initial approval of the tracking mechanism or for other reasons.

    65See section 7.2 of the Columbia Gas Settlement setting forth such a mechanism.

    3. Avoidance of Cost Shifting

    72. The Proposed Policy Statement contemplated that a pipeline must design any proposed surcharge in a manner that will protect the pipeline's captive customers from costs shifts if the pipeline loses shippers or must offer increased discounts to retain business. The Commission suggested that one method of accomplishing this would be to establish a billing determinant floor requiring the pipeline to design the surcharge based on the greater of its actual billing determinants or the floor.

    a. Comments

    73. Virtually all commenters favored the avoidance of cost shifts to the pipeline's captive customers that may result from the implementation of a cost modernization surcharge. AGA, for example, supports the need to ensure that existing shippers are protected from substantial cost shifts, and comments that pipelines should be required, in consultation with their shippers, to develop appropriate measures to protect customers from cost shifts.

    74. Those opposed to the Proposed Policy Statement, however, claim that the very implementation of cost modernization tracker necessarily shifts costs. MDG, for example, states that trackers shift costs to captive customers due to discounting and lost business without taking into account offsetting cost reductions, and thus even the best implementation of the Proposed Policy Statement would raise rates to captive customers unfairly. MDG claims that a billing floor will not alleviate the inherent cost shift in a policy that allows the recovery of one set of costs absent a review of all the pipeline's costs and revenues. MDG suggests that to the extent substantial pipeline capital costs are recovered through a tracker there should be a reduction in that pipeline's return on equity to reflect the pipeline's reduced risk. The NYPSC similarly claims that while requiring a billing determinant floor for a surcharge does allow some risk to remain with the pipeline, a tracker mechanism still reduces a pipeline's risk and transfers it to shippers.

    75. While NGSA, APGA, and IPAA oppose the modernization surcharge tracker, if surcharges are allowed they all support the requirement that pipelines must design the surcharge in a manner that will protect the pipeline's shippers from significant cost shifts. IPAA, NGSA, and KCC contend that at a minimum, any modernization surcharge tracker must provide for a minimum level of billing determinants to design the surcharge as in Columbia Gas. NGSA adds that any surcharge should apply to all throughput in the facilities and under the rate schedules impacted by the surcharge-related costs, so that an agreed upon floor on the billing determinants should be greater than the firm billing determinants (so as to include interruptible throughput, for example). AF&PA agrees that interruptible shippers should share the costs incurred through trackers to the extent that they are related to safety and environmental compliance, as these costs are not related only to firm service. IECA states costs recovered through a tracker should be limited to no more than 5 percent of the costs recovered through the pipeline's tariff.

    76. AF&PA submits that if the Commission implements the Proposed Policy Statement, the policy should spread the costs as widely as possible because environmental and safety costs are incurred for all shippers. AF&PA cautions, however, that a shipper that has released certain capacity should not bear any new costs related to that capacity and recovered through the tracker.

    77. NGSA argues that if shippers are already paying for eligible costs in negotiated contracts, or existing negotiated contracts prohibit recovery of these costs, they should not be subject to the modernization surcharge.

    b. Determination

    78. The third standard for approval of a cost modernization tracker adopted by the Policy Statement is that the pipeline must design any proposed surcharge in a manner that will protect the pipeline's captive customers from cost shifts if the pipeline loses shippers or must offer increased discounts to retain business beyond those reflected in their base rates.

    79. As we stated in the Proposed Policy Statement, our regulations require that a pipeline's rates recover its costs based on projected units of service,66 thereby putting the pipeline at risk for any cost under-recovery between rate cases, incentivizing the pipeline to minimize costs and maximize service. Recovery of costs approved for inclusion in a tracker, however, would be guaranteed, thereby reducing the pipeline's incentives. Moreover, a tracker mechanism can shift costs to the pipeline's captive customers. If a pipeline recovering costs through a tracker or surcharge loses shippers or must offer increased discounts to retain business, a tracker mechanism may shift the amounts previously paid by those shippers directly and automatically to the pipeline's remaining shippers. This direct cost shifting is one of the reasons the Commission has generally disfavored trackers, namely that the cost shifting described would occur without consideration of any offsetting items that would generally be considered in a section 4 rate proceeding, and which the pipeline would normally need to justify to recover.67

    66 18 CFR 284.10(c)(2) (2014).

    67 For example, in order to recover costs associated with discounted rates the pipeline may have offered to certain shippers, the pipeline must demonstrate that the discount was required to meet competition. Policy for Selective Discounting by Natural Gas Pipelines, 113 FERC ¶ 61,173 (2005). In the case of a tracker, no such showing is required by the pipeline to recover the covered costs from its remaining customers.

    80. Thus, as a prerequisite to the Commission allowing such a tracker, the Commission will require that the pipeline design the surcharge in a manner that will protect its shippers from cost shifts and impose on the pipeline some risk of under-recovery. As we noted in the Proposed Policy Statement, one method to accomplish this would be that adopted by Columbia Gas, namely that the pipeline agree to a billing determinant floor such that the pipeline must design the surcharge on the greater of its actual billing determinants or the established floor, and impute the revenue it would achieve by charging the maximum rate for those determinants. While the Commission found this to be a just and reasonable approach to preventing cost shifts in Columbia Gas, we remain open under the Final Policy to considering alternative methods of protecting the pipeline's existing customers from cost shifts if the pipeline loses customers or has to offer increased discounts of its rates to retain business during the period the modernization cost tracker is in effect.

    81. The Commission believes that issues concerning how a modernization cost surcharge should be allocated among a pipeline's services and what billing determinants should be used to design the surcharge are best addressed on a case-by-case basis when each pipeline files to establish a modernization cost tracking mechanism. However, as a general matter, the Commission believes that it would be reasonable for the billing determinants used to design the surcharge to reflect a discount adjustment comparable to any discount adjustment reflected in the pipeline's base rates. Otherwise, a pipeline's modernization cost tracking mechanism would be designed in a manner that would likely lead to the pipeline under-recovering its prudently incurred modernization costs. That would be contrary to the Commission's goal of encouraging pipelines to expedite needed safety and environmental upgrades. The Commission's concern about protecting the pipeline's existing customers from cost shifts relates to cost shifts that would occur if a pipeline were permitted to true up any modernization cost under-recoveries resulting from the loss of customers after its modernization cost tracker goes into effect or a need to offer increased rate discounts to retain business after that date.68

    68 The Commission notes that section 154.109(c) of the Commission's regulations (18 CFR 154.109 (2014)), requires that the pipeline's tariff contain a statement of the order in which the pipeline discounts its rates and charges. Therefore, pipelines with modernization cost surcharges will have to revise their statements of the order in which they discount rates to include the modernization cost surcharge. Treating that surcharge as the last rate component discounted would minimize the need for truing up any under-recoveries due to discounting. See Natural Gas Pipeline Co. of America, 70 FERC ¶ 61,317 (1995).

    82. Finally, with respect to the issue of the pipeline's ability to impose a modernization cost surcharge on discounted or negotiated rate shippers, that is a contractual issue between the pipeline and its discounted or negotiated rate shippers. If a particular shipper's discount or negotiated rate agreement with the pipeline permits the pipeline to add the surcharge to the agreed-upon discounted or negotiated rate, the pipeline will be permitted to do so.69 Otherwise, the pipeline may not impose the surcharge on a discounted or negotiated rate shipper.

    69See, e.g., Sea Robin Pipeline Co., LLC, Opinion No. 516-A, 143 FERC ¶ 61,129, at PP 85-213 (2013).

    4. Periodic Review of the Surcharge

    83. In the Proposed Policy Statement, the Commission proposed that pipelines be required to include in a modernization cost recovery mechanism some method to allow a periodic review of whether the surcharge and the pipeline's base rates remain just and reasonable. As an example of such a method, the Commission cited the Columbia Gas settlement, in which the pipeline agreed to make the surcharge a temporary part of its rates (the surcharge expires automatically after five years), and included a requirement that the pipeline make a new NGA section 4 filing if it wants to continue the surcharge. However, the Commission stated it was open to other methods.

    a. Comments

    84. Virtually all commenters, including AGA, INGAA, NGSA, APGA, PGC, IPAA, Southern, KCC, and TVA support the proposed standard requiring a pipeline proposing a modernization cost tracker to include a method to allow a periodic rate review of the surcharge. While participants generally agreed such a condition was necessary, the recommended method and frequency of review differed.

    85. Numerous commenters advocate requiring a pipeline with a cost modernization tracker to periodically file a full NGA section 4 rate case. NGSA for example, commented that a pipeline should have to file a rate case with its application for a tracker and every five years thereafter. IECA and Cities agree that a minimum 5-year rate case filing obligation is warranted. KCC and PGC espouse refresher requirements of 3 to 5 years, with a condition the pipeline not file to change rates for at least 3 years after implementation of a tracker. IPAA also supports the requirement for a full rate case refresher, and MDG suggests a rate case filing as a condition of extending any tracker beyond its initial term. Calpine commented that any surcharge have a minimum 3-year initial term that is subject to extension and renegotiation. Several commenters also advocated annual filings for pipelines to justify the projects for which costs were collected and to true-up such costs.

    86. Opponents of the Proposed Policy Statement commented that a periodic review methodology was critical, though still not sufficient to justify the use of trackers. They strongly advocate a requirement that the review methodology involve a full blown NGA section 4 rate case. APGA would add the requirement that, if during the period that a surcharge mechanism is in effect, an NGA section 5 complaint is initiated against the pipeline, then the pipeline must agree to make refunds retroactive to the date of the complaint to the extent its rates are determined to be unjust and unreasonable. The NYPSC and TVA comment that the periodic review should ensure that the surcharge does not produce earnings above authorized rates of return.

    b. Determination

    87. In this Policy Statement, the Commission adopts a policy of requiring the pipeline to include some method for a periodic review of whether the surcharge and the pipeline's base rates remain just and reasonable. Potential methods for satisfying this standard may include making the surcharge temporary and/or requiring the pipeline to file an NGA section 4 rate case to the extent it wants to extend the surcharge beyond the initial temporary term. Because we intend the Policy Statement to be flexible enough to meet the particular circumstances of each pipeline's system, we will not require that a pipeline seeking approval of a cost modernization tracker propose to file a full NGA section 4 rate case with some specified regularity and remain open to other reasonable means of accomplishing this goal.

    88. Similar to the review of the pipeline's existing base rates at the beginning of the tracker proposal analysis, during the periodic review the pipeline will have to provide sufficient information to satisfy the Commission that both its base rates and the surcharge amount remain just and reasonable if the surcharge is to continue. If shippers raise any issues of material fact with respect to the continued justness and reasonableness of the pipeline's base rates or the surcharge, the Commission will establish appropriate procedures to enable resolution of those issues based upon substantial evidence on the record.

    89. If a modernization cost tracking mechanism is terminated before the pipeline has fully recovered the costs included in that mechanism, the pipeline may reasonably propose in a subsequent general section 4 rate case to include the unrecovered costs in its base rates. For example, if eligible costs have been treated as rate base items in the modernization cost tracker, the undepreciated portion of those costs as of the time of the NGA section 4 rate filing could be included in the rate base used to calculate the pipeline's proposed base rates in the same manner as any other investment made between rate cases, unless the pipeline's modernization cost tracker mechanism includes some other provision concerning the treatment of unrecovered costs upon termination of the mechanism.

    5. Shipper Support

    90. The fifth condition proposed for a cost recovery surcharge was that the pipeline must work collaboratively with shippers to seek shipper support for any such proposal.

    a. Comments

    91. The vast majority of commenters support this condition but differ on the degree of shipper support the pipeline must have. On one end, INGAA suggests that the Commission could approve a proposed surcharge mechanism that it deems just and reasonable even if it lacks shipper support at the outset. NGSA and APGA, on the other hand, comment that pipeline should have the support of shippers representing 90 percent of the firm billing determinants. AGA comments that while unanimity should not be required, any approved modernization cost recovery tracking mechanism should be established through a robust, ongoing, collaborative process between the pipeline and its shippers that has widespread shipper support.

    92. IECA is more pessimistic and contends that it is completely unrealistic for any pipeline to collaborate and work with its shippers. The KCC supports collaboration among the pipeline and its shippers but comments that the condition should be expanded to include support of “interested parties,” including state public utility commissions.

    b. Determination

    93. The fifth standard for an acceptable cost modernization surcharge adopted in this Policy Statement is that the pipeline must work collaboratively with shippers and other interested parties to seek support for any such proposal. As part of this collaborative process, pipelines should meet with their customers and other interested parties to seek resolution of as many issues as possible before submitting a modernization cost recovery proposal to the Commission. At such meetings, pipelines should share with their customers the results of their review of their systems concerning what system upgrades and improvements are necessary for the safe and efficient operations of their systems. Pipelines should also be responsive to customer requests for specific cost and revenue information necessary to determine whether their existing base rates are just and reasonable. Additionally, pipelines should provide customers and interested parties an opportunity to comment on draft tariff language setting forth their proposed modernization cost recovery mechanism.

    94. As we noted in the Proposed Policy Statement, however, while we strongly encourage the pipeline to attempt to garner support for its proposal from all interested parties, we do not intend to require unanimity of shipper support before approving a cost modernization surcharge. Nor will we establish any minimum level of shipper support required before a pipeline's proposal can be accepted. This Policy Statement will provide pipelines and their customers wide latitude to reach agreements incorporating remedies for a variety of system safety, reliabilityand/or efficiency issues. Despite comments that mutual collaboration is futile or impractical, the Columbia Gas settlement is evidence that a system-wide collaboration between a pipeline and its customers can work to produce a reasonable modernization cost recovery mechanism that benefits all sides. The Commission continues to favor settlements, and notes that the negotiation of a modernization cost tracker to address critical infrastructure issues is exactly the type of issue that lends itself to pipeline customer negotiation and agreement because it will benefit all involved. However, if a pipeline satisfies its burden under NGA section 4 to show that its proposed modernization cost recovery mechanism is just and reasonable, including showing that its proposal is consistent with the guidance herein, the Commission may accept that proposal, even if some parties oppose it.

    C. Additional Questions on Which the Commission Sought Comments

    95. The Commission also sought comments on several additional issues, including: Accelerated amortization, reservation charge crediting, and any other factors or issues commenters believed should be included in the Policy Statement as a prerequisite for approving a modernization cost recovery mechanism.

    1. Accelerated Amortization

    96. In the Proposed Policy Statement, the Commission pointed out that the capital costs included in the modernization cost tracking mechanism approved in Columbia Gas are treated as rate base items, and thus Columbia Gas is allowed to recover a return on equity on the portion of those costs financed by equity. Consistent with the rate base treatment of those costs, they are depreciated over the life of Columbia Gas' system.70 The Commission requested comments on whether pipelines should also be allowed to use accelerated amortization methodologies, akin to that approved by the Commission for hurricane repair cost trackers,71 to recover the costs of any facilities installed pursuant to a modernization cost recovery mechanism. The Commission stated that under such a methodology the costs would not be included in the pipeline's rate base, and the pipeline would not recover any return on equity with respect to the costs financed by equity. Instead, the pipeline would only be allowed to recover the interest necessary to compensate it for the time value of money.

    70Columbia Gas, 142 FERC ¶ 61,062 at P 9.

    71See, e.g., Sea Robin Pipeline Co., LLC, Opinion No. 516, 137 FERC ¶ 61,201, at PP 16-65 (2011), reh'g den, Opinion No. 516-A, 143 FERC ¶ 61,129 at PP 17-80.

    a. Comments

    97. The Commission received a range of comments on this issue. Wisconsin Electric and Wisconsin Gas support using an accelerated amortization of costs of facilities installed pursuant to eligible modernization projects.72 IECA also supports accelerated amortization for safety and environmental compliance costs but argues for the amortization to be set at a rate that would require the pipeline to come back for a rate case in five years.73 NGSA argues that accelerated amortization, with carrying costs, over a specified term, is the most appropriate rate design structure for recovering all approved costs under a tracker, with the length of any amortization period determined on a case-by-case basis, dependent upon the level of costs.74 NGSA argues that it is not appropriate for the pipeline to earn a rate of return and taxes on these types of tracked expenditures because these would be incremental costs, with guaranteed cost recovery (i.e., no risk on the pipeline) under the tracker.75

    72 Wisconsin Electric and Wisconsin Gas Comments at 14.

    73 IECA Comments at 21.

    74 NGSA Comments at 12-13, 24.

    75 NGSA Comments at 24.

    98. NCUC opposes the proposal on the grounds that the accelerated amortization allowed for storm damage repair costs would be inappropriate for modernization costs, because accelerated amortization would raise intergenerational cross—subsidization issues and could magnify rate shock. Similarly, Laclede opposes recovery of capital costs through accelerated amortization methodologies, and argues that any costs not recovered through tracker rates should be rolled into rate base.76

    76 Laclede Comments at 20. See also PGC Comments at 19-20 (PGC opposes accelerated amortization for modernization upgrades, contending that it will only give pipelines additional latitude to increase their profits.).

    99. CAPP recommends that the consultative process by which individual pipelines formulate their respective proposals include the opportunity for stakeholders to evaluate the preferred accelerated amortization methodology.77 Calpine also does not object to allowing pipelines and their shippers to consider accelerated amortization methodologies as part of their modernization surcharge negotiations.78 Columbia Gas states the Commission should consider permitting pipelines to use accelerated amortization methodologies but allow pipelines and their customers the discretion to negotiate the appropriate method of amortization, which should include the possibility of earning a reasonable return.79 INGAA requests that the Commission provide each pipeline that proposes a modernization cost tracker the ability to propose either accelerated amortization methodologies or depreciation over the life of the facilities, because each pipeline faces different competitive circumstances.80

    77 CAPP Comments at 9. See also KCC Comments at 24, 27 (KCC does not oppose extension of the use of accelerated amortization methodologies for recovering approved costs under a modernization cost tracker if the costs subject to accelerated amortization are not included in rate base, and a pipeline is not able to recover any return on equity for costs financed by equity).

    78 Calpine Comments at 30.

    79 Columbia Gas Comments at 34. See also APGA comments at 22 (to the extent the Commission permits pipelines to implement the modernization cost tracker, customers of the requesting pipeline should make the decision as to whether rate base treatment or some sort of reasonable amortization period works best for them under the circumstances).

    80 INGAA Comments at 19-20.

    b. Determination

    100. The Commission agrees with the commenters who suggested that pipelines should be allowed to negotiate with their customers concerning whether modernization costs should be treated as (1) a rate base item to be depreciated over the life of the pipeline with the pipeline recovering a return on equity on the portion of those costs financed by equity together with associated income taxes or (2) a non-rate base item to be amortized over a shorter period with the pipeline recovering the interest necessary to compensate it for the time value of money but no return on equity or associated income taxes. These two cost recovery options have varying advantages and disadvantages. For example, rate base treatment is likely to lead to a lower per unit daily or monthly surcharge, because it spreads the pipeline's recovery of the costs over a substantially longer period. Such lower per unit rates should help mitigate any rate shock. However, over the long run, rate base treatment is likely to be more expensive for shippers, because the surcharge will be in effect for a longer period and the return on the equity portion of the rate base will be greater than the interest rate on the costs being amortized.81 In light of these varying advantages and disadvantages, the Commission will permit pipelines and their shippers to negotiate which recovery method is appropriate for each pipeline, based upon the circumstances of its system.

    81See Opinion No. 516-A, 143 FERC ¶ 61,129 at PP 35-56.

    2. Reservation Charge Crediting

    101. The Commission requires pipelines to provide full reservation charge credits for outages of primary firm service caused by non-force majeure events, where the outage occurred due to circumstances within the pipeline's control, including planned or scheduled maintenance.82 The Commission also requires the pipeline to provide partial reservation charge credits during force majeure outages, so as to share the risk of an event for which neither party is responsible.83 Partial credits may be provided pursuant to: (1) The No-Profit method under which the pipeline gives credits equal to its return on equity and income taxes starting on Day 1; or (2) the Safe Harbor method under which the pipeline provides full credits after a short grace period when no credit is due (i.e., 10 days or less).84 The Commission permits pipelines to reflect the recurring cost of providing reservation charge credits during non-force majeure events in their rates.85

    82See, e.g., Tennessee Gas Pipeline Co., Opinion No. 406, 76 FERC ¶ 61,022 (1996), order on reh'g, Opinion No. 406-A, 80 FERC ¶ 61,070 (1997), as clarified by, Rockies Express Pipeline LLC, 116 FERC ¶ 61,272, at P 63 (2006) (Rockies Express I), and North Baja Pipeline, LLC, 109 FERC ¶ 61,159 (2004), reh'g denied, 111 FERC ¶ 61,101 (2005), aff'd, North Baja Pipeline, LLC v. FERC, 483 F.3d 819 (D.C. Cir. 2007) (North Baja v. FERC).

    83 The Commission has defined force majeure outages as events that are both unexpected and uncontrollable. Opinion No. 406, 76 FERC at 61,088. North Baja v. FERC, 483 F.3d at 823.

    84 The Commission has also stated that pipelines may use some other method that achieves equitable sharing reasonably equivalent to the two specified methods.

    85See, e.g., Northern Natural Gas Co., 137 FERC ¶ 61,202, at P 36 (2011), order on reh'g and compliance, 141 FERC ¶ 61,221, at PP 45-50 (2012) (Northern). The Commission has stated this could be accomplished by a reduction in the billing determinants used to design a pipeline's rates or by including the cost of the full reservation charge credits as an item in the pipeline's cost of service. Gulf South Pipeline Co., LP, 144 FERC ¶ 61,215, at P 34 (2013) (Gulf South).

    102. In the Proposed Policy Statement, the Commission stated that the pipelines' performance of facility upgrades and replacements required by recent legislative and other actions to address pipeline efficiency, safety, and environmental concerns may result in disruption of primary firm service. The Commission also cited recent Commission orders clarifying that one-time outages of primary firm service, if necessary to comply with government orders, may be treated as force majeure outages, for which only partial reservation charge credits are required.86 The Commission requested comments on whether it should make any adjustments to its current reservation charge crediting policy in light of the Proposed Policy Statement.87

    86See, e.g., TransColorado Gas Transmission Co. LLC, 144 FERC ¶ 61,175 (2013) (TransColorado); Gulf South, 144 FERC ¶ 61,215.

    87 Proposed Policy Statement at P 34.

    a. Comments

    103. The pipeline industry generally advocated that the Commission modify its policy requiring pipelines to pay reservation charge credits starting on Day One for disruption of primary firm service required by either voluntary or mandatory system improvements eligible for surcharge cost recovery. They contend that the pipeline modernization programs under consideration are not representative of pipeline mismanagement and are significantly different than conducting routine maintenance,88 and thus the Commission should not impose any reservation charge crediting requirement or at least treat any resulting outages as force majeure events requiring only partial reservation charge credits. INGAA also argued that the Commission should explicitly provide that costs to comply with other statutory and regulatory requirements, such as hydrostatic testing to confirm maximum pressure levels, are not subject to reservation charge credits.89 INGAA also argues, however, that to the extent that a pipeline must pay reservation charge credits for a service outage required by a system improvement eligible for surcharge cost recovery, it should be permitted to recover such crediting costs through the modernization cost recovery tracker.90 Columbia Gas urges the Commission to extend its policy of granting partial reservation charge credits to outages due to construction of eligible modernization projects.91

    88 INGAA Comments at 15-18.

    89 INGAA Comments at 18.

    90 INGAA Comments at 18-19. KM Comments at 8 (agreeing with INGAA that reservation charge crediting not apply for interruptions of firm service when pipelines are performing either voluntary or mandatory maintenance to improve safe and efficient operations.).

    91 Columbia Gas Comments at 36. Boardwalk suggests the Commission should modify its current reservation charge crediting policy to allow for a more equitable balancing of the risks between pipelines and their customers for service disruptions caused by testing, repair or replacement activities taken to comply with the new PHMSA rules. (Boardwalk Comments at 24.).

    104. Shippers and various state commissions encourage the Commission to require pipelines with modernization cost trackers to provide full reservation charge credits during periods that the pipeline must interrupt primary firm service to replace or install eligible facilities under the provisions of the modernization tracker.92 NCUC states that full reservation charge credits will provide pipelines a stronger incentive to schedule any necessary construction or modification of facilities required to comply with any new regulations in an efficient manner.93 Likewise, while PGC, APGA, IPAA, and NGSA oppose the implementation of modernization cost trackers, they request that to the extent the Commission chooses to allow their implementation, it modify its reservation charge crediting policy to require pipelines with modernization cost trackers to provide full reservation charge credits to firm customers during any period that the pipeline must interrupt primary firm service to replace or install eligible facilities.94

    92 Michigan PSC Comments at 20. IECA and American Midstream do not support changes to the existing reservation charge credits. IECA Comments at 21; American Midstream Comments at 8.

    93 NCUC Comments at 34.

    94 PGC Comments at 20, APGA Comments at 22, IPAA Comments at 3, 26-27, NGSA Comments at 13, 25.

    b. Determination

    105. The Commission's current reservation charge crediting policies require pipelines to provide some level of reservation charge credits whenever the pipeline is unable to schedule reserved primary firm service because of a government action. The level of credits to be provided turns on whether the government action is considered a force majeure event.95

    95Tennessee Gas Pipeline Co., L.L.C., 139 FERC ¶ 61,050, at PP 80-82 (2012). Texas Eastern Transmission, LP, 149 FERC ¶ 61,143, at PP 121-123 (2014).

    106. The Commission has defined force majeure outages as events that are both “unexpected and uncontrollable.” In TransColorado96 and Gulf South,97 the Commission clarified the basic distinction as to whether outages resulting from governmental actions are force majeure or non-force majeure events. The Commission found that outages necessitated by compliance with government standards concerning the regular, periodic maintenance activities a pipeline must perform in the ordinary course of business to ensure the safe operation of the pipeline, including PHMSA's integrity management regulations, are non-force majeure events requiring full reservation credits. Outages resulting from one-time, non-recurring government requirements, including special, one-time testing requirements after a pipeline failure, are force majeure events requiring only partial crediting.

    96TransColorado, 144 FERC ¶ 61,175 at PP 35-43.

    97Gulf South, 144 FERC ¶ 61,215 at PP 31-34.

    107. In Gulf South, the Commission explained that this distinction is reasonable for two reasons. First, the pipeline is likely to have greater discretion as to when it performs regular, periodic maintenance on particular pipeline segments than when the government orders special one-time testing, for example after a pipeline failure. Thus, regular, periodic maintenance required by government regulation may be considered reasonably within the control of the pipeline and expected, in contrast to one-time, non-recurring government requirements, which the pipeline may have to implement within a short timeframe. Second, the recurring costs of regular, periodic maintenance performed in the ordinary course of business may be included in a pipeline's rates in a general NGA section 4 rate case, whereas one-time, non-recurring costs are generally not eligible for inclusion in a pipeline's rates in a section 4 rate case. The Commission explained that because the full crediting policy is premised on the ability of the pipeline to recover the costs associated with that policy through its rates, it follows that eligibility for such cost recovery is an important factor in distinguishing between the types of government testing and maintenance requirements that trigger the full crediting requirement and those that only trigger a partial crediting requirement.98 Thus, under TransColorado and Gulf South, outages resulting from one-time non-recurring government requirements that (1) are not part of the pipeline's routine, periodic maintenance programs and (2) provide the pipeline little discretion as to when the outage occurs, qualify as force majeure events.

    98Texas Eastern, 149 FERC ¶ 61,143 at P 123.

    108. Against this background, we recognize that facility upgrade and replacement projects whose costs would be eligible for recovery under a modernization tracker do not lend themselves easily to the governmental action force majeure/non-force majeure distinction described above. On the one hand, such projects do not constitute routine periodic maintenance of the type for which the Commission requires full reservation charge credits; in fact, the Commission has held that such routine maintenance costs are not eligible for inclusion in a modernization cost tracker. Moreover, because each project constitutes a one-time, non-recurring event, any reservation charge credits provided by the pipeline would not be a recurring cost eligible for recovery in a pipeline's NGA section 4 general rate case. On the other hand, pipelines will likely have considerable discretion as to the timing of when they perform each project, with projects likely to be scheduled and performed over a multi-year period. Therefore, the projects are not unexpected in the sense ordinarily required for treatment as a force majeure event.

    109. In these circumstances, the Commission believes the issue of reservation charge credits for projects included in a modernization cost tracker is best addressed, at least initially, on a case-by-case basis in each proceeding in which a pipeline proposes such a tracker. In its filing to establish a tracker, the pipeline should state the extent to which it anticipates that any particular project will disrupt primary firm service, explain why it expects it will not be able to continue to provide firm service, and describe what arrangements the pipeline intends to make to mitigate the disruption or provide alternative methods of providing service. To the extent a pipeline incurs costs to make temporary alternative arrangements to provide service while a project is under construction, such as through temporary line bypasses or natural gas tankers, such costs may be considered for inclusion in the tracker. However, if a modernization project unavoidably causes an outage of primary firm service, the Commission believes that pipelines should provide some relief from the payment of reservation charge to shippers directly affected by that outage. To the extent the pipeline provides such shippers full reservation charge credits, the Commission would consider proposals for the pipeline to recover such costs through the tracker, consistent with the Commission's policy that pipelines may recover the costs of full reservation charge credits in rates. Alternatively, the Commission would consider partial reservation charge crediting methods tailored to the circumstances of the projects included in the tracker.

    3. Other Issues

    110. The Commission sought comments on any other issues or factors interested parties though the Commission should consider for inclusion in the Policy Statement as a prerequisite for approving a modernization cost recovery mechanism.99 The Commission received comments on a variety of proposals on additional items to include in the Policy Statement, including return on equity, and formula rates.

    99 Because the Policy Statement would address issues pertaining to the Commission's review of natural gas rate filings, the statement is categorically excluded from the requirements of the National Environmental Policy Act (NEPA), thus neither an environmental assessment nor an environmental impact statement is required. See 18 CFR 380.4(a)(25) (2014).

    a. Return on Equity

    111. EPMCG, MDG, APGA and the NYPSC argue that if the portion of capital investment subject to a tracker is significant to the pipeline's rate base, then the Commission should adjust downward the pipeline's allowed rate of return on equity to reflect the decreased risk that the pipeline has to recover its cost of investment given the existence of a tracker.100 IPAA and NGSA also argue that the plant facilities to be constructed pursuant to the proposed modernization surcharge should not be eligible to earn a rate of return and taxes, because these facilities are not included in a pipeline's rate base through an NGA general section 4 rate filing.101

    100 EPMCG Comments at 43, APGA Comments at 22-23, and MDG Comments at P 2, NYPSC Comments at P 1-3.

    101 IPAA Comments at 3, 26, NGSA Comments at 13.

    112. The Commission will not mandate an automatic ROE reduction for pipelines that have a modernization surcharge or tracker. We do agree, however, that a modernization tracker or surcharge could be a factor that is considered as to the appropriate level of a pipeline's ROE. We agree that considerations of return on equity reduction may be considered during shipper and pipeline negotiations.

    b. Formula Rates

    113. APGA argues that, if the Commission wants a tracker mechanism that ensures just and reasonable rates, it must apply to the pipeline's entire cost of service, similar to the transmission formula rates that the Commission has approved for electric utilities under the Federal Power Act.102 APGA states that the advantage of such formula rates, most of which allow projected capital additions to be included in a given year's formula rate and are trued up for actuals, are that the electric utilities are assured timely recovery of capital outlays and customers are assured that rates are premised on full and updated cost-of-service data, including throughput, so that the over-recovery problem associated with tracker mechanisms applicable to only a portion of the pipeline's cost of service is obviated.

    102 APGA Comments at 11-12.

    114. The Commission will not adopt APGA's proposal. In the instant proceeding the Commission is adopting a policy permitting pipelines to recover a limited category of one-time costs through a tracker mechanism, namely the costs of making needed upgrades for the safe and efficient operation of the pipeline. For the reasons discussed above, the Commission can permit this limited exception to our general policy of requiring pipelines to design their rates based on projected units of service, without undercutting the benefits of that policy of providing pipeline an incentive to minimize costs and maximize the service they provide. APGA's proposal to require pipelines to track all changes in their cost of service, on the other hand, would eliminate both those incentives.

    c. Transparency

    115. Wisconsin Electric and Wisconsin Gas propose that the Commission include additional transparency measures to require pipelines to identify and track all costs associated with each project or project phase and file a quarterly summary report detailing the progress and completion of the projects included in the tracker. In addition, Wisconsin Electric and Wisconsin Gas state existing service customers should have the right to validate the premise and the projected results of a pipeline's modernization and to audit costs. Finally, Wisconsin Electric and Wisconsin Gas submit that the pipeline should be required to quantify current costs that are reduced or avoided as a result of the and net those costs out of the total eligible cost.103

    103 Wisconsin Electric and Wisconsin Gas Comments at 15.

    116. The Commission will not adopt a policy requiring pipelines to submit reports on its projects based on any particular schedule, or specify the content of those reports in this Policy Statement. These are issues that should be addressed in the individual proceedings where each pipeline proposes a modernization cost tracker. Likewise, the validation and quantification of costs and projects may be negotiated. Nevertheless, a pipeline's compliance with its tariff to implement a modernization cost tracker may be subject to scrutiny through a Commission audit.

    d. Proposed Certificate Policy Modifications

    117. Columbia Gas proposes that the Commission undertake a review and implement a “fast track” processing for NGA 7(c) projects that involve replacement of older vintage pipelines, like bare steel replacement, or involve an important public safety aspect.104 Columbia Gas also comments that not all pipeline facilities are appropriate for replacement or upgrade because some facilities may have reached or are close to the end of their useful life. Therefore, Columbia states a full replacement of certain facilities may be cost prohibitive, even with a tracker, because shippers on the facilities are unwilling or unable to support the costs of the replacement.105 Similarly, Boardwalk states abandonment of facilities that will no longer be economic to operate because of substantial costs necessary to modify the facilities in order to achieve compliance with new requirements may be the best option and in the public interest.106

    104 Columbia Gas Comments at 37.

    105 Columbia Gas Comments at 21.

    106 Boardwalk Comments at 18-19.

    118. Columbia Gas' and Boardwalk's proposals are beyond the scope of this Policy Statement, and thus we will not address them here.

    III. Information Collection Statement

    119. The collection of information discussed in the Policy Statement is being submitted to the Office of Management and Budget (OMB) for review under section 3507(d) of the Paperwork Reduction Act of 1995 107 and OMB's implementing regulations.108 OMB must approve information collection requirements imposed by agency rules.

    107 44 U.S.C. 3507(d) (2012).

    108 5 CFR part 1320.

    120. The Commission solicits comments from the public on the Commission's need for this information, whether the information will have practical utility, the accuracy of the burden estimates, recommendations to enhance the quality, utility, and clarity of the information to be collected, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques. The burden estimates are for implementing the information collection requirements of this Policy Statement. The Commission asks that any revised burden estimates submitted by commenters include the details and assumptions used to generate the estimates.

    121. The collection of information related to this Policy Statement falls under FERC-545A (Gas Pipeline Rates: Rate Change (Non-Formal), Modernization Tracker).109 The following estimate of reporting burden is related only to this Policy Statement.

    109 The information collection requirements in this Policy Statement would normally be included in FERC-545 (OMB Control No. 1902-0154) which covers rate change filings made by natural gas pipelines, including tariff changes. However, another item is pending OMB review under FERC-545, and only one item per OMB Control Number can be pending review at OMB at a time. Therefor in order to submit this timely to OMB, we are using a temporary collection number (FERC-545A) to cover the requirements implemented in PL15-1-000.

    122. Public Reporting Burden: The estimated annual burden and cost follow.

    FERC-545A, as Implemented in Policy Statement in PL15-1-000 Number of
  • respondents 110
  • Number of
  • responses per
  • respondent
  • Average
  • burden hours
  • per response
  • Total annual
  • burden hours
  • Total annual
  • cost ($) 111
  • (rounded)
  • (1) (2) (3) (1) × (2) × (3) Provide information to shippers for any surcharge proposal, and prepare modernization cost tracker filing 112 3 1 750 2,250 $147, 578 Perform periodic review and provide information to show that both base rates and the surcharge amount remain just and reasonable 3 113 0.60 350 630 42,235

    123. Title: FERC-545A (Gas Pipeline Rates: Rate Change (Non-Formal), Modernization Tracker).

    110 An estimated 165 natural gas pipelines (Part 284 program) may be affected by this Policy Statement. Of the 165 pipelines, Commission staff estimates that 3 pipelines may choose to submit an application for a modernization cost tracker per year.

    111 The most recent hourly wage figures are published by the Bureau of Labor Statistics, U.S. Department of Labor, National Occupational Employment and Wage Estimates, United States, Occupation Profiles, May 2014 (available 4/1/2015) at http://www.bls.gov/oes/home.htm, and the benefits are calculated using BLS information, at http://www.bls.gov/news.release/ecec.nr0.htm.

    The average hourly cost (salary plus benefits) to prepare the modernization cost tracker filing is $65.59. It is the average of the following hourly costs (salary plus benefits): Manager ($77.93, NAICS 11-0000), Computer and mathematical ($58.17, NAICS 15-0000), Legal ($129.68, NAICS 23-0000), Office and administrative support ($39.12, NAICS 43-0000), Accountant and auditor ($51.04, NAICS 13-2011), Information and record clerk ($37.45, NAICS 43-4199), Engineer ($66.74, NAICS 17-2199), Transportation, Storage, and Distribution Manager ($64.55, NAICS 11-3071).

    The average hourly cost (salary plus benefits) to perform the periodic review is $67.04. It is the average of the following hourly costs (salary plus benefits): Manager ($77.93, NAICS 11-0000), Legal ($129.68, NAICS 23-0000), Office and administrative support ($39.12, NAICS 43-0000), Accountant and auditor ($51.04, NAICS 13-2011), Information and record clerk ($37.45, NAICS 43-4199).

    112 The pipeline's modernization cost tracker filing is expected to include information to:

    • Demonstrate that its current rates are just and reasonable and that proposal includes the types of benefits that the Commission found maintained the pipeline's incentives for innovation and efficiency;

    • identify each capital investment to be recovered by the surcharge, the facilities to be upgraded or installed by those projects, and an upper limit on the capital costs related to each project to be included in the surcharge, and schedule for completing the projects;

    • establish accounting controls and procedures that it will utilize to ensure that only identified eligible costs are included in the tracker;

    • include method for periodic review of whether the surcharge and the pipeline's base rates remain just and reasonable; and

    • state the extent to which any particular project will disrupt primary firm service, explain why it expects it will not be able to continue to provide firm service, and describe what arrangements the pipeline intends to make to mitigate the disruption or provide alternative methods of providing service.

    113 Based on the Columbia case, we estimate that a review may be required every 5 years, triggering the first pipeline reviews to be done in Year 6 (for the pipelines which applied and received approval in Year 1).

    124. Action: Proposed information collection.

    125. OMB Control No.: To be determined.

    126. Respondents: Business or other for profit enterprise (Natural Gas Pipelines).

    127. Frequency of Responses: Ongoing.

    128. Necessity of Information: The Commission is establishing a policy to allow interstate natural gas pipelines to seek to recover certain capital expenditures made to modernize system infrastructure through a surcharge mechanism, subject to certain conditions. The information that the pipeline should share with its shippers and submit to the Commission is intended to ensure that the resulting rates are just and reasonable and protect natural gas consumers from excessive costs

    129. Internal Review: The Commission has reviewed the guidance in the Policy Statement and has determined that the information is necessary. These requirements conform to the Commission's plan for efficient information collection, communication, and management within the natural gas pipeline industry. The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements.

    130. Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873].

    131. Comments concerning the collection of information and the associated burden estimate should be sent the Commission by June 22, 2015.

    IV. Document Availability

    132. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through FERC's Home Page (http://www.ferc.gov) and in FERC's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

    133. From FERC's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

    134. User assistance is available for eLibrary and the FERC's Web site during normal business hours from FERC Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected]

    V. Effective Date and Congressional Notification

    135. This Policy Statement will become effective October 1, 2015.

    The Commission orders:

    The Commission adopts the Policy Statement and supporting analysis contained in the body of this order.

    By the Commission.

    Issued: April 16, 2015. Nathaniel J. Davis, Sr., Deputy Secretary.
    Note:

    The following appendix will not appear in the Code of Federal Regulations.

    Appendix—List of Commenters American Forest & Paper Association American Gas Association American Midstream, LLC American Public Gas Association Beatrice Gahman Berkshire Hathaway Energy Company Boardwalk Pipeline Partners, LP Calpine Corporation Canadian Association of Petroleum Producers CenterPoint Energy Resources Corp. Clean Air Task Force Columbia Gas Transmission, LLC Deep Gulf Energy LP El Paso Municipal Customer Group Elizabeth Balogh Energy XXI Ltd. Environmental Defense Fund, Conservation Law Foundation and the Sustainable FERC Project Ernest J. Moniz, Secretary. United States Department of Energy Fairfax Hutter Helis Oil and Gas Company, L.L.C. Independent Oil & Gas Association of West Virginia, Inc. Independent Petroleum Association of America Indicated Shippers Industrial Energy Consumers of America Interstate Natural Gas Association of America Kansas Corporation Commission Karen Feridum Kinder Morgan Interstate Pipelines Laura Pritchard Michigan Public Service Commission Missouri Public Service Commission Municipal Defense Group Natural Gas Supply Association New York Public Service Commission Norman W. Torkelson North Carolina Utilities Commission Patriots Energy Group Pipeline Safety Coalition Process Gas Consumers Group and the American Forest & Paper Association Secretary of Energy Southern Company Services Southern Star Central Gas Pipeline, Inc. Tenneesse Valley Authority Teresa Ecker The Laclede Group, Inc. U.S. Department of Energy U.S. Department of Transportation, Pipeline and Hazardous Materials Safety Administration WBI Energy Transmission, Inc. Western Tennessee Municipal Group Wisconsin Electric Power Company and Wisconsin Gas LLC Xcel Energy Companies
    [FR Doc. 2015-09226 Filed 4-21-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 40 [Docket No. RM14-13-000; Order No. 808] Communications Reliability Standards AGENCY:

    Federal Energy Regulatory Commission.

    ACTION:

    Final rule.

    SUMMARY:

    Pursuant to the Federal Power Act, the Commission approves two revised Reliability Standards, COM-001-2 (Communications) and COM-002-4 (Operating Personnel Communications Protocols), developed by the North American Electric Reliability Corporation (NERC), which the Commission has certified as the Electric Reliability Organization responsible for developing and enforcing mandatory Reliability Standards. The two revised Reliability Standards will enhance reliability by, among other things, requiring adoption of predefined communication protocols, annual assessment of those protocols and operating personnel's adherence thereto, training on the protocols, and use of three-part communications. In addition, the Commission directs NERC to develop a modification to Reliability Standard COM-001-2 that addresses internal communications capabilities that could involve the issuance or receipt of Operating Instructions or other communications that could have an impact on reliability.

    DATES:

    This rule will become effective June 22, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Vincent Le (Technical Information), Office of Electric Reliability, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6204, [email protected]

    Michael Gandolfo (Technical Information), Office of Electric Reliability, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6817, [email protected]

    Julie Greenisen (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6362, [email protected]

    SUPPLEMENTARY INFORMATION: Order No. 808 Final Rule

    1. Pursuant to section 215 of the Federal Power Act (FPA),1 the Commission approves two Reliability Standards, COM-001-2 (Communications) and COM-002-4 (Operating Personnel Communications Protocols), developed by the North American Electric Reliability Corporation (NERC), which the Commission has certified as the Electric Reliability Organization responsible for developing and enforcing mandatory Reliability Standards. The Commission also approves three new defined terms for addition to the NERC Glossary of Terms Used in Reliability Standards (NERC Glossary), violation risk factors, violation severity levels, and NERC's proposed implementation plan for both revised standards. Further, pursuant to section 215(d)(5) of the FPA, the Commission directs that NERC develop one modification to Reliability Standard COM-001-2 that addresses internal communications capabilities to the extent that such communications could involve the issuance or receipt of Operating Instructions or other communications that could have an impact on reliability.

    1 16 U.S.C. 824o (2012).

    2. Reliability Standard COM-001-2 is intended to establish a clear set of requirements for the communications capabilities that applicable functional entities must have in place and maintain. Reliability Standard COM-002-4 requires applicable entities to develop communication protocols with certain minimum requirements, including use of three-part communication when issuing Operating Instructions.2 Reliability Standard COM-002-4 also sets out certain communications training requirements for all issuers and recipients of Operating Instructions, and establishes a flexible enforcement approach for failure to use three-part communication during non-emergencies and a “zero-tolerance,” i.e., without exception, enforcement approach for failure to use three-part communication during an emergency.3

    2 NERC proposes to define Operating Instruction as “[a] command by operating personnel responsible for the Real-time operation of the interconnected Bulk Electric System to change or preserve the state, status, output, or input of an Element of the Bulk Electric System or Facility of the Bulk Electric System. (A discussion of general information and of potential options or alternatives . . . is not considered an Operating Instruction.).”

    3See NERC Petition at 3 (“during Emergencies, operating personnel must use the documented communication protocols for three-part communications without exception.”).

    3. We find that Reliability Standards COM-001-2 and COM-002-4 will enhance reliability over the currently-effective versions of these Communications (COM) standards in several respects. For example, the Reliability Standards as modified expand applicability to include generator operators and distribution providers, eliminate certain ambiguities in the currently-effective standards, and clarify that the use of three-part communication is required for issuance and receipt of all Operating Instructions, with a zero-tolerance approach to enforcement of that requirement during an emergency. However, we are not persuaded that COM-001-2 adequately covers all situations in which Operating Instructions are issued or received and, therefore, direct NERC to develop a modification to that standard that addresses our concern, as further discussed below.

    I. Background A. Regulatory Background

    4. Section 215 of the FPA requires a Commission-certified Electric Reliability Organization (ERO) to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval.4 Once approved, the Reliability Standards may be enforced by the ERO subject to Commission oversight, or by the Commission independently.5 In 2006, the Commission certified NERC as the ERO pursuant to FPA section 215.6

    4 16 U.S.C. at 824o(c) and (d).

    5See id. at 824o(e).

    6North American Electric Reliability Corp., 116 FERC ¶ 61,062, order on reh'g and compliance, 117 FERC ¶ 61,126 (2006), aff'd sub nom. Alcoa Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).

    5. The Commission approved Reliability Standard COM-001-1 in Order No. 693.7 In addition, the Commission directed NERC to develop modifications to COM-001-1 to: (1) expand the applicability of the standard to include generator operators and distribution providers, (2) identify specific requirements for telecommunications facilities for use in normal and emergency conditions that reflect the roles of the applicable entities, and (3) include adequate flexibility for compliance to allow for the adoption of new technologies and cost-effective solutions.8 Similarly, the Commission approved Reliability Standard COM-002-2 in Order No. 693. In addition, the Commission directed NERC to develop modifications to (1) include distribution providers as applicable entities, and (2) establish tightened communications protocols, especially for communications during alerts and emergencies.9

    7See Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 508, order on reh'g, Order No. 693-A, 120 FERC ¶ 61,053 (2007); see also North American Electric Reliability Corp., Docket No. RD09-2-000 (2009) (delegated letter order accepting Reliability Standard COM-001-1.1).

    8 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 508.

    9Id. PP 531-535, 540.

    6. NERC initiated Project 2006-06 to address the Order No. 693 directives related to Reliability Standards COM-001 and COM-002, resulting in two proposed Reliability Standards, COM-001-2 and COM-002-3. NERC also initiated Project 2007-02 to develop a new Reliability Standard (COM-003) that would require real-time system operators to use standardized communication protocols during normal and emergency operations, in order to improve situational awareness and shorten response time. The two projects ultimately merged when drafts of Reliability Standard COM-002-3 and COM-003-1 were combined into a single proposed Reliability Standard, COM-002-4.

    B. NERC Petition

    7. On May 14, 2014, NERC filed a petition seeking approval of two revised communication standards, COM-001-2 (Communications) and COM-002-4 (Operating Personnel Communications Protocols).10 Proposed Reliability Standard COM-001-2 establishes a set of requirements for the communications capabilities that various functional entities must maintain to enable communications with other identified functional entities. Proposed Reliability Standard COM-002-4 requires applicable entities to develop documented communications protocols. NERC stated in its petition that the proposed standards are intended to address all relevant Commission directives from Order No. 693. In addition, NERC stated that the revisions reflected in proposed COM-002-4 are intended to address Recommendation No. 26 from the final report on the August 2003 blackout issued by the U.S.-Canada Power System Outage Task Force (Blackout Report) concerning the need to “[t]ighten communications protocols, especially for communications during alerts and emergencies.” 11

    10 The COM Reliability Standards are not attached to the Final Rule. The complete text of the two Reliability Standards is available on the Commission's eLibrary document retrieval system in Docket No. RM14-13 and is posted on the ERO's Web site, available at: http://www.nerc.com.

    11 NERC Petition at 3 (quoting U.S.-Canada Power System Outage Task Force, Final Report on the August 14, 2003 Blackout in the United States and Canada: Causes and Recommendations at 3 (April 2004) (Blackout Report), available at http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/BlackoutFinal-Web.pdf).

    Reliability Standard COM-001-2

    8. NERC stated in its petition that Reliability Standard COM-001-2 establishes requirements for Interpersonal Communication capabilities necessary to maintain reliability. NERC explained that proposed Reliability Standard COM-001-2 applies to reliability coordinators, balancing authorities, transmission operators, generator operators, and distribution providers. The proposed Reliability Standard includes eleven requirements and two new defined terms, “Interpersonal Communication” and “Alternative Interpersonal Communication,” that, according to NERC, collectively provide a comprehensive approach to establishing communications capabilities necessary to maintain reliability.12 NERC stated that the definitions provide clarity that an entity's communication capability must be redundant and that each of the capabilities must not utilize the same medium. According to NERC, the definitions improve the language used in the current Reliability Standard by eliminating the use of the more ambiguous phrases “adequate and reliable” and “redundant and diversely routed” that relate to “telecommunications facilities for the exchange of Interconnection and operating information.” 13

    12Id. at 15. NERC defines Interpersonal Communication as “[a]ny medium that allows two or more individuals to interact, consult, or exchange information” and Alternative Interpersonal Communication as “[a]ny Interpersonal Communication that is able to serve as a substitute for, and does not utilize the same infrastructure (medium) as, Interpersonal Communication used for day-to-day operation.” Id.

    13Id. at 15-16.

    9. The first six requirements of COM-001-2 address the Interpersonal Communication capability and Alternative Interpersonal Communication capability of the reliability coordinator, transmission operator, and balancing authority functions. Requirement R1 requires each reliability coordinator to have Interpersonal Communication capability with all transmission operators and balancing authorities within its reliability coordinator area, and with each adjacent reliability coordinator within the same interconnection. Requirement R2 requires each reliability coordinator to designate Alternative Interpersonal Communication capability with those same identified entities. Requirements R3 and R4 set out the communications capability requirements for a transmission operator. Under Requirement R3, Interpersonal Communication capability is required between the transmission operator's reliability coordinator, each balancing authority within its transmission operator area, each distribution provider and generator operator within its transmission operator area, and each adjacent transmission operator whether synchronously or asynchronously connected. Under Requirement R4, Alternative Interpersonal Communication capability must be designated between the transmission operator's reliability coordinator, each balancing authority within its transmission operator area, and each adjacent transmission operator. Requirements R5 and R6 set out similar requirements for each balancing authority, again identifying the specific functional entities for which the balancing authority must maintain Interpersonal Communication capability and for which it must designate Alternative Interpersonal Communication capability.

    10. Requirements R7 and R8 address the communications capability that distribution providers and generator operators must maintain, with each required to have Interpersonal Communications capability with its balancing authority and its transmission operator.

    11. Requirement R9 requires each reliability coordinator, transmission operator, and balancing authority to test its Alternative Interpersonal Communication capability at least once each calendar month, and to initiate action to repair or designate a replacement if the test is unsuccessful. Requirement R10 requires the same entities to notify applicable entities (as identified in R1, R3 and R5) of the detection of an Interpersonal Communication capability failure that lasts 30 minutes or longer. Finally, Requirement R11 requires distribution providers and generator operators to consult with affected balancing authorities and transmission operators when a failure is detected in their Interpersonal Communication capability, and to determine a mutually agreeable action for the restoration of that capability.

    12. NERC stated in its petition that proposed Reliability Standard COM-001-2 improves the currently-effective Reliability Standard by: (1) Eliminating terms that do not adequately specify the desired actions that applicable entities are expected to take in relation to their telecommunication facilities; (2) clearly identifying the need for applicable entities to be capable of Interpersonal Communication and Alternative Interpersonal Communication; (3) not requiring specific technology or systems to be utilized; and (4) including the distribution provider and generator operator as applicable entities.14 NERC added that COM-001-2 also addresses relevant directives from Order No. 693 by (1) adding generator operators and distribution providers as applicable entities; (2) identifying specific requirements for telecommunications capabilities for use in all operating conditions that reflect the roles of the applicable entities and their impact on reliability; and (3) including adequate flexibility to permit the adoption of new technologies.

    14 NERC Petition at 18.

    13. NERC proposed to retire currently-effective COM-001-1.1 when proposed Reliability Standard COM-001-2 becomes effective, with the exception of Requirement R4, which addresses communications protocols. NERC requested that Requirement R4 be retired when proposed Reliability Standard COM-002-4 becomes effective.15

    15Id. at 22.

    Reliability Standard COM-002-4

    14. NERC stated in its petition that Reliability Standard COM-002-4 improves communications surrounding the issuance of Operating Instructions by requiring the use of predefined communications protocols to reduce the possibility of miscommunication that could lead to action or inaction harmful to reliability.16 NERC noted that the proposed standard requires use of the same protocols regardless of operating condition (i.e., Emergency or non-emergency), but requires operating personnel to use the documented communication protocols for three-part communications “without exception” during an Emergency.17 As NERC explained:

    16Id. at 23. NERC stated that COM-002-3 (which was adopted by the NERC Board but not submitted to the Commission for approval) is proposed for retirement in the Implementation Plan because the proposed Reliability Standard has been combined with proposed COM-003-1 to create proposed Reliability Standard COM-002-4. NERC stated that Reliability Standard COM-002-3 has not been submitted to the Commission for approval, therefore, the currently effective version of COM-002 is COM-002-2. Id. at 23 n.43. Reliability Standard COM-002-4 combines proposed Reliability Standard COM-002-3 and the former draft COM-003-1 into a single standard that addresses communications protocols for operating personnel in Emergency and non-emergency conditions. Id. at 23-24.

    17Id. at 3.

    [T]he proposed Reliability Standard employs the phrase “Operating Instruction during an Emergency” in certain requirements (R5, R6, R7) to provide a demarcation for what is subject to a zero-tolerance compliance approach and what is not.18

    18Id. at 25.

    NERC explained that, for Operating Instructions issued during non-emergency operations, “an entity will be assessed under a compliance approach that focuses on whether an entity meets the initial training Requirement (either R2 or R3) and whether an entity performed the assessment and took corrective actions according to Requirement R4.” 19

    19Id. at 26.

    15. Finally, NERC stated that the proposed Reliability Standard includes distribution providers and generator operators as applicable entities, in accordance with the Commission's directive in Order No. 693, and in recognition of the fact that these types of entities can be recipients of Operating Instructions.

    16. Proposed Reliability Standard COM-002-4 includes seven requirements. Requirement R1 requires entities that can both issue and receive Operating Instructions (balancing authorities, reliability coordinators and transmission operators) to have documented communications protocols that include a minimum set of elements, including use of the English language unless otherwise specified, and required use of three-part communications for issuance and receipt of Operating Instructions.20 Requirement R2 requires these same entities to conduct initial training on the communications protocols for each of their operating personnel responsible for the real-time operation of the bulk electric system. Requirement R3 requires distribution providers and generator operators (who generally only receive but do not issue Operating Instructions) to conduct initial training on three-part communication for each of their operating personnel who can receive an oral two-party, person-to-person Operating Instruction, prior to that individual operator receiving an oral two-party, person-to-person Operating Instruction.

    20See id. at 29.

    17. Requirement R4 requires each balancing authority, reliability coordinator and transmission operator to assess, at least once every twelve months, its operating personnel's adherence to the documented communication protocols required in Requirement R1, and to provide feedback to its operating personnel on their performance.

    18. Requirement R5 requires balancing authorities, reliability coordinators and transmission operators that issue an oral two-party, person-to-person “Operating Instruction during an Emergency” to use three-part communication, and to take an alternative action if a confirmation is not received. Requirement R6 requires all applicable entities (balancing authorities, distribution providers, generator operators, and transmission operators) that receive an oral two-party, person-to-person “Operating Instruction during an Emergency” to use three-part communication, i.e., to repeat the Operating Instruction and receive confirmation from the issuer that the response was correct, or request that the issuer reissue the Operating Instruction. Both Requirement R5 and R6 include the clarification that the requirement does not apply to single-party to multiple-party “burst” Operating Instructions. As noted above, NERC explains that Requirements R5 and R6 require use of three-part communication during an Emergency without exception, because “use of three-part communication is critically important if an Emergency condition already exists, as further action or inaction could increase the harmful effects to the Bulk Electric System.” 21 NERC further explains, however, that applicable entities are expected to use three-part communications at all times when issuing and receiving Operating Instructions.22

    21Id. at 39.

    22Id. at 25-26.

    19. Finally, Requirement R7 requires that when a balancing authority, reliability coordinator, or transmission operator issues a written or oral single-party to multiple-party “burst” Operating Instruction during an Emergency, they must confirm or verify that at least one receiver received the Operating Instruction.

    20. NERC requested that proposed Reliability Standard COM-002-4 become effective on the first day of the first calendar quarter that is twelve months after the date that the standard is approved.

    C. Notice of Proposed Rulemaking

    21. On September 19, 2014, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to approve Reliability Standards COM-001-2 and COM-002-4 pursuant to FPA section 215(d)(2), along with the three new definitions referenced in the proposed standards (Operating Instruction, Interpersonal Communication, and Alternative Interpersonal Communication), the assigned violation risk factors and violation severity levels, and the proposed implementation plan for each standard.23

    23Communications Reliability Standards, Notice of Proposed Rulemaking, 79 FR 58709 (Sept. 30, 2014), 148 FERC ¶ 61,210 (2014) (NOPR).

    22. In the NOPR, the Commission explained that the two revised standards addressed outstanding directives from Order No. 693, in that COM-001-2 has been expanded to include distribution providers and generator operators, and COM-002-4 has been expanded to include distribution providers.24 The Commission also stated that Reliability Standard COM-002-4 would enhance reliability by providing for improved communications through the required development of communication protocols.

    24Id. PP 22, 23.

    23. In the NOPR, the Commission also discussed the following specific matters and asked for further comment: (1) Responsibility for use of three-part communication by transmission owners and generator owners that receive Operator Instructions; (2) whether COM-001-2 should be modified to address internal communication capability requirements, or to address testing requirements for distribution providers and generator operators; and (3) clarifications regarding the proposed terms Interpersonal Communication and Alternative Interpersonal Communication.

    24. Timely comments on the NOPR were filed by: NERC; the Edison Electric Institute and the Electric Power Supply Association (EEI/EPSA); ISO/RTO Council; the National Rural Electric Cooperative Association (NRECA); International Transmission Company (ITC); Idaho Power Company (Idaho Power); and Tri-State G&T. In addition, on March 6, 2015, NERC filed Supplemental Comments.

    II. Discussion

    25. Pursuant to section 215(d)(2) of the FPA, we adopt our NOPR proposal and approve Reliability Standards COM-001-2 and COM-002-4, including the associated definitions, violation risk factors, violation severity levels, and implementation plans, as just, reasonable, not unduly discriminatory or preferential and in the public interest. We note that all of the commenters that addressed the overall value of the Reliability Standards supported, or did not oppose, approval of the two revised standards. We determine that COM-001-2 will enhance reliability by expanding the applicability of currently effective COM-001-1.1 to include generator operators and distribution providers as applicable entities under the COM-001 standard, and by expanding the applicability of COM-002-4 to include distribution providers. We further find that COM-002-4 will enhance reliability by requiring all issuers and recipients of Operating Instructions to develop communications protocols that require use of three-part communications, by requiring training on those protocols, and by adopting a zero-tolerance enforcement approach to the use of three-part communications during an Emergency. Moreover, we conclude that requiring issuers of Operating Instructions to perform an annual assessment of their personnel's adherence to the communications protocols will help ensure a high level of compliance with three-part communications at all times.

    26. Pursuant to section 215(d)(5) of the FPA, the Commission directs that NERC develop one modification to COM-001-2 to address our concerns regarding applicability to certain internal communications, as discussed below.

    27. Below, we discuss the following matters: (A) Ensuring use of three-part communications by generator owners and transmission owners; (B) internal communication capability requirements; (C) testing requirements for distribution providers and generator operators; and (D) scope of the terms Interpersonal Communication and Alternative Interpersonal Communication.

    A. Applicability to Generator Owners and Transmission Owners NOPR

    28. In the NOPR, the Commission raised the concern that generator owners and transmission owners are not “applicable entities” under either COM-001-2 or COM-002-4, although these entities could, under some circumstances, receive and act on Operating Instructions.25 The Commission sought comment on the obligations of an applicable entity when issuing an Operating Instruction to a transmission owner or generator owner, including information regarding which entity is responsible if the transmission owner or generator owner fails to perform three-part communication properly. In addition, the Commission asked NERC to explain its auditing practices when reviewing operating agreements between transmission operators and transmission owners, and between generator operators and generation owners, including NERC's approach to reviewing the protocols of any transmission owner or generator owner that acts on an Operating Instruction in order to ensure that three-part communication is used appropriately.

    25See id. PP 25-27.

    Comments

    29. All commenters that address this issue maintain that the two revised COM Reliability Standards appropriately identify the entities that issue and/or receive Operating Instructions, and that the two standards should not be expanded to include transmission owners or generator owners.26 NERC states that the two COM standards are appropriately tailored to apply to those functional entities that operate the Bulk-Power System as described in the NERC Functional Model and, therefore, apply to transmission operators and generator operators rather than transmission owners and generator owners. However, NERC acknowledges that “there are instances in which Transmission Owners or Generator Owners may receive and act on Operating Instructions within areas operated by RTOs or ISOs.” 27 NERC asserts that, in these instances, the generator owner or transmission owner is “acting on behalf of a registered Transmission Operator or Generator Operator under delegation as a member of the RTO or ISO.” 28 NERC asserts that, if performance of a reliability requirement is not achieved for a delegated task, “the relevant Transmission Operator or Generator Operator responsible for compliance with the Reliability Standards is and has been held accountable.” 29

    26See NERC Comments at 2, 8; EEI/EPSA Comments at 3-4; ISO/RTO Council Comments at 4; ITC Comments at 4-5; Tri-State G&T Comments at 1.

    27 NERC Comments at 8.

    28Id.

    29Id.

    30. NERC provides several examples of the various approaches to assigning compliance responsibility, including a Joint Registration Organization or Coordinated Functional Registration (as used in ERCOT), and assignment of compliance responsibility through operating agreements and manuals (as used in PJM). In both circumstances, NERC and Regional Entity auditors review the relevant documents assigning compliance responsibility “to determine whether there are gaps in performance under the Reliability Standards as a result of the delegation.” 30 In addition, NERC states that “the registered entity for a particular function retains responsibility for providing supporting documentation regarding how a task is delegated,” and “for providing proof of compliance under the Reliability Standards.” 31

    30Id. at 10.

    31Id. at 11.

    31. EEI/EPSA maintains that generator owners do not receive and act on Operating Instructions, and therefore should not be included as applicable entities under the proposed standards. EEI/EPSA further maintains that transmission owners do not typically receive and act on Operating Instructions, except in regions where the transmission owners have arrangements to do so under specific operating contracts, and, in those cases, act “sol[ely] at the direction of a responsible regional TOP, having broad area responsibilities.” 32

    32 EEI/EPSA Comments at 3.

    32. Like NERC, ISO/RTO Council acknowledges that transmission owners and generator owners may act on Operating Instructions from an ISO/RTO, at least within some ISO/RTO regions, but states that in those cases the ISOs have market rules and operating procedures in place for communicating Operating Instructions to utilities and other market participants within their footprint. ISO/RTO Council also asserts that ISOs and RTOs do not control the registration of transmission owners and generator owners within their footprint, but that the entity and the relevant Regional Entity “make the final determination on their registration.” 33 Finally, ISO/RTO Council suggests that applying the requirements of the proposed COM standards to generator owners and transmission owners “seems to address an administrative concern as opposed to a reliability concern,” given that the “core reliability issue at hand is determining whether the RC, BA or TOP command was followed by the relevant recipient,” and given that ISOs and RTOs have market rules or tariff provisions in place that require strict adherence by utilities and market participants.34 ISO/RTO Council also asserts that, if an ISO or RTO issues a command to an entity that is not registered as a transmission operator or generator operator, and there is a three-part communication failure resulting in an enforcement action, then the NERC Rules of Procedure should be used to hold that entity responsible.35

    33 ISO/RTO Council Comments at 3.

    34Id.

    35Id. at 4 (asserting that the NERC Rules of Procedure, Appendix 4C, Section 5.11 allows for an ISO or RTO to include in an enforcement proceeding an entity that causes or contributes to an alleged violation of a Reliability Standard).

    33. ITC asserts that Operating Instructions, as defined by NERC, cannot apply to a generator owner or transmission owner. ITC raises a related question, however, as to whether a transmission operator can issue an Operating Instruction to another transmission operator under the proposed Reliability Standards.36 ITC seeks confirmation from the Commission that a transmission operator cannot issue such an instruction or directive to another transmission operator, or if no such confirmation is given, ITC asks that the Commission “explain the basis and process under which a Transmission Operator could issue such an Operating Instruction.” 37

    36 ITC Comments at 5.

    37Id. at 6.

    34. Idaho Power asserts that COM-002-4 does not apply to generator owners or transmission owners, without further discussion of whether such entities could ever receive and act on Operating Instructions as defined by NERC. Tri-State G&T agrees that generator owners and transmission owners should not be added as applicable entities, as they rarely, if ever receive an Operating Instruction.

    Commission Determination

    35. While several commenters have acknowledged that transmission owners and generator owners can receive and act on Operating Instructions in certain regions, we are persuaded that the proposed Reliability Standards need not be expanded to include those entities at this time. In doing so, we are persuaded by the explanation of NERC that “[w]hile the Transmission Operator or Generator Operator may delegate tasks under the proposed Reliability Standards to other member entities within [an RTO or ISO], the Transmission Operator and Generator Operator retain responsibility for compliance with the Requirements in the proposed Reliability Standards.” 38 Moreover, we rely on NERC's explanation that NERC and Regional Entity auditors examine contractual arrangements “to ascertain how tasks are delegated and to determine whether there are gaps in performance . . . as a result of the delegation. Responsibility will always rest with the entity registered with NERC as the Transmission Operator.” 39 Thus, in the PJM example, if a transmission owner with delegated operating responsibilities fails to use three-part communication as required under COM-002-4, the registered entity that has delegated the operating responsibilities will remain responsible for the violation.

    38See also ISO/RTO Council Comments at 3-4; EEI/EPSA Comments at 3-4 (Commission approved Operating Agreements “contractually bind TOs to act in conformance with TOP obligations”).

    39 NERC Comments at 10-11.

    36. ITC requests clarification whether or not a transmission operator can issue an Operating Instruction to another transmission operator, pursuant to COM-001-2 and COM-002-4. We find that the issue is beyond the scope of this rulemaking. The two standards at issue in this proceeding relate to requirements for communications capability and communications protocols, and do not address the relative authorities as between functional entities to require another entity to modify its operations in real-time, which is more properly addressed in the TOP and IRO Reliability Standards, including currently effective Reliability Standard TOP-1-1a.40

    40 Requirement R1 of TOP-1-1a states that “Each Transmission Operator shall have the responsibility and clear decision-making authority to take whatever actions are needed to ensure the reliability of its area and shall exercise specific authority to alleviate operating emergencies.” The obligation of a functional entity to respond to an Operating Instruction is also expected to be more explicitly addressed in other TOP and IRO standards under development or awaiting Commission approval, including proposed Reliability Standard IRO-001-4, which requires transmission operators, balancing authorities, generator operators, and distribution providers to comply with their Reliability Coordinator's Operating Instructions except under certain described circumstances.

    B. Internal Communication Capability NOPR

    37. In the NOPR, the Commission raised the concern that Reliability Standard COM-001-2 does not appear to carry forward an explicit requirement to maintain adequate internal communications capabilities, unlike the existing COM-001 standard, which states that each reliability coordinator, transmission operator, and balancing authority “shall provide adequate and reliable telecommunication facilities for the exchange of Interconnection and operating information . . . internally.” 41 The Commission stated that maintaining adequate internal communications could be critical to reliability, pointing to specific recommendations in the 2003 Blackout Report. The Commission proposed to direct NERC to develop modifications to COM-001-2, or to develop a separate standard, “that ensures that entities maintain adequate internal communications capability, at least to the extent that such communications could involve the issuance or receipt of Operating Instructions or other communications that could have an impact on reliability.” 42 Alternatively, the Commission suggested that a requirement for internal communication capability could be considered to be implicit in the proposed requirements for communications capability between functional entities, even if those functional entities reside within the same utility, and sought comment on this suggested interpretation as well as the proposed directive.

    41 NOPR, 148 FERC ¶ 61,210 at P 28 (quoting COM-001-1.1, Requirement R1).

    42Id. P 30.

    Comments

    38. NERC and most other commenters assert that Reliability Standard COM-002-4 can and should be read to apply to internal communications between functional entities within the same organization, as the Commission suggested in the NOPR.43 NERC and NRECA also assert that acceptance of this interpretation should eliminate the need for further modification to COM-002-4.44 ITC comments that COM-001-2 should apply to internal communications between different functional entities within the same organization but only “when those communications are performed by means other than in direct, face-to-face situations.” 45 ITC continues, stating that “[f]or entities performing multiple functions that are located in close proximity such that direct, face-to-face communication is available, ITC does not see a reliability need for a requirement for Alternative Interpersonal Communication, and believes the Standards should be interpreted as not requiring AIC in these situations.” 46 ITC also advocates that, if the Commission does not find that COM-001-2 as submitted includes these kinds of internal communications, the standard ought to be modified to do so.

    43 NERC Comments at 13; see also, e.g., NRECA Comments at 1, Idaho Power Comments at 4, and Tri-State Comments at 1.

    44 NERC Comments at 13; NRECA Comments at 1-2.

    45 ITC Comments at 7.

    46Id.

    39. EEI/EPSA acknowledges that the approach taken in COM-001-2 is different than the currently-effective COM standard with respect to internal communications, but maintains that this change is consistent with results-based standards. EEI/EPSA maintains that “a result-based standard should not need to specifically cite facility requirements or the specific internal communication obligations,” and maintains that COM-001-2 properly specifies communications capability “at the Functional Entity level.” 47

    47Id. at 4-5.

    Commission Determination

    40. We agree with NERC and other commenters that Reliability Standard COM-001-2 applies to communications between functional entities within a single organization. For example, COM-001-2, Requirement R3, provides that “each Transmission Operator shall have Interpersonal Communication capability” with the reliability coordinator, and each balancing authority, distribution provider, and generator operator “within its Transmission Operator Area.” We agree with NERC, ITC and other commenters that a reasonable understanding of Requirement R3 is that the transmission operator must have Interpersonal Communication capability with a balancing authority, distribution provider and/or generator operator within the same organization. Moreover, we agree with ITC that the COM-001-2 requirements concerning Alternative Interpersonal Communication only apply when those communications are performed by means other than direct, face-to-face situations.

    41. However, the application of COM-001-2 to different functional entities within the same organization, as discussed above, does not fully address our concern set forth in the NOPR regarding internal communications.48 In particular, the NOPR explained that Requirement R1.1 of currently-effective COM-001-1.1 provides that each reliability coordinator, transmission operator, and balancing authority “shall provide adequate and reliable telecommunication facilities for the exchange of Interconnection and operating information . . . internally.” This currently-effective Requirement applies more broadly to internal communications, including internal communications within the same functional entity. Thus, unlike the currently-effective Reliability Standard, COM-001-2 does not address the adequacy of internal telecommunications (or other internal communication systems) that may have an adverse effect on reliability, even within a single functional entity, including: (1) Communications between geographically separate control centers within the same functional entity; and (2) communications between a control center and field personnel. These scenarios present a gap in reliability of the Bulk-Power System that NERC should address. Accordingly, pursuant to section 215(d)(5) of the FPA, we direct NERC to develop modifications to COM-001-2, or to develop a new standard, to address our concerns regarding ensuring the adequacy of internal communications capability whenever internal communications could directly affect the reliable operation of the Bulk-Power System.

    48See NOPR, 148 FERC ¶ 61,210 at PP 28-31.

    C. Testing Requirements for Distribution Providers and Generator Operators NOPR

    42. In the NOPR, the Commission expressed concern that Reliability Standard COM-001-2 did not include a requirement that distribution providers and generator operators test or actively monitor their telecommunications systems, but were merely required to consult with each affected entity to determine a mutually agreeable action for restoration whenever a failure is detected.49 The Commission asked for comment on “why generator operators and distribution providers should not have some form of requirement to test or actively monitor vital primary and emergency telecommunication facilities.” 50

    49 NOPR, 148 FERC ¶ 61,210 at P 31 (citing to COM-001-2, Requirement R11).

    50Id, (citing System Restoration Reliability Standards, Order No. 749, 134 FERC ¶ 61,215, at P 28 (2011)).

    Comments

    43. NERC and the other commenters on this issue maintain that there is no need for a testing requirement for generator operators and distribution providers comparable to that required for reliability coordinators, balancing authorities and transmission operators, because generator operators and distribution providers are required to maintain only primary Interpersonal Communication capability, which is tested through routine use.51 NERC further explains that its approach is consistent with the Commission's statement in Order No. 693 that “[w]e expect the telecommunication requirements for all applicable entities will vary according to their roles and that these requirements will be developed under the Reliability Standards development process.” 52 NERC also explains that the standard drafting team found that the obligation to detect and address failures in a primary communication system, as set out in Requirement R11 of COM-001-2, is sufficient, given “the limited impact a failure might have on Distribution Providers and Generator Operators overall.” 53

    51See, e.g., NERC Comments at 14 (“routine use is sufficient to demonstrate functionality of this . . . primary capability”); EEI/EPSA Comments at 5-6 (“a system in regular use would gain little through routine testing”); and ISO/RTO Council Comments at 6-7 (“capability will be `tested' through regular use”).

    52 NERC Comments at 14-15 (quoting Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 487).

    53 NERC Comments at 14.

    Commission Determination

    44. We are persuaded by the comments of NERC and others that additional testing requirements for distribution providers and generator operators are not necessary at this time. NERC and other commenters assert that the primary Interpersonal Communication systems used by a distribution provider or generator operator will effectively be tested through routine use, and that any potential failures in a given generator operator or distribution provider's external communication system will not have a substantial impact on the Bulk-Power System. In light of this explanation, as well as our recognition in Order No. 693 that telecommunication requirements for applicable entities will vary according to their roles, we decline to require any additional testing requirements for distribution providers and generator operators at this time.

    D. Definition of Interpersonal Communication and Alternative Interpersonal Communication NOPR

    45. In the NOPR, the Commission sought clarification on the intended scope of the newly defined terms Interpersonal Communication and Alternative Interpersonal Communication.54 The Commission noted that NERC had explained the introduction of these terms as a means of eliminating the ambiguity in the terms “adequate and reliable” and “redundant and diversely routed” as currently used in Requirements R1 and R1.4 of COM-001-1.1.

    54 NOPR, 148 FERC ¶ 61,210 at P 32. As previously noted, NERC is proposing to define the terms, respectively, as follows:

    Interpersonal Communication—Any medium that allows two or more individuals to interact, consult, or exchange information.

    Alternative Interpersonal Communication—Any Interpersonal Communication that is able to serve as a substitute for, and does not utilize the same infrastructure (medium) as, Interpersonal Communication used for day-to-day operation.

    46. The Commission raised two concerns about the new terms as used in proposed Reliability Standard COM-001-2. First, the Commission noted that the definitions do not state a minimum expectation of communication performance, such as speed and quality.55 Second, the Commission asked for clarification as to whether Interpersonal Communication includes mediums used directly to exchange or transfer data, which communications appear to be covered under the currently-approved version of COM-001.56 The Commission, thus, asked for further explanation “regarding acceptable (and unacceptable) performance of communication for both Interpersonal and Alternative Interpersonal Communications.” 57

    55 NOPR, 148 FERC ¶ 61,210 at P 33.

    56Id. As the Commission noted, COM-001-1.1, Requirement R1 addresses “telecommunications facilities for the exchange of Interconnection and operating information.”

    57Id.

    Comments

    47. With respect to minimum performance standards or specifications for the required communications mediums, none of the commenters believe such specifications are necessary or advisable. NERC maintains that additional specifications are not necessary because the standard as written requires applicable entities to have the working capability needed to maintain reliability.58 EEI/EPSA agrees that performance specifications are not necessary, and questions whether it is even possible to set such standards given the diversity of systems used.59 ISO/RTO Council asserts that it would be inadvisable to include technical specifications on the communication mediums required, as it could result in the use of the least expensive medium that could achieve compliance.60 Idaho Power suggests that the kinds of measurable characteristics that might be appropriate for use to establish minimum performance levels for data exchanges are not available here, because the proposed COM standards do not include data exchange. Tri-State G&T states that the most common expected mediums for communication under the standard will likely be email and telephone, and that there is no need to include minimum expectations of speed or performance because “all entities are focused on reliability and would always use the fastest and most reliable means of communication.” 61

    58 NERC Comments at 4, 15-16.

    59 EEI/EPSA Comments at 6-7.

    60 ISO/RTO Council at 5. ISO/RTO Council also notes that its members already have requirements in place with their stakeholders on necessary technical requirements for voice and data exchange.

    61 Tri-State G&T Comments at 2.

    48. With respect to the transfer of data as opposed to communications between persons, all of the commenters to directly address the issue acknowledge that proposed Reliability Standard COM-001-2 is not intended to, and does not, cover data exchanges or transfers. NERC (through its initial and supplemental comments) and ISO/RTO Council maintain that COM-001-2 need not include requirements regarding data transfer capability because such capability is covered under other existing or proposed standards.

    49. With respect to existing standards, NERC states that the standard drafting team determined that IRO-010-1a and IRO-014-1 “provided the necessary mandatory Requirements to ensure proper data exchange is occurring.” 62 ISO/RTO Council provides several additional examples of existing Reliability Standards that address data exchange and transfer capability, including BAL-004-2b, R14; IRO-002-2, R1; and TOP-006-2, R1.63

    62 NERC Comments at 16. See also ISO/RTO Council Comments at 5-6 (noting that the standard drafting team explained that data communication is covered under Requirement R3 of IRO-010-1).

    63 ISO/RTO Council Comments at 6, n.10.

    50. With respect to standards under development, NERC asserts that four proposed IRO and TOP standards, now approved by the Board, “include specific coverage related to data exchange,” and “collectively require data exchange capability” for reliability coordinators, transmission operators, balancing authorities, generator operators, and distribution providers.64 NERC describes the specific requirements in proposed Reliability Standards TOP-001-3, IRO-010-2, TOP-003-3, and IRO-002-4 that will address data exchange capabilities and/or data exchange specifications for applicable functional entities.

    64 NERC Supp. Comments at 3. NERC identified these same four standards in its Initial Comments, but provides a more detailed discussion of the proposed standards and their status in its Supplemental Comments.

    51. EEI/EPSA and Idaho Power also maintain that the term Interpersonal Communication does not cover data exchange, with EEI/EPSA asserting that the phrase requires a system “that enables effective communications between two or more individuals.” 65 Moreover, EEI/EPSA understands the term Alternative Interpersonal Communication to require certain entities to have backup communications that do not utilize the same infrastructure.

    65 EEI/EPSA at 7. Similarly, Idaho Power states that the term was intended to include voice and electronic messaging between people, and exclude data exchanges, such as SCADA and metering data. Idaho Power Comments at 4-5.

    52. ITC asserts that the definitions of Interpersonal Communication and Alternative Interpersonal Communication “could ostensibly be interpreted to extend the Standard beyond verbal and written communications and Operating Instructions to include the transmission of electronic data between control systems that are monitored/used by system operators.” 66 ITC warns that “[i]f the Commission does indeed intend the scope of the Standards to extend to such electronic data transmission, the requirement for Alternative Interpersonal Communication may not be achievable” because “[i]t may simply not be possible to maintain a second pathway for the transmission of such data, whether by dint of data format, system compatibility, or the feasibility of installing a redundant system.” 67 ITC accordingly recommends that if an alternative pathway for data transmission is deemed necessary, then the Commission should retain the language from COM-001-1 which requires “redundant and diversely routed systems.” 68

    66 ITC Comments at 8.

    67Id.

    68Id. at 9.

    Commission Determination

    53. First, we are satisfied that technical specifications regarding minimum levels of performance for the mediums used to satisfy the requirements of COM-001-2 are not necessary at this time. In doing so, we note NERC's explanation that the requirements in COM-001-2 are “absolute” and that entities must “have the capability in place to `establish Interpersonal Communication capabilities necessary to maintain reliability.' ” 69 Moreover, we are persuaded by the commenters that setting performance criteria for the email and telephonic communications at issue here is both impractical and unnecessary.

    69 NERC Comments at 15-16.

    54. Second, the NOPR raised concerns pertaining to whether COM-001-2 addresses “facilities that directly exchange or transfer data.” 70 In response, NERC states that data exchange capability is being addressed in proposed IRO and TOP standards.71 Accordingly, we do not make any determinations regarding data exchange capability in the immediate rulemaking. Rather, based on NERC's explanation, we will address any issues regarding data exchange capability in the pending rulemaking pertaining to NERC's proposed TOP and IRO Reliability Standards.

    70See NOPR, 148 FERC ¶ 61,210 at P 33.

    71See NERC Supplemental Filing at 2-3. On March 18, 2015, NERC submitted a petition for approval of proposed Transmission Operations and Interconnection Reliability Operations and Coordination Reliability Standards, Docket No. RM15-15-000, pending before the Commission.

    III. Information Collection Statement

    55. The collection of information contained in this Final Rule is subject to review by the Office of Management and Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of 1995.72 OMB's regulations require approval of certain information collection requirements imposed by agency rules.73 Upon approval of a collection(s) of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of a rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number.

    72 44 U.S.C. 3507(d) (2012).

    73 5 CFR 1320.11 (2013).

    56. The Commission solicited comments on the need for this information, whether the information will have practical utility, the accuracy of the burden estimates, ways to enhance the quality, utility, and clarity of the information to be collected or retained, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques. Specifically, the Commission asked that any revised burden or cost estimates submitted by commenters be supported by sufficient detail to understand how the estimates were generated.

    57. The Final Rule approves Reliability Standards COM-001-2 and COM-002-4, as well as NERC's proposed retirement of currently-effective Reliability Standards COM-001-1.1 and COM-002-2. Reliability Standard COM-001-2 establishes Interpersonal Communication capability necessary to maintain reliability, while Reliability Standard COM-002-4 improves communications related to Operating Instructions, requiring issuers of Operating Instructions to adopt predefined communications protocols and requiring both issuers and recipients of Operating Instructions to use three-part communications.

    Public Reporting Burden: Reliability Standards COM-001-2 and COM-002-4 do not require responsible entities to file information with the Commission. However, the Reliability Standards require applicable entities to develop and maintain certain information, subject to audit. In particular, COM-001-2 requires that transmission operators, balancing authorities, reliability coordinators, distribution providers, and generator operators must maintain documentation of Interpersonal Communication capability and designation of Alternate Interpersonal Communication, as well as evidence of testing of the Alternate Interpersonal Communication facilities. COM-002-4 requires balancing authorities, distribution providers, reliability coordinators, transmission operators, and generator operators to develop and maintain documented communication protocols, and to be able to provide evidence of training on the protocols and of their annual assessment of the protocols. Additionally, all applicable entities (balancing authorities, reliability coordinators, transmission operators, generator operators, and distribution providers) must be able to provide evidence of three-part communication when issuing or receiving an Operating Instruction during an Emergency.

    Many of the record retention or information collection requirements in COM-001-2 and COM-002-4 are translated in some form from the currently-effective Reliability Standards (COM-001-1 and COM-002-2). For these requirements, the Commission estimates a zero net change in burden. Accordingly, our estimate below shows the increase in record-retention or information collection burden, based on the new requirements to:

    (1) Develop communications protocols (a one-time burden under COM-002-4, Requirement R1),

    (2) maintain evidence of required training, assessments, and use of three-part communications, as applicable (an on-going burden under COM-002-4 Requirements R2, R3, R4, R5 and R6); and

    (3) maintain evidence to demonstrate Interpersonal Communication capability (a new, on-going burden for distribution providers and generator operators under COM-001-2 Requirements R7 and R8).

    The Commission's estimate of the number of respondents is based on the NERC compliance registry as of August 15, 2014. According to the NERC compliance registry, NERC has registered 179 transmission operators, 107 balancing authorities, 15 reliability coordinators, 475 distribution providers, and 853 generator operators within the United States. However, under NERC's compliance registration program, entities may be registered for multiple functions, so these numbers incorporate some double counting, which has been accounted for in the table below. The Commission estimates the annual reporting burden and cost as follows:

    74 The estimated hourly costs (salary plus benefits) are based on Bureau of Labor Statistics (BLS) information, as of March 19, 2015, for an electrical engineer ($65.34/hour for review and documentation) and for an Information and Record Clerk ($33.42/hour for record retention). These figures have been updated since issuance of the NOPR, and are available at: http://bls.gov/oes/current/naics3_221000.htm#17-0000. The first row of the table (one-time burden) is done by an engineer, and the latter three rows (ongoing burden) are done by a file clerk.

    75 This dollar burden figure in row 3 of this chart was incorrectly stated in the NOPR, which led to an incorrect estimate of the total dollar burden for the industry in row 5. Both estimates as stated in the NOPR were higher than the corrected and updated estimate reflected in this Final Rule.

    76 No change is expected in the record-keeping burden under COM-001-2 for reliability coordinators, balancing authorities, and transmission operators as compared to the currently-effective COM-001 standard.

    Information collection requirement Number and type of respondents Annual
  • number of
  • responses per
  • respondent
  • Total number of responses Avg. burden & cost per
  • response 74
  • Total annual burden hours & total annual cost 75
    (1) (2) (1)*(2) = (3) (4) (3)*(4) = (5) (One-time) Development of Communication Protocols [COM-002-4 R1] 212
  • (BA, RC & TOP)
  • 1 212 8 hrs. & $522.72 1,696 hours & $110,816.64
    (On-going) Maintain evidence of Interpersonal Communication capability [COM-001-2 R7 and R8].76 1,217
  • (DP & GOP)
  • 1 1,217 4 hrs. & $133.68 4,868 hours & $162,688.56
    (On-going) Maintain evidence of training and assessments [COM-002-4 R2, R4, R5 and R6] 212
  • (BA, RC & TOP)
  • 1 212 8 hrs. & $267.36 1,696 hours & $56,680.32
    (On-going) Maintain evidence of training [COM-002-4 R3, and R6] 1,217
  • (DP & GOP)
  • 1 1,217 8 hrs. & $267.36 9,736 hours & $ 325,377.12
    Total 2,858 17,996 hours & $655,562.64

    Title: Mandatory Reliability Standards for the Bulk-Power System: COM Reliability Standards.

    Action: Proposed FERC-725V.

    OMB Control No: 1902-0277.

    Respondents: Businesses or other for-profit institutions; not-for-profit institutions.

    Frequency of Responses: One-time and ongoing.

    Necessity of the Information: The approval of Reliability Standards COM-001-2 and COM-002-4 implements the Congressional mandate of the Energy Policy Act of 2005 to develop mandatory and enforceable Reliability Standards to better ensure the reliability of the nation's Bulk-Power System. Specifically, the purpose of the Reliability Standards is to establish Interpersonal Communication capability necessary to maintain reliability, and to improve communications for the issuance of Operating Instructions with predefined communications protocols. The proposed Reliability Standards require entities to maintain records subject to review by the Commission and NERC to ensure compliance with the Reliability Standards.

    Internal Review: The Commission has reviewed the requirements pertaining to the Reliability Standards for the Bulk-Power System and determined that the requirements are necessary to meet the statutory provisions of the Energy Policy Act of 2005. These requirements conform to the Commission's plan for efficient information collection, communication and management within the energy industry. The Commission has assured itself, by means of internal review, that there is specific, objective support for the burden estimates associated with the information requirements.

    58. Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873].

    59. Comments concerning the information collections approved in this Final Rule and the associated burden estimates should be sent to the Commission in these dockets and may also be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at the following email address: [email protected] Please reference FERC-725V and the docket numbers of this Notice of Proposed Rulemaking (Docket No. RM14-13-000) in your submission.

    IV. Regulatory Flexibility Act Certification

    60. The Regulatory Flexibility Act of 1980 (RFA) 77 generally requires a description and analysis of proposed rules that will have significant economic impact on a substantial number of small entities. Reliability Standard COM-001-2 is expected to impose burdens for the first time on 1,217 entities (i.e., distribution providers and generator operators).78 Reliability Standard COM-002-4 may apply to as many as 1,279 entities.79 Comparison of the applicable entities with FERC's small business data indicates that approximately 934 of the 1,279 entities are small entities.80

    77 5 U.S.C. 601-612.

    78 The number of small distribution providers required to comply with the COM standards may decrease significantly. In March 2015, the Commission approved revisions to the NERC Rules of Procedure to implement NERC's “risk based registration” program, which raised the registry threshold for distribution providers from a 25 MW to 75 MW peak load. North American Electric Reliability Corp., 150 FERC ¶ 61,213 (2015).

    79 The applicable entities are balancing authorities, reliability coordinators, transmission operators, generator operators, and distribution providers. After accounting for entities registered for more than one function, the total count is 1,279 entities.

    80 The Small Business Administration sets the threshold for what constitutes a small business. Public utilities may fall under one of several different categories, each with a size threshold based on the company's number of employees, including affiliates, the parent company, and subsidiaries. The possible categories for the applicable entities have a size threshold ranging from 250 employees to 1,000 employees. We are using the 1000 employee threshold for this analysis.

    61. Reliability Standard COM-002-4 will serve to enhance reliability by, among other things, requiring adoption of predefined communication protocols, annual assessment of those protocols and operating personnel's adherence thereto, training on the protocols, and use of three-part communications. The Commission estimates that each small balancing authority, reliability coordinator, and transmission operator subject to Reliability Standard COM-002-4 will incur one-time compliance costs of about $523 (i.e. development of communication protocols), plus on-going annual costs of about $790 (i.e. performing training and maintaining evidence of training and assessments).81 The Commission estimates that each of the small distribution provider and generator operator entities potentially subject to Reliability Standards COM-001-2 and COM-002-4 will incur on-going annual costs of about $887 (i.e. performing training and maintaining evidence of interpersonal communication capability and of training).82 The Commission does not consider the estimated costs per small entity to have a significant economic impact on a substantial number of small entities. Accordingly, the Commission certifies that this Final Rule will not have a significant economic impact on a substantial number of small entities.

    81 The ongoing annual costs for both paperwork and training are based on (8 hours * $33.42) + (8 * $65.34) = $790.16 or approximately $790.00.

    82 The ongoing annual cost is based on (12 * $33.42) + (8 * $60.70) = $886.64 or approximately $887.00.

    V. Environmental Analysis

    62. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.83 The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in the exclusion are rules that are clarifying, corrective, or procedural or that do not substantially change the effect of the regulations being amended.84 The actions approved herein fall within this categorical exclusion in the Commission's regulations.

    83Regulations Implementing the National Environmental Policy Act of 1969, Order No. 486, FERC Stats. & Regs. ¶ 30,783 (1987).

    84 18 CFR 380.4(a)(2)(ii).

    VI. Document Availability

    63. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

    64. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

    65. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected]

    VII. Effective Date and Congressional Notification

    66. This Final Rule is effective June 22, 2015.

    67. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.85 The Commission will submit the Final Rule to both houses of Congress and to the General Accountability Office.

    85See 5 U.S.C. 804(2).

    68. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

    By direction of the Commission.

    Issued: April 16, 2015. Nathaniel J. Davis, Sr., Deputy Secretary.
    [FR Doc. 2015-09225 Filed 4-21-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 40 [Docket No. RM14-10-000; Order No. 810] Real Power Balancing Control Performance Reliability Standard AGENCY:

    Federal Energy Regulatory Commission, Energy.

    ACTION:

    Final rule.

    SUMMARY:

    The Federal Energy Regulatory Commission (Commission) approves Reliability Standard BAL-001-2 (Real Power Balancing Control Performance) and four new definitions submitted by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization. Reliability Standard BAL-001-2 is designed to ensure that applicable entities maintain system frequency within narrow bounds around a scheduled value, and improves reliability by adding a frequency component to the measurement of a Balancing Authority's Area Control Error. In addition, the Commission directs NERC to submit an informational filing pertaining to the potential impact of the Reliability Standard, and also directs NERC to revise one definition.

    DATES:

    This rule is effective June 22, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Enakpodia Agbedia (Technical Information), Office of Electric Reliability, Division of Reliability Standards, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, Telephone: (202) 502-6750, [email protected]

    Mark Bennett (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, Telephone: (202) 502-8524, [email protected]

    SUPPLEMENTARY INFORMATION:

    Order No. 810 Final Rule

    1. Pursuant to section 215 of the Federal Power Act (FPA),1 the Commission approves Reliability Standard BAL-001-2 (Real Power Balancing Control Performance) submitted by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO). Reliability Standard BAL-001-2 applies to balancing authorities and Regulation Reserve Sharing Groups,2 and is intended to ensure that Interconnection frequency is maintained within predefined frequency limits. The Commission also finds that Reliability Standard BAL-001-2 addresses the Commission's directive set forth in Order No. 693 pertaining to BAL-002-0.3 The Commission approves the retirement of currently-effective Reliability Standard BAL-001-1 immediately prior to the effective date of Reliability Standard BAL-001-2.

    1 16 U.S.C. 824(o).

    2 NERC defines Regulation Reserve Sharing Group as “[a]group whose members consist of two or more Balancing Authorities that collectively maintain, allocate, and supply the Regulating Reserve required for all member Balancing Authorities to use in meeting applicable regulating standards.” NERC Petition at 7.

    3Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, FERC Stats. & Regs. ¶ 31,242, order on reh'g, Order No. 693-A, 120 FERC ¶ 61,053 (2007).

    2. Further, the Commission approves NERC's four proposed definitions, associated violation risk factors and violation severity levels, implementation plan, and effective date. The Commission also directs NERC to submit an informational filing 90 days after the end of the two-year period following implementation that includes an analysis of data on whether experience with the Balancing Authority ACE Limit in the first two years after approval has seen ACE swings and inadvertent interchange 4 and unscheduled power flows 5 that could cause system operating limit (SOL) and interconnection reliability operating limit (IROL) exceedances, and further directs NERC to revise one definition.

    4 Inadvertent interchange is “[t]he difference between the Balancing Authority's Net Actual Interchange and Net Scheduled Interchange. (IA-IS).” NERC Glossary of Terms Used in Reliability Standards (NERC Glossary) at 42.

    5 Unscheduled power flows generally refers to power flows that result from the law of physics that causes power from a given source to flow over all possible paths to its destination.

    I. Background

    3. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards that are subject to Commission review and approval. Specifically, the Commission may approve, by rule or order, a proposed Reliability Standard or modification to a Reliability Standard if it determines that the Reliability Standard is just, reasonable, not unduly discriminatory or preferential and in the public interest.6 Once approved, the Reliability Standards may be enforced by NERC, subject to Commission oversight, or by the Commission independently.7

    6 16 U.S.C. 824o(d)(2).

    7Id. 824o(e).

    4. Pursuant to section 215 of the FPA, the Commission established a process to select and certify an ERO,8 and subsequently certified NERC as the ERO.9 Subsequent to the Commission's issuance of Order No. 693, approving 83 of the 107 Reliability Standards filed by NERC, the Commission approved Reliability Standard BAL-001-0 and companion Reliability Standard BAL-002-0.10 While approving Reliability Standard BAL-002-0, the Commission directed NERC “to modify this Reliability Standard to define a significant deviation and a reportable event, taking into account all events that have an impact on frequency, e.g., loss of supply, loss of load and significant scheduling problems, which can cause frequency disturbances and to address how balancing authorities should respond.” 11

    8Rules Concerning Certification of the Electric Reliability Organization; and Procedures for the Establishment, Approval, and Enforcement of Electric Reliability Standards, Order No. 672, FERC Stats. & Regs. ¶ 31,204, order on reh'g, Order No. 672-A, FERC Stats. & Regs. ¶ 31,212 (2006).

    9North American Electric Reliability Corp., 116 FERC ¶ 61,062, order on reh'g and compliance, 117 FERC ¶ 61,126 (2006), aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).

    10North American Electric Reliability Corporation, Docket No. RD13-11-000 (Oct. 16, 2013) (delegated letter order).

    11 Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 355.

    II. NERC Petition and Reliability Standard BAL-001-2

    5. On April 2, 2014, NERC filed a petition seeking approval of Reliability Standard BAL-001-2, four new definitions to be added to the NERC Glossary and the associated violation risk factors and violation severity levels, effective date, and implementation plan.12 In its petition, NERC explained that balancing generation and load is necessary to ensure that system frequency is maintained within narrow bounds based on a scheduled value. NERC stated that the purpose of Reliability Standard BAL-001-2 is to maintain Interconnection frequency within predefined frequency limits and that the Reliability Standard “improves reliability by adding a frequency component to the measurement of a Balancing Authority's Area Control Error (ACE) and allows for the formation of Regulation Reserve Sharing Groups.” 13 NERC further stated that Reliability Standard BAL-001-2 is just, reasonable, not unduly discriminatory or preferential, and in the public interest because it satisfies the factors set forth in Order No. 672, which the Commission applies when reviewing a proposed Reliability Standard.14 Also, NERC asserted that Reliability Standard BAL-001-2 addresses the Commission's Order No. 693 directive pertaining to Reliability Standard BAL-002-0.

    12 Reliability Standard BAL-001-2 not attached to this Final Rule. The standard is available on the Commission's eLibrary document retrieval system in Docket No. RM14-10-000 and on the NERC Web site, www.nerc.com.

    13 NERC Petition at 2.

    14Id. at 6 and Exhibit C (Order No. 672 Criteria) (citing Order No. 672, FERC Stats. & Regs. ¶ 31,204 at PP 323-335, 444).

    6. Reliability Standard BAL-001-2 replaces the Control Performance Standard 2 (CPS2) in currently-effective Requirement R2 with a new term: “Balancing Authority ACE Limit.” 15 The Balancing Authority ACE Limit, unique for each balancing authority, contains dynamic limits as a function of Interconnection frequency and provides the basis for a balancing authority's obligation to balance its resources and demand in real-time so that its clock-minute average ACE does not exceed its Balancing Authority ACE Limit for more than 30 consecutive clock-minutes.16

    15 Area Control Error (ACE) is the “instantaneous difference between a Balancing Authority's net actual and scheduled interchange, taking into accounts the effects of Frequency Bias, correction for meter error, and Automatic Time Error Correction (ATEC), if operating in the ATEC mode. ATEC is only applicable to Balancing Authorities in the Western Interconnection.” NERC Glossary at 7.

    16 NERC Petition at 12.

    7. Reliability Standard BAL-001-2 has two requirements and two attachments that contain the mathematical equations for calculating the Control Performance Standard 1 (CPS1) in Requirement R1, the Balancing Authority ACE Limit in Requirement R2, and associated measures. NERC stated that the only change to Requirement R1 is to move the equation and explanation of the individual components of CPS1 to Attachment 1. NERC explained that the revisions to Requirement R1 “are administratively efficient and clarify the intent of the Requirement.” 17 NERC further stated that the “underlying performance aspect” of Requirement R1 remains the same: “to measure how well a Balancing Authority is able to control its generation and load management programs, as measured by its ACE, to support its Interconnection's frequency over a rolling one-year period.” 18

    17 NERC Petition at 11.

    18Id.

    8. Requirement R2 is new and replaces the existing Control Performance Standard 2 requirement. Currently-effective Reliability Standard BAL-001-1, Requirement R2 requires each balancing authority to operate such that for at least 90 percent of the ten-minute periods in a calendar month (using six non-overlapping periods per hour), the average ACE must be within a specific limit, referred to as L10.

    9. Requirement R2 of Reliability Standard BAL-001-2 states:

    Balancing Authority shall operate such that its clock-minute average of Reporting ACE does not exceed its clock-minute Balancing Authority ACE Limit (BAAL) for more than 30 consecutive clock-minutes, calculated in accordance with Attachment 2, for the applicable Interconnection in which the Balancing Authority operates.

    10. NERC explained that the Balancing Authority ACE Limit is unique for each balancing authority and provides dynamic limits for the balancing authority's ACE value as a function of its Interconnection frequency.19 NERC stated that Reliability Standard BAL-001-2 is intended to enhance the reliability of each Interconnection by maintaining frequency within predefined limits under all conditions. Furthermore, NERC stated that Reliability Standard BAL-001-2 and accompanying definitions include the benefits of the ATEC equation in the Western Electricity Coordinating Council's (WECC) regional variance in Reliability Standard BAL-001-1.20

    19Id. at 12.

    20Id. at 2.

    11. In its petition, NERC proposed violation risk factors and violation severity levels for each requirement of Reliability Standard BAL-001-2, an implementation plan and an effective date. NERC stated that these proposals were developed and reviewed for consistency with NERC and Commission guidelines.

    12. NERC proposed an effective date for Reliability Standard BAL-001-2 that is the first day of the first calendar quarter that is twelve months after the date of Commission approval. NERC stated that this implementation date will allow entities to make any software adjustment that may be required to perform the Balancing Authority ACE Limit calculations.21

    21Id. at 3.

    13. On May 9, 2014, NERC submitted a supplemental filing to address the status of the Commission directive in Order No. 693 that NERC “define a significant deviation and a reportable event, taking into account all events that have an impact on frequency, e.g., loss of supply, loss of load and significant scheduling problems. . . .” 22 Further, NERC provided an update regarding the status of the field trial undertaken for BAL-001-2. In the supplemental filing, NERC reiterated the importance of establishing dynamic limits for a balancing authority's ACE as a function of the Interconnection frequency, stating that “[o]ne of the reliability benefits of the proposed Reliability Standard is that it allows Balancing Authorities to calculate their position within these boundaries on a real-time basis and take action to support reliability.” 23 Further, NERC stated that Reliability Standard BAL-001-2 addresses the Commission's directive related to BAL-002-0 “in an equally efficient and effective manner.” 24 NERC added that revisions to Reliability Standard BAL-002-1 are currently being developed and will complement Reliability Standard BAL-001-2. Regarding the ongoing field trial, discussed below, NERC stated that “the widespread participation of Balancing Authorities has provided insight into how the changes in Reliability Standard BAL-001-2 will impact reliability.” 25

    22 NERC May 9, 2014 Supplemental Filing at 3-5 (citing Order No. 693, FERC Stats. & Regs. ¶ 31,242 at P 355).

    23Id. at 2.

    24Id. at 3.

    25 NERC Supplemental Filing at 6 (stating that 47 balancing authorities participated in the field trial: 16 in the Eastern Interconnection, 29 in the Western Interconnection, ERCOT and Québec).

    14. On July 31, 2014, NERC submitted an informational filing of its Preliminary Field Trial Report evaluating the effects of Reliability Standard BAL-001-2.26 NERC stated that the Field Trial Report results to date demonstrate that the correlation between Requirements R1 and R2 of Reliability Standard BAL-001-2 drive corrective actions to support Interconnection frequency and reliability.27 NERC also stated that the Balancing Authority ACE Limit, in conjunction with currently-effective Reliability Standard BAL-003-1 (Frequency Response and Frequency Bias Setting), satisfies the directive in Order No. 693 pertaining to Reliability Standard BAL-002-0.28

    26 NERC July 31, 2014 Informational Filing (Field Trial Report).

    27 NERC Field Trial Report at 1.

    28Id. at 14.

    III. Notice of Proposed Rulemaking

    15. On November 20, 2014, the Commission issued a Notice of Proposed Rulemaking (NOPR) proposing to approve Reliability Standard BAL-001-2 as just, reasonable, not unduly discriminatory or preferential and in the public interest.29 The Commission also proposed to approve NERC's four proposed definitions, violation risk factor and violation severity level assignments, and the retirement of currently-effective Reliability Standard BAL-001-1.30 The NOPR stated that the new Balancing Authority ACE Limit in Reliability Standard BAL-001-2 encourages operation in support of Interconnection frequency and drives corrective action back within predefined ACE limits when needed to adjust Interconnection frequency.

    29Real Power Balancing Control Performance Reliability Standard, Notice of Proposed Rulemaking, 79 FR 70,483 (November 26, 2014), 149 FERC ¶ 61,139 (2014).

    30 The four proposed definitions for inclusion in the NERC Glossary are: Regulation Reserve Sharing Group, Reserve Sharing Group Reporting ACE, Reporting ACE, and Interconnection. NERC Petition at 7-10. The standard drafting team explained that Regulation Reserve Sharing Group will be added to the NERC Compliance Registry prior to implementation of the Reliability Standard. NERC Petition, Exhibit G (Summary of Development History and Complete Record of Development), Consideration of Comments, April 2013 at 13.

    16. While the Commission proposed to approve Reliability Standard BAL-001-2, the Commission raised concerns regarding the potential of the Reliability Standard to contribute to unscheduled power flows and inadvertent interchange. Based on that concern, the Commission proposed to direct NERC to monitor unscheduled power flows and inadvertent interchange in the Western and Eastern Interconnections and submit an informational filing following implementation of the Reliability Standard providing the number of SOL/IROL violations, the date, time, location, duration and magnitude due to unscheduled power flows and inadvertent interchange. In the NOPR, the Commission sought comments on the following issues: (1) The need for an informational filing and whether NERC should include additional data pertaining to unscheduled power flows and inadvertent interchange in its informational filing; and (2) whether a regional variance would be necessary for a region experiencing adverse impacts from the Reliability Standard due to inadvertent interchange.

    17. In response to the NOPR, the Commission received comments from: NERC, Tri-State Generation and Transmission Association, (Tri-State), Arizona Public Service Company (APS), Edison Electric Institute (EEI), NaturEner USA (NaturEner), Regional Transmission Organizations—Midcontinent Independent System Operator, ISO New England, and PJM Interconnection (collectively “Indicated RTOs”), The Steel Manufacturers Association (SMA), Duke Energy Corporation (Duke), Western Area Power Administration (WAPA), Powerex Corp (Powerex), New York Independent System Operator (NYISO), and Bonneville Power Administration (BPA).

    IV. Discussion

    18. Pursuant to FPA section 215(d)(2), we approve Reliability Standard BAL-001-2 as just, reasonable, not unduly discriminatory or preferential, and in the public interest. The purpose of Reliability Standard BAL-001-2 is to control Interconnection frequency within defined limits. The Commission determines that the Reliability Standard will help ensure that Interconnection frequency is maintained through both long and short term performance measures for Interconnection frequency control and dynamic (i.e., real-time) limits that are specific for each balancing authority and Interconnection.31 We find that, by basing Balancing Authority ACE Limits on predefined frequency trigger limits for each Interconnection, the real-time measurements established in the Reliability Standard will help ensure that the Interconnection frequency returns to a reliable state should a balancing authority's ACE, or the Interconnection's frequency, exceed acceptable bounds.

    31 NERC Supplemental Filing at 2.

    19. We also determine that the Reliability Standard satisfies the outstanding directive concerning Reliability Standard BAL-002 set forth in Order No. 693, as explained in the NOPR,32 and approve NERC's four definitions, violation risk factor and violation severity level assignments, and the retirement of currently-effective Reliability Standard BAL-001-1. Further, we approve NERC's implementation plan, in which NERC proposes an effective date of the first day of the first calendar quarter, twelve months after the date of Commission approval.33

    32 NOPR, 149 FERC ¶ 61,139 at PP 18-19.

    33 NERC Petition, Ex. B (Implementation Plan for Proposed Reliability Standard BAL-001-2) at 4.

    20. While approving Reliability Standard BAL-001-2, as discussed below, we direct NERC to submit an informational filing to assess the potential impact of the Reliability Standard as described herein and to revise the definition of the term Reporting ACE in the NERC Glossary.

    21. We discuss below the following issues raised in the NOPR and addressed in the comments: (A) The proposed informational filing and NOPR comments regarding the need to revise the definition of the term Reporting ACE; and (B) whether a regional variance is necessary to address possible adverse impacts from the implementation of Reliability Standard BAL-001-2.

    A. Informational Filing and Definition of Reporting ACE NOPR

    22. In the NOPR, the Commission noted that feedback from some stakeholders who participated in the field trial indicated that the Balancing Authority ACE Limit established in Requirement R2 of Reliability Standard BAL-001-2 could increase unscheduled power flows, possibly resulting in approaching or exceeding SOL/IROL violations. The NOPR observed that, in comments submitted to NERC's standard drafting team, one large transmission operator stated that the Balancing Authority ACE Limit could increase the number of system operating limit violations, and could cause large unscheduled power flows resulting in an increased ACE.34 Another stakeholder commented that the Balancing Authority ACE Limit could provide opportunities for entities to create unscheduled power flows within the boundaries established by the Reliability Standard.35

    34 NOPR, 149 FERC ¶ 61,139 at P 20 (citing NERC Petition, Ex. G (Summary of Development History and Complete Record of Development), Consideration of Comments, April 2013 at 43).

    35Id., Ex. G, Consideration of Comments, at 77.

    23. The NOPR stated that, while NERC asserted that there was no relationship between the Balancing Authority ACE Limit field trial and accumulated inadvertent interchange, a large allowance of ACE deviations could increase the amount of inadvertent interchange on the bulk electric system. The NOPR explained that Reliability Standard BAL-001-2 could allow balancing authorities to have a very large deviation from an ACE of zero and still be compliant with the dynamic values of the Balancing Authority ACE Limits in the proposed Reliability Standard.36

    36 NOPR, 149 FERC ¶ 61,139 at P 21.

    24. Based on this information, in the NOPR, the Commission expressed concern that Reliability Standard BAL-001-2 may have the “unintended consequence” of (i) creating large unscheduled power flows that could unduly burden transmission operators and reliability coordinators in addressing power flows that approach or exceed system operating limits or interconnection reliability operating limits, and (ii) causing significant increases in inadvertent interchange resulting in an adverse reliability impact between real-time operations and day and/or hour-ahead analysis performed by reliability coordinators and transmission operators.37

    37Id. P 22.

    25. In order to evaluate the effect of the Reliability Standard on unscheduled power flows and inadvertent interchange and the potential impact on the Bulk-Power System, the NOPR proposed to direct NERC to submit an informational filing to monitor unscheduled flows and inadvertent interchange in the Western and Eastern Interconnections 90 days after the end of the two-year period following implementation. Specifically, the NOPR proposed that NERC's informational filing provide “the number of SOL/IROL violations, the date, time, location, the duration and magnitude, due to unscheduled power flows and inadvertent interchange within [the] Western and Eastern Interconnections.” 38 Further, the NOPR stated that the Commission expects NERC will immediately propose and implement adequate remedies should there be increases in unscheduled flow and inadvertent interchange causing reliability issues under the new Balancing Authority ACE Limit during the two-year period covered by the informational filing.

    38Id. P 23.

    Comments

    26. NERC states that it does not support the Commission's proposed directive to submit an informational filing with the data described in the NOPR, because it “will not conclusively demonstrate that large ACE swings are correlated with unscheduled power flow and Inadvertent Interchange causing SOL/IROL exceedances.” 39 NERC asserts that the proposed directive “is based on the speculative opinions of commenters, supported by no documented evidence that the proposed Reliability Standard contributes to unscheduled power flows and Inadvertent Interchange,” and would not be an effective use of NERC or industry resources.40

    39 NERC Comments at 6.

    40Id. at 8.

    27. NERC states that the field trial has not produced any “positive evidence” establishing that implementing the Balancing Authority ACE Limit causes high ACE swings negatively affecting frequency, or relates to unscheduled power flows or inadvertent interchange causing SOL/IROL exceedances. Further, NERC asserts that “high ACE swings are not necessarily determinative of overloading transmission or SOL/IROL exceedances because SOL/IROL exceedances can still occur when ACE is zero.” 41

    41Id.

    28. While disagreeing with the directive as proposed in the NOPR, NERC states that as a “first step” to addressing the Commission's concerns, and to “investigate a possible correlation between [the] Balancing Authority ACE Limit and SOL/IROL exceedances as attributed to Inadvertent Interchange and unscheduled power flows,” NERC will provide the Commission with a “set of baseline data” including “tracking the number of SOL/IROL exceedances occurring in each interconnection where a Balancing Authority's ACE was within BAAL.” 42 NERC states that it would include this data in an informational filing, with the commitment to work with Commission staff to analyze the data.

    42Id. at 8-9.

    29. EEI, Indicated RTOs, NYISO, WAPA, APS, Duke, Tri-State, Powerex and BPA support the Commission's proposed informational filing. While supporting the proposed informational filing, EEI believes that the Reliability Standard “will support stronger management of interconnection frequency.” 43 Indicated RTOs assert that “the trend in manual Time Error Correction is a better indicator of unscheduled flows. Operating limit violations resulting from unscheduled power flows and the trend in Time Error Correction will enable the Commission to evaluate the severity of any issues, and NERC and/or its operating committees routinely collect that information.” 44

    43 EEI Comments at 3-4.

    44 Indicated RTOs Comments at 5-6.

    30. NYISO, Tri-State, BPA and Powerex, while supporting the Commission's proposal, urge that the Commission require NERC to provide more data in the informational filing than described in the NOPR. NYISO states that NERC should provide ACE and Balancing Authority ACE Limit values for the SOL/IROL violations associated with unscheduled power flows or inadvertent interchange. BPA asserts that NERC should examine all unscheduled power flows resulting from the implementation of the Balancing Authority ACE Limit, not just those related to SOL/IROL violations. BPA further states that NERC should be required to conduct an analysis every six months for the initial two year implementation period, including an examination of loss of supply events and their impact on frequency recovery.45

    45 BPA Comments at 7.

    31. BPA states that the proposed definition of “Reporting ACE” should be revised to include the ATEC upper payback limit term “Lmax” and the bounds of that upper payback limit for IATEC. BPA notes that, while incorporating the WECC regional variance contained in currently effective Reliability Standard BAL-001-1 may have been NERC's intent, this cannot be accomplished without including the “Lmax” upper payback limit and the bounds of that upper payback limit in the NERC Glossary. BPA asserts that without this language in the definition, the ATEC payback does not have an upper bound, which could cause some significant unscheduled flows in the interconnection, because a balancing authority with a large primary inadvertent accumulation could pay most of it off within a three hour period.

    32. While supporting the objective of Reliability Standard BAL-001-2, Powerex expresses concern that “the `inadvertent interchange' permitted by the modified standard will have a material, adverse impact on the western transmission markets subject to the Commission's jurisdiction . . . [and] Powerex believes that features of the proposed standard could be used to harm competition to the detriment of both transmission customers and system reliability.” 46 Powerex argues that the Balancing Authority ACE Limit “creates opportunities for commercially-interested [balancing authorities] to deliberately reduce their control of imbalances, effectively leaning on the grid to balance their systems. Such activity creates unscheduled flows on adjacent systems that can inequitably and inefficiently curtail the transmission capacity available to the transmission customers that have paid to use the transmission system.” 47

    46 Powerex Comments at 7.

    47Id. at 8.

    33. Powerex urges the Commission to “take additional steps to ensure that implementation of the BAAL requirement does not thwart the provision of open access transmission service in accordance with Commission policies.” 48 Specifically, Powerex states that the Commission should “direct NERC to supplement its petition with information regarding any rules or requirements that may be in place to protect against potential curtailments of transmission customers due to unscheduled flows associated with BAAL ACEs.” 49 Additionally, Powerex asserts that NERC's informational filing should describe instances in which unscheduled flows associated with the Balancing Authority ACE Limit required curtailment of transmission customers or other mitigation measures, and that this information should be provided every six months during the initial two year implementation period. Powerex also asks the Commission to “provide guidance concerning the creation of deliberate [balancing authority] imbalances,” require balancing authorities to disclose ACE and Balancing Authority ACE Limit information, and direct NERC to implement safeguards to ensure that balancing authorities reduce their ACEs before the curtailment of transmission customers.50 Tri-State agrees with Powerex's comments.

    48Id. at 9.

    49Id. at 22.

    50 Powerex Comments at 24-29.

    34. EEI, Indicated RTOs and Duke suggest limiting the informational filing to the Western Interconnection. Indicated RTOs state that “there has been a decline in the number of time error corrections in the Eastern Interconnection during the course of the field trial. These outcomes suggest that BAL-001-2 works as intended, and does not trigger issue with respect to inadvertent interchange, at least in the Eastern Interconnection.” 51 EEI asserts that unscheduled power flows and inadvertent interchange “have not been an issue within the Eastern Interconnection Field Trial, which has been in place now for nearly ten years. During this trial, approximately two-thirds of the Eastern Interconnection operated under the BAAL measure without issue. Therefore, EEI does not envision problems arising.” 52 Similarly, Duke notes that the Field Trial Report specifically states that unscheduled power flows were not cited as problems within the Eastern Interconnection.53

    51 Indicated RTOs Comments at 5.

    52 EEI Comments at 4 (citing Field Trial Report at 13).

    53 Duke Comments at 4 (citing Field Trial Report at 13).

    35. NaturEner addresses the time component of the Balancing Authority ACE Limit, an issue not raised in the NOPR. NaturEner states that the 30 consecutive clock-minute limitation on the time during which a balancing authority's Reporting ACE can exceed its Balancing Authority ACE Limit should be extended to 60 consecutive clock-minutes. NaturEner asserts that the 30 minute time period provides insufficient time for a balancing authority to use market mechanisms to resolve imbalance events.54 Further, NaturEner states that if Reliability Standard BAL-001-2 is approved in its current form, the Commission should “include severe loss of wind events as qualifying events under BAL-002, thereby qualifying such events as allowable contingency reserve events under which contingency reserves may be called upon.” 55

    54 NaturEner Comments at 1.

    55Id. at 2-3.

    Commission Determination

    36. The Commission adopts the NOPR proposal regarding NERC's submission of an informational filing. We determine that the field trial NERC conducted for Reliability Standard BAL-001-2 raised sufficient concerns regarding unscheduled power flows and inadvertent interchange to warrant NERC's continued monitoring and submission of an informational filing 90 days after the end of the two-year period following implementation, as proposed in the NOPR. Further, we find that the informational filing should encompass both the Western and Eastern Interconnections, as there were concerns about possible increases of SOL/IROL exceedances in both Interconnections.56 EEI supports limiting the informational filing to the Western Interconnection, stating that the Balancing Authority ACE Limit has “been extensively used [in the Eastern Interconnection] for many years without issue.” 57 However, the Commission believes that including both Interconnections is reasonable, because less than 20 percent of balancing authorities in the Eastern Interconnection were in the field trial.58

    56 NYISO supports the inclusion of the Eastern Interconnection within the scope of the information filing. NYISO described the fundamental concern that “BAL-001-2 will allow balancing authorities to have a very large deviation from an Area Control Error (“ACE”)—and potentially negatively affect reliability—yet still be compliant with the dynamic values of the [Balancing Authority ACE Limits calculated pursuant to the proposed Reliability Standard.” NYISO Comments at 1.

    57 EEI Comments at 1-2.

    58 Twenty-seven balancing authorities participated in the Western Interconnection field trial and eleven in the Eastern Interconnection. Field Trial Report at 11, 14.

    37. We are not persuaded by NERC's objection to the informational filing, that the field trial “produced no conclusive results that large ACE swings are correlated with unscheduled power flow and Inadvertent Interchange causing SOL/IROL exceedances.” 59 While the field trial may not have been “conclusive,” the information in the report indicates the possibility of a correlation between large ACE swings and unscheduled power flows that warrant further study and analysis. Thus, we agree with the commenters who observed that the field trial demonstrated clear potential for the Balancing Authority ACE Limit to cause unscheduled power flows and inadvertent interchange that could lead to SOL/IROL problems.60 While the Field Trial Report suggests that unscheduled flow events in the Western Interconnection may have occurred due to a number of factors, the Report does not eliminate large ACE swings as the cause.61 Accordingly, we conclude that the matter warrants further study and analysis, as directed.

    59 NERC Comments at 8.

    60 Tri-State Comments at 5, APS Comments at 3, EEI Comments at 4, Duke Energy Comments at 3-4, WAPA Comments at 3-4, Powerex Comments at 7, NYISO Comments at 1-2 and BPA Comments at 7-8.

    61 NERC Field Trial Report at 16-17, 20.

    38. We acknowledge NERC's commitment to take a “first step” to address the Commission's concerns by providing baseline data, including SOL/IROL exceedances where a balancing authority's ACE was within its Balancing Authority ACE Limit. However, we agree with those commenters who urge the Commission to require NERC to provide more data than described in the NOPR. Therefore, we direct NERC to make an informational filing 90 days after the end of the two-year period following implementation that includes an analysis of data (all relevant events or a representative sample) on whether experience with the Balancing Authority ACE Limit in the first two years after approval has seen ACE swings and unscheduled power flows or inadvertent interchange that could cause SOL/IROL exceedances. However, if it is evident that during this two-year period the issues discussed above are creating SOL/IROL exceedances NERC should provide that information to the Commission, together with appropriate recommendations for mitigation, as this information becomes available. Further, NERC should also make the underlying data available to Commission staff upon request. Regarding BPA's concerns about the interplay of Reliability Standards BAL-001-2 and BAL-002-1, the Commission believes those concerns are best addressed if and when NERC files with the Commission proposed changes to Reliability Standard BAL-002-1. However, we expect NERC to retain the data pursuant to the analysis directed above so that it will be available, if needed, to examine the effect of Reliability Standard BAL-002-1 in relation to the Balancing Authority ACE Limit in the future.62

    62 We leave it to NERC's discretion whether to include in the informational filing time error correction data, as suggested by the Indicated RTOs. (See Indicated RTOs Comments at 5-6.)

    39. Based on the record before us, the Commission is not persuaded by Powerex's assertion that Reliability Standard BAL-001-2 allows inadvertent interchange that “will have a material, adverse impact on the western transmission markets.” 63 Further, there is no support in the record for Powerex's claim that there is evidence that during the field trial market participants seized “opportunities . . . to deliberately reduce their control of imbalances, effectively leaning on their systems . . . resulting in an increase in unscheduled flows and degradation of transmission service in the region.” 64 Powerex's broad assertions lack factual support in the record of this proceeding and are largely speculative.

    63 Powerex Comments at 7.

    64Id. at 8.

    40. We also note that Powerex presented an analysis of the impact of the Balancing Authority ACE Limit on unscheduled flow on the California Oregon Intertie to WECC's Unscheduled Flow Administrative Subcommittee. The WECC staff assessment of Powerex's analysis concluded that “[t]he results of the Powerex analysis are valid only within the assumptions they have made, but based upon actual path flow data we believe the assumptions are incorrect and lead to large overestimations of the RBC (Balancing Authority ACE Limit) impact on Unscheduled Flow.” 65 Powerex's reliance on the increase in e-tag curtailments across Path 36 (“TOT3” in eastern Wyoming and Colorado) noted in the WECC Performance Work Group's December 2011 Quarterly Report on the RBC Field Trial as demonstrating that its concerns are “neither speculative or theoretical” is similarly unpersuasive.66 The existence of e-tag curtailments during the field trial does not establish a causal connection with the Balancing Authority ACE Limit, because other factors, such as outages at the San Onofre Nuclear Generating Station unit in California; poor hydro conditions in Northern California; and other outages impacting energy import to California may have contributed to the curtailments. However, this uncertainty reinforces the need for the informational filing and additional study directed herein.

    65 NERC May 9, 2014 Supplemental Filing at 5, n.8 (citing Reliability-based Control Field Trial Report presented at January 2013 WECC Board of Directors meeting at 32) (available at: https://www.wecc.biz/Administrative/Board%20Packet%20January%2023%202013.pdf.)

    66 Powerex Comments at 17.

    41. We determine that Powerex's concerns about the possible adverse impacts from Reliability Standard BAL-001-2 on reliability, as well as competition and transmission markets, are unpersuasive. While expressing concern about the reliability risks associated with implementing Reliability Standard BAL-001-2, Powerex acknowledges that the extent to which the reliability risks it describes “will materialize remains to be seen.” 67 Instead, we agree with NERC that “[t]he field trial report finds that the results to date demonstrate that the correlation between Requirements R1 and R2 of Reliability Standard BAL-001-2 drive corrective actions to support Interconnection frequency and reliability.” 68 With respect to Powerex's concerns about the possibility that “gaps” in Reliability Standard BAL-001-2 could be “exploited to the detriment of transmission customers,” we encourage Powerex to engage in the ongoing monitoring effort and bring any specific instances of deliberate misconduct to the Commission's attention if they occur.69

    67Id. at 20.

    68 Field Trial Report at 1.

    69 Powerex Comments at 9.

    42. We do not adopt NaturEner's proposal that the 30 consecutive clock-minute time component should be extended to no less than 60 consecutive clock-minutes to allow the use of market mechanisms to address imbalance events. We note that in the Technical Conclusion section of the Field Trial Report the standard drafting team concluded that “[t]he selection of 30 consecutive clock minutes is appropriate and actually improves reliability.” 70 This conclusion is supported in the Field Trial Report by an adequate justification for the 30 consecutive clock-minute time period:

    70 Field Trial Report at 19.

    [S]imilar to the approach taken to address an IROL where operators are provided 30 minutes to assess options for mitigation, the team chose to use the more conservative limit of 30 minute, well within the risk-based criteria of the next resource loss, while also providing appropriate time for the operator to assess the current situation and take corrective actions as needed. Actual experience operating under the proposed standards has met with the support of all participating Real-time system operators.71

    71Id. The Commission notes that in accordance with Reliability Standard IRO-009-1 Requirement R2 and the definition for Interconnection Reliability Operating Limit Tv in the NERC Glossary, the 30 minute period is provided for operators to assess and implement options for mitigation of an IROL.

    In light of this justification and our directive to NERC to monitor the implementation of Reliability Standard BAL-001-2 and submit an informational filing, we believe that NaturEner's request for annual reviews of the 30 consecutive clock-minute time component is unnecessary.72

    72 Regarding NaturEner's comment that the Commission should require that “severe loss of wind events” be considered Qualifying Events under BAL-002, we decline to do so in this rulemaking. NaturEner Comments at 9. NaturEner may raise its concern in NERC's current project to revise Reliability Standard BAL-002.

    43. The Commission is persuaded by BPA's comments that a revision to the definition of Reporting ACE is warranted. In its petition, NERC states that currently-effective Reliability Standard BAL-001-1 includes a WECC regional variance which has been incorporated into the continent-wide Reliability Standard BAL-001-2 through the definition of Reporting ACE. However the definition of Reporting ACE does not include the “Lmax” upper payback limit and the bounds of that upper payback limit in the definition. Accordingly, the Commission directs NERC to revise the definition of Reporting ACE to include the “Lmax” upper payback limit and the bounds of that upper payback limit prior to the effective date of Reliability Standard BAL-001-1.

    B. Need for a Regional Variance NOPR

    44. In the NOPR, the Commission sought comment on whether a regional variance would be necessary for those regions that experienced adverse impacts from inadvertent interchange during the field trial. The NOPR observed that the Western Interconnection applies a limit of four times a balancing authority's L10 to limit ACE deviations from balancing authority flows that negatively impact the transmission system.

    Comments

    45. WAPA and BPA state that the Commission should direct NERC to include a regional variance to establish limits to the Balancing Authority ACE Limits for balancing authorities in the WECC before BAL-001-2 is implemented in the Western Interconnection. BPA states that currently in the Western Interconnection a limit of 4 times L10 is used, due to concerns with unscheduled flow. BPA states that WECC should continue to use this limit until a new limit is established.73 Rather than a regional variance, Indicated RTOs state that a regional standard, or adjustments allowed by Reliability Standard BAL-001-2 to address inadvertent interchange, would be preferable.

    73 BPA Comments at 8. BPA states that NERC will need to retain the definition of L10 after currently-effective Reliability Standard BAL-001-1 is retired. Id.

    Commission Determination

    46. The Commission is not persuaded that there is a need for a regional variance for Reliability Standard BAL-001-2 for use in the Western Interconnection. NERC stated in its NOPR comments that NERC will develop a regional variance, or a modification to Reliability Standard BAL-001-2, should NERC's analysis following the implementation of the Reliability Standard confirm the need for either measure.74 We determine that NERC has described a sound approach for addressing this issue.

    74 NERC Comments at 9.

    V. Information Collection Statement

    47. The Office of Management and Budget (OMB) regulations require that OMB approve certain reporting and recordkeeping (collections of information) imposed by an agency.75 Upon approval of a collection of information, OMB will assign an OMB control number and expiration date. Respondents subject to the filing requirements of this rule will not be penalized for failing to respond to these collections of information unless the collections of information displays a valid OMB control number.

    75 5 CFR 1320.11.

    48. The Commission is submitting these reporting and recordkeeping requirements to OMB for its review and approval under section 3507(d) of the Paper work Reduction Act. The NOPR solicited comments on the Commission's need for this information, whether the information will have practical utility, the accuracy of the provided burden estimate, ways to enhance the quality, utility, and clarity of the information to be collected, and any suggested methods for minimizing the respondent's burden, including the use of automated information techniques. No comments were received.

    49. This final rule approves revisions to Reliability Standard BAL-001-2. NERC states in its petition that the Reliability Standard defines a new term: Balancing Authority ACE Limit, which is unique for each balancing authority and provides dynamic limits for a balancing authority's ACE value as a function of the Interconnection frequency.76 NERC states that the Reliability Standard improves reliability by adding a frequency component to the measurement of a balancing authority's ACE, and allows for the formation of “Regulation Reserve Sharing Groups.” NERC's Reliability Standard requires a balancing authority to balance its resources and demand in real-time so that the clock-minute average of its ACE does not exceed its Balancing Authority ACE Limit for more than 30 consecutive clock-minutes. Furthermore, NERC states that Reliability Standard BAL-001-2 and accompanying definitions include the benefits of the Automatic Time Error Correction equation in the WECC-specific regional variance in Reliability Standard BAL-001-1.77 The Reliability Standard and related reporting requirements are applicable to balancing authorities and regulation reserve sharing groups.

    76 NERC Petition at 12.

    77Id. at 2.

    50. Public Reporting Burden: Our estimate below regarding the number of respondents is based on the NERC Compliance Registry as of October 17, 2014. According to the NERC Compliance Registry, there are 71 balancing authorities in the Eastern Interconnection, 34 balancing authorities in the Western Interconnection and one balancing authority in the Electric Reliability Council of Texas (ERCOT). The Commission bases individual burden estimates on the time needed for balancing authorities to develop tools needed to facilitate reporting that is required in the Reliability Standard. These burden estimates are consistent with estimates for similar tasks in other Commission-approved Reliability Standards. The following estimates relate to the requirements for this final rule in Docket No. RM14-10-000.

    FERC-725R, Modifications in Final Rule in RM14-10-000 Final Rule 78 Number of
  • respondents
  • Annual
  • number of
  • responses per
  • respondent
  • Total number of responses Average burden & cost per
  • response
  • Total annual
  • burden hours &
  • total annual cost 79
  • Cost per
  • respondent
  • ($)
  • (1) (2) (1)*(2) = (3) (4) (3)*(4) = (5) (5) ÷ (1) BA/RRSG: 80 Update and Maintain Energy Management Systems 106 1 106 8 hours per response.
  • $522 (8 × $65.34).
  • 848
  • $55,332
  • $522
    BA: Record Retention 81 106 1 106 4
  • $118
  • 424
  • $12,508
  • $118
    Total 212 640 1,272
  • $67,840
  • $640

    Title: FERC-725R Mandatory Reliability Standards: Resource and Demand Balancing (BAL) Reliability Standards.

    78 Reliability Standard BAL-001-2 applies to balancing authorities and regulation reserve sharing groups. However, the burden associated with the balancing authority complying with Requirement R1 is not included within this table because the Commission accounted for it under Commission-approved Reliability Standards BAL-001-1.

    79 The estimated hourly cost (salary plus benefits) of $98.17 is based on Bureau of Labor Statistics (BLS) information of May 2013 (and available at: http://www.bls.gov/oes/current/naics2_22.htm) and is the average for an electrical engineer (NAICS 17-2071; $65.34/hour) and a lawyer (NAICS 23-1011; $128.76).

    80 BA = Balancing Authority; RRSG = Regulation Reserve Sharing Group.

    81 The $29.52/hour estimate for salary plus benefits is based on the BLS data of May 2013 for a file clerk (NAICS 43-4071).

    Action: Proposed revision.

    OMB Control No.: 1902-0268.

    Respondents: Businesses or other for-profit institutions; not-for-profit institutions.

    Frequency of Responses: On Occasion.

    Necessity of the Information: This Final Rule approves Reliability Standard BAL-001-2 pertaining to requiring balancing authorities to operate such that its clock-minute average reporting ACE does not exceed its clock-minute Balancing Authority ACE Limits for more than 30 consecutive clock-minutes. Requirement R2 provides each balancing authority a dynamic ACE limit that is a function of Interconnection frequency. Reliability Standard BAL-001-2 will provide dynamic limits that are balancing authority and Interconnection-specific. In addition, these ACE limits are based on identified Interconnection frequency limits to ensure the Interconnection returns to a reliable state when an individual balancing authority's ACE or Interconnection frequency deviation contributes undue risk to the Interconnection.

    Internal Review: The Commission has reviewed Reliability Standard BAL-001-2 and has determined that it is necessary to implement section 215 of the FPA. The requirements of Reliability Standard BAL-001-2 should conform to the Commission's expectation for generation and demand balance throughout the Eastern and Western Interconnections as well as within the ERCOT Region.

    51. Interested persons may obtain information on the reporting requirements by contacting the following: Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, Office of the Executive Director, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873].

    Comments on the requirements of this rule may also be sent to the Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503 [Attention: Desk Officer for the Federal Energy Regulatory Commission, phone: (202) 395-4638, fax: (202) 395-7285]. For security reasons, comments to OMB should be submitted by email to: [email protected] Comments submitted to OMB should include FERC-725R and Docket Number RM14-10-000.

    VI. Environmental Analysis

    52. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.82 The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in the exclusion are rules that are clarifying, corrective, or procedural or that do not substantially change the effect of the regulations being amended.83 The actions here fall within this categorical exclusion in the Commission's regulations.

    82Regulations Implementing the National Environmental Policy Act of 1969, Order No. 486, FERC Stats. & Regs., Regulations Preambles 1986-1990 ¶ 30,783 (1987).

    83 18 CFR 380.4(a)(2)(ii).

    VII. Regulatory Flexibility Act Certification

    53. The Regulatory Flexibility Act of 1980 (RFA) 84 generally requires a description and analysis of proposed rules that will have significant economic impact on a substantial number of small entities. The NOPR stated that, as shown in the information collection section, Reliability Standard Reliability Standard BAL-001-2 applies to 106 entities. Comparison of the applicable entities with the Commission's small business data indicates that approximately 23 are small business entities.85 Of these, the Commission estimates that approximately five percent, or one of these small entities, will be affected by the new requirements of Reliability Standard BAL-001-2.

    84 5 U.S.C. 601-612.

    85 This figure constitutes 21.4 percent of the total number of affected entities.

    54. In the NOPR, the Commission estimated that the small entities that will be affected by proposed Reliability Standard BAL-001-2 will incur one-time compliance cost up to $109,180 (i.e., the cost of updating and maintaining energy management systems), resulting in cost of approximately $1,030 per balancing authority and/or Regulation Reserve Sharing Groups. The Commission has revised the cost for small entities that will be affected by Reliability Standard BAL-001-2 and estimates that small entities will incur a one-time compliance cost up to $55,332 (i.e., the cost of updating and maintaining energy management systems), resulting in cost of approximately $522 per balancing authority and/or Regulation Reserve Sharing Group. These costs represent an estimate of the costs a small entity could incur if the entity is identified as an applicable entity. The Commission does not consider the estimated cost per small entity to have a significant economic impact on a substantial number of small entities. The Commission did not receive any comments regarding this aspect of the NOPR. Based on the above, the Commission certifies that this Final Rule will not have a significant economic impact on a substantial number of small entities. Accordingly, no regulatory flexibility analysis is required.

    VIII. Document Availability

    55. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

    56. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number excluding the last three digits of this document in the docket number field.

    57. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at (202) 502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected]

    IX. Effective Date and Congressional Notification

    58. This Final Rule is effective June 22, 2015. The Commission has determined, with the concurrence of the Administrator of the Office of Information and Regulatory Affairs of OMB, that this rule is not a “major rule” as defined in section 351 of the Small Business Regulatory Enforcement Fairness Act of 1996.86 The Commission will submit the final rule to both houses of Congress and to the General Accountability Office.

    86See 5 U.S.C. 804(2).

    By the Commission.

    Issued: April 16, 2015. Nathaniel J. Davis, Sr., Deputy Secretary.
    [FR Doc. 2015-09227 Filed 4-21-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 1 and 16 [Docket No. FDA-2013-N-0365] Administrative Detention of Drugs Intended for Human or Animal Use; Correction AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Final rule; correction.

    SUMMARY:

    The Food and Drug Administration (FDA) is correcting a final rule entitled “Administrative Detention of Drugs Intended for Human or Animal Use” that appeared in the Federal Register of May 29, 2014 (79 FR 30716). The rule sets forth the procedures for detention of drugs believed to be adulterated or misbranded and amends the scope of FDA's part 16 regulatory hearing procedures to include the administrative detention of drugs. The rule published with incorrect statements regarding the impact of the final rule on small entities. This document corrects those errors.

    DATES:

    Effective April 22, 2015 and applicable beginning June 30, 2014.

    FOR FURTHER INFORMATION CONTACT:

    Emily Leongini, Office of Regulatory Affairs, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 32, Rm. 4339, Silver Spring, MD 20993-0002, 301-796-5300, [email protected]

    SUPPLEMENTARY INFORMATION:

    In the Federal Register of May 29, 2014, in FR Doc. 2014-12458, the following corrections are made:

    1. On page 30718, in the third column, under “Analysis of Impacts (Summary of the Regulatory Impact Analysis),” the last sentence of the second paragraph is corrected to read: “FDA certifies that this final rule will not have a significant economic impact on a substantial number of small entities.”

    2. On page 30719, in the first column, the third sentence of the last full paragraph is corrected to read: “We certify that this final rule will not have a significant economic impact on a substantial number of small entities.”

    Dated: April 16, 2015. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2015-09301 Filed 4-21-15; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF EDUCATION 34 CFR Part 263 RIN 1810-AB19 [Docket ID ED-2014-OESE-0050] Indian Education Discretionary Grants Program; Professional Development Program and Demonstration Grants for Indian Children Program AGENCY:

    Office of Elementary and Secondary Education, Department of Education.

    ACTION:

    Final regulations.

    SUMMARY:

    The Secretary amends the regulations that govern the Professional Development program and the Demonstration Grants for Indian Children program (Demonstration Grants program), authorized under title VII of the Elementary and Secondary Act of 1965, as amended (ESEA). The regulations govern the grant application process for new awards for each program for the next fiscal year in which competitions are conducted for that program and subsequent years. For the Professional Development program, the regulations enhance the project design and quality of services to meet the objectives of the program; establish post-award requirements; and govern the payback process for grants in existence on the date these regulations become effective. For the Demonstration Grants program, the regulations add new priorities, including a priority for native youth community projects (NYCPs), and new application requirements.

    DATES:

    These regulations are effective May 22, 2015.

    FOR FURTHER INFORMATION CONTACT:

    John Cheek, U.S. Department of Education, 400 Maryland Avenue SW., Room 3W207, Washington, DC 20202-6135. Telephone: (202) 401-0274 or by email: [email protected]

    If you use a telecommunications device for the deaf (TDD) or a text telephone (TTY), call the Federal Relay Service (FRS), toll free, at 1-800-877-8339.

    SUPPLEMENTARY INFORMATION:

    On December 3, 2014, the Secretary published a notice of proposed rulemaking (NPRM) for Indian Education Discretionary Grant Programs; Professional Development Program and Demonstration Grants for Indian Children Program in the Federal Register (79 FR 71930-71947).

    In the preamble of the NPRM, we discussed on pages 71931 through 71938 the major changes proposed in that document to improve the Professional Development program and the Demonstration Grants program. These included the following:

    • Amending § 263.3 to change the definitions of “Indian organization,” “induction services,” and “professional development;” and to remove the term, “undergraduate degree.”

    • Amending § 263.4 to provide greater detail about the kinds of training costs that may be covered under the Professional Development program.

    • Amending § 263.5 to revise the competitive preference priorities for tribes, Indian organizations, and Indian institutions of higher education (IHE); to amend pre-service priorities to include project-specific goals; and to require applicants to submit a letter of support from an entity in the applicant's service area agreeing to consider program graduates for qualifying employment.

    • Amending § 263.6 to remove fixed points assigned to each criterion; to include in the regulations only program-specific factors and to eliminate the factors that are separately codified in 34 CFR 75.210; and to revise the selection criteria.

    • Amending § 263.7 to specify that participants who do not return from a leave of absence by the end of the grant period will be considered not to have completed the program for the purposes of project performance reporting.

    • Amending § 263.8 to consolidate all of the regulatory provisions that govern the payback process, currently in § 263.8 through § 263.10, into § 263.8.

    • Amending § 263.9 to specify the two types of deferral that are available: Education and military service; to add a provision for military deferrals; and to remove the provision stating that payback begins within six months of program completion.

    • Amending § 263.10 to eliminate the work-related payback plan and the requirement that eligible employment must be continuous.

    • Amending § 263.11 to add a requirement for grantees to conduct a payback meeting with each participant; to require that grantees report participant and payback information to the U.S. Department of Education (Department); to require the grantee to obtain a signed payback agreement from each participant and submit it to the Department; to require that grantees assist participants in finding qualifying employment after completing the program; and to clarify that the hiring preference provisions of the Indian Self-Determination and Education Assistance Act apply to this program.

    • Amending § 263.12 to add to the criteria we use in making continuation awards; and to clarify that we may reduce continuation awards based on a grantee's failure to meet project goals.

    • Amending § 263.20 to modify the definition of “Indian organization”; and to add a definition of “native youth community project.”

    • Amending § 263.21 to remove the set number of competitive preference priority points; to revise the priority for applications submitted by Indian entities in paragraph (b), and to propose in paragraph (c) five new priorities, including one for native youth community projects.

    • Adding § 263.22 to include application requirements for the Demonstration Grants program.

    • Adding § 263.23 to clarify that the hiring preference provisions of the Indian Self-Determination and Education Act apply to this program.

    These final regulations contain changes from the NPRM, which are fully explained in the Analysis of Comments and Changes section of this document.

    Public Comment: In response to our invitation in the NPRM, 15 parties submitted comments on the proposed regulations. We discuss substantive issues under the section number of the item to which they pertain. Several comments did not pertain to a specific section of the proposed regulations. We discuss these comments based on the general topic area. Generally, we do not address technical and other minor changes.

    Analysis of Comments and Changes: An analysis of the comments and of any changes in the regulations since publication of the NPRM follows.

    General Comments

    Comments: Several commenters expressed strong support for the changes in the NPRM generally. One commenter requested that the Secretary issue a tribal consultation policy.

    Discussion: We appreciate the support for the changes to the Professional Development program and the Demonstration Grants program. The tribal consultation policy is outside the scope of this rulemaking. However, we are in the process of developing an updated tribal consultation policy. During this process, we are consulting with tribes, in accordance with the requirements of Executive Order 13175. We expect to publish this revised policy during FY 2015.

    Changes: None.

    Professional Development Program General

    Comments: Several commenters expressed support for the Professional Development program, and gave examples of impressive results from past grants, which have expanded the number of American Indian teachers in tribal communities.

    Discussion: We appreciate the support for this program.

    Changes: None.

    Comment: One commenter asked that we ensure active collaboration among grantees, tribes, and local schools to ensure that the training provided under the grants meets the educational needs of local communities.

    Discussion: We expect that the competitive priority for consortia that include a tribal entity (§ 263.5(a)), the new priority for applicants with a letter of support from a school district or other entity that will consider hiring graduates of this project (§ 263.5(b)(3)), and the new selection criteria for need that relates to employment opportunities and shortages in certain fields (§ 263.6(a)), will all contribute to the commenter's expressed goal.

    Changes: None.

    Eligible Applicants (§ 263.2)

    Comments: Several commenters objected to the requirement that a tribal applicant (tribe or Indian organization) be required to apply in consortium with an IHE. One commenter asked that we allow a period of time after funding in order for a grantee to obtain a partner IHE. Another commenter asked that we define “in consortium with an institution of higher education,” in terms of the level of commitment required from the IHE, and suggested we permit an Indian organization to apply as a sole applicant without an IHE. This commenter also asked whether an Indian organization can apply with more than one IHE, and if so, what is required to demonstrate the partnerships.

    Discussion: The statute requires that any eligible entity that is not an IHE (other than a Department of the Interior Bureau of Indian Education (BIE)-funded school) must apply in consortium with an IHE (section 7122 of the ESEA), and we cannot change that statutory requirement. That eligibility requirement also precludes us from permitting grantees to obtain a partner IHE after grants are made; for entities required to be in a consortium with an IHE in order to be eligible for a grant, the application must be from the consortium.

    With regard to the level of commitment required from the IHE, we do not believe it is necessary to prescribe the details of an arrangement with an IHE. To demonstrate an eligible consortium, the applicant must submit a consortium agreement that complies with the requirements of 34 CFR 75.127-129, including the requirement that the agreement detail the activities to be performed by each member, and bind each member to every statement and assurance in the application. The IHE is the entity that will provide the actual education and training to Indian individuals to enable those individuals to teach in or administer schools serving Indians. By receiving a federally-funded education, these individuals do not need to take on loans and other financial obligations that can be onerous and can often dissuade students from pursuing a career in education. The level of commitment required by the IHE is large; the IHE educates and trains the participants, granting them the degree needed to teach or administer in accordance with State requirements. Often the IHE is the entity that recruits the students, assists with job placement, provides support services during the first year of a participant's teaching or administrative job, and complies with the grantee reporting requirements. However, an eligible entity partner such as an Indian organization or other nonprofit could provide these required support services under the Professional Development grant. It is possible for an eligible entity to apply in consortium with more than one IHE.

    Changes: None.

    Comment: One commenter asked that eligibility for these grants be expanded to include national non-profit organizations.

    Discussion: The eligibility requirements are statutory (see section 7122 of the ESEA) and we cannot expand eligibility beyond the statutory authority.

    Changes: None.

    Comment: One commenter asked whether two local educational agencies (LEAs) and a particular land grant college that does not target Native students could serve as partners for the Professional Development program under the proposed changes. The commenter also asked whether a regional education association (REA) is eligible to apply.

    Discussion: Any number of eligible entities, in consortium with an eligible IHE, can join together to apply for a Professional Development grant. The IHE must be accredited to provide the coursework and level of degree required by the project, as specified in § 263.2(c). The IHE does not have to target or serve primarily Native students; however, in order to receive the priority for an application submitted by an Indian entity, the IHE must be an Indian IHE that meets the definition in § 263.3. A consortium applicant must submit a consortium agreement that complies with the requirements of 34 CFR 75.127-129. With regard to the eligibility of an REA, that entity would need to meet the definition of one of the eligible entities: IHE, State educational agency (SEA), LEA, Indian tribe or Indian organization, or BIE-funded school, and would need to partner with an eligible IHE.

    Changes: None.

    Definitions (§ 263.3)

    Comments: Several commenters supported the broader definition of “Indian organization” that provides eligibility to organizations that have education as one of their purposes, rather than the sole purpose. One commenter asked that we ensure that the expansion of the definition would not preclude existing grantees from receiving funds.

    Discussion: We agree that the broader definition better serves the purposes of this program. The change in definition will not affect existing grantees, which will continue to be eligible for continuation awards. It also will not affect past grantees that qualified under the more narrow definition and will continue to be eligible if they apply for a new grant.

    Changes: None.

    Comments: A few commenters asked that the definition of “Indian institution of higher education” be expanded to include Native American Serving Non-Tribal Institutions (NASNTIs).

    Discussion: “Indian IHE” is currently defined in § 263.3 of these regulations, and includes only tribal colleges and universities. NASNTIs are defined in Title III, Parts A and F, of the Higher Education Act, to mean IHEs that are not tribal colleges or universities, but that meet certain eligibility requirements, including a minimum number of enrolled students who are Native American. We decline to change the definition of “Indian IHE” for ESEA because, while the term “Indian IHE” is not defined in the ESEA, we believe that the plain meaning of the statutory term is limited to tribal colleges and universities, as reflected in our regulations.

    Changes: None.

    Priorities (§ 263.5)

    Comments: Several commenters asked that the priority for Indian entities in § 263.5(a) be expanded to include NASNTIs. These commenters stated that NASNTIs are often located in close proximity to tribal communities, and gave examples, including an institution that was founded in response to local tribal needs for qualified teachers in reservation schools, and another institution that educates and trains large numbers of native students to serve as teachers on a reservation. One commenter asked that the priority include NASNTIs that partner with a tribal college, for example, when students feed from a two-year tribal college into a four-year NASNTI. Another commenter requested that the priority include all IHEs that predominantly serve Native students.

    Discussion: We agree with the commenter that many NASNTIs fulfill an important role in educating Native students to serve as teachers in tribal communities. However, Congress specifically identified in section 7143 of the ESEA the group of entities to which we must give priority (Indian tribes, Indian organizations, and Indian IHEs). This group does not include NANSTIs, and we decline to expand the priority for Indian entities to include NASNTIs. Furthermore, because non-Indian IHEs, including those designated as NASNTI, received almost half of all awards under this grant program over the past three years, we decline to add an additional priority for NASNTIs.

    Changes: None.

    Comments: Several commenters objected to the consolidation of the two existing priorities (in current § 263.5(a) and (b)) in proposed § 263.5(a)); previously, one priority was for applications from any tribal entity, and one priority was for a consortium that includes an Indian IHE as fiscal agent.

    Discussion: We agree with the comments about the difficulties caused by our proposal to combine the two existing priorities into one. The statute requires that we give priority to applications from all three types of tribal entities: Tribes, Indian organizations, and Indian IHEs. As proposed, the combined priority could result in a tribal entity that is part of a consortium, but is not the fiscal agent or lead applicant, not receiving a preference. However, when an Indian IHE or other Indian entity is the lead applicant in a consortium, that entity has more influence in directing and administering the grant. Therefore we are revising the regulations to create two separate priorities rather than the proposed combined one.

    The first priority, in § 263.5(a)(1), gives preference to an Indian entity—tribe, organization, or IHE—either applying alone, or in a consortium for which it serves as the lead applicant. The second priority, in § 263.5(a)(2), is for an Indian entity that is part of a consortium but is not the lead applicant. This will satisfy the statutory requirement to give priority to the three types of Indian entities, while enabling us to provide a competitive preference to applications for which the Indian entity is the sole or lead applicant. An applicant cannot receive competitive preference points under both of these priorities.

    Changes: We have revised § 263.5(a) to create two separate competitive preference priorities. The first is for an Indian entity—tribe, organization, or IHE—either applying alone or as lead applicant in a consortium. The second is for an Indian entity that is part of a consortium but is not the lead applicant.

    Comment: One commenter was concerned about the requirement that a consortium applicant would be eligible for the priority in proposed § 263.5(a) only if an Indian IHE leads the consortium as fiscal agent. The commenter stated that the high overhead costs of IHEs limit the funding delivered directly to the program, and that the requirement would limit flexibility for an entity that trains teachers and administrators by working with a variety of IHEs to provide the required coursework. This commenter suggested that, alternatively, an Indian organization should be able to serve as lead applicant or fiscal agent in a consortium, and be eligible for the priority.

    Discussion: Our goal was to ensure that, in order to receive competitive preference points, a consortium would be led by an Indian entity. We agree with the commenter, however, that the proposed requirement that the lead of the consortium must be an IHE was too narrow. We agree that it is possible for an Indian organization to operate a Professional Development grant in consortium with an IHE, and for the Indian organization to be the actual lead entity for the project. The same is true for a tribe as lead applicant. The tribe or Indian organization would receive the grant and provide the funding to the IHE to pay for the cost of the participants' education. We agree that this could result in more direct funding for student training. Therefore, we are revising the priority in § 263.5(a)(1) to permit a consortium to receive a competitive preference if the lead applicant is an Indian tribe, Indian organization, or Indian IHE. Before awarding priority points, we will examine the proposed project and activities to ensure that the Indian entity will in fact be serving as lead entity for the project.

    Changes: We have revised § 263.5(a)(1) to provide that a consortium may receive a competitive preference if the lead applicant is an Indian tribe, Indian organization, or Indian IHE.

    Comment: None.

    Discussion: During our internal review we reexamined the proposed requirement that the Indian entity leading a consortium must be the fiscal agent in order to receive priority points. While not common, we recognize that it is possible to have a fiscal agent that is not the lead applicant. Accordingly, in § 263.5(a)(1) we are revising the proposed requirement that an Indian entity be the “fiscal agent,” to instead require that the Indian entity be the lead applicant, which is the entity that receives the grant.

    Changes: We have revised § 263.5(a) to change the preference for consortia in which the fiscal agent is an Indian entity, to consortia in which the lead applicant is an Indian entity.

    Comments: Several commenters were generally concerned that the proposed priority in § 263.5(a) would prevent entities other than tribal entities from obtaining grants.

    Discussion: Due to the confusion evident in some comments, we are clarifying that the priorities in § 263.5(a) for tribal entities are competitive preference priorities. We will not use those priorities as absolute priorities, but we will use them as competitive preference priorities in each year of a new competition. If they were absolute priorities, then a non-tribal IHE would not be eligible to receive a grant, which would be inconsistent with the statutory list of eligible entities. This is different from the priorities in § 263.5(b), which we can designate as absolute or competitive in any year, or can decline to use.

    Changes: We have revised § 263.5(a) to clarify that the priorities for tribal entities are competitive preference priorities.

    Comments: One commenter objected to removing the point values from the priorities for applications submitted by Indian entities, arguing that it would cause confusion for applicants and that applicants may not have timely information about eligibility requirements. Another commenter was opposed to removing the five-point priority for tribal colleges. Another commenter suggested that we rely upon letters of support to show collaboration but not assign preference points for partnerships.

    Discussion: We removed the specific number of points from the priorities for Indian entities, including the five points for tribal colleges, so that we have the flexibility to assign more (or fewer) points in a particular grant competition. This will allow us to provide additional points as needed in any application year to ensure that tribal entities, including tribal colleges, are eligible to receive a competitive preference. We do not believe this will confuse applicants. For each year in which we have a competition for new awards, we will announce the points for the tribal entity preferences in the notice inviting applications. Typically the notice is published 60 days in advance of the application deadline.

    With regard to the comment objecting to the awarding of competitive preference points for partnerships, eligible entities for this program include consortia, and we are required by statute to give priority to Indian entities; thus consortia that include such Indian entities will receive priority under revised § 263.5(a). An Indian IHE, however, that applies as the lead applicant in a consortium would receive no advantage, under § 263.5(a), over an Indian IHE that is the sole applicant, because both scenarios are included in § 263.5(a)(1) and would receive an equal number of competitive preference points. With respect to letters of support, § 263.5(b)(3) adds a new priority for applicants that include in their applications a letter of support from an entity, including a local school district, that agrees to consider program graduates for qualifying employment. We believe that such letters of support strengthen the likelihood that graduates will find employment in schools serving Indian students following their training.

    Changes: None.

    Comments: One commenter asked whether we are removing the absolute priority for pre-service training. Several commenters requested that we permit the use of funds to support and train Indian individuals in obtaining masters and doctoral degrees under the priorities in proposed § 263.5(b) for pre-service training for teachers and administrators.

    Discussion: We have not removed the priority for pre-service training, and in any grant competition in which the Department uses this priority, we retain the discretion to designate that priority an absolute priority (see § 263.5(b)).

    With regard to masters and doctoral degrees, funds under the Professional Development program can be used to support a student in obtaining any degree that is required by the State for the teaching or administrative position for which individuals are being trained. However, the focus of this program is on preparing teachers and administrators for elementary and secondary education. The current regulations include graduate degrees as part of the definitions of “full-time student” and “pre-service training” in § 263.3, and we have not changed those definitions. However, we are providing further clarification in the priorities for pre-service training for teachers and administrators by removing the references to bachelor's degrees for teachers and master's degrees for administrators so that a student pursuing a higher-level degree may be supported as a participant under this program if that degree is required for a specific position. However, because we interpret the statute to support only the preparation of teachers and administrators in elementary and secondary education, we are not expanding the scope of the program to include doctoral degrees for Indian students seeking employment in higher education.

    Changes: We have revised the priorities for pre-service training in proposed §§ 263.5(b)(1) and (2) to remove the references to a “bachelor's degree” for pre-service teacher training, and, for administrator training, changing the reference from “master's degree” to “graduate degree.”

    Comments: None.

    Discussion: During our internal review we analyzed the existing requirements in the priorities for pre-service teacher training and administrator training (in current § 263.5(c), proposed § 263.5(b)) and believe it would be helpful to clarify certain provisions. We are revising the regulation to make clear that the requirement that training be provided before the end of the award period applies to all three situations: An education degree, a subject-matter degree, and specialized training. We are removing the exception for a fifth year from the education degree provision because a review of funded projects shows that this exception is not necessary. We are also removing, in the provision on degrees in a subject area (new § 263.5(b)(1)(i)(B)), the reference to the requirement that training meet the requirements for full State certification or licensure, because it is redundant with the introductory language of that paragraph.

    Changes: We have revised the priority for pre-service training for teachers in proposed § 263.5(b)(1) by moving the reference to earning a degree before the end of the award period from proposed § 263.5(b)(1)(i)(a) to the introductory language of final § 263.5(b)(1)(i), by removing the proposed exception for a fifth year from § 263.5(b)(1)(i)(A), and by removing the reference to the requirement that training meets the requirements for full State certification or licensure from proposed § 263.5(b)(1)(i)(B).

    Selection Criteria (§ 263.6)

    Comments: One commenter objected to the job market analysis element of the selection criterion for “Need for Project” in proposed § 263.6, and stated that this would increase the burden for applicants to search for and interpret market analysis data. The commenter also requested that appropriate market analysis Web site links be made available to applicants.

    Discussion: Under the selection criterion “Need for Project” in § 263.6, we will evaluate the extent to which the proposed project will prepare personnel in specific fields, and the extent to which employment opportunities exist in the project's service area, with both elements to be demonstrated by a job market analysis. The purpose of a job market analysis is to determine whether there is a need for qualified education personnel to fill vacancies in teacher and administrator positions within the geographic region to be served. To conduct the job market analysis, applicants can use accessible data sources at the national, State and local level to determine current and future teacher and administrator shortages in selected fields. Because job market data are now generally available online, a market analysis would not increase an applicant's burden. We also note that prior applicants under the current regulations also addressed need for personnel, documenting education personnel shortages in the region to be served and designing their proposed programs accordingly.

    Accessible resources for determining teacher shortages are available at the national level; however, applicants should rely on State and local sources for more accurate and timely data. We also note that this is an element of a selection criterion, not an application requirement, so it is optional for applicants to address, although we encourage all applicants to do so.

    Changes: None.

    Payback Requirements (§ 263.8)

    Comments: Commenters supported the proposed regulations clarifying the payback requirements and procedures.

    Discussion: We appreciate the support for these changes.

    Changes: None.

    Demonstration Grants Program General

    Comments: Several commenters were generally supportive of the proposed changes to the Demonstration Grants program regulations.

    Discussion: We appreciate the support for the changes.

    Changes: None.

    Definitions (§ 263.20)

    Comments: Several commenters addressed the proposed definition of “Indian organization” as it applies to both this program and the Professional Development program; it is the same definition for both programs.

    Discussion: We address those comments under the discussion of Definitions for the Professional Development program (§ 263.3).

    Changes: None.

    Definition of Native Youth Community Project

    Comments: Several commenters supported the proposed definition of “Native Youth Community Project,” and specifically the requirement that a community come together to address the adverse experiences affecting Indian children. However, several other commenters expressed concern that the requirement for a partnership among the specified entities could adversely affect the success of some applications. For example, one commenter was concerned that some applicants do not have readily available partner organizations, which would reduce the likelihood that such applicants would receive funding.

    Discussion: We appreciate the support for encouraging partnerships among entities to more effectively address the complex barriers facing native youth. We believe that greater collaboration among the organizations increases the likelihood that an NYCP will improve the college and career readiness of Indian youth. Furthermore, we believe that proposed projects that demonstrate the existence of a partnership at the time of application are more likely to become strong, viable projects. Therefore, we disagree with the commenters who objected to the partnership requirement.

    While we cannot ensure that partnerships and agreements formed in order to apply for a grant will stand the test of time, we believe that an applicant with a formal partnership agreement will have a greater chance of success than an applicant with only letters of support. We expect that in ranking applications, reviewers will judge the quality of the partnerships presented in those application, based on the selection criteria. Moreover, a partnership that fails after being awarded a grant would not be able to show substantial progress in order to receive continuation funding.

    Changes: None.

    Comment: One commenter asked that we not give priority to applicants simply because of their geographic proximity to locally available and willing partners.

    Discussion: We agree that if a community comes together to create an NYCP, that partnership should have the flexibility to include non-local partners. A tribe and school district may wish to engage with a national nonprofit organization that is skilled in addressing the focus of the local project, whether it is academic success, drug prevention, parental engagement in schools, or any other project focus. Therefore we are broadening part of the definition of NYCP; rather than requiring the applicant or a partner to show that it has the capacity to improve outcomes for Indian students, we are requiring the applicant or a partner to demonstrate that it has the capacity to improve outcomes that are relevant to the project focus. This allows an applicant to partner with a national organization that has demonstrated the capacity to improve outcomes that are relevant to the project focus, and not be limited to locally available and willing partners. There is a statutory application requirement that projects must be based either on scientific research or on an existing program that has been modified to be culturally appropriate for Indian students (see § 263.22(a)(3). Thus, an applicant that partners with an entity that has demonstrated success with non-Indian students, and proposes to use that entity's program model, will need to explain how it has modified that program to be culturally appropriate.

    Changes: We have revised paragraph (6) of the definition of NYCP in § 263.20 to provide that an applicant or a partner must have demonstrated the capacity to improve outcomes that are relevant to the project focus.

    Comment: One commenter requested that we ensure that States and local public schools actively participate and coordinate with tribal grantees.

    Discussion: We are requiring that at least one tribe and at least one local school district be partners in a proposed project. We are not requiring State involvement, although States may be partners in a project. Because of the focus on local community-driven solutions, it would not be appropriate to require a State's involvement.

    Changes: None.

    Comments: Two commenters asked that we include tribal colleges in NYCP partnerships, and one asked that we include both tribal colleges and NASNTIs.

    Discussion: Tribal colleges are eligible entities under the Demonstration Grants program, and nothing in the regulations precludes either a tribal college or a NASNTI from being a partner in an NYCP. Although we agree that a college or university could be a valuable partner in an NYCP, we decline to make tribal colleges or any other IHEs mandatory partners in NYCPs, because the focus of these projects is a local community area, and not all tribal communities have a college in the vicinity.

    Changes: None.

    Comments: We received several comments asking whether one NYCP can include multiple tribes. We also received additional comments expressing the concern that urban communities often include Indian youth from many different tribes, and that urban applicants might face unfair challenges in partnering with tribes or their tribal education agencies because of the distance between the tribes and the urban communities in which the Indian youth live and attend school. Another commenter expressed concern that a partnering tribe would refuse to serve youth from other tribes. Some commenters specifically requested that we eliminate the requirement that applicants form a partnership with a tribe. Another commenter asked whether one tribe can participate in more than one NYCP.

    Discussion: Nothing in the definition of NYCP prohibits a project from including multiple tribes as partners. To meet the NYCP definition, applicants must identify and address significant barriers and needs within a local community. It is likely that in many areas, including urban areas, Indian youth and their families from many tribes live within a defined local community. Also, members of one tribe often live in several different communities. The entities responsible for Indian youth in the identified local community should partner with one another. We agree that certain NYCP applicants may need to partner with multiple tribes or their tribal education agencies in order to address the identified need in the local community. We are therefore clarifying in the final regulations that partnerships can include more than one tribe.

    However, we disagree with the commenters that it is unfair to urban areas to require applicants to partner with one or more tribes. The NYCPs are intended to support the involvement of tribes in the education of Indian children, which is one of the goals of title VII of the ESEA. Each project must therefore include a partnership among a school district or BIE-funded school, a tribe or its education agency, and other organizations as necessary, to address the need identified by the project. The partnering entities must agree to serve the Indian youth living in the defined local community, regardless of their tribal membership.

    With regard to whether one tribe can participate in more than one NYCP, nothing in the regulations prohibits such participation.

    Changes: We have revised paragraph (5)(i) of the definition of NYCP in § 263.20 to include one or more tribes or their tribal education agencies.

    Comment: One commenter objected to the requirement that NYCPs include a school district as a partner, arguing that this would lead to more bureaucracy and undue attention to the school district's own programs as opposed to those favored by a qualifying Indian organization.

    Discussion: We believe that schools, tribes, and Indian organizations similarly value better outcomes for Indian youth, including academic achievement and readiness for postsecondary education and employment. The NYCPs are intended to leverage the resources and capacity currently spread among tribes, LEAs, BIE-funded schools, or other organizations, through a partnership to increase the likelihood of reaching these better outcomes. We believe that, especially for communities where most American Indian/Alaska Native (AI/AN) students attend the local public schools, the inclusion of the LEA in these projects is essential to the success of the projects.

    Changes: None.

    Comment: One commenter suggested that the Department should revise the definition of NYCP to allow for a project to include a partnership with organizations such as the Boys and Girls Club of America.

    Discussion: Paragraph (5) of the NCYP definition permits community organizations to be included in a partnership. However, we do not recommend any specific community organizations as partners in an NYCP. The applicants must determine which entities are necessary partners in order to address the identified need of the Indian youth in the local community to be served by the NYCP.

    Changes: None.

    Definition of “Rural”

    Comment: One commenter requested that we add a definition of “rural” in the final regulations.

    Discussion: There is no need to define “rural” because the priority for rural applicants under § 263.21(c)(5) explains which entities are considered rural. We include further discussion of the rural priority under the Priorities section of the Analysis of Comments and Changes in this notice.

    Changes: None.

    Priorities (§ 263.21)

    Comments: Several commenters supported our proposal to expand the Demonstration Grants program beyond the two absolute priorities of early childhood and college readiness. One commenter further commended the Department for supporting complex projects to address the complex issues facing some Indian communities.

    Discussion: We appreciate the support for the priorities.

    Changes: None.

    Comments: Several commenters generally objected to the proposed revisions to the priorities in § 263.21(b), and to the parallel provision in the Professional Development regulations. One objected to removing the priority preference for consortia that include an Indian entity; another commenter objected to removing the required number of priority preference points.

    Discussion: The statute for both the Professional Development and Demonstration Grants requires that we give priority to applications from all three types of tribal entities: Tribes, Indian organizations, and Indian IHEs. We proposed to remove the priority for consortia that include a tribal entity because a tribal entity that is not a sole applicant or lead applicant in a consortium does not necessarily have the influence that a sole applicant, or lead applicant in a consortium, has. However, if we only give priority when the Indian entity is the lead applicant, it would result in a tribal entity receiving no preference when it is part of a consortium but not the lead applicant. Therefore we are creating two separate priorities for the Demonstration Grants, similar to those created for the Professional Development Grants. The first priority, in § 263.21(b)(1), gives preference to an Indian entity—tribe, organization, or IHE—either applying alone, or in a consortium or partnership if it serves as the lead applicant. The second priority, in § 263.21(b)(2), is for an Indian entity that is part of a consortium or partnership but is not the lead applicant. This will enable us to satisfy the statutory requirement to give priority to the three types of Indian entities, while retaining the ability to provide more points to applications for which the Indian entity is the sole or lead applicant. Applicants cannot receive points under both of these priorities.

    With regard to the concern about removing point values from the regulations, we have removed the five-point limitation for both priorities so that we have the flexibility to assign more (or fewer) points as needed to ensure that applicants from tribal entities have an advantage over other applicants.

    Changes: We have revised § 263.21(b) to create two separate competitive preference priorities. The first priority is for an Indian entity—tribe, organization, or IHE—either applying alone or as lead applicant in a consortium or partnership. The second is for an Indian entity that is part of a consortium or partnership but is not the lead applicant.

    Comments: One commenter objected to the revisions in § 263.21(c) that would give the Department discretion to choose specific priorities for a competition in any given year. The commenter stated that changing the priorities would make it hard for long-term grantees to create stable programs across multiple years.

    Discussion: Under § 263.21(c), the Department has the discretion to choose any of the listed priorities in any year the Department conducts a grant competition for this program. This is consistent with the previous provisions in the same paragraph, which provided that the Department could choose among three different priorities in any given year, although all of those were absolute priorities. We recognize that potential applicants will need to respond to the priorities as published under each notice inviting applications. However, grantees will have the full grant period, typically 48 months, to implement their projects. We also note that there is no guarantee that a grantee under a discretionary grant program will receive another grant under the same program at the end of its grant period. The revisions to the priorities in § 263.21(c) enable the Secretary to prioritize projects that address the needs of the target communities.

    Changes: None.

    Priority for Native Youth Community Project (NYCP) (§ 263.21(c)(1))

    Comments: Several commenters supported the proposed priority for NYCP; one commenter mentioned the benefits of collaboration between tribes and schools and noted how out-of-school environments significantly affect in-classroom success. Other commenters requested that we support parent and family engagement in funding NYCPs.

    Discussion: We appreciate the support for the NYCP priority. We agree that parent and family engagement both in school and in the community is a crucial component in efforts to improve the outcomes of all children, including Indian children and youth. Each applicant must include in its application a description of how parents of Indian children have been and will be involved in developing and implementing the proposed activities, as required by § 263.22(a)(1). In addition, an existing AI/AN parent organization or tribal parent committee could serve as a valuable partner in an NYCP.

    Changes: None.

    Priority for Grantees Under Other Programs (§ 263.21(c)(2))

    Comments: Several commenters objected to the priority for applicants that have been awarded grants under other programs. One commenter stated that Indian organizations would be unfairly excluded under this priority, which would interfere with their ability to receive funding. Another commenter stated that the priority would provide undue advantage to applicants that are already receiving Federal funds.

    Discussion: This priority is designed to increase the likelihood that funded projects will attain their goals. The Demonstration Grants program is intended to target the most persistent issues facing Indian children, and to provide models that others can use. Grantees with existing resources to leverage are likely to have greater opportunities to address the needs of Indian children and to provide models that can be disseminated broadly.

    Although we did not receive a comment requesting clarification, the proposed regulations did not state the timeframe within which applicants must have received these other awards in order to qualify for this preference. We are clarifying that, to receive preference under this priority, the lead applicant or its partner must have received an award within the last four years. A longer period of time would make it less likely that the grantee could build on the experience gained by that grant.

    Changes: We have revised § 263.21(c)(2) to provide that the applicant or one of its partners must have received an award under a selected program within the last four years in order to receive this preference.

    Comment: One commenter objected to the priority for applicants that consolidate funds through a plan that complies with section 7116 of the ESEA or other authority. The commenter argued that this preference would unduly favor tribes, which manage multiple programs, as opposed to Indian organizations that have a more narrow focus.

    Discussion: The purpose of the priority in § 263.21(c)(3) for entities that have Department approval to consolidate funds is to encourage entities to take advantage of measures available to them to reduce duplication and bureaucracy, such as the authority under section 7116 of the ESEA for consolidation of funding designed to benefit Indian students. Even though we recognize that not every eligible entity will be able to take advantage of this priority, we seek to encourage this consolidation in order to increase the impact of Federal funding by reducing duplication of effort.

    Changes: None.

    Rural Priority (§ 263.21(c)(5))

    Comments: We received several comments regarding the competitive preference priority for rural applicants. Some commenters commended our efforts to address the needs associated with rural poverty. However, other commenters stated that urban areas, like rural communities, face the challenges of poverty. Several commenters stated that projects serving urban communities and those serving rural communities should not be required to compete for funding. One commenter stated that more American Indian children live in urban than in rural areas. Several commenters argued that because the Department's Impact Aid program compensates school districts in rural areas, such districts should not receive a priority under this program. A commenter also argued that the Department should allocate more funds to Impact Aid programs in order to address rural poverty, rather than providing a priority under this program.

    Discussion: Based on the Common Core of Data reported by SEAs in school year 2012-2013, nearly one-third of AI/AN children are enrolled in rural school districts, whereas fewer than one-fourth of AI/AN children live in city school districts. Therefore, we believe that giving preference to rural districts will appropriately focus on the geographical areas with proportionately larger populations of Indian children.

    Furthermore, we believe that the solutions to educational challenges may be different in rural communities than in urban communities and that there is a need for solutions that are unique to rural communities. The scarcity of services and resources available in rural communities may require additional attention to address these needs.

    With regard to the argument concerning the Impact Aid program, we note that not all rural school districts receive Impact Aid funding, often because they do not meet the eligibility requirements. For example, compared to the more than 1,200 school districts that receive title VII formula grants for Indian students, fewer than 700 school districts receive Impact Aid funding for students residing on Indian lands. Moreover, Impact Aid funds are intended to replace lost tax revenues or increased expenses due to a Federal presence. The Impact Aid funds are considered general aid to the recipient school districts, and they may use the funds in whatever manner they choose in accordance with their local and State requirements. Thus a school district that receives Impact Aid may be as much in need of supplemental funding for Indian students through the Demonstration Grants program as any other school district.

    Changes: None.

    Comment: None.

    Discussion: During our internal review of the proposed priority for rural applicants in § 263.21(c)(5), we reviewed again whether all BIE-funded schools serve rural locales and determined that not all BIE-funded schools serve those locales. Accordingly, we are revising the regulations to add a reference to the census locale codes as the indicator for BIE-funded schools that would be considered rural for purposes of this priority.

    Changes: We have revised the language in § 263.21(c)(5) with regard to BIE-funded schools to add that, to meet the rural priority, they must be in locale codes 42 or 43, as designated by the U.S. Census Bureau.

    Application Requirements (§ 263.22)

    Comment: One commenter objected to the requirement in § 263.22(b)(2) that applicants submit a written agreement between the partners in a proposed project.

    Discussion: This is an application requirement that the Department may choose to use in any year of a new competition. For a priority such as the NYCP priority, we would select this application requirement because it would be essential for such a project to show agreement between the required partners. For other priorities, such as a priority for early learning projects, this requirement may not be appropriate. We will publish the selected application requirements in the notice inviting applications in the Federal Register.

    Changes: None.

    Comment: None.

    Discussion: During our internal review of the proposed application requirements, we noted that the requirement to submit measureable objectives in § 263.22(b)(3) insufficiently communicated the expectation for the project to use the measureable objectives in evaluating the progress toward and success in meeting its goal or goals. Accordingly, we are revising the regulations to include a project evaluation plan.

    Changes: We have revised the language in § 263.22(b)(3) to clarify that the applicant must submit, in response to a notice inviting applications published in the Federal Register, an evaluation plan that includes measureable objectives.

    Executive Orders 12866 and 13563 Regulatory Impact Analysis

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

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

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

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

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

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

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

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

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

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

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

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

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

    We are issuing these final regulations only on a reasoned determination that their benefits justify their costs. In choosing among alternative regulatory approaches, we selected those approaches that maximize net benefits. Based on the analysis that follows, the Department believes that these final regulations are consistent with the principles in Executive Order 13563.

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

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

    Discussion of Costs and Benefits: The potential costs associated with the priorities and requirements would be minimal while the potential benefits are significant.

    For Professional Development grants, applicants may anticipate costs in developing their applications and time spent reporting participant payback information in the Data Collection System (DCS). Additional costs would be associated with participant and employer information entered in the DCS, but program funds would pay for the costs of carrying out these activities.

    The benefits include enhancing project design and quality of services to better meet the program objectives, with the end result that more participants successfully complete their programs of study and obtain employment as teachers and administrators.

    For the Demonstration Grants program, applicants may anticipate costs associated with developing a partnership agreement and providing evidence of a local needs assessment or data analysis. These requirements should improve the quality of projects funded and conducted under these grants, and we believe the benefits of these improvements will outweigh the costs. Elsewhere in this section, under Paperwork Reduction Act of 1995, we identify and explain burdens specifically associated with information collection requirements.

    Paperwork Reduction Act of 1995

    Sections 263.6, 263.10, 263.11 and 263.22 Indian Education Discretionary Grant Programs; Professional Development Program and Demonstration Grants for Indian Children Program contain information collection requirements. Under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3507(d)), the Department of Education has submitted a copy of these sections and related application forms to the Office of Management and Budget (OMB) for its review and approval. In accordance with the PRA, the OMB Control number associated with the Professional Development final regulations, related application forms, and ICRs for section 263.6, is OMB approved 1810-0580, and for sections 263.10 and 263.11 it is OMB approved 1810-0698. The Department also submitted to OMB for its review and approval a new Information Collection Request (ICR) for control number 1810—New Application for Demonstration Grants for Indian Children Program for section 263.22. An approved OMB control number will be assigned to this new ICR at the time of publication of the final rule.

    A Federal agency may not conduct or sponsor a collection of information unless OMB approves the collection under the PRA and the corresponding information collection instrument displays a currently valid OMB control number. Notwithstanding any other provision of law, no person is required to comply with, or is subject to penalty for failure to comply with, a collection of information if the collection instrument does not display a currently valid OMB control number.

    Intergovernmental Review

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

    This document provides early notification of our specific plans and actions for these programs.

    Assessment of Educational Impact

    In the NPRM we requested comments on whether the proposed regulations would require transmission of information that any other agency or authority of the United States gathers or makes available.

    Based on our review, we have determined that these final regulations do not require transmission of information that any other agency or authority of the United States gathers or makes available.

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

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

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

    (Catalog of Federal Domestic Assistance Numbers: 84.299A Demonstration Grants for Indian Children Program; 84.299B Professional Development Program) List of Subjects in 34 CFR Part 263

    Business and industry, Colleges and universities, Elementary and secondary education, Grant programs—education, Grant program—Indians, Indians—education, Reporting and recordkeeping requirements, Scholarships and fellowships.

    Dated: April 17, 2015. Deborah Delisle, Assistant Secretary for Elementary and Secondary Education.

    For the reasons discussed in the preamble, the Secretary of Education amends title 34 of the Code of Federal Regulations by revising part 263 to read as follows:

    PART 263—INDIAN EDUCATION DISCRETIONARY GRANT PROGRAMS Subpart A—Professional Development Program Sec. 263.1 What is the Professional Development Program? 263.2 Who is eligible to apply under the Professional Development program? 263.3 What definitions apply to the Professional Development program? 263.4 What costs may a Professional Development program include? 263.5 What priority is given to certain projects and applicants? 263.6 How does the Secretary evaluate applications for the Professional Development program? 263.7 What are the requirements for a leave of absence? 263.8 What are the payback requirements? 263.9 What are the requirements for payback deferral? 263.10 What are the participant payback reporting requirements? 263.11 What are the grantee post-award requirements? 263.12 What are the program-specific requirements for continuation awards? Authority:

    20 U.S.C. 7442, unless otherwise noted.

    Subpart B—Demonstration Grants for Indian Children Program Sec. 263.20 What definitions apply to the Demonstration Grants for Indian Children program? 263.21 What priority is given to certain projects and applicants? 263.22 What are the application requirements for these grants? 263.23 What is the Federal requirement for Indian hiring preference that applies to these grants? Authority:

    20 U.S.C. 7441, unless otherwise noted.

    Subpart A—Professional Development Program Authority:

    20 U.S.C. 7442, unless otherwise noted.

    § 263.1 What is the Professional Development program?

    (a) The Professional Development program provides grants to eligible entities to—

    (1) Increase the number of qualified Indian individuals in professions that serve Indian people;

    (2) Provide training to qualified Indian individuals to become teachers, administrators, teacher aides, social workers, and ancillary educational personnel; and

    (3) Improve the skills of qualified Indian individuals who serve in the education field.

    (b) The Professional Development program requires individuals who receive training to—

    (1) Perform work related to the training received under the program and that benefits Indian people, or to repay all or a prorated part of the assistance received under the program; and

    (2) Periodically report to the Secretary on the individual's compliance with the work requirement until work-related payback is complete or the individual has been referred for cash payback.

    § 263.2 Who is eligible to apply under the Professional Development program?

    (a) In order to be eligible for either pre-service or in-service training programs, an applicant must be an eligible entity which means—

    (1) An institution of higher education, including an Indian institution of higher education;

    (2) A State educational agency in consortium with an institution of higher education;

    (3) A local educational agency (LEA) in consortium with an institution of higher education;

    (4) An Indian tribe or Indian organization in consortium with an institution of higher education; or

    (5) A Bureau of Indian Education (Bureau)-funded school.

    (b) Bureau-funded schools are eligible applicants for—

    (1) An in-service training program; and

    (2) A pre-service training program when the Bureau-funded school applies in consortium with an institution of higher education that is accredited to provide the coursework and level of degree required by the project.

    (c) Eligibility of an applicant requiring a consortium with any institution of higher education, including Indian institutions of higher education, requires that the institution of higher education be accredited to provide the coursework and level of degree required by the project.

    § 263.3 What definitions apply to the Professional Development program?

    The following definitions apply to the Professional Development program:

    Bureau-funded school means a Bureau of Indian Education school, a contract or grant school, or a school for which assistance is provided under the Tribally Controlled Schools Act of 1988.

    Department means the U.S. Department of Education.

    Dependent allowance means costs for the care of minor children under the age of 18 who reside with the training participant and for whom the participant has responsibility. The term does not include financial obligations for payment of child support required of the participant.

    Full course load means the number of credit hours that the institution requires of a full-time student.

    Full-time student means a student who—

    (1) Is a degree candidate for a baccalaureate or graduate degree;

    (2) Carries a full course load; and

    (3) Is not employed for more than 20 hours a week.

    Good standing means a cumulative grade point average of at least 2.0 on a 4.0 grade point scale in which failing grades are computed as part of the average, or another appropriate standard established by the institution.

    Graduate degree means a post-baccalaureate degree awarded by an institution of higher education.

    Indian means an individual who is—

    (1) A member of an Indian tribe or band, as membership is defined by the Indian tribe or band, including any tribe or band terminated since 1940, and any tribe or band recognized by the State in which the tribe or band resides;

    (2) A descendant of a parent or grandparent who meets the requirements of paragraph (1) of this definition;

    (3) Considered by the Secretary of the Interior to be an Indian for any purpose;

    (4) An Eskimo, Aleut, or other Alaska Native; or

    (5) A member of an organized Indian group that received a grant under the Indian Education Act of 1988 as it was in effect on October 19, 1994.

    Indian institution of higher education means an accredited college or university within the United States cited in section 532 of the Equity in Educational Land-Grant Status Act of 1994, any other institution that qualifies for funding under the Tribally Controlled College or University Assistance Act of 1978, and the Navajo Community College, authorized in the Navajo Community College Assistance Act of 1978.

    Indian organization means an organization that—

    (1) Is legally established—

    (i) By tribal or inter-tribal charter or in accordance with State or tribal law; and

    (ii) With appropriate constitution, by-laws, or articles of incorporation;

    (2) Includes in its purposes the promotion of the education of Indians;

    (3) Is controlled by a governing board, the majority of which is Indian;

    (4) If located on an Indian reservation, operates with the sanction or by charter of the governing body of that reservation;

    (5) Is neither an organization or subdivision of, nor under the direct control of, any institution of higher education; and

    (6) Is not an agency of State or local government.

    Induction services means services provided after participants complete their training program and during their first year of teaching. Induction services support and improve participants' professional performance and promote their retention in the field of education and teaching. They include, at a minimum, these activities:

    (1) High-quality mentoring, coaching, and consultation services for the participant to improve performance;

    (2) Access to research materials and information on teaching and learning;

    (3) Assisting new teachers with use of technology in the classroom and use of data, particularly student achievement data, for classroom instruction;

    (4) Clear, timely and useful feedback on performance, provided in coordination with the participant's supervisor; and

    (5) Periodic meetings or seminars for participants to enhance collaboration, feedback, and peer networking and support.

    In-service training means activities and opportunities designed to enhance the skills and abilities of individuals in their current areas of employment.

    Institution of higher education means an accredited college or university within the United States that awards a baccalaureate or post-baccalaureate degree.

    Participant means an Indian individual who is being trained under the Professional Development program.

    Payback means work-related service or cash reimbursement to the Department of Education for the training received under the Professional Development program.

    Pre-service training means training to Indian individuals to prepare them to meet the requirements for licensing or certification in a professional field requiring at least a baccalaureate degree.

    Professional development activities means pre-service or in-service training offered to enhance the skills and abilities of individual participants.

    Secretary means the Secretary of the Department of Education or an official or employee of the Department acting for the Secretary under a delegation of authority.

    Stipend means that portion of an award that is used for room, board, and personal living expenses for full-time participants who are living at or near the institution providing the training.

    (Authority: 20 U.S.C. 7442 and 7491)
    § 263.4 What costs may a Professional Development program include?

    (a) A Professional Development program may include, as training costs, assistance to—

    (1) Fully finance a student's educational expenses including tuition, books, and required fees; health insurance required by the institution of higher education; stipend; dependent allowance; technology costs; program required travel; and instructional supplies; or

    (2) Supplement other financial aid, including Federal funding other than loans, for meeting a student's educational expenses.

    (b) The Secretary announces the expected maximum amounts for stipends and dependent allowance in the annual notice inviting applications published in the Federal Register.

    (c) Other costs that a Professional Development program may include, but that must not be included as training costs, include costs for—

    (1) Collaborating with prospective employers within the grantees' local service area to create a pool of potentially available qualifying employment opportunities;

    (2) In-service training activities such as providing mentorships linking experienced teachers at job placement sites with program participants; and

    (3) Assisting participants in identifying and securing qualifying employment opportunities in their field of study following completion of the program.

    § 263.5 What priority is given to certain projects and applicants?

    (a) The Secretary gives competitive preference priority to—

    (1) An application submitted by an Indian tribe, Indian organization, or an Indian institution of higher education that is eligible to participate in the Professional Development program. A consortium application of eligible entities that meets the requirements of 34 CFR 75.127 through 75.129 and includes an Indian tribe, Indian organization, or Indian institution of higher education will be considered eligible to receive preference under this priority only if the lead applicant for the consortium is the Indian tribe, Indian organization, or Indian institution of higher education. In order to be considered a consortium application, the application must include the consortium agreement, signed by all parties; or

    (2) A consortium application of eligible entities that—

    (i) Meets the requirements of 34 CFR 75.127 through 75.129 and includes an Indian tribe, Indian organization, or Indian institution of higher education; and

    (ii) Is not eligible to receive a preference under paragraph (a)(1) of this section.

    (b) The Secretary may annually establish as a priority any of the priorities listed in this paragraph. When inviting applications for a competition under the Professional Development program, the Secretary designates the type of each priority as absolute, competitive preference, or invitational through a notice in the Federal Register. The effect of each type of priority is described in 34 CFR 75.105.

    (1) Pre-Service training for teachers. The Secretary establishes a priority for projects that—

    (i) Provide support and training to Indian individuals to complete a pre-service education program before the end of the award period that enables the individuals to meet the requirements for full State certification or licensure as a teacher through—

    (A) Training that leads to a degree in education;

    (B) For States allowing a degree in a specific subject area, training that leads to a degree in the subject area; or

    (C) Training in a current or new specialized teaching assignment that requires a degree and in which a documented teacher shortage exists;

    (ii) Provide one year of induction services, during the award period, to participants after graduation, certification, or licensure, while they are completing their first year of work in schools with significant Indian student populations; and

    (iii) Include goals for the—

    (A) Number of participants to be recruited each year;

    (B) Number of participants to continue in the project each year;

    (C) Number of participants to graduate each year; and

    (D) Number of participants to find qualifying jobs within twelve months of completion.

    (2) Pre-service administrator training. The Secretary establishes a priority for projects that—

    (i) Provide support and training to Indian individuals to complete a graduate degree in education administration that is provided before the end of the award period and that allows participants to meet the requirements for State certification or licensure as an education administrator;

    (ii) Provide one year of induction services, during the award period, to participants after graduation, certification, or licensure, while they are completing their first year of work as administrators in schools with significant Indian student populations; and

    (iii) Include goals for the—

    (A) Number of participants to be recruited each year;

    (B) Number of participants to continue in the project each year;

    (C) Number of participants to graduate each year; and

    (D) Number of participants to find qualifying jobs within twelve months of completion.

    (3) Letter of support. The Secretary establishes a priority for applicants that include a letter of support signed by the authorized representative of an LEA or Department of the Interior Bureau of Indian Education (BIE)-funded school or other entity in the applicant's service area that agrees to consider program graduates for qualifying employment.

    (Authority: 20 U.S.C. 7442 and 7473)
    § 263.6 How does the Secretary evaluate applications for the Professional Development program?

    The Secretary uses the procedures for establishing selection criteria and factors in 34 CFR 75.200 through 75.210 to establish the criteria and factors used to evaluate applications submitted in a grant competition for the Professional Development program. The Secretary may also consider one or more of the criteria and factors listed in paragraphs (a) through (e) of this section to evaluate applications.

    (a) Need for project. In determining the need for the proposed project, the Secretary considers one or more of the following:

    (1) The extent to which the proposed project will prepare personnel in specific fields in which shortages have been demonstrated through a job market analysis.

    (2) The extent to which employment opportunities exist in the project's service area, as demonstrated through a job market analysis.

    (b) Significance. In determining the significance of the proposed project, the Secretary considers one or more of the following:

    (1) The potential of the proposed project to develop effective strategies for teaching Indian students and improving Indian student achievement, as demonstrated by a plan to share findings gained from the proposed project with parties who could benefit from such findings, such as other institutions of higher education who are training teachers and administrators who will be serving Indian students.

    (2) The likelihood that the proposed project will build local capacity to provide, improve, or expand services that address the specific needs of Indian students.

    (c) Quality of the project design. The Secretary considers one or more of the following factors in determining the quality of the design of the proposed project:

    (1) The extent to which the goals, objectives, and outcomes to be achieved by the proposed project are ambitious but also attainable and address—

    (i) The number of participants expected to be recruited in the project each year;

    (ii) The number of participants expected to continue in the project each year;

    (iii) The number of participants expected to graduate; and

    (iv) The number of participants expected to find qualifying jobs within twelve months of completion.

    (2) The extent to which the proposed project has a plan for recruiting and selecting participants that ensures that program participants are likely to complete the program.

    (3) The extent to which the proposed project will incorporate the needs of potential employers, as identified by a job market analysis, by establishing partnerships and relationships with appropriate entities (e.g., Bureau-funded schools, organizations providing educational services to Indian students, and LEAs) and developing programs that meet their employment needs.

    (d) Quality of project services. The Secretary considers one or more of the following factors in determining the quality of project services:

    (1) The likelihood that the proposed project will provide participants with learning experiences that develop needed skills for successful teaching and/or administration in schools with significant Indian populations.

    (2) The extent to which the proposed project prepares participants to adapt teaching and/or administrative practices to meet the breadth of Indian student needs.

    (3) The extent to which the applicant will provide job placement activities that reflect the findings of a job market analysis and needs of potential employers.

    (4) The extent to which the applicant will offer induction services that reflect the latest research on effective delivery of such services.

    (e) Quality of project personnel. The Secretary considers one or more of the following factors when determining the quality of the personnel who will carry out the proposed project:

    (1) The qualifications, including relevant training, experience, and cultural competence, of the project director and the amount of time this individual will spend directly involved in the project.

    (2) The qualifications, including relevant training, experience, and cultural competence, of key project personnel and the amount of time to be spent on the project and direct interactions with participants.

    (3) The qualifications, including relevant training, experience, and cultural competence (as necessary), of project consultants or subcontractors, if any.

    (Approved by the Office of Management and Budget under control number 1810-0580)
    § 263.7 What are the requirements for a leave of absence?

    (a) A participant must submit a written request for a leave of absence to the project director not less than 30 days prior to withdrawal or completion of a grading period, unless an emergency situation has occurred and the project director chooses to waive the prior notification requirement.

    (b) The project director may approve a leave of absence, for a period not longer than twelve months, provided the participant has completed at least twelve months of training in the project and is in good standing at the time of request.

    (c) The project director permits a leave of absence only if the institution of higher education certifies that the training participant is eligible to resume his or her course of study at the end of the leave of absence.

    (d) A participant who is granted a leave of absence and does not return to his or her course of study by the end of the grant project period will be considered not to have completed the course of study for the purpose of project performance reporting.

    § 263.8 What are the payback requirements?

    (a) General. All participants must—

    (1) Either perform work-related payback or provide cash reimbursement to the Department for the training received. It is the preference of the Department for participants to complete a work-related payback;

    (2) Sign an agreement, at the time of selection for training, that sets forth the payback requirements; and

    (3) Report employment verification in a manner specified by the Department or its designee.

    (b) Work-related payback. (1) Participants qualify for work-related payback if the work they are performing is in their field of study under the Professional Development program and benefits Indian people. Employment in a school that has a significant Indian student population qualifies as work that benefits Indian people.

    (2) The period of time required for a work-related payback is equivalent to the total period of time for which pre-service or in-service training was actually received on a month-for-month basis under the Professional Development program.

    (3) Work-related payback is credited for the actual time the participant works, not for how the participant is paid (e.g., for work completed over 9 months but paid over 12 months, the payback credit is 9 months).

    (4) For participants that initiate, but cannot complete, a work-related payback, the payback converts to a cash payback that is prorated based upon the amount of work-related payback completed.

    (c) Cash payback. (1) Participants who do not submit employment verification within twelve months of program exit or completion, or have not submitted employment verification for a twelve-month period during a work-related payback, will automatically be referred for a cash payback unless the participant qualifies for a deferral as described in § 263.9.

    (2) The cash payback required shall be equivalent to the total amount of funds received and expended for training received under this program and may be prorated based on any approved work-related service the participant performs.

    (3) Participants who are referred to cash payback may incur non-refundable penalty and administrative fees in addition to their total training costs and will incur interest charges starting the day of referral.

    (4) The cash payback obligation may only be discharged through bankruptcy if repaying the loan would cause the participant undue hardship as defined in 11 U.S.C. 523(a)(8).

    § 263.9 What are the requirements for payback deferral?

    (a) Education deferral. If a participant completes or exits the Professional Development program, but plans to continue his or her education as a full-time student without interruption, in a program leading to a degree at an accredited institution of higher education, the Secretary may defer the payback requirement until the participant has completed his or her educational program.

    (1) A request for a deferral must be submitted to the Secretary within 30 days of completing or exiting the Professional Development program and must provide the following information—

    (i) The name of the accredited institution the student will be attending;

    (ii) A copy of the letter of admission from the institution;

    (iii) The degree being sought; and

    (iv) The projected date of completion.

    (2) If the Secretary approves the deferral of the payback requirement on the basis that a participant is continuing as a full-time student, the participant must submit to the Secretary a status report from an academic advisor or other authorized representative of the institution of higher education, showing verification of enrollment and status, after every grading period.

    (b) Military deferral. If a participant exits the Professional Development program because he or she is called or ordered to active duty status in connection with a war, military operation, or national emergency for more than 30 days as a member of a reserve component of the Armed Forces named in 10 U.S.C. 10101, or as a member of the National Guard on full-time National Guard duty, as defined in 10 U.S.C. 101(d)(5), the Secretary may defer the payback requirement until the participant has completed his or her military service, for a period not to exceed 36 months. Requests for deferral must be submitted to the Secretary within 30 days of the earlier of receiving the call to military service or completing or exiting the Professional Development program, and must provide—

    (1) A written statement from the participant's commanding or personnel officer certifying—

    (i) That the participant is on active duty in the Armed Forces of the United States;

    (ii) The date on which the participant's service began; and

    (iii) The date on which the participant's service is expected to end; or

    (2)(i) A true certified copy of the participant's official military orders; and

    (ii) A copy of the participant's military identification.

    § 263.10 What are the participant payback reporting requirements?

    (a) Notice of intent. Participants must submit to the Secretary, within 30 days of completion of, or exit from, as applicable, their training program, a notice of intent to complete a work-related or cash payback, or to continue in a degree program as a full-time student.

    (b) Work-related payback. (1) Starting within six months after exit from or completion of the program, participants must submit to the Secretary employment information, which includes information explaining how the employment is related to the training received and benefits Indian people.

    (2) Participants must submit an employment status report every six months beginning from the date the work-related service is to begin until the payback obligation has been fulfilled.

    (c) Cash payback. If a cash payback is to be made, the Department contacts the participant to establish an appropriate schedule for payments.

    (Approved by the Office of Management and Budget under control number 1810-0698)
    § 263.11 What are the grantee post-award requirements?

    (a) Prior to providing funds or services to a participant, the grantee must conduct a payback meeting with the participant to explain the costs of training and payback responsibilities following training.

    (b) The grantee must report to the Secretary all participant training and payback information in a manner specified by the Department or its designee.

    (c)(1) Grantees must obtain a signed payback agreement from each participant before the participant begins training. The agreement must include—

    (i) The estimated total training costs;

    (ii) The estimated length of training; and

    (iii) Information documenting that the grantee held a payback meeting with the participant that meets the requirements of this section.

    (2) Grantees must submit a signed payback agreement to the Department within seven days of signing the payback agreement.

    (d) Grantees must conduct activities to assist participants in identifying and securing qualifying employment opportunities following completion of the program.

    (e)(1) Awards that are primarily for the benefit of Indians are subject to the provisions of section 7(b) of the Indian Self-Determination and Education Assistance Act (Pub. L. 93-638). That section requires that, to the greatest extent feasible, a grantee—

    (i) Give to Indians preferences and opportunities for training and employment in connection with the administration of the grant; and

    (ii) Give to Indian organizations and to Indian-owned economic enterprises, as defined in section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452(e)), preference in the award of contracts in connection with the administration of the grant.

    (2) For the purposes of paragraph (e), an Indian is a member of any federally recognized Indian tribe.

    (Authority: 25 U.S.C. 450b, 450e(b)) (Approved by the Office of Management and Budget under control number 1810-0698)
    § 263.12 What are the program-specific requirements for continuation awards?

    (a) In making continuation awards, in addition to applying the criteria in 34 CFR 75.253, the Secretary considers the extent to which a grantee has achieved its project goals to recruit, retain, graduate, and place in qualifying employment program participants.

    (b) The Secretary may reduce continuation awards, including the portion of awards that may be used for administrative costs, as well as student training costs, based on a grantee's failure to achieve its project goals specified in paragraph (a) of this section.

    Subpart B—Demonstration Grants for Indian Children Program
    (Authority: 20 U.S.C. 7441, unless otherwise noted.)
    § 263.20 What definitions apply to the Demonstration Grants for Indian Children program?

    The following definitions apply to the Demonstration Grants for Indian Children program:

    Federally supported elementary or secondary school for Indian students means an elementary or secondary school that is operated or funded, through a contract or grant, by the Bureau of Indian Education.

    Indian means an individual who is—

    (1) A member of an Indian tribe or band, as membership is defined by the Indian tribe or band, including any tribe or band terminated since 1940, and any tribe or band recognized by the State in which the tribe or band resides;

    (2) A descendant of a parent or grandparent who meets the requirements described in paragraph (1) of this definition;

    (3) Considered by the Secretary of the Interior to be an Indian for any purpose;

    (4) An Eskimo, Aleut, or other Alaska Native; or

    (5) A member of an organized Indian group that received a grant under the Indian Education Act of 1988 as it was in effect on October 19, 1994.

    Indian institution of higher education means an accredited college or university within the United States cited in section 532 of the Equity in Educational Land-Grant Status Act of 1994, any other institution that qualifies for funding under the Tribally Controlled College or University Assistance Act of 1978, and the Navajo Community College, authorized in the Navajo Community College Assistance Act of 1978.

    Indian organization means an organization that—

    (1) Is legally established—

    (i) By tribal or inter-tribal charter or in accordance with State or tribal law; and

    (ii) With appropriate constitution, by-laws, or articles of incorporation;

    (2) Includes in its purposes the promotion of the education of Indians;

    (3) Is controlled by a governing board, the majority of which is Indian;

    (4) If located on an Indian reservation, operates with the sanction of or by charter from the governing body of that reservation;

    (5) Is neither an organization or subdivision of, nor under the direct control of, any institution of higher education; and

    (6) Is not an agency of State or local government.

    Native youth community project means a project that is—

    (1) Focused on a defined local geographic area;

    (2) Centered on the goal of ensuring that Indian students are prepared for college and careers;

    (3) Informed by evidence, which could be either a needs assessment conducted within the last three years or other data analysis, on—

    (i) The greatest barriers, both in and out of school, to the readiness of local Indian students for college and careers;

    (ii) Opportunities in the local community to support Indian students; and

    (iii) Existing local policies, programs, practices, service providers, and funding sources;

    (4) Focused on one or more barriers or opportunities with a community-based strategy or strategies and measurable objectives;

    (5) Designed and implemented through a partnership of various entities, which—

    (i) Must include—

    (A) One or more tribes or their tribal education agencies; and

    (B) One or more BIE-funded schools, one or more local educational agencies, or both; and

    (ii) May include other optional entities, including community-based organizations, national nonprofit organizations, and Alaska regional corporations; and

    (6) Led by an entity that—

    (i) Is eligible for a grant under the Demonstration Grants for Indian Children program; and

    (ii) Demonstrates, or partners with an entity that demonstrates, the capacity to improve outcomes that are relevant to the project focus through experience with programs funded through other sources.

    Professional development activities means in-service training offered to enhance the skills and abilities of individuals that may be part of, but not exclusively, the activities provided in a Demonstration Grants for Indian Children program.

    § 263.21 What priority is given to certain projects and applicants?

    (a) The Secretary gives priority to an application that presents a plan for combining two or more of the activities described in section 7121(c) of the Elementary and Secondary Education Act of 1965, as amended, over a period of more than one year.

    (b) The Secretary gives a competitive preference priority to—

    (1) An application submitted by an Indian tribe, Indian organization, or Indian institution of higher education that is eligible to participate in the Demonstration Grants for Indian Children program. A group application submitted by a consortium that meets the requirements of 34 CFR 75.127 through 75.129 or submitted by a partnership is eligible to receive the preference only if the lead applicant is an Indian tribe, Indian organization, or Indian institution of higher education; or

    (2) A group application submitted by a consortium of eligible entities that meets the requirements of 34 CFR 75.127 through 75.129 or submitted by a partnership if the consortium or partnership—

    (i) Includes an Indian tribe, Indian organization, or Indian institution of higher education; and

    (ii) Is not eligible to receive the preference in paragraph (b)(1) of this section.

    (c) The Secretary may give priority to an application that meets any of the priorities listed in this paragraph. When inviting applications for a competition under the Demonstration Grants program, the Secretary designates the type of each priority as absolute, competitive preference, or invitational through a notice inviting applications published in the Federal Register. The effect of each type of priority is described in 34 CFR 75.105.

    (1) Native youth community projects.

    (2) Projects in which the applicant or one of its partners has received a grant in the last four years under a federal program selected by the Secretary and announced in a notice inviting applications published in the Federal Register.

    (3) Projects in which the applicant has Department approval to consolidate funding through a plan that complies with section 7116 of the ESEA or other authority designated by the Secretary.

    (4) Projects that focus on a specific activity authorized in section 7121(c) of the ESEA as designated by the Secretary in the notice inviting applications.

    (5) Projects that include either—

    (i) An LEA that is eligible under the Small Rural School Achievement (SRSA) program or the Rural and Low-Income School (RLIS) program authorized under title VI, part B of the ESEA; or

    (ii) A BIE-funded school that is located in an area designated with locale code of either 42 or 43 as designated by the U.S. Census Bureau.

    (Authority: 20 U.S.C. 7426, 7441, and 7473)
    § 263.22 What are the application requirements for these grants?

    (a) Each application must contain—

    (1) A description of how Indian tribes and parents of Indian children have been, and will be, involved in developing and implementing the proposed activities;

    (2) Assurances that the applicant will participate, at the request of the Secretary, in any national evaluation of this program;

    (3) Information demonstrating that the proposed project is based on scientific research, where applicable, or an existing program that has been modified to be culturally appropriate for Indian students;

    (4) A description of how the applicant will continue the proposed activities once the grant period is over; and

    (5) Other assurances and information as the Secretary may reasonably require.

    (b) The Secretary may require an applicant to satisfy any of the requirements in this paragraph. When inviting applications for a competition under the Demonstration Grants program, the Secretary establishes the application requirements through a notice inviting applications published in the Federal Register. If specified in the notice inviting applications, an applicant must submit—

    (1) Evidence, which could be either a needs assessment conducted within the last three years or other data analysis, of—

    (i) The greatest barriers, both in and out of school, to the readiness of local Indian students for college and careers;

    (ii) Opportunities in the local community to support Indian students; and

    (iii) Existing local policies, programs, practices, service providers, and funding sources.

    (2) A copy of an agreement signed by the partners in the proposed project, identifying the responsibilities of each partner in the project. The agreement can be either—

    (i) A consortium agreement that meets the requirements of 34 CFR 75.128, if each of the entities are eligible entities under this program; or

    (ii) Another form of partnership agreement, such as a memorandum of understanding or a memorandum of agreement, if not all the partners are eligible entities under this program.

    (3) A plan, which includes measurable objectives, to evaluate reaching the project goal or goals.

    § 263.23 What is the Federal requirement for Indian hiring preference that applies to these grants?

    (a) Awards that are primarily for the benefit of Indians are subject to the provisions of section 7(b) of the Indian Self-Determination and Education Assistance Act (Pub. L. 93-638). That section requires that, to the greatest extent feasible, a grantee—

    (1) Give to Indians preferences and opportunities for training and employment in connection with the administration of the grant; and

    (2) Give to Indian organizations and to Indian-owned economic enterprises, as defined in section 3 of the Indian Financing Act of 1974 (25 U.S.C. 1452(e)), preference in the award of contracts in connection with the administration of the grant.

    (b) For purposes of this section, an Indian is a member of any federally recognized Indian tribe.

    (Authority: 25 U.S.C. 450b, 450e(b)).
    [FR Doc. 2015-09396 Filed 4-21-15; 8:45 am] BILLING CODE 4000-01-P
    LIBRARY OF CONGRESS Copyright Royalty Board 37 CFR Part 386 [Docket No. 15-CRB-0009 SA (2015)] Cost of Living Adjustment to Satellite Carrier Compulsory License Royalty Rates AGENCY:

    Copyright Royalty Board, Library of Congress.

    ACTION:

    Final rule.

    SUMMARY:

    The Copyright Royalty Judges announce a cost of living adjustment (COLA) of 1.7% in the royalty rates satellite carriers pay for a compulsory license under the Copyright Act. The COLA is based on the change in the Consumer Price Index from October 2013 to October 2014.

    DATES:

    Effective Date: April 22, 2015.

    Applicability Dates: These rates are applicable to the period January 1, 2015, through December 31, 2015.

    FOR FURTHER INFORMATION CONTACT:

    LaKeshia Keys, CRB Program Specialist, by telephone at (202) 707-7658 or by email at [email protected]

    SUPPLEMENTARY INFORMATION:

    The satellite carrier compulsory license establishes a statutory copyright licensing scheme for the retransmission of distant television programming by satellite carriers. 17 U.S.C. 119. Congress created the license in 1988 and has reauthorized the license for additional five-year periods, most recently with the passage of the STELA Reauthorization Act of 2014, Public Law 113-200.

    On August 31, 2010, the Copyright Royalty Judges (Judges) adopted rates for the section 119 compulsory license for the 2010-2014 term. See 75 FR 53198. The rates were proposed by Copyright Owners and Satellite Carriers 1 and were unopposed. Id. Section 119(c)(2) of the Copyright Act provides that, effective January 1 of each year, the Judges shall adjust the royalty fee payable under Section 119(b)(1)(B) “to reflect any changes occurring in the cost of living as determined by the most recent Consumer Price Index (for all consumers and for all items) [CPI-U] published by the Secretary of Labor before December 1 of the preceding year.” Section 119 also requires that “[n]otification of the adjusted fees shall be published in the Federal Register at least 25 days before January 1.” 17 U.S.C. 119(c)(2). Today's notice fulfills this notice obligation.2

    1 Program Suppliers and Joint Sports Claimants comprised the Copyright Owners while DIRECTV, Inc., DISH Network, LLC, and National Programming Service, LLC, comprised the Satellite Carriers.

    2 Given passage of the act extending the Section 119 license in December 2014, publication of the rate adjustment 25 days prior to January 1, 2015, would have been impracticable, if not impossible. On March 30, 2015, the Judges published notice of the commencement of a proceeding to set rates under section 119 of the Copyright Act, but subsequently withdrew the notice after determining that the reauthorization of STELA obviated the need for a rate proceeding.

    The change in the cost of living as determined by the CPI-U during the period from the most recent index published before December 1, 2013, to the most recent index published before December 1, 2014, is 1.7%.3 Application of the 1.7% COLA to the current rate for the secondary transmission of broadcast stations by satellite carriers for private home viewing—27 cents per subscriber per month — results in a rate of 27 cents per subscriber per month (rounded to the nearest cent). See 37 CFR 386.2(b)(1). Application of the 1.7% COLA to the current rate for viewing in commercial establishments—55 cents per subscriber per month—results in an adjusted rate of 56 cents per subscriber per month (rounded to the nearest cent). See 37 CFR 386.2(b)(2).

    3 On November 20, 2014, the Bureau of Labor Statistics announced that the CPI-U increased 1.7% over the last 12 months.

    List of Subjects in 37 CFR Part 386

    Copyright, Satellite, Television.

    Final Regulations

    In consideration of the foregoing, the Judges amend part 386 of title 37 of the Code of Federal Regulations as follows:

    PART 386—ADJUSTMENT OF ROYALTY FEES FOR SECONDARY TRANSMISSIONS BY SATELLITE CARRIERS 1. The authority citation for part 386 continues to read as follows: Authority:

    17 U.S.C. 119(c), 801(b)(1).

    2. Section 386.2 is amended by adding paragraphs (b)(1)(vi) and (b)(2)(vi) to read as follows:
    § 386.2 Royalty fee for secondary transmission by satellite carriers.

    (b) * * *

    (1) * * *

    (vi) 2015: 27 cents per subscriber per month (for each month of 2015).1

    1 This is the 2014 rate adjusted for the amount of inflation as measured by the change in the Consumer Price Index for All Urban Consumers All Items from October 2013 to October 2014.

    (2) * * *

    (vi) 2015: 56 cents per subscriber per month (for each month of 2015).2

    2 This is the 2014 rate adjusted for the amount of inflation as measured by the change in the Consumer Price Index for All Urban Consumers All Items from October 2013 to October 2014.

    Dated: April 16, 2015. Suzanne M. Barnett, Chief Copyright Royalty Judge.
    [FR Doc. 2015-09284 Filed 4-21-15; 8:45 am] BILLING CODE 1410-72-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 90 Control of Emissions From Nonroad Spark-Ignition Engines at or Below 19 Kilowatts CFR Correction In Title 40 of the Code of Federal Regulations, Parts 87 to 95, revised as of July 1, 2014, on page 199, in § 90.116, after paragraph (a) and before the first paragraph (1), add paragraph (b) introductory text to read as follows: “(b) Engines will be divided into classes by the following:”. [FR Doc. 2015-09241 Filed 4-21-15; 8:45 am] BILLING CODE 1505-01-D ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2014-0339; FRL-9923-57] Saflufenacil; Pesticide Tolerances AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes tolerances for residues of saflufenacil in or on alfalfa, forage and alfalfa, hay. BASF Corporation requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).

    DATES:

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

    ADDRESSES:

    The docket for this action, identified by docket identification (ID) number EPA-HQ-OPP-2014-0339, is available at http://www.regulations.gov or at the Office of Pesticide Programs Regulatory Public Docket (OPP Docket) in the Environmental Protection Agency Docket Center (EPA/DC), West William Jefferson Clinton Bldg., Rm. 3334, 1301 Constitution Ave. NW., Washington, DC 20460-0001. The Public Reading Room is open from 8:30 a.m. to 4:30 p.m., Monday through Friday, excluding legal holidays. The telephone number for the Public Reading Room is (202) 566-1744, and the telephone number for the OPP Docket is (703) 305-5805. Please review the visitor instructions and additional information about the docket available at http://www.epa.gov/dockets.

    FOR FURTHER INFORMATION CONTACT:

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

    SUPPLEMENTARY INFORMATION:

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

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

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

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

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

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

    Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2014-0339 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before June 22, 2015. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

    In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2014-0339, by one of the following methods:

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

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

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

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

    II. Summary of Petitioned-For Tolerance

    In the Federal Register of August 1, 2014 (79 FR 44729) (FRL-9911-67), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide petition (PP 4F8256) by BASF Corporation, 26 Davis Drive, P.O. Box 13528, Research Triangle Park, NC 27709-3528. The petition requested that 40 CFR part 180 be amended by establishing tolerances for residues of the herbicide saflufenacil (2-chloro-5-[3,6-dihydro-3-methyl-2,6-dioxo-4-(trifluoromethyl)-1(2H)-pyrimidinyl]-4-fluoro-N-[[methyl(1-methylethyl)amino]sulfonyl]benzamide) and its metabolites, N-[2-chloro-5-(2,6-dioxo-4-(trifluoromethyl)-3,6-dihydro-1(2H)-pyrimidinyl)-4-fluorobenzoyl]-N'-isopropylsulfamide and N-[4-chloro-2-fluoro-5-({[(isopropylamino)sulfonyl]amino}carbonyl)phenyl]urea, calculated as the stoichiometric equivalent of saflufenacil, in or on alfalfa, forage at 0.075 parts per million (ppm) and alfalfa, hay at 0.10 ppm. That document referenced a summary of the petition prepared by BASF Corporation, the registrant, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

    Based upon review of the data supporting the petition, EPA agrees with the tolerance levels proposed by BASF Corporation for alfalfa commodities with the minor exception of a rounding adjustment for the alfalfa, forage tolerance from 0.075 ppm to 0.80 ppm.

    III. Aggregate Risk Assessment and Determination of Safety

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

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

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

    The toxicology database for the saflufenacil is considered complete for the purpose of risk assessment. In the Federal Register of September 3, 2014 (79 FR 52215) (FRL-9912-91), EPA published a final rule establishing tolerances for residues of saflufenacil and its metabolites in or on barley, grass, olive, livestock, and wheat commodities based on EPA's conclusion that aggregate exposure to saflufenacil is safe for the general population, including infants and children. Since that rulemaking, the toxicity profile for saflufenacil has not changed. The requested tolerances will not result in residues on human food commodities, only animal feed. The available residue data submitted for use in alfalfa indicates that the dietary burden for livestock will not change from the current levels that were previously assessed for use in grass pastures. Therefore, the residues of saflufenicil on alfalfa from the proposed new use will not impact the existing human dietary and aggregate risk assessments for saflufenacil. For a detailed discussion of the aggregate risk assessments and determination of safety, as well as a summary of the toxicological endpoints used for human risk assessment, please refer to the final rules published in the Federal Register of February 21, 2014 (79 FR 9861) (FRL-9905-87) and September 3, 2014 (79 FR 52215) (FRL-9912-91). EPA relies upon those supporting risk assessments and the findings made in the Federal Register documents in support of this final rule.

    Based on the risk assessments and information described above, EPA concludes that there is a reasonable certainty that no harm will result to the general population or to infants and children from aggregate exposure to saflufenacil residues.

    IV. Other Considerations A. Analytical Enforcement Methodology

    Adequate enforcement methodology (liquid chromatography/mass spectroscopy/mass spectroscopy (LC-MS/MS) (Method D0603/04)) is available to enforce the tolerance expression.

    The method may be requested from: Chief, Analytical Chemistry Branch, Environmental Science Center, 701 Mapes Rd., Ft. Meade, MD 20755-5350; telephone number: (410) 305-2905; email address: [email protected]

    B. International Residue Limits

    In making its tolerance decisions, EPA seeks to harmonize U.S. tolerances with international standards whenever possible, consistent with U.S. food safety standards and agricultural practices. EPA considers the international maximum residue limits (MRLs) established by the Codex Alimentarius Commission (Codex), as required by FFDCA section 408(b)(4). The Codex Alimentarius is a joint United Nations Food and Agriculture Organization/World Health Organization food standards program, and it is recognized as an international food safety standards-setting organization in trade agreements to which the United States is a party. EPA may establish a tolerance that is different from a Codex MRL; however, FFDCA section 408(b)(4) requires that EPA explain the reasons for departing from the Codex level. The Codex has not established a MRL for saflufenacil in or on alfalfa, forage or alfalfa, hay at this time.

    C. Revisions to Petitioned-For Tolerances

    EPA has modified the tolerance level proposed for alfalfa, forage, from 0.075 ppm to 0.08 ppm, which is the appropriate rounding class according to the tolerance calculation procedures of the Organization for Economic Co-operation and Development (OECD) that EPA utilizes.

    V. Conclusion

    Therefore, tolerances are established for residues of, saflufenacil and its metabolites, in or on alfalfa, forage at 0.08 ppm and alfalfa, hay at 0.10 ppm.

    VI. Statutory and Executive Order Reviews

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

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

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

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

    VII. Congressional Review Act

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

    List of Subjects in 40 CFR Part 180

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

    Dated: April 9, 2015. Susan T. Lewis, Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

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

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

    2. In § 180.649, add alphabetically the commodities to the table in paragraph (a)(1) to read as follows:
    § 180.649 Saflufenacil; tolerances for residues.

    (a) General. (1) * * *

    Commodity Parts per
  • million
  • Alfalfa, forage 0.08 Alfalfa, hay 0.10 *         *         *         *         *         *         *
    [FR Doc. 2015-09394 Filed 4-21-15; 08:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF TRANSPORTATION Maritime Administration 46 CFR Part 298 [Docket Number MARAD-2014-0011] Final Action Regarding “Other Relevant Criteria” for Consideration When Evaluating the Economic Soundness of Title XI Maritime Loan Guarantee Program Applications AGENCY:

    Maritime Administration, Department of Transportation.

    ACTION:

    Final policy.

    SUMMARY:

    This document serves to inform interested parties and the public of the Maritime Administration's (MARAD) final policy regarding the factors MARAD will consider as “Other Relevant Criteria” in its review of the economic soundness of applications under the Title XI Loan Guarantee Program [also known as “Title XI” or the Federal Ship Financing Program (FSFP)]. On February 24, 2014, MARAD published a Notice of Proposed Policy (NPP) and sought comments relating to the agency's evaluation of Title XI Maritime Loan Guarantee applications. In this document MARAD: Responds to comments received during the public notice; clarifies and reinforces that applicants with projects to construct or reconstruct vessels to use alternative energies, or to meet current or future U.S. or international environmental and safety standards, are eligible and encouraged to apply for FSFP loan guarantees; and implements the final policy.

    DATES:

    This policy is effective April 22, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Owen Doherty, Associate Administrator for Business and Finance Development, Maritime Administration, Telephone: 202-366-1883; Email: [email protected]; Mail: MARAD, 1200 New Jersey Avenue SE., Washington, DC 20590.

    SUPPLEMENTARY INFORMATION: A. Introduction

    In order to be eligible for a FSFP loan guarantee an obligation must, among other things, aid the financing of the “construction, reconstruction, or reconditioning of a vessel.”

    46 U.S.C. 53706. The terms construction, reconstruction and reconditioning are broadly defined to include “designing, inspecting, outfitting, and equipping.” 46 U.S.C. 53701(3).

    Chapter 537 of Title 46 of the United States Code, as implemented by part 298 of title 46 of the Code of Federal Regulations (CFR), details the factors MARAD must consider in processing FSFP loan guarantee applications. The factors include economic soundness, project feasibility and specifically enumerated priorities. For the economic soundness determination, 46 U.S.C. 53708(a) provides six mandatory factors MARAD must consider, but allows consideration of “other relevant criteria” as well. The accompanying regulation, 46 CFR 298.14(b), also provides that MARAD may take into account “other relevant criteria.” Sections 53708(a) and (b) explicitly provide “the need for technical improvements, including increased fuel efficiency or improved safety” as matters the Administrator and Secretary must consider with regard to applications for vessels intended for use on inland waterways and for fishing vessels, respectively.

    On February 24, 2014, MARAD published a Notice of Proposed Policy (79 FR 10075) in which it proposed to consider “various environmental initiatives that are likely to increase efficiency and lead to future cost savings as `other relevant criteria' in evaluation of [the economic soundness of] Title XI loan guarantee applications.” A non-exclusive list of such initiatives are alternative fuel systems designs, fuel cells, hybrid propulsion systems, air emissions reduction technologies and ballast water treatment technologies.

    The policy provides that, “demand for environmentally friendly designs, fuel and technologies is growing rapidly throughout the maritime industry because, among other things, they meet new air emissions and other discharge standards, and present the potential for greater efficiency and cost savings.” The proposed policy also stated, “. . . that many of the economic benefits of environmentally friendly designs, fuels and technologies take the form of public benefits.” Many of these public benefits cannot be captured by vessel owners and operators using traditional economic metrics, but are valuable nonetheless, because they contribute to environmental sustainability and human health. MARAD sought public comment on the NPP.

    In this final policy, MARAD is responding to the comments received, announcing that it intends to clarify and implement the policy as proposed in the prior notice, and clarifying that applicants with projects to construct or reconstruct vessels to be powered by alternative energies, or to meet U.S. or international environmental standards as required for continued operations, are eligible and encouraged to apply for FSFP loan guarantees.

    The comments received varied in the degree to which they directly addressed the substantive provisions in the policy. Some commenters expressed agreement with the general principle of considering environmental factors in the review of applications for FSFP loan guarantees. The majority disagreed with the proposal to include environmental considerations as a factor used to determine the economic soundness of projects.

    B. Comments

    MARAD received a total of 11 comments in response to the policy. Nine commenters disagreed with the proposal to include environmental considerations as “other relevant criteria” in the economic soundness analysis. MARAD received three comments indicating general support for including environmental considerations when evaluating FSFP applications. One commenter suggested that doing so could help accelerate replacement of an aging U.S.-flag fleet. Another stated that FSFP guarantees should be granted in order to make the new ships as environmentally friendly as possible. However, these commentators did not provide input on specific actions MARAD could take to further those interests. The comments, as submitted to the docket for the policy (Docket No. MARAD-2014-0011-0001) may be accessed via http://www.regulations.gov.

    While many of the other comments included general support for considering environmental factors at some point when evaluating applications that are otherwise economically sound, none of those commenters supported including such factors in the “economic soundness” analysis required under 46 U.S.C. 53703(b). Many commenters focused on the reference to “public benefits” in the original document. They expressed concern that it would be difficult and expensive for applicants and MARAD to incorporate the public benefits (e.g., human health and lower air emissions) of environmentally friendly technologies into a review of economic soundness, which is based on traditionally quantifiable financial factors. Commenters stated that attempting to address public benefits in the economic soundness analysis would result in additional time and expense, which would be inconsistent with MARAD's stated desire to streamline the application review process. Other commenters noted that cost savings from increased efficiency resulting from the use of alternative fuels are already captured in the current economic soundness factors.

    MARAD received two comments that suggested that the policy might be interpreted to mean that MARAD does not consider projects to reconstruct or reconstruct vessels to use alternative energies (e.g., from a diesel propulsion system to a liquefied natural gas (LNG) propulsion or a hybrid diesel/LNG propulsion system) to be eligible for FSFP loan guarantees.

    Several commenters noted that MARAD is already authorized, under 46 U.S.C. 53706(c), implemented by 46 CFR 298.3(k), to prioritize applications for certain vessels, and that a formal rulemaking to add environmental considerations to that section would be more appropriate than adding such considerations to the economic soundness analysis.

    MARAD received three comments that referenced issues beyond the scope of the proposed policy.

    C. MARAD Response to Comments

    MARAD understands the concerns commenters expressed about potential ramifications of implementing this policy. In response to these concerns, MARAD clarifies the policy as described below. The Department of Transportation and MARAD are committed to supporting the development and implementation of technologies that help the U.S.-flag fleet meet or exceed national and international environmental standards and result in environmental improvements. MARAD is also determined to reduce FSFP application processing times and administrative burdens that potential applicants face.

    D. Final Policy

    By this document, MARAD announces that it will implement the core of the proposed policy. Under this final policy, in addition to the factors listed in 46 U.S.C. 53708(a)(1)-(4) and (6), MARAD will consider whether such projects include environmental initiatives that are likely to increase efficiency and lead to future cost savings. As noted by several commenters, cost savings resulting from increased fuel efficiency are captured in the current economic soundness analysis factors—most notably projected revenues and expenses of the vessel(s). This final policy merely states explicitly what MARAD is authorized to do under current law and regulations.

    MARAD clarifies that it will not require applicants to quantify the potential public benefits of environmentally friendly designs, fuels and technologies. MARAD encourages applicants to emphasize any public benefits or costs of greenhouse gas or criteria pollutant emissions caused or reduced by vessel(s) to be constructed or reconstructed. MARAD encourages applicants to quantify such public benefits to the extent practicable. Consult the following authorities for guidance for undertaking such calculations: (1) White House Office of Management and Budget, Circular A-94, Circular A-94 Guidelines and Discount Rates for Benefit-Cost Analysis of Federal Programs (October 29, 1992) (https://www.whitehouse.gov/sites/default/files/omb/assets/a94/a094.pdf); Interagency Working group on Social Cost of Carbon, United States Government, Technical Support Document: Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis Under Executive Order 12866 (May 2013; revised November 2013) (https://www.whitehouse.gov/sites/default/files/omb/assets/inforeg/technical-update-social-cost-of-carbon-for-regulator-impact-analysis.pdf).

    In addition, MARAD considers as part of economic soundness the degree to which applications include the use of such designs, fuels or technologies for: (1) Reconstruction of vessels to ensure compliance with current or future environmental and safety operating standards, or (2) construction of new vessels to replace vessels that would not meet such standards. MARAD encourages applicants to include information in their applicants regarding the degree to which the vessel(s) to be constructed or reconstructed meets these components of economic soundness analysis.

    Consideration of the impact of environmental and safety standards on the economic soundness of an application is consistent with the factors MARAD is required to review. See, 46 U.S.C. 53708(a)(1)-(3). For example, pursuant to new global standards promulgated by the International Maritime Organization, and enforced in the U.S. by the Environmental Protection Agency, NOx emissions from large “Category 3” vessel engines are required to be substantially reduced by 2020. Implementation of these standards will result in many vessels currently in operation being taken out of service, unless they are converted to reduce emissions. These environmental factors directly impact the need for, and market potential and projected revenues and expenses of, any proposed construction or reconstruction.

    Further, MARAD clarifies that projects to reconstruct existing vessels are eligible for Title XI loan guarantees. Reconstruction includes conversion of vessels to LNG or dual-fuel power.

    Authority:

    46 U.S.C. 53708.

    Dated: April 17, 2015.

    By Order of the Maritime Administrator.

    Thomas M. Hudson, Jr., Acting Secretary, Maritime Administration.
    [FR Doc. 2015-09385 Filed 4-21-15; 8:45 am] BILLING CODE 4910-81-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 622 [Docket No. 140818679-5356-02] RIN 0648-BE47 Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; Reef Fish Fishery of the Gulf of Mexico; Amendment 40 AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Final rule.

    SUMMARY:

    NMFS implements management measures described in Amendment 40 to the Fishery Management Plan for the Reef Fish Resources of the Gulf of Mexico (FMP), as prepared by the Gulf of Mexico Fishery Management Council (Council). This final rule contains measures to establish two components within the recreational sector for Gulf of Mexico (Gulf) red snapper (a Federal charter vessel/headboat (for-hire) component and private angling component) with a 3-year sunset provision; allocate the red snapper recreational quota and annual catch target (ACT) between the components; and establish separate red snapper season closure provisions for the two components. The purpose of Amendment 40 and this rule is to provide a basis for increased flexibility in future management of the recreational sector, and reduce the likelihood of recreational quota overruns, which could negatively impact the rebuilding of the red snapper stock.

    DATES:

    This rule is effective May 22, 2015.

    ADDRESSES:

    Electronic copies of Amendment 40, which includes an environmental impact statement, a fishery impact statement, a Regulatory Flexibility Act analysis, and a regulatory impact review, may be obtained from the Southeast Regional Office Web site at http://sero.nmfs.noaa.gov/sustainable_fisheries/gulf_fisheries/reef_fish/2013/am40/index.html.

    FOR FURTHER INFORMATION CONTACT:

    Peter Hood, telephone: 727-824-5305; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    NMFS and the Council manage the Gulf reef fish fishery under the FMP. The Council prepared the FMP and NMFS implements the FMP through regulations at 50 CFR part 622 under the authority of the Magnuson-Stevens Act.

    On January 16, 2015, NMFS published a notice of availability for Amendment 40 and requested public comment (80 FR 2379). On January 23, 2015, NMFS published a proposed rule for Amendment 40 and requested public comment (80 FR 3541). NMFS approved Amendment 40 on April 10, 2015. The proposed rule and Amendment 40 outline the rationale for the actions contained in this final rule. A summary of the actions implemented by Amendment 40 and this final rule is provided below.

    Management Measures Contained in This Final Rule

    This final rule establishes two components in the Gulf red snapper recreational sector: A Federal for-hire component and a private angling component. In addition, this rule establishes a Federal for-hire quota and a private angling quota based on the component allocation of the recreational quota, component ACTs, and seasonal closure provisions for the two components. These management measures will be in effect for 3 years, unless changed by subsequent Council action.

    Establishing Private Angling and Federal For-Hire Components

    This final rule establishes a Federal for-hire component and a private angling component for the Gulf red snapper recreational sector. The Federal for-hire component includes operators of vessels with Federal charter vessel/headboat permits for Gulf reef fish and the private angling component includes anglers fishing from private vessels and state-permitted for-hire vessels.

    Component Quotas

    This final rule establishes component quotas based on the allocation of 42.3 percent for the Federal for-hire component and 57.7 percent for the private angling component, as selected in Amendment 40. All weights given in this rule are in round weight. Currently, the 2015 recreational quota is set at 5.390 million lb (2.445 million kg). Therefore, this final rule sets the Federal for-hire component quota at 2,279,970 lb (1,034,177 kg), and the private angling component quota at 3,110,030 lb (1,410,686 kg), for the 2015 fishing year.

    However, the Council has developed a framework action to revise the commercial and recreational quotas for the 2015, 2016, and 2017 fishing years and subsequent fishing years for red snapper based on new acceptable biological catches (ABCs) recommended by the Council's Scientific and Statistical Committee (SSC) and on the current commercial and recreational allocations (51-percent commercial and 49-percent recreational). A proposed rule for the framework action was published on April 1, 2015 (80 FR 17380). If the framework action is approved, a final rule containing revised component quotas would be published and effective prior to the June 1, 2015, start date of the Federal fishing season.

    Recreational Season Closure Provisions

    This final rule establishes separate red snapper seasonal closure provisions for the Federal for-hire and private angling components based on each component's ACT. Each component's season will begin on June 1 and the season length will be projected from each component's ACT. The ACTs are reduced from each component's quota by 20 percent.

    Given the current component quotas, the Federal charter vessel/headboat component ACT will be 1.824 million lb (0.827 million kg), and the private angling ACT will be 2.488 million lb (1.129 million kg). However, if the final rule for the 2015 Gulf red snapper framework action is implemented the component ACTs for the 2015, 2016, and 2017 and subsequent fishing years will be revised.

    The 2015 season lengths will be announced prior to the June 1 Federal fishing season start date; most likely in the final rule for the 2015 Gulf red snapper framework action.

    Sunset Provision

    This rule implements a 3-year sunset provision for the establishment of the Federal for-hire and private angling components and associated management measures. The components and associated management measures will be effective through the end of the 2017 fishing year, on December 31, 2017. For these components and management measures to extend beyond 3 years, the Council would need to take further action.

    ACLs and AMs

    Prior to Amendment 40, rather than establishing ACLs for red snapper management, the Council chose to refer to the sector quotas as the functional equivalent to sector ACLs, and the sum of all quotas as the stock ACLs. This led to confusion when discussing and implementing red snapper catch levels. In the preamble to the proposed rule for Amendment 40, NMFS failed to explain that this rule would add sector ACLs and an AM for the commercial sector to the regulations. However, the proposed rule's regulatory text, and the discussion in Amendment 40, did include sector ACLs. Consistent with what was proposed, this final rule adds commercial and recreational ACLs, which are equivalent to the commercial and recreational quotas, respectively, and adds language explaining that the commercial AM is defined as the IFQ program for red snapper.

    Changes From the Proposed Rule

    A recent framework action (80 FR 14328) implemented a post-season AM for the recreational sector as a whole. This AM requires that NMFS adjust the subsequent year's total recreational quota and ACT if the quota is exceeded in the prior fishing year and red snapper are classified as overfished. The proposed rule for Amendment 40 included the provision for adjusting the total recreational quota and the component ACTs, but not the provision for adjusting the component quotas. If an overage of the total recreational ACL (equal to the total recreational quota) occurs, the component quotas must be adjusted to reflect the adjustment to the total quota, otherwise the combined component quotas would exceed the total quota. The adjusted component quotas are also necessary to calculate the reduced component ACTs. NMFS has determined the provision for adjusting component quotas was reasonably foreseeable from what was included in the proposed rule, and is a logical outgrowth of the proposed rule because it is necessary to implement the AM as proposed. Therefore, this final rule adds the necessary language for reducing the component quotas to § 622.41(q)(2)(ii).

    Comments and Responses

    A total of 18,353 comments were received on Amendment 40 and the proposed rule, including comments from individuals, 2 state agencies, 4 non-governmental organizations (NGOs), 6 fishing associations, 1 U.S. Congressman, and 1 U.S. Senator. NMFS received 3,212 comments in opposition to Amendment 40 or the proposed rule, of which 1,806 comments were letters attached to a submission from a recreational fishing organization. There were 15,089 comments in support of Amendment 40 and the proposed rule, of which 15,025 comments were copies of emails submitted by members of an NGO, which submitted them to NMFS. There were 52 commenters who did not indicate whether they supported or were in opposition to the amendment. In addition to these comments, a minority report was submitted by the 7 members of the Council who voted against approval of Amendment 40.

    Comments opposing the action include: There is a lack of significant support for the action; the action disproportionately harms private anglers by reducing their Federal season; the action privatizes the resource; all anglers should be treated alike; the Council lacked certain information before making its decision; the action does little to improve recreational management; and the action violates National Standards 2, 4, 5, 8, and 10. In addition, commenters suggested several Council members had a conflict of interest and should not have voted for approval of Amendment 40.

    Comments in support of the action include that the action will: Give better access to red snapper fishing by non-boat-owning anglers; provide management flexibility; increase recreational accountability; and help to stabilize the for-hire component. NMFS also received comments that addressed issues outside the scope of this action. Comments in this category include: Asking for different red snapper size and bag limits, weekend-only red snapper seasons, and a tagging system to allocate fish; halting the removal of oil rigs; and opposing creation of a catch share-like program for the for-hire component. Although these measures could be developed for one or both components as a result of Amendment 40, Amendment 40 does not specifically address these topics. Specific comments related to the actions contained in the amendment and the rule as well as NMFS' respective responses, are summarized below.

    Comment 1: Amendment 40 disproportionately harms private anglers by reducing the length of their Federal season.

    Response: NMFS disagrees that Amendment 40 disproportionately harms private anglers. NMFS recognizes that the Federal season for private anglers is likely to be shorter than the Federal fishing season for the federally permitted for-hire vessels. However, this is a result of the unlimited number of private recreational vessels and state-permitted for-hire vessels, increasing fish size, and the decisions by the Gulf states to extend their red snapper fishing seasons in state waters beyond the Federal fishing season. As explained in Amendment 40, the number of private recreational vessels has increased over time and the moratorium on Federal for-hire permits has limited growth in the for-hire industry and, in turn, anglers' access to these vessels. In addition, last year, all the Gulf states extended their red snapper fishing seasons beyond the Federal fishing season, and some states extended their fishing seasons in previous years. Private anglers and state-permitted vessel operators are able to harvest red snapper outside of the Federal season as long as the fish are caught in state waters during the extended state fishing seasons. On the other hand, fishermen fishing from federally permitted reef fish for-hire vessels are prohibited from harvesting red snapper caught in state waters when the Federal fishing season is closed, but state waters are open. Therefore, fishermen fishing from private and state-permitted vessels have seen increased fishing opportunities in recent years, whereas, fishermen fishing from federally-permitted for-hire vessels have seen their Federal fishing season reduced under current conditions. While the Federal for-hire component fishing season will be longer than the Federal private angling component fishing season, the private angling component is expected to have additional fishing opportunities in state waters.

    Comment 2: Amendment 40 complicates management by creating a different set of rules for each component that must fish under the same recreational quota. All recreational anglers, whether they are fishing from their own boat or from a federally permitted for-hire vessel, should be treated alike and have the same size limit, bag limit, and season.

    Response: The overall management program may be slightly more complex as modified by Amendment 40, however NMFS disagrees that Amendment 40 complicates management. For both recreational components, the Federal bag and size limits and the start date of the Federal fishing season (June 1) are the same. The only difference is that the end date of the fishing season for the respective components will be different. The projections of the season length provided in Amendment 40 show the Federal for-hire component to have a longer fishing season than the private angling component, in part, due to red snapper harvested in state waters during extended state fishing seasons. Differences in catch rates, size of fish, and total effort also contribute to season-length differences.

    The Council may determine that other component-specific management measures are needed to improve the management of the recreational sector fishing for red snapper. Any new management measures would be developed through a framework action or plan amendment and would require public participation.

    Comment 3: Amendment 40 does little or nothing to improve accountability and the collection of data. Although the amendment identifies factors that contribute to quota overruns, it does not identify how the proposed action will do anything to minimize quota overruns.

    Response: The purpose of Amendment 40 is not to improve data collection. However, Amendment 40 may facilitate greater certainty in data collected by establishing distinct private angling and Federal for-hire components of the red snapper recreational sector in the Gulf, which will provide a basis for flexible management approaches tailored to each component. NMFS disagrees that this amendment does little or nothing to improve accountability. The landings data for each component have different degrees of uncertainty because of differences in how recreational data are collected. Private angler data are derived from surveys whereas for-hire data are collected through surveys and logbooks. In addition, the number of for-hire vessels is known and is much smaller than vessels operated by private anglers. When private recreational landings estimates, that have a higher degree of uncertainty, are combined with for-hire landings data, projecting when the season should close is more difficult, and less effective management measures may result for the recreational sector. The analysis in Amendment 40 explains that because it is easier to both monitor and project landings for the for-hire component, it is easier to ensure that this component will not exceed its quota. Thus, separating management of the components is expected to improve the projections of when the recreational quota is reached and create a platform for future management of the recreational sector that can focus on maximizing opportunities for each component.

    Comment 4: Amendment 40 violates National Standard 2 because the Council did not have the best scientific information available when making its decision. The final allocation percentages, which were dependent on recalibrated landings from a Marine Recreational Information Program (MRIP) workshop, were not available when the Council made its final decision. Thus, the Council did not have a clear idea of what the social and economic impacts would be from the final allocations set in Amendment 40. In addition, there was no attempt to quantify the economic consequences to the Federal for-hire component or the recreational sector as a whole.

    Response: NMFS disagrees that Amendment 40 is inconsistent with National Standard 2 and that the Council did not have a clear idea of the social and economic impacts that would result from the final allocations. National Standard 2 states that conservation and management measures shall be based on the best scientific information available. At the time the Council took final action on Amendment 40, the document contained a complete analysis of the social and economic impacts of establishing separate recreational components and the allocation alternatives. As discussed in Amendment 40 and the proposed rule, a quantitative economic analysis could not be conducted because the information required for such an analysis is not available. Instead, a qualitative analysis based on the best scientific information available was provided. This analysis acknowledged that the allocation would result in decreased harvest and associated economic benefits to anglers in the private component compared to recent years, and increased harvest and associated economic benefits for the Federal for-hire component. The analysis also indicated, however, that in the long term, total economic benefits would be expected to increase due to the enhanced quota monitoring capability and ability to better tailor management, through subsequent rulemaking, to the needs of each component.

    To ensure that the Council's allocation decision was based on the best scientific information available, the preliminary results of the MRIP workshop were presented to the Council at its October 2014 meeting and the Council was advised that the preferred allocation could change by as much as ±3.3 percent. The methods used to calibrate the MRIP landings were reviewed earlier in October 2014 by the Council's SSC. The SSC did not note any concerns about the methodology. When the final results from the workshop were incorporated in Amendment 40, 1.7 percent of the recreational quota was shifted from the Federal for-hire component to the private angling component. This change in allocation did not change the season length projections for the two components that were included in Amendment 40 at the time the Council took final action. In a memorandum dated January 7, 2015, the Southeast Fisheries Science Center certified that the actions in Amendment 40 are based on the best scientific information available.

    Comment 5: Amendment 40 violates National Standard 4 because sector separation will have disparate impacts on residents from different states, particularly given different states have differing proportions of for-hire and private angling fishers.

    Response: NMFS disagrees that Amendment 40 is inconsistent with National Standard 4. National Standard 4 states, in part, that conservation and management measures shall not discriminate between residents of different states and that if allocation is assigned, it is fair and equitable to all fishermen, and reasonably calculated to promote conservation.

    Amendment 40 may have different impacts on the residents of different states because of the proportion of fishers using federally permitted for-hire vessels and private vessels varies regionally. In addition, as explained in the proposed rule, because red snapper availability and abundance in state waters can vary regionally, fishing opportunities for individual fishermen in the private-angling component may vary if the Gulf States set state seasons inconsistent with one another. However, the actions in Amendment 40 do not differentiate between residents of different states. For the private-angling component, there will be a single Federal season in the exclusive economic zone (EEZ) off all Gulf states that will be determined using past landings data and will take into account any harvest allowed in state waters.

    The National Standard 4 Guidelines state that “conservation and management measures that have different effects on persons in various geographic locations are permissible if they satisfy the other guidelines under Standard 4.” 50 CFR 600.325(b). NMFS has determined that Amendment 40 is reasonably calculated to promote conservation and that the allocation is fair and equitable. Amendment 40 is reasonably calculated to promote conversation because it will provide a basis for increased flexibility in future management of the recreational sector, it will reduce the likelihood of recreational quota overruns, and is likely to have positive indirect effects on discard mortality as compared to the status quo. With respect to the allocation of the recreational quota between the private angling and for-hire components, a detailed discussion of the basis for the Council's decision is discussed in the amendment and proposed rule. NMFS has determined that the allocation is fair and equitable because it reflects both historical changes in the recreational sector as well as current conditions, and is expected to increase the total benefits to the recreational sector.

    Comment 6: Amendment 40 violates National Standard 5 because it only establishes an economic sub-allocation of a quota. Thus economic allocation is the sole purpose of the action.

    Response: NMFS disagrees that Amendment 40 is inconsistent with National Standard 5. National Standard 5 requires that conservation and management measures, where practicable, shall consider efficiency in the utilization of fishery resources, except no such measure shall have economic allocation as its sole purpose. As stated in the proposed rule and in the response to Comment 5, the purpose of Amendment 40 is to improve management of the recreational sector and increase both biological and economic benefits. Amendment 40 will allow the development and implementation of management measures better tailored to the specific needs of the separate components; improve quota monitoring; and reduce bycatch and associated discard mortality compared to the status quo. Thus, NMFS has determined that Amendment 40 and this final rule are consistent with National Standard 5.

    Comment 7: Amendment 40 violates National Standard 8 because, without having sufficient information, particularly quantitative information of the economic impacts to the Federal for-hire component, the Council could not effectively evaluate the effects of the allocations. For example, no discussion of the impact of the longer season for the Federal for-hire component relative to the shorter season for the private angler component was provided. In addition, Amendment 40 does not take into account the importance of fishery resources to fishing communities dependent on private anglers who target red snapper. Nor does it provide for the sustained participation or minimize adverse economic impacts on these communities.

    Response: NMFS disagrees that Amendment 40 is inconsistent with National Standard 8. National Standard 8 requires that conservation and management measures take into account the importance of fishery resources to fishing communities by utilizing economic and social data consistent with National Standard 2 in order to provide for the sustained participation of such communities and, to the extent practicable, to minimize adverse economic impacts on such communities. As discussed in the response to Comment 4, a quantitative economic analysis was not provided in Amendment 40 because the information required for such an analysis is not available. However, Amendment 40 includes a qualitative economic analysis based on the best scientific information available, which concludes that, overall, greater percentages allocated to the Federal for-hire component would correspond to increasing economic benefits to the Federal for-hire component and decreasing benefits to the private angling component.

    Amendment 40 does not include an analysis of the impacts of season length because the season length depends on a number of factors in addition to each component's allocation. As explained in Amendment 40, even under the status quo alternative (a single recreational quota), the length of the 2015 recreational red snapper season could not be projected at the time the Council took final action because final 2014 harvest information and the results of a 2014 red snapper update assessment were not available. However, Amendment 40 did provide estimated season lengths for each allocation alternative if sector separation was implemented for the 2014 fishing season, and as explained below, did consider fishing communities, which generally service recreational anglers fishing from all fishing modes.

    With respect to impacts on fishing communities, the National Standard 8 Guidelines define a fishing community as place-based, such that members of the community “reside in a specific location” 50 CFR 600.345(b)(3). As explained above, Amendment 40 includes an extensive economic analysis. Amendment 40 also includes an extensive qualitative social analysis including identifying the communities where most fishing activity takes place. These analyses are based on the best scientific information available.

    Amendment 40 provides a ranked list of fishing communities most reliant on recreational fishing, generally, as recreational landings of red snapper are not available at the community level. Recreational fishing infrastructure, such as marinas and tackle shops, are used by recreational anglers fishing from all fishing modes, including charter vessels, headboats, and private vessels. The resulting communities are all “general” recreational fishing communities and not disaggregated as private angling communities or for-hire communities. Generally, communities that service one component would be expected to service the other, such that distinct private angling communities and for-hire communities do not exist. However, there are more private recreational fishing vessels, there are more departure sites for these vessels, and there are no minimum geographic or population size requirements to define a community. Thus, there are likely some small and/or isolated locations that may only cater to private anglers. In general, however, NMFS expects that most communities with substantial amounts of recreational fishing infrastructure and services cater to both components.

    The National Standard 8 Guidelines define “sustained participation” as “continued access to the fishery within the constraints of the condition of the resource” 50 CFR 600.345(b)(4). To the extent there may be some small or isolated locations that cater only to private anglers who target red snapper, based on historical participation, these communities' sustained participation is secured by the 57.7 percent of the quota allocated to that component.

    Concerning the requirement to minimize adverse economic impacts on communities, as described above, communities from which for-hire vessels and private angling vessels depart overlap. Thus, NMFS does not expect there to be distinct Federal for-hire communities and private angling communities that will experience different effects from this action. Further, fishermen in both recreational components also target other species, including other reef fish, in addition to red snapper. Fishing trips for these species would be unaffected by this action and the associated economic benefits from these trips would continue to support these coastal communities. Although some anglers may only fish for red snapper, the continued viability of these communities, despite the brevity of the red snapper recreational fishing season in recent years, demonstrates the diversity and resilience of the recreational fishing industry and the general absence of reliance on individual species at the community level.

    Comment 8: Amendment 40 violates National Standard 10 because it would create a derby for private anglers, which will likely result in crowded boat ramps, waterways, and artificial reefs, as well as negatively affect law enforcement's ability to effectively monitor catches.

    Response: NMFS disagrees Amendment 40 violates National Standard 10. NMFS has determined that Amendment 40 and the final rule are consistent with National Standard 10, which requires that conservation and management measures, to the extent practicable, promote the safety of human life at sea. As noted in the proposed rule, a shorter Federal fishing season for the private-angling component will likely be offset by extended state fishing seasons. This will reduce both the incentive to fish in the EEZ if unsafe fishing conditions exist during the open season and the likelihood that boat ramps, waterways, and artificial reefs will be crowded to the point of creating a safety concern or impeding the ability of law enforcement to effectively monitor catches. In addition, private anglers do not have an economic incentive, compared to commercial fishermen who earn their living fishing, to fish in unsafe conditions. Thus, NMFS has determined that it is unlikely that private anglers will attempt to fish for red snapper in Federal waters in hazardous weather conditions.

    Comment 9: Given other actions the Gulf Council is working on, it is unclear how sector separation will improve red snapper management.

    Response: The purpose and need statement for Amendment 40 explains that “Establishing separate components within the recreational sector would provide a basis for flexible management approaches tailored to each component and reduce the likelihood for recreational quota overruns which could jeopardize the rebuilding of the red snapper stock.” Currently, the Council is working on amendments that consider regional management, options for private anglers such as tags and slot limits, and the development of for-hire allocation-based programs. By separating the recreational sector into the two components and establishing component quotas, the Council now has the flexibility to focus on maximizing opportunities for each component independently. For example, regional management would allow Gulf states or sub-regions of the Gulf to be managed differently so long as the proposed regional management measures are not projected to exceed the regional quota allocation. With two components, the Council has greater flexibility in how it manages each.

    Comment 10: No actions should be applied to the recreational sector until there are better data to determine red snapper recreational harvest.

    Response: NMFS disagrees that no recreational red snapper management measures should be developed until some unspecified time in the future. National Standard 2 requires that management measures be based on the best scientific information available. Consistent with this requirement, NMFS currently determines red snapper harvest based on harvest information obtained from an MRIP-based private angler/charter survey; the Southeast Region Headboat Survey; the Louisiana Department of Wildlife and Fisheries (LDWF) creel survey; and the Texas Parks and Wildlife Department (TPWD) creel survey. NMFS agrees there are opportunities to improve the data collection process and is collaborating with many of the Gulf States' marine fisheries resource agencies to make improvements in both data collection and analysis. Any improvements will be incorporated into future management decisions and season projections.

    Comment 11: Amendment 40 violates the Magnuson-Stevens Act because the fish belong to the recreational sector as a whole. The Magnuson-Stevens Act does not provide the authority for the Council to divide the recreational quota between the Federal for-hire and private-angling components. For this same reason, approval of Amendment 40 would violate the Administrative Procedure Act.

    Response: NMFS disagrees that Amendment 40 violates the Magnuson-Stevens Act by separating the recreational sector into two components. As discussed in the proposed rule, Section 407(d) of the Magnuson-Stevens Act requires separate quotas for commercial and recreational fishing (which, for the purposes of the subsection includes for-hire fishing), and a prohibition on the retention of fish when each quota is reached. The Magnuson-Stevens Act does not prohibit the Council from further subdividing the recreational quota among different components of the recreational sector to improve the management of the fishery, and the approach of subdividing a quota has been used repeatedly by fishery management councils nationwide as consistent with the authority provided in the Act. See e.g., 16 U.S.C. 1853(b)(3)(A) (allowing the councils to establish specified limitations which are necessary and appropriate for the conservation and management of the fishery on the—“(A) catch of fish (based on area, species, size, number, weight, sex, bycatch, total biomass, or other factors)”).

    The one constraint on managing the two components of the recreational sector independently, per section 407(d) of the Magnuson-Stevens Act, is the mandate to prohibit the retention of red snapper when the recreational red snapper quota is reached. Consistent with this requirement, this rule does not change the fact that there is a total recreational quota or the requirement that the recreational sector be closed when that total quota is reached. Thus, if NMFS determines that the Gulf-wide recreational quota has been met, all recreational harvest of red snapper in the EEZ will be prohibited regardless of whether one component has remaining allocation. However, the use of an ACT to set the component season lengths will reduce the likelihood of this occurring.

    Comment 12: NMFS should disapprove Amendment 40 because several Council members should not have voted to submit the amendment for implementation. These include two members who have charter for-hire vessels and so have a conflict of interest (i.e., the amendment would directly benefit them). Three other Council members are members of a commercial fishing lobbying-group and failed to list this activity on their financial disclosure forms.

    Response: NMFS disagrees. First, Council members appointed by the Secretary “must be individuals who, by reason of their occupational or other experience, scientific expertise or training, are knowledgeable” about the relevant fishery resources, and often are individuals who are engaged in the fishing industry. Consequently, the MSA provides that a conflict of interest alone does not disqualify a Council member from voting on a Council decision. Section 302(j)(7) of the Magnuson-Stevens Act and the regulations at 50 CFR 600.235(c), prohibit a Council member from voting on a Council decision only in specific circumstances, and there is no indication that any Council member had a financial interest that met the criteria for mandatory recusal. Second, under section 302(j)(6) of the Magnuson-Stevens Act, the participation of a Council member in an action by the Council during any time in which the Council member is not in compliance with the financial disclosure regulations is not a basis for invalidating that action.

    Comment 13: Amendment 40 does not differentiate between commercial and recreational sustenance fishing and should take into account the families of these fishermen who they need to feed.

    Response: It is unclear whether the commenter meant sustenance or subsistence fishing. Sustenance refers to the consumption of what is harvested, whereas subsistence is a circumstance under which the harvest of fish, or other foodstuff, is required to meet the minimum dietary requirements necessary for living and other more cost-effective means to meet these needs are not available. The two terms are not equivalent and simply eating what one catches does not qualify as subsistence. Amendment 40 would not prevent either recreational or commercial fishermen from harvesting and consuming red snapper as long as they follow current regulations. Amendment 40 discusses subsistence and explains that there are no known claims for subsistence consumption of Gulf red snapper by any population including tribes or indigenous groups. This rule pertains to the harvest of red snapper in the EEZ, which would require a boat capable of safely travelling 3-9 miles (5-14 km) offshore, depending on its departure location, and associated high fuel and gear costs. As a result, the costs associated with the harvest of red snapper are inconsistent with the concept of subsistence fishing because alternative foods, as well as fresh fish, including red snapper, could be purchased more cheaply than the cost of a fishing trip. Thus, it is unlikely that there would be any concerns associated with subsistence fishing resulting from the actions in this amendment.

    Comment 14: Amendment 40 could force anglers to use for-hire services if they want to harvest red snapper and will cause prices for for-hire trips to increase as a few people will be able to control prices.

    Response: NMFS disagrees that Amendment 40 forces anglers to use for-hire services if they want to harvest red snapper and that this will cause price increase. Anglers in the private component would only have to use for-hire services if they choose to fish in Federal waters when the season for the private component is closed. These anglers could continue to fish in open state waters during the extended state fishing seasons, without using for-hire services. For those anglers who choose to use for-hire services to fish in Federal waters, there is sufficient capacity in the for-hire fleet to prevent price control. As stated in Amendment 40, there are an estimated 1,269 charter vessels and 67 headboats operating in the Gulf with charter/headboat reef fish permits. The average number of red snapper target trips in the charter mode is approximately 54,000 trips, or approximately 40 angler trips per charter vessel. Assuming 6 anglers per trip, the average number of vessel trips per charter vessel would be approximately 7 trips, equivalent to 7 days if full-day trips are taken, or fewer than 7 days if some trips are half-day trips. Similar information is not available for headboats because target information is not collected for these vessels. Although all of the charter vessels may not operate in areas where red snapper is available, these results show there is ample capacity to increase the number of for-hire trips without substantial price changes.

    Comment 15: The analysis in Amendment 40 underestimates the expected economic impacts on private anglers and associated businesses and communities. Private anglers contribute more to the local economy than commercial fishing operations.

    Response: NMFS disagrees. As discussed in Amendment 40, anglers in the private angling component would be expected to experience decreased harvests and associated economic benefits compared to recent years, if their harvest is sufficiently constrained by state regulations, because their sub-quota would be less than the portion of the red snapper recreational quota they have harvested in recent years. In the long term, however, the total economic benefits to the private angling component and the recreational sector as a whole would be expected to increase due to the enhanced quota monitoring capability and ability to better tailor management, through subsequent rulemaking, to the needs of each component. Quantitative estimates of the short- or long-term economic impacts were not provided because of the lack of appropriate data. Although the amount of allowable harvest by the private angling component would be reduced, these anglers would retain the ability to fish for other species in Federal and state waters. It is unknown, however, how many anglers may continue to fish but target other species, how many may cease to fish, or the appropriate economic values to assign to these anglers. Additionally, even though the private angling component quota will be less than recent harvests, if state regulations are ineffective in adequately restraining red snapper harvest, the total red snapper harvest and associated economic benefits accruing to the private angling component may be largely unaffected, resulting in shortening of the Federal for-hire season because of the quota closure requirements. Nevertheless, if effort is reduced, the economic benefits accruing to the private angling component would be reduced.

    With respect to the comment that private anglers contribute more to the local economy than commercial fishing operations, because the provision of for-hire services is a commercial activity, NMFS assumes that the commenter was referring to for-hire businesses and not the commercial reef fish sector (otherwise the comment is beyond the scope of this rule, as Amendment 40 does not affect the commercial sector). Although the percent distributions were not provided, the information shown in Amendment 40 demonstrates that charter fishing produces more business activity per trip than private angling. Although red snapper target effort by anglers fishing on charter vessels typically comprises less than 20 percent in Louisiana through Florida (comparable information on Texas is not available) of total red snapper target effort, with the exception of Mississippi, which has minimal charter vessel activity compared to the other Gulf states, the business activity associated with these trips ranges from approximately 54 percent to 67 percent. Anglers fishing on charter vessels spend, on average, more per trip than private anglers. Although these estimates may include anglers that fish on charter vessels and target red snapper in state waters, this activity is expected to be minimal compared to anglers fishing on charter vessels in Federal waters. Thus, the per trip contribution of charter vessel anglers to business activity in local communities exceeds that of private anglers. Similar information is not available for headboats. Because there are more private angler vessels and suitable launch sites for private angler vessels than there are for for-hire vessels, there may be isolated areas where the for-hire presence is limited compared to private angling. However, generally, areas with substantial amounts of private angling activity also support for-hire businesses. Thus, although there will be areas with no access to for-hire services and it is possible to define a community as an area so small that for-hire activity is excluded, generally, it is expected that the areas that provide private angling services also provide for-hire angling services. As a result, areas that may experience changes in fishing by private anglers may benefit from changes in fishing by for-hire anglers.

    Comment 16: NMFS withheld a decision tool that contained information that was vital for the Council to make an informed decision on Amendment 40.

    Response: No information vital to the Council decision was withheld. The “decision tool” referred to in the comment was merely an Excel spreadsheet developed by NMFS staff at the request of a single for-hire fisherman, and was not related to Amendment 40 or allocating quota between the for-hire component and private angling component. Rather, the spreadsheet as the fisherman requested, allowed him to calculate various quota percentages for use in discussing hypothetical individual fishing quota (IFQ) allocations for a hypothetical charter vessel IFQ program.

    Comment 17: After any red snapper recreational quota overage, the ACT should be reset using the Council's ACL/ACT control rule.

    Response: NMFS disagrees that the component ACT should be reset using the ACL/ACT control rule after a recreational quota overage. The ACT is not intended to address quota overages. The ACT is used to account for management uncertainty in setting the recreational fishing season and is intended to help ensure that the quota is not exceeded. If a quota overage occurs, the accountability measure's payback provision, which reduces the quota by the amount of the overage and sets the ACT at 20-percent less than the adjusted quota, mitigates for that excess harvest. Keeping a consistent buffer of 20 percent between the quota and ACT provides for more stable management of the recreational sector. If new information indicates that a 20-percent buffer may no longer be appropriate, the Council may consider revising the ACT in the future. The ACL/ACT control rule could be used to determine one alternative for an appropriate buffer. The Council may also consider other reasonable alternatives before deciding whether to adjust the ACT.

    Comment 18: The use of “historic” harvest information that is more than 30 years old in setting the allocation is not reflective of the current make-up of the recreational sector or how communities in the Gulf have grown and changed to accommodate the expansion of the private recreational component. More recent information including MRIP and state marine resource agency harvest data should be used to set the allocation.

    Response: The Council, in evaluating different allocation alternatives, did consider some alternatives based solely on more recent years. However, the Council determined the allocations based only on these limited time series did not capture changes that have occurred in the fishery, such as changes in regulations and disruptive events such as hurricanes and oil spills that have affected how recreational fishing is prosecuted. At the same time, the Council also recognized the importance of including more recent landings information to reflect current conditions in recreational red snapper fishing. Therefore, the Council determined, and NMFS agrees, that a fair and equitable allocation resulted by using both historic harvest information (1986-2013) and more recent harvest information (2006-2013). This is an approach used by the Council in setting allocations for other species (e.g., the jurisdictional apportionment of black grouper and yellowtail snapper resources between the Gulf and South Atlantic Councils).

    Comment 19: Amendment 40 fails to include any instructions for how the quotas for the private and charter vessel/headboat components will be managed, but assumes there will be separate harvest accounting measures for each component.

    Response: As stated in the response to Comment 2, red snapper management for the for-hire and private angling components will be managed with a 2-fish bag limit, 16-inch (40.6 cm), total length, minimum size limit, and a June 1 season opening and the season for each component will be projected based on each component's ACT. However, these measures may change in the future as the Council explores flexible management approaches tailored to each component. The component ACTs, which are 20-percent reductions from the component quotas, serve as in-season AMs designed to reduce the likelihood of a component exceeding its component quota. If the total recreational ACL is exceeded in a fishing year and red snapper are classified as overfished, NMFS will adjust the applicable recreational component quota(s) and ACT(s) the following fishing year, based on the overage on the total recreational quota. As has been done in the past, harvest information to compare landings to the quotas for each component will be obtained from an MRIP-based private angler/charter survey and the LDWF and the TPWD creel surveys. Additional information for the for-hire component will come from the Southeast Region Headboat Survey. These harvest information programs are likely to change as NMFS, collaborating with its state partners, work to make improvements in both data collection and analysis.

    Comment 20: No portion of the recreational quota should be privatized.

    Response: Amendment 40 does not privatize any portion of the red snapper recreational quota. The actions in the amendment do four things: Split the recreational sector that fishes for red snapper into a private angler and a Federal for-hire component; sunsets the components after 3 years; provides an allocation of the recreational red snapper quota to each of the components; and revises the recreational red snapper AMs to account for the two components.

    Comment 21: Amendment 40 does not contain a full fishery impact statement (FIS) that takes into consideration the effects of the proposed actions on all entities involved.

    Response: The Magnuson-Stevens Act requires that an FIS be prepared for all fishery management plans and amendments prepared by or submitted to the Secretary after October 1, 1990. The FIS assesses, specifies, and analyzes the likely effects, if any, including the cumulative conservation, economic, and social impacts of the conservation and management measures on fishery participants and their communities, participants in the fisheries conducted in adjacent areas under the authority of another Fishery Management Council, and the safety of human life at sea. Amendment 40, as submitted by the Council, contains a full FIS that describes the effects of the action on fishery participants and their communities, participants in the fisheries conducted in adjacent areas, and the safety of human life at sea. These effects are fully analyzed based on the best scientific information available (per National Standard 2). The FIS focuses on the effects of the preferred alternatives, which are the management measures submitted for implementation and approval. Amendment 40 contains additional analysis that addresses both the impacts of the preferred alternatives as well as those alternatives that were not selected for implementation.

    Classification

    The Regional Administrator, Southeast Region, NMFS has determined that this final rule is necessary for the conservation and management of Gulf red snapper and is consistent with Amendment 40, the FMP, the Magnuson-Stevens Act, and other applicable law.

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

    The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this rule would not have a significant economic impact on a substantial number of small entities. The factual basis for this determination was published in the proposed rule and is not repeated here. No comments were received regarding the certification to the Small Business Administration. Comments regarding the general economic effects of the action are addressed in the comments and responses section of this final rule. No changes to the final rule were made in response to these comments. As a result, a final regulatory flexibility analysis was not required and none was prepared.

    List of Subjects in 50 CFR Part 622

    Fisheries, Fishing, Gulf, Quotas, Recreational, Red snapper.

    Dated: April 16, 2015. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.

    For the reasons set out in the preamble, 50 CFR part 622 is amended as follows:

    PART 622—FISHERIES OF THE CARIBBEAN, GULF OF MEXICO, AND SOUTH ATLANTIC 1. The authority citation for part 622 continues to read as follows: Authority:

    16 U.S.C. 1801 et seq.

    2. In § 622.8, paragraphs (a) and (c) are revised to read as follows:
    § 622.8 Quotas—general.

    (a) Quotas apply for the fishing year for each species, species group, sector or component, unless accountability measures are implemented during the fishing year pursuant to the applicable annual catch limits and accountability measures sections of subparts B through V of this part due to a quota overage occurring the previous year, in which case a reduced quota will be specified through notification in the Federal Register. Annual quota increases are contingent on the total allowable catch for the applicable species not being exceeded in the previous fishing year. If the total allowable catch is exceeded in the previous fishing year, the RA will file a notification with the Office of the Federal Register to maintain the quota for the applicable species, sector or component from the previous fishing year for following fishing years, unless NMFS determines based upon the best scientific information available that maintaining the quota from the previous year is unnecessary. Except for the quotas for Gulf and South Atlantic coral, the quotas include species harvested from state waters adjoining the EEZ.

    (c) Reopening. When a species, sector or component has been closed based on a projection of the quota specified in this part, or the ACL specified in the applicable annual catch limits and accountability measures sections of subparts B through V of this part being reached and subsequent data indicate that the quota or ACL was not reached, the Assistant Administrator may file a notification to that effect with the Office of the Federal Register. Such notification may reopen the species, sector or component to provide an opportunity for the quota or ACL to be harvested.

    3. In § 622.39, paragraphs (a)(2)(i) and (c) are revised to read as follows:
    § 622.39 Quotas.

    (a) * * *

    (2) * * *

    (i) Recreational quota for red snapper—(A) Total recreational quota (Federal charter vessel/headboat and private angling component quotas combined)—5.390 million lb (2.445 million kg), round weight.

    (B) Federal charter vessel/headboat component quota—2,279,970 lb (1,034,177 kg), round weight. The Federal charter vessel/headboat component quota applies to vessels that have been issued a valid Federal charter vessel/headboat permit for Gulf reef fish any time during the fishing year. This component quota is effective for only the 2015, 2016, and 2017 fishing years. For the 2018 and subsequent fishing years, the total recreational quota specified in § 622.39(a)(2)(i)(A) will apply to the recreational sector.

    (C) Private angling component quota—3,110,030 lb (1,410,686 kg), round weight. The private angling component quota applies to vessels that fish under the bag limit and have not been issued a Federal charter vessel/headboat permit for Gulf reef fish any time during the fishing year. This component quota is effective for only the 2015, 2016, and 2017 fishing years. For the 2018 and subsequent fishing years, the total recreational quota specified in § 622.39(a)(2)(i)(A) will apply to the recreational sector.

    (c) Restrictions applicable after a recreational quota closure or recreational component quota closure. The bag limit for the applicable species for the recreational sector or recreational sector component in or from the Gulf EEZ is zero. When the Federal charter vessel/headboat component is closed or the entire recreational sector is closed, this bag and possession limit applies in the Gulf on board a vessel for which a valid Federal charter vessel/headboat permit for Gulf reef fish has been issued, without regard to where such species were harvested, i.e., in state or Federal waters.

    4. In § 622.41, paragraph (q) is revised to read as follows:
    § 622.41 Annual catch limits (ACLs), annual catch targets (ACTs), and accountability measures (AMs).

    (q) Red snapper—(1) Commercial sector. The IFQ program for red snapper in the Gulf of Mexico serves as the accountability measure for commercial red snapper. The commercial ACL for red snapper is equal to the commercial quota specified in § 622.39(a)(1)(i).

    (2) Recreational sector. (i) The AA will determine the length of the red snapper recreational fishing season, or recreational fishing seasons for the Federal charter vessel/headboat and private angling components, based on when recreational landings are projected to reach the recreational ACT, or respective recreational component ACT specified in paragraph (q)(2)(iii) of this section, and announce the closure date(s) in the Federal Register. These seasons will serve as in-season accountability measures. On and after the effective date of the recreational closure or recreational component closure notifications, the bag and possession limit for red snapper or for the respective component is zero. When the recreational sector or Federal charter vessel/headboat component is closed, this bag and possession limit applies in the Gulf on board a vessel for which a valid Federal charter vessel/headboat permit for Gulf reef fish has been issued, without regard to where such species were harvested, i.e., in state or Federal waters.

    (ii) In addition to the measures specified in paragraph (q)(2)(i) of this section, if red snapper recreational landings, as estimated by the SRD, exceed the total recreational quota specified in § 622.39(a)(2)(i)(A), and red snapper are overfished, based on the most recent Status of U.S. Fisheries Report to Congress, the AA will file a notification with the Office of the Federal Register to reduce the total recreational quota by the amount of the quota overage in the prior fishing year, and reduce the applicable recreational component quota(s) specified in § 622.39(a)(2)(i)(B) and (C) and the applicable recreational component ACT(s) specified in paragraph (q)(2)(iii) of this section (based on the buffer between the total recreational ACT and the total recreational quota specified in the FMP), unless NMFS determines based upon the best scientific information available that a greater, lesser, or no overage adjustment is necessary.

    (iii) The recreational ACL is equal to the total recreational quota specified in § 622.39(b)(2)(i)(A). The total recreational ACT for red snapper is 4.312 million lb (1.956 million kg), round weight. The recreational component ACTs for red snapper are 1.824 million lb (0.827 million kg), round weight, for the Federal charter vessel/headboat component and 2.488 million lb (1.129 million kg), round weight, for the private angling component. These recreational component ACTs are effective for only the 2015, 2016, and 2017 fishing years. For the 2018 and subsequent fishing years, the total recreational ACT will apply to the recreational sector.

    [FR Doc. 2015-09353 Filed 4-21-15; 8:45 am] BILLING CODE 3510-22-P
    80 77 Wednesday, April 22, 2015 Proposed Rules DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 929 [Doc. No. AMS-FV-14-0091; FV15-929-1 PR] Cranberries Grown in States of Massachusetts, et al.; Revising Determination of Sales History AGENCY:

    Agricultural Marketing Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    This proposed rule would implement a recommendation from the Cranberry Marketing Committee (Committee) to revise the determination of sales history provisions currently prescribed under the cranberry marketing order (order). The Committee, which consists of 13 growers and 1 public member, locally administers the order regulating the handling of cranberries grown in Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York. Under the order, there are two different sales history calculations that have been established for this program. This action would clarify when the different methods for calculating sales history would be used. This action would also remove the fresh fruit exemption from one of the calculations.

    DATES:

    Comments must be received by May 7, 2015.

    ADDRESSES:

    Interested persons are invited to submit written comments concerning this proposal. Comments must be sent to the Docket Clerk, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number and the date and page number of this issue of the Federal Register and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. All comments submitted in response to this proposal will be included in the record and will be made available to the public. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the internet at the address provided above.

    FOR FURTHER INFORMATION CONTACT:

    Doris Jamieson, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA; Telephone: (863) 324-3375, Fax: (863) 291-8614, or Email: [email protected] or [email protected].

    Small businesses may request information on complying with this regulation by contacting Jeffrey Smutny, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected].

    SUPPLEMENTARY INFORMATION:

    This proposal is issued under Marketing Agreement and Order No. 929, as amended (7 CFR part 929), regulating the handling of cranberries grown in the states of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

    The Department of Agriculture (USDA) is issuing this proposed rule in conformance with Executive Orders 12866, 13563, and 13175.

    This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. This proposed rule is not intended to have retroactive effect.

    The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed not later than 20 days after the date of the entry of the ruling.

    There are two sales history calculations in effect under two separate sections of the order. This action would clarify when the different methods for calculating sales history would be used. This proposed rule also invites comments on the removal of the exemption for fresh fruit from the sales history calculation found in § 929.149. The Committee unanimously recommended these changes at meetings held on February 10, and August 20, 2014.

    The order provides authority for volume control in the form of a producer allotment program. When in effect, this program limits the quantity of cranberries that handlers may purchase or handle on behalf of growers in years of oversupply. Each year, prior to determining if volume regulation is needed, grower sales histories are calculated. The sales history averages recent years' sales data using information submitted by each grower on a production and eligibility report filed with the Committee. If the Committee determines that volume regulation is needed, a producer allotment percentage is calculated. Each grower's allotment of cranberries eligible for handling is then calculated by multiplying the allotment percentage by the grower's sales history.

    Section 929.48 of the order contains provisions for computing an annual grower sales history. Section 929.48 also provides that the Committee, with the approval of the Secretary, may establish alternative grower's sales history calculations as warranted. One such alternative calculation is established in § 929.149. This alternative calculation supplements the calculation found in § 929.48 by including an additional sales history for growers with new and renovated acreage. It also provides that the sales history be computed for processed fruit only, with fresh fruit sales deducted from the calculation. The alternative calculation method established in § 929.149 was developed for the 2001-02 marketing year, the last time volume regulation was implemented, and was recently revised so that it could be used for any season.

    The Committee believes the provisions in the alternative sales history calculation are beneficial and provide equity to growers who have recently planted or renovated acreage. However, the alternative method for calculating sales history requires physical verification of the renovated or new acreage, thus resulting in additional costs to the Committee. When considering the costs and the benefits of both sales history calculation methods, the Committee concluded that the method in § 929.48 was adequate for annual calculations when volume regulation was not anticipated. However, due to the importance of a grower's sales history in the determination of that grower's allotment during years of volume regulation, the inclusion of new and renovated acreage is paramount. Accordingly, the Committee concluded that the sales history calculation in § 929.149 should be used in all years when volume regulation is anticipated.

    Consequently, at its February 10 and August 20, 2014, meetings, the Committee recommended that the alternative calculation method found in § 929.149 only apply during times when a producer allotment volume regulation is being implemented. When a producer allotment volume regulation is not being implemented, the Committee would calculate grower's sales history according to the provisions provided in § 929.48 of the order.

    The Committee also recommended revising the alternative calculation method in § 929.149 by removing the exemption for fresh fruit sales. Committee members stated that automatically exempting fresh fruit from the sales history calculation provides the grower with an inaccurate representation of their total sales. Further, the exclusion of fresh fruit affects the industry's total sales history, which is used to determine the allotment percentage under a producer allotment program. The Committee believes if any exemptions to future producer allotment calculations are warranted, such exemptions should be considered and recommended to USDA as part of a proposed volume regulation. Removing the fresh exemption provision from the alternative calculation would allow the Committee to determine, on an as-needed basis, whether or not volume regulation should apply to the fresh cranberry supply.

    Initial Regulatory Flexibility Analysis

    Pursuant to requirements set forth in the Regulatory Flexibility Act (RFA)(5 U.S.C. 601-612), the Agricultural Marketing Service (AMS) has considered the economic impact of this action on small entities. Accordingly, AMS has prepared this initial regulatory flexibility analysis.

    The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions in order that small businesses will not be unduly or disproportionately burdened. Marketing orders issued pursuant to the Act, and rules issued thereunder, are unique in that they are brought about through group action of essentially small entities acting on their own behalf.

    There are approximately 1,300 cranberry growers in the regulated area and approximately 45 cranberry handlers who are subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000 and small agricultural service firms are defined as those having annual receipts of less than $7,000,000 (13 CFR 121.201).

    According to industry and Committee data, grower prices ranged between $15 and $47 per barrel for cranberries during the 2012-13 marketing year, and total sales were around 7.8 million barrels. Based on production data and grower prices, the average annual grower revenue is below $750,000. Using Committee information and shipment data, 44 out of the 45 cranberry handlers could also be considered small businesses under SBA's definition. Therefore, the majority of cranberry growers and handlers may be classified as small entities.

    This proposal would revise the rules and regulations pertaining to the determination of sales history currently prescribed in § 929.149 of the order. There are two sales history calculations under two separate sections of the order. This action would clarify when the different methods for calculating sales history would be used. It would also remove the exemption for fresh fruit from the calculation method found in § 929.149. These changes were unanimously recommended by the Committee at meetings held on February 10, and August 20, 2014. Authority for these changes is provided in § 929.48 of the order.

    It is not anticipated that this action would impose any additional costs on the industry. Each year, the Committee is required to calculate a sales history for each grower. This rule would clarify that the alternative sales history calculation method established under § 929.149 would only apply when a producer allotment regulation is being implemented. The calculation method found in § 929.48 would be used when volume regulation is not being implemented.

    Removing the fresh exemption provision from the calculation found in § 929.149 would allow the Committee to determine, on an as-needed basis, whether or not volume regulation should apply to the fresh cranberry supply. It also would provide growers, and the Committee, with a more accurate representation of their sales history. The benefits of this proposed rule are not expected to be disproportionately greater or lesser for small handlers or producers than for large entities.

    The Committee considered the alternative of making no changes to the rules and regulations pertaining to the determination of sales history. However, the Committee recognized that this change would help the industry avoid the additional costs of acreage verification in years when volume regulation is not being implemented. Also, the Committee agreed that the current grower sales history tabulation exempting fresh fruit was not representative of the actual sales. Therefore, this alternative was rejected.

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the order's information collection requirements have been previously approved by the Office of Management and Budget (OMB) and assigned OMB No. 0581-0189, Generic Fruit Crops. No changes in those requirements as a result of this action are necessary. Should any changes become necessary, they would be submitted to OMB for approval.

    This action would not impose any additional reporting or recordkeeping requirements on either small or large cranberry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

    AMS is committed to complying with the E-Government Act, to promote the use of the internet and other information technologies to provide increased opportunities for citizen access to Government information and services, and for other purposes.

    In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this proposed rule.

    Further, the Committee's meetings were widely publicized throughout the cranberry industry and all interested persons were invited to attend the meetings and participate in Committee deliberations on all issues. Like all Committee meetings, the February 10, and August 20, 2014, meetings were public meetings and all entities, both large and small, were able to express views on this issue. Finally, interested persons are invited to submit comments on this proposed rule, including the regulatory and informational impacts of this action on small businesses.

    A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: http://www.ams.usda.gov/MarketingOrdersSmallBusinessGuide. Any questions about the compliance guide should be sent to Jeffrey Smutny at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

    A 15-day comment period is provided to allow interested persons to respond to this proposal. Fifteen days is deemed appropriate because this proposed rule would need to be in place as soon as possible as the Committee is beginning discussions regarding establishing a producer allotment volume regulation for the coming season. As such, it would be important to have these changes in place as the Committee moves forward with these discussions and potential implementation. All written comments timely received will be considered before a final determination is made on this matter.

    List of Subjects in 7 CFR Part 929

    Cranberries, Marketing agreements, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 929 is proposed to be amended as follows:

    PART 929—CRANBERRIES GROWN IN THE STATES OF MASSACHUSETTS, RHODE ISLAND, CONNECTICUT, NEW JERSEY, WISCONSIN, MICHIGAN, MINNESOTA, OREGON, WASHINGTON, AND LONG ISLAND IN THE STATE OF NEW YORK 1. The authority citation for 7 CFR part 929 continues to read as follows: Authority:

    7 U.S.C. 601-674.

    § 929.149 [Amended]
    2. In § 929.149, the words “when a producer allotment volume regulation is in effect” are added to the end of the introductory text, and paragraphs (e) and (f) are removed. Dated: April 16, 2015. Rex A. Barnes, Associate Administrator, Agricultural Marketing Service.
    [FR Doc. 2015-09291 Filed 4-21-15; 8:45 am] BILLING CODE 3410-02-P
    DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 929 [Docket No. AMS-FV-15-0014; FV15-929-2] Cranberries Grown in States of Massachusetts, et. al.; Continuance Referendum AGENCY:

    Agricultural Marketing Service, USDA.

    ACTION:

    Referendum order.

    SUMMARY:

    This document directs that a referendum be conducted among eligible producers of cranberries grown in the states of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York, to determine whether they favor continuance of the marketing order regulating the handling of cranberries grown in the production area.

    DATES:

    The referendum will be conducted from May 4 through May 26, 2015. To vote in this referendum, producers must have produced cranberries within the designated production area during the period September 1, 2013, through August 31, 2014.

    ADDRESSES:

    Copies of the marketing order may be obtained from the referendum agents at 1124 First Street South, Winter Haven, FL 33880, or the Office of the Docket Clerk, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or Internet: www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Doris Jamieson, Marketing Specialist, or Christian D. Nissen, Regional Director, Southeast Marketing Field Office, Marketing Order and Agreement Division, Fruit and Vegetable Program, AMS, USDA, 1124 First Street South, Winter Haven, FL 33880; Telephone: (863) 324-3375, Fax: (863) 291-8614, or Email: [email protected] or [email protected]

    SUPPLEMENTARY INFORMATION:

    Pursuant to Marketing Agreement and Order No. 929, as amended (7 CFR part 929), hereinafter referred to as the “order,” and the applicable provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” it is hereby directed that a referendum be conducted to ascertain whether continuance of the order is favored by the producers. The referendum shall be conducted from May 4 through May 26, 2015, among cranberry growers in the production area. Only cranberry producers that were engaged in the production of cranberries, during the period of September 1, 2013, through August 31, 2014, may participate in the continuance referendum.

    USDA has determined that continuance referenda are an effective means for determining whether producers favor the continuation of marketing order programs. USDA would terminate the order if less than 50 percent of the producers voting in the referendum and producers of less than 50 percent of the volume of cranberries represented in the referendum favor continuance.

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520), the ballot materials to be used in the referendum have been submitted to and approved by the Office of Management and Budget (OMB) and have been assigned OMB No. 0581-0189, Generic Fruit Crops. It has been estimated that it will take an average of 20 minutes for each of the approximately 1,300 producers of cranberries to cast a ballot. Participation is voluntary. Ballots postmarked after May 26, 2015, will not be included in the vote tabulation.

    Doris Jamieson and Christian D. Nissen of the Southeast Marketing Field Office, Fruit and Vegetable Program, AMS, USDA, are hereby designated as the referendum agents of the Secretary of Agriculture to conduct this referendum. The procedure applicable to the referendum shall be the “Procedure for the Conduct of Referenda in Connection With Marketing Orders for Fruits, Vegetables, and Nuts Pursuant to the Agricultural Marketing Agreement Act of 1937, as Amended” (7 CFR 900.400-900.407).

    Ballots will be mailed to all producers of record and may also be obtained from the referendum agents, or from their appointees.

    List of Subjects in 7 CFR Part 929

    Cranberries, Marketing Agreements, Reporting and recordkeeping requirements.

    Authority:

    7 U.S.C. 601-674.

    Dated: April 16, 2015. Rex A. Barnes, Associate Administrator, Agricultural Marketing Service.
    [FR Doc. 2015-09282 Filed 4-21-15; 8:45 am] BILLING CODE P
    NUCLEAR REGULATORY COMMISSION 10 CFR Part 73 [NRC-2014-0118] RIN 3150-AJ41 Enhanced Security of Special Nuclear Material AGENCY:

    Nuclear Regulatory Commission.

    ACTION:

    Regulatory basis.

    SUMMARY:

    The U.S. Nuclear Regulatory Commission (NRC) is making available a regulatory basis document to support a rulemaking potentially amending its regulations concerning the security of special nuclear material. The NRC is not seeking public comments on this document.

    DATES:

    At this time, the NRC is not soliciting public comments on this document. There will be an opportunity for formal public comment on the proposed rule when it is published in the Federal Register.

    ADDRESSES:

    Please refer to Docket ID NRC-2014-0118 when contacting the NRC about the availability of information for this document. You may obtain publicly-available information related to this document by any of the following methods:

    • Federal Rulemaking Web site: Go to www.regulations.gov and search for Docket ID NRC-2014-0118. Address questions about NRC dockets to Carol Gallagher; telephone:

    (301) 415-3463; email: [email protected] For technical questions, please contact the individual listed in the FOR FURTHER INFORMATION CONTACT section of this document.

    • NRC's Agencywide Documents Access and Management System (ADAMS): You may obtain publicly-available documents online in the ADAMS Public Documents collection at http://www.nrc.gov/reading-rm/adams.html. To begin the search, select “ADAMS Public Documents” and then select “Begin Web-based ADAMS Search.” For problems with ADAMS, please contact the NRC's Public Document Room (PDR) reference staff at 1-800-397-4209, (301) 415-4737, or by email to [email protected] The ADAMS accession number for each document referenced (if it is available in ADAMS) is provided the first time that it is mentioned in the SUPPLEMENTARY INFORMATION section.

    • NRC's PDR: You may examine and purchase copies of public documents at the NRC's PDR, Room O1-F21, One White Flint North, 11555 Rockville Pike, Rockville, Maryland 20852.

    FOR FURTHER INFORMATION CONTACT:

    Timothy Harris, Office of Nuclear Security and Incident Response, U.S. Nuclear Regulatory Commission, Washington, DC 20555-0001; telephone: (301) 287-3594 email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Table of Contents I. Background II. Publicly-Available Documents III. Plain Writing I. Background

    On June 18, 2014, the NRC solicited comment from members of the public on a draft regulatory basis addressing the need for a rulemaking to enhance the security of special nuclear material (79 FR 34641). The public comment period ended on October 17, 2014. The NRC received a total of 26 comment submissions from individuals, non-government organizations, and industry. The NRC staff reviewed and considered the comments in finalizing the regulatory basis. The regulatory basis is available in ADAMS under Accession No. ML14321A007 or on the Federal rulemaking Web site, www.regulations.gov, under Docket ID NRC-2014-0118.

    II. Publicly-Available Documents

    As the NRC continues its ongoing proposed rulemaking effort to amend portions of part 73 of Title 10 of the Code of Federal Regulations (10 CFR) to enhance security of special nuclear material, the NRC is making documents publicly available on the Federal rulemaking Web site, www.regulations.gov, under Docket ID NRC-2014-0118. By making these documents publicly available, the NRC seeks to inform stakeholders of the current status of the NRC's rulemaking development activities and to provide preparatory material for future public meetings.

    The NRC may post additional materials relevant to this rulemaking at www.regulations.gov, under Docket ID NRC-2014-0118. Please take the following actions if you wish to receive alerts when changes or additions occur in a docket folder: (1) Navigate to the docket folder (NRC-2014-0118); (2) click the “Email Alert” link; and (3) enter your email address and select how frequently you would like to receive emails (daily, weekly, or monthly).

    III. Plain Writing

    The Plain Writing Act of 2010, (Pub. L. 111-274) requires Federal agencies to write documents in a clear, concise, well-organized manner that also follows other best practices appropriate to the subject or field and the intended audience. Although regulations are exempt under the Act, the NRC is applying the same principles to its rulemaking documents. Therefore, the NRC has written this document to be consistent with the Plain Writing Act.

    Dated at Rockville, Maryland, this 9th day of April 2015. For the Nuclear Regulatory Commission. Laura A. Dudes, Director, Division of Material Safety, State, Tribal and Rulemaking Programs, Office of Nuclear Material Safety and Safeguards.
    [FR Doc. 2015-09403 Filed 4-21-15; 8:45 am] BILLING CODE 7590-01-P
    SMALL BUSINESS ADMINISTRATION 13 CFR Part 131 RIN 3245-AG02 Office of Women Owned Business: Women's Business Center Program AGENCY:

    U.S. Small Business Administration.

    ACTION:

    Advance Notice of Proposed Rulemaking.

    SUMMARY:

    The U.S. Small Business Administration (SBA) is issuing this Advanced Notice of Proposed Rulemaking (ANPRM) to solicit comments on issues involving the Women's Business Center (WBC) Program. SBA is evaluating the policies and procedures governing the management and oversight of the program and believes that public input could enhance its efforts to provide clear comprehensive and consistent guidance to the WBC grantees. Among other things, the ANPRM seeks public feedback on: (1) The standards and procedures for evaluating applications for new or renewal application for WBC grant; (2) procedures and requirements for resolving findings and disputes resulting from financial exams, programmatic reviews, accreditation reviews, and other SBA oversight activities; and (3) the form and function of the required WBC information clearinghouse. SBA expects this effort will remove any ambiguity and uncertainty in the program and result in improved delivery of services to the small business clients WBCs serve throughout the country.

    DATES:

    Comments must be received by June 22, 2015.

    ADDRESSES:

    You may submit comments, identified by RIN 3245-AG02 by one of the following methods:

    (1) Federal Rulemaking Portal: www.regulations.gov. Follow the instructions for submitting comments;

    (2) Mail/Hand Delivery/Courier: U.S. Small Business Administration, Attn: Bruce Purdy, Deputy Assistant Administrator for the Office of Women's Business Ownership (DAA/OWBO), 409 3rd Street SW., Washington, DC 20416, via facsimile (202) 481-0554; or

    (3) Email to [email protected] SBA will post all comments to this Advance Notice of Proposed Rulemaking on www.regulations.gov. If you wish to submit confidential business information (CBI) as defined in the User Notice at www.regulations.gov, you must submit such information to the U.S. Small Business Administration, Attn: Bruce Purdy, Deputy Assistant Administrator for the Office of Women's Business Ownership (DAA/OWBO), 409 3rd Street SW., Washington, DC 20416, via facsimile (202) 481-0554, or submit them via email to [email protected]. Highlight the information that you consider to be CBI and explain why you believe SBA should hold this information as confidential. SBA will review your information and determine whether it will make the information public.

    FOR FURTHER INFORMATION CONTACT:

    Bruce Purdy, DAA/OWBO, U.S. Small Business Administration, 490 3rd Street SW., Washington, DC 20416, telephone number (202) 205-7532 or [email protected].

    SUPPLEMENTARY INFORMATION: I. Background

    The Office of Women's Business Ownership (OWBO) and the Women's Business Center program were created under the authority of Title II of the Women's Business Ownership Act of 1988 (Pub. L. 100-533) and the Women's Business Development Act of 1991 (Pub. L. 102-191). The program authority is now codified in Section 29 of the Small Business Act 15 U.S.C. 656. The initial Demonstration Training Program, later renamed the Women's Business Center Program and the Office of Women's Business Ownership were created in response to Congress's desire to remove barriers to the creation and development of small businesses owned and controlled by women and to stimulate the economy by aiding and encouraging the growth and development of such businesses. The specific objectives of the demonstration were to provide long term training and counseling to potential and current women business owners including those who are socially and economically disadvantaged.

    Since its creation, the Women's Business Center program has changed through a number of public laws that have turned the program from a demonstration program into a permanent program. The program has grown and evolved to provide a variety of services to the many entrepreneurs ranging from those interested in starting a business to those looking to expand an existing business.

    Over the last several years, SBA has incorporated processes to monitor the WBC program, including conducting financial examinations required by statute. However, as the program was still a demonstration program until 2007, regulations have never been drafted and issued for the program.

    According to section 29(a)(4) of the Small Business Act, 15 U.S.C. 656(a)(4), a women's business center must reach a distinct population that would otherwise not be served; whose services are targeted to women; and whose scope, function, and activities are similar to those of the primary women's business center or centers in conjunction with which it was established.

    The SBA is seeking comments on how to define “distinct population that would otherwise not be served” and “whose services are targeted to women” with respect to this statutory requirement. Currently, the SBA defines “a distinct population that would otherwise not be served” as economically and socially disadvantaged women. SBA defines “services targeted to women” as a Women's Business Center having a majority of their clients as women.

    In addition, the Small Business Act at section 29(c)(2), 15 U.S.C. 656(c)(2), states that Women's Business Center Program grantees shall not have more than one-half of the non-Federal sector matching assistance be in the form of in-kind contributions that are budget line items only. The SBA is seeking comments on how to define what is acceptable for activities that fall under “in-kind” and what guidelines grantees should use in determining reasonable costs associated with in-kind activities and acceptable guidelines for documenting in-kind match. Currently, the SBA finds donated time by subject matter experts (e.g., lawyers, accountants) conducting training or counseling and real estate donations (e.g., donated office space) as legitimate in-kind activities. The SBA is also seeking comments on guidelines for determining what should or should not be a “budget line item.”

    The Small Business Act at section 29(f), 15 U.S.C. 656(f), also states that selection criteria used in deciding whether to award an initial Women's Business Center grant are: (1) The experience of the applicant in conducting programs or ongoing efforts designed to impart or upgrade the business skills of women business owners or potential owners; (2) the present ability of the applicant to commence a project within a minimum amount of time; (3) the ability of the applicant to provide training and services to a representative number of women who are both socially and economically disadvantaged; and (4) the location for the women's business center site proposed by the applicant. Based on these statutory criteria, the SBA is seeking comments on what guidelines SBA should use in evaluating “the experience of the applicant” and “the proposed location for the women's business center.” Additionally, the SBA is seeking comments on how to define what an appropriate “minimum amount of time” would be to commence operating as a Women's Business Center following receipt of an award.

    According to section 29(g)(2)(B)(i), 15 U.S.C. 656(g)(2)(B)(i), one of the responsibilities of the Office of Women's Business Ownership is to “maintain a clearinghouse to provide for the dissemination and exchange of information between women's business centers.” The SBA is seeking comments on how to maintain this clearinghouse and in what form the clearinghouse should exist.

    Section 29(l)(2)(a)(ii), 15 U.S.C. 656(l)(2)(a)(ii), the Small Business Act states that in order for a non-profit organization to renew its original grant, the applicant must certify that the organization “employs a full-time executive director or program manager to manage the center.” The SBA is seeking comments on how to define “full-time” for purposes of managing the center. This same section states that the applicant must submit information about its “ability to fundraise.” The SBA is seeking comments on what factors and types of information the SBA should collect to make a determination on the applicant's ability to fundraise.

    Finally, in addition to the specific issues raised above, SBA invites comments on other aspects of the WBC program that the public believes should be evaluated and revised where possible. We ask that you provide a brief justification for any suggested changes.

    Maria Contreras-Sweet, Administrator.
    [FR Doc. 2015-09391 Filed 4-21-15; 8:45 am] BILLING CODE 8025-01-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-1008; Directorate Identifier 2013-SW-064-AD] RIN 2120-AA64 Airworthiness Directives; Sikorsky Aircraft Corporation (Type Certificate Previously Held by Schweizer Aircraft Corporation) AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for Sikorsky Aircraft Corporation (Sikorsky) Model 269A, 269A-1, 269B, 269C, 269C-1, 269D, and TH-55A helicopters. This proposed AD would require repetitively inspecting and lubricating the tail rotor (T/R) driveshaft splined fittings. This proposed AD is prompted by a report that the T/R driveshaft can disconnect due to deterioration of the splined coupling. The proposed actions are intended to detect and prevent excessive wear of the splined coupling, which could lead to failure of the T/R driveshaft and subsequent loss of control of the helicopter.

    DATES:

    We must receive comments on this proposed AD by June 22, 2015.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov or in person at the Docket Operations Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the economic evaluation, any comments received, and other information. The street address for the Docket Operations Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed AD, contact Sikorsky Aircraft Corporation, Customer Service Engineering, 124 Quarry Road, Trumbull, CT 06611; telephone 1-800-Winged-S or 203-416-4299; email [email protected] You may review the referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas 76137. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-1008.

    FOR FURTHER INFORMATION CONTACT:

    Stephen Kowalski, Aviation Safety Engineer, New York Aircraft Certification Office, Engine & Propeller Directorate, 1600 Stewart Ave., suite 410, Westbury, New York 11590; telephone (516) 228-7327; email [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

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

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

    Discussion

    We propose to adopt a new AD for Sikorsky Model 269A, 269A-1, 269B, 269C, 269C-1, 269D, and TH-55A helicopters. This proposed AD would require a one-time inspection and lubrication of the T/R driveshaft splined fittings and replacing a splined fitting and the T/R driveshaft if the fitting has excessive wear. This proposed AD would also require repetitively inspecting the driveshaft for straightness, twists, and scratches, repetitively inspecting the internal coupling splines, internal stops, and coupling drive splines for wear, and repetitively correcting the torque of each main transmission aft pinion nut (pinion nut).

    This proposed AD is prompted by a report of excessive spline wear on the forward and aft T/R driveshaft splined fittings installed on Sikorsky Model 269A, 269A-1, 269B, 269C, 269C-1, 269D, and TH-55A helicopters. This abnormal spline wear can lead to the T/R driveshaft disconnecting. An investigation has determined that insufficient lubrication of the splined fittings can result in deterioration of the splined teeth and subsequent failure of the T/R driveshaft coupling. The proposed actions are intended to detect excessive wear of the splined coupling and prevent failure of the T/R driveshaft and subsequent loss of control of the helicopter.

    Sikorsky has developed a one-time inspection that requires cleaning, inspecting, and lubricating the driveshaft splines. Sikorsky has also developed a repetitive 100-hour time-in-service (TIS) requirement for inspecting the T/R driveshaft for straightness, twists, and scratches; each coupling and internal stop for wear; each coupling drive spline for wear; and each pinion nut for correct torque.

    FAA's Determination

    We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs.

    Related Service Information Under 1 CFR Part 51

    We reviewed Sikorsky 269 Alert Service Bulletin (ASB) B-299.1 for Model 269A, 269A-1, 269B, 269C, and TH-55A helicopters; 269C-1 ASB C1B-036.1 for Model 269C-1 helicopters; and 269D ASB DB-041.1 for Model 269D helicopters, each Revision 1 and dated February 24, 2012. Each ASB describes procedures for cleaning, inspecting, and lubricating the forward and aft T/R driveshaft splined fittings and returning to Sikorsky any parts that exceed wear limits. Each ASB also requires implementing a 100 hour TIS recurring inspection of the T/R driveshaft, coupling and internal stop, coupling drive splines, and the pinion nut by following the procedures in each model helicopter's Handbook of Maintenance Instructions. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this NPRM.

    Proposed AD Requirements

    This proposed AD would require, within 100 hours TIS, inspecting for wear and lubricating the forward and aft T/R driveshaft splines by following certain procedures in the Sikorsky ASBs for each model helicopter. If there is excessive wear of the T/R driveshaft splines, the proposed AD would require replacing the driveshaft fitting before further flight. If the helicopter has a T/R driveshaft grease fitting installed, the proposed AD would also require inspecting each grease fitting for certain conditions and replacing the grease fitting if necessary. The proposed AD would also require, at intervals not exceeding 100 hours TIS, inspecting the T/R driveshaft for straightness, twists, and scratches; inspecting each forward and aft T/R driveshaft splines for wear; and correcting the torque of each pinion nut.

    Differences Between This Proposed AD and the Service Information

    The Sikorsky ASBs require returning any splined fittings that exceed wear limits to Sikorsky, while this proposed AD requires replacing those fittings and the T/R driveshaft.

    Costs of Compliance

    We estimate that this proposed AD would affect 1,085 helicopters of U.S. Registry. We estimate that operators may incur the following costs in order to comply with this AD. At an average labor rate of $85 per work-hour, inspecting and lubricating the T/R driveshaft splined fittings would require 1.8 hours, for a cost per helicopter of $153 and a total cost of $166,005 for the fleet. Inspecting the grease fittings would require 0.25 hour, for a cost of $21 per helicopter and a total cost of $22,785 for the fleet. Inspecting the driveshaft, fittings, internal stops, and drive spines would require 1.8 hours, for a cost per helicopter of $153 and a total cost of $166,005 for the fleet, per inspection cycle.

    If required, replacing the T/R driving spline and driveshaft would require 1.6 work-hours, and required parts would cost about $14,853, for a cost per helicopter of $14,989.

    If required, replacing a T/R driven spline and driveshaft would require 1.5 work-hours, and required parts would cost about $14,836, for a cost per helicopter of $14,964.

    If required, replacing a grease fitting would require about .25 work-hour, and required parts would cost about $5, for a cost per helicopter of $26.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

    We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by Reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Sikorsky Aircraft Corporation (Type Certificate Previously Held by Schweizer Aircraft Corporation) Helicopters: Docket No. FAA-2015-1008; Directorate Identifier 2013-SW-064-AD. (a) Applicability

    This AD applies to Sikorsky Aircraft Corporation (Sikorsky) Model 269A, 269A-1, 269B, 269C, 269C-1, 269D, and TH-55A helicopters, certificated in any category.

    (b) Unsafe Condition

    This AD defines the unsafe condition as insufficient lubrication of a tail rotor (T/R) driveshaft splined fitting. This condition could result in excessive wear of the T/R driveshaft splines, which could lead to failure of the T/R driveshaft and subsequent loss of control of the helicopter.

    (c) Comments Due Date

    We must receive comments by June 22, 2015.

    (d) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (e) Required Actions

    (1) Within 100 hours time-in-service (TIS):

    (i) Inspect each T/R driveshaft splined fitting for a crack, a break, excessive wear, galling, spalling, chipping, corrosion, heat discoloration, and distortion by following the Accomplishment Instructions, paragraphs 3.B.(1) through 3.B.(2), of Sikorsky 269 Alert Service Bulletin (ASB) B-299.1 for Model 269A, 269A-1, 269B, 269C, and TH-55A helicopters; 269C-1 ASB C1B-036.1 for Model 269C-1 helicopters; or 269D ASB DB-041.1 for Model 269D helicopters, each Revision 1 and dated February 24, 2012. If there is a crack, a break, excessive wear, galling, spalling, chipping, corrosion, heat discoloration, or distortion on any T/R driveshaft splined fitting, before further flight, replace the affected splined fitting and the T/R driveshaft.

    (ii) If installed, inspect each T/R driveshaft grease fitting for looseness, presence of a check ball inside each fitting, and for proper operation and seating of each check ball. If any grease fitting is loose, missing a check ball, fails to properly operate, or if a check ball fails to seat, before further flight, replace the grease fitting.

    (iii) Lubricate each driveshaft fitting by following the Accomplishment Instructions, paragraph 3.B.(6), of Sikorsky 269 ASB B-299.1 for Model 269A, 269A-1, 269B, 269C, and TH-55A helicopters; 269C-1 ASB C1B-036.1 for Model 269C-1 helicopters; or 269D ASB DB-041.1 for Model 269D helicopters, each Revision 1 and dated February 24, 2012.

    (2) Within 100 hours TIS after the inspections required by paragraph (e)(1) of this AD, and thereafter at intervals not exceeding 100 hours TIS:

    (i) Remove the driveshaft from the gearbox and clean any grease from each end fitting.

    (ii) Inspect the driveshaft for straightness, a twist, and a scratch. If the driveshaft has any bends, twists, or scratches, before further flight, replace the driveshaft.

    (iii) Inspect the internal splines of each forward and aft fitting and each internal stop for wear. If there is any wear, before further flight, replace the fitting.

    (iv) Inspect the drive splines of each splined drive fitting for wear. If there is any wear, before further flight, replace the splined drive fitting.

    (v) Loosen the aft frame clamp and apply a torque of 750 to 1,000 inch-pounds to each main transmission aft pinion nut.

    (f) Alternative Methods of Compliance (AMOC)

    (1) The Manager, New York Aircraft Certification Office, FAA, may approve AMOCs for this AD. Send your proposal to: Stephen Kowalski, Aviation Safety Engineer, New York Aircraft Certification Office, Engine & Propeller Directorate, 1600 Stewart Ave., suite 410, Westbury, New York 11590; telephone (516) 228-7327; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (g) Additional Information

    For service information identified in this AD, contact Sikorsky Aircraft Corporation, Customer Service Engineering, 124 Quarry Road, Trumbull, CT 06611; telephone 1-800-Winged-S or 203-416-4299; email [email protected] You may review a copy of information at the FAA, Office of the Regional Counsel, Southwest Region, 2601 Meacham Blvd., Room 663, Fort Worth, Texas 76137.

    (h) Subject

    Joint Aircraft Service Component (JASC) Code: 6500: Tail Rotor Drive.

    Issued in Fort Worth, Texas, on April 14, 2015. Lance T. Gant, Acting Directorate Manager, Rotorcraft Directorate, Aircraft Certification Service.
    [FR Doc. 2015-09098 Filed 4-21-15; 8:45 am] BILLING CODE 4910-13P-
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-0927; Directorate Identifier 2013-NM-172-AD] RIN 2120-AA64 Airworthiness Directives; Zodiac Aerotechnics (Formerly Intertechnique Aircraft Systems) AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain Zodiac Aerotechnics (formerly Intertechnique Aircraft Systems) flightcrew oxygen mask regulators as installed on, but not limited to, various transport and small airplanes. This proposed AD was prompted by a report that improper maintenance on oxygen mask regulators was found. This proposed AD would require the identification and replacement of all potentially affected units. This proposed AD also would require installation of a placard and revision of the airplane flight manual to include an operational procedure for use in case of depressurization. We are proposing this AD to detect and correct affected oxygen mask regulators, which could lead to inadequate protection to the affected flightcrew against hypoxia. Hypoxia can start from a headache and drowsiness and lead eventually to unconsciousness with severe consequence in terms of airplane controllability.

    DATES:

    We must receive comments on this proposed AD by June 8, 2015.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: (202) 493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this proposed AD, contact Zodiac Services, Technical Publication Department, Zodiac Aerotechnics, Oxygen Systems Europe, 61 Rue Pierre Curie—CS20001, 78373 Plaisir Cedex, France; phone: (33) 01 61 24 23 23; fax: (33) 01 30 55 71 61; email: [email protected]; Internet: http://www.zodiacaerospace.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-0927; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Ian Lucas, Aerospace Engineer, Boston Aircraft Certification Office (ACO) ANE-150, FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; phone: 781-238-7757; fax: 781-238-7170; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2015-0927; Directorate Identifier 2013-NM-172-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2012-0254R1, dated December 21, 2012 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for the specified products. The MCAI states:

    In a repair station, improper maintenance on [flightcrew] oxygen mask regulators was reported to Intertechnique: during an inspection of the oxygen test bench by its manufacturer, incorrect settings were noticed. This test bench setting discrepancy on the oxygen mask regulator could cause an improper mask dilution schedule.

    This condition, if not detected and corrected, could lead, in case of a diversion above 10,000 feet after a depressurization event, to the inhalation of air with improper content of oxygen, due to the bad dilution settings, thereby providing inadequate protection to the affected flightcrew member against hypoxia, which can start from a headache and drowsiness and lead eventually to unconsciousness with severe consequence in term of aeroplane controllability.

    For the reasons described above, this [EASA] AD requires the identification and replacement of all potentially affected units. This [EASA] AD also requires installation of a placard and [a revision to the airplane flight manual to include] . . . an operational procedure [in case of depressurization] pending replacement of the affected units.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating it in Docket No. FAA-2015-0927.

    Related Service Information Under 1 CFR Part 51

    Zodiac Services has issued Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012. The service information describes procedures for the identification and replacement of all potentially affected units. The actions described in this service information are intended to correct the unsafe condition identified in the MCAI. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this NPRM.

    FAA's Determination and Requirements of This Proposed AD

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with the State of Design Authority, we have been notified of the unsafe condition described in the MCAI and service information referenced above. We are proposing this AD because we evaluated all pertinent information and determined an unsafe condition exists and is likely to exist or develop on other products of the same type design.

    Costs of Compliance

    We estimate that this proposed AD affects 13 appliances installed on, but not limited to, various transport and small airplanes of U.S. registry.

    We also estimate that it would take about 3 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $225 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $6,240, or $480 per product.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

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

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    The Proposed Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Zodiac Aerotechnics (formerly Intertechnique Aircraft Systems): Docket No. FAA-2015-0927; Directorate Identifier 2013-NM-172-AD. (a) Comments Due Date

    We must receive comments by June 8, 2015.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Zodiac Aerotechnics (formerly Intertechnique Aircraft Systems) flightcrew oxygen mask regulators having part number MC10, MF10, and MF20 series, with serial numbers listed in Appendix 1 of Zodiac Services Service Bulletin MCF-SBU-35-001, Revision 01, dated December 3, 2012. These oxygen mask regulators are installed on various transport and small airplanes, certificated in any category, including, but not limited to, the airplanes of the manufacturers specified in paragraphs (c)(1), (c)(2), (c)(3), (c)(4), (c)(5), (c)(6), and (c)(7) of this AD. An oxygen mask regulator having part number MC10-04-127 with serial number 48573 is affected only if it is part of part number MSE101-27 with serial number 7521.

    (1) Airbus.

    (2) ATR—GIE Avions de Transport Régional.

    (3) The Boeing Company.

    (4) Bombardier, Inc.

    (5) Cessna Aircraft Company.

    (6) Gulfstream Aerospace Corporation.

    (7) Gulfstream Aerospace LP.

    (d) Subject

    Air Transport Association (ATA) of America Code 26, Fire Protection.

    (e) Reason

    This AD was prompted by a report that improper maintenance on oxygen mask regulators was found. During an inspection of the oxygen test bench, incorrect settings were noticed. This test bench setting discrepancy on the oxygen mask regulator could cause an improper mask dilution schedule. We are issuing this AD to detect and correct affected oxygen mask regulators, which could lead, in case of mask usage at or above 10,000 feet after a depressurization event, to the inhalation of air with improper content of oxygen, due to the bad dilution settings, thereby providing inadequate protection to the affected flightcrew against hypoxia. Hypoxia can start from a headache and drowsiness and lead eventually to unconsciousness with severe consequence in terms of airplane controllability.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Inspection

    Within 30 days after the effective date of this AD, inspect each flightcrew oxygen mask regulator to identify the part number and serial number, in accordance with the Accomplishment Instructions of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012. A review of airplane maintenance records is acceptable to make the determination as specified in this paragraph, provided those records can be relied upon for that purpose, and each flightcrew oxygen mask regulator can be conclusively identified from that review.

    (h) Action for Affected Regulators

    If the part number and serial number, identified as required by paragraph (g) of this AD, are listed in Appendix 1 of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012, within 30 days after the effective date of this AD, accomplish the actions specified in paragraph (h)(1) or (h)(2) of this AD.

    (1) Replace each affected flightcrew oxygen mask regulator with a part identified in paragraph (h)(1)(i) or (h)(1)(ii) of this AD.

    (i) A serviceable part, not having a part number and serial number listed in Appendix 1 of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012.

    (ii) A part that has been tested and passed the test in accordance with paragraph 3.A.(4) of the Accomplishment Instructions of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012

    (2) Do the actions specified in paragraphs (h)(2)(i) and (h)(2)(ii) of this AD.

    (i) Revise the Emergency Procedures section of the airplane flight manual (AFM) by inserting the statement provided in figure 1 to paragraph (h)(2)(i) of this AD. This may be done by inserting a copy of figure 1 to paragraph (h)(2)(i) of this AD into the AFM.

    Figure 1 to Paragraph (h)(2)(i) of This AD In case of depressurization, both pilots must use the mask regulator on 100% demand or Emergency mode only. Note 1 to paragraph (h)(2)(i) of this AD:

    For oxygen over-consumption, refer to applicable airplane type certificate holder limitations, if existing, depending on the airplane configuration and/or flight plan.

    Note 2 to paragraph (h)(2)(i) of this AD:

    It is the operators' responsibility to assess the operational consequences of the oxygen over-consumption and ensure that the operational requirements with regard to supplemental oxygen and crew protective breathing equipment are still done. Operators are expected to amend, as applicable, their operations manual(s) accordingly.

    (ii) Fabricate and install a placard on the flightcrew oxygen mask container that states: “USE SELECTOR on “100%” OR “EMERGENCY” ONLY.”

    (i) Regulator Replacement

    Within 12 months after the effective date of this AD, unless already accomplished as specified in paragraph (h)(1) of this AD, replace each affected flightcrew oxygen mask regulator identified in paragraph (h) of this AD with a part identified in paragraph (i)(1) or (i)(2) of this AD. After replacement of all affected flightcrew oxygen mask regulators on an airplane, the actions specified in paragraph (h)(2) of this AD are no longer required, the AFM revision specified in paragraph (h)(2)(i) of this AD may be removed from the AFM, and the placard identified in paragraph (h)(2)(ii) of this AD may be removed from the airplane.

    (1) A serviceable part, not having a part number and serial number listed in Appendix 1 of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012.

    (2) A part that has been tested and passed the test in accordance with paragraph 3.A.(4) of the Accomplishment Instructions of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012.

    (j) Credit for Previous Actions

    This paragraph provides credit for actions required by paragraphs (g), (h)(1)(ii), and (i)(2) of this AD, if those actions were performed before the effective date of this AD using Zodiac Aerospace Service Bulletin MCF-SBU-35-001, dated October 25, 2012, which is not incorporated by reference in this AD.

    (k) Parts Installation Limitation

    As of the effective date of this AD, no person may install any flightcrew oxygen mask regulator with a part number and serial number listed in Appendix 1 of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012, on any airplane, unless the regulator has been tested and passed the test, in accordance with paragraph 3.A.(4) of the Accomplishment Instructions of Zodiac Aerospace Service Bulletin MCF-SBU-35-001, Revision 1, dated December 3, 2012.

    (l) Alternative Methods of Compliance (AMOCs)

    The Manager, Boston Aircraft Certification Office (ACO) ANE-150, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the ACO, send it to ATTN: Ian Lucas, Aerospace Engineer, Boston Aircraft Certification Office (ACO) ANE-150, FAA, Engine and Propeller Directorate, 12 New England Executive Park, Burlington, MA 01803; phone: 781-238-7757; fax: 781-238-7170; email: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (m) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2012-0254R1, dated December 21, 2012, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating it in Docket No. FAA-2015-0927.

    (2) For service information identified in this AD, contact Zodiac Services, Technical Publication Department, Zodiac Aerotechnics, Oxygen Systems Europe, 61 Rue Pierre Curie—CS20001, 78373 Plaisir Cedex, France; phone: (33) 01 61 24 23 23; fax: (33) 01 30 55 71 61; email: [email protected]; Internet:_ http://www.zodiacaerospace.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on April 10, 2015. Jeffrey E. Duven, Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2015-09103 Filed 4-21-15; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 40 [Docket No. RM15-4-000] Disturbance Monitoring and Reporting Requirements Reliability Standard AGENCY:

    Federal Energy Regulatory Commission.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Federal Energy Regulatory Commission proposes to approve Reliability Standard PRC-002-2 (Disturbance Monitoring and Reporting Requirements) submitted by the North American Electric Reliability Corporation. The purpose of proposed Reliability Standard PRC-002-2 is to have adequate data available to facilitate analysis of bulk electric system disturbances.

    DATES:

    Comments are due June 22, 2015.

    ADDRESSES:

    Comments, identified by docket number, may be filed in the following ways:

    • Electronic Filing through http://www.ferc.gov. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format.

    • Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.

    Instructions: For detailed instructions on submitting comments and additional information on the rulemaking process, see the Comment Procedures Section of this document.

    FOR FURTHER INFORMATION CONTACT: Juan R. Villar (Technical Information), Office of Electric Reliability, Division of Reliability Standards and Security, 888 First Street NE., Washington, DC 20426, Telephone: (202) 536-2930, [email protected]. Alan Rukin (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, Telephone: (202) 502-8502, [email protected].
    SUPPLEMENTARY INFORMATION:

    1. Pursuant to section 215 of the Federal Power Act (FPA), the Federal Energy Regulatory Commission (Commission) proposes to approve proposed Reliability Standard PRC-002-2 (Disturbance Monitoring and Reporting Requirements).1 The North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO), submitted proposed Reliability Standard PRC-002-2 for approval. The purpose of proposed Reliability Standard PRC-002-2 is to have adequate data available to facilitate analysis of bulk electric system disturbances. In addition, the Commission proposes to approve the associated violation risk factors and violation severity levels, implementation plan, and effective date proposed by NERC.

    1 16 U.S.C. 824o.

    I. Background A. Section 215 and Mandatory Reliability Standards

    2. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval.2 Once approved, the Reliability Standards may be enforced by the ERO subject to Commission oversight, or by the Commission independently.3 In 2006, the Commission certified NERC as the ERO pursuant to FPA section 215.4

    2Id. 824o(c) and (d).

    3Id. 824o(e).

    4North American Electric Reliability Corp., 116 FERC ¶ 61,062 (ERO Certification Order), order on reh'g and compliance, 117 FERC ¶ 61,126 (2006), order on compliance, 118 FERC ¶ 61,190, order on reh'g, 119 FERC ¶ 61,046 (2007), rev. denied sub nom. Alcoa Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).

    B. Order No. 693

    3. On March 16, 2007, the Commission issued Order No. 693, approving 83 of the 107 Reliability Standards filed by NERC, including Reliability Standard PRC-018-1.5 Reliability Standard PRC-018-1 requires the installation of disturbance monitoring equipment and the reporting of disturbance data in accordance with comprehensive requirements.6

    5Mandatory Reliability Standards for the Bulk-Power System, Order No. 693, FERC Stats. and Regs. ¶ 31,242, order on reh'g, Order No. 693-A, 120 FERC ¶ 61,053 (2007).

    6Id. at PP 1550-1551.

    4. In Order No. 693, the Commission determined that proposed Reliability Standard PRC-002-1 was a “fill-in-the-blank” Reliability Standard because it required Regional Reliability Organizations to establish requirements for installation of disturbance monitoring equipment and report disturbance data to facilitate analyses of events and verify system models.7 The Commission stated that it would not approve or remand proposed Reliability Standard PRC-002-1 until NERC submitted additional necessary information to the Commission.8

    7Id. at P 1451.

    8Id. at P 1456.

    C. NERC Petition and Proposed Reliability Standard PRC-002-2

    5. On December 15, 2014, NERC submitted a petition seeking Commission approval of proposed Reliability Standard PRC-002-2.9 NERC contends that proposed Reliability Standard PRC-002-2 is just, reasonable, not unduly discriminatory or preferential, and in the public interest. NERC explains that the proposed Reliability Standard consolidates the requirements of unapproved Reliability Standard PRC-002-1 and currently-effective Reliability Standard PRC-018-1.10

    9 Proposed Reliability Standard PRC-002-2 is not attached to this Notice of Proposed Rulemaking. The proposed Reliability Standard is available on the Commission's eLibrary document retrieval system in Docket No. RM15-4-00 and is posted on NERC's Web site, available at http://www.nerc.com.

    10 NERC Petition at 15.

    6. NERC states that it is important to monitor and analyze disturbances to plan and operate the Bulk-Power System to avoid instability, separation and cascading failures.11 NERC maintains that the proposed Reliability Standard improves reliability by providing personnel with necessary data to enable more effective post event analysis, which can also be used to verify system models.12 Moreover, NERC explains that the proposed Reliability Standard “focuses on ensuring that the requisite data is captured and the Requirements constitute a results‐based approach to capturing data.” 13

    11Id. at 13. NERC defines a “Disturbance” as: “(1) an unplanned event that produces an abnormal system condition; (2) any perturbation to the electric system; [or] (3) the unexpected change in [area control error] that is caused by the sudden failure of generation or interruption of load.” Id. (quoting Glossary of Terms Used in NERC Reliability Standards at 30).

    12Id. at 15.

    13Id. at 14-15.

    7. NERC states that, in the United States, proposed Reliability Standard PRC-002-2 will apply to planning coordinators in the Eastern Interconnection, planning coordinators or the reliability coordinator in the Electric Reliability Council of Texas (ERCOT) Interconnection, and the reliability coordinator in the Western Interconnection, which are collectively referred to as “Responsible Entities.” The proposed Reliability Standard will also apply to transmission owners and generation owners.

    8. NERC states that proposed Reliability Standard PRC-002-2 includes 12 Requirements. Requirement R1 requires transmission owners: (1) To identify bulk electric system buses, e.g., substations, for which sequence of event recording and fault record data is required; (2) to notify other owners of bulk electric system elements connected to those particular bulk electric system buses where sequence of event recording and fault record data will be necessary; and (3) to re-evaluate all bulk electric system buses every five years. Requirement R2 requires transmission owners and generation owners to collect sequence of event data. Requirement R3 and Requirement R4 require transmission owners and generation owners to collect fault recording data and parameters of that data. Requirement R5 through Requirement R9 lay out thresholds where dynamic disturbance recording data are required and provide more specifics on its collection. Requirement R10 requires transmission owners and generation owners to time synchronize the recordings. According to NERC, Requirement R10 provides the synchronization requirements in response to Recommendation No. 28 from the final report on the August 2003 blackout issued by the U.S.-Canada Power System Outage Task Force (Blackout Report).14 Requirement R11 requires transmission owners and generation owners to provide sequence of event recording, fault recording and dynamic disturbance recording data upon request and establishes specific guidelines to ensure that data can be used in the analysis of events. Requirement R12 requires transmission owners and generation owners to restore the recording capability of the equipment used to record disturbances, if this capability is interrupted.

    14 NERC Petition at 35-36 (quoting U.S.-Canada Power System Outage Task Force, Final Report on the August 14, 2003 Blackout in the United States and Canada: Causes and Recommendations at 162 (Apr. 2004), available at http://energy.gov/sites/prod/files/oeprod/DocumentsandMedia/BlackoutFinal-Web.pdf).

    9. NERC proposes an implementation plan that includes an effective date for proposed Reliability Standard PRC-002-2 that is the first day of the first calendar quarter that is six months after the date that the Commission approves the standard. Concurrent with the effective date, the implementation plan calls for the retirement of currently-effective Reliability Standard PRC-018-1 and “pending” Reliability Standard PRC-002-1.15

    15Id. at Ex. B (Implementation Plan).

    II. Discussion

    10. Pursuant to section 215(d)(2) of the FPA, the Commission proposes to approve proposed Reliability Standard PRC-002-2 as just, reasonable, not unduly discriminatory or preferential, and in the public interest. The Commission also proposes to approve the associated violation risk factors and violation severity levels, implementation plan, and effective date proposed by NERC. Further, the Commission proposes to approve the retirement of “pending” Reliability Standard PRC-002-1 and currently-effective Reliability Standard PRC-018-1, as proposed by NERC.16

    16 As noted above, the Commission in Order No. 693 did not approve proposed Reliability Standard PRC-002-1 but, rather, took no action on the Reliability Standard pending the receipt of additional information. Order No. 693, FERC Stats. and Regs. ¶ 31,242 at P 1456. Approval of Reliability Standard PRC-002-2, as proposed herein, will render PRC-002-1 “retired,” i.e., withdrawn, and no longer pending before the Commission.

    11. Proposed Reliability Standard PRC-002-2 enhances reliability by imposing mandatory requirements concerning the monitoring and reporting of disturbances. Proposed Reliability Standard PRC-002-2 provides greater continent-wide consistency regarding collection methods for data used in the analysis of disturbances on the Bulk-Power System. Specifically, proposed Reliability Standard PRC-002-2 enhances reliability by consistently requiring covered entities to collect time-synchronized information and to report disturbances on the Bulk-Power System. Accordingly, proposed Reliability Standard PRC-002-2 satisfies the relevant directive in Order No. 693.17 In addition, we agree with NERC that Reliability Standard PRC-018-1 can be retired due to its consolidation with proposed Reliability Standard PRC-002-2.

    17 Order No. 693, FERC Stats. and Regs. ¶ 31,242 at P 1456 (“the ERO should consider whether greater consistency can be achieved” regarding disturbance monitoring and reporting).

    III. Information Collection Statement

    12. The collection of information addressed in this Notice of Proposed Rulemaking is subject to review by the Office of Management and Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of 1995.18 OMB's regulations require approval of certain information collection requirements imposed by agency rules.19 Upon approval of a collection(s) of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of a rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number.

    18 44 U.S.C. 3507(d).

    19 5 CFR 1320.11.

    13. We solicit comments on the need for this information, whether the information will have practical utility, the accuracy of the burden estimates, ways to enhance the quality, utility, and clarity of the information to be collected or retained, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques. Specifically, the Commission asks that any revised burden or cost estimates submitted by commenters be supported by sufficient detail to understand how the estimates are generated.

    14. Public Reporting Burden: The number of respondents below is based on an examination of the NERC compliance registry for transmission owners and generation owners and the estimation of how many entities from that registry will be affected. At the time of Commission review of proposed Reliability Standard PRC-002-2, 330 transmission owners and 914 generation owners in the United States are registered in the NERC compliance registry. The Commission estimates that two-thirds (216) of these registered transmission owners will need to comply with at least one of the requirements contained in proposed Reliability Standard PRC-002-2. The Commission notes that many generation sites share a common generation owner. Due to the nature of this task, it is likely generator owners will manage this information aggregation task using a centralized staff. Therefore, we estimate that one-third of the generation owners (305) will have to meet the requirements contained in proposed Reliability Standard PRC-002-2. Finally, the Commission finds the number of “Responsible Entities” 20 in the United States to equal fifty, based on the NERC compliance registry. The following table illustrates the burden to be applied to the information collection.21

    20 As discussed above, proposed Reliability Standard PRC-002-2 defines the term “Responsible Entity” to include planning coordinators in the Eastern Interconnection, the reliability coordinator in the Western Interconnection, and planning coordinators or the reliability coordinator in the ERCOT Interconnection.

    21 In the burden table, engineering is abbreviated as “Eng.” and record keeping is abbreviated as “R.K.”

    Requirement and respondent category for PRC-002-2 Number of
  • respondents
  • Annual
  • number of
  • responses per
  • respondent
  • Total number of responses Average burden hours & cost per response 22 Annual burden hours & total annual cost
    (1) (2) (1)*(2) = (3) (4) (3)*(4) = (5) R1. Each Transmission Owner 324 1 324 (Eng.) 24 hrs. ($1,568.16); (R.K.) 12 hrs. ($401.04) 11,664 hrs. (7776 Eng., 3888 R.K.); $638,020.80 ($508,083.84 Eng., $129,936.96 R.K.) R2. Each Transmission Owner and Generator Owner 521 1 521 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 7,294 hrs. (5210 Eng., 2084 R.K.);
  • $410,068.68 ($340,421.40 Eng., $69,647.28 R.K.)
  • R3 & R4. Each Transmission Owner and Generator Owner 521 1 521 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 7,294 hrs. (5210 Eng., 2084 R.K.);
  • $410,068.68 ($340,421.40 Eng., $69,647.28 R.K.)
  • R5. Each Responsible Entity 50 1 50 (Eng.) 24 hrs. ($1,568.16); (R.K.) 12 hrs. ($401.04) 1,800 hrs. (1200 Eng., 600 R.K.);
  • $98,460 ($78,408 Eng., $20,052 R.K.)
  • R6. Each Transmission Owner 216 1 216 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 3,024 hrs. (2160 Eng., 864 R.K.);
  • $170,009.28 ($141,134.40 Eng., $28,874.88 R.K.)
  • R7. Each Generator Owner 305 1 305 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 4,270 hrs. (3050 Eng., 1220 R.K.);
  • $240,059.40 ($199,287 Eng., $40,772.40 R.K.)
  • R8. Each Transmission Owner and Generator Owner 521 1 521 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 7,294 hrs. (5210 Eng., 2084 R.K.);
  • $410,068.68 ($340,421.40 Eng., $69,647.28 R.K.)
  • R9. Each Transmission Owner and Generator Owner 521 1 521 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 7,294 hrs. (5210 Eng., 2084 R.K.);
  • $410,068.68 ($340,421.40 Eng., $69,647.28 R.K.)
  • R10. Each Transmission Owner and Generator Owner 521 1 521 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 7,294 hrs. (5210 Eng., 2084 R.K.);
  • $410,068.68 ($340,421.40 Eng., $69,647.28 R.K.)
  • R11. Each Transmission Owner and Generator Owner 521 1 521 (Eng.) 8 hrs. ($522.72); (R.K.) 4 hrs. ($133.68) 6,252 hrs. (4168 Eng., 2084 R.K.);
  • $341,984.4 ($272,337.12 Eng., $69,647.28 R.K.)
  • R12. Each Transmission Owner and Generator Owner 23 52 1 52 (Eng.) 10 hrs. ($653.40); (R.K.) 4 hrs. ($133.68) 728 hrs. (520 Eng., 208 R.K.);
  • $40,928.16 ($33,976.80 Eng., $6,951.36 R.K.)
  • Total 64,208 hrs. (44,924 Eng., 19,284 R.K.);
  • $3,579,805.44 ($2,935,334.16 Eng., $644,471.28 R.K.)
  • 22 The estimates for cost per response are derived using the following formula: Burden Hours per Response * $/hour = Cost per Response. The $65.34/hour figure for an engineer and the $33.42/hour figure for a record clerk are based on the average salary plus benefits data from Bureau of Labor Statistics.

    23 The Commission estimates that 10% (or 52) of the 521 registered entities will have to restore recording capability or institute a corrective action plan (CAP) each year.

    Title: FERC-725G2 24 Disturbance Monitoring and Reporting Requirements.

    24 FERC-725G2 is temporarily being used because FERC-725G (OMB Control No. 1902-0252) is currently pending review at OMB.

    Action: Revision to existing collection.

    OMB Control No: To be determined.

    Respondents: Business or other for profit, and not for profit institutions.

    Frequency of Responses: Annually.

    Necessity of the Information: Proposed Reliability Standard PRC-002-2 sets forth requirements for disturbance monitoring and reporting requirements that will ensure adequate data are available to facilitate analysis of bulk electric system disturbances.

    Internal review: The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements.

    15. Interested persons may obtain information on the reporting requirements by contacting the Federal Energy Regulatory Commission, Office of the Executive Director, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873].

    16. Comments concerning the information collection proposed in this Notice of Proposed Rulemaking and the associated burden estimates, should be sent to the Commission in this docket and may also be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at the following email address: [email protected]. Please reference FERC-725G2 and the docket numbers of this Notice of Proposed Rulemaking (Docket No. RM15-4-000) in your submission.

    IV. Environmental Analysis

    17. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.25 This action has been categorically excluded under section 380.4(a)(2)(ii) of the Commission's regulations, addressing the collection of information.26

    25Regulations Implementing the National Environmental Policy Act of 1969, Order No. 486, 52 FR 47897 (Dec. 17, 1987), FERC Stats. & Regs. Preambles 1986-1990 ¶ 30,783 (1987).

    26 18 CFR 380.4(a)(2)(ii).

    V. Regulatory Flexibility Act

    18. The Regulatory Flexibility Act of 1980 (RFA) 27 generally requires a description and analysis of proposed rules that will have significant economic impact on a substantial number of small entities.

    27 5 U.S.C. 601-612.

    19. The Small Business Administration (SBA) revised its size standards (effective January 22, 2014) for electric utilities from a standard based on megawatt hours to a standard based on the number of employees, including affiliates. Under SBA's new standards, some transmission owners and generation owners will possibly fall under the following category and associated size threshold: Electric bulk power transmission and control at 500 employees; hydroelectric power generation at 500 employees; fossil fuel electric power generation at 750 employees; nuclear electric power generation at 750 employees.

    20. The Commission estimates that the number of applicable small entities will be minimal due to the gross million volt amps (MVA) thresholds embedded into proposed Reliability Standard PRC-002-2, which focus information collection on bulk electric system facilities having Interconnection-wide impacts worthy of collecting. The proposed Reliability Standard applies to approximately 526 entities in the United States. The Commission estimates, applying the MVA thresholds above, that approximately 52 (or 10 percent of the 521) are small entities. The Commission estimates for these small entities, proposed Reliability Standard PRC-002-2 Requirement R1 may need to be evaluated and documented every five years with costs of $9,847 for each evaluation. From this set of small entities, the Commission estimates that five percent, or only two or three small entities, may be affected by the other requirements, i.e., Requirements R2 through R12, of proposed Reliability Standard PRC-002-2. Based on a prior industry-sponsored survey, annual compliance costs will average $100,000-$160,000 for entities subject to these requirements.28 Accordingly, the Commission certifies that the proposed Reliability Standard will not have a significant economic impact on a substantial number of small entities.

    28See NERC Petition Ex. G (Record of Development) at 257 of pdf file, providing link to: NERC Cost Effective Analysis Process (CEAP) Pilot for NERC Project 2007-11—Disturbance Monitoring—PRC-002-2 at 8 (Apr. 9, 2014).

    VI. Comment Procedures

    21. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due June 22, 2015. Comments must refer to Docket No. RM15-4-000, and must include the commenter's name, the organization they represent, if applicable, and their address in their comments.

    22. The Commission encourages comments to be filed electronically via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing formats. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format. Commenters filing electronically do not need to make a paper filing.

    23. Commenters that are not able to file comments electronically must send an original of their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.

    24. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters.

    VII. Document Availability

    25. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

    26. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number of this document, excluding the last three digits in the docket number field.

    27. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at (202) 502-6652 (toll free at 1 (866) 208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected].

    By direction of the Commission.

    Issued: April 16, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-09219 Filed 4-21-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission 18 CFR Part 40 [Docket No. RM15-9-000] Protection System, Automatic Reclosing, and Sudden Pressure Relaying Maintenance Reliability Standard AGENCY:

    Federal Energy Regulatory Commission, Department of Energy.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    Pursuant to the Federal Power Act, the Commission proposes to approve a revised Reliability Standard, PRC-005-4 (Protection System, Automatic Reclosing and Sudden Pressure Relaying Maintenance), developed and submitted by the North American Electric Reliability Corporation (NERC). In addition, the Commission proposes to approve one new definition and four revised definitions referenced in the proposed Reliability Standard, as well as NERC's proposed violation risk factors, violation severity levels, and implementation plan. Consistent with Order No. 758, the proposed Reliability Standard requires applicable entities to test and maintain certain sudden pressure relays as part of a protection system maintenance program.

    DATES:

    Comments are due June 22, 2015.

    ADDRESSES:

    Comments, identified by docket number, may be filed in the following ways:

    Electronic Filing through http://www.ferc.gov. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format.

    Mail/Hand Delivery: Those unable to file electronically may mail or hand-deliver comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.

    Instructions: For detailed instructions on submitting comments and additional information on the rulemaking process, see the Comment Procedures Section of this document.

    FOR FURTHER INFORMATION CONTACT:

    Tom Bradish (Technical Information), Office of Electric Reliability, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (301) 665-1391, [email protected]. Julie Greenisen (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-6362, [email protected]. SUPPLEMENTARY INFORMATION:

    1. Pursuant to section 215 of the Federal Power Act (FPA),1 the Commission proposes to approve a revised Reliability Standard, PRC-005-4 (Protection System, Automatic Reclosing and Sudden Pressure Relaying Maintenance), developed and submitted by the North American Electric Reliability Corporation (NERC), the Commission-certified Electric Reliability Organization (ERO). In addition, the Commission proposes to approve one new definition and four revised definitions referenced in the proposed Reliability Standard, as well as NERC's proposed violation risk factors, violation severity levels, and implementation plan. Consistent with Order No. 758,2 the proposed Reliability Standard requires applicable entities to test and maintain certain sudden pressure relays as part of a protection system maintenance program.

    1 16 U.S.C. 824o (2012).

    2Interpretation of Protection System Reliability Standard, Order No. 758, 138 FERC ¶ 61,094, clarification denied, 139 FERC ¶ 61,227 (2012).

    I. Background A. Regulatory Background

    2. Section 215 of the FPA requires a Commission-certified ERO to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval.3 Once approved, the Reliability Standards may be enforced by the ERO subject to Commission oversight, or by the Commission independently.4 In 2006, the Commission certified NERC as the ERO pursuant to FPA section 215.5

    3 16 U.S.C. at 824o(c) and (d).

    4See id. at 824o(e).

    5North American Electric Reliability Corp., 116 FERC ¶ 61,062, order on reh'g & compliance, 117 FERC ¶ 61,126 (2006), aff'd sub nom. Alcoa, Inc. v. FERC, 564 F.3d 1342 (D.C. Cir. 2009).

    3. In 2007, the Commission approved an initial set of Reliability Standards submitted by NERC, including initial versions of four protection system and load-shedding-related maintenance standards: PRC-005-1, PRC-008-0, PRC-011-0, and PRC-017-0.6 In addition, the Commission directed NERC to develop a revision to PRC-005-1 incorporating a maximum time interval during which to conduct maintenance and testing of protection systems, and to consider combining into one standard the various maintenance and testing requirements for all of the maintenance and testing-related standards for protection systems, underfrequency load shedding (UFLS) equipment and undervoltage load shedding (UVLS) equipment.

    6Mandatory Reliability Standards for the Bulk Power System, Order No. 693, FERC Stats. & Regs. ¶ 31,242, at PP 1474, 1492, 1497, and 1514, order on reh'g, Order No. 693-A, 120 FERC ¶ 61,053 (2007).

    4. In February 2012, the Commission issued Order No. 758 in response to NERC's request for approval of its interpretation of Requirement R1 of the then-current version of the protection system maintenance standard, Reliability Standard PRC-005-1. In that order, the Commission accepted NERC's proposed interpretation of Requirement R1, which interpretation provided guidance on the types of protection system equipment to which the Reliability Standard did or did not apply. In reviewing NERC's interpretation, the Commission raised several concerns about potential gaps in the coverage of PRC-005-1, including a concern that the standard as written may not include all components that serve in some protective capacity.7

    7See Order No. 758, 138 FERC ¶ 61,094 at P 12. NERC has addressed the Commission's concerns stated in Order No. 758 through a series of projects modifying the PRC-005 standard. See Protection System Maintenance Reliability Standard, Order No. 793, 145 FERC ¶ 61,253 (2013) (approving Reliability Standard PRC-005-2, which incorporated specific minimum maintenance activities and maximum time intervals for maintenance of individual components of the protection systems and load shedding equipment affecting the bulk electric system); Protection System Maintenance Reliability Standard, Order No. 803,150 FERC ¶ 61,039 (2015) (approving PRC-005-3 and directing NERC to develop a modification to include maintenance and testing of supervisory relays associated with relevant autoreclosing relay schemes).

    B. NERC Petition and Proposed Standard PRC-005-4

    5. On December 18, 2014, NERC submitted a petition seeking approval of proposed Reliability Standard PRC-005-4, which would add to the applicability of Reliability Standard PRC-005-3 those sudden pressure relays that NERC has identified as having a potential effect on the reliable operation of the Bulk-Power System.8 NERC states that these revisions were developed to satisfy NERC's commitment to develop modifications to PRC-005 that would address the Commission's concerns, as set out in Order No. 758, regarding the lack of maintenance requirements for non-electrical sensing relays (such as sudden pressure relays) that could affect the reliable operation of the Bulk-Power System.9

    8 Proposed Reliability Standard PRC-005-4 is not attached to the NOPR; however, the complete text of the proposed Reliability Standard is available on the Commission's eLibrary document retrieval system in Docket No. RM15-9-000 and is posted on NERC's Web site, available at: http://www.nerc.com.

    9See NERC Petition at 3, 9.

    6. NERC states that sudden pressure relays “are designed to quickly detect faults on the Bulk-Power System transformer equipment that may remain undetected by other Protection Systems, and can operate to limit any potential damage on the equipment.” 10 NERC states that the “misoperation of sudden pressure relays that initiate tripping in response to fault conditions can impact the reliability of the Bulk-Power System,” and accordingly proposes revisions to PRC-005-3 that will require entities to document and implement programs for maintenance of applicable sudden pressure relays.11

    10Id. at 3. NERC describes sudden pressure relays as relays which “respond to changes in pressure and are utilized as protective devices for power transformers,” and which may “detect rapid changes in gas pressure, oil pressure, or oil flow that are indicative of faults within the transformer equipment.” Id. at 13. NERC notes that in addition to detecting faults, certain sudden pressure relays can trip the associated transformer circuitry in response to the fault conditions.

    11Id. at 3-4.

    7. NERC explains that, consistent with Order No. 758, NERC's System Protection and Control Subcommittee (SPCS) performed a technical study “to determine which devices that respond to non-electrical quantities should be addressed within PRC-005 identified devices.” 12 NERC states that the SPCS considered a broad range of devices that respond to non-electrical quantities, starting with the list of ninety-four devices included in the IEEE Standard Electrical Power System Device Function Numbers, then applying “multiple layers of analysis to each device to select the ones that can affect the reliability of the Bulk-Power System.” 13 The SPCS first determined that only those devices that initiate action to clear faults or mitigate abnormal system conditions presented a risk to the Bulk-Power System. Next, the SPCS eliminated those devices that were “previously considered as a result of the revised definition of Protection System or those that are clearly not protective devices, such as primary equipment and control devices.” 14 Finally, the SPCS conducted an in-depth analysis of the remaining devices, and concluded that only one category—sudden pressure relays that are utilized in a trip application—should be included in the revised PRC-005-4.

    12Id. at 4.

    13Id. at 10.

    14Id.

    8. NERC also explains that the SPCS developed a Supplemental Report in response to comments and questions about its initial recommendations from the Commission staff. These comments and questions focused on whether PRC-005 should include turbine generator vibration monitors and circuit breaker arc extinguishing systems.15 The SPCS Supplemental Report, issued on October 31, 2014, examined these two kinds of devices and provided information on events during which these devices operated or failed to operate. The Supplemental Report concluded that neither device affected the reliable operation of the Bulk-Power System.

    15 NERC Petition at 11, Ex. E, Sudden Pressure Relays and Other Devices that Respond to Non-Electrical Quantities: Supplemental Information to Support Project 2007-17.3: Protection System Maintenance and Testing, NERC SPCS (Oct. 31, 2014) (SPCS Supplemental Report).

    9. NERC states that the standard drafting team that was tasked with developing the modifications to PRC-005 in response to Order No. 758 adopted the SPCS Report's recommendations, both as to the scope of additional relays included, and as to the required minimum maintenance activities and maximum maintenance intervals for these relays.

    10. NERC maintains that proposed Reliability Standard PRC-005-4 will enhance reliability by extending the coverage of an applicable entity's protection system maintenance program to include sudden pressure relaying components. NERC further maintains that the proposed standard satisfies the Commission's concerns as raised in Order No. 758 “by including . . . sudden pressure relays that detect [a] fault on Bulk-Power System transformer equipment and trip in response to fault conditions, as recommended by the SPCS Report.” 16

    16 NERC Petition at 12.

    11. NERC explains that proposed Reliability Standard PRC-005-4 has been modified to include a new definition for “Sudden Pressure Relaying,”, as well as four revised definitions as part of an applicable entity's protection system maintenance program.17 NERC further explains that the proposed standard would include a sudden pressure relay that trips an interrupting device to isolate the equipment it is monitoring, but “does not include other non-electric sensing devices, pressure relays that only initiate an alarm, or pressure relief devices.” 18 In addition, NERC explains that the revised standard replaces the term “Special Protection System” with the term “Remedial Action Scheme,” to align the standard with NERC's employment of the latter term moving forward, and revises Applicability section 4.2.6.1 to address how the largest BES generating unit would be determined in circumstances involving a Reserve Sharing Group.

    17 NERC proposes to modify the definitions of Protection System Maintenance Program, Component Type, Component, and Countable Event to reflect the addition of sudden pressure relays to the scope of a required maintenance program. NERC Petition at 15-16.

    18Id. at 18.

    12. NERC's proposed implementation plan for PRC-005-4 incorporates the phased-in implementation period approved for PRC-005-2, which has a twelve year phase-in period, with the addition of compliance dates for the new requirements for applicable sudden pressure relays. NERC asks that PRC-005-4 become effective the first day of the first calendar quarter following Commission approval. Reliability Standard PRC-005-3 would be retired immediately prior to PRC-005-4 becoming effective.

    13. NERC explains that the evidence retention period for PRC-005-4 is shorter than that required in the preceding versions of the standard, as it requires entities to maintain records for one maintenance cycle, rather than two cycles, if the interval of the maintenance activity is longer than the audit cycle. For maintenance activities where the interval is shorter than the audit cycle, documentation is to be retained for all maintenance activities since the previous audit.

    14. NERC states that the violation risk factors proposed in PRC-005-4 track those in previous versions of the standard, and that the violation severity levels have been revised to include the additional component (sudden pressure relays) in a manner consistent with the approach taken for PRC-005-3.

    II. Discussion

    15. Pursuant to section 215(d)(2) of the FPA, the Commission proposes to approve Reliability Standard PRC-005-4, as well as the new definition of Sudden Pressure Relaying, the four revised definitions referenced in the proposed standard, the assigned violation risk factors and violation severity levels, and the proposed implementation plan. We believe that proposed Reliability Standard PRC-005-4 will enhance reliability by requiring the inclusion of sudden pressure relays of certain criteria that are utilized in a trip application as part of the protection system maintenance program, and by requiring entities to undertake minimum required maintenance activities at maximum defined maintenance intervals.

    16. NERC has relied on the SPCS's determination that the only non-electrical sensing devices that can impact reliable operation of the Bulk-Power System are the sudden pressure relays that can detect rapid changes in gas pressure, oil pressure, or oil flow that are indicative of faults within the transformer equipment, and can trip associated transformer circuitry to isolate the transformer and limit the potential damage of the equipment. We agree that these relays should be included in an adequate protection system maintenance program.

    17. However, we continue to have some concern that the misoperation of other types of non-electrical sensing relays or devices, such as pressure sensing devices associated with air blast or SF6 circuit breaker arc extinguishing systems, could affect the reliable operation of the Bulk-Power System. These non-electrical sensing devices are utilized in this context to give an indication that the circuit breaker may be unable to operate as designed on the Bulk-Power System. With regard to these types of devices, the SPCS stated that, “there is no operating experience in which misoperation of a density switch or sensor [i.e, pressure sensing device] in response to a system disturbance has contributed to a cascading event.” 19 However, we expect Commission staff to continue exploring this issue with NERC, particularly in light of the findings in NERC's 2014 and 2013 State of Reliability reports that AC substation equipment failures remain among the leading causes of Bulk Power System problems.

    19 SPCS Supplemental Report at 4.

    III. Information Collection Statement

    18. The following collection of information contained in this Notice of Proposed Rulemaking is subject to review by the Office of Management and Budget (OMB) under section 3507(d) of the Paperwork Reduction Act of 1995 (PRA).20 OMB's regulations require approval of certain information collection requirements imposed by agency rules.21 Upon approval of a collection(s) of information, OMB will assign an OMB control number and an expiration date. Respondents subject to the filing requirements of a rule will not be penalized for failing to respond to these collections of information unless the collections of information display a valid OMB control number.

    20 44 U.S.C. 3507(d) (2006).

    21 5 CFR 1320.11 (2012).

    19. We solicit comments on the Commission's need for this information, whether the information will have practical utility, the accuracy of the burden estimates, ways to enhance the quality, utility, and clarity of the information to be collected or retained, and any suggested methods for minimizing respondents' burden, including the use of automated information techniques. Specifically, the Commission asks that any revised burden or cost estimates submitted by commenters be supported by sufficient detail to understand how the estimates are generated.

    20. The Commission proposes to approve Reliability Standard PRC-005-4, which will replace PRC-005-3 (Protection System and Automatic Reclosing Maintenance). The proposed Reliability Standard expands the existing standard to cover sudden pressure relays that meet certain criteria, thereby imposing mandatory minimum maintenance activities and maximum maintenance intervals for the applicable relays. Because the specific requirements were designed to reflect common industry practice, entities are not expected to experience a meaningful change in actual maintenance and documentation practices. However, each applicable entity will have to perform a one-time review of sudden pressure relays that detect rapid changes in gas pressure, oil pressure, or oil flow that are indicative of faults within transformer equipment, and, if it has applicable sudden pressure relay devices, review current maintenance programs to ensure that they meet the requirements of proposed standard PRC-005-4. Accordingly, all additional information collection costs are expected to be limited to the first year of implementation of the revised standard.

    21. Proposed Reliability Standard PRC-005-4 reduces the evidence retention requirements approved in previously-approved versions of the standard, and now requires entities to maintain documentation of maintenance activities for only one maintenance cycle (a maximum of twelve years) if the maintenance interval is longer than the audit cycle. For maintenance activities where the interval is shorter than the audit cycle, documentation is to be retained for all maintenance activities since the previous audit. While the potential data retention requirement exceeds the three-year period that is routinely allowed for regulations requiring record retention under the OMB regulations implementing the PRA,22 the maximum evidence retention period has been reduced from 24 years to a maximum of 12 years as a result of the Commission's prior request for comment on the reasonableness of the evidence retention period in earlier versions of the standard, and appears to reflect the minimum time needed to ensure compliance with maintenance requirements.23

    22See 5 CFR 1320.5(d)(2)(iv).

    23See Order No. 803, 150 FERC ¶ 61,039 at PP 37-38.

    22. Public Reporting Burden: Affected entities must perform a one-time review of their existing sudden pressure relay schemes and associated maintenance programs to ensure that the programs contain at a minimum the activities required by Reliability Standard PRC-005-4. If the existing maintenance program does not meet the criteria in Reliability Standard PRC-005-4, the entity will have to make certain adjustments to the program.

    23. Our estimate below assumes that the number of unique applicable entities (distribution providers, generator owners and transmission owners, or a combination of those) in the United States is approximately 1,287 24 and the time required to do the one-time review will be approximately eight hours. The estimate further assumes that the one-time review would be performed by an engineer at a rate of $65.34 per hour.25

    24 This figure reflects the generator owners, transmission owners, and distribution providers identified in the NERC Compliance Registry as of February 27, 2015.

    25 The figure is taken from the Bureau of Labor Statistics at http://www.bls.gov/oes/current/naics2_22.htm; Occupation Code: 17-2071).

    RM15-9-000 (Mandatory Reliability Standards: Reliability Standard PRC-005-4) Number of
  • respondents
  • Annual
  • number of
  • responses per
  • respondent
  • Total number of responses Average
  • burden (hours) cost per
  • response
  • Total annual burden hours total annual cost Cost per
  • respondent
  • ($)
  • (1) (2) (1)*(2) = (3) (4) (3)*(4) = (5) (5) ÷ (1) One-time review of sudden pressure relay maintenance program and adjustment 1,287 1 1,287 8
  • $523
  • 10,296
  • $673,101
  • $523

    Title: FERC-725P1,26 Mandatory Reliability Standards: Reliability Standard PRC-005-4.

    26 The FERC-725P1 is a temporary collection established so the Commission can submit this proposed rulemaking to OMB on time. However, the burden contained in this rulemaking should be contained in FERC-725G (OMB Control No. 1902-0252). Commission staff plans eventually to move this burden to FERC-725G.

    Action: Proposed Collection of Information.

    OMB Control No: To be determined.

    Respondents: Business or other for-profit and not-for-profit institutions.

    Frequency of Responses: One time.

    Necessity of the Information: The proposed Reliability Standard PRC-005-4, if adopted, would implement the Congressional mandate of the Energy Policy Act of 2005 to develop mandatory and enforceable Reliability Standards to better ensure the reliability of the nation's Bulk-Power System. Specifically, the proposal would ensure that transmission and generation protection systems affecting the reliability of the bulk electric system are maintained and tested.

    24. Internal review: The Commission has reviewed revised Reliability Standard PRC-005-4 and made a determination that approval of this standard is necessary to implement section 215 of the FPA. The Commission has assured itself, by means of its internal review, that there is specific, objective support for the burden estimates associated with the information requirements.

    25. Interested persons may obtain information on the reporting requirements by contacting the Federal Energy Regulatory Commission, Office of the Executive Director, 888 First Street NE., Washington, DC 20426 [Attention: Ellen Brown, email: [email protected], phone: (202) 502-8663, fax: (202) 273-0873].

    26. Comments concerning the information collections proposed in this NOPR and the associated burden estimates should be sent to the Commission in this docket and may also be sent to the Office of Management and Budget, Office of Information and Regulatory Affairs [Attention: Desk Officer for the Federal Energy Regulatory Commission]. For security reasons, comments should be sent by email to OMB at the following email address: [email protected] Please reference the docket number of this Notice of Proposed Rulemaking (Docket No. RM15-9-000) in your submission.

    IV. Regulatory Flexibility Act Analysis

    27. The Regulatory Flexibility Act of 1980 (RFA) 27 generally requires a description and analysis of Proposed Rules that will have significant economic impact on a substantial number of small entities. Proposed Reliability Standard PRC-005-4 is expected to impose an additional, one-time burden on 1,287 entities (distribution providers, generator owners, and transmission owners, or a combination thereof). Comparison of the applicable entities with FERC's small business data indicates that approximately 789 of the 1,287 entities are small entities, or 61.31 percent of the respondents affected by this proposed Reliability Standard.28

    27 5 U.S.C. 601-12. The number of small distribution providers required to comply with PRC-005-4 may decrease significantly. In March 2015, the Commission approved revisions to the NERC Rules of Procedure to implement NERC's “risk based registration” program, which raised the registry threshold for distribution providers from a 25 MW to 75 MW peak load. North American Electric Reliability Corp., 150 FERC ¶ 61,213 (2015).

    28 The Small Business Administration sets the threshold for what constitutes a small business. Public utilities may fall under one of several different categories, each with a size threshold based on the company's number of employees, including affiliates, the parent company, and subsidiaries. For the analysis in this NOPR, we are using a 500 employee threshold for each affected entity. Each entity is classified as Electric Bulk Power Transmission and Control (NAICS code 221121).

    28. On average, each small entity affected may have a one-time cost of $523, representing a one-time review of the program for each entity, consisting of 8 man-hours at $65.34/hour, as explained above in the information collection statement. We do not consider this cost to be a significant economic impact for small entities. Accordingly, the Commission certifies that proposed Reliability Standard PRC-005-4 will not have a significant economic impact on a substantial number of small entities. The Commission seeks comment on this certification.

    V. Environmental Analysis

    29. The Commission is required to prepare an Environmental Assessment or an Environmental Impact Statement for any action that may have a significant adverse effect on the human environment.29 The Commission has categorically excluded certain actions from this requirement as not having a significant effect on the human environment. Included in the exclusion are rules that are clarifying, corrective, or procedural or that do not substantially change the effect of the regulations being amended.30 The actions proposed herein fall within this categorical exclusion in the Commission's regulations.

    29Regulations Implementing the National Environmental Policy Act of 1969, Order No. 486, FERC Stats. & Regs. ¶ 30,783 (1987).

    30 18 CFR 380.4(a)(2)(ii).

    VI. Comment Procedures

    30. The Commission invites interested persons to submit comments on the matters and issues proposed in this notice to be adopted, including any related matters or alternative proposals that commenters may wish to discuss. Comments are due June 22, 2015. Comments must refer to Docket No. RM15-9-000, and must include the commenter's name, the organization they represent, if applicable, and address.

    31. The Commission encourages comments to be filed electronically via the eFiling link on the Commission's Web site at http://www.ferc.gov. The Commission accepts most standard word processing formats. Documents created electronically using word processing software should be filed in native applications or print-to-PDF format and not in a scanned format. Commenters filing electronically do not need to make a paper filing.

    32. Commenters that are not able to file comments electronically must send an original of their comments to: Federal Energy Regulatory Commission, Secretary of the Commission, 888 First Street NE., Washington, DC 20426.

    33. All comments will be placed in the Commission's public files and may be viewed, printed, or downloaded remotely as described in the Document Availability section below. Commenters on this proposal are not required to serve copies of their comments on other commenters.

    VII. Document Availability

    34. In addition to publishing the full text of this document in the Federal Register, the Commission provides all interested persons an opportunity to view and/or print the contents of this document via the Internet through the Commission's Home Page (http://www.ferc.gov) and in the Commission's Public Reference Room during normal business hours (8:30 a.m. to 5:00 p.m. Eastern time) at 888 First Street NE., Room 2A, Washington, DC 20426.

    35. From the Commission's Home Page on the Internet, this information is available on eLibrary. The full text of this document is available on eLibrary in PDF and Microsoft Word format for viewing, printing, and/or downloading. To access this document in eLibrary, type the docket number of this document excluding the last three digits in the docket number field.

    36. User assistance is available for eLibrary and the Commission's Web site during normal business hours from the Commission's Online Support at 202-502-6652 (toll free at 1-866-208-3676) or email at [email protected], or the Public Reference Room at (202) 502-8371, TTY (202) 502-8659. Email the Public Reference Room at [email protected]

    By direction of the Commission.

    Issued: April 16, 2015. Nathaniel J. Davis, Sr., Deputy Secretary.
    [FR Doc. 2015-09228 Filed 4-21-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 73 [Docket No. FDA-2015-C-1154] E. & J. Gallo Winery; Filing of Color Additive Petition AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Notice of petition.

    SUMMARY:

    The Food and Drug Administration (FDA or we) is announcing that we have filed a petition, submitted by E. & J. Gallo Winery, proposing that the color additive regulations be amended to provide for the safe use of mica-based pearlescent pigments as color additives in certain distilled spirits.

    DATES:

    The color additive petition was filed on March 19, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Salome Bhagan, Center for Food Safety and Applied Nutrition (HFS-265), Food and Drug Administration, 5100 Paint Branch Pkwy., College Park, MD 20740-3835, 240-402-3041.

    SUPPLEMENTARY INFORMATION:

    Under section 721(d)(1) of the Federal Food, Drug, and Cosmetic Act (21 U.S.C. 379e(d)(1)), we are giving notice that we have filed a color additive petition (CAP 5C0302), submitted by E. & J. Gallo Winery, c/o Keller and Heckman LLP, Three Embarcadero Center, Suite 1420, San Francisco, CA 94111. The petition proposes to amend the color additive regulations in § 73.350 Mica-based pearlescent pigments (21 CFR 73.350) to provide for the safe use of mica-based pearlescent pigments at a level of up to 0.07 percent by weight in distilled spirits containing not less than 18 percent and not more than 25 percent alcohol by volume, and to remove the current exclusion for distilled spirit mixtures containing more than 5 percent wine on a proof gallon basis.

    We have determined under 21 CFR 25.32(k) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

    Dated: April 15, 2015. Dennis M. Keefe, Director, Office of Food Additive Safety, Center for Food Safety and Applied Nutrition.
    [FR Doc. 2015-09248 Filed 4-21-15; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Parts 1, 301, and 602 [REG-103281-11] RIN 1545-BK06 Tax on Certain Foreign Procurement AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    This document contains proposed regulations under section 5000C of the Internal Revenue Code relating to the 2 percent tax on payments made by the U.S. government to foreign persons pursuant to certain contracts. The proposed regulations affect U.S. government acquiring agencies and foreign persons providing certain goods or services to the U.S. government pursuant to a contract. This document also contains proposed regulations under section 6114, with respect to foreign persons claiming an exemption from the tax under an income tax treaty.

    DATES:

    Written or electronic comments and requests for a public hearing must be received by July 21, 2015.

    ADDRESSES:

    Send submissions to: CC:PA:LPD:PR (REG-103281-11), Internal Revenue Service, Room 5203, P.O. Box 7604, Ben Franklin Station, Washington, DC 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to CC:PA:LPD:PR (REG-103281-11), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224; or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-103281-11).

    FOR FURTHER INFORMATION CONTACT:

    Concerning the proposed regulations, Kate Hwa at (202) 317-6934, or for questions related to tax treaties, Rosy Lor at (202) 317-6933; concerning submissions of comments, Oluwafunmilayo Taylor, (202) 317-5179, (not toll-free numbers).

    SUPPLEMENTARY INFORMATION:

    Paperwork Reduction Act

    The collection of information contained in this notice of proposed rulemaking has been submitted to the Office of Management and Budget (OMB) for review in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)). Comments on the collection of information should be sent to the Office of Management and Budget, Attn: Desk Officer for the Department of the Treasury, Office of Information and Regulatory Affairs, Washington, DC 20503, with copies to the Internal Revenue Service, Attn: IRS Reports Clearance Officer, SE:W:CAR:MP:T:T:SP, Washington, DC 20224. Comments on the collection of information should be received by June 22, 2015. Comments are specifically requested concerning:

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

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

    How the quality, utility, and clarity of the information to be collected may be enhanced;

    How the burden of complying with the proposed collection of information may be minimized, including through the application of automated collection techniques or other forms of information technology; and

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

    The collection of information in the proposed regulations is contained in a number of provisions including §§ 1.5000C-2, 1.5000C-3, and 1.5000C-4. Responses to these collections of information are required to verify the status of foreign persons to whom specified Federal procurement payments subject to the section 5000C tax are made; to obtain a benefit (to claim an exemption to, or a reduction in, withholding); and to facilitate tax compliance (to verify entitlement to an exemption). The IRS intends that these information collection requirements will be satisfied primarily on existing chapter 3 withholding forms by U.S. government acquiring agencies, along with Form 1120-F, “U.S. Income Tax Return of a Foreign Corporation,” and Form 1040NR, “U.S. Nonresident Alien Income Tax Return.” However, in certain circumstances, foreign persons must collect certain information in order to demonstrate to an acquiring agency the appropriate amount to withhold, if any, on a Section 5000C Certificate. This reporting burden will be reflected in a new Form W-14, “Certificate of Party Receiving Federal Procurement Payment,” or the Section 5000C Certificate.

    The likely respondents are the U.S. government and foreign persons that enter into contracts with the U.S. government.

    Estimated total annual reporting or recordkeeping burden: 11,840 hours.

    Estimated average annual burden hours per respondent or recordkeeper varies from .5 hours to 40 hours, depending on individual circumstances, with an estimated average of 5 hours, 55 minutes.

    Estimated number of respondents or recordkeepers: 2,000.

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

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

    Background

    This document contains proposed amendments to 26 CFR part 1 under section 5000C of the Internal Revenue Code (Code). On January 2, 2011, section 301 of the James Zadroga 9/11 Health and Compensation Act of 2010, Public Law 111-347 (the Act), 124 Stat. 3623, added section 5000C to the Code. Section 5000C imposes on any foreign person a 2 percent tax on certain payments received from the Government of the United States (U.S. government) for goods and services. Section 301(a)(3) of the Act provides that section 5000C applies to payments received pursuant to contracts entered into on and after January 2, 2011. Additionally, section 301(b)(1) of the Act stipulates that no funds are to be disbursed to any foreign contractor in order to reimburse the tax imposed under section 5000C. The Federal Acquisition Regulation (FAR) is the body of rules that generally governs acquisitions and contracting procedures for federal agencies. See 48 CFR Chapter 1. To comply with section 301(b)(1) of the Act, the Federal Acquisition Regulation Council has amended the FAR to reflect that the 2 percent tax imposed under section 5000C is disallowed as a contract cost, excluded from the contract price, and not reimbursed under the contract. See 48 CFR 31.205-41(b), 52.229-3(b)(2), 52.229-4(b)(2), 52.229-6(c)(2), and 52.229-7(b)(2).

    Section 301(c) of the Act provides that section 5000C shall be applied in a manner consistent with United States obligations under international agreements.

    This document also contains amendments to 26 CFR part 301 under section 6114 of the Code. Section 6114(a) generally requires reporting when a taxpayer takes the position that a treaty of the United States overrules (or otherwise modifies) an internal revenue law. Section 6114(b) provides that the Secretary may waive the reporting requirement under section 6114(a) with respect to classes of cases for which the Secretary determines that the waiver will not impede the assessment and collection of tax.

    Explanation of Provisions

    The proposed regulations provide rules relating to the imposition of, and exemption from, the tax under section 5000C. They also contain rules relating to the obligation of the U.S. government to withhold, deposit, and report amounts to the IRS under section 5000C. Further, they provide guidance to foreign persons who must report and pay the tax under section 5000C in certain circumstances. If the U.S. government fails to withhold an amount equal to the tax due under section 5000C, the foreign person must file a U.S. return and pay the tax due. In addition, the proposed regulations provide guidance as to when the imposition of tax would be inconsistent with U.S. treaty obligations. Proposed regulations under section 6114(b) generally waive the reporting requirements under section 6114(a) when a taxpayer takes the position that a nondiscrimination provision of an income tax treaty exempts a payment from tax under section 5000C, provided that certain other requirements are satisfied.

    I. Payments Subject to Section 5000C Tax

    Section 5000C(a) applies to foreign persons that are party to certain contracts with the U.S. government entered into on and after January 2, 2011. In particular, section 5000C imposes on the foreign person a tax equal to 2 percent of the amount of a specified Federal procurement payment in certain circumstances. Section 5000C(b) defines the term specified Federal procurement payment as any payment made pursuant to a contract with the U.S. government for goods or services if the goods are manufactured or produced in or the services are provided in any country that is not a party to an international procurement agreement with the United States.

    II. Definitions

    Proposed § 1.5000C-1(c) sets forth definitions that apply solely for purposes of section 5000C and the proposed regulations, several of which are described as follows.

    A. Contracting Party, Foreign Contracting Party

    Under the proposed regulations, the term contracting party means any person that is a party to a contract with the U.S. government entered into on and after January 2, 2011. The term foreign contracting party means a contracting party that is not a U.S. person.

    B. U.S. Government

    For purposes of section 5000C, the proposed regulations define the term Government of the United States or U.S. government as the executive departments specified in 5 U.S.C. 101 (such as the Department of Agriculture and the Department of Transportation), the military departments specified in 5 U.S.C. 102 (which includes the Department of the Army, the Department of the Navy, and the Department of the Air Force), the independent establishments specified in 5 U.S.C. 104(1), and wholly owned Government corporations specified in 31 U.S.C. 9101(3) (such as the Export-Import Bank of the United States and the Pension Benefit Guaranty Corporation). Unless otherwise specified in 5 U.S.C. 101, 102, or 104(1), or 31 U.S.C. 9101(3), the term U.S. government does not include any quasi-governmental entities or instrumentalities of the U.S. government. The proposed regulations refer to U.S. government departments or agencies that are party to a contract as acquiring agencies. Moreover, to the extent that a U.S. government department or agency other than the acquiring agency is making the payments pursuant to the contract, that department or agency is also treated as the acquiring agency for purposes of the proposed regulations.

    C. International Procurement Agreement

    The proposed regulations define the term international procurement agreement as the World Trade Organization Government Procurement Agreement within the meaning of 48 CFR 25.400(a)(1) and any Free Trade Agreement to which the United States is a party that includes government procurement obligations that provide appropriate competitive government procurement opportunities to U.S. goods, services, and suppliers. For purposes of this definition, a party to an agreement is a signatory to the agreement and does not include a country that is merely an observer with respect to the agreement.

    D. Contract

    The proposed regulations provide that the term contract has the same meaning as provided in § 2.101 of the FAR. Under the FAR, a contract does not include a grant agreement or cooperative agreement within the meaning of 31 U.S.C. 6304 and 6305, respectively. A grant agreement is an agreement between the U.S. government and a recipient when: (1) The principal purpose of the relationship is to transfer a thing of value to the recipient to carry out a public purpose of support or stimulation authorized by a law of the United States instead of acquiring (by purchase, lease, or barter) property or services for the direct benefit or use of the U.S. government; and (2) substantial involvement is not expected between the executive agency and the recipient when carrying out the activity contemplated in the agreement. See 31 U.S.C. 6304. A cooperative agreement is similar to a grant agreement except that substantial involvement is expected between the U.S. government and the recipient when carrying out the activity contemplated in the agreement. See 31 U.S.C. 6305. Thus, consistent with the FAR, the proposed regulations provide that the tax imposed under section 5000C does not apply to grant or cooperative agreements with the U.S. government.

    III. Exemptions From Section 5000C Tax

    The proposed regulations provide five exemptions from the tax imposed under section 5000C. The first exemption excludes payments for purchases under the simplified acquisitions procedures that do not exceed the simplified acquisitions threshold (as described in the FAR). The second exemption excludes payments pursuant to contracts for certain emergency acquisitions (as defined in the FAR). The third exemption excludes payments if the imposition of the tax would be inconsistent with any international agreement with the United States, including for example, when a foreign contracting party is entitled to the benefit of a nondiscrimination provision of an international agreement with the United States, such as a qualified income tax treaty. The fourth exemption applies if the goods are manufactured or produced, or services are provided, in the United States. The final exemption is for goods manufactured or produced or services provided in a country that is a party to an international procurement agreement with the United States. Sections III.A-C of this preamble discuss several of the exemptions.

    A. Payments for Simplified Acquisitions

    The IRS and the Department of the Treasury (Treasury Department) recognize that withholding under section 5000C on contracts in certain circumstances may be administratively burdensome and, in some cases, more costly than the tax actually collected. Accordingly, the proposed regulations provide that the tax imposed under section 5000C will not apply to payments for purchases under the simplified acquisition procedures described in the FAR that do not exceed the simplified acquisition threshold. See 48 CFR 2.101. In general, simplified acquisition procedures apply when the U.S. government makes purchases of supplies or services of $150,000 or less.

    B. Emergency Acquisitions

    From time to time, the U.S. government makes purchases in emergency situations. The IRS and Treasury Department recognize that in those emergency situations it may not be practicable to impose tax on payments otherwise subject to section 5000C because it may impede the ability of the U.S. government to make certain acquisitions that are necessary to prevent serious injury, financial or other, to the U.S. government. Therefore, § 1.5000C-1(d)(2) exempts payments pursuant to contracts (1) awarded under the “unusual and compelling urgency” authority of 48 CFR 6.302-2, and (2) entered into under the emergency acquisition flexibilities as defined in 48 CFR part 18. Acquisitions pursuant to the unusual and compelling urgency authority of 48 CFR 6.302-2 are subject to special rules and procedures when the need for supplies or services is of such an urgency that serious injury, financial or other, could result for the U.S. government if the special procedures did not apply. Certain written justifications and approvals described in 48 CFR 6.303 and 6.304 are required for acquisitions in these circumstances. Acquisitions entered into under the emergency acquisition flexibilities of 48 CFR part 18 refer to acquisitions of supplies or services by the U.S. government that, as determined by the head of an executive agency, may be used (1) in support of a contingency operation (as defined in 48 CFR 2.101), (2) to facilitate the defense against or recovery from nuclear, biological, chemical, or radiological attack against the United States, or (3) when the President issues an emergency declaration, or a major disaster declaration.

    C. Certain International Agreements

    Section 301(c) of the Act requires that section 5000C be applied in a manner consistent with United States obligations under international agreements. The reference to “international agreements” includes income tax treaties to which the United States is a party. The General Explanation of Tax Legislation prepared by the Joint Committee on Taxation accompanying section 5000C explains that treaties generally provide that neither country may subject nationals of the other country to taxation more burdensome than the tax it imposes on its own nationals. This explanation by the Joint Committee on Taxation refers to the nondiscrimination provisions of tax treaties. See Staff of the Joint Committee on Taxation, General Explanation of Tax Legislation Enacted in the 111th Congress, at 693-4.

    The United States currently has 58 comprehensive income tax treaties in force that cover 66 countries. Virtually all nondiscrimination articles in these treaties contain provisions that prohibit the imposition of tax on a foreign national that is more burdensome than the taxation to which a U.S. national under similar circumstances may be subjected. A national is generally defined in tax treaties to include both individuals possessing citizenship and legal persons whose status is derived from the laws of that country. Some of these income tax treaties only prohibit discrimination against foreign nationals who are individuals, and a few provide protection only for foreign nationals who are also U.S. residents. The majority of nondiscrimination articles contain provisions that prohibit discrimination against all foreign nationals of the treaty country, regardless of whether the national is a resident of the treaty country.

    Many of these income tax treaties have a nondiscrimination article that applies to “taxes of every kind and description,” whether or not an income tax, and are broad enough to apply to the tax imposed under section 5000C. Consistent with section 301(c) of the Act, any foreign contracting party that is entitled to the benefits of such a nondiscrimination article is not subject to tax under section 5000C. The proposed regulations refer to a treaty with such an article as a qualified income tax treaty. The term is defined as a U.S. income tax treaty in force that contains a nondiscrimination provision that applies to the tax imposed under section 5000C and prohibits taxation that is more burdensome on a foreign national than a U.S. national (or in the case of some income tax treaties, taxation that is more burdensome on a foreign citizen than a U.S. citizen), regardless of residence. Notice 2015-35, 2015-18 IRB, identifies income tax treaties in force, as of the date the proposed regulations are issued, that are qualified income tax treaties (available on www.irs.gov). This Notice may be updated or amended in subsequent IRS Forms, Instructions, Publications, or other media (including electronic media).

    IV. Rules for Determining Where Goods Are Manufactured or Produced, and Where Services Are Performed

    Section 5000C(b) applies when payments are made pursuant to a contract for goods or services if the goods are manufactured or produced in or the services are provided in a country that is not a party to an international procurement agreement with the United States. Solely for purposes of section 5000C, the proposed regulations provide rules for determining where goods are manufactured or produced, and where services are performed. In particular, the proposed regulations provide that goods are manufactured or produced in the country (or countries) where property has been substantially transformed into the goods that are procured, or alternatively, where there has been assembly or conversion of component parts into the final product. Further, the proposed regulations provide that services will be considered to be provided in the country where the individuals performing the services are physically located when they perform their duties pursuant to the contract.

    If, pursuant to a single contract, goods are manufactured or produced or services are provided in multiple countries, the proposed regulations provide that a foreign contracting party may use a reasonable allocation method to determine how the goods or services must be allocated to each country for purposes of applying the relevant exemptions for payments pursuant to that contract. A reasonable allocation method would include taking into account the proportionate costs (including the cost of labor and raw materials) incurred to manufacture or produce the goods in each country, or taking into account the proportionate costs incurred to provide the services in each country.

    V. Withholding by the U.S. Government on Specified Federal Procurement Payments A. Increase Amount Deducted and Withheld Under Chapter 3

    Section 5000C(d)(1) provides that the amount deducted and withheld under chapter 3 shall be increased by the amount of tax imposed under section 5000C. Accordingly, the proposed regulations generally follow the procedural requirements in the Code and Treasury regulations for situations in which withholding is required under chapter 3 on fixed or determinable annual or periodical income (FDAP). For example, similar to withholding agents under chapter 3, acquiring agencies with an obligation to withhold under section 5000C must file Form 1042, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,” and Form 1042-S, “Foreign Person's U.S. Source Income Subject to Withholding,” to report amounts withheld. However, the proposed regulations differ from the withholding and reporting rules under chapter 3 to take into account the differences between the tax imposed under section 5000C and the tax imposed under subtitle A to which chapter 3 applies. Thus, a foreign contracting party is not required to submit a Form W-8BEN, “Certificate of Foreign Status of Beneficial Owner for United States Tax Withholding,” or Form W-8BEN-E, “Certificate of Status of Beneficial Owner for United States Tax Withholding and Reporting (Entities),” to an acquiring agency under the proposed regulations to certify its foreign status or claim a reduction in withholding under an applicable income tax treaty.

    The proposed regulations require instead that a foreign contracting party must submit a “Section 5000C Certificate,” signed under penalties of perjury, that provides all of the information required by the proposed regulations to claim an exemption from section 5000C. The term “Section 5000C Certificate” also includes any form that the IRS may prescribe as a substitute for the certificate. Under the proposed regulations, an acquiring agency may generally rely on a claim made in a Section 5000C Certificate if the foreign contracting party provides complete information in the time and manner required by the regulations. However, an acquiring agency may not rely on the information provided by the foreign contracting party if it has reason to know that the information is incorrect or unreliable. An acquiring agency has reason to know that the information is incorrect or unreliable if it has knowledge of relevant facts or statements contained in the submitted information such that a reasonably prudent person in the position of the acquiring agency would know that the information provided is incorrect or unreliable.

    For the convenience of both acquiring agencies and foreign contracting parties, a model Section 5000C Certificate is included as part of the proposed regulations. A foreign contracting party may choose not to use the format of the model certificate, but in all cases it must submit all the necessary information required by the proposed regulations accompanied by a signed penalties of perjury statement. Each Section 5000C Certificate applies to a single contract, and thus a foreign contracting party with multiple contracts with the U.S. government must complete a new certificate for each contract, if necessary.

    B. Steps for Acquiring Agencies

    The proposed regulations provide steps that an acquiring agency must follow to comply with its withholding obligations under section 5000C. Applying these steps will identify the payments that are subject to withholding under section 5000C and eliminate those that are not. The steps are organized so that if an acquiring agency already possesses information that establishes that the payment is not subject to the tax imposed under section 5000C (because, for example, the payment is made to a U.S. person), the acquiring agency may conclude based on that particular information that the payment is not subject to withholding and will not have to continue to evaluate the other steps.

    The first of these steps instructs an acquiring agency to determine whether the payment is made pursuant to a contract for goods or services. If the U.S. government is making a payment for any other purpose, there will not be an obligation to withhold under section 5000C on the payment. Thus, this step will eliminate from withholding payments made pursuant to grant or cooperative agreements, and payments made pursuant to contracts that are not for goods or services, such as a contract for the purchase or lease of land or an interest in land.

    Under the second step, an acquiring agency must determine whether the payment is made to a U.S. person. This step takes into account that only foreign persons are subject to tax under section 5000C and § 1.5000C-1(b). Under this step, if the acquiring agency determines that the contracting party is a U.S. person based on its TIN as reflected in a U.S. government information system, such as the System for Award Management (or because there is a completed Form W-9, “Request for Taxpayer Identification Number (TIN) and Certification,” on file), payments made pursuant to this contract are not subject to withholding under section 5000C.

    Under the third step, an acquiring agency determines whether the payment is for purchases under the simplified acquisition procedures as described in the FAR. If it is, the acquiring agency does not have an obligation to withhold under section 5000C on the payment. This step takes into account the exemption from tax for simplified acquisitions in § 1.5000C-1(d)(1).

    Under the fourth step, the acquiring agency determines whether the payment is made for certain emergency acquisitions. If it is, the acquiring agency does not have an obligation to withhold under section 5000C on the payment. This step takes into account the exemption from tax for emergency acquisitions as described in § 1.5000C-1(d)(2).

    Under the fifth and sixth steps, the acquiring agency determines whether the payment is subject to withholding (in whole or in part) based on the information contained in a Section 5000C Certificate, if one has been provided by the foreign contracting party. Under the fifth step, if the acquiring agency determines that the foreign contracting party is exempt from the tax under section 5000C by reason of an international agreement with the United States, as represented on a completed Section 5000C Certificate, the acquiring agency does not have an obligation to withhold. For example, under this step, the acquiring agency does not have an obligation to withhold if a foreign contracting party provides a completed Section 5000C Certificate that accurately identifies the nondiscrimination article of a qualified income tax treaty on which it is relying to claim an exemption and the basis for that reliance.

    Under the sixth step, the acquiring agency must determine from the Section 5000C Certificate if the payments are (in whole or part) made pursuant to a contract for goods manufactured or produced or services provided in the United States, or in a foreign country that is a party to an international procurement agreement and therefore exempt (to that extent) from withholding under Section 5000C.

    Under the seventh step, if the acquiring agency determines that it has an obligation to withhold, the acquiring agency computes the amount of withholding based on the information contained in the Section 5000C Certificate, including a claim for a partial exemption from withholding, and withholds that amount from the payment.

    Under the final step, the acquiring agency must deposit and report any amounts withheld.

    VI. Procedure for the Foreign Contracting Party To Request Offset for Underwithholding or Overwithholding

    Under certain circumstances, the proposed regulations provide that the foreign contracting party may request that the acquiring agency increase or decrease the amount of withholding on future payments for which withholding is required under section 5000C. The IRS and Treasury Department intend for this procedure to provide flexibility for foreign contracting parties that discover that the previous amounts withheld did not satisfy, or exceeded, their tax liability under section 5000C and the proposed regulations. These requests must be in writing, and provide an explanation, signed under penalties of perjury. Any increase or decrease in amounts withheld under this procedure may occur only if the payments to which it applies are made on or before the date on which the acquiring agency must file Form 1042 for the year with respect to the payment for which the overwithholding or underwithholding occurred.

    VII. Administrative Provisions Relating to Withholding by U.S. Government

    Under § 1.6302-2 of the Income Tax Regulations, the amount of tax under chapter 3 that U.S. withholding agents are required to withhold determines the frequency of their deposits: Monthly, quarter-monthly, or annual. Section 5000C(d)(1) instructs acquiring agencies to increase amounts deducted and withheld under chapter 3 by amounts withheld under section 5000C. Therefore, for purposes of determining the frequency of their deposits, the proposed regulations require acquiring agencies that have chapter 3 deposit obligations for a period to add amounts withheld under section 5000C to the amounts withheld under chapter 3. This rule applies regardless of whether the chapter 3 deposit obligation is with respect to the contracting party or any other person. However, to reduce the burden on acquiring agencies that have no chapter 3 withholding obligations, the proposed regulations require these acquiring agencies to make deposits monthly, regardless of the amount of tax withheld. Acquiring agencies must deposit all withheld amounts by electronic funds transfer, as that term is defined in § 31.6302-1(h)(4)(i).

    VIII. Special Arrangement for Certain Contracts and Classified Contracts

    The IRS and Treasury Department have determined that, in limited circumstances, it may be in the interest of sound tax administration to allow flexibility in some of the rules provided in the proposed regulations. Thus, the proposed regulations authorize the IRS to consent to alternative means for depositing the tax due under section 5000C when agreed to by the acquiring agency and the foreign contracting party subject to tax under section 5000C. In these situations, the IRS may also modify any reporting or return requirements of the acquiring agency or the foreign contracting party. Similarly, § 1.5000C-3 provides that an acquiring agency is not required to report information on Form 1042-S for payments made pursuant to classified contracts, as described in section 6050M(e)(3), unless the acquiring agency determines that the information reported on the Form 1042-S does not compromise the safeguarding of classified information or national security.

    IX. Requirement for Foreign Contracting Party To File a Return and Pay Tax, and Procedures for Contracting Party To Seek a Refund

    Section 5000C(d)(2) provides that for purposes of subtitle F of the Code (relating to procedure and administration), the tax imposed under section 5000C on foreign contracting parties is treated as a tax imposed under subtitle A (rather than as an excise tax under subtitle D). As such, and because section 5000C(d)(1) provides only that the amount deducted and withheld under chapter 3 shall be increased by the amount of tax imposed under section 5000C, the proposed regulations treat the tax imposed on foreign contracting parties under section 5000C as administered in a manner similar to gross basis income taxes. Thus, if a payment is subject to the tax imposed under section 5000C and the foreign contracting party remains liable for the tax because, for example, it was not fully satisfied by withholding by the acquiring agency, the foreign contracting party must make an income tax return (for example, Form 1120-F, “U.S. Income Tax Return of a Foreign Corporation”) and remit payment by the due date of that income tax return. See sections 6012 and 6072 and the regulations thereunder. Penalties may apply for the foreign contracting party's failure to comply, including those in sections 6651 and 6662.

    If the acquiring agency has overwithheld under section 5000C and has made a deposit of the amount withheld, the contracting party may claim a refund of the amount overwithheld pursuant to the procedures described in chapter 65. See section 6402 and the regulations thereunder for refund procedures. See section 6511 and the regulations thereunder for the statute of limitations on refund claims.

    X. Anti-Abuse Rule

    The proposed regulations contain an anti-abuse rule to prevent circumvention of the tax under section 5000C. Under this rule, if a foreign person engages in a transaction (or series of transactions) with a principal purpose of avoiding the tax imposed under section 5000C, the transaction (or series of transactions) may be disregarded or the arrangement may be recharacterized in accordance with its substance.

    XI. Section 6114 Reporting

    Ordinarily any foreign person claiming that a nondiscrimination provision of an income tax or any other treaty obligation precludes the application of an otherwise applicable Code provision is required to report that position under § 301.6114-1(b)(1). Proposed § 301.6114-1(c)(1)(ix) provides that this reporting obligation is waived when a foreign person is claiming that a qualified income tax treaty precludes the application of section 5000C, but only if the foreign person has provided a Section 5000C Certificate (or such other form as may be prescribed by the Commissioner pursuant to section 5000C) in accordance with section 5000C and the regulations thereunder. Accordingly, if a foreign person relying on a qualified income tax treaty has not provided the certificate or is relying on a treaty obligation other than an income tax treaty to claim an exemption from the tax, reporting is not waived.

    Proposed Effective/Applicability Date

    Section 5000C applies to specified Federal procurement payments received pursuant to contracts entered into on and after January 2, 2011. Proposed §§ 1.5000C-1 through 1.5000C-7 and proposed § 301.6114-1(c)(1)(ix) will apply on and after the date that is 90 days after the date they are published as final regulations in the Federal Register.

    Contracting parties and acquiring agencies may generally rely upon the rules in the proposed regulations until the date they become effective/applicable as final regulations. To the extent that a foreign contracting party is eligible for an exemption under the proposed regulations that would eliminate the tax imposed under section 5000C for any specified Federal procurement payments received on or before April 22, 2015, no further action is required, and the requirement to provide a Section 5000C Certificate is waived. Further, prior to the date these rules become effective/applicable as final regulations, the requirement to file a Form 8833, “Treaty-Based Return Position Disclosure Under Section 6114 or 7701(b),” under section 6114 and the regulations thereunder (with respect to relief pursuant to the nondiscrimination provision of a qualified income tax treaty) is waived for positions related to the tax imposed under section 5000C (and thus no information reporting penalties will be imposed under section 6712).

    If a foreign contracting party has a tax liability under section 5000C for any specified Federal procurement payment received before the date these rules become effective/applicable as final regulations (taking into account any exemptions in the proposed regulations as finalized) that has not been satisfied by withholding, the foreign contracting party should file a tax return and pay the tax in accordance with applicable IRS forms, such as Form 1120-F. If a foreign contracting party fully satisfies its tax and filing obligations under section 5000C with respect to any payments received before the date these rules become effective/applicable as final regulations, penalties will not be asserted with respect to those payments. However, with respect to tax due under section 5000C, a foreign contracting party is subject to applicable interest on the underpayments (as described in Subchapter A of Chapter 67 of the Code).

    Special Analyses

    It has been determined that this proposed regulation 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 the proposed regulations. The collection of information requirement in the proposed regulations will not have a significant economic impact on a substantial number of small entities because a limited number of foreign contracting parties that are small entities will be subject to the tax. Pursuant to section 7805(f) of the Code, the proposed regulations have been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

    Comments and Public Hearing

    Before the proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely to the IRS. The IRS and Treasury Department request comments on all aspects of the proposed rules, including comments on the clarity of the proposed rules and how they may be made easier with which to comply. All comments will be available for public inspection and copying at www.regulations.gov or upon request.

    Drafting Information

    The principal authors of the proposed regulations are Kate Hwa, Brad McCormack, and Rosy Lor, Office of Associate Chief Counsel (International). However, other personnel from the IRS and Treasury Department participated in their development.

    List of Subjects 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

    26 Part 301

    Employment taxes, Estate taxes, Excise taxes, Gift taxes, Income taxes, Penalties, Reporting and recordkeeping requirements.

    26 CFR Part 602

    Reporting and recordkeeping requirements.

    Proposed Amendments to the Regulations

    Accordingly, 26 CFR parts 1, 301, and 602 are proposed to be amended as follows:

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

    26 U. S. C. 7805 * * *

    Par. 2. An undesignated center heading is revised immediately following § 1.5000A-5 to read as follows: Tax on Certain Foreign Procurement Par. 3. Section 1.5000C-0 is added to read as follows:
    § 1.5000C-0 Table of contents.

    This section lists the table of contents for §§ 1.5000C-1 through 1.5000C-7.

    § 1.5000C-1 Tax on specified Federal procurement payments. (a) Overview. (b) Imposition of tax. (c) Definitions. (d) Exemptions. (1) Simplified acquisitions. (2) Emergency acquisitions. (3) Certain international agreements. (4) Goods manufactured or produced or services provided in the United States. (5) Goods manufactured or produced or services provided in a country that is a party to an international procurement agreement. (e) Country in which goods are manufactured or produced or services provided. (1) Goods manufactured or produced. (2) Provision of services. (3) Allocation of total contract price to determine the nonexempt amount. (4) Reduction or elimination of withholding by an acquiring agency. § 1.5000C-2 Withholding on specified Federal procurement payments. (a) In general. (b) Steps in determining the obligation to withhold under section 5000C. (1) Determine whether the payment is pursuant to a contract for goods or services. (2) Determine whether the payment is made pursuant to a contract with a U.S. person. (3) Determine whether the payment is for purchases under the simplified acquisition procedures. (4) Determine whether the payment is for emergency acquisitions. (5) Determine whether the foreign contracting party is entitled to relief pursuant to an international agreement. (6) Determine whether the contract is for goods manufactured or produced or services provided in the United States or in a foreign country that is a party to an international procurement agreement. (7) Compute amounts to withhold. (8) Deposit and report amounts withheld. (c) Determining whether the contracting party is a U.S. person. (1) In general. (2) Determination based on Taxpayer Identification Number (TIN). (3) Determination based on the Form W-9. (4) Contracting party treated as a foreign contracting party. (d) Withholding when a foreign contracting party submits a Section 5000C Certificate. (1) In general. (2) Exemption for a foreign contracting party entitled to the benefit of relief pursuant to certain international agreements. (3) Exemption when goods are manufactured or produced or services provided in the United States, or in a foreign country that is a party to an international procurement agreement. (4) Information required for Section 5000C Certificate. (5) Validity period of Section 5000C Certificate. (6) Change in circumstances. (7) Model Section 5000C Certificate. (8) Time for submitting Section 5000C Certificate or Form W-9, “Request for Taxpayer Identification Number and Certification”. (e) Offset for underwithholding or overwithholding. (1) In general. (2) Underwithholding. (3) Overwithholding. § 1.5000C-3 Payment and returns of tax withheld by the acquiring agency. (a) In general. (b) Deposit rules. (1) Acquiring agency with a chapter 3 deposit requirement treats amounts withheld as under chapter 3. (2) Acquiring agency with no chapter 3 filing obligation deposits withheld amounts monthly. (c) Return requirements. (1) In general. (2) Classified contracts. (d) Special arrangement for certain contracts. § 1.5000C-4 Requirement for the foreign contracting party to file a return and pay tax, and procedures for the contracting party to seek a refund. (a) In general. (b) Tax obligation of foreign contracting party independent of withholding. (c) Return of tax by the foreign contracting party. (d) Time and manner of paying tax. (e) Refund requests when amount withheld exceeds tax liability. § 1.5000C-5 Anti-abuse rule. § 1.5000C-6 Examples. § 1.5000C-7 Effective/applicability date. (a) In general. (b) Reliance on proposed regulations. (c) Obligation to file a return and pay tax. (d) Waiver of penalties under certain circumstances.
    Par. 4. Sections 1.5000C-1 through 1.5000C-7 are added to read as follows:
    § 1.5000C-1 Tax on specified Federal procurement payments.

    (a) Overview. This section provides definitions and general rules relating to the imposition of, and exemption from, the tax on specified Federal procurement payments under section 5000C. Section 1.5000C-2 provides rules concerning withholding under section 5000C(d)(1), including the steps that must be taken to determine the obligation to withhold and whether an exemption from withholding applies. Section 1.5000C-3 provides the time and manner for depositing the amounts withheld under section 5000C and the related reporting requirements. Section 1.5000C-4 contains the rules for a foreign contracting party that must pay and report the tax under section 5000C when the tax obligation under section 5000C is not fully satisfied by withholding, as well as procedures by which a contracting party may seek a refund when the amount withheld exceeds its tax liability under section 5000C. Section 1.5000C-5 contains an anti-abuse rule. Section 1.5000C-6 contains examples illustrating the principles of §§ 1.5000C-1 through 1.5000C-7. Finally, § 1.5000C-7 contains the effective/applicability date for §§ 1.5000C-1 through 1.5000C-7.

    (b) Imposition of tax. Except as otherwise provided, section 5000C imposes on any foreign contracting party a tax equal to 2 percent of the amount of a specified Federal procurement payment. In general, the tax imposed under section 5000C applies to specified Federal procurement payments received pursuant to contracts entered into on and after January 2, 2011. Specified Federal procurement payments received by a nominee or agent on behalf of a contracting party are considered to be received by that contracting party. The tax imposed under section 5000C is to be applied in a manner consistent with U.S. obligations under international agreements. Payments for the purchase or lease of land or an interest in land are not subject to the tax imposed under section 5000C.

    (c) Definitions. Solely for purposes of section 5000C and §§ 1.5000C-1 through 1.5000C-7, the following definitions apply:

    (1) The term acquiring agency means the U.S. government department, agency, independent establishment, or corporation described in paragraph (c)(7) of this section that is a party to the contract. To the extent that a U.S. government department or agency, other than the acquiring agency, is making the payments pursuant to the contract, that department or agency is also considered to be the acquiring agency.

    (2) The term contract has the same meaning as provided in 48 CFR 2.101, and thus does not include a grant agreement or a cooperative agreement within the meaning of 31 U.S.C. 6304 and 6305, respectively.

    (3) The term contract ratio refers to the nonexempt amount over the total contract price.

    (4) The term contracting party means any person that is a party to a contract with the U.S. government that is entered into on or after January 2, 2011.

    (5) The term foreign contracting party means a contracting party that is a foreign person.

    (6) The term foreign person means any person other than a United States person (as defined in section 7701(a)(30)).

    (7) The term Government of the United States or U.S. government means the executive departments specified in 5 U.S.C. 101, the military departments specified in 5 U.S.C. 102, the independent establishments specified in 5 U.S.C. 104(1), and wholly owned government corporations specified in 31 U.S.C. 9101(3). Unless otherwise specified in 5 U.S.C. 101, 102, or 104(1), or 31 U.S.C. 9101(3), the term Government of the United States or U.S. government does not include any quasi-governmental entities or instrumentalities of the U.S. government.

    (8) The term international procurement agreement means the World Trade Organization Government Procurement Agreement within the meaning of 48 CFR 25.400(a)(1) and any Free Trade Agreement to which the United States is a party that includes government procurement obligations that provide appropriate competitive government procurement opportunities to U.S. goods, services, and suppliers. A party to an international procurement agreement is a signatory to the agreement and does not include a country that is merely an observer with respect to the agreement.

    (9) The term nonexempt amount means the portion of the contract price allocated to nonexempt goods and nonexempt services.

    (10) The term nonexempt goods means goods manufactured or produced in a foreign country that is not a party to an international procurement agreement with the United States.

    (11) The term nonexempt services means services provided in a foreign country that is not a party to an international procurement agreement with the United States.

    (12) The term outlying areas has the same meaning as set forth in 48 CFR 2.101(b), which includes Puerto Rico, the Northern Mariana Islands, American Samoa, Guam, the Virgin Islands, Baker Island, Howland Island, Jarvis Island, Johnston Atoll, Kingman Reef, Midway Islands, Navassa Island, Palmyra Atoll, and Wake Atoll.

    (13) The term qualified income tax treaty means a U.S. income tax treaty in force that contains a nondiscrimination provision that applies to the tax imposed under section 5000C and prohibits taxation that is more burdensome on a foreign national than a U.S. national (or in the case of certain income tax treaties, taxation that is more burdensome on a foreign citizen than a U.S. citizen), regardless of its residence.

    (14) The term Section 5000C Certificate means a written statement that includes the information described in § 1.5000C-2(d) that the foreign contracting party submits to an acquiring agency for the purposes of demonstrating that the foreign contracting party is eligible for certain exemptions from withholding (in whole or in part) under section 5000C with respect to a contract. The term also includes any form that the Internal Revenue Service may prescribe as a substitute for the Section 5000C Certificate.

    (15) The term specified Federal procurement payment means any payment made pursuant to a contract with a foreign contracting party that is for goods manufactured or produced or services provided in a foreign country that is not a party to an international procurement agreement with the United States. For purposes of the prior sentence, a foreign country does not include an outlying area.

    (16) The term Taxpayer Identification Number or TIN means the identifying number assigned to a person under section 6109, as defined in section 7701(a)(41).

    (17) The term total contract price means the total cost to the U.S. Government of the goods and services procured under a contract and paid to the contracting party.

    (d) Exemptions. The tax imposed under paragraph (b) of this section does not apply to the payments made in the following situations. For the exemptions in paragraphs (d)(3), (4) and (5) of this section, see § 1.5000C-2(d) for the procedures to eliminate withholding by an acquiring agency.

    (1) Simplified acquisitions. Payments for purchases under the simplified acquisition procedures that do not exceed the simplified acquisition threshold as described in 48 CFR 2.101.

    (2) Emergency acquisitions. A payment made pursuant to a contract if the contract is—

    (i) Awarded under the “unusual and compelling urgency” authority of 48 CFR 6.302-2, or

    (ii) Entered into under the emergency acquisition flexibilities as defined in 48 CFR Part 18.

    (3) Certain international agreements. A payment made by the U.S. government pursuant to a contract with a foreign contracting party when the payment is entitled to relief from the tax imposed under section 5000C pursuant to an international agreement with the United States, including relief pursuant to a nondiscrimination provision of a qualified income tax treaty, because the foreign contracting party is entitled to the benefit of that provision.

    (4) Goods manufactured or produced or services provided in the United States. A payment made pursuant to a contract to the extent that the payment is for goods manufactured or produced or services provided in the United States.

    (5) Goods manufactured or produced or services provided in a country that is a party to an international procurement agreement. A payment made pursuant to a contract to the extent the payment is for goods manufactured or produced or services provided in a country that is a party to an international procurement agreement, as defined in paragraph (c)(8) of this section.

    (e) Country in which goods are manufactured or produced or services provided—(1) Goods manufactured or produced. Solely for purposes of section 5000C, goods are manufactured or produced in the country (or countries)—

    (i) Where property has been substantially transformed into the goods that are procured pursuant to a contract; or

    (ii) Where there has been assembly or conversion of component parts (involving activities that are substantial in nature and generally considered to constitute the manufacture or production of property) into the final product that constitutes the goods procured pursuant to a contract.

    (2) Provision of services. Solely for purposes of section 5000C, services are considered to be provided in the country where the individuals performing the services are physically located when they perform their duties pursuant to the contract.

    (3) Allocation of total contract price to determine the nonexempt amount. If, pursuant to a contract, goods are manufactured or produced, or services are provided, in multiple countries and only a portion of the goods manufactured or produced or the services provided pursuant to the contract are nonexempt goods or nonexempt services, a foreign contracting party may use a reasonable allocation method to determine the nonexempt amount. A reasonable allocation method would include taking into account the proportionate costs (including the cost of labor and raw materials) incurred to manufacture or produce the goods in each country, or taking into account the proportionate costs incurred to provide the services in each country.

    (4) Reduction or elimination of withholding by an acquiring agency. For procedures to reduce or eliminate withholding by an acquiring agency based on where goods are manufactured or produced or where services are provided, including as a result of an allocation under this paragraph (e), see § 1.5000C-2(d).

    § 1.5000C-2 Withholding on specified Federal procurement payments.

    (a) In general. Except as otherwise provided in this section, every acquiring agency making a specified Federal procurement payment on which tax is imposed under section 5000C and §§ 1.5000C-1 through 1.5000C-7 must deduct and withhold an amount equal to 2 percent of the payment. For rules relating to the liability of a foreign contracting party with respect to specified Federal procurement payments not fully withheld upon at source, see § 1.5000C-4. An acquiring agency may rely upon any information furnished by a contracting party under this section unless the acquiring agency has reason to know that the information is incorrect or unreliable. An acquiring agency has reason to know that the information is incorrect or unreliable if it has knowledge of relevant facts or statements contained in the submitted information such that a reasonably prudent person in the position of the acquiring agency would know that the information provided is incorrect or unreliable.

    (b) Steps in determining the obligation to withhold under section 5000C. An acquiring agency generally determines its obligation to withhold under section 5000C according to the steps described in this paragraph (b). See, however, paragraph (e) of this section for situations in which withholding may be increased in the case of underwithholding, or may be decreased in the case of overwithholding.

    (1) Determine whether the payment is pursuant to a contract for goods or services. The acquiring agency determines whether it is making a payment pursuant to a contract for goods or services. If the acquiring agency is making a payment for any other purpose, it does not have an obligation to withhold under section 5000C on the payment.

    (2) Determine whether the payment is made pursuant to a contract with a U.S. person. The acquiring agency determines whether the payment is made pursuant to a contract with a person considered to be a United States person (U.S. person) in accordance with paragraph (c) of this section. If the contracting party is a U.S. person, the acquiring agency does not have an obligation to withhold under section 5000C on the payment.

    (3) Determine whether the payment is for purchases under the simplified acquisition procedures. The acquiring agency determines whether the payment is for purchases under the simplified acquisitions procedures that do not exceed the simplified acquisition threshold as described in 48 CFR 2.101. If it is, the acquiring agency does not have an obligation to withhold under section 5000C on the payment.

    (4) Determine whether the payment is for emergency acquisitions. The acquiring agency determines whether the payment is made for certain emergency acquisitions within the meaning of § 1.5000C-1(d)(2). If it is, the acquiring agency does not have an obligation to withhold under section 5000C on the payment.

    (5) Determine whether the foreign contracting party is entitled to relief pursuant to an international agreement. If the foreign contracting party submits a Section 5000C Certificate in accordance with paragraph (d) of this section representing that the foreign contracting party is entitled to relief from the tax imposed under section 5000C pursuant to an international agreement with the United States (such as relief pursuant to the nondiscrimination provision of a qualified income tax treaty), the acquiring agency does not have an obligation to withhold under section 5000C on the payment.

    (6) Determine whether the contract is for goods manufactured or produced or services provided in the United States or in a foreign country that is a party to an international procurement agreement. If the foreign contracting party submits a Section 5000C Certificate in accordance with paragraph (d) of this section that represents that the contract is for goods manufactured or produced or services provided in the United States, or in a foreign country that is a party to an international procurement agreement, the acquiring agency does not have an obligation to withhold. If the Section 5000C Certificate provides that payments under the contract are only partially exempt from withholding under section 5000C, the acquiring agency must withhold to the extent described in paragraph (b)(7).

    (7) Compute amounts to withhold. If, after evaluating each step described in this paragraph (b), the acquiring agency determines that it has an obligation to withhold, the acquiring agency computes the amount of withholding by multiplying the amount of the payment by 2 percent, unless the foreign contracting party has provided a Section 5000C Certificate. In cases in which the Section 5000C Certificate demonstrates that the exemption in Step 6 applies, the acquiring agency generally computes the amount of withholding by multiplying the amount of the payment by the contract ratio provided on the most recent Section 5000C Certificate, the product of which is multiplied by 2 percent. However, in cases in which the exemption in Step 6 applies and the requirements of paragraph (d)(4)(iii)(B)(2) of this section are met, the acquiring agency computes the amount of withholding based on the payment for the specifically identified items, which may be identified by the contract line item number, or CLIN. The acquiring agency withholds the computed amount from the payment.

    (8) Deposit and report amounts withheld. The acquiring agency deposits and reports the amounts determined in the prior step in accordance with § 1.5000C-3.

    (c) Determining whether the contracting party is a U.S. person—(1) In general. An acquiring agency must rely on the provisions of this paragraph (c) to determine the status of the contracting party as a U.S. person for purposes of withholding under section 5000C.

    (2) Determination based on Taxpayer Identification Number (TIN). An acquiring agency must treat a contracting party as a U.S. person if the U.S. government information system (such as the System for Award Management (SAM)) indicates that the contracting party is a corporation (for example, because the name listed in SAM contains the term “Corporation,” “Inc,” or “Corp”) and that it has a TIN that begins with two digits other than “98” (a limited liability company or LLC is not treated as a corporation for purposes of this paragraph (c)(2)). Further, an acquiring agency must treat a contracting party as a U.S. person if the acquiring agency has access to a U.S. government information system that indicates that the contracting party is an individual with a TIN that begins with a digit other than “9”.

    (3) Determination based on the Form W-9. An acquiring agency must treat a contracting party as a U.S. person if the person has submitted to it a valid Form W-9, “Request for Taxpayer Identification Number (TIN) and Certificate” (or valid substitute form described in § 31.3406(h)-3(c)(2) of this chapter), signed under penalties of perjury.

    (4) Contracting party treated as a foreign contracting party. If an acquiring agency cannot determine that a contracting party is a U.S. person based on application of paragraph (c)(2) or (3) of this section, then the contracting party is treated as a foreign contracting party for purposes of this section.

    (d) Withholding when a foreign contracting party submits a Section 5000C Certificate—(1) In general. Unless the acquiring agency has reason to know that the information is incorrect or unreliable, the acquiring agency may rely on a claim that a foreign contracting party is entitled to an exemption (in whole or in part) from withholding on payments pursuant to a contract if the foreign contracting party provides a Section 5000C Certificate to the acquiring agency as prescribed in this paragraph (d). When a Section 5000C Certificate is furnished, the acquiring agency is not required to withhold, or must reduce the amount of withholding, on payments made to a foreign person if the certificate establishes that the foreign person is wholly or partially exempt from withholding. An acquiring agency may establish a system for a foreign contracting party to electronically furnish a Section 5000C Certificate.

    (2) Exemption for a foreign contracting party entitled to the benefit of relief pursuant to certain international agreements. An acquiring agency is not required to withhold on payments pursuant to a contract with a foreign contracting party when the payment is entitled to relief from the tax imposed under section 5000C pursuant to an international agreement, including relief pursuant to a nondiscrimination provision of a qualified income tax treaty, because the foreign contracting party is entitled to the benefit of that agreement and the foreign contracting party has submitted a Section 5000C Certificate that includes all of the information described in paragraphs (d)(4)(i) and (ii) of this section.

    (3) Exemption when goods are manufactured or produced or services provided in the United States, or in a foreign country that is a party to an international procurement agreement. An acquiring agency is not required to withhold on payments pursuant to a contract with a foreign contracting party to the extent that the payments are for goods manufactured or produced or services provided in the United States or in a foreign country that is a party to an international procurement agreement with the United States, provided that the foreign contracting party has submitted a Section 5000C Certificate that includes all of the information described in paragraphs (d)(4)(i) and (iii) of this section. If the Section 5000C Certificate provides that the payment is only partially exempt from withholding under section 5000C, the acquiring agency must withhold to the extent that the payment is not exempt.

    (4) Information required for Section 5000C Certificate—(i) In general. The Section 5000C Certificate, entitled “Section 5000C Certificate,” must be signed under penalties of perjury by the foreign contracting party, and contain—

    (A) The name of the foreign contracting party, country of organization (if applicable), and permanent residence address of the foreign contracting party;

    (B) The mailing address of the foreign contracting party (if different than the permanent residence address);

    (C) The TIN assigned to the foreign contracting party (if any);

    (D) The identifying or reference number on the contract (if known);

    (E) The name and address of the acquiring agency;

    (F) A statement that the person signing the Section 5000C Certificate is the foreign contracting party listed in paragraph (d)(4)(i)(A) of this section (or is authorized to sign on behalf of the foreign contracting party);

    (G) A statement that the foreign contracting party is not acting as an agent or nominee for another foreign person with respect to the goods manufactured or produced or services provided under the contract;

    (H) A statement that the foreign contracting party agrees to pay an amount equal to any tax (including any applicable penalties and interest) due under section 5000C that the acquiring agency does not withhold under section 5000C;

    (I) A statement that the foreign contracting party acknowledges and understands the rules in § 1.5000C-4 relating to procedural obligations related to section 5000C; and

    (J) A statement that the foreign contracting party has not engaged in a transaction (or series of transactions) with a principal purpose of avoiding the tax imposed under section 5000C as defined in § 1.5000C-5.

    (ii) Additional information required for claiming an exemption based on the certain international agreements with the United States. In addition to the information required by paragraph (d)(4)(i) of this section, a foreign contracting party claiming an exemption from withholding in reliance on a provision of an international agreement with the United States, including a qualified income tax treaty, must provide—

    (A) The name of the international agreement under which the foreign contracting party is claiming benefits;

    (B) The specific provision of the international agreement relied upon (for example, the nondiscrimination article of a qualified income tax treaty); and

    (C) The basis on which it is entitled to the benefits of that provision (for example, because the foreign contracting party is a corporation organized in a foreign country that has in force a qualified income tax treaty with the United States that covers all nationals, regardless of their residence).

    (iii) Additional required information for claiming exemption based on country where goods are manufactured or services provided. (A) In general. In addition to the information required by paragraph (d)(4)(i) of this section, a foreign contracting party claiming an exemption from withholding (in whole or in part) because payments will be pursuant to a contract for goods manufactured or produced or services provided in the United States or a foreign country that is party to an international procurement agreement, the information submitted on the Section 5000C Certificate must describe the relevant goods or services and the country (or countries) in which they are manufactured or produced or are provided and include the name of the international procurement agreement or agreements (if relevant).

    (B) Information on allocation to exempt and nonexempt amounts. (1) In general. In situations in which a foreign contracting party claims the exemption in paragraph (d)(3) of this section with respect to only a portion of the payments received under the contract, the Section 5000C Certificate must include an explanation of the method used by the foreign contracting party to allocate the total contract price among the countries, as described in § 1.5000C-1(e)(3), if applicable. In general, the Section 5000C Certificate also must include the total contract price and the nonexempt amount; however, when necessary, an estimate of the total contract price or the nonexempt amount may be used. For example, total contract price may be estimated when a Section 5000C Certificate is being completed with respect to payments to be made pursuant to a cost-reimbursement contract that is paid on the basis of actual incurred costs and the total amount of such costs is not known at the time the certificate is provided.

    (2) Specific identification of exempt items. If agreed to by the acquiring agency, the Section 5000C Certificate may identify specific exempt and nonexempt amounts. For example, specific contract line items (such as a contract line item number or CLIN) identified in the contract may be listed on the Section 5000C Certificate as exempt and nonexempt amounts (in whole or in part), as applicable. When this paragraph applies, and whether or not the contract identifies exempt and nonexempt amounts, a foreign contracting party must provide the information required by paragraphs (d)(4)(iii)(A) and (d)(4)(iii)(B)(1) of this section, on the Section 5000C Certificate to explain why the contract line items are eligible for an exemption; however, the foreign contracting party is not required to include information about the total contract price under this paragraph. In these circumstances, only one Section 5000C Certificate is required to be provided identifying the exempt and nonexempt contract line items that relate to the contract (for example, a spreadsheet may be attached to the Section 5000C Certificate that identifies the contract line items with an explanation for the treatment as exempt or nonexempt).

    (5) Validity period of Section 5000C Certificate. Except as otherwise provided in paragraph (d)(6) of this section, the Section 5000C Certificate is valid for the term of the contract.

    (6) Change in circumstances. A foreign contracting party must submit a revised Section 5000C Certificate within 30 days of a change in circumstances that causes the information in a Section 5000C Certificate held by the acquiring agency to be incorrect with respect to the acquiring agency's determination of whether to withhold or the amount of withholding under Section 5000C. An acquiring agency must request a new Section 5000C Certificate from a contracting party in circumstances in which it knows (or has reason to know) that a previously submitted Section 5000C Certificate becomes incorrect or unreliable. An acquiring agency may request an updated Section 5000C Certificate at any time, including when other documentation is required under the contract, such as the annual representations and certifications required in 48 CFR 4.1201.

    (7) Model Section 5000C Certificate. The following is a sample of a Section 5000C Certificate. A foreign contracting party that chooses to use this model as a template for the Section 5000C Certificate must include all the necessary information required by this paragraph (d) on the completed model Section 5000C Certificate it submits to the acquiring agency.

    BILLING CODE 4830-01-P EP22AP15.000 EP22AP15.001 BILLING CODE 4830-01-C

    (8) Time for submitting Section 5000C Certificate or Form W-9, “Request for Taxpayer Identification Number and Certification.” A contracting party must submit the Section 5000C Certificate or Form W-9 (as applicable) as early as practicable (for example, when the offer for the contract is submitted to the U.S. government). In all cases, however, the Section 5000C Certificate or Form W-9 must be submitted to the acquiring agency no later than the date of execution of the contract.

    (e) Offset for underwithholding or overwithholding—(1) In general. If the foreign contracting party discovers that amounts withheld on prior payments either were insufficient or in excess of the amount required to satisfy its tax liability under section 5000C, the foreign contracting party may request the acquiring agency to increase or decrease the amount of withholding on future payments for which withholding is required under section 5000C. The request must be in writing, signed under penalties of perjury, contain the amount by which the foreign contracting party requests to increase or decrease future amounts withheld under section 5000C, and explain the reason for the request. The request may be submitted in conjunction with an original or updated Section 5000C Certificate.

    (2) Underwithholding. Upon receipt of a request described in paragraph (e)(1) of this section, acquiring agencies may increase the amount of withholding under this paragraph to correct underwithholding only if the payment for which the increase is applied is otherwise subject to withholding under section 5000C and made before the date that Form 1042, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,” is required to be filed (not including extensions) with respect to the payment for which the underwithholding occurred. Amounts withheld under this paragraph must be deposited and reported in the time and manner as prescribed by § 1.5000C-3. See § 1.5000C-4 for procedures for a foreign contracting party that must pay tax due when its tax liability under section 5000C was not fully satisfied by withholding by an acquiring agency.

    (3) Overwithholding. Upon receipt of a request described in paragraph (e)(1) of this section, acquiring agencies may decrease the amount of withholding on subsequent payments made to the foreign contracting party that are otherwise subject to withholding under section 5000C provided that the payment for which the decrease is applied is made on or before the date on which Form 1042, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,” is required to be filed (not including extensions) with respect to the payment for which the overwithholding occurred. See § 1.5000C-4(e) for procedures for foreign contracting parties to file a claim for refund for the overwithheld amount under section 5000C.

    § 1.5000C-3 Payment and returns of tax withheld by the acquiring agency.

    (a) In general. This section provides administrative procedures that acquiring agencies must follow to satisfy their obligations to deposit and report amounts withheld under § 1.5000C-2. An acquiring agency with a section 5000C withholding obligation must increase the amount it deducts and withholds under chapter 3 for fixed or determinable annual or periodical income (FDAP income) by the amount it must withhold under § 1.5000C-2. Accordingly, this section generally applies the administrative provisions of chapter 3 for FDAP income relating to the deposit, payment, and reporting for amounts withheld under § 1.5000C-2, and contains some variation from those provisions to take into account the nature of the tax imposed under section 5000C.

    (b) Deposit rules—(1) Acquiring agency with a chapter 3 deposit requirement treats amounts withheld as under chapter 3. If an acquiring agency has a chapter 3 deposit obligation for a period, it must treat any amount withheld under § 1.5000C-2 as an additional amount of tax withheld under chapter 3 for purposes of the deposit rules of § 1.6302-2. Thus, depending on the combined amount withheld under chapter 3 and § 1.5000C-2, an acquiring agency subject to this paragraph (b)(1) must make monthly deposits, quarter-monthly deposits, or annual deposits under the rules in § 1.6302-2. To the extent provided in forms, instructions, or publications prescribed by the Internal Revenue Service (IRS), acquiring agencies must deposit all withheld amounts by electronic funds transfer, as that term is defined in § 31.6302-1(h)(4)(i) of this chapter.

    (2) Acquiring agency with no chapter 3 filing obligation deposits withheld amounts monthly. If an acquiring agency has no chapter 3 deposit obligation to which the deposit rules of § 1.6302-2 apply for a calendar month, it must make monthly deposits of the amounts withheld under the rules in this paragraph (b)(2). Thus, an acquiring agency with no chapter 3 deposit obligations and that has withheld any amount under § 1.5000C-2 during any calendar month must deposit that amount by the 15th day of the month following the payment. To the extent provided in forms, instructions, or publications prescribed by the Internal Revenue Service (IRS), acquiring agencies must deposit all withheld amounts by electronic funds transfer, as that term is defined in § 31.6302-1(h)(4)(i) of this chapter.

    (c) Return requirements. (1) In general. Except as provided in paragraph (c)(2) of this section, an acquiring agency that withholds an amount pursuant to section 5000C generally must file Form 1042-S, “Foreign Person's U.S. Source Income Subject to Withholding,” and Form 1042, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,” each year, or other such forms as the IRS may prescribe, to report information related to amounts withheld under section 5000C. The acquiring agency must prepare a Form 1042-S for each contracting party reporting the amount withheld under section 5000C for the preceding calendar year. The Form 1042 must show the aggregate amounts withheld under section 5000C that were required to be reported on Forms 1042-S (including those amounts withheld under section 5000C for which a Form 1042-S is not required to be filed pursuant to paragraph (c)(2) of this section). The Form 1042 must also include the information required by the form and accompanying instructions. Further, any forms required under this paragraph (c) are due at the same time, at the same place, and eligible for the same extended due dates and may be amended in the same manner as Form 1042 and Form 1042-S (or such other forms as the IRS may prescribe related to chapter 3). The acquiring agency must furnish a copy of the Form 1042-S (or such other form as the IRS may prescribe for the same purpose) to the contracting party for whom the form is prepared on or before March 15 of the calendar year following the year in which the amount subject to reporting under section 5000C was paid. It must be filed with a transmittal form as provided in instructions to the Form 1042-S and to the transmittal form. Section 5000C Certificates or other statements or information as prescribed by § 1.5000C-2 that are provided to the acquiring agency are not required to be attached to the Form 1042 filed with the IRS. However, an acquiring agency that is required to file Form 1042 must retain a copy of Form 1042, Form 1042-S, the Section 5000C Certificates, or other statements or information prescribed by § 1.5000C-2 for at least three years from the original due date of Form 1042 or the date it was filed, whichever is later. An acquiring agency that is not required to file Form 1042 must retain any Section 5000C Certificates or other statements or information as prescribed by § 1.5000C-2 for at least three years from the date the Form 1042 would have been due had the acquiring agency had an obligation to file.

    (2) Classified contracts. An acquiring agency is not required to report information otherwise required by this section on Form 1042-S for payments made pursuant to classified contracts (as described in section 6050M(e)(3)), unless the acquiring agency determines that the information reported on the Form 1042-S does not compromise the safeguarding of classified information or national security.

    (d) Special arrangement for certain contracts. In limited circumstances, the IRS may authorize the amount otherwise required to be withheld under section 5000C to be deposited in the time and manner mutually agreed upon by the acquiring agency and the foreign contracting party. In these circumstances, the IRS may in its sole discretion also modify any reporting or return requirements of the acquiring agency or the foreign contracting party.

    § 1.5000C-4 Requirement for the foreign contracting party to file a return and pay tax, and procedures for the contracting party to seek a refund.

    (a) In general. For purposes of subtitle F of the Internal Revenue Code (“Procedure and Administration”), the tax imposed under section 5000C on foreign persons is treated as a tax imposed under subtitle A. Except as provided elsewhere in the regulations under section 5000C, forms, or accompanying instructions, the tax imposed on foreign contracting parties under section 5000C is administered in a manner similar to gross basis income taxes. This section provides procedures that a foreign contracting party must follow to satisfy its obligations to report and deposit tax due under § 1.5000C-1 as well as procedures for contracting parties to seek a refund of amounts overwithheld.

    (b) Tax obligation of foreign contracting party independent of withholding. A foreign contracting party subject to tax under section 5000C and §§ 1.5000C-1 through 1.5000C-7 remains liable for the tax unless its tax obligation was fully satisfied by withholding by an acquiring agency in accordance with §§ 1.5000C-2 and 1.5000C-3.

    (c) Return of tax by the foreign contracting party. If the tax liability under § 1.5000C-1 relating to a payment is not fully satisfied by withholding in accordance with §§ 1.5000C-2 and 1.5000C-3 (including as a result of the use of an estimated nonexempt amount or estimated total contract price in computing the contract ratio), a foreign contracting party subject to tax under § 1.5000C-1 during a calendar year must make a return of tax on, for example, Form 1120-F, “U.S. Income Tax Return of a Foreign Corporation,” or such other form as the Internal Revenue Service (IRS) may prescribe to report the amount of tax due under section 5000C (required return). A foreign contracting party with no other U.S. tax filing obligation other than with respect to its liability for the tax imposed under section 5000C must file its required return on or before the fifteenth day of the sixth month following the close of its taxable year. The required return must include the information required by the form and accompanying instructions. The required return must be filed at the place and time (including any extension of time to file) provided by the form and accompanying instructions. Penalties for failure to file contained in Subtitle F can apply to foreign contracting parties who fail to file the required return. A foreign contracting party must attach copies of all Forms 1042-S, “Foreign Person's U.S. Source Income Subject to Withholding,” received from acquiring agencies (if any) to the required return.

    (d) Time and manner of paying tax. A foreign contracting party must pay the tax imposed under section 5000C in the manner provided and in the time prescribed in the required return and accompanying instructions. In general, the foreign contracting party must pay the tax at the time that the required return is due, excluding extensions. To the extent provided in forms, instructions, or publications prescribed by the IRS, each foreign contracting party must deposit tax due under section 5000C by electronic funds transfer, as that term is defined in § 31.6302-1(h)(4)(i) of this chapter. A foreign contracting party that fails to pay tax in the time and manner prescribed in this section (or under forms, instructions, or publications prescribed by the IRS under this section) may be subject to penalties and interest under Subtitle F.

    (e) Refund requests when amount withheld exceeds tax liability. After taking into account any offsets pursuant to § 1.5000C-2(e)(3), if the acquiring agency has overwithheld amounts under section 5000C and has made a deposit of the amounts under § 1.5000C-3(b), the contracting party may claim a refund of the amount overwithheld pursuant to the procedures described in chapter 65. The contracting party's claim for refund must meet the requirements of section 6402 and the regulations thereunder, as applicable, and must be filed before the expiration of the period of limitations on refund in section 6511 and the regulations thereunder. In general, the contracting party making a refund claim must file the required return to claim a refund, stating the grounds upon which the claim is based. A Section 5000C Certificate and a copy of the Form 1042-S received from the acquiring agency must be attached to the required return. For purposes of this section, an amount is overwithheld if the amount withheld from the payment pursuant to section 5000C and §§ 1.5000C-1 through 1.5000C-7 exceeds the contracting party's tax liability under § 1.5000C-1, regardless of whether the overwithholding was in error or appeared correct when it occurred. A U.S. person may seek a refund under this paragraph (e) even if it was treated as a foreign person under the rules in § 1.5000C-2 (for example, because it neither had a taxpayer identification number on file in the System for Award Management nor submitted Form W-9, “Request for Taxpayer Identification Number (TIN) and Certification,” to the acquiring agency).

    § 1.5000C-5 Anti-abuse rule.

    If a foreign person engages in a transaction (or series of transactions) with a principal purpose of avoiding the tax imposed under section 5000C, the transaction (or series of transactions) may be disregarded or the arrangement may be recharacterized (including disregarding an intermediate entity), in accordance with its substance. If this section applies, the foreign person remains liable for any tax (including any tax obligation unsatisfied as a result of underwithholding) and the Internal Revenue Service retains all other rights and remedies under any applicable law available to collect any tax imposed on the foreign contracting party by section 5000C.

    § 1.5000C-6 Examples.

    The rules of §§ 1.5000C-1 through 1.5000C-4 are illustrated by the following examples. For purposes of the examples: all contracts are executed with acquiring agencies on or after January 2, 2011, and are for the provision of either goods or services; none of the contracts are for emergency acquisitions described in § 1.5000C-1(d)(2); the acquiring agencies have no other withholding obligations under chapter 3 of the Code and have no other contracts subject to section 5000C; the foreign contracting parties do not have any U.S. source income or a U.S. tax return filing obligation other than a tax return filing obligation that arises based on the facts described in the particular example; and none of the contracts are classified contracts as described in section 6050M(e)(3).

    Example 1.

    U.S. person not subject to tax; no withholding. (i) Facts. Company A Inc., a U.S. corporation and the contracting party, enters into a contract with Agency L, the acquiring agency. Before making its first payment under the contract (for example, on the date of execution of the contract), pursuant to the first step in § 1.5000C-2(b) Agency L determines that the contract will be for services. Under the second step, Agency L reviews Company A Inc.'s record in the System for Award Management (SAM) and determines that Company A is a corporation and is considered to be a U.S. person because Agency L's records demonstrate that Company A Inc. is a business entity treated as a corporation for tax purposes that has a TIN that does not begin with “98.”

    (ii) Analysis. Company A Inc. is a U.S. person and thus is not subject to the tax under section 5000C. Moreover, because Company A Inc. is a corporation for tax purposes that has a TIN that does not begin with “98,” Agency L is able to determine that it has no obligation to withhold any amounts under section 5000C on the payment made to Company A Inc. For purposes of section 5000C, Company A Inc. could also establish that it is a U.S. person by providing a Form W-9, “Request for Taxpayer Identification Number (TIN) and Certification,” to Agency L. Company A Inc. does not need to file a Section 5000C Certificate to demonstrate its eligibility for an exemption from withholding.

    Example 2.

    Foreign national entitled to the benefit of a nondiscrimination provision of a treaty; no withholding. (i) Facts. Company B, a foreign contracting party and a national of Country T, provides goods to Agency M, the acquiring agency. Company B determines that it is exempt from tax under section 5000C because it is entitled to the benefit of the nondiscrimination article of a qualified income tax treaty between the United States and Country T. Company B submits a Section 5000C Certificate to Agency M when the contract is executed. Company B uses the model Section 5000C Certificate and properly fills out Sections II and IV stating the name of the treaty, the specific article relied upon, and the basis on which it is entitled to the benefits of that article. Following the steps in § 1.5000C-2, Agency M determines that the nondiscrimination provision of the Country T-United States income tax treaty applies to exempt Company B from the tax imposed under section 5000C. Agency M makes one lump sum payment of $50 million to Company B pursuant to the contract.

    (ii) Analysis. Company B has no liability for tax under section 5000C because it is entitled to the benefit of a nondiscrimination article of a qualified income tax treaty. Because Company B submitted a Section 5000C Certificate meeting the requirements in § 1.5000C-2 and Agency M does not have reason to know that the submitted information is incorrect or unreliable, Agency M is not required to withhold under section 5000C. Agency M must retain the Section 5000C Certificate for at least three years pursuant to § 1.5000C-3(c)(1).

    Example 3.

    Foreign treaty beneficiary does not submit Section 5000C Certificate; withholding required. (i) Facts. The facts are the same as in Example 2, except that Company B does not submit a Section 5000C Certificate to Agency M before Agency M makes the $50 million payment.

    (ii) Analysis. Company B is not subject to tax under section 5000C, but Agency M must nevertheless withhold on the payment made to Company B because Agency M did not receive a Section 5000C Certificate from Company B in the time and manner required pursuant to § 1.5000C-2(d). Agency M must withhold $1 million (2 percent of $50 million) on the payment, and deposit that amount under the rules in § 1.5000C-3 no later than the 15th day of the month following the month in which the payment was made. Agency M must also complete Forms 1042, “Annual Withholding Tax Return for U.S. Source Income of Foreign Persons,” and 1042-S, “Foreign Person's U.S. Source Income Subject to Withholding,” on or before the date specified on those forms and the accompanying instructions. Agency M must furnish copies of Form 1042-S to Company B. Agency M must retain a copy of the Form 1042 and the Form 1042-S for 3 years from the due date for the Form 1042 pursuant to § 1.5000C-3(c)(1). As Company B is not liable for the tax, it may later file a claim for refund pursuant to the procedures described in chapter 65.

    Example 4.

    Foreign contracting party partially exempt from tax under section 5000C when goods are manufactured in different countries. (i) Facts. Company C, a foreign contracting party, provides goods to Agency N in 2015. The terms of the contract require that payment be made to Company C by Agency N in two $5 million installments in 2015. Company C has a TIN that begins with “98” and is not entitled to relief pursuant to an international agreement with the United States, such as relief pursuant to a nondiscrimination provision of a qualified income tax treaty. Some of the goods are manufactured in Country R, which is a party to an international procurement agreement with the United States, with the remainder being manufactured in Country S, a country that is not a party to an international procurement agreement with the United States. Company C uses a reasonable allocation method based on the information available to it at the time in accordance with § 1.5000C-1(e)(3) to estimate that $3 million is the nonexempt amount produced in Country S. Company C submits a valid and complete Section 5000C Certificate to Agency N in the time and manner required by §§ 1.5000C-1 through 1.5000C-7 that provides that the nonexempt amount is $3 million. In 2015, Agency N pays Company C in two installments pursuant to the terms of the contract.

    (ii) Analysis. Using a reasonable allocation method to determine the estimated nonexempt amount, Company C determines that pursuant to section 5000C and §§ 1.5000C-1 through 1.5000C-7, tax of $30,000 (2 percent of the $5 million payment, multiplied by a fraction (the numerator of which is the estimated nonexempt amount, $3 million, and the denominator of which is the estimated total contract price, or $10 million)) is imposed on each payment made to Company C. Because Company C has timely submitted a Section 5000C Certificate explaining the basis for this allocation, Agency N withholds $30,000 on each payment made to Company C. Agency N must deposit each $30,000 withholding tax no later than the 15th day of the month following the month in which each payment is made. Agency N must also complete Forms 1042 and 1042-S and furnish copies of Form 1042-S to Company C. Provided that Agency N properly withholds on the nonexempt portion as required under section 5000C and §§ 1.5000C-1 through 1.5000C-7 and that Company C's estimate of the nonexempt amount is the actual nonexempt amount, Company C does not have an additional tax liability or a U.S. tax return filing obligation as a result of receiving the payment.

    Example 5.

    Foreign contracting party liable for additional tax under Section 5000C not fully withheld upon due to errors on the Section 5000C Certificate. (i) Facts. The facts are the same as in Example 4, except that the Section 5000C Certificate submitted to Agency N by Company C erroneously provides that the estimated nonexempt amount is $1.5 million instead of $3 million. As a result, Agency N only withholds $15,000 (2 percent of the $5 million payment multiplied by a fraction (the numerator of which is the estimated nonexempt amount stated on the Section 5000C Certificate, $1.5 million, and the denominator of which is the estimated total contract price, or $10 million)) on each payment made to Company C. Agency N neither discovered nor had reason to know that the information on the Section 5000C Certificate was incorrect or unreliable. After both payments have been made and after the filing due date for Form 1042 for 2015, Company C determines that the estimated nonexempt amount should have been stated as $3 million on the Section 5000C Certificate.

    (ii) Analysis. The tax imposed under section 5000C on Company C as a result of the receipt of specified Federal procurement payments is $60,000 and this amount has not been fully satisfied by withholding by Agency N. Accordingly, Company C must remit additional tax of $30,000 ($60,000 tax liability less $30,000 amounts already withheld by Agency N) and file its required return, a Form 1120-F, “U.S. Income Tax Return of a Foreign Corporation,” for 2015 to report this tax liability, as required by § 1.5000C-4. Company C must explain its corrected allocation method in its Form 1120-F. Company C must also attach a copy of the Form 1042-S it received from Agency N to Form 1120-F.

    § 1.5000C-7 Effective/applicability date.

    Section 5000C applies to specified Federal procurement payments received pursuant to contracts entered into on and after January 2, 2011. Sections 1.5000C-1 through 1.5000C-7 apply on and after the date that is 90 days after the date they are published as final regulations in the Federal Register.

    PART 301—PROCEDURE AND ADMINISTRATION Par. 5. The authority citation for part 301 continues to read in part as follows: Authority:

    26 U.S.C. 7805 * * *

    Par. 6. Section 301.6114-1 is amended by adding paragraph (c)(1)(ix) and revising paragraph (e) to read as follows:
    § 301.6114-1 Treaty-based return positions.

    (c) * * *

    (1) * * *

    (ix) Notwithstanding paragraph (b)(1) of this section, that a nondiscrimination provision of an income tax treaty exempts a payment from tax under section 5000C, but only if the foreign person claiming such relief has provided a Section 5000C Certificate (or such other form as may be prescribed by the Commissioner pursuant to section 5000C) in accordance with section 5000C and the regulations thereunder.

    (e) Effective/applicability date—(1) In general. This section is effective for taxable years of the taxpayer for which the due date for filing returns (without extensions) occurs after December 31, 1988. However, if—

    (i) A taxpayer has filed a return for such a taxable year, without complying with the reporting requirement of this section, before November 13, 1989, or

    (ii) A taxpayer is not otherwise than by paragraph (a) of this section required to file a return for a taxable year before November 13, 1989. Such taxpayer must file (apart from any earlier filed return) the statement required by paragraph (d) of this section before June 12, 1990, by mailing the required statement to the Internal Revenue Service, P.O. Box 21086, Philadelphia, PA 19114. Any such statement filed apart from a return must be dated, signed and sworn to by the taxpayer under the penalties of perjury. In addition, with respect to any return due (without extensions) on or before March 10, 1990, the reporting required by paragraph (a) of this section must be made no later than June 12, 1990. If a taxpayer files or has filed a return on or before November 13, 1989, that provides substantially the same information required by paragraph (d) of this section, no additional submission will be required. Foreign insurers and reinsurers subject to reporting described in paragraph (c)(7)(ii) of this section must so report for calendar years 1988 and 1989 no later than August 15, 1990.

    (2) Section 5000C. Paragraph (c)(1)(ix) of this section is effective on the date that is 90 days after the date these regulations are published as final regulations in the Federal Register. However, a foreign contracting party may rely on §§ 1.5000C-1 through 1.5000C-7 before that date.

    PART 602—OMB CONTROL NUMBERS UNDER THE PAPERWORK REDUCTION ACT Par. 7. The authority citation for part 602 continues to read in part as follows: Authority:

    26 U.S.C. 7805 * * *

    Par. 8. In § 602.101, paragraph (b) is amended by adding entries in numerical order to the table to read as follows:
    § 602.101 OMB Control numbers.

    (b) * * *

    CFR Part or section where identified and described Current OMB control No. *    *    *    *    * 1.5000C-2 1545-xxxx 1.5000C-3 1545-xxxx 1.5000C-4 1545-xxxx *    *    *    *    *
    John M. Dalrymple, Deputy Commissioner for Services and Enforcement.
    [FR Doc. 2015-09383 Filed 4-20-15; 4:15 pm] BILLING CODE 4830-01-P
    DEPARTMENT OF LABOR Mine Safety and Health Administration 30 CFR Part 75 [MSHA-2014-0029] RIN 1219-AB85 Request for Information To Improve the Health and Safety of Miners and To Prevent Accidents in Underground Coal Mines AGENCY:

    Mine Safety and Health Administration, Labor.

    ACTION:

    Request for information; extension of comment period.

    SUMMARY:

    In response to requests from interested parties, the Mine Safety and Health Administration (MSHA) is extending the comment period on the Agency's Request for Information To Improve the Health and Safety of Miners and To Prevent Accidents in Underground Coal Mines. This extension gives interested parties additional time to submit information to the Agency.

    DATES:

    The comment period for the document published February 26, 2015 (80 FR 10436), has been extended. Comments must be received or postmarked by midnight Eastern Daylight Savings time on June 26, 2015.

    ADDRESSES:

    Submit comments and informational materials, identified by “RIN 1219-AB85” or Docket Number “MSHA-2014-0029”, by any of the following methods:

    Federal E-Rulemaking Portal: http://www.regulations.gov. Follow the on-line instructions for submitting comments for Docket Number MSHA-2014-0029.

    Electronic mail: [email protected] Include “RIN 1219-AB85” in the subject line of the message.

    Mail: MSHA, Office of Standards, Regulations, and Variances, 1100 Wilson Boulevard, Room 2350, Arlington, Virginia 22209-3939.

    Hand Delivery/Courier: MSHA, Office of Standards, Regulations, and Variances, 1100 Wilson Boulevard, Room 2350, Arlington, Virginia, between 9:00 a.m. and 5:00 p.m. Monday through Friday, except Federal holidays. Sign in at the receptionist's desk on the 21st floor.

    Instructions: All submissions received must include the Agency name “MSHA” and Docket Number “MSHA-2014-0029” or “RIN 1219-AB85.” All comments received will be posted without change to http://www.regulations.gov, under Docket Number MSHA-2014-0029, and on http://www.msha.gov/currentcomments.asp, including any personal information provided.

    Docket: For access to the docket to read comments received, go to http://www.regulations.gov or http://www.msha.gov/currentcomments.asp. To read background documents, go to http://www.regulations.gov. Review the docket in person at MSHA, Office of Standards, Regulations, and Variances, 1100 Wilson Boulevard, Room 2350, Arlington, Virginia, between 9:00 a.m. and 5:00 p.m. Monday through Friday, except Federal Holidays. Sign in at the receptionist's desk on the 21st floor.

    FOR FURTHER INFORMATION CONTACT:

    Sheila A. McConnell, Acting Director, Office of Standards, Regulations, and Variances, MSHA, at [email protected] (email); 202-693-9440 (voice); or 202-693-9441 (facsimile). These are not toll-free numbers.

    SUPPLEMENTARY INFORMATION:

    On February 26, 2015 (80 FR 10436), MSHA published a Request for Information To Improve the Health and Safety of Miners and To Prevent Accidents in Underground Coal Mines. The comment period is scheduled to close on April 27, 2015. In response to requests, MSHA is extending the comment period to June 26, 2015, to allow additional time for interested parties to coordinate responses.

    Dated: April 16, 2015. Joseph A. Main, Assistant Secretary of Labor for Mine Safety and Health.
    [FR Doc. 2015-09246 Filed 4-21-15; 8:45 am] BILLING CODE 4510-43-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Parts 174 and 180 [EPA-HQ-OPP-2015-0032; FRL-9925-79] Receipt of Several Pesticide Petitions Filed for Residues of Pesticide Chemicals in or on Various Commodities AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Notice of filing of petitions and request for comment.

    SUMMARY:

    This document announces the Agency's receipt of several initial filings of pesticide petitions requesting the establishment or modification of regulations for residues of pesticide chemicals in or on various commodities.

    DATES:

    Comments must be received on or before May 22, 2015.

    ADDRESSES:

    Submit your comments, identified by docket identification (ID) number and the pesticide petition number (PP) of interest as shown in the body of this document, by one of the following methods:

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

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

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

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

    FOR FURTHER INFORMATION CONTACT:

    Susan Lewis, Registration Division (RD) (7505P), main telephone number: (703) 305-7090; email address: [email protected] The mailing address for each contact person is: Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001. As part of the mailing address, include the contact person's name, division, and mail code. The division to contact is listed at the end of each pesticide petition summary.

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

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

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

    If you have any questions regarding the applicability of this action to a particular entity, consult the person listed under FOR FURTHER INFORMATION CONTACT for the division listed at the end of the pesticide petition summary of interest.

    B. What should I consider as I prepare my comments for EPA?

    1. Submitting CBI. Do not submit this information to EPA through regulations.gov or email. Clearly mark the part or all of the information that you claim to be CBI. For CBI information in a disk or CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as CBI and then identify electronically within the disk or CD-ROM the specific information that is claimed as CBI. In addition to one complete version of the comment that includes information claimed as CBI, a copy of the comment that does not contain the information claimed as CBI must be submitted for inclusion in the public docket. Information so marked will not be disclosed except in accordance with procedures set forth in 40 CFR part 2.

    2. Tips for preparing your comments. When preparing and submitting your comments, see the commenting tips at http://www.epa.gov/dockets/comments.html.

    3. Environmental justice. EPA seeks to achieve environmental justice, the fair treatment and meaningful involvement of any group, including minority and/or low-income populations, in the development, implementation, and enforcement of environmental laws, regulations, and policies. To help address potential environmental justice issues, the Agency seeks information on any groups or segments of the population who, as a result of their location, cultural practices, or other factors, may have atypical or disproportionately high and adverse human health impacts or environmental effects from exposure to the pesticides discussed in this document, compared to the general population.

    II. What action is the agency taking?

    EPA is announcing its receipt of several pesticide petitions filed under section 408 of the Federal Food, Drug, and Cosmetic Act (FFDCA), 21 U.S.C. 346a, requesting the establishment or modification of regulations in 40 CFR part 180 for residues of pesticide chemicals in or on various food commodities. The Agency is taking public comment on the requests before responding to the petitioners. EPA is not proposing any particular action at this time. EPA has determined that the pesticide petitions described in this document contain the data or information prescribed in FFDCA section 408(d)(2), 21 U.S.C. 346a(d)(2); however, EPA has not fully evaluated the sufficiency of the submitted data at this time or whether the data support granting of the pesticide petitions. After considering the public comments, EPA intends to evaluate whether and what action may be warranted. Additional data may be needed before EPA can make a final determination on these pesticide petitions.

    Pursuant to 40 CFR 180.7(f), a summary of each of the petitions that are the subject of this document, prepared by the petitioner, is included in a docket EPA has created for each rulemaking. The docket for each of the petitions is available at http://www.regulations.gov.

    As specified in FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), EPA is publishing notice of the petition so that the public has an opportunity to comment on this request for the establishment or modification of regulations for residues of pesticides in or on food commodities. Further information on the petition may be obtained through the petition summary referenced in this unit.

    New Tolerance

    1. PP 4F8294. (EPA-HQ-OPP-2015-0179). Cheminova, Inc., c/o Cheminova A/S, 1600 Wilson Blvd., Suite 700, Arlington, VA 22209-2510, requests to establish a tolerance in 40 CFR part 180 for residues of the fungicide, flutriafol, in or on hops, dried cones at 20 parts per million (ppm). The GC/MSD is used to measure and evaluate the chemical flutriafol. Contact: RD.

    2. PP 4F8333. (EPA-HQ-OPP-2015-0180). Syngenta Crop Protection, P.O. Box 18300, Greensboro, NC 27409, requests to establish tolerances in 40 CFR 180.532 for residues of the fungicide cyprodinil in or on nut, tree, group 14-12, except almond, except pistachio, at 0.04 parts per million (ppm). The Syngenta Crop Protection Method AG-631B is used to measure and evaluate the chemical cyprodinil. Contact: RD.

    Amended Tolerance Exemption

    PP 4F8324. EPA-HQ-OPP-2014-0865. Cupron, Inc., 800 East Leigh St., Richmond, VA 23219, requests to amend an exemption from the requirement of a tolerance in 40 CFR 180.1021 for residues of the antimicrobial, cuprous oxide, in or on meat, milk, poultry, eggs, fish, shellfish, and irrigated crops when embedded in polymer emitter heads used in irrigation systems for agricultural crops or residential food commodities for algicidal or root incursion prevention. The petitioner believes no analytical method is needed because an exemption from the requirement of a tolerance is being sought. Contact: AD.

    Authority:

    21 U.S.C. 346a.

    Dated: April 14, 2015. Susan Lewis, Director, Registration Division, Office of Pesticide Programs.
    [FR Doc. 2015-09209 Filed 4-21-15; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Parts 13 and 21 [Docket No. FWS-R9-MB-2009-0045; FF09M21200-134-FXMB1232099BPP0] RIN 1018-AW75 Migratory Bird Permits; Abatement Permit Regulations; Correction AGENCY:

    Fish and Wildlife Service, Interior.

    ACTION:

    Proposed rule; correction.

    SUMMARY:

    We, the U.S. Fish and Wildlife Service (Service), published a proposed rule in the Federal Register on April 1, 2015, to propose permit regulations to govern the use of captive-bred, trained raptors to control or take birds or other wildlife to mitigate damage or other problems, including risks to human health and safety. In that proposed rule, we provided a partially incorrect address for the submission of hard-copy comments and some incorrect information regarding information collection requirements. With this document, we correct these errors.

    DATES:

    There are two dates for submissions relevant to the proposed rule that published on April 1, 2015 (80 FR 17374). Electronic comments on this proposed rule via http://www.regulations.gov must be submitted by 11:59 p.m. Eastern time on June 30, 2015. Comments submitted by mail must be postmarked no later than June 30, 2015. Comments on the information collection must be submitted by May 22, 2015.

    ADDRESSES:

    You may submit comments on the April 1, 2015, proposed rule by one of the following methods:

    (1) Electronically: Go to the Federal eRulemaking Portal: http://www.regulations.gov. In the Search box, enter FWS-R9-MB-2009-0045, which is the docket number for this rulemaking. You may submit a comment by clicking on “Comment Now!”

    (2) By hard copy: Submit by U.S. mail or hand-delivery to: Public Comments Processing, Attn: FWS-R9-MB-2009-0045; Division of Policy, Performance, and Management Programs; U.S. Fish and Wildlife Service, MS: BPHC; 5275 Leesburg Pike; Falls Church, VA 22041-3803.

    We will not accept emailed or faxed comments on the proposed rule. We will post all comments on http://www.regulations.gov. This generally means that we will post any personal information that you provide. See the Public Comments section of the proposed rule for more information.

    Submit comments on the information collection requirements to the Desk Officer for the Department of the Interior at Office of Management and Budget (OMB-OIRA) at (202) 395-5806 (fax) or [email protected] (email). Please provide a copy of your comments to the Service Information Collection Clearance Officer, U.S. Fish and Wildlife Service, MS: BPHC, 5275 Leesburg Pike, Falls Church, VA 22041-3803 (mail), or [email protected] (email).

    FOR FURTHER INFORMATION CONTACT:

    George Allen at 703-358-1825.

    SUPPLEMENTARY INFORMATION:

    In a proposed rule that published in the Federal Register on April 1, 2015, at 80 FR 17374, the ADDRESSES section provided some incorrect information for the submission of hard-copy comments. The corrected address appears above in ADDRESSES.

    In addition, the section of the preamble with the subtitle Paperwork Reduction Act, beginning on page 17377, contained several errors. For the convenience of the reader, we are republishing that entire section here.

    Paperwork Reduction Act of 1995 (PRA)

    This proposed rule contains new information collection requirements for which Office of Management and Budget approval is required under the PRA (44 U.S.C. 3501 et seq.). We may not conduct or sponsor and you are not required to respond to a collection of information unless it displays a currently valid OMB control number.

    OMB has reviewed and approved the collections of information for (1) applications for abatement and depredation permits, (2) annual reporting for depredation permits, and (3) reporting of acquisition and disposition of migratory birds. These information collections are covered by existing OMB Control No. 1018-0022, which expires on May 31, 2017. OMB has also approved the recordkeeping and reporting associated with the depredation order for blackbirds, grackles, cowbirds, magpies, and crows and assigned OMB Control Number 1018-0146, which expires December 31, 2017.

    We are requesting that OMB assign a new OMB control number for the proposed new requirements below. After we issue final regulations, we will incorporate the burden for the new information collection requirements into OMB Control Number 1018-0022 and discontinue the new number.

    • Application—FWS Form 3-200-79. We are revising the application form to reflect the increase in the application fee from $100 to $150.

    • Abatement permittees must provide each of their subpermittees with a legible copy of their permit and an original signed and dated letter designating the person as a subpermittee for part or all of the authorized activities. (§ 21.32(e)(2)(ii)).

    • Subpermittees must report take under a depredation order to the permit holder. (§ 21.32(e)(3)(iii)(A)).

    • Permittees must immediately report any unauthorized take of federally protected wildlife, disturbance of bald eagles or golden eagles, or harassment of endangered species. (§ 21.32(e)(3)(iii)(C)).

    • Permittees must maintain complete and accurate records of the activities conducted under the abatement permit. (§§ 21.32(e)(2)(iv), 21.32(e)(8)(ii) and (iii), 21.32(e)(11), and 21.32(g)).

    • Permittees must submit an annual report to their migratory bird permit issuing office. The report must include the information required on FWS Form 3-202-22-2133. (§ 21.32(e)(12)).

    Title: Abatement Permit Reporting and Recordkeeping, 50 CFR 21.32.

    OMB Control Number: 1018-XXXX.

    Type of Request: Request for a new OMB control number.

    Service Form Number: 3-200-79 and 3-202-22-2133.

    Description of Respondents: Individuals.

    Respondent's Obligation: Required to obtain or retain a benefit.

    Frequency of Collection: On occasion.

    Estimated Nonhour Burden Costs: $15,000 for application fees.

    Activity Number of
  • responses
  • Completion time per response Total annual burden hours
    Application—FWS Form 3-200-79 100 2 hours 200 Designation Letter (§ 21.32(e)(2)(ii)) 200 10 minutes 33 Report Take under Depredation Order (§ 21.32(e)(3)(iii)(A)) 200 1 hour 200 Report Unauthorized Take of Federally Protected Wildlife, Disturbance of Bald Eagles or Golden Eagles, or Harassment of Endangered Species (§ 21.32(e)(3)(iii)(C)) 4 30 minutes 2 Recordkeeping (§§ 21.32(e)(2)(iv), 21.32(e)(8)(ii) and (iii), 21.32(e)(11), and 21.32(g)) 100 5 hours 500 Annual Reports (§ 21.32(e)(12)) 100 1 hour 100 Totals 704 1,035

    You may review all documents submitted to OMB to support the proposed new information collection requirements online at http://www.reginfo.gov. Follow the instructions to review Department of the Interior collections under review by OMB.

    As part of our continuing effort to reduce paperwork and respondent burdens, we invite the public and other Federal agencies to comment on any aspect of the reporting burden, including:

    • Whether or not the collection of information is necessary, including whether or not the information will have practical utility;

    • The accuracy of our estimate of the burden for this collection of information;

    • Ways to enhance the quality, utility, and clarity of the information to be collected; and

    • Ways to minimize the burden of the collection of information on respondents.

    Send your comments and suggestions on this information collection to the Desk Officer for the Department of the Interior at OMB-OIRA at (202) 395-5806 (fax) or [email protected] (email). Please provide a copy of your comments to the Service Information Collection Clearance Officer, U.S. Fish and Wildlife Service, MS BPHC, 5275 Leesburg Pike, Falls Church, VA 22041-3830 (mail), or [email protected] (email).

    Dated: April 13, 2015. Michael J. Bean, Principal Deputy Assistant Secretary for Fish and Wildlife and Parks.
    [FR Doc. 2015-09283 Filed 4-21-15; 8:45 am] BILLING CODE 4310-55-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Parts 223 and 224 [Docket No. 150211136-5136-01] RIN 0648-XD769 Listing Endangered or Threatened Species; 90-Day Finding on a Petition To Delist the Snake River Fall-Run Chinook Salmon Evolutionarily Significant Unit AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    90-Day petition finding, request for information, and initiation of status review.

    SUMMARY:

    We, the National Marine Fisheries Service (NMFS), announce a 90-day finding on a petition to delist the Snake River fall-run Chinook salmon (Oncorhynchus tshawytscha) (Snake River fall-run Chinook) Evolutionarily Significant Unit (ESU) under the Endangered Species Act (ESA). The Snake River fall-run Chinook ESU was listed as threatened under the ESA in 1992. We reviewed the status of the ESU in 2005 and again in 2011 and concluded that the ESU's classification as a threatened species remained appropriate. We find that the petition presents substantial scientific information indicating that the petitioned action may be warranted. We hereby initiate a status review of the Snake River fall-run Chinook ESU to determine whether the petitioned action is warranted. To ensure that the status review is comprehensive, we are soliciting scientific and commercial information pertaining to this species.

    DATES:

    Comments must be received by June 22, 2015.

    ADDRESSES:

    You may submit comments on this document, identified by NOAA-NMFS-2015-0039, by either of the following methods:

    Electronic Submission: Submit all electronic public comments via the Federal e-Rulemaking Portal.

    1. Go to www.regulations.gov/#!docketDetail;D=NOAA-NMFS-2015-0039.

    2. Click the “Comment Now!” icon, complete the required fields.

    3. Enter or attach your comments.

    —OR—

    • MAIL or Hand Delivery: Submit written comments to: Protected Resources Division, West Coast Region, NMFS, 501 West Ocean Blvd., Suite 4200, Long Beach, CA 90802-4213.

    Instructions

    Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. All comments received are a part of the public record and will generally be posted for public viewing on www.regulations.gov without change. All personal identifying information (e.g., name, address, etc.), confidential business information, or otherwise sensitive information submitted voluntarily by the sender will be publicly accessible. We will accept anonymous comments (enter “N/A” in the required fields if you wish to remain anonymous).

    FOR FURTHER INFORMATION CONTACT:

    Elizabeth Holmes Gaar, NMFS West Coast Region at (503) 230-5434; or Dwayne Meadows, NMFS Office of Protected Resources at (301) 427-8403.

    SUPPLEMENTARY INFORMATION:

    Background

    The Snake River fall-run Chinook ESU was listed as threatened under the ESA in 1992 (57 FR 14658; April 22, 1992). Section 4(c)(2) of the ESA requires that we conduct a review of listed species at least once every 5 years (5-year review). On the basis of such 5-year reviews, we determine under section 4(c)(2)(B) whether a species should be delisted or reclassified from endangered to threatened or from threatened to endangered. We conducted 5-year reviews for the Snake River fall-run Chinook ESU in 2005 (70 FR 37160; June 28, 2005) and again in 2011 (76 FR 50448; August 15, 2011) and determined that the ESU should remain classified as “threatened.”

    On January 16, 2015, we received a petition from the Chinook Futures Coalition to delist the Snake River fall-run Chinook ESU under the ESA. Copies of the petition are available upon request (see ADDRESSES). Separately, on February 6, 2015, we published a notice of initiation of 5-year reviews for 32 species, including Snake River fall-run Chinook salmon (80 FR 6695; February 6, 2015).

    Historically, the Snake River fall-run Chinook ESU consisted of three large populations: The extant Lower Mainstem Snake River population, and two currently extirpated populations (Marsing Reach and Salmon Falls) that spawned in the upper mainstem Snake River above the current Hells Canyon Dam complex. The listed Snake River fall-run Chinook salmon ESU consists of one population, the extant Lower Mainstem Snake population, which includes all natural-origin fall-run Chinook salmon originating from the mainstem Snake River below Hells Canyon Dam (the lowest of three impassable dams that form the Hells Canyon Complex), and from the Tucannon River, Grande Ronde River, Imnaha River, Salmon River, and Clearwater River subbasins. The ESU also includes four artificial propagation programs: The Lyons Ferry Hatchery Program, Fall Chinook Acclimation Ponds Program, Nez Perce Tribal Hatchery Program, and Oxbow Hatchery Program.

    ESA Statutory, Regulatory, and Policy Provisions and Evaluation Framework

    Section 4(b)(3)(A) of the ESA of 1973, as amended (16 U.S.C. 1531 et seq.), requires, to the maximum extent practicable, that within 90 days of receipt of a petition to remove a species from the list of threatened or endangered species, the Secretary of Commerce make a finding on whether that petition presents substantial scientific or commercial information indicating that the petitioned action may be warranted, and to promptly publish the finding in the Federal Register (16 U.S.C. 1533(b)(3)(A)). When we find that substantial scientific or commercial information in a petition indicates that the petitioned action may be warranted (a “positive 90-day finding”), we are required to promptly commence a review of the status of the species concerned, which includes conducting a comprehensive review of the best available scientific and commercial information. Within 12 months of receiving the petition, we must conclude the review with a finding as to whether, in fact, the petitioned action is warranted. Because the finding at the 12-month stage is based on a significantly more thorough review of the available information, a “may be warranted” finding at the 90-day stage does not prejudge the outcome of the status review.

    ESA-implementing regulations at 50 CFR 424.14(b) issued jointly by NMFS and the U.S. Fish and Wildlife Service (USFWS) (jointly “the Services”) define “substantial information” in the context of reviewing a petition to list, delist, or reclassify a species as the amount of information that would lead a reasonable person to believe that the measure proposed in the petition may be warranted. When evaluating whether substantial information is contained in a petition, we must consider whether the petition: (1) Clearly indicates the administrative measure recommended and gives the scientific and any common name of the species involved; (2) contains detailed narrative justification for the recommended measure, describing, based on available information, past and present numbers and distribution of the species involved and any threats faced by the species; (3) provides information regarding the status of the species over all or a significant portion of its range; and (4) is accompanied by the appropriate supporting documentation in the form of bibliographic references, reprints of pertinent publications, copies of reports or letters from authorities, and maps (50 CFR 424.14(b)(2)).

    To make a 90-day finding on a petition to list, delist or reclassify a species, we evaluate the petitioner's request based upon the information in the petition including its references, and the information readily available in our files. We do not conduct additional research, and we do not solicit information from parties outside the agency to help us in evaluating the petition. We will accept the petitioner's sources and characterizations of the information presented, if they appear to be based on accepted scientific principles, unless we have specific information in our files that indicates the petition's information is incorrect, unreliable, obsolete, or otherwise irrelevant to the requested action. Information that is susceptible to more than one interpretation or that is contradicted by other available information will not be dismissed at the 90-day finding stage, so long as it is reliable and a reasonable person would conclude that it supports the petitioner's assertions. Conclusive information indicating that the species may meet the ESA's requirements for delisting is not required to make a positive 90-day finding. We will not conclude that a lack of specific information alone negates a positive 90-day finding, if a reasonable person would conclude that the lack of information itself suggests a particular extinction risk conclusion for the species at issue.

    Many petitions identify risk classifications made by non-governmental organizations, such as the International Union for Conservation of Nature (IUCN), the American Fisheries Society, or NatureServe, as evidence of extinction risk for a species. Risk classifications by other organizations or made under other Federal or state statutes may be informative, but such classification alone may not provide the rationale for a positive 90-day finding under the ESA. For example, as explained by NatureServe, their assessments of a species' conservation status do “not constitute a recommendation by NatureServe for listing under the U.S. Endangered Species Act” because NatureServe assessments “have different criteria, evidence requirements, purposes and taxonomic coverage than government lists of endangered and threatened species, and therefore these two types of lists should not be expected to coincide” (http://www.natureserve.org/prodServices/statusAssessment.jsp). Thus, when a petition cites such classifications, we will evaluate the source of information that the classification is based upon in light of the standards on extinction risk and impacts or threats discussed above.

    Under the ESA, a listing determination may address a species, which is defined to also include subspecies and, for any vertebrate species, any DPS that interbreeds when mature (16 U.S.C. 1532(16)). A joint Services policy (DPS Policy) clarifies the agencies' interpretation of the phrase “distinct population segment” for the purposes of listing, delisting, and reclassifying a species under the ESA (61 FR 4722; February 7, 1996). A species, subspecies, or DPS is “endangered” if it is in danger of extinction throughout all or a significant portion of its range, and “threatened” if it is likely to become endangered within the foreseeable future throughout all or a significant portion of its range (ESA sections 3(6) and 3(20), respectively, 16 U.S.C. 1532(6) and (20)). For identifying stocks of Pacific salmon for listing under the ESA, we use our Policy on Applying the Definition of Species under the ESA to Pacific Salmon (ESU Policy) (56 FR 58612; November 20, 1991). Under this policy, populations of salmon that are substantially reproductively isolated from other conspecific populations and that represent an important component in the evolutionary legacy of the biological species are considered to be an ESU. In our listing determinations for Pacific salmon under the ESA, we have treated an ESU as constituting a DPS, and hence a “species,” under the ESA.

    NMFS assesses viability for Pacific salmon ESUs based on a common set of biological principles described in NMFS' technical memorandum, Viable Salmonid Populations and the Recovery of Evolutionarily Significant Units (McElhany et al. 2000). Viable salmonid populations (VSPs) are defined in terms of four population parameters: Abundance, population productivity or growth rate, population spatial structure, and diversity. Abundance and productivity need to be sufficient to provide for population-level persistence in the face of year-to-year variations in environmental influences. Spatial structure of populations should provide for resilience to the potential impact of catastrophic events, and diversity should provide for patterns of phenotypic, genotypic, and life history diversity that sustains natural production across a range of conditions, allowing for adaptation to changing environmental conditions.

    Pursuant to the ESA and our implementing regulations, we determine whether species are threatened or endangered based on any one or a combination of the following five ESA section 4(a)(1) factors: The present or threatened destruction, modification, or curtailment of habitat or range; overutilization for commercial, recreational, scientific, or educational purposes; disease or predation; inadequacy of existing regulatory mechanisms; and any other natural or manmade factors affecting the species' existence (16 U.S.C. 1533(a)(1), 50 CFR 424.11(c)).

    Under section 4(a)(1) of the ESA and our implementing regulations at 50 CFR 424.11(d), a species may be removed from the list if the Secretary of Commerce determines, based on the best scientific and commercial data available and after conducting a review of the species' status, that the species is no longer threatened or endangered because of one or a combination of the section 4(a)(1) factors. Pursuant to our regulations at 50 CFR 424.11(d), a species may be delisted only if such data substantiate that it is neither endangered nor threatened for one or more of the following reasons:

    (1) Extinction. Unless all individuals of the listed species had been previously identified and located, and were later found to be extirpated from their previous range, a sufficient period of time must be allowed before delisting to indicate clearly that the species is extinct.

    (2) Recovery. The principal goal of the Services is to return listed species to a point at which protection under the ESA is no longer required. A species may be delisted on the basis of recovery only if the best scientific and commercial data available indicate that it is no longer endangered or threatened.

    (3) Original data for classification in error. Subsequent investigations may show that the best scientific or commercial data available when the species was listed, or the interpretation of such data, were in error.

    Judicial decisions have clarified the appropriate scope and limitations of the Services' review of petitions at the 90-day finding stage, in making a determination whether a petitioned action may be warranted. As a general matter, these decisions hold that a petition need not establish a “strong likelihood” or a “high probability” that a species is or is not either threatened or endangered to support a positive 90-day finding.

    Application of the Hatchery Listing Policy

    On June 28, 2005, we announced a final policy addressing the role of artificially propagated (hatchery produced) Pacific salmon and steelhead in listing determinations under the ESA (70 FR 37204; June 28, 2005) (Hatchery Listing Policy). The Hatchery Listing Policy's purpose is to provide direction to NMFS staff for considering hatchery-origin fish in making listing determinations for Pacific salmon and steelhead. Among other things, the Hatchery Listing Policy: (1) Establishes criteria for including hatchery stocks in ESUs and DPSs; (2) provides direction for considering hatchery fish in extinction risk assessments of ESUs and DPSs; and (3) provides that hatchery fish determined to be part of an ESU will be included in any listing of the ESU.

    The Hatchery Listing Policy also provides that status determinations for Pacific salmon ESUs and steelhead DPSs will be based on the status of the entire ESU or DPS and that in assessing the status of an ESU/DPS, NMFS will apply the policy in support of the conservation of naturally-spawning salmon and the ecosystems upon which they depend, consistent with section 2(b) of the ESA. Finally, the Hatchery Listing Policy provides that hatchery fish will be included in assessing an ESU's or DPS's status in the context of their contributions to conserving natural self-sustaining populations.

    Biology of Snake River Fall-Run Chinook Salmon

    Snake River fall-run Chinook spend 1 to 4 years in the Pacific Ocean, depending on gender and age at the time of ocean entry. Most Snake River fall-run Chinook salmon return for reproduction to the lower Columbia River in August and September, and the adults enter the Snake River between early September and mid-October. There are presently five recognized major spawning areas for Snake River fall-run Chinook salmon: The Snake River upper reach (from the Hells Canyon Dam complex to the mouth of the Salmon River), the Snake River lower reach (from mouth of the Salmon River to Lower Granite dam Reservoir), and the lower Grande Ronde, lower Clearwater, and lower Tucannon Rivers. Adults spawn in nests (redds) from late October through early December. Emergence of young fall-run Chinook from redds typically occurs in the following April through early June. Juvenile Snake River fall-run Chinook salmon exhibit different early life history timing and growth traits in riverine habitat, depending on growth opportunity, which is often largely related to water temperature. Relatively warm temperatures produce juveniles that migrate seaward as subyearlings in May and June, whereas reaches with cooler temperatures produce juveniles that grow more slowly, over-winter and migrate seaward as yearlings.

    Summary of Petition

    The petition contains three parts. Part I asserts that hatchery fish must be counted when assessing the status of the ESU and must be considered in any delisting decision where hatchery fish are part of the ESU, as is the case for Snake River fall-run Chinook salmon. The petitioner refers to NMFS' Hatchery Listing Policy and points out its requirement that status determinations for Pacific salmon ESUs will be based on the status of the entire ESU. The petitioner disagrees with NMFS' approach used in the most recent Snake River fall-run Chinook 5-year review (NMFS 2011) to base viability criteria on natural fish.

    Part II of the petition asserts that Snake River fall-run Chinook meet the standards for delisting under the ESA and presents information on the ESU's recent status and trends. It asserts that Snake River fall-run Chinook have met the four VSP criteria, and consequently that the ESU's short-term extinction risk is zero and its long-term extinction risk is less than 1 percent. The petitioner asserts that the recovery standards articulated in the last 5-year review arbitrarily redefined the ESU to exclude hatchery fish. The petitioner also reviews the 5-year review's consideration of the VSP parameters of abundance, productivity, spatial structure, and diversity. The 5-year review's VSP criteria were recommended by the Interior Columbia River Technical Recovery Team (ICTRT 2007; Ford et al. 2011). The petitioner asserts that Snake River fall-run Chinook salmon have met the abundance and productivity criteria set forth in the 2011 5-year review, and the petitioner presents abundance and productivity data made available since the 2011 5-year review, for the years 2010 through 2014. The petitioner cites data sources for updated abundance and productivity from the Pacific Fishery Management Council (PFMC 2014), Arnsberg et al. (2013, 2014) and a powerpoint presentation given in 2013 by a scientist from NMFS' Northwest Fisheries Science Center (Cooney 2013).

    The petitioner asserts that the Snake River fall-run Chinook salmon ESU also meets criteria from the 5-year review for spatial distribution and diversity. For spatial distribution, the Interior Columbia Technical Recovery Team recommended that for the Snake River fall-run Chinook ESU to be considered at low extinction risk, there should be another population, in addition to the extant Lower Mainstem Snake River population. We included that criterion in the 2011 5-year review. The petitioner points to redd count data in the Clearwater River from Arnsberg et al. (2014) and concludes that the spawning aggregation in the Clearwater River satisfies the spatial structure criterion for a second population of Snake River fall-run Chinook. The petitioner further asserts, however, that establishing another population of Snake River fall-run Chinook salmon to lower the risk of extinction is not relevant when all other delisting criteria have been met. The petitioner disagrees with NMFS' approach to diversity criteria, which evaluates diversity within the ESU. The petitioner asserts that Pacific salmon are diverse because they are composed of two or more ESUs, and that the only means for increasing diversity is to increase the abundance of spawners in an ESU. The petitioner points out that this increase in abundance has happened for the Snake River fall Chinook ESU.

    Part III of the petition evaluates the statutory standards for delisting and asserts that the extinction risk of Snake River fall-run Chinook is at or approaching zero, and that the delisting standards are met individually and collectively. The petitioner also provides an evaluation of each of the five ESA section 4(a)(1) listing factors. The petitioner concludes that: (1) There is no destruction, modification, or curtailment of the Snake River fall-run Chinook habitat or range that justifies continued listing; (2) that there is no overutilization of Snake River fall-run Chinook; (3) predation and disease are not present factors, and predation is less of a factor today than when the species was listed; (4) existing regulatory mechanisms are adequate as evidenced by the demonstrated increasing numbers of Snake River fall-run Chinook; and (5) while drought might be a consideration for other natural or manmade factors, the operation of the Federal Columbia River Power System, the Hells Canyon Dam Complex, and Dworshak Dam ensures that sufficient waters will be available for Snake River fall-run Chinook in the future.

    Petition Analysis and Finding

    As described above, the standard for determining whether a petition includes substantial information is whether the amount of information presented provides a basis for us to find that it would lead a reasonable person to believe that the measure proposed in the petition may be warranted. We find the analysis of additional data presented and referenced in the petition regarding the abundance and productivity of Snake River fall-run Chinook since the last status review in 2011 meets this standard, and that it presents substantial scientific evidence indicating that the petitioned action may be warranted.

    Information Solicited

    As a result of this 90-day finding, we will commence a status review of the Snake River fall-run Chinook ESU to determine whether delisting the species is warranted. To ensure that our review of Snake River fall-run Chinook is informed by the best available scientific and commercial information, we are opening a 60-day public comment period to solicit information to support our 12-month finding on this petition. We note that on February 6, 2015, we announced the initiation of 5-year reviews of 32 species, including Snake River fall-run Chinook, and requested information that has become available since the species' statuses were last updated. In the case of Snake River fall-run Chinook, the last update was in 2011 (NMFS 2011). We will consider all information submitted through that solicitation, as well as information submitted in response to this finding and request for information, to inform our status review and 12-month finding. There is no need to resubmit information that has already been submitted in response to our 5-year review solicitation notice. We are opening a 60-day public comment period to solicit additional information beyond that provided for the 5-year review process in response to our finding on this petition.

    Specifically, we request new information that has become available since the 2011 5-year status review of Snake River fall-run Chinook salmon regarding: (1) Population abundance; (2) population productivity; (3) changes in species distribution or population spatial structure; (4) patterns of phenotypic, genotypic, and life history diversity; (5) changes in habitat conditions and associated limiting factors and threats; (6) conservation measures that have been implemented that benefit the species, including monitoring data demonstrating the effectiveness of such measures in addressing identified limiting factors or threats; (7) information on the adequacy of regulatory mechanisms to conserve the species in the event it were delisted; (8) data concerning the status and trends of identified limiting factors or threats; (9) information that may affect determinations regarding the composition of the ESU; (10) information on changes to hatchery programs that may affect determinations regarding the ESU membership or contribution to recovery of natural populations; (11) information on targeted harvest (commercial, tribal, and recreational) and bycatch of the species; and (12) other new information, data, or corrections including, but not limited to, taxonomic or nomenclatural changes, identification of erroneous information in the previous listing determination, and improved analytical methods for evaluating extinction risk.

    We request that all information be accompanied by: (1) Supporting documentation such as maps, bibliographic references, or reprints of pertinent publications; and (2) the submitter's name, address, and any association, institution, or business that the person represents.

    References Cited

    The complete citations for the references used in this document can be obtained by contacting NMFS (See ADDRESSES and FOR FURTHER INFORMATION CONTACT) or on our Web page at: http://www.westcoast.fisheries.noaa.gov/protected_species/salmon_steelhead/salmon_and_steelhead_listings/chinook/snake_river_fall/snake_river_fall_run_chinook.html.

    Authority:

    The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

    Dated: April 17, 2015. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.
    [FR Doc. 2015-09358 Filed 4-21-15; 8:45 am] BILLING CODE 3510-22-P
    80 77 Wednesday, April 22, 2015 Notices DEPARTMENT OF AGRICULTURE Submission for OMB Review; Comment Request April 16, 2015.

    The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments regarding (a) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (b) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility and clarity of the information to be collected; (d) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), [email protected] or fax (202) 395-5806 and to Departmental Clearance Office, USDA, OCIO, Mail Stop 7602, Washington, DC 20250-7602. Comments regarding these information collections are best assured of having their full effect if they are received within 30 days of this notification. Copies of the submission(s) may be obtained by calling (202) 720-8958.

    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 potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.

    Food and Nutrition Service

    Title: FNS Generic Clearance for Pre-Testing, Pilot, and Field Testing Studies.

    OMB Control Number: 0584-NEW.

    Summary of Collection: The Food and Nutrition Service (FNS) is requesting approval from the Office of Management and Budget (OMB) to conduct pre-testing of surveys using a generic clearance that will allow FNS to conduct a variety of data-gathering activities aimed at improving the quality and usability of information collection instruments associated with research and analysis activities. The procedures utilized to this effect include but are not limited to experiments with levels of incentives for study participants, tests of various types of survey operations, focus groups, pilot testing, exploratory interviews, experiments with questionnaire design, and usability testing of electronic data collection instruments. The authorizing statutes for data collections submitted under this generic clearance are: The Healthy, Hunger-Free Kids Act of 2010 (Pub. L. 111-296, Sec 305), and Section 17 (7 U.S.C. 2026) (a)(1) of the Food and Nutrition Act of 2008.

    Need and Use of the Information: The information collected will be used to pre-test, evaluate and improve the quality of surveys instruments and provide reassessments before they are conducted. This generic testing clearance is a helpful vehicle for evaluating questionnaires/assessments and various data collection procedures. It will allow FNS to take advantage of a variety of methods to identify questionnaire/assessment and procedural problems, suggest solutions, and measure the relative effectiveness of alternative solutions. The quality and timeliness of data collections will be improved by conducting pre-testing in advance of full surveys.

    Description of Respondents: Individual or households; Business or other for-profit; Not-for-profit institutions; State, Local or Tribal Government.

    Number of Respondents: 1,500.

    Frequency of Responses: Reporting: On occasion.

    Total Burden Hours: 1,500.

    Ruth Brown, Departmental Information Collection Clearance Officer.
    [FR Doc. 2015-09286 Filed 4-21-15; 8:45 am] BILLING CODE 3410-30-P
    DEPARTMENT OF AGRICULTURE Food Safety and Inspection Service [Docket No. FSIS-2015-0011] Codex Alimentarius Commission: Meeting of the Codex Alimentarius Commission AGENCY:

    Office of the Under Secretary for Food Safety, USDA.

    ACTION:

    Notice of public meeting and request for comments.

    SUMMARY:

    The Office of the Under Secretary for Food Safety, U.S. Department of Agriculture (USDA) is sponsoring a public meeting on June 17, 2015. The objective of the public meeting is to provide information and receive public comments on agenda items and draft United States (U.S.) positions to be discussed at the 38th Session of the Codex Alimentarius Commission (CAC), taking place in Geneva, Switzerland, July 6-11, 2015. The Deputy Under Secretary for Food Safety recognizes the importance of providing interested parties the opportunity to obtain background information on the 38th Session of the CAC and to address items on the agenda.

    DATES:

    The public meeting is scheduled for Wednesday, June 17, 2015 from 1:00-4:00 p.m.

    ADDRESSES:

    The public meeting will take place at The Jamie L. Whitten Building, United States Department of Agriculture (USDA), 1400 Independence Avenue SW., Room 107-A, Washington, DC 20250. Documents related to the 38th Session of the CAC will be accessible via the Internet at the following address: http://www.codexalimentarius.org/meetings-reports/en/.

    The U.S. Delegate to the 38th Session of the CAC invites U.S. interested parties to submit their comments electronically to the following email address: [email protected]

    Call in Number

    If you wish to participate in the public meeting for the 38th Session of the CAC by conference call, please use the call in number and participant code listed below:

    Call in Number: 1-888-844-9904.

    The participant code will be posted on the Web page below: http://www.fsis.usda.gov/wps/portal/fsis/topics/international-affairs/us-codex-alimentarius/public-meetings.

    Registration

    Attendees may register to attend the public meeting by emailing [email protected] by June 14, 2015. Early registration is encouraged because it will expedite entry into the building. The meeting will be held in a Federal building. Attendees should also bring photo identification and plan for adequate time to pass through security screening systems. Attendees who are not able to attend the meeting in person, but who wish to participate, may do so by phone.

    For Further Information about the 38th Session of the CAC Contact:

    Barbara McNiff, U.S. Codex Office, 1400 Independence Avenue SW., Room 4861, Washington, DC 20250, Phone: (202) 690-4719 Fax: (202)720-3157, Email: [email protected]

    For Further Information about the Public Meeting Contact:

    Jasmine Curtis, U.S. Codex Office, 1400 Independence Avenue SW., Room 4865 Washington, DC 20250, Phone: (202)205-7760 Fax: (202) 720-3157, Email: [email protected]

    SUPPLEMENTARY INFORMATION: Background

    The Codex Alimentarius Commission (Codex) was established in 1963 by two United Nations organizations, the Food and Agriculture Organization (FAO) and the World Health Organization (WHO). Through adoption of food standards, codes of practice, and other guidelines developed by its committees, and by promoting their adoption and implementation by governments, Codex seeks to protect the health of consumers and ensure fair practices in the food trade; promotes coordination of all food standards work undertaken by international governmental and non-governmental organizations; determines priorities and initiates and guides the preparation of draft standards through and with the aid of appropriate organizations; finalizes standards elaborated and publishes them in a Codex Alimentarius (food code) either as regional or worldwide standards; and amends published standards, as appropriate, in the light of new developments.

    Issues To Be Discussed at the Public Meeting

    The following items on the Agenda for the 38th Session of CAC will be discussed during the public meeting:

    • Adoption of the Agenda • Report by the Chairperson on the 70th Session of the Executive Committee • Reports of FAO/WHO Coordinating Committees • Proposed amendments to the Procedural Manual/Comments • Development of Codex Standards and related texts (a) Final adoption (at Steps 8, 5/8 and 5a)/Comments (b) Adoption at Step 5/Comments (c) Revocation (d) Proposals for New Work (e) Proposals for Discontinuation of Work (f) Amendments to Codex Standards and Related Texts • Matters referred to the Commission by Codex Committees (a) Codex Work Management and Functioning of the Executive Committee (b) Revitalization of FAO/WHO Coordinating Committees (c) Other matters • Codex Strategic plan 2014-2019: General Implementation Status • Financial and Budgetary Matters (a) Codex (b) FAO/WHO Scientific Support to Codex • Matter arising from FAO and WHO (a) Scientific Advice to Codex and Member States (b) Capacity Building Activities of FAO and WHO (d) FAO/WHO Project and Trust Fund for Enhanced Participation in Codex • Relations between the Codex Alimentarius Commission and other International Organizations • Election of the Chairperson and Vice-Chairpersons and Members elected on Geographical basis and appointment of the Coordinators • Designation of Countries responsible for Appointing the Chairpersons of Codex Committees and Schedule of Sessions 2016-2017 • Other Business

    Each issue listed will be fully described in documents distributed, or to be distributed, by the Secretariat prior to the Meeting. Members of the public may access or request copies of these documents (see ADDRESSES).

    Public Meeting

    At the June 17, 2015 public meeting, draft U.S. positions on the agenda items will be described, discussed, and attendees will have the opportunity to pose questions and offer comments. Written comments may be offered at the meeting or sent to the U.S. Delegate for the 38th Session of CAC (see ADDRESSES). Written comments should state that they relate to activities of the 38th session of the CAC.

    Additional Public Notification

    Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this Federal Register publication on-line through the FSIS Web page located at: http://www.fsis.usda.gov/federal-register .

    FSIS also will make copies of this publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to our constituents and stakeholders. The Update is available on the FSIS Web page. Through the Web page, FSIS is able to provide information to a much broader, more diverse audience. In addition, FSIS offers an email subscription service which provides automatic and customized access to selected food safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export information, regulations, directives, and notices. Customers can add or delete subscriptions themselves, and have the option to password protect their accounts.

    USDA Non-Discrimination Statement

    No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA.

    How To File a Complaint of Discrimination

    To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your authorized representative.

    Send your completed complaint form or letter to USDA by mail, fax, or email:

    Mail

    U.S. Department of Agriculture, Director, Office of Adjudication, 1400 Independence Avenue SW., Washington, DC 20250-9410.

    Fax

    (202) 690-7442.

    Email

    Email: [email protected].

    Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.), should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

    Done at Washington, DC on April 17, 2015. Mary Frances Lowe, U.S. Manager for Codex Alimentarius.
    [FR Doc. 2015-09387 Filed 4-21-15; 8:45 am] BILLING CODE 3410-DM-P
    DEPARTMENT OF COMMERCE National Telecommunications and Information Administration First Responder Network Authority First Responder Network Authority Board Special Meeting AGENCY:

    First Responder Network Authority, National Telecommunications and Information Administration, U.S. Department of Commerce.

    ACTION:

    Public meeting notice.

    SUMMARY:

    The Board of the First Responder Network Authority (FirstNet) will hold a Special Meeting via telephone conference (teleconference) on April 24, 2015.

    DATES:

    The Special Meeting will be held on April 24, 2015, from 10:00 a.m. to 12:15 p.m. Eastern Daylight Time.

    ADDRESSES:

    The Special Meeting will be conducted via teleconference. Members of the public may listen to the meeting by dialing toll-free 1-888-997-9859 and using passcode 3572169. Due to the limited number of ports, attendance via teleconference will be on a first-come, first-served basis.

    FOR FURTHER INFORMATION CONTACT:

    Uzoma Onyeije, Secretary, FirstNet, 12201 Sunrise Valley Drive Reston, VA 20192; telephone: (703) 648-4165; email: [email protected] Please direct media inquiries to Ryan Oremland at (703) 648-4114.

    SUPPLEMENTARY INFORMATION:

    Background: The Middle Class Tax Relief and Job Creation Act of 2012 (Act), Public Law 112-96, 126 Stat. 156 (2012), created FirstNet as an independent authority within the National Telecommunications and Information Administration (NTIA). The Act directs FirstNet to ensure the building, operating and maintaining of a single nationwide, interoperable public safety broadband network. The FirstNet Board is responsible for making strategic decisions regarding FirstNet's operations. As provided in section 4.08 of the FirstNet Bylaws, the Board through this Notice provides at least two days notice of a Special Meeting of the Board to be held April 24, 2015, from 10:00 a.m. to 12:15 p.m. Eastern Daylight Time. The Board may, by a majority vote, close a portion of the Special Meeting as necessary to preserve the confidentiality of commercial or financial information that is privileged or confidential, to discuss personnel matters, or to discuss legal matters affecting FirstNet, including pending or potential litigation. See 47 U.S.C. 1424(e)(2).

    Matters to Be Considered: FirstNet will post an agenda for the Special Meeting on its Web site at www.firstnet.gov prior to the meeting. The agenda topics are subject to change.

    Time and Date: The Special Meeting will be held on April 24, 2015, from 10:00 a.m. to 12:15 p.m. Eastern Daylight Time. The times and dates are subject to change. Please refer to FirstNet's Web site at www.firstnet.gov for the most up-to-date information.

    Other Information: The teleconference for the Special Meeting is open to the public. On the date and time of the Special Meeting, members of the public may call toll-free 1-888-997-9859 and use passcode 3572169 to listen to the meeting. To view the slide presentations, the public may visit https://www.mymeetings.com/nc/join and enter Conference number: PW3373297 and audience passcode: 3572169. As an alternative, members of the public may view the slide presentations by visiting: https://www.mymeetings.com/nc/join.php?i=PW3373297&p=3572169&t=c. If you experience technical difficulty, please contact Margaret Baldwin by telephone (703) 648-4161 or via email [email protected] Public access will be limited to listen-only. Due to the limited number of ports, attendance via teleconference will be on a first-come, first-served basis. The Special Meeting is accessible to people with disabilities. Individuals requiring accommodations are asked to notify Mr. Onyeije, by telephone at (703) 648-4165 or email at [email protected], at least two (2) business days before the meeting.

    Records: FirstNet maintains records of all Board proceedings. Minutes of the meetings will be available at www.firstnet.gov.

    Dated: April 17, 2015. Eli Veenendaal, Attorney—Advisor, First Responder Network Authority.
    [FR Doc. 2015-09376 Filed 4-21-15; 8:45 am] BILLING CODE 3510-TL-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-489-815] Light-Walled Rectangular Pipe and Tube From Turkey; Preliminary Results of Antidumping Duty Administrative Review; 2013-2014 AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    In response to a request from ÇINAR Boru Profil Sanayi ve Ticaret A.Ş. (CINAR), the Department of Commerce (the Department) is conducting an administrative review of the antidumping duty order on light-walled rectangular pipe and tube from Turkey.1 The period of review (POR) is May 1, 2013, through April 30, 2014. We preliminarily find that CINAR made sales at prices below normal value (NV) during the POR. We invite interested parties to comment on these preliminary results.

    1See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 79 FR 36462 (June 27, 2014). See also Notice of Antidumping Duty Order: Light-Walled Rectangular Pipe and Tube From Turkey, 73 FR 31065 (May 30, 2008) (the Order).

    DATES:

    Effective date April 22, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Mark Flessner or Robert James, AD/CVD Operations, Office VI, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-6312 or (202) 482-0649, respectively.

    SUPPLEMENTARY INFORMATION: Scope of the Order

    The merchandise covered by the Order is certain welded carbon quality light-walled steel pipe and tube, of rectangular (including square) cross section, having a wall thickness of less than 4 millimeters. The merchandise subject to the Order is classified in the Harmonized Tariff Schedule of the United States at subheadings 7306.61.50.00 and 7306.61.70.60.2

    2 For a full description of the scope of the Order, see the memorandum from Gary Taverman, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to Paul Piquado, Assistant Secretary for Enforcement and Compliance, “Light-Walled Rectangular Pipe and Tube from Turkey: Decision Memorandum for the Preliminary Results of Antidumping Duty Administrative Review; 2013-2014” (Preliminary Decision Memorandum), which is dated concurrently with this notice and is hereby incorporated by reference. A list of the topics discussed in the Preliminary Decision Memorandum appears in the Appendix to this notice.

    The Preliminary Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov3 and is available to all parties in the Central Records Unit, room 7046 of the main Department of Commerce building. In addition, a complete version of the Preliminary Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/index.html. The signed Preliminary Decision Memorandum and the electronic versions of the Preliminary Decision Memorandum are identical in content.

    3 On November 24, 2014, Enforcement and Compliance changed the name of Import Administrations's AD and CVD Centralized Electronic Service System (“IA ACCESS”) to AD and CVD Centralized Electronic Service System (“ACCESS”). The Web site location was changed from http://iaaccess.trade.gov to http://access.trade.gov. The Final Rule changing the references to the Regulations can be found at: 79 FR 69046 (November 20, 2014).

    Methodology

    The Department conducted this review in accordance with section 751(a)(2) of the Tariff Act of 1930, as amended (the Act). Export price (EP) is calculated in accordance with section 772 of the Act. NV is calculated in accordance with section 773 of the Act. For a full description of the methodology underlying our conclusions, see the Preliminary Decision Memorandum.

    Preliminary Results of the Review

    As a result of this review, we preliminarily determine the following weighted-average dumping margin for the period May 1, 2013, through April 30, 2014:

    Exporter or producer Weighted-average dumping margin ÇINAR Boru Profil Sanayi ve Ticaret A.Ş 1.02 percent Disclosure and Public Comment

    The Department intends to disclose to interested parties the calculations performed in connection with these preliminary results within five days of the date of publication of this notice.4 Pursuant to 19 CFR 351.309(c)(1)(ii), interested parties may submit cases briefs no later than 30 days after the date of publication of this notice. Rebuttal briefs, limited to issues raised in the case briefs, may be filed no later than five days after the date for filing case briefs.5 Parties who submit case briefs or rebuttal briefs in this proceeding are encouraged to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities.6 Case and rebuttal briefs should be filed using ACCESS.7 An electronically filed document must be received successfully in its entirety by ACCESS, by 5:00 p.m. Eastern Time on the day on which it is due.8

    4See 19 CFR 351.224(b).

    5See 19 CFR 351.309(d).

    6See 19 CFR 351.309(c)(2) and (d)(2).

    7See 19 CFR 351.303.

    8See 19 CFR 351.303(b)(1).

    Pursuant to 19 CFR 351.310(c), interested parties who wish to request a hearing, or to participate if one is requested, must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS. Requests should contain: (1) The party's name, address, and telephone number; (2) the number of participants; and (3) a list of issues to be discussed. Issues raised in the hearing will be limited to those raised in the respective case and rebuttal briefs. If a request for a hearing is made, parties will be notified of the date and time of the hearing to be held at the U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230.

    The Department intends to issue the final results of this administrative review within 120 days after the date of publication of this notice, pursuant to section 751(a)(3)(A) of the Act and 19 CFR 351.213(h)(1).

    Assessment Rates

    Upon completion of the administrative review, the Department shall determine, and U.S. Customs and Border Protection (CBP) shall assess, antidumping duties on all appropriate entries.9 If CINAR's weighted-average dumping margin is not zero or de minimis (i.e., less than 0.5 percent) in the final results of this review, we will calculate an importer-specific assessment rate on the basis of the ratio of the total amount of dumping calculated for the importer's examined sales and the total entered value of such sales in accordance with 19 CFR 351.212(b)(1). If the weighted-average dumping margin for CINAR is zero or de minimis in the final results of review, we will instruct CBP to liquidate CINAR's entries without regard to antidumping duties in accordance with the Final Modification for Reviews, i.e., “{w}here the weighted-average margin of dumping for the exporter is determined to be zero or de minimis, no antidumping duties will be assessed.” 10 Where an importer-specific assessment rate is zero or de minimis, we will instruct CBP to liquidate the appropriate entries without regard to antidumping duties in accordance with 19 CFR 351.106(c)(2).

    9 In these preliminary results, the Department applied the assessment rate calculation method adopted in Antidumping Proceedings: Calculation of the Weighted-Average Dumping Margin and Assessment Rate in Certain Antidumping Duty Proceedings; Final Modification, 77 FR 8101 (February 14, 2012) (Final Modification for Reviews).

    10Id., 77 FR at 8102.

    We intend to issue instructions to CBP 15 days after publication of the final results of this review.

    Cash Deposit Requirements

    The following deposit requirements will be effective upon publication of the notice of final results of administrative review for all shipments of light-walled rectangular pipe and tube from Turkey entered, or withdrawn from warehouse, for consumption on or after the date of publication as provided by section 751(a)(2) of the Act: (1) The cash deposit rate for CINAR will be equal to the weighted-average dumping margin established in the final results of this administrative review except if the rate is de minimis within the meaning of 19 CFR 351.106(c)(1), in which case the cash deposit rate will be zero; (2) for merchandise exported by manufacturers or exporters not covered in this review but covered in a prior segment of the proceeding, the cash deposit rate will continue to be the company-specific rate published for the most recently completed segment of this proceeding in which the manufacturer or exporter participated; (3) if the exporter is not a firm covered in this review, a prior review, or the original less-than-fair-value investigation but the manufacturer is, the cash deposit rate will be the rate established for the most recently completed segment of the proceeding for the manufacturer of the merchandise; (4) the cash deposit rate for all other manufacturers or exporters will continue to be 27.04 percent ad valorem, the all-others rate established in the less-than-fair-value investigation.11 These cash deposit requirements, when imposed, shall remain in effect until further notice.

    11See the Order at 73 FR 31065.

    Notification to Importers

    This notice also serves as a preliminary reminder to importers of their responsibility under 19 CFR 351.402(f)(2) to file a certificate regarding the reimbursement of antidumping duties prior to liquidation of the relevant entries during this review period. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping duties occurred and the subsequent assessment of double antidumping duties.

    Notification to Interested Parties

    We are issuing and publishing these results in accordance with sections 751(a)(1) and 777(i)(1) of the Act and 19 CFR 351.213(h)(1).

    Dated: April 1, 2015. Paul Piquado, Assistant Secretary for Enforcement and Compliance. Appendix—List of Topics Discussed in the Preliminary Decision Memorandum Summary Background Scope of the Order Limited Home Market Reporting Methodology Fair Value Comparisons Product Comparisons Determination of Comparison Method Results of Differential Pricing Analysis Date of Sale U.S. Price Normal Value Currency Conversion Conclusion
    [FR Doc. 2015-09386 Filed 4-21-15; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [C-122-854] Supercalendered Paper From Canada: Postponement of Preliminary Determination in the Countervailing Duty Investigation AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    FOR FURTHER INFORMATION CONTACT:

    Joshua Morris or Shane Subler, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-1779 or (202) 482-0189, respectively.

    SUPPLEMENTARY INFORMATION:

    Background

    On March 18, 2015, the Department of Commerce (the Department) initiated a countervailing duty investigation on supercalendered paper from Canada.1 Currently, the preliminary determination is due no later than May 22, 2015.

    1See Supercalendered Paper from Canada: Initiation of Countervailing Duty Investigation, 80 FR 15981 (March 26, 2015).

    Postponement of the Preliminary Determination

    Section 703(b)(1) of the Tariff Act of 1930, as amended (the Act), requires the Department to issue the preliminary determination in a countervailing duty investigation within 65 days after the date on which the Department initiated the investigation. However, if the petitioner makes a timely request for an extension in accordance with 19 CFR 351.205(e), section 703(c)(1)(A) of the Act allows the Department to postpone the preliminary determination until no later than 130 days after the date on which the Department initiated the investigation.

    On April 9, 2015, the petitioner 2 submitted a timely request pursuant to section 703(c)(l)(A) of the Act and 19 CFR 351.205(e) to postpone the preliminary determination.3 Therefore, in accordance with section 703(c)(l)(A) of the Act, we are fully postponing the due date for the preliminary determination to not later than 130 days after the day on which the investigation was initiated. As a result, the deadline for completion of the preliminary determination is now July 27, 2015.4

    2 The Coalition For Fair Paper Imports (the petitioner).

    3See Letter from the petitioner, entitled “Supercalendered Paper from Canada: Request For Postponement Of The Preliminary Determination,” dated April 9, 2015.

    4 The actual deadline based on the postponement to 130 days is July 26, 2015, which is a Sunday. Department practice dictates that where a deadline falls on a weekend or federal holiday, the appropriate deadline is the next business day. See Notice of Clarification: Application of “Next Business Day” Rule for Administrative Determination Deadlines Pursuant to the Tariff Act of 1930, As Amended, 70 FR 24533 (May 10, 2005).

    This notice is issued and published pursuant to section 703(c)(2) of the Act and 19 CFR 351.205(f)(l).

    Dated: April 15, 2015. Paul Piquado, Assistant Secretary for Enforcement and Compliance.
    [FR Doc. 2015-09389 Filed 4-21-15; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XD857 Takes of Marine Mammals Incidental to Specified Activities; Taking Marine Mammals Incidental to a Wharf Maintenance Project AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice; proposed incidental harassment authorization; request for comments.

    SUMMARY:

    NMFS has received a request from the U.S. Navy (Navy) for authorization to take marine mammals incidental to construction activities as part of a wharf maintenance project. Pursuant to the Marine Mammal Protection Act (MMPA), NMFS is requesting comments on its proposal to issue an incidental harassment authorization (IHA) to the Navy to incidentally take marine mammals, by Level B Harassment only, during the specified activity.

    DATES:

    Comments and information must be received no later than May 22, 2015.

    ADDRESSES:

    Comments on the application should be addressed to Jolie Harrison, Chief, Permits and Conservation Division, Office of Protected Resources, National Marine Fisheries Service. Physical comments should be sent to 1315 East-West Highway, Silver Spring, MD 20910 and electronic comments should be sent to [email protected]

    Instructions: Comments sent by any other method, to any other address or individual, or received after the end of the comment period, may not be considered by NMFS. Comments received electronically, including all attachments, must not exceed a 25-megabyte file size. Attachments to electronic comments will be accepted in Microsoft Word or Excel or Adobe PDF file formats only. All comments received are a part of the public record and will generally be posted for public viewing on the Internet at www.nmfs.noaa.gov/pr/permits/incidental/construction.htm without change. All personal identifying information (e.g., name, address), confidential business information, or otherwise sensitive information submitted voluntarily by the sender will be publicly accessible.

    FOR FURTHER INFORMATION CONTACT:

    Ben Laws, Office of Protected Resources, NMFS, (301) 427-8401.

    SUPPLEMENTARY INFORMATION: Availability

    An electronic copy of the Navy's application and supporting documents, as well as a list of the references cited in this document, may be obtained by visiting the Internet at: www.nmfs.noaa.gov/pr/permits/incidental/construction.htm. In case of problems accessing these documents, please call the contact listed above (see FOR FURTHER INFORMATION CONTACT).

    National Environmental Policy Act (NEPA)

    The Navy prepared an Environmental Assessment (EA) to consider the direct, indirect and cumulative effects to the human environment resulting from the wharf maintenance project. NMFS has reviewed the EA and believes it appropriate to adopt the EA in order to assess the impacts to the human environment of issuance of an IHA to the Navy and subsequently sign our own Finding of No Significant Impact (FONSI). Information in the Navy's application, the Navy's EA, and this notice collectively provide the environmental information related to proposed issuance of this IHA for public review and comment. All documents are available at the aforementioned Web site. We will review all comments submitted in response to this notice as we complete the NEPA process, including a final decision of whether to adopt the Navy's EA and sign a FONSI, prior to a final decision on the incidental take authorization request.

    Background

    Sections 101(a)(5)(A) and (D) of the MMPA (16 U.S.C. 1361 et seq.) direct the Secretary of Commerce to allow, upon request by U.S. citizens who engage in a specified activity (other than commercial fishing) within a specified area, the incidental, but not intentional, taking of small numbers of marine mammals, providing that certain findings are made and the necessary prescriptions are established.

    The incidental taking of small numbers of marine mammals may be allowed only if NMFS (through authority delegated by the Secretary) finds that the total taking by the specified activity during the specified time period will (i) have a negligible impact on the species or stock(s) and (ii) not have an unmitigable adverse impact on the availability of the species or stock(s) for subsistence uses (where relevant). Further, the permissible methods of taking and requirements pertaining to the mitigation, monitoring and reporting of such taking must be set forth.

    The allowance of such incidental taking under section 101(a)(5)(A), by harassment, serious injury, death, or a combination thereof, requires that regulations be established. Subsequently, a Letter of Authorization may be issued pursuant to the prescriptions established in such regulations, providing that the level of taking will be consistent with the findings made for the total taking allowable under the specific regulations. Under section 101(a)(5)(D), NMFS may authorize such incidental taking by harassment only, for periods of not more than one year, pursuant to requirements and conditions contained within an IHA. The establishment of these prescriptions requires notice and opportunity for public comment.

    NMFS has defined “negligible impact” in 50 CFR 216.103 as “. . . an impact resulting from the specified activity that cannot be reasonably expected to, and is not reasonably likely to, adversely affect the species or stock through effects on annual rates of recruitment or survival.” Except with respect to certain activities not pertinent here, section 3(18) of the MMPA defines “harassment” as: “. . . any act of pursuit, torment, or annoyance which (i) has the potential to injure a marine mammal or marine mammal stock in the wild [Level A harassment]; or (ii) has the potential to disturb a marine mammal or marine mammal stock in the wild by causing disruption of behavioral patterns, including, but not limited to, migration, breathing, nursing, breeding, feeding, or sheltering [Level B harassment].”

    Summary of Request

    On November 4, 2014, we received a request from the Navy for authorization to take marine mammals incidental to pile driving and removal associated with maintenance of an explosives handling wharf (EHW-1) in the Hood Canal at Naval Base Kitsap in Bangor, WA (NBKB). The Navy submitted revised versions of the request on February 27 and March 17, 2015. The latter of these was deemed adequate and complete. The Navy proposes to replace four structurally unsound piles, between July 16, 2015, and January 15, 2016.

    The use of both vibratory and impact pile driving is expected to produce underwater sound at levels that have the potential to result in behavioral harassment of marine mammals. Species with the expected potential to be present during all or a portion of the in-water work window include the Steller sea lion (Eumetopias jubatus monteriensis), California sea lion (Zalophus californianus), harbor seal (Phoca vitulina richardii), killer whale (transient only; Orcinus orca), and harbor porpoise (Phocoena phocoena vomerina). These species may occur year-round in the Hood Canal, with the exception of the Steller sea lion, which is present only from fall to late spring (approximately late September to early May), and the California sea lion, which is only present from late summer to late spring (approximately late August to early June).

    This would be the third such IHA for similar work on the same structure, if issued. The Navy previously received IHAs for a two-year maintenance project at EHW-1 conducted in 2011-12 and 2012-13 (76 FR 30130 and 77 FR 43049). Additional IHAs were issued to the Navy in recent years for marine construction projects on the NBKB waterfront, including the construction of a second explosives handling wharf (EHW-2) immediately adjacent to EHW-1. Three consecutive IHAs were issued for that project, in 2012-13 (77 FR 42279), 2013-14 (78 FR 43148), and 2014-15 (79 FR 43429). Additional projects include the Test Pile Project (TPP), conducted in 2011-12 in the proposed footprint of the EHW-2 to collect geotechnical data and test methodology in advance of the project (76 FR 38361) and a minor project to install a new mooring for an existing research barge, conducted in 2013-14 (78 FR 43165). In-water work associated with all projects was conducted only during the approved in-water work window (July 16-February 15). Monitoring reports for all of these projects are available on the Internet at www.nmfs.noaa.gov/pr/permits/incidental/construction.htm and provide environmental information related to proposed issuance of this IHA for public review and comment.

    Description of the Specified Activity Overview

    NBKB provides berthing and support services to Navy submarines and other fleet assets. The Navy proposes to complete necessary maintenance at the EHW-1 facility at NBKB as part of ongoing maintenance conducted as necessary to maintain the structural integrity of the wharf and ensure its continued functionality to support necessary operational requirements. The EHW-1 facility, constructed in 1977, requires ongoing maintenance due to the deterioration of the wharf's existing piling sub-structure. The proposed action includes the replacement of four existing 24-in hollow prestressed octagonal concrete piles with four new 30-in concrete filled steel pipe piles. Existing piles will be removed using a pneumatic hammer and a crane. Vibratory pile driving will be the primary method used to install new piles, though an impact hammer may be used if substrate conditions prevent the advancement of piles to the required depth or to verify the load-bearing capacity. Sound attenuation measures (i.e., bubble curtain) would be used during all impact hammer operations.

    Dates and Duration

    The Navy's specified activity would occur only during July 16 through January 15, within the allowable season for in-water work at NBKB. This window is established by the Washington Department of Fish and Wildlife in coordination with NMFS and the U.S. Fish and Wildlife Service (USFWS) to protect juvenile salmon. A maximum of eight pile driving days would occur, but the eight days could occur on any day during the window. Vibratory driving, as compared with impact driving or pile removal via pneumatic chipping, is expected to occur on only four total days.

    Impact pile driving during the first half of the in-water work window (July 16 to September 23) may only occur between two hours after sunrise and two hours before sunset to protect breeding marbled murrelets (Brachyramphus marmoratus; an Endangered Species Act [ESA]-listed bird under the jurisdiction of USFWS). Vibratory driving during the first half of the window, and all in-water work conducted between September 23 and January 15, may occur during daylight hours (sunrise to sunset). Other construction (not in-water) may occur between 7 a.m. and 10 p.m., year-round. Therefore, in-water work is restricted to daylight hours (at minimum) and there is at least a nine-hour break during the 24-hour cycle from all construction activity.

    Specific Geographic Region

    NBKB is located on the Hood Canal approximately 32 km west of Seattle, Washington (see Figures 2-1 through 2-3 in the Navy's application). The Hood Canal is a long, narrow fjord-like basin of the western Puget Sound. Throughout its 108-km length, the width of the canal varies from 1.6-3.2 km and exhibits strong depth/elevation gradients and irregular seafloor topography in many areas. Although no official boundaries exist along the waterway, the northeastern section extending from the mouth of the canal at Admiralty Inlet to the southern tip of Toandos Peninsula is referred to as northern Hood Canal. NBKB is located within this region. Please see Section 2 of the Navy's application for detailed information about the specific geographic region, including physical and oceanographic characteristics.

    Detailed Description of Activities

    Maintenance of necessary facilities for handling of explosive materials is part of the Navy's sea-based strategic deterrence mission, and the Navy has determined that EHW-1 structural integrity is compromised due to deterioration of the wharf's piling sub-structure. The EHW-1 consists of two 30-m access trestles and a main pier deck that measures approximately 215 m in length. The wharf is supported by both 16-in and 24-in hollow octagonal pre-cast concrete piles. Additionally, there are steel and timber fender piles on the outboard and inboard edges of the wharf (see Figures 1-1 through 1-4 in the Navy's application).

    The Navy proposes to replace four structurally unsound 24-in hollow prestressed octagonal concrete piles, as well as performing additional repair and replacement work above water that would not be expected to result in effects to marine mammals. The piles would be replaced with four 30-in concrete filled steel piles. Piles to be removed would first be scored by a diver using a small pneumatic hammer and then removed by crane. Pile installation will utilize vibratory pile drivers to the greatest extent possible, and the Navy anticipates that most piles will be able to be vibratory driven to within several feet of the required depth. Pile drivability is, to a large degree, a function of soil conditions and the type of pile hammer. The soil conditions encountered during geotechnical explorations at NBKB indicate existing conditions generally consist of fill or sediment of very dense glacially overridden soils, and recent experience at other construction locations along the NBKB waterfront indicates that most piles should be able to be driven with a vibratory hammer to proper embedment depth. However, difficulties during pile driving may be encountered as a result of obstructions, such as rocks or boulders, which may exist throughout the project area. If difficult driving conditions occur, usage of an impact hammer would occur. Impact driving may also be used to verify load-bearing capacity, or proof, installed piles.

    Description of Marine Mammals in the Area of the Specified Activity

    There are eight marine mammal species with recorded occurrence in the Hood Canal during the past fifteen years, including five cetaceans and three pinnipeds. The harbor seal resides year-round in Hood Canal, while the Steller sea lion and California sea lion inhabit Hood Canal during portions of the year. Harbor porpoises may transit through the project area and occur regularly in Hood Canal, while transient killer whales could be present in the project area but do not have regular occurrence in the Hood Canal. The Dall's porpoise (Phocoenoides dalli dalli), humpback whale (Megaptera novaeangliae), and gray whale (Eschrichtius robustus) have been observed in Hood Canal, but their presence is sufficiently rare that we do not believe there is a reasonable likelihood of their occurrence in the project area during the proposed period of validity for this IHA. The latter three species are not carried forward for further analysis beyond this section.

    We have reviewed the Navy's detailed species descriptions, including life history information, for accuracy and completeness and refer the reader to Sections 3 and 4 of the Navy's application instead of reprinting the information here. Please also refer to NMFS' Web site (www.nmfs.noaa.gov/pr/species/mammals/) for generalized species accounts and to the Navy's Marine Resource Assessment for the Pacific Northwest, which documents and describes the marine resources that occur in Navy operating areas of the Pacific Northwest, including Puget Sound (DoN, 2006). The document is publicly available at: www.navfac.navy.mil/products_and_services/ev/products_and_services/marine_resources/marine_resource_assessments.html (accessed March 25, 2015).

    Table 1 lists the marine mammal species with expected potential for occurrence in the vicinity of NBKB during the project timeframe and summarizes key information regarding stock status and abundance. Taxonomically, we follow Committee on Taxonomy (2014). Please see NMFS' Stock Assessment Reports (SAR), available at www.nmfs.noaa.gov/pr/sars, for more detailed accounts of these stocks' status and abundance. The harbor seal, California sea lion and harbor porpoise are addressed in the Pacific SARs (e.g., Carretta et al., 2014, 2015), while the Steller sea lion and transient killer whale are treated in the Alaska SARs (e.g., Allen and Angliss, 2014, 2015).

    In the species accounts provided here, we offer a brief introduction to the species and relevant stock as well as available information regarding population trends and threats, and describe any information regarding local occurrence.

    Table 1—Marine Mammals Potentially Present in the Vicinity of NBKB Species Stock ESA/
  • MMPA
  • status;
  • strategic
  • (Y/N) 1
  • Stock abundance (CV, Nmin, most recent abundance survey) 2 PBR 3 Annual M/SI 4 Relative occurrence in Hood Canal; season of occurrence
    Order Cetartiodactyla—Cetacea—Superfamily Odontoceti (toothed whales, dolphins, and porpoises) Family Delphinidae Killer whale West coast transient 6 -; N 243 (n/a; 2009) 2.4 0 Rare; year-round (but last observed in 2005). Family Phocoenidae (porpoises) Harbor porpoise Washington inland waters 7 -; N 10,682 (0.38; 7,841; 2003) unk ≥2.2 Possible regular presence; year-round. Order Carnivora—Superfamily Pinnipedia Family Otariidae (eared seals and sea lions) California sea lion U.S. -; N 296,750 (n/a; 153,337; 2011) 9,200 389 Seasonal/common; Fall to late spring (Aug to Jun). Steller sea lion Eastern U.S.5 -; N 60,131-74,448 (n/a; 36,551; 2008-13) 8 1,645 9 92.3 Seasonal/occasional; Fall to late spring (Sep to May). Family Phocidae (earless seals) Harbor seal Hood Canal 7 -; N 3,555 (0.15; unk; 1999) unk 0.2 Common; Year-round resident. 1 ESA status: Endangered (E), Threatened (T)/MMPA status: Depleted (D). A dash (-) indicates that the species is not listed under the ESA or designated as depleted under the MMPA. Under the MMPA, a strategic stock is one for which the level of direct human-caused mortality exceeds PBR (see footnote 3) or which is determined to be declining and likely to be listed under the ESA within the foreseeable future. Any species or stock listed under the ESA is automatically designated under the MMPA as depleted and as a strategic stock. 2 CV is coefficient of variation; Nmin is the minimum estimate of stock abundance. In some cases, CV is not applicable. For killer whales, the abundance values represent direct counts of individually identifiable animals; therefore there is only a single abundance estimate with no associated CV. For certain stocks of pinnipeds, abundance estimates are based upon observations of animals (often pups) ashore multiplied by some correction factor derived from knowledge of the species (or similar species) life history to arrive at a best abundance estimate; therefore, there is no associated CV. In these cases, the minimum abundance may represent actual counts of all animals ashore. 3 Potential biological removal, defined by the MMPA as the maximum number of animals, not including natural mortalities, that may be removed from a marine mammal stock while allowing that stock to reach or maintain its optimum sustainable population size (OSP). 4 These values, found in NMFS' SARs, represent annual levels of human-caused mortality plus serious injury from all sources combined (e.g., commercial fisheries, subsistence hunting, ship strike). Annual M/SI often cannot be determined precisely and is in some cases presented as a minimum value. All values presented here are from the draft 2014 SARs (www.nmfs.noaa.gov/pr/sars/draft.htm). 5 Abundance estimates (and resulting PBR values) for these stocks are new values presented in the draft 2014 SARs. This information was made available for public comment and is currently under review and therefore may be revised prior to finalizing the 2014 SARs. However, we consider this information to be the best available for use in this document. 6 The abundance estimate for this stock includes only animals from the “inner coast” population occurring in inside waters of southeastern Alaska, British Columbia, and Washington—excluding animals from the “outer coast” subpopulation, including animals from California—and therefore should be considered a minimum count. For comparison, the previous abundance estimate for this stock, including counts of animals from California that are now considered outdated, was 354. 7 Abundance estimates for these stocks are greater than eight years old and are therefore not considered current. PBR is considered undetermined for these stocks, as there is no current minimum abundance estimate for use in calculation. We nevertheless present the most recent abundance estimates, as these represent the best available information for use in this document. 8 Best abundance is calculated as the product of pup counts and a factor based on the birth rate, sex and age structure, and growth rate of the population. A range is presented because the extrapolation factor varies depending on the vital rate parameter resulting in the growth rate (i.e., high fecundity or low juvenile mortality). 9 PBR is calculated for the U.S. portion of the stock only (excluding animals in British Columbia) and assumes that the stock is not within its OSP. If we assume that the stock is within its OSP, PBR for the U.S. portion increases to 2,193.

    Although present in Washington inland waters in small numbers (Falcone et al., 2005), primarily in the Strait of Juan de Fuca and San Juan Islands but also occasionally in Puget Sound, the humpback whale is not typically present in Hood Canal. Archived sighting records show no confirmed observations from 2001-11 (www.orcanetwork.org; accessed March 26, 2015), and no records are found in the literature. In January-February of 2012, and again in 2015, one individual was observed in Hood Canal repeatedly over a period of several weeks. No other sightings have been recorded.

    Gray whales generally migrate southbound past Washington in late December and January, and transit past Washington on the northbound return in March to May. Gray whales do not generally make use of Washington inland waters, but have been observed in certain portions of those waters in all months of the year, with most records occurring from March through June (Calambokidis et al., 2010; www.orcanetwork.org) and associated with regular feeding areas. Usually fewer than twenty gray whales visit the inner marine waters of Washington and British Columbia beginning in about January, and six to ten of these are individual whales that return most years to feeding sites in northern Puget Sound. The remaining individuals occurring in any given year generally appear unfamiliar with feeding areas, often arrive emaciated, and commonly die of starvation (WDFW, 2012). Gray whales have been sighted in Hood Canal on six occasions since 1999 (including a stranded whale), with the most recent report in November 2010 (www.orcanetwork.org).

    In Washington, Dall's porpoises are most abundant in offshore waters where they are year-round residents, although interannual distribution is highly variable (Green et al., 1992). In inland waters, Dall's porpoises are most frequently observed in the Strait of Juan de Fuca and Haro Strait between San Juan Island and Vancouver Island (Nysewander et al., 2005), but are seen occasionally in southern Puget Sound and may also occasionally occur in Hood Canal. Only a single Dall's porpoise has been observed at NBKB, in deeper water during a 2008 summer survey conducted by the Navy (Tannenbaum et al., 2009). On the basis of this single observation, we previously assumed it appropriate to authorize incidental take of this species. However, there have been no subsequent observations of Dall's porpoises in Hood Canal during either dedicated vessel line-transect surveys or project-specific monitoring and we no longer believe that the species may be reasonably expected to be present in the action area.

    Steller Sea Lion

    Steller sea lions are distributed mainly around the coasts to the outer continental shelf along the North Pacific rim from northern Hokkaido, Japan through the Kuril Islands and Okhotsk Sea, Aleutian Islands and central Bering Sea, southern coast of Alaska and south to California (Loughlin et al., 1984). Based on distribution, population response, and phenotypic and genotypic data, two separate stocks of Steller sea lions are recognized within U.S. waters, with the population divided into western and eastern distinct population segments (DPS) at 144°W (Cape Suckling, Alaska) (Loughlin, 1997). The eastern DPS extends from California to Alaska, including the Gulf of Alaska, and is the only stock that may occur in the Hood Canal.

    According to NMFS' recent status review (NMFS, 2013), the best available information indicates that the overall abundance of eastern DPS Steller sea lions has increased for a sustained period of at least three decades while pup production has also increased significantly, especially since the mid-1990s. Johnson and Gelatt (2012) provided an analysis of growth trends of the entire eastern DPS from 1979-2010, indicating that the stock increased during this period at an annual rate of 4.2 percent (90% CI 3.7-4.6). Most of the overall increase occurred in the northern portion of the range (southeast Alaska and British Columbia), but pup counts in Oregon and California also increased significantly (e.g., Merrick et al., 1992; Sease et al., 2001; Olesiuk and Trites, 2003; Fritz et al. 2008; Olesiuk, 2008; NMFS, 2008, 2013). In Washington, Pitcher et al. (2007) reported that Steller sea lions, presumably immature animals and non-breeding adults, regularly used four haul-outs, including two “major” haul-outs (>50 animals). The same study reported that the numbers of sea lions counted between 1989 and 2002 on Washington haul-outs increased significantly (average annual rate of 9.2 percent) (Pitcher et al., 2007). Although the stock size has increased, its status relative to OSP size is unknown. However, the consistent long-term estimated annual rate of increase may indicate that the stock is reaching OSP size (Allen and Angliss, 2014).

    The eastern stock breeds in rookeries located in southeast Alaska, British Columbia, Oregon, and California. There are no known breeding rookeries in Washington (Allen and Angliss, 2014) but eastern stock Steller sea lions are present year-round along the outer coast of Washington, including immature animals or non-breeding adults of both sexes. In 2011, the minimum count for Steller sea lions in Washington was 1,749 (Allen and Angliss, 2014), up from 516 in 2001 (Pitcher et al., 2007). In Washington, Steller sea lions primarily occur at haul-out sites along the outer coast from the Columbia River to Cape Flattery and in inland waters sites along the Vancouver Island coastline of the Strait of Juan de Fuca (Jeffries et al., 2000; Olesiuk and Trites, 2003; Olesiuk, 2008). Numbers vary seasonally in Washington waters with peak numbers present during the fall and winter months (Jeffries et al., 2000). Beginning in 2008, Steller sea lions have been observed at NBKB hauled out on submarines at Delta Pier (located approximately 1.25 km south of the project site) during fall through spring months, with September 26 as the earliest documented arrival. When Steller sea lions are present, there are typically one to four individuals, with a maximum observed group size of eleven.

    Harbor Seal

    Harbor seals inhabit coastal and estuarine waters and shoreline areas of the northern hemisphere from temperate to polar regions. The eastern North Pacific subspecies is found from Baja California north to the Aleutian Islands and into the Bering Sea. Multiple lines of evidence support the existence of geographic structure among harbor seal populations from California to Alaska (e.g., O'Corry-Crowe et al., 2003; Temte, 1986; Calambokidis et al., 1985; Kelly, 1981; Brown, 1988; Lamont, 1996; Burg, 1996). Harbor seals are generally non-migratory, and analysis of genetic information suggests that genetic differences increase with geographic distance (Westlake and O'Corry-Crowe, 2002). However, because stock boundaries are difficult to meaningfully draw from a biological perspective, three separate harbor seal stocks have been recognized for management purposes along the west coast of the continental U.S.: (1) Inland waters of Washington (including Hood Canal, Puget Sound, and the Strait of Juan de Fuca out to Cape Flattery), (2) outer coast of Oregon and Washington, and (3) California (Carretta et al., 2014). Multiple stocks are recognized in Alaska. Samples from Washington, Oregon, and California demonstrate a high level of genetic diversity and indicate that the harbor seals of Washington inland waters possess unique haplotypes not found in seals from the coasts of Washington, Oregon, and California (Lamont et al., 1996).

    Recent genetic evidence indicates that harbor seals of Washington inland waters have sufficient population structure to warrant division into multiple distinct stocks (Huber et al., 2010, 2012). Based on studies of pupping phenology, mitochondrial DNA, and microsatellite variation, Carretta et al. (2014) divide the Washington inland waters stock into three new populations, and present these as stocks: (1) Southern Puget Sound (south of the Tacoma Narrows Bridge); (2) Washington northern inland waters (including Puget Sound north of the Tacoma Narrows Bridge, the San Juan Islands, and the Strait of Juan de Fuca); and (3) Hood Canal. Only the Hood Canal stock of harbor seals is expected to occur in the action area.

    The best available abundance estimate was derived from aerial surveys of harbor seals in Washington conducted during the pupping season in 1999, during which time the total numbers of hauled-out seals (including pups) were counted (711; Jeffries et al., 2003). Radio-tagging studies conducted at six locations collected information on harbor seal haul-out patterns in 1991-92, resulting in a pooled correction factor (across three coastal and three inland sites) of 1.53 to account for animals in the water which are missed during the aerial surveys (Huber et al., 2001), which, coupled with the aerial survey counts, previously provided the abundance estimate. More recent tagging information specifically conducted in Hood Canal suggests that harbor seals in Hood Canal haul out twenty percent of the time (London et al., 2012). Therefore, the aerial surveys represented only twenty percent of the population, and the abundance estimate has been revised accordingly (see Table 1).

    Harbor seal counts in Washington State increased at an annual rate of six percent from 1983-96, increasing to ten percent for the period 1991-96 (Jeffries et al., 1997). The population is thought to be stable, and harbor seals in Washington inland waters have generally been considered to be within OSP size (Jeffries et al., 2003).

    Harbor seals are the most abundant marine mammal in Hood Canal, where they can occur anywhere year-round and are considered resident, and are the only pinniped that breeds in inland Washington waters (Jeffries et al., 2003). They are year-round, non-migratory residents, pup (i.e., give birth) in Hood Canal, and the population is considered closed, meaning that they do not have much movement outside of Hood Canal (London, 2006). Surveys in the Hood Canal from the mid-1970s to 2000 show a fairly stable population between 600-1,200 seals, and the abundance of harbor seals in Hood Canal has likely stabilized at its carrying capacity of approximately 1,000 seals (Jeffries et al., 2003). Harbor seals have been consistently sighted during Navy surveys, found in all marine habitats including nearshore waters and deeper water, and have been observed hauled out on manmade objects such as buoys (Agness and Tannenbaum, 2009; Tannenbaum et al., 2009, 2011). Harbor seals were commonly observed in the water during monitoring conducted for other projects at NBKB in 2011-13 (HDR, 2012a, 2012b; Hart Crowser, 2013).

    The project area is not known as a regular pupping or haul-out site, as harbor seals in Hood Canal prefer river deltas and exposed tidal areas (London, 2006). The closest haul-out to the project area is approximately 16 km southwest of NBKB at Dosewallips River mouth, outside the potential area of effect for this project (see Figure 4-1 of the Navy's application). However, recent observations have shown that harbor seals frequently haul-out opportunistically along the NBKB waterfront (though not on many of the larger structures, which are inaccessible to harbor seals, or on docked submarines, which are favored by sea lions) and that pupping does occur along the NBKB waterfront. Pupping has been observed on the NBKB waterfront at Carderock Pier and Service Pier (both locations over a mile south of the project site), and a harbor seal neonate was observed on a small floating dock near the project site in 2013. Evidence of pupping has been observed in other locations, and Navy biologists now believe that pupping may occur regularly at the Service Pier. During most of the year, all age and sex classes (except neonates) occur in the project area throughout the period of construction activity. Despite evidence of pupping, harbor seal neonates would not generally be expected to be present during pile driving.

    California Sea Lion

    California sea lions range from the Gulf of California north to the Gulf of Alaska, with breeding areas located in the Gulf of California, western Baja California, and southern California. Five genetically distinct geographic populations have been identified: (1) Pacific temperate, (2) Pacific subtropical, and (3-5) southern, central, and northern Gulf of California (Schramm et al., 2009). Rookeries for the Pacific temperate population are found within U.S. waters and just south of the U.S.-Mexico border, and animals belonging to this population may be found from the Gulf of Alaska to Mexican waters off Baja California. For management purposes, a stock of California sea lions comprising those animals at rookeries within the U.S. is defined (i.e., the U.S. stock of California sea lions) (Carretta et al., 2014). Pup production at the Coronado Islands rookery in Mexican waters is considered an insignificant contribution to the overall size of the Pacific temperate population (Lowry and Maravilla-Chavez, 2005).

    Trends in pup counts from 1975 through 2008 have been assessed for four rookeries in southern California and for haul-outs in central and northern California. During this time period counts of pups increased at an annual rate of 5.4 percent, excluding six El Niño years when pup production declined dramatically before quickly rebounding (Carretta et al., 2014). The maximum population growth rate was 9.2 percent when pup counts from the El Niño years were removed. There are indications that the California sea lion may have reached or is approaching carrying capacity, although more data are needed to confirm that leveling in growth persists (Carretta et al., 2014).

    Sea lion mortality has been linked to the algal-produced neurotoxin domoic acid (Scholin et al., 2000). Future mortality may be expected to occur, due to the sporadic occurrence of such harmful algal blooms. There is currently an Unusual Mortality Event (UME) declaration in effect for California sea lions. Beginning in January 2013, elevated strandings of California sea lion pups have been observed in southern California, with live sea lion strandings nearly three times higher than the historical average. Findings to date indicate that a likely contributor to the large number of stranded, malnourished pups was a change in the availability of sea lion prey for nursing mothers, especially sardines. The causes and mechanisms of this UME remain under investigation (www.nmfs.noaa.gov/pr/health/mmume/californiasealions2013.htm; accessed March 28, 2015).

    An estimated 3,000 to 5,000 California sea lions migrate northward along the coast to central and northern California, Oregon, Washington, and Vancouver Island during the non-breeding season from September to May (Jeffries et al., 2000) and return south the following spring (Mate, 1975; Bonnell et al., 1983). In past years, peak numbers of up to 1,000 California sea lions occur in Puget Sound (including Hood Canal) during this time period (Jeffries et al., 2000). Given the overall population increase, it is likely that seasonal occurrence in Puget Sound has also increased.

    California sea lions are present in Hood Canal during much of the year with the exception of mid-June through August, and occur regularly at NBKB, as observed during Navy waterfront surveys conducted from April 2008 through December 2013 (DoN, 2013). They are known to utilize a diversity of man-made structures for hauling out (Riedman, 1990) and, although there are no regular California sea lion haul-outs known within the Hood Canal (Jeffries et al., 2000), they are frequently observed hauled out at several opportune areas at NBKB (e.g., submarines, floating security fence, barges). All documented instances of California sea lions hauling out at NBKB have been on submarines docked at Delta Pier, where a maximum of 122 California sea lions have been observed at any one time (DoN, 2013), and on pontoons of the NBKB floating security fence.

    Killer Whale

    Killer whales are one of the most cosmopolitan marine mammals, found in all oceans with no apparent restrictions on temperature or depth, although they do occur at higher densities in colder, more productive waters at high latitudes and are more common in nearshore waters (Leatherwood and Dahlheim, 1978; Forney and Wade, 2006). Killer whales are found throu