Federal Register Vol. 80, No.87,

Federal Register Volume 80, Issue 87 (May 6, 2015)

Page Range25897-26180
FR Document

Current View
Page and SubjectPDF
80 FR 26179 - Public Service Recognition Week, 2015PDF
80 FR 26175 - National Small Business Week, 2015PDF
80 FR 26094 - Sunshine Act MeetingPDF
80 FR 26099 - Sunshine Act Meetings; National Science BoardPDF
80 FR 25994 - General Services Administration Acquisition Regulation (GSAR); Transactional Data Reporting; Extension of Time for CommentsPDF
80 FR 26032 - California State Nonroad Engine Pollution Control Standards; Amendments to Spark Ignition Marine Engine and Boat Regulations; Notice of DecisionPDF
80 FR 25946 - Bacillus thuringiensis Cry1A.105 Protein in Soybean; Exemption From the Requirement of a TolerancePDF
80 FR 26003 - Certain Circular Welded Non-Alloy Steel Pipe from Mexico: Rescission of Antidumping Duty Administrative Review; 2013-2014PDF
80 FR 26010 - Termination of Environmental Impact Statement for the Gray's Beach Restoration Project, Waikiki, Island of Oahu, HawaiiPDF
80 FR 26030 - Notice of Extension of Public Comment Period for the Preliminary Designation of Certain Stormwater Discharges in the State of New Mexico Under the National Pollutant Discharge Elimination System of the Clean Water ActPDF
80 FR 26048 - Notice of Agreements FiledPDF
80 FR 26041 - California State Nonroad Engine Pollution Control Standards; Small Off-Road Engines Regulations; Notice of DecisionPDF
80 FR 26142 - Notice of Buy America WaiverPDF
80 FR 26133 - Qualification of Drivers; Exemption Applications; Diabetes MellitusPDF
80 FR 25997 - Notice of Request To Extend an Information Collection: (Consumer Complaint Monitoring System and the Food Safety Mobile Questionnaire)PDF
80 FR 25996 - Information Collection Request; Request for Aerial PhotographyPDF
80 FR 26139 - Qualification of Drivers; Exemption Applications; VisionPDF
80 FR 26131 - Qualification of Drivers; Exemption Applications; VisionPDF
80 FR 26046 - Information Collection Being Reviewed by the Federal Communications Commission Under Delegated AuthorityPDF
80 FR 26047 - Information Collection Being Reviewed by the Federal Communications CommissionPDF
80 FR 25967 - Fisheries of the Economic Exclusive Zone Off Alaska; Groundfish Fishery by Non-Rockfish Program Catcher Vessels Using Trawl Gear in the Western and Central Regulatory Area of the Gulf of AlaskaPDF
80 FR 26050 - Proposed Agency Information Collection Activities: Comment RequestPDF
80 FR 26144 - Proposed Collection; Comment Request for Form 4810PDF
80 FR 26145 - Proposed Collection; Comment Request for Form 1098-CPDF
80 FR 26146 - Proposed Collection; Comment Request for Form 14693PDF
80 FR 26012 - The Historically Black Colleges and Universities Capital Financing Advisory BoardPDF
80 FR 25966 - Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2015 Commercial Accountability Measure and Closure for South Atlantic Gray TriggerfishPDF
80 FR 26146 - Proposed Collection: Comment Request for Form 4670PDF
80 FR 26147 - Treasury Directive 75-02 and Directive Publication 75-02, Department of the Treasury National Environmental Policy Act (NEPA) ProgramPDF
80 FR 25970 - Qualifying Income From Activities of Publicly Traded Partnerships With Respect to Minerals or Natural ResourcesPDF
80 FR 26049 - Formations of, Acquisitions by, and Mergers of Bank Holding CompaniesPDF
80 FR 26049 - Notice of Proposals To Engage in or To Acquire Companies Engaged in Permissible Nonbanking ActivitiesPDF
80 FR 26049 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding CompanyPDF
80 FR 26089 - Notice of Proposed Information Collection; Request for Comments for 1029-0129PDF
80 FR 26106 - Syntax, LLC and Syntax ETF Trust; Notice of ApplicationPDF
80 FR 26114 - TCW Direct Lending LLC, et al.; Notice of ApplicationPDF
80 FR 26090 - Notice of Proposed Information Collection; Request for Comments for 1029-0059PDF
80 FR 26007 - Broadband Opportunity Council WebinarPDF
80 FR 26011 - Secretarial Authorization for a Member of the Department of the Navy To Serve on the Board of Directors, Navy-Marine Corps Relief SocietyPDF
80 FR 26018 - Notice of Commission Staff AttendancePDF
80 FR 26026 - Combined Notice of Filings #1PDF
80 FR 26021 - TransCanada Hydro Northeast, Inc.; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and ProtestsPDF
80 FR 26012 - Pacific Gas and Electric Company; Notice Of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and ProtestsPDF
80 FR 26014 - Arrow Energy RRH, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
80 FR 26014 - Kiyoshi Technologies, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
80 FR 26024 - Chevron U.S.A. Inc.; Notice of Petition for Declaratory OrderPDF
80 FR 26019 - Northern Natural Gas Company; Notice of Withdrawal of Staff Protest to Proposed Blanket Certificate ActivityPDF
80 FR 26028 - Combined Notice of Filings #1PDF
80 FR 26014 - Minneapolis Lease Housing Associates IV, Limited Partnership; Notice of Revised Restricted Service List for a Programmatic Agreement for Managing Properties Included In or Eligible for Inclusion in the National Register of Historic PlacesPDF
80 FR 26023 - Willow Creek Hydro, LLC; Notice of Termination Of License (Minor Project) by Implied Surrender and Soliciting Comments and ProtestsPDF
80 FR 26029 - Trafalgar Power, Inc. Ampersand Forestport Hydro, LLC; Notice of Application for Transfer of License and Soliciting Comments, Motions To Intervene, and ProtestsPDF
80 FR 26022 - Pacific Gas and Electric Company; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and ProtestsPDF
80 FR 26018 - Sacramento Municipal Utility District; Notice of Availability of Environmental AssessmentPDF
80 FR 26017 - Pacific Gas and Electric Company; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and ProtestsPDF
80 FR 26022 - 65HK 8me LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
80 FR 26019 - 67RK 8me LLC; Supplemental Notice that Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
80 FR 26020 - PJM Interconnection, LLC; Notice Inviting Post-Technical Conference CommentsPDF
80 FR 26024 - Rockies Express Pipeline LLC; Notice of Intent To Prepare an Environmental Assessment for the Proposed Rex Zone 3 Capacity Enhancement Project and Request for Comments on Environmental IssuesPDF
80 FR 26015 - National Fuel Gas Supply Corporation and Empire Pipeline, Inc.; Supplemental Notice of Intent To Prepare an Environmental Assessment for the Proposed Northern Access 2016 Project, Request for Comments on Environmental Issues, Notice of Environmental Site Review, and Notice of Public Scoping MeetingPDF
80 FR 26010 - Meeting of the U.S. Naval Academy Board of VisitorsPDF
80 FR 26096 - TÜV SÜD America, Inc.: Application for Expansion of RecognitionPDF
80 FR 26095 - TUV Rheinland of North America, Inc.: Grant of Expansion of RecognitionPDF
80 FR 26097 - Nemko-CCL: Grant of Expansion of RecognitionPDF
80 FR 25924 - Chartering and Field of Membership ManualPDF
80 FR 26105 - Submission for OMB Review; Comments RequestPDF
80 FR 25932 - Corporate Credit UnionsPDF
80 FR 25958 - Medicare Program; Changes to the Requirements for Part D PrescribersPDF
80 FR 26143 - Notice and Request for CommentsPDF
80 FR 26051 - Proposed Data Collection Submitted for Public Comment and RecommendationsPDF
80 FR 26055 - Proposed Data Collection Submitted for Public Comment and RecommendationsPDF
80 FR 26053 - Proposed Data Collection Submitted for Public Comment and RecommendationsPDF
80 FR 26065 - National Institute of Diabetes and Digestive and Kidney Diseases; Notice of Closed MeetingsPDF
80 FR 26057 - Providing Regulatory Submissions in Electronic Format-Certain Human Pharmaceutical Product Applications and Related Submissions Using the Electronic Common Technical Document Specifications; Guidance for Industry; AvailabilityPDF
80 FR 26067 - Proposed Flood Hazard DeterminationsPDF
80 FR 26074 - Final Flood Hazard DeterminationsPDF
80 FR 26074 - Changes in Flood Hazard DeterminationsPDF
80 FR 26080 - Changes in Flood Hazard DeterminationsPDF
80 FR 26070 - Changes in Flood Hazard DeterminationsPDF
80 FR 26078 - Changes in Flood Hazard DeterminationsPDF
80 FR 25995 - Notice of Request for Extension of Approval of an Information Collection; User Fee RegulationsPDF
80 FR 26089 - National Register of Historic Places; Notification of Pending Nominations and Related ActionsPDF
80 FR 25995 - Submission for OMB Review; Comment RequestPDF
80 FR 26086 - Draft General Management Plan/Wilderness Study/Environmental Impact Statement Hawaii Volcanoes National Park, HawaiiPDF
80 FR 26001 - Renewable Energy and Energy Efficiency Advisory CommitteePDF
80 FR 26084 - Intent To Request Renewal From OMB of One Current Public Collection of Information: Department of Homeland Security Traveler Redress Inquiry Program (DHS TRIP)PDF
80 FR 26071 - Agency Information Collection Activities: Proposed Collection; Comment Request, National Fire Department CensusPDF
80 FR 26072 - Proposed Flood Hazard DeterminationsPDF
80 FR 26130 - New York Disaster #NY-00159PDF
80 FR 26066 - Proposed Flood Hazard DeterminationsPDF
80 FR 26131 - Administrative Declaration of a Disaster for the Commonwealth of VirginiaPDF
80 FR 26091 - Certain Television Sets, Television Receivers, Television Tuners, and Components Thereof; Commission Determination to Review in Part a Final Initial Determination; Schedule for Filing Written SubmissionsPDF
80 FR 26131 - Surrender of License of Small Business Investment CompanyPDF
80 FR 26131 - Audit and Financial Management Advisory Committee (AFMAC)PDF
80 FR 25940 - Revisions to Rules of PracticePDF
80 FR 26011 - Agency Information Collection Activities; Comment Request; Migrant Student Information Exchange (MSIX)PDF
80 FR 26008 - Proposed Collection; Comment RequestPDF
80 FR 26001 - Large Power Transformers From the Republic of Korea: Amended Final Results of Antidumping Duty Administrative Review; 2012-2013PDF
80 FR 26121 - Starboard Investment Trust and Foliometrix, LLC; Notice of ApplicationPDF
80 FR 26009 - Proposed Collection; Comment RequestPDF
80 FR 26124 - Self-Regulatory Organizations; Chicago Board Options Exchange, Incorporated; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Amend the Fees SchedulePDF
80 FR 26127 - Self-Regulatory Organizations; The Options Clearing Corporation; Order Approving Proposed Rule Change Concerning the Provision of Clearance and Settlement Services for Energy Futures and Options on Energy FuturesPDF
80 FR 26118 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Filing of Proposed Rule Change Amending Sections 312.03(b) and 312.04 of the NYSE Listed Company Manual To Exempt Early Stage Companies From Having To Obtain Shareholder Approval Before Issuing Shares for Cash to Related Parties, Affiliates of Related Parties or Entities in Which a Related Party has a Substantial InterestPDF
80 FR 26099 - Notice of Intent To Seek Approval To Extend an Information CollectionPDF
80 FR 26004 - Prospective Grant of Exclusive Patent LicensePDF
80 FR 26064 - Center for Scientific Review; Notice of Closed MeetingsPDF
80 FR 26099 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
80 FR 26100 - Duke Energy Florida, Inc.; Crystal River Nuclear Generating Plant, Unit 3PDF
80 FR 26104 - Nuclear Innovation North America LLC; South Texas Project, Units 3 and 4PDF
80 FR 25943 - Defensin Proteins (SoD2 and SoD7) Derived From Spinach (Spinacia oleracea L.) in Citrus Plants; Temporary Exemption From the Requirement of a TolerancePDF
80 FR 26030 - Pesticide Product Registration; Receipt of Applications for New UsesPDF
80 FR 26061 - Leveraging Existing Clinical Data for Extrapolation to Pediatric Uses of Medical Devices; Draft Guidance for Industry and Food and Drug Administration Staff; AvailabilityPDF
80 FR 26062 - Administrative Applications and the Phased Review Process; Guidance for Industry; AvailabilityPDF
80 FR 26058 - Waiver of In Vivo Bioavailability and Bioequivalence Studies for Immediate-Release Solid Oral Dosage Forms Based on a Biopharmaceutics Classification System; Draft Guidance for Industry; AvailabilityPDF
80 FR 26063 - Bioequivalence Recommendations for Clozapine Orally Disintegrating Tablets/Oral; Draft Guidance for Industry; AvailabilityPDF
80 FR 26059 - Withdrawal of Draft Guidance Documents Published Before December 31, 2013PDF
80 FR 25999 - Notice of Proposed Changes to the National Handbook of Conservation Practices for the Natural Resources Conservation ServicePDF
80 FR 25977 - 911 Call-Forwarding Requirements for Non-Service-Initialized PhonesPDF
80 FR 25989 - Modernizing Common Carrier RulesPDF
80 FR 26004 - NOAA RESTORE Act Science Program Science PlanPDF
80 FR 25969 - Clarification of United States Antitrust Laws, Immunity, and Liability Under Marketing Order ProgramsPDF
80 FR 25897 - National Organic Program Regulations; Section 610 ReviewPDF
80 FR 25901 - Final Affordability Determination-Energy Efficiency StandardsPDF
80 FR 25953 - Fenazaquin; Pesticide TolerancesPDF
80 FR 26048 - Federal Advisory Committee Act; Technological Advisory CouncilPDF
80 FR 26094 - 176th Meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans; Notice of MeetingPDF
80 FR 26031 - Pesticide Product Registration; Receipt of Applications for New Active IngredientsPDF
80 FR 25950 - 1-Octanol; Exemption From the Requirement of a TolerancePDF
80 FR 26105 - Request for Information: Public Input on the Sustained Assessment Process of the U.S. National Climate AssessmentPDF
80 FR 26084 - Rocky Mountain Arsenal National Wildlife Refuge, Commerce City, CO; Draft Comprehensive Conservation Plan and Environmental Impact StatementPDF
80 FR 25998 - Notice of Request for Applications for the Veterinary Medicine Loan Repayment ProgramPDF
80 FR 26149 - Boating Infrastructure Grant ProgramPDF

Issue

80 87 Wednesday, May 6, 2015 Contents Agricultural Marketing Agricultural Marketing Service RULES National Organic Program Regulations: Section 610 Review, 25897-25901 2015-10446 PROPOSED RULES United States Antitrust Laws, Immunity, and Liability under Marketing Order Programs, 25969-25970 2015-10447 Agriculture Agriculture Department See

Agricultural Marketing Service

See

Animal and Plant Health Inspection Service

See

Farm Service Agency

See

Food Safety and Inspection Service

See

National Institute of Food and Agriculture

See

Natural Resources Conservation Service

See

Rural Utilities Service

RULES Final Affordability Determination Energy Efficiency Standards, 25901-25924 2015-10380 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 25995 2015-10529
Animal Animal and Plant Health Inspection Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: User Fee Regulations, 25995-25996 2015-10531 Centers Disease Centers for Disease Control and Prevention NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26051-26056 2015-10541 2015-10542 2015-10543 Centers Medicare Centers for Medicare & Medicaid Services RULES Medicare Programs: Changes to the Requirements for Part D Prescribers, 25958-25966 2015-10545 Commerce Commerce Department See

International Trade Administration

See

National Institute of Standards and Technology

See

National Oceanic and Atmospheric Administration

See

National Telecommunications and Information Administration

Defense Department Defense Department See

Engineers Corps

See

Navy Department

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26008-26010 2015-10509 2015-10510 2015-10513
Education Department Education Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Migrant Student Information Exchange, 26011-26012 2015-10514 Meetings: The Historically Black Colleges and Universities Capital Financing Advisory Board, 26012 2015-10596 Employee Benefits Employee Benefits Security Administration NOTICES Meetings: Advisory Council on Employee Welfare and Pension Benefit Plans, 26094-26095 2015-10369 Energy Department Energy Department See

Federal Energy Regulatory Commission

Engineers Engineers Corps NOTICES Environmental Impact Statements; Availability, etc.: Gray's Beach Restoration Project, Waikiki, Island of Oahu, HI; Withdrawal, 26010 2015-10618 Environmental Protection Environmental Protection Agency RULES Pesticide Tolerances: Fenazaquin, 25953-25958 2015-10375 Tolerance Requirements; Exemptions: 1-Octanol, 25950-25953 2015-10364 Bacillus thuringiensis Cry1A.105 Protein in Soybean, 25946-25950 2015-10624 Defensin Proteins derived from spinach in Citrus Plants, 25943-25946 2015-10486 NOTICES California State Nonroad Engine Pollution Control Standards: Small Off-Road Engines, 26041-26046 2015-10610 Spark Ignition Marine Engine and Boat Regulations, 26032-26041 2015-10632 Pesticide Product Registrations: Applications for New Active Ingredients, 26031-26032 2015-10368 Applications for New Uses, 26030-26031 2015-10483 Preliminary Designation of Certain Stormwater Discharges in the State of New Mexico, 26030 2015-10617 Farm Service Farm Service Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Request for Aerial Photography, 25996-25997 2015-10606 Federal Communications Federal Communications Commission PROPOSED RULES 911 Call-Forwarding Requirements for Non-Service-Initialized Phones, 25977-25989 2015-10472 Modernizing Common Carrier Rules, 25989-25994 2015-10470 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26046-26048 2015-10602 2015-10603 Meetings: Technological Advisory Council, 26048 2015-10370 Federal Emergency Federal Emergency Management Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: National Fire Department Census, 26071-26072 2015-10525 Flood Hazard Determinations, 26074 2015-10536 Flood Hazard Determinations; Changes, 26070-26071, 26074-26084 2015-10532 2015-10533 2015-10534 2015-10535 Flood Hazard Determinations; Proposals, 26066-26070, 26072-26074 2015-10522 2015-10524 2015-10537 Federal Energy Federal Energy Regulatory Commission NOTICES Applications: Pacific Gas and Electric Co., 26012-26013, 26017-26018, 26022 2015-10562 2015-10564 2015-10573 TransCanada Hydro Northeast, Inc., 26021-26022 2015-10574 Combined Filings, 26026-26029 2015-10568 2015-10576 Environmental Assessments; Availability, etc.: National Fuel Gas Supply Corp. and Empire Pipeline, Inc.; Northern Access 2016 Project, 26015-26017 2015-10557 Rockies Express Pipeline LLC REX Zone 3 Capacity Enhancement Project, 26024-26026 2015-10558 Sacramento Municipal Utility District Upper American River Hydroelectric Project, 26018 2015-10563 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: 65HK 8me LLC, 26022-26023 2015-10561 67RK 8me LLC, 26019 2015-10560 Arrow Energy RRH, LLC, 26014-26015 2015-10572 Kiyoshi Technologies, LLC, 26014 2015-10571 License Terminations: Willow Creek Hydro, LLC, 26023-26024 2015-10566 License Transfer Applications: Trafalgar Power, Inc.; Ampersand Forestport Hydro, LLC, 26029-26030 2015-10565 Petitions for Declaratory Orders: Chevron U.S.A. Inc., 26024 2015-10570 Requests under Blanket Authorizations: Northern Natural Gas Co.; Staff Protests; Withdrawal, 26019-26020 2015-10569 Restricted Service Lists: Minneapolis Lease Housing Associates IV, LP, Minnesota A-Mill Artist Lofts Hydroelectric Project, 26014 2015-10567 Staff Attendances, 26018-26019 2015-10577 Technical Conferences PJM Interconnection, LLC; Comment Requests, 26020-26021 2015-10559 Federal Maritime Federal Maritime Commission NOTICES Agreements Filed, 26048-26049 2015-10611 Federal Motor Federal Motor Carrier Safety Administration NOTICES Qualification of Drivers; Exemption Applications: Diabetes Mellitus, 26133-26139 2015-10608 Vision, 26131-26133, 26139-26142 2015-10604 2015-10605 Federal Reserve Federal Reserve System NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26050-26051 2015-10600 Changes in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Company, 26049 2015-10589 Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 26049-26050 2015-10591 Proposals to Engage in or to Acquire Companies Engaged in Permissible Nonbanking Activities, 26049 2015-10590 Federal Trade Federal Trade Commission RULES Rules of Practice, 25940-25943 2015-10517 Fish Fish and Wildlife Service RULES Boating Infrastructure Grant Program, 26150-26174 2015-09961 NOTICES Environmental Impact Statements; Availability, etc.: Rocky Mountain Arsenal National Wildlife Refuge, Commerce City, CO, Comprehensive Conservation Plan, 26084-26086 2015-10326 Food and Drug Food and Drug Administration NOTICES Guidance: Administrative Applications and the Phased Review Process, 26062-26063 2015-10480 Bioequivalence Recommendations for Clozapine Orally Disintegrating Tablets/Oral, 26063-26064 2015-10478 Leveraging Existing Clinical Data for Extrapolation to Pediatric Uses of Medical Devices, 26061-26062 2015-10482 Providing Regulatory Submissions in Electronic Format—Certain Human Pharmaceutical Product Applications and Related Submissions Using the Electronic Common Technical Document Specifications, 26057-26058 2015-10539 Waiver of In Vivo Bioavailability and Bioequivalence Studies for Immediate-Release Solid Oral Dosage Forms Based on a Biopharmaceutics Classification System, 26058-26059 2015-10479 Withdrawal of Guidance Published Before December 31, 2013, 26059-26061 2015-10477 Food Safety Food Safety and Inspection Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Consumer Complaint Monitoring System and the Food Safety Mobile Questionnaire, 25997-25998 2015-10607 Foreign Claims Foreign Claims Settlement Commission NOTICES Meetings; Sunshine Act, 26094 2015-11037 General Services General Services Administration PROPOSED RULES General Services Administration Acquisition Regulations: Transactional Data Reporting; Extension of Time for Comments, 25994 2015-10637 Health and Human Health and Human Services Department See

Centers for Disease Control and Prevention

See

Centers for Medicare & Medicaid Services

See

Food and Drug Administration

See

National Institutes of Health

Homeland Homeland Security Department See

Federal Emergency Management Agency

See

Transportation Security Administration

Housing Housing and Urban Development Department RULES Final Affordability Determination - Energy Efficiency Standards, 25901-25924 2015-10380 Interior Interior Department See

Fish and Wildlife Service

See

National Park Service

See

Surface Mining Reclamation and Enforcement Office

Internal Revenue Internal Revenue Service PROPOSED RULES Qualifying Income from Activities of Publicly Traded Partnerships with Respect to Minerals or Natural Resources, 25970-25977 2015-10592 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26144-26147 2015-10594 2015-10597 2015-10598 2015-10599 International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Circular Welded Non-Alloy Steel Pipe from Mexico, 26003-26004 2015-10623 Large Power Transformers from the Republic of Korea, 26001-26003 2015-10512 Meetings: Renewable Energy and Energy Efficiency Advisory Committee, 26001 2015-10527 International Trade Com International Trade Commission NOTICES Investigations; Determinations, Modifications, and Rulings, etc.: Television Sets, Television Receivers, Television Tuners, and Components Thereof, 26091-26094 2015-10520 Justice Department Justice Department See

Foreign Claims Settlement Commission

Labor Department Labor Department See

Employee Benefits Security Administration

See

Occupational Safety and Health Administration

National Archives National Archives and Records Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26099 2015-10495 National Credit National Credit Union Administration RULES Chartering and Field of Membership Manual, 25924-25931 2015-10548 Corporate Credit Unions, 25932-25939 2015-10546 National Highway National Highway Traffic Safety Administration NOTICES Buy America Waivers, 26142-26143 2015-10609 National Institute Food National Institute of Food and Agriculture NOTICES Applications: Veterinary Medicine Loan Repayment Program, 25998-25999 2015-10287 National Institute National Institute of Standards and Technology NOTICES Exclusive Patent Licenses, 26004 2015-10497 National Institute National Institutes of Health NOTICES Meetings: Center for Scientific Review, 26064-26065 2015-10496 National Institute of Diabetes and Digestive and Kidney Diseases, 26065 2015-10540 National Oceanic National Oceanic and Atmospheric Administration RULES Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic: South Atlantic Gray Triggerfish; Commercial Accountability Measure and Closure, 25966-25967 2015-10595 Fisheries of the Economic Exclusive Zone Off Alaska: Groundfish Fishery by Non-Rockfish Program Catcher Vessels Using Trawl Gear in the Western and Central Regulatory Area of the Gulf of Alaska, 25967-25968 2015-10601 NOTICES NOAA RESTORE Act Science Program Science Plan, 26004-26007 2015-10453 National Park National Park Service NOTICES Environmental Impact Statements; Availability, etc.: General Management Plan/Wilderness Study, Hawaii Volcanoes National Park, HI, 26086-26089 2015-10528 National Register of Historic Places: Pending Nominations and Related Actions, 26089 2015-10530 National Science National Science Foundation NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26099-26100 2015-10500 Meetings; Sunshine Act, 26099 2015-10961 National Telecommunications National Telecommunications and Information Administration NOTICES Meetings: Broadband Opportunity Council Webinar, 26007-26008 2015-10580 National Resources Natural Resources Conservation Service NOTICES Proposed Changes to the National Handbook of Conservation Practices, 25999-26001 2015-10476 Navy Navy Department NOTICES Meetings: U.S. Naval Academy Board of Visitors, 26010-26011 2015-10556 Secretarial Authorization for Navy Department Member to Serve on Board of Directors, Navy-Marine Corps Relief Society, 26011 2015-10578 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Combined Licenses: Nuclear Innovation North America LLC; South Texas Project, Units 3 and 4, 26104-26105 2015-10492 Exemptions: Duke Energy Florida, Inc., Crystal River Nuclear Generating Plant, Unit 3, 26100-26104 2015-10494 Occupational Safety Health Adm Occupational Safety and Health Administration NOTICES Expansions of Recognition as a Nationally Recognized Testing Laboratory: Nemko-CCL, 26097-26098 2015-10549 TUV Rheinland of North America, Inc., 26095-26096 2015-10550 TUV SUD America, Inc., 26096-26097 2015-10551 Overseas Overseas Private Investment Corporation NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26105 2015-10547 Presidential Documents Presidential Documents PROCLAMATIONS Special Observances: National Small Business Week (Proc. 9270), 26175-26178 2015-11103 Public Service Recognition Week (Proc. 9271), 26179-26180 2015-11109 Rural Utilities Rural Utilities Service NOTICES Meetings: Broadband Opportunity Council Webinar, 26007-26008 2015-10580 Science Technology Science and Technology Policy Office NOTICES Requests for Information: Sustained Assessment Process of the U.S. National Climate Assessment, 26105-26106 2015-10352 Securities Securities and Exchange Commission NOTICES Applications: Starboard Investment Trust and Foliometrix, LLC, 26121-26124 2015-10511 Syntax, LLC and Syntax ETF Trust, 26106-26114 2015-10586 TCW Direct Lending, LLC, et al., 26114-26118 2015-10585 Self-Regulatory Organizations; Proposed Rule Changes: Chicago Board Options Exchange, Inc., 26124-26127 2015-10505 New York Stock Exchange, LLC, 26118-26121 2015-10503 Options Clearing Corp., 26127-26130 2015-10504 Small Business Small Business Administration NOTICES Disaster Declarations: New York, 26130 2015-10523 Virginia, 26131 2015-10521 Meetings: Audit and Financial Management Advisory Committee, 26131 2015-10518 Surrender of Licenses: EGL NatWest Equity Partners USA, LP, 26131 2015-10519 Surface Mining Surface Mining Reclamation and Enforcement Office NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 26089-26091 2015-10582 2015-10587 Surface Transportation Surface Transportation Board NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Notifications of Trails Act Agreement and Substitute Sponsorship, 26143-26144 2015-10544 Transportation Department Transportation Department See

Federal Motor Carrier Safety Administration

See

National Highway Traffic Safety Administration

See

Surface Transportation Board

Security Transportation Security Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Department of Homeland Security Traveler Redress Inquiry Program, 26084 2015-10526 Treasury Treasury Department See

Internal Revenue Service

NOTICES Final Policy and Procedures for Implementation of the National Environment Policy Act, 26147 2015-10593
Separate Parts In This Issue Part II Interior Department, Fish and Wildlife Service, 26150-26174 2015-09961 Part III Presidential Documents, 26175-26180 2015-11103 2015-11109 Reader Aids

Consult the Reader Aids section at the end of this page for phone numbers, online resources, finding aids, reminders, and notice of recently enacted public laws.

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80 87 Wednesday, May 6, 2015 Rules and Regulations DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 205 [Docket Numbers AMS-NOP-11-0005; AMS-NOP-11-01] National Organic Program Regulations; Section 610 Review AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Confirmation of regulations.

SUMMARY:

This document summarizes the findings of a USDA Agricultural Marketing Service (AMS) review of the National Organic Program (NOP) which is implemented under the Organic Food Production Act (OFPA). The review criteria are stipulated by the Regulatory Flexibility Act (RFA), in section 610. Based upon this review, the AMS has determined that the USDA organic regulations meet the objectives of the OFPA and should continue. Since becoming effective on the October 21, 2002, there have been multiple amendments to the USDA organic regulations. Most of these amendments were additions to or deletions from the National List of Allowed and Prohibited Substances (National List).

DATES:

Effective May 6, 2015.

FOR FURTHER INFORMATION CONTACT:

Interested persons may obtain a copy of the review. Requests for a copy of the review should be sent to Jennifer Tucker, Ph.D., Acting Director, Standards Division, National Organic Program, USDA-AMS-NOP, 1400 Independence Ave. SW., Room 2648-S., Ag Stop 0268, Washington, DC 20250-0268. Telephone: (202) 720-3252, Fax. (202) 205-7808 or email: [email protected], or by accessing the Web site at http://www.ams.usda.gov/nop.

SUPPLEMENTARY INFORMATION:

The National Organic Program (NOP) is authorized by the Organic Foods Protection Act (OFPA) of 1990, as amended (7 U.S.C. 6501-6522). The USDA Agricultural Marketing Service (AMS) administers the NOP. Final regulations implementing the NOP were published December 21, 2000 (65 FR 80548), and became effective on October 21, 2002. Through these regulations, the AMS oversees national standards for the production, handling, and labeling of organically produced agricultural products.

The OFPA authorizes the certification and inspection of crop, wild crop, livestock, or handling operations that label, market or represent agricultural products as organic. The OFPA also provides authorization for the NOP to accredit state and private certifying agents to certify organic crop, wild crop, livestock, or handling operations to the USDA organic regulations in the United States and internationally. Since becoming fully effective in 2002, the USDA organic regulations have been frequently amended. Most of these amendments were changes to the National List of Allowed and Prohibited Substances (National List) in 7 CFR 205.601-205.606.

This National List identifies the synthetic substances that may be used and the nonsynthetic (natural) substances that may not be used in organic production. The National List also identifies synthetic, nonsynthetic nonagricultural, and nonorganic agricultural substances that may be used in organic handling. The OFPA and the NOP regulations, in § 205.105, specifically prohibit the use of any synthetic substance in organic production and handling unless the synthetic substance is on the National List. Section 205.105 also requires that any nonorganic agricultural and any nonsynthetic nonagricultural substance used in organic handling appear on the National List.

Recommendations to amend the National List are developed by the National Organic Standards Board (NOSB), a 15-member advisory board composed of four organic farmers; two organic handlers; one retailer; three experts in environmental protection and resource conservation; three consumer or public interest group members; one expert in toxicology, ecology, or biochemistry and; one certifying agent representative. The NOSB is organized under the Federal Advisory Committee Act (5 U.S.C. App. 2 et seq.) to assist in the development of standards for substances to be used or not used in organic production and handling, and to advise the Secretary on any other sections of the USDA organic regulations. NOSB members are nominated by the organic community and selected by the Secretary. The OFPA also requires a review of all substances on the National List within 5 years of their addition or renewal. If a substance is not reviewed by the NOSB and renewed through rulemaking by the USDA within the five year period, its allowance or prohibition on the National List is no longer in effect (7 U.S.C. 6517(e)).

As of January 2, 2014, there are 27,108 producer and handler operations certified to the USDA organic regulations. Some of these certified operations are certified as “grower groups,” certified as a single entity, but consisting of groups of ten to thousands of small organic producers. The USDA organic regulations, as authorized by the OFPA, are implemented and applied uniformly and are designed to benefit all entities, regardless of size.

On March 24, 2006, the AMS published in the Federal Register (71 FR 14827), its schedule to review certain regulations, including the NOP, under criteria contained in section 610 of the RFA (5 U.S.C. 601-612). Because many AMS regulations impact small entities, AMS decided, as a matter of policy, to periodically review certain regulations, irrespective of whether specific regulations meet the threshold requirement for mandatory review established by the RFA.

A Notice of Regulatory Flexibility Act: Section 610 Review of the USDA organic regulations was published in the Federal Register on February 25, 2011 (76 FR 10527). This notice indicated AMS would implement specific criteria contained in section 610 of the RFA during the review of the USDA organic regulations that have a significant effect on a substantial number of small entities to determine whether any effect can be decreased or minimized. The purpose of the review is for AMS to determine whether the USDA organic regulations should be continued without change, amended or rescinded, consistent with the objectives of OFPA, to minimize impact on small entities. The review considered these factors: (1) The continued need for the regulations; (2) the nature of complaints or comments received from the public concerning the regulations; (3) the complexity of the regulations; (4) the extent to which the regulations overlap, duplicate, or conflict with other Federal rules, and, to the extent feasible, with State and local government rules; and (5) the length of time since the regulations have been evaluated or the degree to which technology, economic conditions, or other factors have changed in the area affected by the regulations. The notice invited the general public and interested parties to submit written comments on the impact of the regulations on small business.

In response to this notice, the NOP received written comments from five organic producers (two crop, one wild crop, and two livestock), three accredited certifying agents, three handlers (an ingredient supplier, a retailer, and a beverage association), two consumers, and an organic business consultant, for a total of fourteen comments.

Of the fourteen comments received, eight commenters specifically addressed the need for the regulations to continue, and not be terminated or rescinded. Five additional commenters proposed amendments or made recommendations about issues for the NOP to consider. One commenter stated that certification of organic products was unfair because of time commitment and expense. This commenter alternatively proposed that conventional operations should be certified to assess inputs used on these operations. Nine commenters described their concerns with the program or described concerns regarding the regulations. Eight commenters specifically addressed the complexity of the regulations either by indicating that the complexity of the regulations can be problematic at times, or that a significant level of complexity is needed to ensure organic product integrity. There were five comments on whether the regulations overlap, duplicate, or conflict with other Federal, State or Local government regulation. Four commenters specifically addressed the RFA section 610 review criteria regarding impacts on small entities as a result of changes in technology, economic conditions, or other factors that may have impacted an area affected by the regulations since the regulations became effective on October 21, 2002.

One commenter, a certifying agent, addressed all of the factors considered in the RFA section 610 review of the USDA organic regulations. Most of the commenters addressed three out of five of the review factors. Comments are categorically grouped and discussed below.

Comments from organic producers supported continuation of the regulations, but some did include concerns with the program or included proposed amendments for improving it. An organic seed producer expressed support for the continuation of the regulations, but suggested that NOP has not adequately enforced the requirement for the use of organic seed when commercially available as required by 7 CFR 205.204(a). This commenter also suggested that some certifying agents may be routinely allowing the use of non-organic seed, even though high quality organic seed is available in commercial quality and quantity. The commenter requested increased enforcement of the organic seed regulation requirements to ensure organic seed is being utilized by organic producers. In response to comments received at public meetings, the NOSB provided the NOP with recommendations that outlined concepts and procedures for determining commercial availability of organic seeds and planting stock. In response, the NOP published final guidance NOP 5029: Seeds, Annual Seedlings, and Planting Stock in Organic Crop Production, in the NOP Program Handbook on February 28, 2013.1 This guidance describes practices for certified operations to use to obtain all organic seeds, annual seedlings, and planting stock in support of their organic production. The guidance also describes the responsibilities of organic operations and certifying agents for sourcing organic seeds and planting stock and emphasizes the utilization of organic seed is a requirement of the regulations.

1 NOP final guidance, instructions, and policy memos can be found in the NOP Program Handbook, available on the NOP Web site at: http://www.ams.usda.gov/NOPProgramHandbook.

A certified organic fruit producer commented on being prevented from using an organic label claim on his organic fruit alcohol product because of added sulfites. The commenter stated that because of the restriction with added sulfites limited for use with only organic grapes, a “made with organic. . .” claim could not be used on the product label. On October 31, 2011, the NOP published Policy Memo 10-2: Sulfur Dioxide in wine made with organic fruit, in the Program Handbook.2 This policy memo stipulates that added sulfites, as sulfur dioxide, can only be used in organic wine made from organic grapes as specified on the National List in § 205.605(b). The allowance for sulfur dioxide on the National List limits the use of sulfur dioxide to only wine made with organic grapes and can only be labeled as “made with organic grapes.” Changing the allowance of sulfur dioxide in organic wine can be considered through submission of a National List petition to amend the annotation, and subsequent rulemaking to amend the regulations. As per 7 CFR 205.607 of the USDA organic regulations, any person may submit a petition to change or amend the National List according to petition procedures published on January 18, 2007 (72 FR 2167).3

2Ibid.

3 Notice of Guidelines on Procedures for Submitting National List Petitions, January 18, 2007, available on the NOP Web site: http://www.ams.usda.gov/AMSv1.0/ams.fetchTemplateData.do?template=TemplateN&navID=NationalOrganicProgram&leftNav=NationalOrganicProgram&page=NOPFilingaPetition&description=Filing%20a%20Petition.

An organic wild crop producer supported continuation of the regulations, concluding there is an ongoing need for Federal regulation and oversight of the term “organic” as it applies to all products being produced and handled organically. The commenter also stated accredited certifying agents should ensure that organic livestock producers are providing organic livestock with organic feed ingredients. The commenter specifically mentioned organic wild harvested kelp. The commenter claimed ensuring the feeding of organic kelp would enhance his organization's opportunity to develop and maintain additional certified organic wild crop harvesting sites for kelp, and would support the growth of the business. On February 28, 2013, the NOP published guidance document NOP 5057: The Use of Kelp in Organic Livestock Feed.4 This guidance establishes that kelp may be certified organic as a wild crop under 7 CFR 205.207 and must be certified organic if used as an ingredient in livestock feed per § 205.237. The guidance applies to all NOP certifying agents that certify kelp and certified organic operations that feed kelp to organic livestock.

4 NOP 5057: The Use of Kelp in Organic Livestock Feed, available in the NOP Program Handbook on the NOP Web site at: http://www.ams.usda.gov/NOPProgramHandbook.

A small livestock producer requested the program increase the $5,000 exemption limit for organic certification. There is an exemption from certification for organic producers and handlers who sell less than $5,000 in organic agricultural products per year (7 U.S.C. 6505; 7 CFR 205.101(a)). The livestock producer pointed out that the OFPA was passed in 1990, and the $5,000 limit has been subject to inflation since 1990. This commenter proposed that the small operation exemption be raised to $10,000 or $20,000. Since the $5,000 exemption from certification is a specific OFPA requirement, an increase in the exemption amount must be enacted through Congress and cannot be amended through the regulatory process.

A veterinarian, who also is an organic egg producer, supports the NOP, stating there is a good system of certifiers and inspectors in place. However, this commenter expressed concern with changes in poultry health care practices and living condition standards being advocated by some organizations. The comments addressed issues on poultry access to pasture, animal behavior, bird stocking rate, age of bird, and temporary confinement. According to the commenter, changes in the organic standards on these issues should be based upon scientific merit, and not on human desires and social interactions. During NOSB deliberations, the NOSB considered technical information on livestock practice standards. In 2009 and 2011, the NOSB forwarded several recommendations on establishing more specific animal welfare requirements. These recommendations addressed issues on animal handling and transport and animal welfare, including stocking rates and livestock health care. The NOP is currently evaluating these recommendations to determine how to effectively process these recommendations through rulemaking.

Three accredited certifying agents provided comments in support of continuation of the regulations. A small accredited certifying agent commented on the burden of the expense of the periodic USDA-required accreditation audits on small organic certifiers and requested that audit fees should be scaled upon the size of the certifier. The two larger certifying agents also commented on the paperwork burden on operations seeking certification or continuing with certification. One certifying agent affirmed the need for regulations as critical to assure integrity and maintain consumer confidence in the organic industry. However, comments received from clients regarding the regulations were mostly concerned with the amount of paperwork required for recordkeeping, which some considered to be excessive and burdensome. This certifying agent stated there is a need to streamline paperwork and recordkeeping requirements for all organic operations. Another certifying agent also addressed the burden faced by certified operations, specifically organic dairy operations complying with pasture practice standards. This commenter stated that the pasture practice standards rule (75 FR 7154) was not needed, was excessively complex, would cause significant adverse effects for many small farms, and would be difficult for certifying agents to effectively implement. The NOP is aware of the commenter's concerns and notes that the pasture practice standards were developed over a period of five years with input of multiple stakeholders. There were a significant number of oral and written responses submitted during public comment periods associated with the development of this rule. The majority of commenters, including many dairy operations, supported the addition of detailed pasture practice standards.

During NOP trainings for accredited certifying agents conducted in 2012 and 2013, the NOP received statements from certifying agents on farmers reporting that they are spending too much of their time completing program forms and maintaining program records. As required in 7 CFR 205.103, recordkeeping is essential to ensure organic operations are implementing required organic practice standards. The NOP has considered how to minimize the regulatory burden when implementing the regulations. As a result, the NOP began implementing an initiative in 2013 to identify and remove barriers to certification, to streamline the certification process, to focus enforcement activities, and to work with organic producers and handlers to correct small issues before they become larger issues. When developing this initiative, the NOP outlined five objectives: (1) Develop efficient processes by eliminating bureaucratic processes that do not contribute to organic integrity; (2) streamline recordkeeping requirements to ensure that required records support organic integrity and are not a barrier for farms and businesses to maintain organic compliance; (3) apply common sense to an operation's organic system plans that clearly capture organic practices; (4) implement fair and focused enforcement; and (5) maintain or improve organic integrity by focusing on factors that impact organic integrity. The NOP continues to work with certifying agents to implement these objectives with regard to the recordkeeping and reporting requirements for certifying agents and organic producers and handlers.

Three organic handlers commented on the RFA Section 610 review. An ingredient processor submitted a comment requesting clarification on why non-organic ethanol is not permitted in the U.S. for use in processing organic products. The processor stated that their product, processed with ethanol, was marketed with an organic label in the European Union (EU), where ethanol is allowed for organic processing in the EU regulations. In the U.S., ethanol is available in certified organic, natural, and synthetic forms. The use of certified organic ethanol would be permitted in the production of the processor's product under the USDA organic regulations. Non-organic ethanol is allowed for use in organic crop and livestock production as a sanitizer. Non-organic ethanol cannot be used in organic processing under the USDA organic regulations since it is not included on the National List in either 7 CFR 205.605 or 7 CFR 205.606. Use of non-organic ethanol in organic processing requires amendment of the National List through the petition process to include non-organic ethanol on the National List, and subsequent rulemaking.

A beverage association comment disagreed with Alcohol, Tobacco Tax, and Trade Bureau (TTB) labeling requirements for wine that requires approval for changes to a vintage year on an organic wine label that was previously approved. This requirement is outside of the scope of the USDA organic regulations. The TTB reviews and approves wine labels, including any requirements for changing the vintage year. Under a Memorandum of Understanding between AMS and TTB, the TTB receives, reviews, and approves or rejects labeling applications for alcohol products bearing an organic claim. TTB has informed the NOP of their change in the TTB list of the allowable revisions that may be made to an approved label without the need for resubmission contained on the TTB Application for and certification of label/bottle approval. TTB removed the caveat that the change in vintage dates did not apply to organic products.

A comment from an organic co-operative retailer supported the continued need for the regulations. The commenter gave a description of the positive impacts of the complexity of the regulation on their business, and emphasized that the regulations do not overlap, duplicate, or conflict with other Federal, state or local rules for the operation.

A comment from a consumer claimed that certification requirements for organic operations are unfair because nonorganic operations are not required to disclose to the public the uses of harmful substances. All food products in the normal stream of commerce are subject to Federal, state, and local laws and regulatory requirements that contribute to maintaining food safety and restrict or prohibit the use of harmful substances.

Another consumer comment expressed support for continuation of the regulations. This commenter chooses organic products to assure that the food is raised humanely and without synthetic ingredients. However, the commenter also expressed concern that the regulations may be more burdensome to small dairy operations. As noted in prior discussion, the NOP started an initiative on 2013 to reduce the regulatory burden on organic operations.

An organic agricultural business expressed strong support for continuation of the regulations. This commenter stated that the regulations need to be routinely amended since organic production is based upon a concept of continual improvement, and the regulation should adhere to this principle. Such amendments should take into account innovations and improvements by organic practitioners. The commenter proposed several amendments to the regulations, some of these proposed amendments were identified as opportunities to decrease regulatory complexity and reduce regulatory burden without sacrificing organic integrity or compromise consumer confidence. A summary of these proposed amendments include:

• The NOP should prohibit blending of organic and non-organic forms of the same ingredient in “made with organic” products. On May 2, 2014, the NOP published final guidance NOP 5032: Products in the “made with Organic * * * Labeling Category to address this issue.5 This guidance describes requirements for products in the “made with organic (specified ingredients or food group(s))” category. This guidance clarifies product composition, labeling claims, use of organic and nonorganic forms of the same ingredient, percentage of organic ingredient statements, and ingredients or food groups in the “made with organic * * *” claim.

5 NOP 5032: Products in the “made with Organic * * * Labeling Category, available in the NOP Program Handbook on the NOP Web site at: http://www.ams.usda.gov/NOPProgramHandbook.

• The regulations should allow the use of non-synthetic substances allowed for use in crop production to control pest infestation in post-harvest handling pest control when preventive practices are ineffective. On April 25, 2014, the NOP published draft guidance, NOP 5023: Substances Used in Post-Harvest Handling of Organic Products.6 This draft guidance describes substances that may be used in post-harvest handling of organic products. The guidance clarifies: (1) What substances may be used; (2) the difference between post-harvest handling of raw agricultural crops and further processing; and (3) the provisions for facility pest management.

6 Draft Guidance NOP 5023: Substances Used in Post-Harvest Handling of Organic Products. NOP draft guidance can be found on the NOP Web site at: http://www.ams.usda.gov/NOPDraftGuidance.

• The NOP should amend 7 CFR 205.237(a) to allow commercial availability to be applied to minor agricultural ingredients fed to organic livestock to alleviate burden on small organic livestock producers. On February 28, 2013, the NOP published NOP 5030, Evaluating Allowed Ingredients and Sources of Vitamins and Minerals For Organic Livestock Feed.7 This guidance clarifies the agricultural, nonsynthetic, and synthetic ingredients permitted in organic livestock feed and also addresses the feed supplements and feed additives that must be reviewed for compliance with regulations. Under the USDA organic regulations, organic producers must provide livestock feed pursuant to 7 CFR 205.237. Section 205.237 states that agricultural ingredients included in the ingredients list for livestock feed products must be organically produced.

7 NOP 5030: Evaluating Allowed Ingredients and Sources of Vitamins and Minerals For Organic Livestock Feed, available in the NOP Program Handbook on the NOP Web site at: http://www.ams.usda.gov/NOPProgramHandbook.

• The NOP should amend the National List petition procedures and processes as they are complicated, costly, lengthy, arbitrary, and may not provide due process to the petitioners. In May 2014, the NOP in collaboration with the NOSB initiated a process to revise National List petition procedures in an effort to make the petition submission procedures clearer for petitioners. The revised procedures will clarify how to submit complete petitions, explain to petitioners what to expect in the petition process, and make the review process for the NOSB clearer and more consistent.

• The NOP should increase collaboration between NOP and other government agencies with authority related to organic agricultural production. Historically, NOP has established and maintained collaborative interactions with the U.S. Food and Drug Administration (FDA) on organic food processing and handling and livestock healthcare products and feed ingredients; with the U.S. Environmental Protection Agency (EPA) on pest control ingredients and applications; with TTB on labeling of organic alcohol beverages; and with the Federal Trade Commission on product labeling. As part of these interactions, NOP continues to collaborate regarding agricultural products that fall within the scope of organic certification.

• The NOP should alter restrictions on the use of plastic mulch (§ 205.601(b)(2)(ii)) so that biodegradable plastic mulch could remain on the soil beyond harvest or end of the growing season. The commenter indicated there is no listing for mulch made from biodegradable plastic on the National List, and a petition would have to be submitted to add this new material. In August 2013, the NOP published proposed rule (78 FR 52100), based upon NOSB recommendations, which would add a new definition for biodegradable biobased mulch film to 7 CFR 205.2 and add biodegradable biobased mulch film to the National List in 7 CFR 205.601 for use in organic crop production.8

8 National Organic Program; Proposed Amendments to the National List of Allowed and Prohibited Substances (Crops and Processing); Proposed rule; Available on the NOP Web site: http://www.ams.usda.gov/AMSv1.0/getfile?dDocName=STELPRDC5104847

Upon the completion of the RFA Section 610 review of the USDA organic regulations, AMS has determined that there is no critical need to amend the regulations. Since becoming effective on the October 21, 2002, there have been multiple amendments of the regulations, mostly to the National List. Some of these amendments have reduced the burden on small operations, while some amendments, that have served to protect organic integrity and support consumer confidence, may have increased the burden on small operations. Based on the findings from the review, AMS has determined that the NOP is not overly complex and does not significantly overlap, or conflict with other regulations.

Based upon the review, AMS has determined that the NOP should continue. The USDA organic regulations are dynamic in nature and the NOP continues to collaborate with the NOSB and the organic community on rulemaking and development of guidance documents, such as recently published rulemaking on pesticide residue testing, and published guidance on composting, wild crop harvesting, handling unpackaged organic goods, and the list of permitted substances for crops.

Authority:

7 U.S.C. 6501-6522.

Dated: April 30, 2015. Rex A. Barnes, Associate Administrator, Agricultural Marketing Service.
[FR Doc. 2015-10446 Filed 5-5-15; 8:45 am] BILLING CODE 3410-02-P
DEPARTMENT OF AGRICULTURE 7 CFR Chapter 0 RIN 0575-ZA00 DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Parts 91 and 93 [HUD FR-5647-N-02] RIN 2501-ZA01 Final Affordability Determination—Energy Efficiency Standards AGENCY:

U.S. Department of Housing and Urban Development and U.S. Department of Agriculture.

ACTION:

Notice of Final Determination.

SUMMARY:

The U.S. Department of Housing and Urban Development (HUD) and the U.S. Department of Agriculture (USDA) have determined that adoption of the 2009 edition of the International Energy Conservation Code (IECC) for single family homes and the 2007 edition of the American Society of Heating, Refrigerating and Air-conditioning Engineers (ASHRAE) 90.1 for multifamily buildings will not negatively affect the affordability and availability of certain HUD- and USDA-assisted housing specified in section 481 of the Energy and Independence and Security Act of 2007 (EISA). This determination fulfills a statutory requirement established under EISA that HUD and USDA adopt revisions to the 2006 IECC and ASHRAE 90.1-2004 subject to: A determination that the revised codes do not negatively affect the availability or affordability of new construction of single family and multifamily housing covered by EISA; and a determination by the Secretary of Energy that the revised codes “would improve energy efficiency.” For the more recent IECC and ASHRAE codes that have been published since the publication of the 2009 IECC and ASHRAE 90.1-2007, HUD and USDA intend to follow this Notice of Final Determination with an advance notice that addresses the next steps the agencies plan to take on the 2015 IECC and ASHRAE 90.1-2013 codes.

DATES:

This notice of final determination will be effective according to the implementation schedule described herein that commences no earlier than June 5, 2015.

FOR FURTHER INFORMATION CONTACT:

HUD: Rachel Isacoff, Office of Economic Resilience, Department of Housing and Urban Development, 451 7th Street SW., Room 10180, Washington, DC 20410; telephone number 202-402-3710 (this is not a toll-free number). Persons with hearing or speech impairments may access this number through TTY by calling the Federal Relay Service toll-free at 800-877-8339. USDA: Meghan Walsh, Rural Housing Service, Department of Agriculture, 1400 Independence Avenue SW., Room 6900-S, Washington, DC 20250; telephone number 202-205-9590 (this is not a toll-free number).

SUPPLEMENTARY INFORMATION: I. Background A. Statutory Requirements B. HUD and USDA Preliminary Determination C. Public Comments on Preliminary Determination D. Adoption of Preliminary Determination as Final Determination II. HUD-USDA Final Affordability Determination A. Discussion of Market Failures B. 2009 IECC Affordability Determination 1. Current Adoption of the 2009 IECC 2. 2009 IECC Affordability Analysis 3. Cost Effectiveness Analysis and Results 4. Limitations 5. Distributional Impacts on Low-Income Consumers or Low Energy Users 6. Conclusion C. ASHRAE 90.1-2007 Affordability Determination 1. Current Adoption of ASHRAE 90.1-2007 2. ASHRAE 90.1-2007 Affordability Analysis 3. Energy Savings Analysis 4. Cost Effectiveness Analysis and Results 5. Conclusion D. Impact on Availability of Housing 1. Impact of increases in housing prices and hedonic effects 2. Impact of 2009 IECC on Housing Availability 3. Impact of ASHRAE 90.1-2007 on Housing Availability 4. Conclusion E. Implementation Schedule F. Alternative Compliance Paths G. Cost Benefit Analysis 1. Energy Costs and Savings 2. Social Benefits of Energy Standards III. Findings and Certifications A. Environmental Review List of Tables: 1. Current Energy Standards and Incentives for HUD and USDA Programs (New Construction Only) 2. Current Status of IECC Adoption by State 3. Life-cycle Cost (LCC) Savings, Net Positive Cash Flow, and Simple Payback for the 2009 IECC 4. Quintiles of Income Before Taxes and Shares of Average Annual Expenditures 5. Current Status of ASHRAE Code Adoption by State 6. Estimated Costs and Benefits per Dwelling Unit From Adoption of ASHRAE 90.1-2007 7. Estimated Number of HUD- and USDA-Supported Units Potentially Impacted by Adoption of 2009 IECC 8. Estimated Number of HUD-Assisted Units Potentially Impacted by Adoption of ASHRAE 90.1-2007 9. Annualized Value of Reduction in CO2 Emissions Appendices: 1. Covered HUD and USDA Programs 2. Estimated Energy and Cost Savings From Adoption of ASHRAE 90.1-2007 3. Total Development Cost (TDC) Adjustment Factors for States That Have Not Adopted ASHRAE 90.1-2007 4. Estimated Total Costs and Energy Cost Savings From Adoption of 2009 IECC 5. Estimated Total Costs and Energy Cost Savings From Adoption of ASHRAE 90.1-2007 I. Background A. Statutory Requirements

HUD and USDA have a statutory responsibility to adopt minimum energy standards for new construction of certain HUD- and USDA-assisted housing, following procedures established in EISA. Section 481 of EISA amended section 109 of the Cranston-Gonzalez National Affordable Housing Act of 1990 (Cranston-Gonzalez) (42 U.S.C. 12709), which establishes procedures for setting minimum energy standards for certain HUD and USDA programs. The two standards referenced in EISA (the IECC and ASHRAE 90.1) apply to different building types: the IECC standard applies to single family homes and low-rise multifamily buildings (up to three stories), while ASHRAE 90.1 applies to multifamily mid- or high-rise residential buildings (four or more stories).1

1 The IECC addresses both residential and commercial buildings. ASHRAE 90.1 covers commercial buildings only, including multifamily buildings four or more stories above grade. The IECC adopts, by reference, ASHRAE 90.1; that is, compliance with ASHRAE 90.1 qualifies as compliance with the IECC for commercial buildings.

The following HUD and USDA programs are specified in the statute:

(A) New construction of public and assisted housing and single family and multifamily residential housing (other than manufactured homes) subject to mortgages insured under the National Housing Act; 2

2 This subsection of EISA refers to HUD programs only. See Appendix 1 for specific HUD programs covered by the Act.

(B) New construction of single family housing (other than manufactured homes) subject to mortgages insured, guaranteed, or made by the Secretary of Agriculture under title V of the Housing Act of 1949; 3 and,

3 This subsection of EISA refers to USDA programs only. See Appendix 1 for specific USDA programs covered by the Act.

(C) Rehabilitation and new construction of public and assisted housing funded by HOPE VI revitalization grants under section 24 of the United States Housing Act of 1937 (42 U.S.C. 1437v).

In addition to these EISA-specified categories, sections 215(a)(1)(F) and (b)(4) of Cranston-Gonzalez make new construction of rental housing and homeownership housing assisted under the HOME Investment Partnerships Program (HOME) subject to section 109 of Cranston-Gonzalez and, therefore, to section 481 of EISA. From the beginning of the HOME program, the regulation at 24 CFR 92.251 implemented section 109. However, compliance with section 109 of Cranston-Gonzalez was omitted from the July 2013 HOME program final rule because HUD planned to update and implement energy efficiency standards through a separate proposed rule (see the discussion in the preamble to the HOME proposed rule published on December 16, 2011 (76 FR 78344)). Although the energy standards at 24 CFR 92.251(a)(2)(ii) are reserved in the July 2013 HOME final program rule, the statutory requirements of section 109 continue to apply to all newly-constructed housing funded by the HOME program. Therefore, this notice is applicable to the HOME program when the regulations at 24 CFR 92.251 in the 2013 HOME final rule (78 FR 44627) become effective. The HOME program will issue Guidance for HOME Participating Jurisdictions (PJs) that provides notice that the new standard takes effect. A conforming amendment to the HOME regulation will be published at a later date.

Section 109(a) of Cranston Gonzalez, as amended by EISA, required HUD and USDA to collaborate and develop their own energy efficiency building standards if they met or exceeded the 2006 IECC or ASHRAE 90.1-2004, but if the two agencies did not act on this option, EISA specifies that the 2006 IECC and ASHRAE 90.1-2004 standards would apply. The two agencies did not develop independent energy efficiency building standards, and, therefore, the 2006 IECC or ASHRAE 90.1-2004 applied to covered HUD and USDA programs, and the provision of section 109(d) of Cranston-Gonzalez must be followed.

This notice implements section 109(d) of Cranston-Gonzalez, as amended by EISA, which establishes procedures for updating HUD and USDA energy standards, following periodic revisions to the 2006 IECC and ASHRAE 90.1-2004 codes. Specifically, section 109(d) provides that subsequent revisions to the IECC or ASHRAE codes will apply to HUD and/or USDA's programs if: (1) Either agency “make[s] a determination that the revised codes do not negatively affect the availability or affordability” of new construction housing covered by the Act, and (2) the Secretary of Energy has made a determination under section 304 of the Energy Conservation and Production Act (42 U.S.C. 6833) that the revised codes would improve energy efficiency (see 42 U.S.C. 12709(d)). Otherwise, the 2006 IECC and ASHRAE 90.1-2004 will continue to apply.

B. HUD and USDA Preliminary Determination

On April 15, 2014, at 79 FR 21259, HUD and USDA announced in the Federal Register their Preliminary Determination that the 2009 IECC and ASHRAE 90.1-2007 would not negatively affect the affordability and availability of housing covered by the Act. This Preliminary Determination followed the Department of Energy's (DOE) Determination that the 2009 IECC and ASHRAE 90.1-2007 standards would improve energy efficiency.4 The April 15, 2014, HUD-USDA notice solicited public comment on this Preliminary Determination for a period of 45 days, and the public comment period concluded on May 30, 2014. HUD and USDA convened a conference call for interested parties on May 15, 2014, at which the agencies summarized the key features of the notice and answered several questions from participants.

4 See HUD's April 15, 2014 Federal Register notice for additional information about DOE's determination. http://www.thefederalregister.org/fdsys/pkg/FR-2014-04-15/pdf/2014-08562.pdf.

C. Public Comments on Preliminary Determination and HUD Responses 1. Overview of Comments

HUD received 13 public comments, representing 28 organizations or individuals, on this notice. Comments were received from a wide range of stakeholders, including one state (Colorado), the two code bodies represented in this notice (the International Code Council and ASHRAE), as well as several national associations representing mortgage lenders, home builders, environmental and energy efficiency advocates, consumers, State energy offices, insulation and other building product trade associations, and other interested parties. All but two of the comments were from single organizations or individuals. Multiple organizations were represented in two comments, one submitted on behalf of another three organizations, and another on behalf of 16 additional national organizations.

The overwhelming majority of the comments expressed support for HUD's and USDA's Preliminary Determination. Of these supportive comments, most expressed support for HUD's and USDA's methodology and conclusions, but in turn urged HUD and USDA to rapidly move to adopt the more recent IECC or ASHRAE 90.1 codes that have been promulgated since the publication of the 2009 edition of the IECC and the 2007 edition of ASHRAE 90.1 that are addressed in this notice. In addition, several commenters suggested that HUD and USDA allow alternative compliance pathways for these standards through equivalent or higher state standards, or through one or more green building standards that have seen rapid growth in adoption rates in recent years.

Three of the 13 comments expressed concerns or opposition to one or more features of the Preliminary Determination. The concerns raised were in three primary areas: the use of the Social Cost of Carbon (SCC) as an appropriate cost-benefit metric for this determination; the proposed timetable for implementing the proposed standards after a Final Determination is published; and the relatively longer payback periods of 10 or more years estimated by HUD and USDA for adoption of ASHRAE 90.1-2007 in some States.

This discussion of the public comments received on the Preliminary Determination presents the significant issues and questions raised by the commenters.

2. Support for Preliminary Determination

Comment: Support for Preliminary Determination. The large majority of comments supported the Preliminary Determination. These comments generally agreed with HUD's and USDA's methodology in arriving at the determination that the 2009 IECC and ASHRAE 90.1-2007 would not negatively impact the affordability and availability of the housing covered by the Determination.

One commenter noted, for example, “that it is well settled and no longer in dispute that the 2009 IECC, as well as the 2007 ASHRAE 90.1 . . . increase the energy efficiency of homes and buildings constructed to meet them.” The commenter commended HUD and USDA for “an exceptionally thorough and comprehensive review of both the available research and literature relating to the cost effectiveness of building homes and multifamily units to the IECC and/or ASHRAE 90.1,” and pointed out that HUD and USDA had reached the same conclusion as experts and building code authorities in the majority of States: that building single family and multifamily homes to the 2009 IECC is cost-effective, results in greater affordability, and lowers energy use and energy expenses.

The commenter also stressed the importance of assessing affordability on the basis of operating costs as well as the first cost of the home: “if the monthly utility bill is lowered by 10 or 20 percent, as a result of energy efficient code requirements, the home is more affordable, even if the initial cost increases by several thousand dollars, since the increase in the monthly amortized mortgage cost will be less than the decrease in utility costs.”

Another representative comment characterized the HUD and USDA determination as a “comprehensive and robust evaluation of the reasons to adopt the current updated standards under consideration based on the Departments' statutory responsibilities under federal law to establish minimum energy standards.” Another commenter stated that “HUD and USDA's determination . . . is well supported by law and policy.”

Another commenter indicated that recent experience with the adoption of the 2009 IECC and ASHRAE 90.1-2007 codes, as well as with “premium” labels such as ENERGY STAR, offers clear and convincing evidence that the codes do not harm affordability and availability. The commenter noted that “[i]f builders were unable or unwilling to build homes that meet the codes, or buyers were unable or unwilling to pay for them, there would not be new homes in states that have adopted the codes, or new homes with green labels.”

The commenter also provided national data reflecting housing production in the 32 States and the District of Columbia that have adopted the 2009 IECC or a comparable statewide code as follows: 1.6 million residential building permits were issued between when the 2009 IECC went into effect and the end of 2013, with 538,000 permits issued in the 12 months after the 2009 IECC went into effect, compared to 433,000 beforehand-an increase of 24 percent. For ASHRAE 90.1-2007, the commenter provided similar data: 650,000 units were built since the codes were implemented in 37 States and the District of Columbia, 168,000 of them in the first 12 months after the codes were enacted, compared to 109,000 in the previous 12 months. The commenter concludes that “codes do not seem to be harming construction in states that have implemented them,” and also references the significant number of homes (81,000 in 2012 alone) that have been built voluntarily to a higher (ENERGY STAR) standard.

HUD-USDA Response: HUD and USDA acknowledge the support expressed by these commenters for the Preliminary Determination. These comments indicate confidence in HUD and USDA's use of DOE's and the Pacific Northwest National Laboratory's (PNNL's) analysis of the subject codes, and in their overall conclusions regarding the lack of a negative impact that these codes would have on the affordability and availability of housing covered by EISA.

Comment: HUD should proceed quickly to adoption of the more recent IECC/ASHRAE codes. Several commenters who were supportive of the Preliminary Determination also encouraged HUD and USDA to move quickly to adoption of the next or most recent IECC and ASHRAE codes. One commenter urged HUD and USDA to “provide a consistent Federal Government approach” by endorsing ASHRAE 90.1-2010, and to “promptly update their regulations” to ASHRAE 90.1-2013 upon a favorable DOE determination. The commenter noted that “[a] single, consistent U.S. Standard will enable better enforcement and compliance and avoid marketplace confusion, ultimately moving the U.S. toward President Obama's goal of significant improvement in building energy efficiency.”

Another commenter and 16 national consumer, environmental, energy efficiency, or building organizations urged HUD and USDA to finalize this determination and incorporate the codes into their loan processes as soon as possible, and to “move quickly to complete a determination on the 2012 IECC and ASHRAE 90.1-2010, which have already been determined by DOE to save energy, and which have been shown to be very cost-effective.” The commenter also urged HUD and USDA to “help and encourage builders to comply with the new requirements” through education and quality assurance efforts.

HUD-USDA Response: HUD and USDA will address the affordability of the more recent IECC and ASHRAE 90.1 codes in an advance notice in the near future, according to the timetable prescribed in EISA. For adoption or consideration of these codes and future code revisions, HUD and USDA are committed to timely and expeditious compliance with the EISA statutory requirements. However, it is unlikely that HUD and USDA will be able to meet the statutory one-year compliance period prescribed under Cranston-Gonzalez section 109(c) as amended by EISA, because of the time required to do the following: publish a Preliminary Determination, allow for public comments on the Preliminary Determination, and publish a Final Determination along with the requisite clearances by HUD and USDA and the Office of Management and Budget (OMB).

Accordingly, while HUD and USDA will continue to explore ways to comply with the one-year compliance period set forth in section 109(c), HUD and USDA intend to address the next code cycles under the requirements of section 109(d) of Cranston-Gonzalez. Section 109(d) requires that, after failure to comply with section 109(c), the two agencies will conduct an analysis of the impact that the new code will have on the “affordability and availability” of covered housing. As is the case for this Final Determination on the 2009 IECC and ASHRAE 90.1-2007, for future code determinations HUD and USDA will rely on the following reports or notices from DOE and PNNL: (1) An efficiency determination required under Title III of the Energy Conservation and Production Act of 2005; and (2) a subsequent cost analysis by PNNL.

3. Objections To or Concerns With Preliminary Determination

Comment: The payback periods shown for ASHRAE 90.1-2007 that exceed 10 years are too long to require compliance with this standard. One commenter recommends that, while the 2009 IECC shows payback periods of less than 10 years, this is not the case for ASHRAE 90.1-2007. Appendix 4 in the Preliminary Determination showed that six of the 11 states evaluated for ASHRAE 90.1-2007 have payback periods that exceed this period. The commenter also maintains that multifamily rental property investors expect to see annual rental receipts that are approximately 11 percent of the value of the property. This implies a 100 percent increased first cost/11 percent increase in rental receipts or a 9-year simple payback on energy efficiency requirements. If that rate of return is not achieved, then the likelihood of a project being built will be reduced. Paybacks of greater than 9 years may therefore reduce the future availability of multifamily rental properties. Given these “two realities,” the commenter does not support the HUD-USDA finding that compliance with ASHRAE 90.1-2007 will not negatively affect the affordability and availability of housing covered by EISA—at least in those six States with longer payback periods of more than 10 years.

HUD-USDA Response: Note that ASHRAE 90.1-2007 only impacts HUD-insured or -assisted properties; USDA multifamily properties are not covered by EISA. Of the 12 States that have not yet adopted this standard, Appendix 4 of the Preliminary Determination (amended as Table 6 in this Final Determination) showed six States with paybacks of more than 10 years: Hawaii, Colorado, Minnesota, Missouri, Oklahoma, and Tennessee. With the exception of Hawaii, all of these States showed simple paybacks of less than 15 years:

Preliminary Determination—Appendix 4 Estimated Costs and Benefits per Dwelling Unit From Adoption of ASHRAE 90.1-2007 State Incremental cost/unit
  • ($)
  • Energy cost savings/unit
  • ($/year)*
  • Simple payback/unit
  • (years)
  • AK 489 57.68 8.5 AZ 340 52.12 6.5 CO 354 31.96 11.1 HI 476 8.17 58.4 KS 338 59.37 5.7 ME 373 42.66 8.8 MN 413 33.96 12.2 MO 366 26.60 14.3 OK 309 21.96 14.1 SD 317 34.53 9.2 TN 318 25.61 12.5 WY 319 33.09 9.7

    The estimated energy cost savings per unit and simple paybacks provided in this table in the Preliminary Determination used national average prices for natural gas of $1.2201 per therm, and $.0939 per kWh for electricity, using the methodology used by PNNL in their cost determination of ASHRAE 90.1-2007.5 In this Final Determination, HUD and USDA have updated the PNNL methodology by using individualized state-by-state fuel and electricity prices, in order to provide a more current and accurate estimate of cost savings. The updated and revised estimated cost savings and paybacks are now presented in Table 6 of the Final Determination as follows:

    5 Pacific Northwest National Laboratory, Cost Effectiveness and Impact Analysis of Adoption of ASHRAE 90.1-2007 for New York State. (U.S. Department of Energy, PNNL-18552, June 2009). http://www.pnl.gov/main/publications/external/technical_reports/PNNL-18552.pdf.

    Final Determination—Table 6. Estimated Costs and Benefits per Dwelling Unit From Adoption of ASHRAE 90.1-2007 State Incremental cost/unit
  • ($)
  • Energy cost savings/unit
  • ($/year)*
  • Simple payback/unit
  • (years)
  • AK 489 68.95 7.1 AZ 340 76.88 4.4 CO 354 28.70 12.4 HI 476 31.66 15.1 KS 338 80.13 4.2 ME 373 62.95 5.9 MN 413 31.15 13.3 MO 366 36.28 10.1 OK 309 31.79 9.7 SD 317 32.32 9.8 TN 318 30.40 10.5 WY 319 33.38 9.6

    Using individual state-by-state fuel and electricity prices, rather than a national average as used by PNNL, of the 12 States that have not yet adopted ASHRAE 90.1-2007, seven States show simple paybacks of less than 10 years (Alaska, Arizona, Kansas, Maine, Oklahoma, South Dakota, and Wyoming) and four States show paybacks of less than 15 years (Colorado, Minnesota, Missouri, Tennessee). One state (Hawaii) shows a payback of more than 15 years (15.1 years).

    With regard to the five States with paybacks of more than 10 years, while we agree that shorter paybacks are generally better when considering simple payback periods as a measure of cost-effectiveness or affordability, we believe that the 10-year simple payback limit proposed by the commenter is too limiting for the purpose of this analysis, for two reasons. First, the life of the energy efficient equipment or materials installed as a result of complying with ASHRAE 90.1-2007 (e.g., windows, doors, insulation, boilers, etc.) is likely to be significantly longer than 10 years, in some cases for the life of the building; a cost-benefit analysis for these measures indicates a net-positive result over the much longer life of the equipment. Second, as noted in the Preliminary Determination, another important factor is the incremental cost involved; the per-unit costs shown above (in the $300-$400 range) are a small fraction of the Total Development Cost (TDC) per unit.

    In addition, the price-ratio measure referenced by the commenter may mix the expected return on an entire property with the expected return on a particular aspect of the property (the upgraded features). In order to cause a development not to be pursued, the new standard would have to violate the return threshold for the entire property. And, it ignores the possibility that efficiency measures, to some extent, would be internalized in rent receipts.

    To best understand the profitability of multifamily housing, it may be preferable to examine the capitalization rate (rental income less operating costs divided by the market value of the property) rather than the rent-to-price ratio, since the capitalization rate takes into account operating costs and therefore is more likely to reflect the building's energy efficiency than the rent-to-price ratio. According to the 2012 Rental Housing Finance Survey (RHFS), the median capitalization rate of rental buildings is 6 percent. For some states, the cost savings are close to 6 percent. However, as described in the notice, the return on investment (ROI) is almost always positive, which would increase affordability. Perhaps most important, at an estimated average cost per unit of $441, the cost of compliance is less than 1 percent (0.24%) of the average TDC per unit of $185,000, and is more than offset by the benefits of this notice. Thus, the value of the construction project will not be adversely affected by the higher code adopted as a result of this notice.

    Comment: HUD should ease compliance with the code requirements for single family homes by updating and accepting Form HUD-92541 as evidence of compliance. One commenter indicated that, while it “does not disagree with USDA and HUD's estimates about affordability,” it is concerned about how mortgage lenders should demonstrate compliance for single-family new construction. The commenter noted that this is “particularly important when underwriting loans for new construction in unincorporated localities, where there may not be public inspectors and other third-party specialists, such as Home Energy Rating System (HERS) rating specialists within several hundred miles, such as in states like Colorado or South Dakota.” The commenter recommends that HUD modify form HUD-92541 by changing box number four, “International Energy Conservation Code (IECC) 2006,” to read “IECC 2009 or a higher standard,” and that this form should be available when the Final Determination is issued. The commenter also recommends that the HUD handbook be updated to reflect the single family new construction requirement and that Form HUD-92541 be treated as an acceptable method of certifying the property's minimum energy efficient status.

    HUD-USDA Response: HUD agrees that Builder's Certification form HUD-92541 will be the primary tool for ensuring compliance of single family FHA-insured properties with the 2009 IECC and intends to update the form to reflect the code (the 2009 IECC) established by this notice. HUD cannot commit to this being completed simultaneously with the publication of the Final Determination, in light of Paperwork Reduction Act requirements; however, it is anticipated that the updated Builder's Certification form HUD-92451, as well as any handbook updates, will be completed during the 180-day implementation period, in order to ensure maximum compliance with the new code requirement.

    4. Comments Regarding Data and Methodology

    Comment: The Social Cost of Carbon (SCC) should not be included in this notice. One commenter objected to the use of the Social Cost of Carbon in this notice, and proposed its deletion. The commenter maintained that the SCC is “discordant with the best scientific literature on the equilibrium climate sensitivity and the fertilization effect of carbon dioxide—two critically important parameters for establishing the net externality of carbon dioxide emissions.” The commenter also notes that the SCC [is] “at odds with existing Office of Management and Budget (OMB) guidelines for preparing regulatory analyses, and founded upon the output of Integrated Assessment Models (IAMs) which encapsulate such large uncertainties as to provide no reliable guidance as to the sign, much less the magnitude of the social cost of carbon.” The commenter also suggests that the IAMs, as run by the Interagency Working Group (IWG) produce “illogical results” that indicate a “misleading disconnect between a climate change and the SCC value.” Further, the commenter believes that sea-level rise projections (and thus SCC) of at least one of the IAMs (DICE 2010) cannot be supported by the mainstream climate science.

    Based on these objections to the SCC, the commenter proposes that the SCC should be “barred from use in this and all other federal rulemaking. It is better not to include any value for the SCC in cost/benefit analyses such as these, than to include a value which is knowingly improper, inaccurate and misleading.” The commenter proposes “to remove any and all analyses in this Preliminary Determination that makes reference to, or incorporates a value of, the social cost of carbon as determined by the federal Interagency Working Group.” Specifically, the commenter proposes that HUD-USDA remove Table 8 and related text from the notice.

    An alternative, supportive, view of the SCC was provided by another commenter. This commenter strongly argues for the use of the SCC as a measure of nonenergy benefits. This commenter notes that “SCC calculations are important for evaluating the costs of activities that produce greenhouse gas emissions and contribute to climate change, such as burning fossil fuels to produce energy. The SCC is also important for evaluating the benefits of policies that would reduce the amount of those emissions going into the atmosphere. For example, in order to properly evaluate standards that reduce the use of carbon-intensive energy or that improve energy efficiency—like the proposed updated energy codes—it is important to understand the benefits they will provide, including the benefit of reducing carbon pollution and the harm it causes.”

    This commenter also defends the Interagency Working Group's (IWG) analysis as “science-based, open, and transparent” and believes that “the IWG correctly used a global SCC value.” While conceding that the IWG can improve its SCC methodology, the commenter nevertheless argues that “HUD and USDA should continue to use the current IWG estimate of the SCC.”

    HUD Response: HUD and USDA acknowledge the critique of the SCC from the commenter, but believe that the SCC is an important and established element of a regulatory impact analysis for energy-related governmental regulations. Lower energy consumption involving fossil fuels will by default result in lower carbon emissions; there are economic, health and safety costs associated with these emissions, and, conversely, cost benefits when these emissions are reduced. While the commenter is correct that the SCC is not specifically required for the affordability or availability analysis specified under EISA (the primary analysis for that purpose involves energy and cost savings accruing directly to the property owner or resident) the SCC is relevant to the larger economic costs and benefits required for a regulatory impact analysis. The cost benefits of carbon saved as a result of adopting the higher standards specified in the notice can and should be incorporated in the regulatory impact analysis, and do not affect, or undermine, the underlying affordability or availability findings of the notice.

    Comment: Additional research shows similar results as DOE findings. One commenter cited a study by the National Association of Home Builders (NAHB) Research Center (now the Home Innovation Research Labs) (Research Center) that shows the national average simple payback for the 2009 IECC of 5.6 years compared to the DOE study cited in the Preliminary Determination of 5.1 years. The commenter notes that the slightly longer payback from the Research Center may be because the initial construction costs were assumed to be about 35 percent higher in the Research Center analysis than in the PNNL analysis for DOE, due to the Research Center's reference home being based on national averages with more wall area than assumed in the PNNL analysis (2,580 vs. 2,380 sq. ft.) while having slightly less floor area (2,352 vs. 2,400 sq. ft.). In addition, the commenter points out that construction costs used in the Research Center study generated by actual builders were higher than those used by PNNL, which were developed by commercial estimators.

    HUD-USDA Response: HUD and USDA relied on DOE and PNNL analysis of the 2009 IECC and ASHRAE 90.1-2007 in order to maximize alignment of our findings with those of other Federal agencies. We appreciate and recognize the additional independent findings on the 2009 IECC referenced by the commenter in the Research Center report. Despite the differences noted in the characteristics of the assumed reference house, the NAHB Research Center's results show very similar payback periods to those arrived at by DOE and PNNL (5.6 years vs. 5.1 years), thereby confirming and reinforcing HUD and USDA's findings on the cost effectiveness of the 2009 IECC.6 While the PNNL and Research Center paybacks are similar, the incremental costs for the 2009 IECC in the Research Center report are higher than those determined by PNNL.

    6 NAHB Research Center, 2009 IECC Cost Effectiveness Analysis, May 2012. http://www.homeinnovation.com/~/media/Files/Reports/Percent%20Energy%20Savings%202009%20IECC%20Cost%20Effectiveness%20Analysis.PDF.

    These incremental cost differences result from the differences in the reference homes used in each report. The PNNL methodology defines a residential prototype building to be representative of typical new residential construction using data from the U.S. Census Bureau, the American Housing Survey, and NAHB, and establishes typical construction and operating assumptions, whereas the Research Center uses national averages. The assumptions were subjected to a public review through a Request for Information (RFI) process.7 We believe that the PNNL methodology provides an objective prototype most suitable for a national sample.

    7 The PNNL methodology for the residential prototype is published online at http://www.energycodes.gov/development/residential/methodology.

    Comment: Updated information in local or statewide adoption of the subject codes. The Preliminary Determination identified 18 States that have not yet adopted the 2009 IECC and 12 States that have not yet adopted ASHRAE 90.1-2007. Two commenters provided updated information that at least five of these States (Colorado, Arizona, Kansas, Missouri and Maine) have seen significant local adoption of the 2009, or even the 2012, IECC. In Colorado, for example, jurisdictions that have adopted either of these standards represent 90 percent of the statewide population; in Arizona, it is estimated at 70 percent. It was also noted by one commenter that two States (Kentucky and Louisiana) have “already adopted” the 2009 IECC or “almost its equivalent,” while two additional States are either in the final stages of adopting or are in the process of adopting the 2009 IECC (Minnesota and Arkansas, respectively).

    HUD-USDA Response: HUD and USDA recognize these updates on State or local adoption of the 2009 or 2012 IECC. Statewide adoption of energy codes is an evolving process, with new States (or home rule municipalities) adopting the more recent codes on an ongoing basis. The 18 states that had not yet adopted the 2009 IECC or ASHRAE 90.1-2007 cited in the Preliminary Determination reflected information posted by DOE's Building Energy Codes Program (BECP) at or near the time of publication of the Preliminary Determination. The updated data on two additional States provided by the commenters does not change the overall affordability and availability finding for the remaining States that have not yet adopted the 2009 IECC or ASHRAE 90.1-2007 (that the subject codes will not negatively impact the affordability and availability of covered housing); rather, these data have the effect of lowering the number of units estimated to be impacted by the adoption of the codes addressed in this notice. Similarly, to the extent that there are local jurisdictions that have adopted higher codes than those adopted by local jurisdictions within States that have not yet adopted the code statewide, this will have the effect of lowering the overall costs (and related benefits) associated with this notice. HUD and USDA have updated the estimated impacts in the Final Determination, in order to reflect the most recent code adoption status reported by the BECP at http://www.energycodes.gov/adoption/states (as of May 2014).

    5. Alternative Green Standards or Equivalent State or Local Standards

    Comment: HUD and USDA should accept one or more green building standards as alternative compliance paths. One commenter proposed that the ICC 700 National Green Building Standard (NGBS) should be accepted as an alternative compliance certification, for the following reasons: NGBS certification requirements ensure that all certified buildings achieve a minimum energy efficiency performance 15 percent more efficient than the 2009 IECC, and many homes/buildings that achieve NGBS certification far exceed that baseline; the NGBS is designed to cover all residential construction, and can be applied to all housing types noted in the notice; and NGBS certification offers a quality assurance mechanism, in that all units are verified by an independent, third-party NGBS Green Verifier. Another commenter proposed similar adoption by HUD and USDA of LEED for Homes (Version 8) as a compliance path, and another commenter indicated that the codes referenced in the notice are already included as a minimum requirement in the Enterprise Green Communities standard.

    Comment: Equivalent energy performance. One commenter suggested that HUD and USDA recognize State and/or local jurisdictions that have established standards that have equal or better energy savings. The commenter cites title IV, section 410, of the American Recovery and Reinvestment Act, that provided specific language that dealt with equivalency by considering any energy code that “achieves equivalent or greater energy savings” as an acceptable alternative code. This would benefit States such as California that already exceed the 2009 IECC with their independently developed Title 24 energy efficiency standard. The commenter suggests that a reference to energy equivalency be included in the “Implementation” section of the notice.

    HUD-USDA Response: The 2009 IECC and ASHRAE 90.1-2007 codes addressed in this Determination establish a floor, not a ceiling, for HUD- and USDA-covered programs. HUD and USDA recognize that the green building certifications referenced by the commenters, such as the NGBS (Performance Path), LEED for Homes, and Enterprise Green Communities, have incorporated the 2009 IECC or ASHRAE 90.1-2007 as minimum required energy standards. Accordingly, HUD and USDA will accept these standards as evidence of compliance with the 2009 IECC or ASHRAE 90.1-2007. In addition to these standards, these may include LEED for New Construction, ENERGY STAR Certified New Homes or ENERGY STAR for Multifamily High Rise, Enterprise Green Communities, and other regionally or locally recognized green building standards, such as Earth Advantage, Earthcraft, and others.

    With regard to State standards that have equivalent or higher standards, there is documented evidence that Title 24 in California exceeds the standards specified in the HUD-USDA notice, so by definition any project in California complying with Title 24 will automatically comply with the 2009 IECC and/or ASHRAE 90.1-2007. If documented evidence is provided to HUD and USDA that a specific state standard equals or exceeds the standards specified in this notice, these State standards will also be accepted as a compliance path.

    6. Suggested Changes and Alternatives to Preliminary Determination

    Comment: Hawaii should not be exempted from ASHRAE 90.1-2007. HUD and USDA solicited comments on whether Hawaii should be exempted from complying with ASHRAE 90.1-2007, as was proposed in the Preliminary Determination. Using average national electricity prices in the Preliminary Determination, Hawaii showed a 58-year payback for adoption of ASHRAE 90.1-2007; however, using Hawaii electricity prices, the payback dropped to 17 years. (As discussed below, this Final Determination uses more recent October 2014 electricity prices, and the resulting payback for Hawaii declines further to 15.1 years.)

    Two commenters disagreed with the Preliminary Determination's finding that exempted Hawaii from adopting ASHRAE 90.1-2007 and proposed instead that HUD and USDA require Hawaii compliance with ASHRAE 90.1-2007. The most detailed comment was provided by one commenter. This commenter notes that the Hawaii State Building Code Council has approved the 2009 IECC (roughly equivalent to ASHRAE 90.1-2007) for adoption in its four counties, and one county has already adopted these requirements. The commenter argues that “if Hawaii has already found the code to be sensible for all residential and commercial buildings in its unique climate zone, we do not see any reason to exclude it from the updated HUD/USDA energy efficiency standard.”

    The commenter also maintains that Hawaii's cooling needs are very different from New York's, on which HUD's and USDA's conclusion was based, and that “a simple payback analysis is [not] a complete enough foundation from which to make a decision on cost-effectiveness.” The Preliminary Determination found that when Hawaii's average electricity costs are applied to the HUD/USDA analysis (rather than a national average), mid-rise apartment buildings achieved simple payback in 17 years. The commenter suggested that a 17-year payback should not automatically be deemed not cost-effective, considering the expected lifetime of a multifamily building (30 to 100 years). The commenter suggests that a closer consideration of Hawaii will demonstrate a much more rapid payback, but even if the payback period is 17 years, EISA does not set a specific simple payback period or even require a simple payback analysis. The commenter notes that the relevant inquiry is whether the home or dwelling unit is “affordable,” and by a life-cycle analysis of 30 years, “multifamily buildings in Hawaii should be required to meet ASHRAE 90.1-2007.”

    Another commenter reached a similar conclusion. The commenter noted Hawaii has exceptionally high energy prices, and Hawaii is in a different climate zone with different requirements and thus will have different costs than New York, on which the Preliminary Determination was based. In fact, the Hawaii Building Code Council adopted the 2009 IECC (roughly equivalent for commercial buildings to ASHRAE 90.1-2007) with amendments, suggesting that the Hawaiians found the code reasonable for their State.

    HUD-USDA Response: In this Final Determination HUD and USDA are amending the proposed exemption in the Preliminary Determination of HUD-assisted or FHA-insured multifamily properties in Hawaii from compliance with ASHRAE 90.1-2007. HUD acknowledges that the Hawaii Building Code Council has already adopted the 2009 IECC (roughly equivalent to ASHRAE 90.1-2007), as well as the fact that current (October 2014) EIA data show the average cost per kilowatt hour in Hawaii as of October 2014 has risen to 36 cents per kilowatt hour—even higher than the 32 cents cited in the Preliminary Determination, thereby lowering the estimated payback period for Hawaii to 15.1 years. At 36 cents per kilowatt hour, the simple payback of 15.1 years for energy savings in Hawaii is consistent with the other four States shown in table 6 with paybacks that are longer than 10 years; i.e., Colorado, Minnesota, Missouri, and Tennessee, whose paybacks range from 10.1 years to 13.3 years. Accordingly, HUD-assisted or FHA-insured multifamily properties in Hawaii are covered under this Final Determination.

    Comment: Extend implementation period for ASHRAE 90.1-2007 for multifamily buildings from 90 to 180 days. Two commenters requested that the implementation timetable for multifamily properties be extended to 180 days. The notice currently states that for FHA-insured multifamily programs, the new standard would apply to those properties for which mortgage insurance applications are received by HUD 90 days after the effective date of a final determination. One commenter maintains that multifamily loan applications must include “almost full” plans and specifications; the design of the project will therefore have been completed or nearly-completed at the time of the loan application within 90 days. A 90-day notice may therefore result in developers having to modify plans and specs, which could be costly so late in the design process. Similarly, another commenter expressed a concern that multifamily new construction or substantial rehabilitation transactions have a long lead time and, for locations where the new standard represents a change, a longer lead time would ensure that the standard would not affect financings already in the development or application stages.

    HUD Response: HUD proposes to retain the 90-day implementation period for multifamily properties but, to address the concerns expressed by the commenters that this could impact projects already in the development or application stages, HUD will clarify that the 90 days refers to the preapplication; i.e., not the application for Firm Commitment. This 90-day period would commence 30 days after the Final Determination is published, thereby effectively providing a 120-day implementation period.8 Multifamily properties have different compliance dates than single family properties, since the process is different for securing FHA single family mortgage insurance or USDA single family loan guarantees versus multifamily insurance. Multifamily developers submit preapplication proposals to FHA for insurance very early in the application process, whereas there is no such similar preapplication requirement for FHA single family. HUD does not want the implementation to impede or slow down projects in the pipeline, but is also aware that there have been two code cycles since ASHRAE 90.1-2007 and that it is important that this standard be implemented as expeditiously as possible.

    8 Note that the 90 days applies to preapplications for FHA multifamily insurance, whereas the 180 days applies to building permits for FHA single family insurance.

    D. Adoption of Preliminary Determination as Final Determination

    After consideration of the public comments on the Preliminary Determination, HUD and USDA adopt the Preliminary Determination as their Final Determination. This Final Determination takes into consideration the public comments received in response to HUD and USDA's Preliminary Determination.

    After careful consideration of the issues raised by the comments, HUD and USDA have made five changes as follows:

    (1) Modified the implementation schedule for multifamily properties to clarify that the 90-day implementation period commences after the 30-day effective date of the Final Determination, and that the implementation period refers to preapplications received by HUD for multifamily insurance, not the application for Firm Commitment. The Final Determination also includes an implementation schedule for new HOME units covered by the statute;

    (2) Provided an alternative compliance path for properties meeting ENERGY STAR Certified Homes, ENERGY STAR for Multifamily High Rise and certain green building standards;

    (3) Provided additional detail on administrative and regulatory actions that HUD and USDA will take to implement the code requirements;

    (4) Updated the status of code adoption of certain States or localities to reflect the status reported in the comments as confirmed by DOE. These include Louisiana and Kentucky, both of which, as of November 2014, have adopted the 2009 IECC, and adjustments of the estimated number of impacted units in Colorado and Arizona to reflect home rule municipalities' adoption of these codes in the absence of statewide legislation; and,

    (5) Removed the exemption proposed in the Preliminary Determination of HUD-assisted or FHA-insured multifamily properties in Hawaii from compliance with ASHRAE 90.1-2007.

    This notice does not address the more recent IECC and ASHRAE codes for which DOE has published efficiency determinations:

    • Final Determination for the 2010 edition of ASHRAE 90.1 (published October 19, 2011);

    • Final Determination for the 2012 edition of the IECC (published May 17, 2012);

    • Final Determination for the 2013 edition of ASHRAE 90.1 (published September 26, 2014); 9

    9 U.S. Department of Energy, “Determination Regarding Energy Efficiency Improvements in ANSI/ASHRAE/IES Standard 90.1-2013: Energy Standard for Buildings Except Low-Rise Residential Buildings,” Federal Register Notice, 79-FR-57900, September 26, 2014. https://federalregister.gov/a/2014-22882.

    • Preliminary Determination for the 2015 edition of the IECC (published September 26, 2014).10

    10 Current status of determinations are listed by DOE at https://www.energycodes.gov/determinations.

    DOE has also completed a cost analysis of the 2012 IECC for 43 of the 50 States and the District of Columbia, a national cost analysis of ASHRAE 90.1-2010, and a cost analysis of the ASHRAE 90.1-2010 for 22 of the 50 States and the District of Columbia.11 DOE intends to publish a similar national cost-effectiveness analysis for ASHRAE 90.1-2013 in 2015.

    11 ASHRAE 90.1 cost-effectiveness analyses are provided at https://www.energycodes.gov/development/commercial/cost_effectiveness.

    The impact of these more recent codes on the affordability and availability of HUD- and USDA-funded new construction is currently being assessed by the two agencies. Since HUD and USDA's affordability determination relies on DOE's analysis, HUD and USDA will address the affordability of these codes in a subsequent notice in the near future. It is HUD's and USDA's intention that while adoption of future IECC and ASHRAE 90.1 standards can be implemented with a Determination such as this one, each program will subsequently update its handbooks, mortgagee letters, relevant forms, or other administrative procedures each time HUD and USDA determine that the new standard will not negatively impact the affordability or availability of housing under the covered programs.

    Although HUD and USDA are adopting the 2009 IECC and ASHRAE 90.1-2007 energy codes, as noted in their April 15, 2014, Preliminary Determination, HUD and USDA, along with other Federal agencies, have also adopted the December 2011 energy alignment framework of the interagency Rental Policy Working Group. According to this framework, several HUD competitive grant programs already require or provide incentives to grantees to comply with energy efficiency standards that exceed the 2009 IECC and ASHRAE 90.1-2007 standards outlined in this notice.12 This standard is typically ENERGY STAR Certified New Homes for single family properties or ENERGY STAR for Multifamily High Rise for multifamily properties. Nothing in this notice will preclude these competitive programs from maintaining these higher standards, or raising them further. A list of current program requirements or incentives prior to publication of this notice is shown in Table 1, below.

    12 Rental Policy Working Group, Federal Rental Alignment: Administration Proposals, December 31, 2011. www.huduser.org/portal/aff_rental_hsg/rpwg_conceptual_proposals_fall_2011.pdf.

    Table 1—Current Energy Standards and Incentives for HUD and USDA Programs [New construction only] Program Type Current energy efficiency requirements and incentives HUD Choice Neighborhoods—Implementation Competitive Grant Single family and low-rise multifamily: ENERGY STAR Certified New Homes. Multifamily high-rise (4 or more stories): ENERGY STAR for Multifamily High Rise. Additional 2 rating points for achieving Certified LEED-ND or similar standard; or 1 point if project complies with goal of achieving LEED-ND or similar standard. Choice Neighborhoods—Planning Competitive Grant Eligible for Stage 1 Conditional Approval of all or a portion of the neighborhood targeted in their Transformation Plan for LEED for Neighborhood Development from the U.S. Green Building Council. HOPE VI Competitive Grant While no new grants are being awarded, the most recent Notice of Funding Availability provided the following rating points: 3 points if new units were certified to one of several recognized green building programs, including Enterprise Green Communities, National Green Building Standard, LEED for Homes, LEED New Construction, or local or regional standards such as Earthcraft; 2 points if new construction was certified to ENERGY STAR for New Homes standard; 1 point if only ENERGY STAR-certified products and appliances were used in new units. Section 202 Supportive Housing for the Elderly Competitive Grant Single family and low-rise multifamily: ENERGY STAR Certified New Homes. Multifamily high-rise (4 or more stories): ENERGY STAR for Multifamily High Rise. Applicants earn additional points if they meet one of several recognized green building standards. http://archives.hud.gov/funding/2010/202elderly.pdf. (Note: capital advances for new construction last awarded in FY 2010). Section 811 for Persons with Disabilities Project Rental Assistance Competitive Grant ENERGY STAR Certified New Homes for single family homes, or ENERGY STAR for Multifamily High Rise for multifamily buildings. http://archives.hud.gov/funding/2012/sec811pranofa.pdf. (Note that HUD is no longer awarding Section 811 grants for new units.) Rental Assistance Demonstration (RAD) Conversion of Existing Units Minimum 2006 IECC or ASHRAE 90.1-2004 for new construction or any successor code adopted by HUD; applicants encouraged to build to ENERGY STAR Certified New Homes or ENERGY STAR for Multifamily High Rise. Minimum WaterSense and ENERGY STAR appliances required and the most cost-effective measures identified in the Physical Condition Assessment (PCA). (Note that most RAD units will be conversions of existing units, not new construction). FHA Multifamily Mortgage Insurance Mortgage Insurance 2006 IECC or ASHRAE 90.1-2004 (Multifamily Accelerated Processing Guide at http://portal.hud.gov/hudportal/documents/huddoc?id=4430GHSGG.pdf). FHA Single Family Mortgage Insurance Mortgage Insurance 2006 IECC (See Builder's Certification form HUD-92541 at http://portal.hud.gov/hudportal/documents/huddoc?id=92541.pdf.) HOME Investment Partnerships Program Formula Grant Cranston-Gonzalez sections 215(b)(4) and section 215(a)(1)(F) require HOME units to meet minimum energy efficiency standards promulgated by the Secretary in accordance with Cranston Gonzalez section 109 (42 U.S.C. 12745). Final HOME Rule published July 24, 2013 at www.onecpd.info/home/home-final-rule/reserves the energy standard for a separate rulemaking at 24 CFR 92.251. Public Housing Capital Fund Formula Grant 2009 IECC and ASHRAE 90.1-2010, or successor standards, Capital Final Rule October 24, 2013, at http://www.thefederalregister.org/fdsys/pkg/FR-2013-10-24/pdf/2013-23230.pdf. ENERGY STAR appliances are also required unless not cost effective. USDA Section 502 Guaranteed Housing Loans Loan Guarantee 2006 IECC at minimum.* Rural Energy Plus program requires compliance with most recent version of IECC, which is currently IECC 2012. Section 502 Rural Housing Direct Loans Loan Guarantee 2006 IECC at minimum.* A pilot is being created that gives incentive points for participation in ENERGY STAR Certified New Homes, Green Communities, Challenge Home, NAHB National Green Building Standard, and LEED for Homes Section 502 Direct Loans for Section 523 Mutual Self-Help Loan program homeowner participants Loan Guarantee 2006 IECC at minimum.* A pilot is being created that gives incentive points for participation in ENERGY STAR Certified New Homes, Green Communities, Challenge Home, NAHB National Green Building Standard, and LEED for Homes * USDA programs updated annually per Administrative Notice. II. HUD-USDA Final Affordability Determination

    The specific HUD and USDA programs covered by this notice are listed in Appendix I. While not specifically referenced in EISA, the Home Investment Partnerships Program (HOME) is covered, pursuant to a requirement in the HOME statute at section 215(b)(4) (42 U.S.C. 12745(b)(4)) and section 215(a)(1)(F) (42 U.S.C. 12745(a)(1)(f)) of Cranston-Gonzalez, which set the minimum standard for new construction of HOME-funded units at the standard established through this determination under Cranston-Gonzalez section 109.

    Several exclusions are worth noting. EISA's application to the “rehabilitation and new construction of public and assisted housing funded by HOPE VI revitalization grants” is no longer applicable, since funding for HOPE VI has been discontinued. HUD's Housing Choice Voucher program, also known as Section 8 Tenant-Based Rental Assistance (TBRA), is excluded since the agency does not have the authority or ability to establish housing standards for properties before they are rented by tenant households under that program; i.e., when they are newly built. Indian housing programs are excluded because they do not constitute assisted housing and are not authorized under the National Housing Act (12 U.S.C. 1701 et seq.) as specified in EISA. For instance, the Section 184 Loan Guarantee Program is authorized under section 184 of the Housing and Community Development Act of 1992 (42 U.S.C. 1715z-13a). Similarly, housing financed with Community Development Block Grant (CDBG) funds is not included, since CDBG, which is authorized by the Housing and Community Development Act of 1974 (42 U.S.C. 5301 et seq.), is neither an assisted housing program nor a National Housing Act mortgage insurance program. Finally, only single family USDA programs are covered by EISA, whereas both single family and multifamily HUD programs are covered.

    A. Discussion of Market Failures

    Before focusing on the specific costs and benefits associated with adoption of the IECC and ASHRAE codes addressed in this notice, the extent to which market failures or barriers exist in the residential sector that may prompt the need for these higher codes is discussed below. There is a wide body of literature on a range of market failures that have resulted in an “energy efficiency gap” between the actual level of investment in energy efficiency and the higher level of investment that would be cost beneficial from the consumer's (i.e., the individual's or firm's) point of view.13 More broadly, market failures involve externalities, market power, and inadequate or asymmetric information. Market barriers include capital market barriers and incomplete markets for energy efficiency; i.e., the fact that energy efficiency is generally purchased as an attribute of another product (in this case shelter or a building).

    13 The existence of this gap has been documented in many cases. See Marilyn A. Brown, “Market Failures and Barriers as a Basis for Clean Energy Policies,” Energy Policy 29 (2001): 1197-1207.

    Within this broader world of market failures and barriers, suboptimal energy efficient investment in housing imposes two primary costs: Increased energy expenditures for households and an increase in the negative externalities associated with energy consumption. In addition to complying with the EISA statute, HUD and USDA have two primary motivations in the promulgation of this notice: (1) To reduce the total cost of operating and thereby increasing the affordability of housing by promoting the adoption of cost-effective energy technologies, and (2) to reduce the social costs (negative externalities) imposed by residential energy consumption. The first justification (lowering housing costs) requires that there exist significant market failures or other barriers that deter builders from supplying the energy efficiency demanded by consumers of housing. Alternatively, there may be market barriers that limit consumer demand for energy efficiency, which builders might readily supply if such demand existed. While the gains from cost-effective investments in energy efficiency are potentially very large, the argument that the market will not provide energy efficient housing demanded by households is somewhat complex.

    The second justification (reducing social costs) requires that the consumption of energy imposes external costs that are not internalized by the market. There is near universal agreement among scientists and economists that energy consumption leads to indirect costs. The challenge is to measure those costs.

    Under Investment in Energy-Saving Technologies

    The production of energy efficient housing may be substantial, but if there are market failures or barriers that are not reflected in the return on the investment, the market penetration of energy efficient investments in housing will be less than optimal.

    When analyzing energy efficiency standards, the generation of savings is typically the greatest of the different categories of benefits. Using potential private benefits to justify costly energy efficiency standards is often criticized.14 A skeptic of this approach of measuring the benefits discussed in this notice would indicate that if, indeed, there were net private benefits to energy efficient housing, consumers would place a premium on that characteristic and builders would respond to market incentives and provide energy-efficient homes. The noninterventionist might argue that the analyst who finds net benefits of implementing a standard did not measure the benefits and costs correctly.15 The existence of unobserved costs (either upfront or periodic) is a potential explanation for low levels of investment in energy-saving technology. Finally, a proponent of the market approach could argue that the very existence of energy efficient homes is ample proof that the market functions well. If developers build energy efficient housing, the theoretical challenge is to explain why there is an undersupply.

    14 Hunt Allcott and Michael Greenstone, Is There An Energy Efficiency Gap? National Bureau of Economic Research, Working Paper No. 17766, January 2012. http://www.nber.org/papers/w17766.pdf.

    15 For a detailed example, see Allcott and Greenstone, Is There an Energy Efficiency Gap?

    Despite the economic argument for nonintervention, there are many compelling economic arguments for the existence of an energy efficiency gap. Thaler and Sunstein attribute the energy efficiency gap to incentive problems that are exaggerated because upfront costs are borne by the builder, whereas the benefits are enjoyed over the long term by tenants.16 Four justifications deserve special consideration: (1) Imperfect information concerning energy efficiency, (2) inattention to energy efficiency, (3) split incentives for energy efficient investments in the housing market, and (4) lack of financing for energy efficient retrofits.17

    16 Richard H. Thaler and Cass R. Sunstein, Nudge: Improving Decisions about Health, Wealth, and Happiness (New Haven: Yale University Press, 2008).

    17 Allcott and Greenstone, Is There an Energy Efficiency Gap?

    (1) Imperfect information. Assuming information concerning energy efficiency affects investment, one can imagine two scenarios in which imperfect information would lead to an underinvestment in energy efficiency. First, consumers may be unaware of the potential gains from energy efficiency or even of the existence of a particular energy-saving investment. Second, imperfect information may inhibit energy efficient investments. A consumer may be perfectly capable of evaluating energy efficiency and making rational economic decisions but researching the options is costly. Establishing standards reduces search costs: consumers will know that newer housing possesses a minimal level of efficiency. Similarly, because it may be costly for consumers to identify energy efficient housing, the real estate industry may hesitate to invest in energy efficiency.

    (2) Consumer inattention to energy efficiency. Consumers may be inattentive to long-run operating costs (energy bills) when purchasing durable energy-using goods.18 Procrastination and self-control also may affect the rationality of long-run decisions.19 These behavioral phenomena may deter energy efficiency choices. Establishing minimal standards that do not impose excessive costs but generate economic gains will benefit consumers who, when making housing choices, concentrate on other characteristics of the property.

    18Ibid, 21.

    19 Dan Ariely, Predictably Irrational. Revised and Expanded Edition (New York: Harper Collins, 2009).

    (3) Split incentives. For owner-occupied homes, the prospect of ownership transfer may create a barrier to energy efficient investment.20 If owners, builders, or buyers do not believe that they will be able to recapture the value of the investment upon selling their home, they will be deterred from investing in energy efficiency. As indicated by McKinsey and Company in their landmark 2009 report, the length of the payback period and lifetime of the stream of benefits is longer than a large proportion of households' tenure. This concern may lead to the exclusive pursuit of investments for which there is an immediate payback.

    20 McKinsey and Company, Unlocking Efficiency in the U.S. Economy (July 2009), p.24. http://www.mckinsey.com/client_service/electric_power_and_natural_gas/latest_thinking/unlocking_energy_efficiency_in_the_us_economy.

    For rental housing, split incentives exist that lead to sub-optimal housing.21 There is an agency problem when the landlord pays the energy bill and cannot observe tenant behavior or when the tenant pays the energy bill and cannot observe the landlord's investment behavior.22

    21 Kenneth Gillingham, Matthew Harding and David Rapson, “Split Incentives and Household Energy Consumption,” Energy Journal 33:2 (2012): 37-62.

    22 Such agency problems are not unique to energy. A landlord does not know in advance of extending a lease to what extent a tenant will inflict damage, make an effort to take care of the property, or report urgent problems. The response is to raise rent and lower quality.

    (4) Lack of financing. Energy efficient investment may require a significant investment that cannot be equity financed. Capital constraints are a formidable barrier to energy efficiency for low-income households.23 While there is a wide variety of financing alternatives for home purchases, there are not many financing alternatives specifically for undertaking energy retrofits of for-sale housing.24 Building energy efficiency into housing at the time of construction allows homeowners and landlords to finance the energy-saving improvement with a lower mortgage interest rate, as opposed to a less affordable home improvement loan specifically for energy retrofits.25

    23 McKinsey and Company, Unlocking Efficiency.

    24 Alastair McFarlane, “The Impact of Home Energy Retrofit Loan Insurance: A Pilot Program,” Cityscape: A Journal of Policy Development and Research, Volume 13, Number 3. U.S. Department of Housing and Urban Development Office of Policy Development Research (2011): 237-249.

    25 With the exception of a few programs serving specific markets and a Federal Housing Administration (FHA) pilot program, affordable financing for home energy improvements that reflects sound lending principles is limited. Unsecured consumer loans or credit card products for home improvements typically charge high interest rates. Home equity lines of credit require owners to be willing to borrow against the value of their homes during a period when home values are flat or declining in many markets. Utility “on bill” financing (in which a home energy retrofit loan is amortized through an incremental change on a utility bill) serves only a handful of markets on a small scale. Property Assessed Clean Energy (PACE) financing programs have encountered resistance because of their general requirement to have priority over existing liens on a property.

    Nonenergy Benefits

    Even if there were no investment inefficiencies and individual consumers who were able to satisfy their need for energy efficiency, nonenergy consumption externalities could justify energy conservation policy. The primary nonenergy co-benefits of reducing energy consumption are the reduction of emissions, and health benefits. The emission of pollutants (such as particulate matter) cause health and property damage. Greenhouse gases (such as carbon dioxide) cause global warming, which imposes a cost on health, agriculture, and other sectors. Greater energy efficiency allows households to afford energy for heating during severe cold or cooling during intense heat, which could have positive health effects for vulnerable populations. For example, studies have found a strong link between health outcomes and indoor environmental quality, of which temperature, lighting, and ventilation are important determinants.26 Clinch and Healy discuss how to value the effect on mortality and morbidity in a cost-benefit analysis of energy efficiency.27

    26 William J. Fisk, “How IEQ Affects Health, Productivity,” ASHRAE Journal 57 (2002).

    27 Peter J. Clinch and John D. Healy, “2001 Cost-benefit Analysis of Domestic Energy Efficiency,” Energy Policy 29 (2001): 113-124.

    In addition to the direct health benefits for residents of energy efficient housing, there will be indirect public health benefits. First, the local population will gain from reducing emissions of particulate matter that have harmful health effects. Second, there may be a positive safety effect from reducing the probability of fires by eliminating the need for supplemental heating sources.28

    28 Martin Schweitzer and Bruce Tonn, Nonenergy Benefits from the Weatherization Assistance Program: A Summary of Findings from the Recent Literature. ORNL/CON-484 (Oak Ridge National Laboratory, April 2002).

    B. 2009 IECC Affordability Determination

    The IECC is a model energy code developed by the ICC through a public hearing process involving national experts for single family residential and commercial buildings.29 The code contains minimum energy efficiency provisions for residential buildings, defined as single family homes and low-rise residential buildings up to three stories, offering both prescriptive and performance-based approaches. Key elements of the code are building envelope requirements for thermal performance and air leakage control.

    29 The IECC also covers commercial buildings. States may choose to adopt the IECC for residential buildings only, or may extend the code to commercial buildings (which include multifamily residential buildings of four or more stories).

    The IECC is typically published every 3 years, though there are some exceptions. In the last two decades, full editions of its predecessor, the Model Energy Code, came out in 1989, 1992, 1993, and 1995, and full editions of the IECC came out in 1998, 2000, 2003, 2006, 2009, and 2012. Though there were changes in each edition of the IECC from the previous one, the IECC can be categorized into two general eras: 2003 and before, and 2004 and after. The residential portion of the IECC was heavily revised in 2004. The climate zones were completely revised (reduced from 17 zones to 8 primary zones), and the building envelope requirements were restructured into a different format.30 The post-2004 code became much more concise and simpler to use, but these changes complicate comparisons of State codes based on pre-2004 versions of the IECC to the 2009 IECC.

    30 In the early 2000s, researchers at the U.S. Department of Energy's Pacific Northwest National Laboratory prepared a simplified map of U.S. climate zones. This PNNL-developed map divided the United States into eight temperature-oriented climate zones. http://apps1.eere.energy.gov/buildings/publications/pdfs/building_america/4_3a_ba_innov_buildingscienceclimatemaps_011713.pdf.

    The 2009 IECC substantially revised the 2006 code as follows: 31

    31 Pacific Northwest National Laboratory for the U.S. Department of Energy, Impacts of the 2009 IECC for Residential Buildings at State Level (September 2009). https://www.energycodes.gov/impacts-2009-iecc-residential-buildings-state-level-0.

    • The duct system has to be tested and the air leakage out of ducts must be kept to an acceptable maximum level. Testing is not required if all ducts are inside the building envelope (for example in heated basements), though the ducts still have to be sealed.

    • 50 percent of the lighting (bulbs, tubes, etc.) in a building has to be energy efficient. Compact fluorescent light bulbs qualify; standard incandescent bulbs do not.

    • Trade-off credit can no longer be obtained for high-efficiency heating, ventilation, and air conditioning (HVAC) equipment. For example, if a high-efficiency furnace is used, no reduction in wall insulation is allowed.

    • Vertical fenestration U-factor requirements are reduced from 0.75 to 0.65 in Climate Zone 2, 0.65 to 0.5 in Climate Zone 3, and 0.4 to 0.35 in Climate Zone 4.

    • The maximum allowable solar heat gain coefficient for glazed fenestration (windows) is reduced from 0.40 to 0.30 in Climate Zones 1, 2, and 3.

    • R-20 walls in climate zones 5 and 6 (increased from R-19).

    • Modest basement wall and floor insulation improvements.

    • R-3 pipe insulation on hydronic distribution systems (increased from R-2).

    • Limitation on opaque door exemption both size and style (side hinged).

    • Improved air-sealing language.

    • Controls for driveway/sidewalk snow melting systems.

    • Pool covers are required for heated pools.

    1. Current Adoption of the 2009 IECC

    As of November 2014, 34 States and the District of Columbia have voluntarily adopted the 2009 IECC, its equivalent, or a more recent energy code (Table 2).32 The remaining 16 States have not yet adopted the 2009 IECC.33 (In certain cases, cities or counties within a State have a different code from the rest of the State. For example, the cities of Austin and Houston, Texas, have adopted energy codes that exceed the minimum Texas statewide code).34 35 HUD and USDA are primarily interested in those States that have not yet adopted the 2009 IECC, since it is in these States that any affordability impacts will be felt relative to the cost of housing built to current State codes. As noted, in instances where a local entity has a more stringent standard, the affordability impacts within a State will differ.

    32 Not shown in Table 2 are the U.S. Territories. The status of IECC code adoption in these jurisdictions is as follows: Guam, Puerto Rico, and the U.S. Virgin Islands have adopted the 2009 IECC for residential buildings. The Northern Mariana Islands have adopted the Tropical Model Energy Code, which is equivalent to the 2003 IECC. American Samoa does not have a building energy code. These territories are all covered by EISA, for any covered HUD and USDA program that operates in these localities.

    33 In addition, there are two territories that have not yet adopted the 2009 IECC: the Northern Mariana Islands and American Samoa. Accordingly, they will be covered by the affordability and availability determinations of this notice.

    34 Pacific Northwest National Laboratory, Impacts of the 2009 IECC.

    35 HUD and USDA do not currently maintain a list of local communities that may have adopted a different code than their State code. There are cities and counties that have adopted the 2009 or even the 2012 IECC in States that have not adopted the 2009 IECC or equivalent/better. For example, most major cities or counties in Arizona have adopted the 2009 IECC or better. And Maine has adopted the 2009 IECC but allows towns under 4,000 people to be exempt. The code requirements can also vary. Kentucky, for example, adopted the 2009 IECC for all homes except those that have a basement. The following Web site notes locations that have adopted the 2012 (but not the 2009) IECC: http://energycodesocean.org/2012-iecc-and-igcc-local-adoptions.

    An increasing number of States have in recent years adopted, or plan to adopt, the 2009 IECC, in part due to section 410 of the American Recovery and Reinvestment Act of 2009 (ARRA) (Pub L. 111-5, approved February 17, 2009), which established as a condition of receiving State energy grants the adoption of an energy code that meets or exceeds the 2009 IECC (and ASHRAE 90.1-2007), and achievement of 90 percent compliance by 2017. All 50 State governors subsequently submitted letters notifying DOE that the provisions of section 410 would be met.36

    36 American Recovery and Reinvestment Act, Pub L. 111-5, division A, section 410(a)(2).

    Table 2—Current Status of IECC Adoption by State 37 [As of November 2014] 2009 IECC or
  • equivalent or higher
  • (34 states and DC)
  • Prior codes
  • (16 states)
  • Alabama 2006 IECC or Equivalent (6 States) California (Exceeds 2012 IECC) Hawaii. Connecticut Minnesota. Delaware (2012 IECC) Oklahoma. District of Columbia (2012 IECC) Tennessee. Florida Utah. Georgia Wisconsin. Idaho Illinois (2012 IECC) 2003 IECC or Equivalent (2 States) Indiana Arkansas. Iowa (2012 IECC) Colorado. Kentucky Louisiana No Statewide Code (8 States) Maryland (2012 IECC) Alaska. Massachusetts (2012 IECC) Arizona. Michigan Kansas. Montana Maine. Nebraska Mississippi. Nevada Missouri. New Hampshire South Dakota. New Jersey Wyoming. New Mexico New York North Carolina North Dakota Ohio Oregon Pennsylvania Rhode Island (2012 IECC) South Carolina Texas Vermont Virginia (2012 IECC) Washington (2012 IECC) West Virginia
    2. 2009 IECC Affordability Analysis

    In this  notice, HUD and USDA address two aspects of housing affordability in assessing the impact that the revised code will have on housing affordability. As described further below, the primary affordability test is a life-cycle cost (LCC) savings test, the extent to which the additional, or incremental, investments required to comply with the revised code are cost effective; i.e., the additional measures pay for themselves with energy cost savings over a typical 30-year mortgage period. A second test is whether the incremental cost of complying with the code as a share of total construction costs—regardless of the energy savings associated with the investment—is affordable to the borrower or renter of the home.

    37 “Status of State Energy Code Adoption,” U.S. Department of Energy, http://www.energycodes.gov/adoption/states.

    In determining the impact that the 2009 IECC will have on HUD and USDA assisted, guaranteed or insured new homes, the agencies have relied on a cost-benefit analysis of the 2009 IECC completed by PNNL for DOE.38 This study provides an assessment of both the initial costs and the long-term estimated savings and cost-benefits associated with complying with the 2009 IECC. It offers evidence that the 2009 IECC may not negatively impact the affordability of housing covered by EISA. The financing assumptions used in the LCC analysis prepared by PNNL for DOE contains several variables that may not fully represent the target population of FHA-insured and USDA-guaranteed borrowers relative to borrowers utilizing conventional financing. For example, it assumes a higher down payment (20 percent) than FHA single family borrowers usually have, and it does not incorporate the Mortgage Insurance Premiums associated with FHA-insured single family mortgages.39 However, these variables do not change the overall affordability and/or availability findings in this Determination. While FHA average housing prices are lower than the national average, and the down payment requirements are lower for FHA than for conventional financing (3.5 percent vs. as high as 20 percent), these differences do not impact the overall cost-benefit findings, given the very small incremental costs involved. For example, the lower 3.5 percent down payment allowed by FHA will make the “mortgage payback” for the incremental cost of the higher energy code somewhat more attractive—in that the increase in the down payment to cover the added construction cost for the new energy code will be lower for FHA than conventional financing. The remaining amount will be amortized over 30 years for the FHA loan and will therefore actually improve cash flow to the consumer.

    38 U.S. Department of Energy, National Energy and Cost Savings for New Single- and Multifamily Homes: A Comparison of the 2006, 2009 and 2012 Editions of the IECC (April 2012). http://www .energycodes.gov/sites/default/files/documents/NationalResidentialCostEffectiveness.pdf.

    39 Pacific Northwest National Laboratory for the U.S. Department of Energy, Methodology for Evaluating Cost-Effectiveness of Residential Energy Code Changes (April 2012), 3-11. http://www.energycodes.gov/sites/default/files/documents/residential_methodology.pdf.

    Note that there may be other benefits associated with energy efficient homes, in addition to positive cash flows. A March 2013 study by the University of North Carolina (UNC) Center for Community Capital and the Institute for Market Transformation (IMT) shows a correlation between greater energy efficiency and lower mortgage default risk for new homes. The UNC study surveyed 71,000 ENERGY STAR-rated homes and found that mortgage default risks are 32 percent lower for these more energy efficient homes than homes without ENERGY STAR ratings.40

    40 University of North Carolina, Home Energy Efficiency and Mortgage Risks (March 2013). http://www.imt.org/uploads/resources/files/IMT_UNC_HomeEEMortgageRisksfinal.pdf.

    3. Cost-Effectiveness Analysis and Results

    The DOE study, National Energy and Cost Savings for New Single and Multifamily Homes: A Comparison of the 2006, 2009, and 2012 Editions of the IECC, published in April 2012 (2012 DOE study), shows positive results for the cost effectiveness of the 2009 IECC for new homes. This national study projects energy and cost savings, as well as LCC savings that assume that the initial costs are mortgaged over 30 years. The LCC method is a “robust cost-benefit metric that sums the costs and benefits of a code change over a specified time frame. LCC is a well-known approach to assessing cost effectiveness.” 41 In September 2011, DOE solicited input via Federal Register notice on their proposed cost-benefit methodology 42 and this input was incorporated into the final methodology posted on DOE's Web site in April 2012.43 A further Technical Support Document was published in April 2013.44

    41 U.S. Department of Energy, National Energy and Cost Savings for new Single- and Multifamily Homes.

    42 U.S. Department of Energy, Building Energy Codes Cost Analysis (Federal Register notice 76-FR-56413, September 13, 2011). https://federalregister.gov/a/2011-23236.

    43 Pacific Northwest National Laboratory for the Department of Energy Methodology for Evaluating Cost-Effectiveness of Residential Energy Code Changes.

    44 Pacific Northwest National Laboratory for the Department of Energy (V. Mendon, R. Lucas, S. Goel), Cost-Effectiveness Analysis of the 2009 and 2012 IECC Residential Provisions—Technical Support Document (April 2013). http://www.energycodes.gov/sites/default/files/documents/State_CostEffectiveness_TSD_Final.pdf.

    In summary, DOE calculates energy use for new homes using EnergyPlusTM energy modeling software, Version 5.0. Two buildings are simulated: A 2,400 square foot single family home and an apartment building (a three-story multifamily prototype with six dwelling units per floor) with 1,200 square-foot per dwelling. DOE combines the results into a composite average dwelling unit based on 2010 Census building permit data for each State and eight climate zones. Single family home construction is more common than low-rise multifamily construction; the results are weighted accordingly to reflect this. Census data also is used to determine climate zone and national averages weighted for construction activity.

    Four heating systems are considered: Natural gas furnaces, oil furnaces, electric heat pumps, and electric resistance furnaces. The market share of heating system types are obtained from the U.S. Department of Energy Residential Energy Consumption Survey (2009). Domestic water heating systems are assumed to use the same fuel as the space heating system.

    For all 50 States, DOE estimates that the 2009 IECC saves 10.8 percent of energy costs for heating, cooling, water heating, and lighting over the 2006 IECC. LCC savings over a 30-year period are significant in all climate zones: Average consumer savings range from $1,944 in Climate Zone 3, to $9,147 in Climate Zone 8 when comparing the 2009 IECC to the 2006 IECC.45

    45 U.S. Department of Energy, National Energy and Cost Savings, 3.

    The published cost and savings data for all 50 States provides weighted average costs and savings for both single family and low-rise multifamily buildings. For the 16 States impacted by this notice, DOE provided disaggregated data for single family homes and low-rise multifamily housing to HUD and USDA. These disaggregated data are shown in Table 3. Front-end construction costs range from $550 (Kansas) to $1,950 (Hawaii) for the 2009 IECC over the 2006 IECC. On the savings side, average LCC savings over a 30-year period of ownership range from $1,633 in Utah to $6,187 in Alaska when comparing the 2009 IECC to the 2006 IECC.46

    46 Disaggregated single family and low-rise multifamily data provided by DOE to HUD and USDA. Data shows LCC savings disaggregated for single family homes only (subset of LCC savings for both single family and low-rise multifamily shown in an April 2012 DOE study. Data are posted at www.hud.gov/resilience.

    In addition to LCC savings, the 2012 DOE study also provides simple paybacks and “net positive cash flows” for these investments. These are additional measures of cost effectiveness. Simple payback is a measure, expressed in years, of how long it will take for the owner to repay the initial investment with the estimated annual savings associated with that investment. Positive cash flow assumes that the measure will be financed with a 30-year mortgage, and reflects the break-even point—equivalent to the number of months or years after loan closing—at which the cost savings from the incremental energy investment exceeds the combined cost of: (1) The additional down payment requirement and (2) the additional monthly debt service resulting from the added investment.

    For example, the average LCC for Minnesota's adoption of the 2009 IECC over its current standard (the 2006 IECC) is estimated at $2,174, with a simple payback of 7.2 years, and a net positive cash flow (mortgage payback) of 2 years. Mississippi homeowners will save $2,674 over 30 years under the 2009 IECC, with a simple payback of 3.8 years, and a positive cash flow of 1 year on the initial investment. As shown in Table 3, below, similar results were obtained for the remaining States analyzed, with simple paybacks ranging from a high of 8.3 years (Louisiana) to a low of 2.6 years (Alaska). The positive cash flow for all 18 impacted States is always 1 or 2 years, while the simple payback averages 5.1 years, and is always less than 10 years (the longest payback is 8.3 years in Louisiana).

    As noted, the costs and savings estimates for the 16 States presented here do not use the composite single family/low-rise multifamily data presented in the 2012 DOE study. Rather, DOE provided HUD and USDA with the unpublished underlying disaggregated data for single family housing, to more accurately reflect the housing type receiving FHA single family mortgage insurance or USDA loan guarantees. These disaggregated data for single family homes are available at www.hud.gov/resilience.

    Table 3—Life-Cycle Cost (LCC) Savings, Net Positive Cash Flow, and Simple Payback for the 2009 IECC 47 State * Weighted
  • average
  • incremental
  • cost
  • ($ per unit)
  • Weighted
  • average
  • energy cost
  • savings
  • per year
  • ($)
  • Life-cycle cost (LCC) savings
  • ($ per unit)
  • Net positive cash flow (years) Simple
  • payback
  • (years)
  • Alaska 940 357 6,187 1 2.6 Arizona 1,364 242 3,411 1 5.6 Arkansas 1,090 173 2,320 2 6.3 Colorado 902 134 1,782 2 6.7 Hawaii 1,950 393 5,861 1 5.0 Kansas 550 176 2,934 1 3.1 Maine 910 305 5,261 1 3.0 Minnesota 1,275 176 2,174 2 7.2 Mississippi 643 168 2,674 1 3.8 Missouri 967 151 2,077 2 6.4 Oklahoma 1,293 202 2,680 2 6.4 South Dakota 869 196 3,070 1 4.4 Tennessee 643 143 2,158 1 4.5 Utah 925 128 1,633 2 7.2 Wisconsin 1,027 239 3,788 1 4.3 Wyoming 885 155 2,215 1 5.7 Avg. of U.S. 980 203 3,069 1.4 5.1 Avg. of 16 States 1,019 215 3,066 1.3 5.0 * Only the 16 States that have not yet adopted the 2009 IECC as of November 2014 are included in this table.
    4. Limitations of Cost Benefit Analysis

    HUD and USDA are aware of studies that discuss limitations associated with cost-savings models such as these developed by PNNL for DOE. For example, Alcott and Greenstone suggest that “it is difficult to take at face value the quantitative conclusions of the engineering analyses” associated with these models, as they suffer from several empirical problems.48 They cite two problems in particular. First, engineering costs typically incorporate upfront capital costs only and omit opportunity costs or other unobserved factors. For example, one study found that nearly half of the investments that engineering assessments showed would have short payback periods were not adopted due to unaccounted physical costs, risks, or opportunity costs. Second, engineering estimates of energy savings can overstate true field returns, sometimes by a large amount, and some engineering simulation models have still not been fully calibrated to approximate actual returns. Another limitation may be the uncertainty as to the extent to which home rule municipalities have adopted higher energy codes in the absence of statewide adoption.

    47 Data provided by DOE to HUD and USDA showing disaggregated LCC savings for single family homes only (subset of LCC savings for both single family and low-rise multifamily published in April 2012 DOE study). Data are posted at www.hud.gov/resilience.

    48 Allcott and Greenstone, Is There An Energy Efficiency Gap?, 3-28.

    HUD and USDA nevertheless believe that the PNNL-DOE model used to estimate the savings shown in this notice represents the current state-of-the art for such modeling, is the product of significant public comment and input, and is now the standard for all of DOE's energy code simulations and models.

    5. Distributional Impacts on Low-Income Consumers or Low Energy Users

    For reasons discussed below, HUD and USDA project that affordability will not decrease for many low-income consumers of HUD- or USDA-funded units as a result of the determination in this notice. The purpose of this regulatory action is to lower gross housing costs. For rental housing, the gross housing cost equals contract rent plus utilities (unless the contract rent includes utilities, in which case gross housing costs equal the contract rent). For homeowners, housing cost equals mortgage payments, property taxes, insurance, utilities, and other maintenance expenditures. Reducing periodic utility payments is achieved through an upfront investment in energy efficiency. The cost of building energy efficient housing will be passed on to residents (either renters or homeowners) through the price of the unit (either rent or sales price). Households will gain so long as the net present value of energy savings to the consumer is greater than the cost to the builder of providing energy efficiency. The 2012 DOE study cited in this notice provides compelling evidence that this is the case for the energy standards in question; i.e., that they would have a positive impact on affordability. In the 16 States impacted by the 2009 IECC, one of two codes addressed in the notice, the average incremental cost of going to the higher standard is just $1,019 per unit, with average annual savings of $215, for a 5.0 year simple payback, and a 1.3 year net positive cash flow.49

    49 U.S. Department of Energy, National Energy and Cost Savings.

    Households that would gain the most from this regulatory action would be those that consume energy the most intensively. However, it is possible, although unlikely, that a minority of households could experience a net increase in housing costs as a result of the regulatory action. Households that consume significantly less energy than the average household could experience a net gain in housing costs if their energy expenditures do not justify paying the cost of providing energy efficient housing.

    There are a few reasons why a significant number of these households are not expected to be inconvenienced. First, in the rare case that a household does not value the benefits of energy efficient housing, much of the preexisting housing stock is available at a lower standard. Those that would lose from the capitalization of energy savings in more efficient housing could choose alternative housing from the large stock of existing and less energy efficient housing.

    Second, to the extent that the majority of users of HUD/USDA programs are likely to be lower-income households, these households may suffer more from the “energy efficiency gap” than higher income households. Low-income households pay a larger portion of their income on utilities and so are not likely to be adversely affected by requiring energy efficiency rules. According to data from the 2012 Consumer Expenditure Survey, utilities represent almost 10 percent of total expenditures for the lowest-income households, as opposed to just 5 percent for the highest income. A declining expenditure share indicates that utilities are a necessary good. One study of earlier data from the Consumer Expenditure Survey found a short-run income elasticity of demand of 0.23 (indicating that energy is a normal and necessary good).50 Given these caveats, the expectation is that the overwhelming majority of low-income households will gain from this regulatory action.

    50 Raphael E. Branch, “Short Run Income Elasticity of Demand for Residential Electricity Using Consumer Expenditure Survey Data,” Energy Journal 14:4 (1993): 111-121.

    Table 4—Quintiles of Income Before Taxes and Shares of Average Annual Expenditures Item Lowest 20
  • percent
  • Second 20
  • percent
  • Third 20
  • percent
  • Fourth 20
  • percent
  • Highest 20
  • percent
  • All consumer units
  • (%)
  • Total Housing * 40 38 34 31 30 33 Shelter 25 22 20 18 18 19 Utilities, fuels, and public services 9.8 9.1 8.3 7.0 5.4 7.1 Natural gas 0.9 0.8 0.8 0.7 0.6 0.7 Electricity 4.3 3.7 3.2 2.5 1.9 2.7 Fuel oil and other fuels 0.3 0.3 0.3 0.2 0.2 0.3 Telephone services 3.0 3.0 2.9 2.5 1.8 2.4 Water and other public services 1.3 1.3 1.2 1.0 0.8 1.0 * Housing expenditures are composed of shelter, utilities, household operations, housekeeping expenses, furniture, and appliances. Source: Consumer Expenditure Survey, 2012, shares calculated by HUD.

    Third, as noted above, the standards under consideration in this notice are not overly restrictive and are expected to yield a high benefit-cost return.

    Notwithstanding the LCC savings and rapid simple paybacks on the initial investment described in this notice, low-income households face severe capital constraints; as a result there may be a question as to whether low-income families could be adversely impacted by the front-end incremental costs associated with adopting these codes. Based on the analysis provided in this Determination, the incremental costs are not sufficiently large to disadvantage low-income families in relation to the immediate benefits of that cost. Assuming a 3.5 percent down payment for an FHA-insured mortgage, low-income families will be required to pay an additional $35 at closing on the average incremental cost of approximately $1,000 required for the 2009 IECC. In addition, while HUD and USDA recognize the disproportionate burden that the incremental cost associated with higher code adoption has on low-income families, the benefits would also be shared disproportionately (this time positively), as a result of the much higher share of income low-income families spend on utilities relative to other households.

    6. Conclusion

    For the 34 States and the District of Columbia that have already adopted the 2009 IECC or a stricter code, there will be little or no impact on HUD and USDA's adoption of this standard for the programs covered under EISA, since all housing in these States is already required to meet this standard as a result of state legislation. For the remaining 16 States that have not yet adopted the 2009 IECC, HUD and USDA expect no negative affordability impacts from adoption of the code as a result of the low incremental first costs, the rapid simple payback times, and the LCC savings documented above.

    For the States that have not yet adopted the 2009 IECC, the evidence shows that the 2009 IECC is cost effective in all climate zones and on a national basis. Cost effectiveness is based on LCC cost savings estimated by DOE for energy-savings equipment financed over a 30-year period. In addition, simple paybacks on these investments are typically less than 10 years, and positive cash flows are in the 1- to 2-year range. HUD and USDA therefore determine that the adoption of the 2009 IECC code for HUD and USDA assisted and insured new single family home construction does not negatively impact the affordability of those homes.

    C. ASHRAE 90.1-2007 Affordability Determination

    EISA requires HUD to consider the adoption of ASHRAE 90.1 for HUD-assisted multifamily programs (USDA multifamily programs are not covered). ASHRAE 90.1 is an energy code published by the ASHRAE for commercial buildings, which, by definition, include multifamily residential buildings of more than three stories. The standard provides minimum requirements for the energy efficient design of commercial buildings, including high-rise residential buildings (four or more stories). By design of the standard revision process, ASHRAE 90.1 sets requirements for the cost-effective use of energy in commercial buildings.

    Beginning with ASHRAE 90.1-2001, the standard moved to a 3-year publication cycle. Substantial revisions to the standard have occurred since 1989. Significant requirements in ASHRAE 90.1-2007 over the previous (2004) code included stronger building insulation, simplified fenestration requirements, demand control ventilation requirements for higher density occupancy, and separate simple and complex mechanical requirements.

    ASHRAE 90.1-2007 included 44 changes, or addenda, to ASHRAE 90.1-2004.51 In an analysis of the code, DOE preliminarily determined that 30 of the 44 would have a neutral impact on overall building efficiency; these included editorial changes, changes to reference standards, changes to alternative compliance paths, and other changes to the text of the standard that may improve the usability of the standard, but do not generally improve or degrade the energy efficiency of the building. Eleven changes were determined to have a positive impact on energy efficiency and two changes to have a negative impact.52

    51 Pacific Northwest National Laboratory for the U.S. Department of Energy, Impacts of Standard 90.1-2007 for Commercial Buildings at State Level (September 2009). https://www.energycodes.gov/impacts-standard-901-2007-commercial-buildings-state-level.

    52 The two negative impacts on energy efficiency are: (1) Expanded lighting power exceptions for use with the visually impaired, and (2) allowance for louvered overhangs.

    The 11 addendums with positive impacts on energy efficiency include: increased requirement for building vestibules, removal of data processing centers from exceptions to HVAC requirements, removal of hotel room exceptions to HVAC requirements, modification of demand-controlled ventilation requirements, modification of fan power limitations, modification of retail display lighting requirements, modification of cooling tower testing requirements, modification of commercial boiler requirements, modification of part load fan requirements, modification of opaque envelope requirements, and modification of fenestration envelope requirements.

    1. Current Adoption of ASHRAE 90.1-2007

    Thirty-eight States and the District of Columbia have adopted ASHRAE 90.1-2007, its equivalent, or a stronger commercial energy standard (Table 5).53 In many cases, that standard is adopted by reference through adoption of the commercial buildings section of the 2009 IECC, while in other cases ASHRAE 90.1 is adopted separately. Twelve States either have previous ASHRAE codes in place or no statewide codes. ASHRAE 90.1-2007 was also the baseline energy standard established under ARRA for commercial buildings (including multifamily properties), to be adopted by all 50 States and for achieving a 90 percent compliance rate by 2017.54

    53 Not shown in Table 5 are the U.S. Territories. Guam, Puerto Rico, and the U.S. Virgin Islands have adopted ASHRAE 90.1-2007 for multifamily buildings. The Northern Mariana Islands have adopted the Tropical Model Energy Code, equivalent to ASHRAE 90.1-2001. American Samoa does not have a building energy code.

    Table 5—Current Status of ASHRAE Code Adoption by State 54 [as of November 2014] ASHRAE 90.1-2007 or higher
  • (38 states and District of Columbia)
  • Prior or no statewide codes
  • (12 States)
  • Alabama ASHRAE 90.1-2004 or Equivalent (4 States) Arkansas Hawaii. California Minnesota. Connecticut Oklahoma. Delaware Tennessee. District of Columbia Florida ASHRAE 90.1-2001 or Equivalent (1 State) Georgia Colorado. Idaho Illinois No Statewide Code (7 States) Indiana Alaska. Iowa Arizona. Kentucky Kansas. Louisiana Maine. Maryland Missouri. Massachusetts South Dakota. Michigan Wyoming. Mississippi (Effective July 1, 2013) Montana Nebraska Nevada New Hampshire New Jersey New Mexico New York North Carolina North Dakota Ohio Oregon Pennsylvania Rhode Island South Carolina Texas Utah Vermont Virginia Washington West Virginia Wisconsin
    2. ASHRAE 90.1-2007 Affordability Analysis

    54 “Status of State Energy Code Adoption.”

    Section 304(b) of Energy Conservation and Policy Act of 2005 (ECPA) requires the Secretary of DOE to determine whether a revision to the most recent ASHRAE standard for energy efficiency in commercial buildings will improve energy efficiency in those buildings.55 In its determination of improved energy efficiency for commercial buildings, DOE developed both a “qualitative” analysis and a “quantitative” analysis to assess increased efficiency of ASHRAE Standard 90.1.56 The qualitative analysis evaluates the changes from one version of Standard 90.1 to the next and assesses if each individual change saves energy overall. The quantitative analysis estimates the energy savings associated with the change, and is developed from whole building simulations of a standard set of buildings built to the standard over a range of U.S. climates.

    55 42 U.S.C. 6833(b)(2)(A). http://www.thefederalregister.org/fdsys/pkg/USCODE-2010-title42/pdf/USCODE-2010-title42-chap81-subchapII-sec6833.pdf.

    56 U.S. Department of Energy, Building Energy Standards Program: Determination Regarding Energy Efficiency Improvements in the Energy Standard for Buildings, Except Low-Rise Residential Buildings, ANSI/ASHRAE/IESNA Standard 90.1-2007 (Federal Register notice 76-FR-43287, July 20, 2011). https://www.federalregister.gov/articles/2011/07/20/2011-18251/building-energy-standards-program-determination-regarding-energy-efficiency-improvements-in-the.

    3. Energy Savings Analysis

    DOE's quantitative analysis for ASHRAE 90.1-2007 concluded that on average for mid-rise apartment buildings nationwide, electric energy use intensity would decrease by 2.1 percent and natural gas energy use intensity would decrease by 11.5 percent, for a total site decrease in energy use intensity of 4.3 percent under ASHRAE 90.1-2007.57 The energy cost index for this building type was also calculated to decrease by 3 percent.

    57 Pacific Northwest National Laboratory, Impacts of Standard 90.1-2007 for Commercial Buildings at State Level.

    DOE also completed a state-by-state assessment of the impacts of ASHRAE 90.1-2007 on residential (mid-rise apartments), nonresidential, and semi-heated buildings subject to commercial building codes.58 This analysis included energy and cost savings over current commercial building codes by both State and climate zone, by comparing each State's base code at the time of the study to ASHRAE standard 90.1-2007. Results of this savings analysis for the 12 States that have not yet adopted Standard 90.1-2007 can be found in Appendix 2. Results are shown for the percent reduction estimated by DOE in both overall site energy use and energy cost resulting from adoption of Standard 90.1-2007 over the base case.59 ASHRAE 90.1-2007 was projected to generate both energy and cost savings in all States in all climate zones over existing codes.

    58Ibid, 9ff. Individual state reports also available at https://www.energycodes.gov/impacts-standard-901-2007-commercial-buildings-state-level.

    59 Energy cost savings were estimated using national average energy costs of $0.0939 per kWh for electricity and $1.2201 per therm for natural gas.

    As shown in Appendix 2, the highest energy and cost savings projected by DOE for residential buildings, for example, was in Topeka, Kansas (Climate Zone 4A), where adoption of ASHRAE 90.1-2007 would provide 10.3 percent energy savings and 6.8 percent cost savings over the current energy code of the State of Kansas. The lowest energy and cost savings estimated by DOE for residential buildings were in Honolulu, Hawaii (Climate Zone 1A), at 0.8 percent in reduced electricity consumption and costs. (Differentials between energy savings and cost savings reflect price differences and varying shares of the total for different fuel sources.)

    As shown in Table 6, estimated front-end construction costs for the 12 States that have not yet adopted ASHRAE Standard 90.1-2007 range from $309 (Oklahoma) to $489 (Alaska). On the savings side, the estimated cost savings per unit range from a low of $28.70/year/unit in Colorado, to a high of $80.13/year/unit in Kansas. Simple paybacks on the initial investment range from a low of 4.2 years (Kansas) to a high of 15.1 years (Hawaii).

    Table 6—Estimated Costs and Benefits Per Dwelling Unit From Adoption of ASHRAE 90.1-2007 60 State Incremental
  • cost/unit
  • ($)
  • Energy cost
  • savings/unit
  • ($/year)*
  • Simple
  • payback/unit
  • (years)
  • AK 489 68.95 7.1 AZ 340 76.88 4.4 CO 354 28.70 12.4 HI 476 31.66 15.1 KS 338 80.13 4.2 ME 373 62.95 5.9 MN 413 31.15 13.3 MO 366 36.28 10.1 OK 309 31.79 9.7 SD 317 32.32 9.8 TN 318 30.40 10.5 WY 319 33.38 9.6 * Note on Energy Cost Savings: This table uses EIA fuel prices by state.
    4. Cost Effectiveness Analysis and Results

    60 Sources: HUD estimate of incremental costs and cost savings associated with ASHRAE 90.1-2007; incremental costs/unit were estimated by adjusting the New York incremental cost of $441 per unit by Total Development Cost (TDC) adjustment factors in Appendix 2B. Energy cost savings/unit were derived using EIA's Average Retail Price of Electricity in October 2014 (http://www.eia.gov/electricity/monthly/, Table 5.6 for October 2014 data from the December 2014 Electric Power Monthly) and October 2014 Natural Gas Prices (http://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_m.htm).

    As discussed above, while DOE has completed an analysis of projected savings that will result from ASHRAE 90.1-2007, an equivalent to the cost studies conducted by DOE of the 2009 IECC does not exist for ASHRAE 90.1-2007. However, in 2009 PNNL completed an analysis for DOE of the incremental costs and associated cost benefits of complying with the new standard for the State of New York, and this analysis was used by HUD and USDA as the basis for determining the overall affordability impacts of the new standard.61 Note, however, a number of limitations exist in this analysis. For their cost analysis, PNNL compared ASHRAE 90.1-2007 to the prevailing code in New York at the time, the 2003 IECC (that references ASHRAE 90.1-2001) whereas the current minimum standard for HUD-assisted multifamily buildings is ASHRAE 90.1-2004. On the other hand, for their benefits analysis (i.e., energy savings) PNNL compared savings that would result from the adoption of ASHRAE 90.1-2007 to prevailing state codes at the time. For the 12 states that have not yet adopted ASHRAE 90.1-2007, the prevailing state codes used by PNNL were equivalent to the current HUD standard, ASHRAE 90.1-2004, in three States. For the remaining States, the prevailing State codes used by PNNL were ASHRAE 90.1-2001 in two States, a State-specific code in one State (Minnesota) and ASHRAE 90.1-1999 in five States in the absence of a statewide code. Despite these limitations as to the baseline codes used by PNNL compared to current minimum HUD standards, the PNNL baseline analysis as used in this Determination is the best available analysis upon which to base a Determination on the costs and benefits associated with the adoption of ASHRAE 90.1-2007.

    61 Pacific Northwest National Laboratory, Cost Effectiveness and Impact Analysis of Adoption of ASHRAE 90.1-2007 for New York State.

    In its New York analysis, PNNL found that adoption of ASHRAE 90.1-2007 would be cost effective for all commercial building types, including multifamily buildings, in all climate zones in the State. The incremental first cost of adopting the revised standard for a hypothetical 31-unit mid-rise residential prototype building in New York was projected to be $21,083, $10,423, and $9,525 per building for each of three climate zones in New York (Climate Zones 4A, 5A, and 6A, respectively), for an average across all climate zones of $13,677 per building, or $441 per dwelling unit. (Costs in Climate Zone 4A were high because the sample location chosen for construction costs was New York City.)

    Annual energy cost savings in New York were projected to be $2,050, $1,234, and $1,185 for Climate Zones 4A, 5A, and 6A per building, respectively, for an average building, yielding cost savings of $1,489 per building for all climate zones, and average savings of $45 per unit. The average simple payback period for this investment in New York is 9.8 years, with a range of approximately 8 to 10 years.

    Using New York as a baseline, HUD and USDA used Total Development Cost (TDC) adjustment factors developed by HUD in order to determine an estimate of the incremental costs associated with ASHRAE 90.1-2007 in the 12 States that have not yet adopted this code. HUD develops annual TDC limits for multifamily units for major metropolitan areas in each State. The average TDC for each State was derived by averaging TDCs for walkup- and elevator-style building types in each of several metropolitan areas in that State. Note that TDC costs include soft costs, site improvement costs, and management costs, and are derived by a standard adjustment factor applied to hard construction costs, referred to as Housing Construction Costs (HCC). HCC limits are determined by averaging R.S. Means “average” and Marshall and Swift “good” cost indices. Section 6(b) of the United States Housing Act of 1937 and regulations at 24 CFR 941.306 require HUD to establish TDC limits by multiplying the HCC construction cost guideline by 1.6 for elevator type structures and by 1.75 for non-elevator type structures. For the State of New York, TDCs were averaged for all of the State's metro areas, and arrived at an average New York TDC of $221,607 per unit.62 HUD and USDA then developed a TDC adjustment factor, which consists of the ratio of the average New York TDC of $221,607 for a two-bedroom unit against the average TDC for a similar unit in other States (Appendix 3). This TDC adjustment factor was then applied to the average cost per unit of $441 for complying with ASHRAE 90.1-2007 in New York, to arrive at an incremental cost per unit for the 12 States that have not yet adopted ASHRAE 90.1-2007 (Table 6).

    62 “2011 Unit Total Development Cost (TDC) Limits,” U.S. Department of Housing and Urban Development, http://portal.hud.gov/huddoc/2011tdcreport.pdf.

    In developing this adjustment factor, HUD considered whether to use IECC location cost indices developed by PNNL 63 or HCC costs (TDC minus soft and site improvement costs) rather than TDC costs. With regard to possible use of the IECC cost indices, since TDC cost indices were specifically developed for HUD-assisted properties, they are appropriately used here rather than the IECC cost indices. In addition, TDC (and HCC) costs apply to mid- and high-rise multifamily properties, while the IECC cost indices may or may not be transferable since they were developed for a different building type (single family or low-rise multifamily). With regard to using the HCC rather than the TDC, since the TDC is a standard function of the HCC, the adjustment factor will be the same for both the TDC (including soft costs) and the HCC (excluding soft costs).

    63 Pacific Northwest National Laboratory, Cost-Effectiveness Analysis of the 2009 and 2012 IECC Residential Provisions—Technical Support Document.

    In their April 15 Preliminary Determination HUD and USDA used national averages for electricity and fuel rates to estimate energy savings. In this Final Determination HUD and USDA use current State average electricity and natural gas rates (October 2014) published by the EIA, and apply those rates to an average of DOE's estimated energy savings across climate zones in each State to generate statewide energy savings estimates and to calculate simple payback periods for the ASHRAE 90.1-2007 investments.64 For example, as shown in Table 6 and Appendix 2, the average annual cost savings per unit resulting from adopting ASHRAE 90.1-2007 in Arizona is estimated to be 5.5 percent of baseline utility costs of $1,393 per unit per year, or $76.88 in per unit annual energy cost savings. For an estimated average incremental cost of $340 per unit, the simple payback derived from these costs savings in Arizona is 4.4 years.65 Note that the same baseline code used for the New York incremental cost analysis (the IECC 2003 or ASHRAE 90.1-2001) is assumed for these States; the actual baseline codes in these States may vary from the New York baseline (see Appendix 2).

    64 U.S. Energy Information Administration, Independent Statistics and Analysis, October 2014, at http://www.eia.gov/electricity/monthly/, Table 5.6 for October 2014 data from the December 2014 Electric Power Monthly, and http://www.eia.gov/dnav/ng/ng_pri_sum_a_EPG0_PRS_DMcf_m.htm.

    65 While the 12 States that have not yet adopted ASHRAE 90.1-2007 have a variety of different energy codes, for the purposes of these estimates, the current codes in those States are assumed to be roughly equivalent to those in New York (ASHRAE 90.1-2004) at the time of the DOE study. States that have pre-2004 codes in place are likely to yield greater savings.

    5. Conclusion

    USDA's multifamily programs are not covered by EISA, and therefore will not be impacted by ASHRAE 90.1. For impacted HUD programs in the 38 States and the District of Columbia that have adopted ASHRAE 90.1-2007 or a higher standard, there will, by default, be no adverse affordability impacts of adopting this standard. For the remaining 12 States that have not yet adopted ASHRAE 90.1-2007, HUD and USDA estimate the incremental cost of ASHRAE 90.1-2007 compliance at under $500 per dwelling unit, with the highest incremental cost at $490 per dwelling unit (Alaska), and the lowest cost at $310 per dwelling unit (Oklahoma). This estimate compares favorably to the cost of complying with the 2009 IECC for single family homes, which shows a somewhat higher average incremental cost of $1,019 per dwelling unit. With one exception (Hawaii), simple payback times using the most recent State average energy prices from EIA are 15 years or under.

    The estimated payback for Hawaii slightly exceeds 15 years (15.1 years). While the Preliminary Determination had proposed to exempt Hawaii, as a result of this Final Determination, HUD will require Hawaii to comply with ASHRAE 90.1-2007 for HUD-assisted or FHA-insured multifamily properties specified in EISA. This is because the Hawaii Building Code Council has already adopted the 2009 IECC (roughly equivalent to ASHRAE 90.1-2007), as well as the fact that current (October 2014) EIA data show the average cost per kilowatt hour in that State as of February 2014 has risen to 36 cents per kilowatt hour, thereby lowering the payback period to 15.1 years. The payback of 15.1 years is consistent with the other four States shown in Table 6 with paybacks that are longer than 10 years.

    Accordingly, given the low incremental cost of compliance with the new standard and the generally favorable simple payback times, HUD and USDA have determined that adoption of ASHRAE 90.1-2007 by the covered HUD programs will not negatively impact the affordability of multifamily buildings built to the revised standard in the 12 States that have not yet adopted this standard.

    D. Impact on Availability of Housing

    EISA requires that HUD and USDA assess both the affordability and availability of housing covered by the Act. This section of this notice addresses the impact that the EISA requirements would have on the “availability” of housing covered by the Act. “Affordability” is assumed to be a measure of whether a home built to the updated energy code is affordable to potential homebuyers or renters, while “availability” of housing is a measure associated with whether builders will make such housing available to consumers at the higher code level; i.e., whether the higher cost per unit as a result of complying with the revised code will impact whether that unit is likely to be built or not. A key aspect of determining the impact on availability is the proportion of affected units in relation to total units funded by HUD and USDA or total for-sale units. These issues are discussed below.

    1. Impact of Increases in Housing Prices and Hedonic Effects

    Though both higher construction costs and hedonic increases in demand for more energy-efficient housing are expected to contribute to an increase in housing prices or contract rents, HUD and USDA do not project such higher prices to decrease the quantity of affordable housing exchanged in the market. For reasons explained in the above discussion of market failures, improved standards are expected to reduce operating costs per square foot, which will motivate consumers to increase demand for more housing at each rent level, and for developers or builders to respond to such demand with increased supply. Therefore, regulatory action that leads to investments with positive net present value can be expected to maintain or increase the quantity of housing consumed.

    Measuring the hedonic value (demand effect) of energy efficiency improvements is fraught with difficulty, and there is little consensus in the empirical literature concerning the degree of capitalization.66 However, whatever their methodology, studies do suggest a significant and positive influence of energy efficiency on real estate values. One of the most complete studies on the hedonic effects of energy efficiency is on commercial buildings.67 The results indicate that a commercial building with an ENERGY STAR certification will rent for about 3 percent more per square foot, increase effective rents by 7 percent, and sell for as much as 16 percent more. The authors skillfully disentangle the energy savings required to obtain a label from the unobserved effects of the label itself. Energy savings are important: a 10 percent decrease in energy consumption leads to an increase in value of about 1 percent, over and above the rent and value premium for a labeled building. According to the authors of the study, the “intangible effects of the label itself” seem to play a role in determining the value of green buildings.

    66 Joseph Laquatra et al, “Housing Market Capitalization of Energy Efficiency Revisited,” (paper presented at the 2002 ACEEE Summer Study on Energy Efficiency in Buildings, 2002). http://www.eceee.org/library/conference_proceedings/ACEEE_buildings/2002/Panel_8/p8_12/paper.

    67 P. Eichholz, N. Kok and J. Quigley, “Doing Well by Doing Good? Green Office Buildings,” American Economic Review 100:5 (2010): 2492-2509.

    2. Impact of 2009 IECC on Housing Availability

    For the 34 States and the District of Columbia that have already adopted the 2009 IECC, there will be few negative effects on the availability of housing covered by EISA as a result of HUD and USDA establishing the 2009 IECC as a minimum standard. For those 16 States that have not yet adopted the revised codes, HUD and USDA have estimated the number of new construction units built under the affected programs in FY 2011. As detailed in Table 7, in FY 2011, a total of 15,425 units of HUD- and USDA-assisted new single family homes were built in these States, including 11,533 that were FHA-insured new homes, 850 that received USDA Section 502 direct loans, and 2,864 that received Section 502 guaranteed loans. Overall, this represented 4.6 percent of all new single family home sales in the United States, and 0.3 percent of all U.S. single family home sales in FY 2011.68

    68 New single family home sales totaled 333,000 in 2011; all single family home sales totaled 5,236,000. “FHA Single-Family Activity in the Home-Purchase Market Through November 2011,” Federal Housing Administration, February 2012, http://portal.hud.gov/hudportal/documents/huddoc?id=fhamkt1111.pdf.

    Assuming similar levels of production as in 2011, the share of units estimated as likely to be impacted by the IECC in the 16 States that have not yet adopted this code is likely to be similar; i.e., approximately 4.6 percent of all new single family home sales in those 16 States, and 0.3 percent of all single family home sales in those 16 States.

    Table 7—Estimated Number of HUD- and USDA-Supported Units Potentially Impacted by Adoption of 2009 IECC States not yet adopted 2009 IECC HOME FHA Single family USDA
  • Sec. 502
  • direct
  • USDA
  • Sec. 502
  • guaranteed
  • Total
    AK 16 207 25 53 301 AR 10 672 127 412 1,221 AZ 14 866 28 115 1,023 CO 5 195 5 8 212 HI 10 109 35 165 319 KS 5 686 28 52 771 ME 0 175 50 95 320 MN 14 1,659 20 72 1,765 MO 13 1,456 48 284 1,801 MS 10 506 114 361 991 OK 15 1,074 100 275 1,464 SD 6 182 30 80 298 TN 28 1,609 57 349 2,043 UT 14 1,224 156 314 1,708 WI 19 743 15 66 843 WY 0 171 12 163 346 Total 178 11,533 850 2,864 15,425

    Adoption of the 2009 IECC for affected HUD and USDA programs represents an estimated one-time incremental cost increase for new construction single family units of $15 million nationwide, and an estimated annual benefit of $3.0 million in energy cost savings, for an estimated simple payback of 5 years, as shown in Appendix 5.

    3. Impact of ASHRAE 90.1-2007 on Housing Availability

    ASHRAE 90.1-2007 has been adopted by 38 States and the District of Columbia; the availability of HUD- assisted housing will therefore not be negatively impacted in these States with the adoption of this standard by the two agencies. As shown in Table 8, in the 12 States that have not yet adopted this code, 5,256 new multifamily units were funded or insured through HUD programs in FY 2011. HUD and USDA project that of the units produced in the programs shown in Table 8, only units for which HOME Investment Partnership Program (HOME) funds are committed on or after January 24, 2015, and future units under FHA-insured multifamily programs will be affected by this Notice of Final Determination. Using FY 2011 unit production as the baseline, HUD and USDA project this to be approximately 3,217 units annually. This total, as well as other totals in Table 8 below, reflect a discount factor for Arizona and Colorado to reflect current home rule adoption of higher codes in those States (70 percent and 90 percent, respectively).

    Although covered under EISA, HUD's Public Housing Capital Fund, the Sections 202 and 811 Supportive Housing and the HOPE VI programs are not projected to be covered by the codes addressed in this notice, due to the fact that the Public Housing Capital Fund currently already requires a more recent building energy code for new construction (ASHRAE 90.1-2010); the Sections 202 and 811 Supportive Housing programs no longer fund new construction, and, in any case have established higher standards for new construction in recent notices of funding availability (NOFAs) (ENERGY STAR Certified New Homes and ENERGY STAR Certified Multifamily High Rise buildings); and HOPE VI is no longer active.

    Table 8—Estimated Number of HUD-Assisted Units Potentially Impacted by Adoption of ASHRAE 90.1-2007 States not yet adopted
  • ASHRAE 90.1-2007
  • Public housing capital fund Section
  • 202/811
  • HOME HOPE VI FHA-
  • Multifamily
  • Total
    AK 16 53 0 69 AZ * 0 175 82 257 CO * 1 15 164 181 HI 0 138 0 138 KS 24 35 0 59 ME 0 0 0 0 MN 204 80 180 464 MO 134 532 144 810 OK 10 215 1,086 1,311 SD 0 79 60 139 TN 33 91 144 268 WY 0 9 72 81 Unallocated 1,155 323 Total Units Produced in FY2011 1,155 422 1,422 323 1,932 5,256 Total Units Projected to be Covered Under this Notice 1,422 1,932 3,217 * AZ and CO statewide numbers adjusted by 70 percent and 90 percent respectively, to reflect estimated adoption rate of the code by home rule municipalities.

    Of the total, approximately 15 new multifamily projects with 1,932 units were endorsed by FHA in 2011 in these States. The 1,932 multifamily units endorsed by FHA in FY 2011 in States that have not yet adopted ASHRAE 90.1-2007 represented approximately 1 percent of a total of 180,367 units receiving FHA multifamily endorsements nationwide in FY 2011. The 15 projects with affected units represented a mortgage value of $187 million, or 1.6 percent of a total FHA-insured mortgage amount of $11.68 billion in FY 2011. Assuming a similar share of impacted units as in FY 2011 in future years, HUD and USDA assume that approximately 1 percent of FHA multifamily endorsements will be impacted by ASHRAE 90.1-2007, and less than 2 percent of total loan volume.

    For both HOME and FHA-insured units shown in Table 8 (above) adoption of ASHRAE 90.1-2007 by the covered HUD programs represents an estimated one-time incremental cost increase for new multifamily residential units of $1 million nationwide, and an estimated annual benefit of $93,400 nationwide, resulting in an estimated simple payback time of less than 12 years, as shown in Appendix 5.

    4. Conclusion

    Given the extremely low incremental costs associated with adopting both the 2009 IECC and ASHRAE 90.1-2007 described above, and that the estimated number of new construction units built under the affected programs in FY 2011 in States that have not yet adopted the revised codes is a small percentage of the total number of new construction units in those programs nationwide, HUD and USDA have determined that adoption of the codes will not adversely impact the availability of the affected units.

    E. Implementation Schedule

    Section 109(d) of Cranston-Gonzalez automatically applies 2009 IECC and ASHRAE 90.1-2007 to all covered programs upon completion of this determination by HUD and USDA, and the previously published energy efficiency determinations by DOE. Accordingly, the adoption of the 2009 IECC or ASHRAE 90.1-2007 new construction standards described in this notice will take effect as follows:

    (1) For FHA-insured multifamily programs, to those properties for which mortgage insurance pre-applications are received by HUD 90 days after the effective date of this Final Determination;

    (2) For FHA-insured and USDA-guaranteed single family loan programs, to properties for which building permits are issued 180 days after the effective date of a Final Determination.

    (3) For the HOME program, the standards set forth by this notice are applicable to projects upon publication of guidance by HUD related to property standard requirements at 24 CFR 92.251.

    HUD and USDA will take such administrative actions as are necessary to ensure timely implementation of, and compliance with, the energy codes, to include mortgagee letters, notices, Builder's Certification form HUD-92541, and amendments to relevant handbooks. Conforming rulemaking will also be required for one HUD program to update previous regulatory standards: the Federal Housing Administration's (FHA) single family minimum property standards, for which the regulations are codified at 24 CFR 200.926d. In addition, USDA will update minimum energy requirements codified in USDA regulations at 7 CFR 1924.

    F. Alternative Compliance Paths

    HUD and USDA will accept certifications for a range of energy and green building standards that require energy efficiency levels that meet or exceed the 2009 IECC or ASHRAE 90.1-2007 as evidence of compliance with the standards addressed in this notice. These include the ICC-700 National Green Building Standard (Performance Path), Enterprise Green Communities, ENERGY STAR Certified New Homes, ENERGY STAR Multifamily High Rise, LEED-NC, LEED-H, or LEED-H Midrise, and several regional or local green building standards, such as Earthcraft House, Earthcraft Multifamily, Earth Advantage New Homes, or GreenPoint Rated New Homes. These standards all require energy efficiency levels that meet or exceed the 2009 IECC and ASHRAE 90.1-2007. In addition, several States have adopted energy efficiency codes or standards that exceed the efficiency levels of the 2009 IECC and ASHRAE 90.1-2007, including, for example, the Title 24 California Energy Code in California, and Focus on Energy in Wisconsin. HUD and USDA will accept certifications of compliance with these State codes or standards as well as other State codes or standards for which credible third-party documentation exists that these exceed the 2009 IECC and ASHRAE 90.1-2007.

    G. Cost Benefit Analysis 1. Energy Costs and Savings

    For both single family units complying with the 2009 IECC and multifamily units complying with ASHRAE 90.1-2007, the combined cost of implementing the updated codes is estimated at $16.1 million, with an estimated annual energy cost savings of $3.1 million, yielding a simple payback of 5.2 years. Annualized costs for this initial investment over 10 years are $1.8 million. Over 10 years, the present value of these cost savings, using a discount rate of 3 percent, is $27.0 million, for a net present value savings of $10.9 million over 10 years.

    2. Social Benefits of Energy Standards

    In addition to energy savings (described above) that will result from adoption of the energy standards addressed in this Determination, additional benefits are realized (in the form of lower social costs) from the resulting reductions in emissions of pollutants (such as particulate matter) that cause health and property damage and greenhouse gases (such as carbon dioxide) (CO2) that cause global warming.

    The “social cost of carbon” (SCC) is an estimate used by EPA and other Federal agencies to describe the economic damages associated with a small increase in CO2 emissions, conventionally 1 metric ton, in a given year. This dollar figure also represents the value of damages avoided for a small emission reduction (i.e., the benefit of a CO2 reduction).69 The SCC is meant to be a comprehensive estimate of climate change damages and includes, but is not limited to, changes in net agricultural productivity, human health, and property damages from increased flood risk.70

    69 Definition of Social Cost of Carbon at http://www.epa.gov/climatechange/EPAactivities/economics/scc.html.

    70Ibid. Given current modeling and data limitations, the SCC does not include all important damages. As noted by the Intergovernmental Panel on Climate Change Fourth Assessment Report, it is “very likely that [SCC] underestimates” the damages. The models used to develop SCC estimates, known as integrated assessment models, do not currently include all of the important physical, ecological, and economic impacts of climate change recognized in the climate change literature because of a lack of precise information on the nature of damages and because the science incorporated into these models naturally lags behind the most recent research. Nonetheless, the SCC is a useful measure to assess the benefits of CO2 reductions.

    The marginal social cost of carbon is taken from the Interagency Working Group on Social Cost of Carbon (2013) and adjusted by the Gross Domestic Product deflator to the 2012 price level. To calculate the social cost of carbon in any given year, the Interagency Working Group on Social Cost of Carbon estimated the future damages to agriculture, human health, and other market and nonmarket sectors from an additional unit (metric ton) of carbon dioxide emitted in a particular year.71 The interagency group provides estimates of the damage for every year of the analysis from a future value of $39 in 2013 to $96 in 2027 (a 25-year stream of benefits). A worst-case scenario was presented by the Interagency Working Group with costs starting at $110 in 2013 and rising to $196 by 2037.

    71 Interagency Working Group on Social Cost of Carbon, Technical Support Document: Social Cost of Carbon for Regulatory Impact Analysis under Executive Order 12866, United States Government, 2010. The interagency group chose a global measure of the social cost of carbon because emissions of most greenhouse gases contribute to damages around the world.

    The emission rate of metric tons of CO2 for each British thermal unit (BTU) consumed varies by power or fuel source. The primary source for these data is emissions factors developed by the U.S. Energy Information Administration (EIA) and utilized by the EIA Voluntary Reporting of Greenhouse Gases Program, as well as other EIA sources.72

    72 The EIA Voluntary Reporting Greenhouse Gas Reporting Program was discontinued in 2011, but the emissions factors utilized by that program, posted at http://www.eia.gov/oiaf/1605/emission_factors.html, and utilized here by HUD and USDA, remain valid.

    HUD uses a range for its emission factor of 0.107 to 0.137 metric tons of CO2 per million BTUs. The lower figure of 0.107 metric tons of CO2 per million BTUs was derived as follows: the most direct method of calculating the CO2 emission rate for the residential sector is to divide total reported CO2 emissions from energy consumption in the energy sector (1,162 million metric tons) by the corresponding energy consumption (10,833 trillion BTUs) including coal, natural gas, petroleum, and retail electricity. The average emission factor would be 107 kg CO2 per million BTUs.

    The higher figure of 0.137 metric tons of CO2 per million BTUs was derived using a more detailed and comprehensive analysis for specific power or fuel sources: the emission rates for coal, natural gas, and petroleum 73 are those for the residential and commercial sectors as provided the EIA. Carbon dioxide emission coefficients from the generation of electricity were calculated from the 2012 United States Electricity Profile 2012.74 HUD included both direct (sales) and indirect (energy losses) emissions using an emission factor of 169.8 metric tons of CO2 per million BTUs for both.75 HUD found that the weighted average CO2 emission factor is 137.7 metric tons CO2 per million BTUs by weighting the emission coefficient factors by the share of residential energy consumption from each power source except biomass.76

    73 Petroleum consumption includes distillate fuel oil, kerosene, and liquefied petroleum gases. The emission coefficient is the one for “Home Heating and Diesel Fuel.”

    74 U.S. Energy Information Administration, “State Electricity Profiles,” 2012. http://www.eia.gov/electricity/state/unitedstates/.

    75 This estimate is very close to that of www.carbonfund.org, which estimates a CO2 emission factor of 173 using EPA eGRID data.

    76 Energy Information Administration, Annual Energy Review, 2013, Table 2.1b.

    Given that both approaches are credible but arrive at a different estimate, HUD and USDA used a range for its emission factor of from 0.107 to 0.137 metric tons of CO2 per million BTUs.

    Based on studies by DOE, HUD estimates energy savings of 1.79 million BTUs per housing unit per year from the ASHRAE 90.1-2007 standard and a reduction of 7.3 million BTUs per housing unit per year from the 2009 IECC. The expected aggregate energy savings (technical efficiency) is approximately 118,300 million BTUs annually.77

    77 Aggregated energy savings are derived as follows: 1.79 MMBTU × 3,217 multifamily units + 7.3 MMBTU × 15,425 single family units.

    Whatever the predicted energy savings (technical efficiencies) of an energy efficiency upgrade, the actual energy savings by a household are likely to be smaller due to a behavioral response known as the “rebound effect.” A rebound effect has been observed when an energy efficient investment effectively lowers the price of the outputs of energy (heat, cooling, and lighting), which may lead to both income and substitution effects by raising the demand for energy. Increasing energy efficiency reduces the expense of physical comfort and may thus increase the demand for comfort. To account for the wide range of estimates for the scale of the rebound effect and the uncertainty surrounding these estimates, HUD assumes a range of between 10 and 30 percent.78 The size of the rebound effect does not reduce the benefit to a consumer of energy efficiency but indicates how those benefits are allocated between reduced energy costs and increased comfort. Taking account of the rebound effect, the technical efficiencies provided by the energy standards discussed in this notice produce an estimated energy savings between 82,810 million and 106,470 million BTUs.

    78 Sorrel, Steven, The Rebound Effect: An Assessment of the Evidence for Economy-Wide Energy Savings from Improved Energy Efficiency, UK Energy Research Centre, October 2007.

    Table 9 below summarizes the aggregate social benefits realized from reducing carbon emissions for different marginal social cost scenarios (average and worst case), lifecycles, and scenario assumptions. The highest benefits will be for a high marginal social cost of carbon, long life cycle, low rebound factor, and high emissions factor.

    Marginal Social Costs as used here are a measure of the non-energy economic costs associated with carbon emissions. Marginal Social Costs are defined by the Business Dictionary as the “incremental cost of an activity as viewed by the society and expressed as the sum of marginal external cost and marginal private cost.” As discussed in more detail above, the Marginal Social Cost of carbon is the social cost of each additional ton of CO2 resulting from energy consumption. As defined by the Technical Update of the Social Cost of Carbon for Regulatory Impact Analysis, “(t)he SCC is an estimate of the monetized damages associated with an incremental increase in carbon emissions in a given year. It is intended to include (but is not limited to) changes in net agricultural productivity, human health, property damages from increased flood risk, and the value of ecosystem services due to climate change.79

    79 Under Executive Order 12866, Interagency Working Group on Social Cost of Carbon.

    Table 9—Annualized Value of Reduction in CO2 Emissions [$2012 million] Life cycle Emission factor of 0.107 Rebound 30% Median
  • MSC *
  • High
  • MSC
  • Rebound 10% Median
  • MSC *
  • High
  • MSC
  • Emission factor of 0.137 Rebound of 30% Median
  • MSC *
  • High
  • MSC
  • Rebound of 10% Median
  • MSC *
  • High
  • MSC
  • 10 years 0.39 1.14 0.49 1.45 0.49 1.45 0.64 1.86 15 years 0.41 1.20 0.52 1.55 0.52 1.54 0.67 2.01 20 years 0.43 1.26 0.55 1.62 0.55 1.62 0.70 2.11 25 years 0.44 1.33 0.57 1.70 0.57 1.70 0.72 2.18 * MSC = Marginal Social Cost.

    The annualized value of the social benefits of reducing carbon emissions, discounted at 3 percent, ranges from $390,000 (median MSC over 10 years) to $2.18 million (high MSC over 25 years).80 The corresponding present values range from $3.4 to $16.3 million over 10 years and from $7.9 million to $39 million over 25 years.

    80 Because the Interagency Group used a 3 percent rate to calculate the present value of damage, HUD uses the same rate in order to be consistent with the federally approved estimates of damage.

    III. Findings and Certifications Environmental Review

    A Finding of No Significant Impact with respect to the environment was made with respect to the preliminary affordability determination in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of the National Environmental Policy Act of 1969 (42 U.S.C. 4332(2)(C)), and remains applicable to this final affordability determination. That finding is posted at www.regulations.gov and www.hud.gov/resilience and is available for public inspection between the hours of 8 a.m. and 5 p.m., weekdays, in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the finding by calling the Regulations Division at 202-402-3055 (this is not a toll-free number).

    Dated: April 23, 2015. Julián Castro, Secretary, U.S. Department of Housing and Urban Development. Dated: April 23, 2015. Thomas J. Vilsack, Secretary, U.S. Department of Agriculture. Appendix 1. Covered HUD and USDA Programs Legal authority Regulations HUD Programs: Public Housing Capital Fund Section 9(d) and section 30 of the U.S. Housing Act of 1937 (42 U.S.C. 1437g(d) and 1437z-2) 24 CFR parts 905, 941, and 968. HOPE VI Revitalization of Severely Distressed Public Housing Section 24 of the U.S. Housing Act of 1937 (42 U.S.C. 1437v) 24 CFR part 971. Choice Neighborhoods Implementation Grants Section 24 of the U.S. Housing Act of 1937 (42 U.S.C. 1437v) 24 CFR part 971. Choice Neighborhoods Planning Grants Section 24 of the U.S. Housing Act of 1937 (42 U.S.C. 1437v) 24 CFR part 971. Section 202 Supportive Housing For the Elderly Section 202 of the Housing Act of 1959 (12 U.S.C. 1701q), as amended 24 CFR part 891. Section 811 Supportive Housing for Persons with Disabilities Section 811 of the Housing Act of 1959 (12 U.S.C. 1701q), as amended 24 CFR part 891. HOME Investment Partnerships (HOME) Title II of the Cranston-Gonzalez National Affordable Housing Act (42 U.S.C. 12742 et seq.) 24 CFR part 92. FHA Single Family Mortgage Insurance Programs National Housing Act Sections 203(b) (12 U.S.C. 1709(b)), Section 251 (12 U.S.C. 1715z-16), Section 247 (12 U.S.C. 1715z-12), Section 203(h) (12 U.S.C. 1709(h)), Housing and Economic Recovery Act of 2008 (Pub. L. 110-289), Section 248 of the National Housing Act (12 U.S.C. 1715z-13) 24 CFR parts 203, Subpart A; 203.18(i); 203.43i; 203; 203.49; 203.43h. FHA Multifamily Mortgage Insurance Programs Sections 213, 220, 221, 231, and 232 of the National Housing Act (12 U.S.C.1715e, 12 U.S.C.1715v, 12 U.S.C.1715k, 12 U.S.C.17151, 12 U.S.C.1715w) 24 CFR parts 200, subpart A, 213; 231; 220;221, subparts C and D; and 232. USDA Programs: Section 502 Guaranteed Housing Loans Section 502 of Housing Act (42 U.S.C. 1472) 7 CFR part 1980. Section 502 Rural Housing Direct Loans Section 502 of Housing Act (42 U.S.C. 1472) 7 CFR part 3550. Section 502 Mutual Self Help Loan program, homeowner participants Section 502 of Housing Act (42 U.S.C. 1472) 7 CFR part 3550. Appendix 2. Estimated Energy and Cost Savings from Adoption of ASHRAE 90.1-2007  81

    81 Source: Pacific Northwest National Laboratory (PNNL), Department of Energy, Impacts of Standard 90.1-2007 for Commercial Buildings at State Level, September 2009. States for which figures are provided are States that have not yet adopted ASHRAE 90.1-2007. Available at http://www.energycod5.6es.gov/impacts-standard-901-2007-commercial-buildings-state-level. This table updates the energy cost savings presented in this report, by utilizing current individual State fuel and electricity prices (as of October 2014), whereas the PNNL report utilizes national average prices.

    State Location Climate zone Energy savings
  • (%)
  • Baseline energy costs
  • ($/unit/year)
  • Energy cost
  • savings
  • ($/unit/year)
  • Energy cost
  • savings
  • (%)
  • AK Anchorage 7 6.5 2,202 70.40 3.3 Fairbanks 8 4.7 2,428 67.50 2.8 Average 5.6 2,315 68.95 3.0 AZ Phoenix 2B 6.6 1,385 82.55 6.0 Sierra Vista 3B 6.1 1,342 76.29 5.7 Prescott 4B 8.7 1,407 92.76 6.6 Flagstaff 5B 5.7 1,437 55.92 3.9 Average 6.8 1,393 76.88 5.5 CO La Junta 4B 7.4 1,300 45.28 3.5 Boulder 5B 7.5 1,304 46.13 3.5 Eagle 6B 1.7 1,295 8.18 0.6 Alamosa 7B 2.7 1,306 15.20 1.2 Average 4.8 1,301 28.70 2.2 HI Honolulu 1A 0.8 3,930 31.66 0.8 Average 0.8 3,930 31.66 0.8 KS Topeka 4A 10.3 1,615 109.83 6.8 Goodland 5A 5.2 1,594 50.43 3.2 Average 7.8 1,605 80.13 5.0 ME Portland 6A 4.5 1,907 47.78 2.5 Caribou 7 5.4 2,104 78.12 3.7 Average 5.0 2,005 62.95 3.1 MN St. Paul 6A 2.2 1,462 12.04 0.8 Duluth 7 5.2 1,546 50.27 3.3 Average 3.7 1,504 31.15 2.1 MO St. Louis 4A 3.5 1,370 36.05 2.6 St. Joseph 5A 3.6 1,383 36.51 2.6 Average 3.6 1,377 36.28 2.6 OK Oklahoma City 3A 1.5 1,325 21.27 1.6 Guymon 4A 3.6 1,374 42.32 3.1 Average 2.6 1,349 31.79 2.4 SD Yankton 5A 4.1 1,409 32.49 2.3 Pierre 6A 4.2 1,411 32.14 2.3 Average 4.2 1,410 32.32 2.3 TN Memphis 3A 3.4 1,174 35.68 3.0 Nashville 4A 3.2 1,221 25.12 2.1 Average 3.3 1,198 30.40 2.5 WY Torrington 5B 4.2 1,316 31.21 2.4 Cheyenne 6B 4.5 1,347 33.72 2.5 Rock Springs 7B 4.7 1,372 35.20 2.6 Average 4.5 1,345 33.38 2.5
    Appendix 3. TDC Adjustment Factors For States That Have Not Adopted ASHRAE 90.1-2007 State TDC Limit
  • ($)
  • TDC adjustment factor *
    AK 245,882 1.11 AZ 171,058 0.77 CO 178,241 0.80 HI 239,412 1.08 KS 170,213 0.77 ME 187,802 0.85 MN 207,475 0.94 MO 184,221 0.83 OK 155,578 0.70 SD 159,576 0.72 TN 160,222 0.72 WY 160,431 0.72 Avg. 185,009 * Uses New York TDC as baseline; assumes average 2-BR multifamily unit.
    Appendix 4. Estimated Total Costs and Energy Cost Savings From Adoption of 2009 IECC State Total incremental cost per state
  • ($)
  • Total energy cost savings per state
  • ($ per year)
  • AK 282,940 107,457 AR 1,330,890 211,233 AZ * 1,394,963 247,493 CO * 190,953 28,368 HI 622,050 125,367 KS 424,050 135,696 ME 291,200 97,600 MN 1,840,895 432,425 MO 1,158.043 302,568 MS 1,263,525 174,416 OK 1,892,952 295,728 SD 258,962 58,408 TN 1,313,649 292,149 UT 1,579,900 218,624 WI 865,761 201,477 WY 306,210 53,630 Total 15,016,943 2,982,639 * AZ and CO statewide estimates were adjusted by 70 percent and 90 percent, respectively, to reflect estimated adoption rate of code by home rule municipalities.
    Appendix 5. Estimated Total Costs and Energy Cost Savings From Adoption of ASHRAE 90.1-2007

    82 No units were produced under affected programs in Maine in FY 2011, the baseline year used for this analysis; therefore, no estimated costs or savings are shown for this State.

    State Total incremental cost/state
  • ($)
  • Total energy cost savings/state
  • ($/year)
  • AK 25,945 3,069 AZ * 87,658 13,956 CO * 63,873 5,762 KS 11,860 2,074 ME  82 0 0 MN 107,396 8,749 MO 247,930 17,948 OK 402,972 28,271 SD 44,159 4,909 TN 74,960 6,009 WY 25,871 2,669 Total 1,092,624 93,416 * AZ and CO statewide estimates adjusted by 70 percent and 90 percent, respectively, to reflect estimated adoption rate of code by home rule municipalities.
    [FR Doc. 2015-10380 Filed 5-5-15; 8:45 am] BILLING CODE 4210-67-P
    NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 701 RIN 3133-AE31 Chartering and Field of Membership Manual AGENCY:

    National Credit Union Administration (NCUA).

    ACTION:

    Final rule.

    SUMMARY:

    The NCUA Board (Board) is issuing a final regulation to amend the associational common bond provisions of NCUA's chartering and field of membership requirements. Specifically, the amendments establish a threshold requirement which provides that, in order for an association to qualify to be part of a federal credit union's (FCU) field of membership (FOM), the association must not have been formed primarily for the purpose of expanding credit union membership. The amendments also expand the criteria in NCUA's current totality of the circumstances test, which is a regulatory tool used to determine if an association, after satisfying the above-referenced threshold requirement, also satisfies the associational common bond requirements necessary to qualify for inclusion in an FCU's FOM. The amendments will better ensure that FCUs comply with established membership requirements. Additionally, NCUA is granting automatic membership qualification under the associational common bond requirements to certain categories of associations that NCUA has routinely approved for FCU membership in the past. For ease of reading, NCUA uses the terms “association” and “group” interchangeably in this rulemaking.

    DATES:

    This rule is effective July 6, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Robert Leonard, Director, Division of Consumer Access, and Rita Woods, Director, Division of Consumer Access—South, Office of Consumer Protection, at 1775 Duke Street, Alexandria, VA 22314, or by telephone (703) 518-1140; or Frank Kressman, Associate General Counsel, Office of General Counsel, at the above address, or by telephone (703) 518-6540.

    SUPPLEMENTARY INFORMATION: I. Legal Background and Summary of the April 2014 Proposal II. Summary of the Public Comments and the Final Rule III. Regulatory Procedures I. Legal Background and Summary of the April 2014 Proposal A. Legal Background

    NCUA has implemented the Federal Credit Union Act's (FCU Act) FOM requirements 1 in NCUA's Chartering and Field of Membership Manual (Chartering Manual), which is incorporated as Appendix B to part 701 of NCUA's regulations.2 NCUA also has published the Chartering Manual as an Interpretative Ruling and Policy Statement (IRPS), the current version of which is published as IRPS 08-2, as amended by IRPS 10-1.

    1 12 U.S.C. 1759.

    2 12 CFR part 701, appendix B.

    Section 109 of the FCU Act provides for three types of FCU charters: (1) Single common bond (occupational or associational); (2) multiple common bond (multiple groups); and (3) community.3 Section 109 of the FCU Act also describes the individual membership criteria for each of these three types of charters.4 Further, each type of charter is subject to, and shaped by, certain applicable limitations.

    3 12 U.S.C. 1759(b).

    4Id.

    An FOM consists of those persons and entities eligible for membership for each type of charter, respectively. The Chartering Manual provides that a single common bond FCU consists of one group having a common bond of occupation or association.5 A multiple common bond FCU consists of more than one group, each of which has a common bond of occupation or association.6

    5 12 CFR part 701, appendix B (Chapter 2, Section I.A.1). A community FCU consists of persons or organizations within a well-defined local community, neighborhood, or rural district.

    6Id. This final rule does not affect the current requirements for occupational common bond FCUs.

    Associational Common Bond

    A single associational common bond consists of individuals (natural persons) and/or groups (non-natural persons) whose members participate in activities developing common loyalties, mutual benefits, and mutual interests.7 Separately chartered associational groups can establish a single common bond relationship with each other if those groups are integrally related and share common goals and purposes.8 The Chartering Manual more specifically enumerates the individuals and groups eligible for membership in a single associational common bond credit union. Eligible individuals and groups are natural and non-natural person members of the association, employees of the association, and the association itself.9

    7 12 CFR part 701, appendix B (Chapter 2, Section III.A.1).

    8Id.

    9Id.

    Under NCUA's current FOM regulations, NCUA determines if a group satisfies the associational common bond requirements, for purposes of qualifying for membership in an FCU, by applying the below factors, commonly referred to as the totality of the circumstances test.10 The test consists of the following seven factors: 11

    10Id.

    11Id.

    (1) Whether members pay dues;

    (2) Whether members participate in the furtherance of the goals of the association;

    (3) Whether the members have voting rights; 12

    12 To meet this requirement, members do not have to vote directly for an officer, but may vote for a delegate who in turn represents the members' interests.

    (4) Whether the association maintains a membership list;

    (5) Whether the association sponsors other activities;

    (6) The association's membership eligibility requirements; and

    (7) The frequency of meetings.

    Additionally, the Chartering Manual specifies certain examples of associations that may or may not qualify as having an associational common bond. It states that educational groups, student groups, and consumer groups may qualify as having an associational common bond.13 Associations based primarily on a client-customer relationship, however, do not satisfy the associational common bond requirements.14

    13 12 CFR part 701, appendix B (Chapter 2, Section III.A.1).

    14Id.

    B. Summary of the April 2014 Proposal

    In April 2014, NCUA issued a proposal to amend the associational common bond requirements in the Chartering Manual.15 The following is a summary of the proposed amendments.

    15 79 FR 24623 (May 1, 2014).

    Threshold Requirement Regarding the Purpose for Which an Association Is Formed

    The proposal established a threshold requirement that, in order for an association to qualify to be part of an FCU's FOM, the association must not have been formed primarily for the purpose of expanding credit union membership. As part of the chartering analysis, NCUA would determine if an association has been formed primarily for the purpose of expanding credit union membership. If NCUA determines it has, then the association is denied inclusion in the FCU's FOM. If NCUA determines that the association was formed to serve some other organizational function, not primarily to expand credit union membership, then NCUA will continue the analysis by applying the totality of the circumstances test to determine if the association satisfies the associational common bond requirements. As part of satisfying the threshold requirement, the proposal would have required that the association being reviewed must have been operating as an independent organization for at least one year prior to the request to add the association to the FCU's FOM.

    As discussed more fully below in the section summarizing the public comments and the final rule, NCUA, as a result of the comments, is amending the threshold requirement to provide additional regulatory relief to FCUs.

    Totality of the Circumstances Test

    NCUA proposed to amend the totality of the circumstances test, as discussed more fully below. The proposal noted that by clarifying and expanding the test, NCUA would be better able to ensure that only an association that satisfies the associational common bond requirements would be eligible for inclusion in an FCU's FOM.

    More specifically, NCUA proposed to enhance the totality of the circumstances test by adding to it an additional factor regarding corporate separateness. NCUA would review whether corporate separateness exists between an FCU and the association the FCU wishes to add to its FOM. To satisfy this proposed additional factor, the FCU and the association must operate in a way that demonstrates the separate corporate existence of each entity. NCUA proposed to consider the degree to which the following factors are present to determine if corporate separateness exists:

    • The FCU's and the association's respective business transactions, accounts, and records are not intermingled;

    • Each observes the formalities of its separate corporate procedures;

    • Each is adequately financed as a separate entity in light of normal obligations reasonably foreseeable in a business of its size and character;

    • Each is held out to the public as a separate enterprise; and

    • The association maintains a separate physical location, which does not include a P.O. Box or other mail drop, and not on premises owned or leased by the FCU. Acknowledged exceptions to this factor include associations located on the premises of a labor union or church.

    The presence or absence of any one of these factors is not determinative.

    The proposed rule stated that qualified associations already within an FCU's FOM are grandfathered and would not be subject to the corporate separateness factor.

    As discussed more fully below in the section summarizing the public comments and the final rule, NCUA, as a result of the comments, is amending the totality of the circumstances test with respect to the corporate separateness factor to provide additional regulatory relief to FCUs.

    While NCUA proposed to add this additional factor to the totality of the circumstances test, NCUA did not propose to remove any of the current criteria from the test. However, the Board clarified in the proposal that, after examining an association's purpose as a threshold matter, NCUA's primary focus under the totality of the circumstances test will be on the following factors: (1) Whether the association provides opportunities for its members to participate in the furtherance of the goals of the association; 16 (2) whether the association maintains a membership list; (3) whether the association sponsors other activities; and (4) whether the association's membership eligibility requirements are authoritative.17

    16 With respect to this factor, the underlined portion is additional language that clarifies that the factor is satisfied if the association provides a member with opportunities to participate in the furtherance of the association's goals even if the member does not choose to participate. This change in language is simply a clarification reflecting how NCUA interprets this provision. This also provides additional flexibility to an association that wishes to be included in an FCU's FOM.

    17 Prior to this final rule, the factor regarding an association's membership eligibility requirements did not contain the word “authoritative.” However, NCUA has long interpreted this factor to assess if an association's membership eligibility requirements are authoritative. The addition of the word “authoritative” to this factor is simply a clarification of NCUA's longstanding interpretation and practices, and not the imposition of any new requirement.

    As part of applying the totality of the circumstances test, NCUA also proposed to consider whether an FCU enrolls a member in an association without the member's knowledge or consent. This practice would reflect negatively on the association's qualification for FCU membership because it suggests that the members do not truly support the goals and mission of the association given they may not even know they are members. However, an FCU may pay a member's associational dues if the member has given his or her consent to do so.

    Automatic Approval of Certain Categories of Associations

    Historically, NCUA has approved certain categories of associations almost without exception because their structures, practices, and functions so clearly demonstrate compliance with the Chartering Manual's associational common bond requirements. By their very nature, these categories of associations are comprised of members who consistently participate in activities developing common loyalties, mutual benefits, and mutual interests to further the goals and purposes of the associations.

    Accordingly, the proposed rule provided for the automatic membership approval of the following categories of associations into an FCU's FOM, if the FCU chooses to add one or more to its FOM: (1) Religious organizations including churches; (2) homeowner associations; (3) scouting groups; (4) electric cooperatives; (5) alumni associations; and (6) labor unions. Additionally, for the reasons stated above, NCUA proposed to automatically approve associations that have a mission based on preserving or furthering the culture of a particular national or ethnic origin. However, with respect to all of these associations, NCUA proposed not to include in the automatic approval those individuals who are considered to be honorary members or other classes of non-regular members of the associations.

    The automatic approval of the above-referenced associations will provide regulatory relief for FCUs, as they will no longer be required to devote resources to the regular approval process. It also will enable NCUA to more efficiently use its own resources. This aspect of the proposed rule is adopted as proposed, and as discussed below, additional categories of associations are to be automatically approved.

    Grandfathering Members

    NCUA proposed to grandfather in existing FCU members who attained FCU membership by virtue of their membership in an association currently part of an FCU's FOM.

    II. Summary of the Public Comments and the Final Rule

    NCUA received forty-three comments on the proposed rule. The comments were received from one bankers association, twenty-three FCUs, three federally insured, state-chartered credit unions, three law firms, and thirteen credit union trade associations. Most of the commenters supported the intent of the proposed rule, but, for various reasons, did not agree with the substance of the rule.

    General Comments

    Five commenters generally supported the proposed rule as written. These commenters noted that the rule is consistent with the intent of the FCU Act and reinforces the common bond relationship that is central to credit union membership. In addition, these commenters stated that the proposed amendments, if strictly enforced, would thwart any attempt to expand an FCU's FOM beyond appropriate limits.

    About half of the commenters articulated strong concerns with some aspect of the proposed rule. Four commenters recommended that NCUA enforce the proposed chartering provisions through guidance or as part of the supervisory process, rather than by rulemaking. Eight commenters stated that NCUA should withdraw the proposed rule. These commenters maintained that the proposed rule is a reaction to the behavior of only a few FCUs, but that it will cause unintended and undue hardship on all FCUs. A number of commenters urged NCUA to provide further clarification on certain aspects of the proposal and/or to reconsider them. Additionally, several commenters asked NCUA to consider changes outside of the scope of the proposed rule. The Board will consider such changes as part of its broader initiative to review policies and procedures governing FOM expansions and conversions.

    Automatic Approval of Certain Categories of Associations

    In the proposed rule, NCUA asked commenters to recommend certain categories of associations, in addition to those NCUA specifically identified in the proposal, which NCUA could consider for automatic approval. Almost thirty commenters were supportive of NCUA's proposal to automatically approve certain associations. In response to NCUA's request, a majority of these commenters suggested other categories of associations to be added to the list of automatically approved associations. Some of the most common examples include:

    • Groups formed for support of school-based, school-sponsored, or community-based sports teams; extracurricular club activities; fraternal organizations; and social clubs.

    • Parent-teacher associations, military-affiliated associations, and 501(c)(3) nonprofits.

    • Historical societies, library associations, and museum associations.

    • YMCAs, local chamber and rotary affiliates (and other civic organizations), and industry groups.

    • Farmer cooperatives.

    The Board appreciates the suggestions made by the commenters. After considering the recommendations and further evaluating the agency's history of approving associational groups, the Board has determined to include additional types of groups that will automatically satisfy the associational common bond requirements. The Board clarifies that when a group “automatically” satisfies the associational common bond requirements, it means that the group will not be reviewed under the totality of the circumstances test. The Chartering Manual's other prerequisites for an FCU's charter expansion, including an FCU's capitalization level and safety and soundness record, must still be satisfied.18

    18 Chartering Manual, Chapter 2, IV.B.2—Numerical Limitation of Select Groups. An existing multiple common bond FCU that submits a request to amend its charter must provide documentation to establish that the multiple common bond requirements have been met. The NCUA must approve all amendments to a multiple common bond credit union's field of membership. NCUA will approve groups to a credit union's field of membership if the agency determines in writing that the following criteria are met:

    • The credit union has not engaged in any unsafe or unsound practice, as determined by the NCUA, which is material during the one year period preceding the filing to add the group;

    • The credit union is “adequately capitalized.” NCUA defines adequately capitalized to mean the credit union has a net worth ratio of not less than six percent. For low-income credit unions or credit unions chartered less than ten years, the NCUA may determine that a net worth ratio of less than six percent is adequate if the credit union is making reasonable progress toward meeting the six percent net worth requirement. For any other credit union, the NCUA may determine that a net worth ratio of less than six percent is adequate if the credit union is making reasonable progress toward meeting the six percent net worth requirement, and the addition of the group would not adversely affect the credit union's capitalization level;

    • The credit union has the administrative capability to serve the proposed group and the financial resources to meet the need for additional staff and assets to serve the new group;

    • Any potential harm the expansion may have on any other credit union and its members is clearly outweighed by the probable beneficial effect of the expansion. With respect to a proposed expansion's effect on other credit unions, the requirements on overlapping fields of membership are also applicable; and

    • If the formation of a separate credit union by such group is not practical and consistent with reasonable standards for the safe and sound operation of a credit union.

    A detailed analysis is required for groups of 3,000 or more primary potential members requesting to be added to a multiple common bond credit union. It is incumbent upon the credit union to demonstrate that the formation of a separate credit union by such a group is not practical. The group must provide evidence that it lacks sufficient volunteer and other resources to support the efficient and effective operations of a credit union or does not meet the economic advisability criteria outlined in Chapter 1. If this can be demonstrated, the group may be added to a multiple common bond credit union's field of membership.

    The following additional types of groups will automatically satisfy the associational common bond provisions:

    • Parent teacher associations (PTAs) organized at the local level to serve a single school district;

    • Chamber of commerce groups (members only and not employees of members);

    • Athletic booster clubs whose members have voting rights;

    • Fraternal organizations or civic groups with a mission of community service whose members have voting rights; and

    • Organizations promoting social interaction or educational initiatives among persons sharing a common occupational profession.

    The table below provides samples of the types of groups that will and will not automatically satisfy the associational common bond requirements:

    Type of group Will automatically qualify Will not automatically qualify Parent Teacher Association Anytown Chapter of the Parent Teacher Association of Anytown, Virginia National Council of Parent Teacher Associations in Anytown, Virginia. Chamber of Commerce Members of the Jonesboro, Georgia Chamber of Commerce Employees of Members of the Liverpool, New York Chamber of Commerce. Athletic Booster Club Voting members of the XYZ High School Booster Club in Hometown, Florida Members of PDQ Booster Club who become members by paying onetime dues and do not have voting rights. Fraternal Organization Members of the ABC Fraternal Organization who have voting rights Persons becoming members of ABC Fraternal Association who do not have voting rights. Professional Organization Voting members of the National Association of XYZ Profession Members of the National Association of XYZ Profession who do not have voting rights.

    Further, commenters suggested some groups for automatic approval that NCUA has not regularly approved. For instance, NCUA has long held that health clubs, such as YMCAs, do not meet the associational common bond requirements because they are based primarily on a client-customer relationship.19 While fraternal organizations with broad missions or museum associations may, under some circumstances, satisfy the associational common bond criteria, these groups often are not structured in a way that would warrant automatic approval into an FCU's FOM.

    19 79 FR 24623, 24625 (May 1, 2014).

    The Board received several comments recommending that NCUA consider automatically approving farmer cooperatives. After fully considering the agency's experience with farmer cooperatives, the Board has determined not to include them as a category of associations receiving automatic approval. The Board is concerned that farmer cooperatives are not as easily identifiable as other associations, such as religious groups or labor unions. While there is a National Association of Farmer Cooperatives, both it and the United States Department of Agriculture acknowledge that there are a variety of types of farmer cooperatives. The Board does not believe farmer cooperatives can be objectively classified and sufficiently described to support automatic approval as associations that satisfy the associational common bond requirements.

    Further, NCUA has approved numerous farmer cooperatives as occupational groups, but has only approved one farmer cooperative as an associational group. Farmer cooperatives also often have characteristics of a customer-client relationship. In many cases, farmer members pay for the services the cooperative provides and the members do not typically interact with one another. As a result, farmer cooperatives will not be automatically approved, but NCUA welcomes the opportunity to evaluate FCU requests to serve individual farm cooperatives on a case-by-case basis.

    It is important to highlight that a credit union interested in serving a group which does not fall under the automatic approval categories can still submit documentation to NCUA to support how the group is a valid association. This provides for flexibility in considering unique circumstances when appropriate and may help to identify other groups which may automatically qualify in the future.

    Service Areas and Reasonable Proximity

    Thirteen commenters strongly suggested that NCUA should revisit the definitions of “service areas” and “reasonable proximity” as those terms relate to multiple common bond credit unions. These commenters suggested that NCUA should reconsider its interpretation of both definitions in light of the technological advancements now available to credit unions. These comments relate to multiple common bond expansion, an issue not addressed by the April 2014 proposed rulemaking, and which is outside the scope of this final rule. Therefore, this issue will not be part of the final rule but will be considered as part of NCUA's current review of FOM policies.

    Threshold Requirement and Independent Organization for One Year

    Twenty-six commenters expressed concern with the proposed threshold requirement. As described above, at the beginning of NCUA's associational evaluation process, NCUA would determine if the association was formed primarily for the purpose of expanding credit union membership. These commenters were concerned that NCUA was not specific enough about how it would apply the threshold requirement. These commenters also strongly urged NCUA to provide additional guidance in this regard.

    Eleven commenters specifically stated their opposition to the proposed threshold requirement. These commenters posited that the threshold requirement seems particularly arbitrary, overly restrictive, and unnecessary. Some of these commenters believed that the NCUA could use its current totality of the circumstances test, or a modified version of that test, to determine if an association was or was not formed primarily for the purpose of expanding credit union membership.

    The Board disagrees with the commenters' characterization of the threshold requirement. The threshold requirement will serve as an effective gatekeeper to prevent unqualified associations from joining FCUs. The Board emphasizes that only those groups that are formed primarily to expand credit union membership will fail to satisfy the threshold requirement. In addition, as discussed in the preamble to the proposed rule, NCUA is concerned that the current totality of the circumstances test may not be sufficiently filtering out those groups that do not meet the associational common bond requirements.

    Six commenters expressed concern about the use of the term “primarily” in the phrase “primarily for the purpose of expanding credit union membership” in the proposed threshold requirement. These commenters noted that the term “primarily” is subjective and undefined in NCUA's regulations. Four of these commenters recommended NCUA change “primarily” to “solely.” The Board intends for the word “primarily” to be given its plain English definition. For purposes of this rule “primarily” means: For the most part; essentially; mostly; chiefly; principally. 20

    20 See Dictionary.com and m-w.com (Merriam-Webster online).

    Twenty commenters had questions or expressed concern about the “one-year” requirement. In the proposed rule, as part of the discussion of the threshold requirement, NCUA stated that “[i]n furtherance of this [threshold] requirement, the association must have been operating as an organization independent from the requesting FCU for at least one year prior to the request to add the group to the FCU's FOM.” 21 These commenters questioned NCUA's reasoning for the one-year requirement and requested further clarification on what this requirement means. In addition, eleven of these commenters specifically stated their opposition to the one-year requirement. These commenters stated that NCUA did not provide a basis for this minimum time requirement, and the commenters did not believe that it should matter how long the association has been in existence if it serves its members and meets the criteria of the totality of the circumstances test.

    21 79 FR 24625 (footnote 17) (May 1, 2014).

    Almost half of the commenters who opposed the one-year requirement believed the requirement would have adverse effects on FCU membership. These commenters maintained that it would cause the unintended consequence of preventing FCUs from being able to serve and support their communities. They also believed that this would create a competitive disadvantage for FCUs.

    While the Board continues to believe that associations that have operated independently for at least one year are more likely to be associations that exist for organizational purposes beyond primarily expanding credit union membership,22 the Board acknowledges the concerns raised by the commenters in this regard. Accordingly, the Board is taking action to relieve the regulatory burden that commenters associated with the one-year requirement. Specifically, the Board is eliminating the one-year requirement from the threshold test so that the one-year requirement is no longer a condition of satisfying the threshold test. This change will provide additional flexibility and opportunity for an association to qualify under the totality of the circumstances test. For example, even if an association has not operated independently for at least one year, the association may still qualify for FCU membership under the totality of the circumstances test.

    22 59 FR 29066, 29076 (June 3, 1994).

    Totality of the Circumstances Test

    As discussed in more detail below, eighteen commenters expressed various concerns with the proposed amendments to the totality of the circumstances test. These commenters generally found the current totality of the circumstances test sufficient. In addition, four commenters requested that NCUA publish guidance to further explain how NCUA will apply the totality of the circumstances test in practice.

    Four commenters had concerns with the criterion that assesses the degree to which an association's membership eligibility requirements are authoritative. NCUA clarified this criterion in the proposed rule to emphasize the importance that an association's particular membership requirements be authoritative. These commenters stated that the term “authoritative” was ambiguous and requested further clarification. The Board added the term “authoritative” to this criterion in the proposal to further stress NCUA's long held position that it is important for an association to avoid having lax enrollment standards, as that undercuts its ability to satisfy the associational common bond requirements.

    Three commenters supported the criterion that an FCU may pay a member's associational dues if the member has given consent. Two commenters expressed concern with this criterion, suggesting that this transaction could indicate a lack of corporate separateness or that NCUA should not dictate what an association's business model should look like.

    The Board believes it is important to continue the policy of allowing an FCU to pay its member's associational dues, if the member has given his or her consent. The Board believes this policy helps to facilitate the appropriate use of qualified associations by providing FCUs with this additional flexibility. If an association is automatically approved or approved because it satisfies the totality of the circumstances test, then this practice is permissible for FCUs, but is not mandatory.

    Corporate Separateness

    There was little support among the commenters for the proposed corporate separateness requirement, although there was support for grandfathering a qualified association already within an FCU's FOM so it would not need to satisfy the corporate separateness requirement.

    Two commenters had specific concerns about this criterion. One commenter believed that this provision would have the unintended consequence of discouraging qualified associations from seeking FCU membership. Another commenter suggested that smaller credit unions and their affiliated associations generally do not have the resources to meet these additional requirements, which could unfairly restrict their membership base. In addition, seven commenters maintained that it is inappropriate to measure the independence of an association by evaluating whether it maintains a separate physical location. These same seven commenters stated that the physical location of an association has no bearing on its separate corporate existence from an FCU.

    The Board has carefully considered these concerns and agrees with commenters that the corporate separateness criterion may be too burdensome as presented in the proposed rule. The Board still believes that an association's degree of corporate separateness is a reasonable factor to consider in determining if an association satisfies the associational common bond requirements and that it is a useful indicator of the true purpose of an association. However, the Board acknowledges that the numerous factors comprising the corporate separateness criterion, as listed in the proposed rule, may be too difficult for some FCUs and associations to demonstrate. Accordingly, as a result of the comments, to simplify the final rule and provide regulatory relief to FCUs, the Board is reducing the multiple corporate separateness factors listed in the proposed rule to just one factor in the final rule. The sole factor to be included in the final rule, which is an easier standard for FCUs and associations to meet, is if an FCU's and an association's respective business transactions, accounts, and records are not intermingled. Also, in the final rule, the Board is adding the word “corporate” to describe what records are not to be intermingled. This addition is purely for clarification and adds no new burden.

    The Board reiterates that, in reviewing this less burdensome corporate separateness factor along with the other seven factors that constitute the totality of the circumstances test, no one factor is determinative. Additionally, as noted above, the April 2014 proposed rule stated that qualified associations already within an FCU's FOM are grandfathered in this regard and will not be subject to the corporate separateness factor.

    Quality Assurance Reviews

    Over half of the commenters expressed concern about the quality assurance reviews that NCUA's Office of Consumer Protection (OCP) is conducting on currently approved associations. As discussed in the proposed rule, these reviews are intended to ensure that an association currently included in an FCU's FOM continues to satisfy the associational common bond requirements that are required for continued membership. These commenters noted specific concerns about how the reviews are being and will be conducted and what could result from them. The commenters requested that NCUA ensure these reviews are conducted using objective and transparent standards. In addition, some of these commenters noted they did not support NCUA reviewing currently approved associations.

    Four commenters specifically questioned if NCUA would allow associations, determined to be out of compliance with the associational common bond requirements, the opportunity to get back into compliance, and, if so, how long would those associations have to do so. They also asked if NCUA's OCP would provide any assistance in that regard. Six commenters also asked if there would be a process by which an FCU could appeal an action by NCUA to remove an association from an FCU's FOM. These commenters recommended such an appeals process. These commenters suggested that an appeals process should establish time frames in which certain actions must be taken and that an FCU should be able to continue to add new members during the appeals process.

    Ten commenters recommended that NCUA clearly articulate that, regardless of the outcome of a quality assurance review, existing FCU members, including those who qualified for FCU membership through membership in the subject qualified association, would be grandfathered and their memberships unaffected. The Board has long held the position that once a person attains membership in an FCU, he or she always remains a member of that FCU, unless expelled by the FCU or upon voluntary withdrawal.23 Accordingly, the Board confirms that all existing FCU members discussed above are grandfathered and their memberships are unaffected by the results of any quality assurance review.

    23 12 U.S.C. 1759(e).

    Twelve commenters stated that they did not support NCUA taking action to remove a currently approved association for any reason. Three of these commenters argued that any new associational common bond standards must only apply to associations seeking membership subsequent to the effective date of this final rule. In addition, six of these commenters requested that NCUA provide guidance on the process for removing an association from an FCU's FOM, including notice, timing, and appeals information. The Board agrees that such guidance is appropriate and has directed OCP to publish guidance in the near future. As noted below, however, NCUA considers removal of an association from an FCU's FOM a last resort.

    Four commenters argued that a quality assurance review could usurp the rights of a currently approved association because the review could result in NCUA removing the association from an FCU's FOM without due process. These commenters noted that NCUA failed to cite to or reference the statutory authority on which NCUA relies to conduct these reviews. These commenters also stated that NCUA failed to provide sufficient notice to associations and FCUs that the agency continues to monitor associations' compliance with NCUA associational common bond requirements. In addition, these commenters argued that NCUA lacks the direct authority to remove an association from an FCU's FOM.

    Many commenters have misinterpreted the purpose of the quality assurance reviews. They are intended to protect the integrity of NCUA's FOM requirements, not disrupt an FCU's ability to serve its members or to hamper an FCU's ability to thrive. NCUA will work cooperatively with FCUs and associations to ensure FOM compliance. Further, the Board emphasizes that quality assurance reviews are not a new phenomenon. NCUA's regional offices conducted them for many years and only ceased doing so once OCP assumed responsibility for field of membership processing and chartering activities after its inception in 2010.

    OCP currently has in place quality control processes to review associations added to an FCU's FOM. OCP does not plan to change these processes following the adoption of this final rule. OCP's current quality assurance processes require its staff to review for compliance with NCUA's chartering regulations all new FCU requests, including required documentation, to serve groups prior to OCP making a final decision on the request. Specifically for associational groups, OCP has established a checklist for reviewing an association's bylaws and other associational documentation to ensure that OCP reviews all requests in a consistent manner. This process includes reviewing groups added through the Field of Membership Internet Application (FOMIA) system.24 OCP staff reviews data entered by FCU officials, and, if necessary, OCP staff contacts FCU officials for additional documentation. Through the FOMIA system, OCP also randomly selects certain groups with no red flags for review. This sampling process helps ensure that FCU officials using the FOMIA system are using it as it was intended to be used.

    24 FOMIA is an online system that multiple common bond credit unions can use to add associational and/or occupational groups of 2,999 potential members or less as well as the non-natural person corporate account associated with that group.

    NCUA does not envision the referenced processes or the quality assurance processes will change following the adoption of the final rule. In addition, whether with respect to a new request for an FOM addition or as part of a post-approval quality assurance review, OCP will work closely with FCU officials to determine if there are compliance problems and, if so, how to satisfactorily address those problems. NCUA considers the removal of an association from an FCU's FOM an action of last resort.

    Geographic Limitation

    Thirteen commenters raised concerns that certain language in the preamble to the proposed rule appeared to indicate that NCUA was seeking to impose a geographic limitation on associational groups, similar to the geographic limitation placed on multiple common bond FCUs. The Board clarifies that nothing in the preamble to the proposed rule was intended to impose such a geographic limitation. The Board reiterates that the Chartering Manual clearly states that single associational common bond FCUs do not have a geographic limitation.25

    25 12 CFR part 701, appendix B (Chapter 2, Section III.A.1).

    III. Regulatory Procedures A. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis to describe any significant economic impact a regulation may have on a substantial number of small entities.26 For purposes of this analysis, NCUA considers small credit unions to be those having under $50 million in assets.27 This rule focuses on the structure and operations of independent associations who wish to join an FCU's FOM. To the extent there is any cost to small entities to voluntarily participate in the determination of whether the association satisfies NCUA's associational common bond requirements, those costs are minimal and they are incurred infrequently. Because this final rule would affect relatively few small entities and the associated costs are minimal, NCUA certifies the rule will not have a significant economic impact on small entities.

    26 5 U.S.C. 603(a).

    27 Interpretive Ruling and Policy Statement 03-2, 68 FR 31949 (May 29, 2003), as amended by Interpretative Ruling and Policy Statement 13-1, 78 FR 4032 (Jan. 18, 2013).

    B. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden on regulated entities or modifies an existing burden.28 For purposes of the PRA, a paperwork burden may take the form of either a reporting or a recordkeeping requirement, both referred to as information collections. This final rule amends the criteria NCUA will use to evaluate if an association satisfies NCUA's associational common bond requirements, but it requires essentially the same information from an FCU that was previously required and changes none of the relevant forms identified in the Chartering Manual. Therefore, this final rule will not create new paperwork burdens or modify any existing paperwork burdens.

    28 44 U.S.C. 3507(d); 5 CFR part 1320.

    C. Executive Order 13132

    Executive Order 13132 encourages independent regulatory agencies to consider the impact of their actions on state and local interests. In adherence to fundamental federalism principles, NCUA, an independent regulatory agency as defined in 44 U.S.C. 3502(5), voluntarily complies with the executive order. This rule applies only to federally chartered credit unions. It does not apply to state-chartered credit unions, which are subject to the FOM requirements of their respective states. Accordingly, this rule will not have a substantial direct effect on the states, on the connection between the national government and the states, or on the distribution of power and responsibilities among the various levels of government. NCUA has determined this rule does not constitute a policy that has federalism implications for purposes of the executive order.

    D. Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this final rule will not affect family well-being within the meaning of Section 654 of the Treasury and General Government Appropriations Act, 1999.29

    29 Public Law 105-277, 112 Stat. 2681 (1998).

    E. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 30 (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act.31 NCUA does not believe this final rule is a “major rule” within the meaning of the relevant sections of SBREFA. NCUA has submitted the rule to the Office of Management and Budget for its determination in that regard.

    30 Public Law 104-121, 110 Stat. 857 (1996).

    31 5 U.S.C. 551.

    List of Subjects in 12 CFR Part 701

    Credit, Credit unions, Reporting and recordkeeping requirements.

    By the National Credit Union Administration Board on April 30, 2015. Gerard S. Poliquin, Secretary of the Board.

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

    PART 701—ORGANIZATION AND OPERATION OF FEDERAL CREDIT UNIONS 1. The authority for part 701 continues to read as follows: Authority:

    12 U.S.C. 1752(5), 1755, 1756, 1757, 1758, 1759, 1761a, 1761b, 1766, 1767, 1782, 1784, 1786, 1787, 1789. Section 701.6 is also authorized by 15 U.S.C. 3717. Section 701.31 is also authorized by 15 U.S.C. 1601 et seq.; 42 U.S.C. 1981 and 3601-3610. Section 701.35 is also authorized by 42 U.S.C. 4311-4312.

    2. Section III.A.1 of Chapter 2 of appendix B to part 701 is revised to read as follows: Appendix B to Part 701—Chartering and Field of Membership Manual Chapter 2 III.A.1—General

    A single associational federal credit union may include in its field of membership, regardless of location, all members and employees of a recognized association. A single associational common bond consists of individuals (natural persons) and/or groups (non-natural persons) whose members participate in activities developing common loyalties, mutual benefits, and mutual interests. Separately chartered associational groups can establish a single common bond relationship if they are integrally related and share common goals and purposes. For example, two or more churches of the same denomination, Knights of Columbus Councils, or locals of the same union can qualify as a single associational common bond.

    Individuals and groups eligible for membership in a single associational credit union can include the following:

    • Natural person members of the association (for example, members of a union or church members);

    • Non-natural person members of the association;

    • Employees of the association (for example, employees of the labor union or employees of the church); and

    • The association.

    Generally, a single associational common bond does not include a geographic definition and can operate nationally. However, a proposed or existing federal credit union may limit its field of membership to a single association or geographic area. NCUA may impose a geographic limitation if it is determined that the applicant credit union does not have the ability to serve a larger group or there are other operational concerns. All single associational common bonds should include a definition of the group that may be served based on the association's charter, bylaws, and any other equivalent documentation.

    Applicants for a single associational common bond federal credit union charter or a field of membership amendment to include an association must provide, at the request of NCUA, a copy of the association's charter, bylaws, or other equivalent documentation, including any legal documents required by the state or other governing authority.

    The associational sponsor itself may also be included in the field of membership—e.g., “Sprocket Association”—and will be shown in the last clause of the field of membership.

    III.A.1.a—Threshold Requirement Regarding the Purpose for Which an Associational Group Is Formed and the Totality of the Circumstances Criteria

    As a threshold matter, when reviewing an application to include an association in a federal credit union's field of membership, NCUA will determine if the association has been formed primarily for the purpose of expanding credit union membership. If NCUA makes such a determination, then the analysis ends and the association is denied inclusion in the federal credit union's field of membership. If NCUA determines that the association was formed to serve some other separate function as an organization, then NCUA will apply the following totality of the circumstances test to determine if the association satisfies the associational common bond requirements. The totality of the circumstances test consists of the following factors:

    1. Whether the association provides opportunities for members to participate in the furtherance of the goals of the association;

    2. Whether the association maintains a membership list;

    3. Whether the association sponsors other activities;

    4. Whether the association's membership eligibility requirements are authoritative;

    5. Whether members pay dues;

    6. Whether the members have voting rights; To meet this requirement, members need not vote directly for an officer, but may vote for a delegate who in turn represents the members' interests;

    7. The frequency of meetings; and

    8. Separateness—NCUA reviews if there is corporate separateness between the group and the federal credit union. The group and the federal credit union must operate in a way that demonstrates the separate corporate existence of each entity. Specifically, this means the federal credit union's and the group's respective business transactions, accounts, and corporate records are not intermingled.

    No one factor alone is determinative of membership eligibility as an association. The totality of the circumstances controls over any individual factor in the test. However, NCUA's primary focus will be on factors 1-4.

    III.A.1.b—Pre-Approved Groups

    NCUA automatically approves the below groups as satisfying the associational common bond provisions. NCUA only approves regular members of an approved group. Honorary, affiliate, or non-regular members do not qualify.

    These groups are:

    (1) Alumni associations;

    (2) Religious organizations, including churches or groups of related churches;

    (3) Electric cooperatives;

    (4) Homeowner associations;

    (5) Labor unions;

    (6) Scouting groups;

    (7) Parent teacher associations (PTAs) organized at the local level to serve a single school district;

    (8) Chamber of commerce groups (members only and not employees of members);

    (9) Athletic booster clubs whose members have voting rights;

    (10) Fraternal organizations or civic groups with a mission of community service whose members have voting rights;

    (11) Organizations having a mission based on preserving or furthering the culture of a particular national or ethnic origin; and

    (12) Organizations promoting social interaction or educational initiatives among persons sharing a common occupational profession.

    III.A.1.d—Additional Information

    A support group whose members are continually changing or whose duration is temporary may not meet the single associational common bond criteria. Each class of member will be evaluated based on the totality of the circumstances. Individuals or honorary members who only make donations to the association are not eligible to join the credit union.

    Student groups (e.g., students enrolled at a public, private, or parochial school) may constitute either an associational or occupational common bond. For example, students enrolled at a church sponsored school could share a single associational common bond with the members of that church and may qualify for a federal credit union charter. Similarly, students enrolled at a university, as a group by itself, or in conjunction with the faculty and employees of the school, could share a single occupational common bond and may qualify for a federal credit union charter.

    Tenant groups, consumer groups, and other groups of persons having an “interest in” a particular cause and certain consumer cooperatives may also qualify as an association.

    Associations based primarily on a client-customer relationship do not meet associational common bond requirements. Health clubs are an example of a group not meeting associational common bond requirements, including YMCAs. However, having an incidental client-customer relationship does not preclude an associational charter as long as the associational common bond requirements are met. For example, a fraternal association that offers insurance, which is not a condition of membership, may qualify as a valid associational common bond.

    [FR Doc. 2015-10548 Filed 5-5-15; 8:45 am] BILLING CODE 7535-01-P
    NATIONAL CREDIT UNION ADMINISTRATION 12 CFR Part 704 RIN 3133-AE43 Corporate Credit Unions AGENCY:

    National Credit Union Administration (NCUA).

    ACTION:

    Final rule.

    SUMMARY:

    The NCUA Board (Board) is amending its regulations governing corporate credit unions (Corporates) and the scope of their activities. The amendments clarify the mechanics of a number of regulatory provisions and make several non-substantive, technical corrections.

    DATES:

    This final rule is effective June 5, 2015.

    FOR FURTHER INFORMATION CONTACT:

    John Sozanski, Supervision Analyst, Office of National Examinations and Supervision, 1775 Duke Street, Alexandria, Virginia 22314-3428 or telephone (703) 518-6640; or Justin M. Anderson, Senior Staff Attorney, Office of General Counsel, 1775 Duke Street, Alexandria, Virginia 22314-3428 or telephone (703) 518-6540.

    SUPPLEMENTARY INFORMATION:

    Table of Contents I. Background II. Summary of Comments and Final Amendments III. Regulatory Procedures I. Background

    In 2010, in response to the preceding financial crisis, the Board comprehensively revised NCUA's regulations governing Corporates and their activities.1 The Board also amended those regulations twice more in 2011.2 In November 2014, the Board issued a proposed rule (Proposal) to further amend the Corporate regulations by clarifying or modifying several provisions and making several non-substantive, technical corrections.3 The Proposal not only clarified and streamlined the Corporate regulations, but it also enhanced their readability and provided a degree of regulatory relief to Corporates. This final rule adopts all of the amendments in the Proposal, with one change.

    1 12 CFR part 704; 75 FR 64786 (Oct. 20, 2010).

    2 76 FR 23861 (Apr. 29, 2011); 76 FR 79531 (Dec. 22, 2011). The Board also made technical changes to the regulations in 2011 and 2013. 76 FR 16235 (Mar. 23, 2011); 78 FR 77563 (Dec. 24, 2013).

    3 79 FR 65353 (Nov. 4, 2014).

    II. Summary of Comments and Final Amendments

    In response to the Proposal, NCUA received 20 comments, nine from Corporates, 10 from trade associations and state credit union leagues, and one from a natural person credit union. All of the commenters generally supported the clarifications and technical changes. As discussed more fully below, however, most commenters suggested additional changes beyond the scope of the Proposal or commented on provisions of the current Corporate regulations that were not addressed in the Proposal. The Board adopts the Proposal as issued with only one modification.

    1. Section 704.2—Definitions

    In the definitions section, the Board deleted several terms it determined were duplicative and redefined a number of other terms to minimize confusion and enhance the effectiveness of the Corporate regulations. The Board removed the definitions of “adjusted core capital” and “core capital” and incorporated them into the definition of “Tier 1 capital.” The Board also deleted the term “capital” when that term was used as a specific measure, and replaced it with the term “total capital.” The Board removed the definition of “supplementary capital” and incorporated it into the definition of “Tier 2 capital.” The Board also eliminated the definitions of certain terms in Appendix C to part 704, which are no longer relevant to Corporates. Finally, the Board modified a number of additional definitions to provide greater clarity or to make them consistent with other NCUA regulations.

    In response to these proposed changes, NCUA received one comment that supported the proposed definition of retained earnings, stating that the change would make it easier for the continuing credit union in a merger situation to count retained earnings carried on the books of the merging credit union. In addition, there were a number of comments on definitions in the Corporate regulations that were outside the scope of the Proposal. Specifically, 16 commenters objected to the requirement that perpetual contributed capital (PCC) be discounted over time from what may be counted as Tier 1 capital. This requirement, which is in the current rule, was not the subject of any proposed amendment. Commenters, however, stated that PCC is consistent with the definition of “Tier 1 capital” or “core capital” as used by banking regulators, the Securities and Exchange Commission, and the U.S. Treasury, and thus questioned the rationale of requiring certain amounts to be excluded from the calculation of Tier 1 Capital, as discussed below. Some commenters suggested that the mandatory phase-out of PCC would have the effect of altering a Corporate's Tier 1 Capital after the specified dates, even though nothing substantive had changed in the structure of the PCC account because of its nature as permanent capital. Another commenter suggested that the rule be changed to provide for a more explicit retained earnings requirement.

    With respect to the comments on PCC and a more explicit retained earnings requirement, the Board notes that these are outside the scope of the Proposal. However, the Board notes that it was NCUA's intent, with the adoption of the final Corporate regulations in 2010, to ensure that the Corporates would never again present the sort of systemic risk to the entire credit union system that the Corporates did in that time period and which required NCUA to take extraordinary regulatory action.

    An aspect of the 2010 Corporate regulations was to incent Corporates to build greater reserves of retained earnings to absorb potential losses. Retained earnings are considered to be the most superior form of capital carried by a Corporate, as retained earnings absorb losses without causing a corresponding loss to another party, such as a natural person credit union that purchased contributed capital from that Corporate. As referenced in the comment letters, part 704 contains provisions, effective in 2016, that limit the amount of contributed capital, including PCC, which may be counted toward a Corporate's regulatory capital. NCUA intended this provision to encourage a Corporate to build its retained earnings. By increasing retained earnings, a Corporate could count more contributed capital as regulatory capital.

    As noted by commenters, PCC has elements that are consistent with Tier 1 capital. However, one distinguishing element of PCC is that it is almost entirely sourced from member credit unions. Accordingly, losses that deplete PCC would summarily impair investments made by credit union members and their corresponding capital. This downstream effect poses increased risk to the National Credit Union Share Insurance Fund that capital sourced from external sources would not. Should Corporates successfully raise meaningful amounts of capital from external sources, the Board may consider easing the restrictions on contributed capital in a future rulemaking.

    The Board is finalizing the proposed amendments to the definitions section and Appendix C to part 704 without change.

    2. Section 704.3—Corporate credit union capital

    The Proposal included amendments to § 704.3(b)(5) and (c)(3) regarding corporate capital. The proposed amendments clarified that upon redeeming or calling nonperpetual capital accounts or PCC instruments, a Corporate must continue to meet its minimum required capital and net economic value ratios. These clarifications made the provisions consistent with each other and with the terms and conditions of contributed capital included in the Model Forms in Appendix A to part 704. The Proposal also deleted § 704.3(f)(4), as that provision refers to a regulatory requirement that Corporates were to have complied with before December 20, 2011.

    NCUA received only one comment on this section. That commenter requested that the rule be modified to provide enhanced guidance to Corporates on how to handle the redemption of PCC. The Board notes that this comment is outside the scope of the Proposal. Further, the Board does not believe it is appropriate to consider issuing a proposed rule to address this comment at this time. However, if Corporates continue to satisfactorily rebuild retained earnings that were depleted during the credit crisis of 2007, then NCUA may consider revisiting this issue in the future.

    The Board is finalizing the proposed amendments to this section as proposed.

    3. Section 704.5—Investments

    The Proposal included an amendment to § 704.5(j) regarding grandfathering certain Corporate investments. This amendment clarified that, while a Corporate may continue to hold an investment that was permissible at the time of purchase but later became impermissible because of a regulatory change, the investment is still subject to all other sections of part 704 that apply to investments, including those pertaining to credit risk management, asset and liability management, liquidity management, and investment action plans.

    NCUA received no comments on this section and is adopting the amendment as proposed.

    4. Section 704.6—Credit risk management

    The Proposal provided clarification on how to value investments when calculating whether a Corporate is in compliance with various sector and issuer limits. NCUA received one comment on this section, which suggested that the Board should amend the rule to provide an exception to the single issuer limit for auto and equipment dealer floor plan asset-backed securities so that such securities would receive treatment similar to credit card master trust asset-backed securities. This comment is outside the scope of the Proposal, and the Board does not believe such an exception is warranted as auto and equipment asset-backed security issuances are widely available. The Board is adopting the amendments to this section as proposed.

    5. Section 704.7—Lending

    Section 704.7(c) currently restricts a Corporate's unsecured member lending to 50 percent of capital and its secured member lending to 100 percent of capital. The Proposal provided greater flexibility to Corporates by permitting them to lend on a secured basis up to 150 percent of their total capital to any individual credit union borrower. No commenters opposed this change, but eight commenters recommended that NCUA include an additional exclusion from the lending limit for a bridge loan made to a natural person member credit union in connection with that credit union receiving approval for a loan from the Central Liquidity Facility (CLF). All of the commenters who commented on this aspect of the Proposal supported a ten-day maturity limit on these bridge loans.

    The Board agrees with these commenters and intends to provide an exclusion from the lending limit for bridge loans related to CLF loans. As this issue was not included in the Proposal, the Board, in compliance with the Administrative Procedure Act, will issue a subsequent notice of proposed rulemaking to effect this change.

    6. Section 704.8—Asset and liability management

    Current § 704.8 establishes requirements to identify, measure, monitor, and control risk in the management of assets and liabilities. These requirements include interest rate sensitivity analyses, net interest income modeling, and limiting the weighted average life of assets. Current § 704.8(j) also imposes reporting and other requirements on Corporates that experience a decline in net economic value (NEV) or other NEV-related measures beyond certain thresholds. The Proposal included an amendment to clarify that if a Corporate experiences such NEV-related breaches, but is able to adjust its balance sheet to meet required regulatory limits within 10 days, then the Corporate will not be considered to be in violation of the regulation. The Proposal clarified that a regulatory violation would exist only if a Corporate could not timely resolve a breach.

    NCUA received several comments on this section. One commenter suggested that Corporates should be given more than 10 days to complete an adjustment to its balance sheet to satisfy the requirements of § 704.8(d), (f), and (g). This commenter suggested a 60-day grace period and an opportunity to re-test at the expiration of the grace period.

    The Board recognizes that, through the normal course of business, a Corporate may temporarily experience an NEV-related breach. Often, a Corporate can resolve the breach within a timely manner, which is why the current regulation permits a Corporate to resolve any breach within 10 days prior to further regulatory action being taken. The Board is concerned that lengthening the grace period could allow a Corporate to circumvent the purpose of the regulation, which is to address breaches that are not resolved in a timely manner. The Board, therefore, continues to believe the proposed 10-day grace period is appropriate.

    In addition, four commenters suggested that the rule be expanded to provide for treatment of government securities, including agency securities, as cash equivalent for purposes of assigning weighted average life (WAL) values, resulting in such securities receiving a zero WAL valuation. The Board recognizes that government-guaranteed securities present a different risk profile than other investments that Corporates are permitted to purchase. However, these securities can pose risks to a Corporate. Specifically, government-issued or government-guaranteed securities may have longer-dated maturities that do not match a Corporate's funding structure. In addition, they are subject to prepayment, extension, and interest rate risks. Given those risks, the Board does not believe that government-issued or government-guaranteed securities merit a cash equivalent designation for purposes of assigning WAL values. It is also important to note that government-guaranteed securities (when compared to non-government-issued or non-government-guaranteed securities) are allowed a preferential factoring for purposes of calculating WAL tests pursuant to § 704.8.

    Four commenters also suggested that NCUA should anticipate that certain government-sponsored enterprises will increasingly require that investors in their mortgage-backed securities agree to certain credit-risk sharing features. These commenters suggested that NCUA should amend its regulations to specifically allow Corporates to acquire these types of investments. This issue is outside the scope of the Proposal, but the Board will continue to consider these comments for future rulemakings.

    7. Section 704.9—Liquidity management

    Section 704.9(b) currently restricts a Corporate's general borrowing limit to the lower of 10 times capital or 50 percent of capital and shares. The Proposal included several changes to this section. First, the Proposal changed the limit to 10 times total capital, consistent with the definitional changes discussed above. Second, the Proposal removed the restriction of 50 percent of capital and shares. Finally, the Proposal increased the secured borrowing maturity limit from 30 days to 120 days to accommodate seasonality in the borrowing patterns of member credit unions.

    Fifteen commenters requested that the borrowing maturity limit be increased beyond 120 days. Most of the commenters addressing this topic advocated an extension of one to two years. In addition, one commenter advocated the elimination of any specific maturity limit. Another commenter sought to tie the maturity limit to the use of highly liquid collateral. Finally, several commenters argued for a system that would allow a Corporate to request a waiver from the borrowing limits.

    The Board has considered all of these comments and has determined to extend the maturity limit to 180 days. The Board believes this additional extension will not materially increase risk, yet will provide the corporate greater flexibility in accommodating the fluctuation of its share base attributed to seasonal changes in member credit union liquidity demands. For example, credit unions incur routine deposit and withdrawal patterns associated with payrolls and consumer spending that can occur on an intra-month or multi-month basis. This seasonality of behavior has a direct impact on credit union funds held on deposit with the corporate. The Board believes the extension of the maturity limit will allow corporate credit unions to better serve the unique attributes of their members.

    One commenter recommended that the Board remove the current limitation on the amount of secured borrowings permitted for non-liquidity purposes, and to simply allow such borrowings as long as all capital ratios continue to exceed the levels required to remain well capitalized. The Board believes that Corporates should be limited in their ability to borrow on a secured basis for other than liquidity purposes. The borrowing limitation is intended to preclude leveraging for investment purposes, which can introduce greater risk when markets encounter disruption. Secured lenders require collateral to be valued at market, and they impose an additional margin to ensure the borrowing is fully and continuously collateralized. Market shocks can create short-term market values that are significantly below long-term intrinsic values, which can magnify potential losses if the creditor seizes the collateral and sells it as permitted by the lending agreements. The Board is adopting the amendments as proposed, except as noted above.

    8. Section 704.11—Corporate credit union service organizations (Corporate CUSOs)

    The Proposal included several amendments to this section of the regulations. First, the Proposal eliminated dates included in § 704.11(e) that have since passed and are no longer relevant. Second, the Proposal added a requirement to § 704.11(g) that a Corporate CUSO provide to NCUA and, if applicable, the appropriate state supervisory authority (SSA), the kinds of reports required to be produced and submitted by natural person credit union service organizations pursuant to a recent revision to NCUA's natural person credit union service organization rule.4

    4 12 CFR 712.3(d)(4) and (5); 78 FR 72537 (Dec. 3, 2013).

    Three commenters opposed this provision, all of whom challenged NCUA's authority to impose this requirement. Two of these commenters noted that the effect of this provision is likely to place CUSOs at a competitive disadvantage relative to other service providers. One commenter noted that this provision could expose a CUSO to the public release of confidential materials should its report become the subject of a Freedom of Information Act (FOIA) request. One commenter requested further clarification in the rule of the term “level of activity of each credit union” which the commenter mistakenly asserted appears in this section. One commenter, while not opposing the substance of this provision, opposed NCUA's use of incorporation by reference to the natural person credit union service organization rule.

    The Board recognizes the concerns raised by commenters and notes that FOIA, as well as applicable FOIA exemptions, apply to any data or information submitted by natural person credit union service organizations and Corporate CUSOs to NCUA. The Board anticipates that natural person credit union service organization and Corporate CUSO submissions often will contain or consist of “trade secrets and commercial or financial information obtained from a person [that is] privileged or confidential.” 5 This type of information generally is subject to withholding under exemption 4 of FOIA. In addition, information that is “contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions” is generally subject to withholding under exemption 8 of FOIA. To the extent, however, that natural person credit union service organization or Corporate CUSO submissions may contain or consist of data or information not subject to an applicable FOIA exemption, for example, an entity's name, address, or other publicly available information, that data or information would be releasable under FOIA.

    5 5 U.S.C. 552(b)(4).

    Further, pursuant to approved Corporate CUSO activities, as found on the agency Web site, all Corporate CUSOs engaged in a particular approved activity must currently provide NCUA with quarterly and annual reports. Most of the reporting required by the Proposal is currently required by NCUA via the agency Web site. The Board is adopting the proposed changes to this section.

    9. Section 704.14—Representation

    The Proposal clarified the provisions in the current regulation pertaining to the qualifications required of a Corporate's directors, and specified that any candidate for a position on the board of a Corporate must currently hold a senior management position at a member credit union and hold that position at the time he or she is seated on the board of a Corporate. The Board received no comments in opposition to this proposed changed and is adopting it as proposed.

    10. Section 704.15—Audit and reporting requirements

    The Proposal made technical changes to this section by eliminating dates that are no longer relevant and corrected a typographical error. The Board received no comment on these changes and is adopting them as proposed.

    11. Section 704.18—Fidelity bond coverage

    The Proposal changed the measure in this section from core capital to Tier 1 capital, consistent with the definitional changes discussed above. The Board received no comments on this change and is adopting it as proposed.

    12. Section 704.21—Enterprise risk management (ERM)

    The Proposal removed the minimum education and background requirements in this section applicable to an independent risk management expert. The Board received two comments, which advocated that this entire section be the subject of guidance, rather than included in the regulations. The Board disagrees with these comments and believes ERM should be addressed formally through regulation. Without emphasis placed on a strong ERM program, Corporates may be practicing good risk management on an exposure-by-exposure basis, but they may not be paying close enough attention to the aggregation of exposures across the entire institution. A Corporate must measure and understand all the individual risks associated with its various business components, and also understand how they interact dynamically. Accordingly, the Board is adopting the changes in this section as proposed.

    13. Appendix A to Part 704—Capital Prioritization and Model Forms

    The Proposal removed expired forms and redesignated the remaining forms as A-D. The Proposal also removed a sentence from the introductory note to current Model Form G, redesignated as Model Form C, to clarify that in some instances previously issued “paid-in capital” may not be considered PCC. The Board received no comments on these changes and is adopting them as proposed.

    14. Appendix B to Part 704—Expanded Authorities and Requirements

    Consistent with the earlier discussion regarding the simplification of terms relating to capital, the Proposal substituted “leverage ratio” for “capital ratio” and “total capital” for “capital” in this appendix. The Board received no comments on these changes and is adopting them as proposed.

    15. Appendix C to Part 704—Risk-Based Capital Credit Risk-Weight Categories

    The Proposal removed references to assets and activities that are not consistent with the regular business activities of Corporates. The Board received no comments on these changes and is adopting them as proposed.

    III. Regulatory Procedures 1. Regulatory Flexibility Act

    The Regulatory Flexibility Act requires NCUA to prepare an analysis of any significant economic impact a regulation may have on a substantial number of small entities (primarily those under $50 million in assets).6 This final rule only affects Corporates, all of which have more than $50 million in assets. Furthermore, the final rule consists primarily of technical and clarifying amendments. Accordingly, NCUA certifies the rule will not have a significant economic impact on a substantial number of small credit unions.

    6 5 U.S.C. 603(a); 12 U.S.C. 1787(c)(1).

    2. Paperwork Reduction Act

    The Paperwork Reduction Act of 1995 (PRA) applies to rulemakings in which an agency by rule creates a new paperwork burden or increases an existing burden.7 For purposes of the PRA, a paperwork burden may take the form of a reporting or recordkeeping requirement, both referred to as information collections. Under the final rule, a Corporate with an investment in or loan to a Corporate CUSO will need to revise the current agreement it has with the Corporate CUSO to provide that the Corporate CUSO will prepare and submit basic or expanded reports directly to NCUA and, if applicable, the appropriate SSA.

    7 44 U.S.C. 3507(d); 5 CFR part 1320.

    Currently, there are 13 Corporates and approximately 16 Corporate CUSOs, 13 of which provide the complex or high-risk services that require expanded reporting. The information collection burdens imposed, on an annual basis, are analyzed below.

    Changing the written agreement relating to reports to NCUA.

    Frequency of response: One-time.

    Initial hour burden: 4.

    4 hours × 13 = 52 hours.

    Initial Corporate CUSO reporting to NCUA and SSA—basic information.

    Frequency of response: One-time.

    Initial hour burden: 0.5.

    0.5 hours × 16 = 8 hours.

    Initial Corporate CUSO reporting to NCUA and SSA—expanded information.

    Frequency of response: One-time.

    Initial hour burden: 3.

    3 hours × 13 = 39 hours.

    Annual Corporate CUSO reporting to NCUA and SSA—expanded information.

    Frequency of response: Annual.

    Annual hour burden: 3.

    3 hours × 13 = 39 hours.

    As required by the PRA, NCUA submitted a copy of this Proposal to OMB for its review and approval.

    3. Executive Order 13132

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

    4. Assessment of Federal Regulations and Policies on Families

    NCUA has determined that this final rule will not affect family well-being within the meaning of section 654 of the Treasury and General Government Appropriations Act, 1999, Public Law 105-277, 112 Stat. 2681 (1998).

    5. Small Business Regulatory Enforcement Fairness Act

    The Small Business Regulatory Enforcement Fairness Act of 1996 8 (SBREFA) provides generally for congressional review of agency rules. A reporting requirement is triggered in instances where NCUA issues a final rule as defined by Section 551 of the Administrative Procedure Act.9 NCUA does not believe this final rule is a “major rule” within the meaning of the relevant sections of SBREFA because it only clarifies the mechanics of a number of regulatory provisions and makes several non-substantive, technical corrections. NCUA has submitted the rule to the Office of Management and Budget for its determination in that regard.

    8 Public Law 104-121, 110 Stat. 857 (1996).

    9 5 U.S.C. 551.

    List of Subjects in 12 CFR Part 704

    Credit unions, Corporate credit unions, Reporting and recordkeeping requirements.

    By the National Credit Union Administration Board on April 30, 2015. Gerard Poliquin, Secretary of the Board.

    For the reasons discussed above, the National Credit Union Administration amends 12 CFR part 704 as follows:

    PART 704—CORPORATE CREDIT UNIONS 1. The authority citation for part 704 continues to read as follows: Authority:

    12 U.S.C. 1766(a), 1781, and 1789.

    2. Amend § 704.2 by: a. Removing the definitions of “Adjusted core capital” and “Asset-backed commercial paper program”; b. Revising the first two sentences of the definition of “Available to cover losses that exceed retained earnings”; c. Removing the definitions of “Capital”,Capital ratio”,Core capital”,Core capital ratio”, and “Credit-enhancing interest-only strip”; d. Revising the definition of “Derivatives”; e. Removing the definition of “Eligible ABCP liquidity facility”; f. Revising the definitions of “Equity investment”,Equity security”,Fair value”, and “Internal control”; g. Removing the two definitions of “Leverage ratio”; h. Adding a new definition, in alphabetical order, for “Leverage ratio”; i. Revising the definitions of “Net assets”,Net risk-weighted assets”, and “Retained earnings”; j. Removing the definition of “Supplementary Capital”; k. Revising the definitions of “Tier 1 capital”; l. Adding a definition, in alphabetical order, for “Tier 1 risk-based capital ratio”; m. Revising the definition of “Tier 2 capital”; and n. Revising the definition of “Total capital”.

    The revisions and additions read as follows:

    § 704.2 Definitions.

    Available to cover losses that exceed retained earnings means that the funds are available to cover operating losses realized, in accordance with generally accepted accounting principles (GAAP), by the corporate credit union that exceed retained earnings and equity acquired in a combination. Likewise, available to cover losses that exceed retained earnings and perpetual contributed capital (PCC) means that the funds are available to cover operating losses realized, in accordance with GAAP, by the corporate credit union that exceed retained earnings and equity acquired in a combination and PCC. * * *

    Derivatives means a financial contract which derives its value from the value and performance of some other underlying financial instrument or variable, such as an index or interest rate.

    Equity investment means an investment in an equity security and other ownership interest, including, for example, an investment in a partnership or limited liability company.

    Equity security means any security representing an ownership interest in an enterprise (for example, common, preferred, or other capital stock) or the right to acquire (for example, warrants and call options) or dispose of (for example, put options) an ownership interest in an enterprise at fixed or determinable prices. However, the term does not include Federal Home Loan Bank stock, convertible debt, or preferred stock that by its terms either must be redeemed by the issuing enterprise or is redeemable at the option of the investor.

    Fair value means the price that would be received to sell an asset, or paid to transfer a liability, in an orderly transaction between market participants at the measurement date, as defined by GAAP.

    Internal control means the process, established by the corporate credit union's board of directors, officers and employees, designed to provide reasonable assurance of reliable financial reporting and safeguarding of assets against unauthorized acquisition, use, or disposition. A credit union's internal control structure generally consists of five components: Control environment; risk assessment; control activities; information and communication; and monitoring. Reliable financial reporting refers to preparation of Call Reports as well as financial data published and presented to members that meet management's financial reporting objectives. Internal control over safeguarding of assets against unauthorized acquisition, use, or disposition refers to prevention or timely detection of transactions involving such unauthorized access, use, or disposition of assets which could result in a loss that is material to the financial statements.

    Leverage ratio means the ratio of Tier 1 capital to moving daily average net assets.

    Net assets means total assets less Central Liquidity Facility (CLF) stock subscriptions, loans guaranteed by the National Credit Union Share Insurance Fund (NCUSIF), and member reverse repurchase transactions. For its own account, a corporate credit union's payables under reverse repurchase agreements and receivables under repurchase agreements may be netted out if the GAAP conditions for offsetting are met. Also, any amounts deducted in calculating Tier 1 capital are also deducted from net assets.

    Net risk-weighted assets means risk-weighted assets less CLF stock subscriptions, CLF loans guaranteed by the NCUSIF, and member reverse repurchase transactions. For its own account, a corporate credit union's payables under reverse repurchase agreements and receivables under repurchase agreements may be netted out if the GAAP conditions for offsetting are met. Also, any amounts deducted in calculating Tier 1 capital are also deducted from net risk-weighted assets.

    Retained earnings means undivided earnings, regular reserve, reserve for contingencies, supplemental reserves, reserve for losses, and other appropriations from undivided earnings as designated by management or NCUA.

    Tier 1 capital means the sum of paragraphs (1) through (4) of this definition from which paragraphs (5) through (9) of this definition are deducted:

    (1) Retained earnings;

    (2) Perpetual contributed capital;

    (3) The retained earnings of any acquired credit union, or of an integrated set of activities and assets, calculated at the point of acquisition, if the acquisition was a mutual combination;

    (4) Minority interests in the equity accounts of CUSOs that are fully consolidated;

    (5) Deduct the amount of the corporate credit union's intangible assets that exceed one half percent of its moving daily average net assets (however, NCUA may direct the corporate credit union to add back some of these assets on NCUA's own initiative, by petition from the applicable state regulator, or upon application from the corporate credit union);

    (6) Deduct investments, both equity and debt, in unconsolidated CUSOs;

    (7) Deduct an amount equal to any PCC or NCA that the corporate credit union maintains at another corporate credit union;

    (8) Beginning on October 20, 2016, and ending on October 20, 2020, deduct any amount of PCC that causes PCC minus retained earnings, all divided by moving daily net average assets, to exceed two percent; and

    (9) Beginning after October 20, 2020, deduct any amount of PCC that causes PCC to exceed retained earnings.

    Tier 1 risk-based capital ratio means the ratio of Tier 1 capital to the moving monthly average net risk-weighted assets.

    Tier 2 capital means the sum of paragraphs (1) through (4) of this definition:

    (1) Nonperpetual capital accounts, as amortized under § 704.3(b)(3);

    (2) Allowance for loan and lease losses calculated under GAAP to a maximum of 1.25 percent of risk-weighted assets;

    (3) Any PCC deducted from Tier 1 capital; and

    (4) Forty-five percent of unrealized gains on available-for-sale equity securities with readily determinable fair values. Unrealized gains are unrealized holding gains, net of unrealized holding losses, calculated as the amount, if any, by which fair value exceeds historical cost. NCUA may disallow such inclusion in the calculation of Tier 2 capital if NCUA determines that the securities are not prudently valued.

    Total capital means the sum of Tier 1 capital and Tier 2 capital, less the corporate credit union's equity investments not otherwise deducted when calculating Tier 1 capital.

    3. Amend § 704.3 by revising paragraphs (b)(5), (c)(3), and (e)(3)(i) and removing paragraph (f)(4) to read as follows:
    § 704.3 Corporate credit union capital.

    (b) * * *

    (5) Redemption. A corporate credit union may redeem NCAs prior to maturity or prior to the end of the notice period only if it meets its minimum required capital and net economic value ratios after the funds are redeemed and only with the prior approval of NCUA and, for state chartered corporate credit unions, the applicable state regulator.

    (c) * * *

    (3) Callability. A corporate credit union may call PCC instruments only if it meets its minimum required capital and net economic value ratios after the funds are called and only with the prior approval of the NCUA and, for state chartered corporate credit unions, the applicable state regulator. PCC accounts are callable on a pro-rata basis across an issuance class.

    (e) * * *

    (3) * * * (i) Notwithstanding the definitions of Tier 1 capital and Tier 2 capital in paragraph (d) of this section, NCUA may find that a particular asset or Tier 1 capital or Tier 2 capital component has characteristics or terms that diminish its contribution to a corporate credit union's ability to absorb losses, and NCUA may require the discounting or deduction of such asset or component from the computation of Tier 1 capital, Tier 2 capital, or total capital.

    4. Amend § 704.5 by revising paragraph (j) to read as follows:
    § 704.5 Investments.

    (j) Grandfathering. A corporate credit union's authority to hold an investment is governed by the regulation in effect at the time of purchase. However, all grandfathered investments are subject to the other requirements of this part.

    5. Amend § 704.6 by revising paragraphs (c), (d), and (e) to read as follows:
    § 704.6 Credit risk management.

    (c) Issuer concentration limits—(1) General rule. The aggregate value recorded on the books of the corporate credit union of all investments in any single obligor is limited to 25 percent of total capital or $5 million, whichever is greater.

    (2) Exceptions. (i) Investments in one obligor where the remaining maturity of all obligations is less than 30 days are limited to 50 percent of total capital;

    (ii) Investments in credit card master trust asset-backed securities are limited to 50 percent of total capital in any single obligor;

    (iii) Aggregate investments in repurchase and securities lending agreements with any one counterparty are limited to 200 percent of total capital;

    (iv) Investments in non-money market registered investment companies are limited to 50 percent of total capital in any single obligor;

    (v) Investments in money market registered investment companies are limited to 100 percent of total capital in any single obligor; and

    (vi) Investments in corporate CUSOs are subject to the limitations of section 11 of this part.

    (d) Sector concentration limits. (1) A corporate credit union must establish sector limits based on the value recorded on the books of the corporate credit union that do not exceed the following maximums:

    (i) Mortgage-backed securities (inclusive of commercial mortgage-backed securities)—the lower of 1000 percent of total capital or 50 percent of assets;

    (ii) Commercial mortgage-backed securities—the lower of 300 percent of total capital or 15 percent of assets;

    (iii) Federal Family Education Loan Program student loan asset-backed securities—the lower of 1000 percent of total capital or 50 percent of assets;

    (iv) Private student loan asset-backed securities—the lower of 500 percent of total capital or 25 percent of assets;

    (v) Auto loan/lease asset-backed securities—the lower of 500 percent of total capital or 25 percent of assets;

    (vi) Credit card asset-backed securities—the lower of 500 percent of total capital or 25 percent of assets;

    (vii) Other asset-backed securities not listed in paragraphs (d)(1)(ii) through (vi) of this section—the lower of 500 percent of total capital or 25 percent of assets;

    (viii) Corporate debt obligations—the lower of 1000 percent of total capital or 50 percent of assets; and

    (ix) Municipal securities—the lower of 1000 percent of total capital or 50 percent of assets.

    (2) Registered investment companies—A corporate credit union must limit its investment in registered investment companies to the lower of 1000 percent of total capital or 50 percent of assets. In addition to applying the limit in this paragraph, a corporate credit union must also include the underlying assets in each registered investment company in the relevant sectors described in paragraph (d)(1) of this section when calculating those sector limits.

    (3) A corporate credit union must limit its aggregate holdings in any investments not described in paragraphs (d)(1) or (2) of this section to the lower of 100 percent of total capital or 5 percent of assets. The NCUA may approve a higher percentage in appropriate cases.

    (4) Investments in other federally insured credit unions, deposits and federal funds investments in other federally insured depository institutions, and investment repurchase agreements are excluded from the concentration limits in paragraphs (d)(1), (2), and (3) of this section.

    (e) Corporate debt obligation subsector limits. In addition to the limitations in paragraph (d)(1)(viii) of this section, a corporate credit union must not exceed the lower of 200 percent of total capital or 10 percent of assets in any single North American Industry Classification System (NAICS) industry sector based on the value recorded on the books of the corporate credit union. If a corporation in which a corporate credit union is interested in investing does not have a readily ascertainable NAICS classification, a corporate credit union will use its reasonable judgment in assigning such a classification. NCUA may direct, however, that the corporate credit union change the classification.

    6. Amend § 704.7 by revising paragraph (c) to read as follows:
    § 704.7 Lending.

    (c) Loans to members—(1) Credit unions. (i) The maximum aggregate amount in unsecured loans and lines of credit from a corporate credit union to any one member credit union, excluding pass-through and guaranteed loans from the CLF and the NCUSIF, must not exceed 50 percent of the corporate credit union's total capital.

    (ii) The maximum aggregate amount in secured loans (excluding those secured by shares or marketable securities and member reverse repurchase transactions) and unsecured loans (excluding pass-through and guaranteed loans from the CLF and the NCUSIF) and lines of credit from a corporate credit union to any one member credit union must not exceed 150 percent of the corporate credit union's total capital.

    (2) Corporate CUSOs. Any loan or line of credit from a corporate credit union to a corporate CUSO must comply with § 704.11.

    (3) Other members. The maximum aggregate amount of loans and lines of credit from a corporate credit union to any other one member must not exceed 15 percent of the corporate credit union's total capital plus pledged shares.

    7. Amend § 704.8 by revising paragraph (j) to read as follows:
    § 704.8 Asset and liability management.

    (j) Limit breaches. (1)(i) If a corporate credit union's decline in NEV, base case NEV ratio, or any NEV ratio calculated under paragraph (d) of this section exceeds established or permitted limits, or the corporate is unable to satisfy the tests in paragraphs (f) or (g) of this section, the operating management of the corporate must immediately report this information to its board of directors and ALCO; and

    (ii) If the corporate credit union cannot adjust its balance sheet to meet the requirements of paragraphs (d), (f), or (g) of this section within 10 calendar days after detection by the corporate, the corporate must notify in writing the Director of the Office of National Examinations and Supervision.

    (2) If any breach described in paragraph (j)(1) of this section persists for 30 or more calendar days, the corporate credit union:

    (i) Must immediately submit a detailed, written action plan to the NCUA that sets forth the time needed and means by which it intends to come into compliance and, if the NCUA determines that the plan is unacceptable, the corporate credit union must immediately restructure its balance sheet to bring the exposure back within compliance or adhere to an alternative course of action determined by the NCUA; and

    (ii) If presently categorized as adequately capitalized or well capitalized for prompt corrective action purposes, and the breach was of paragraph (d) of this section, the corporate credit union will immediately be recategorized as undercapitalized until coming into compliance, and

    (iii) If presently categorized as less than adequately capitalized for prompt corrective action purposes, and the breach was of paragraph (d) of this section, the corporate credit union will immediately be downgraded one additional capital category.

    8. Amend § 704.9 by revising paragraph (b) to read as follows:
    § 704.9 Liquidity management.

    (b) Borrowing limits. A corporate credit union may borrow up to 10 times its total capital.

    (1) Secured borrowings. A corporate credit union may borrow on a secured basis for liquidity purposes, but the maturity of the borrowing may not exceed 180 days. Only a corporate credit union with Tier 1 capital in excess of five percent of its moving daily average net assets (DANA) may borrow on a secured basis for nonliquidity purposes, and the outstanding amount of secured borrowing for nonliquidity purposes may not exceed an amount equal to the difference between the corporate credit union's Tier 1 capital and five percent of its moving DANA.

    (2) Exclusions. CLF borrowings and borrowed funds created by the use of member reverse repurchase agreements are excluded from the limit in paragraph (b)(1) of this section.

    9. Amend § 704.11 by: a. Revising paragraphs (b)(1) and (2) and (e)(1) introductory text; b. Removing paragraph (e)(2); c. Redesignating paragraph (e)(3) as paragraph (e)(2); d. Redesignating paragraphs (g)(4) through (7) as paragraphs (g)(5) through (8), respectively; and e. Adding new paragraph (g)(4).

    The revisions and addition read as follows:

    § 704.11 Corporate Credit Union Service Organizations (Corporate CUSOs).

    (b) Investment and loan limitations. (1) The aggregate of all investments in member and non-member corporate CUSOs that a corporate credit union may make must not exceed 15 percent of a corporate credit union's total capital.

    (2) The aggregate of all investments in and loans to member and nonmember corporate CUSOs a corporate credit union may make must not exceed 30 percent of a corporate credit union's total capital. A corporate credit union may lend to member and nonmember corporate CUSOs an additional 15 percent of total capital if the loan is collateralized by assets in which the corporate has a perfected security interest under state law.

    (e) Permissible activities. (1) A corporate CUSO must agree to limit its activities to:

    (g) * * *

    (4) Will provide the reports as required by § 712.3(d)(4) and (5) of this chapter;

    10. Amend § 704.14 by revising paragraphs (a)(2), (a)(9), and (e)(2) to read as follows:
    § 704.14 Representation.

    (a)* * *

    (2) Only an individual who currently holds the position of chief executive officer, chief financial officer, chief operating officer, or treasurer/manager at a member credit union, and will hold that position at the time he or she is seated on the corporate credit union board if elected, may seek election or re-election to the corporate credit union board;

    (9) At least a majority of directors of every corporate credit union, including the chair of the board, must serve on the corporate board as representatives of natural person credit union members.

    (e)* * *

    (2) The provisions of § 701.14 of this chapter apply to corporate credit unions, except that where “Regional Director” is used, read “Director of the Office of National Examinations and Supervision.”

    11. Amend § 704.15 by revising paragraph (a)(2)(iii) introductory text, the first sentence of paragraph (b)(2), and the first sentence of paragraph (d)(1) to read as follows:
    § 704.15 Audit and reporting requirements.

    (a) * * *

    (2) * * *

    (iii) An assessment by management of the effectiveness of the corporate credit union's internal control structure and procedures as of the end of the past calendar year that must include the following:

    (b) * * *

    (2) * * *The independent public accountant who audits the corporate credit union's financial statements must examine, attest to, and report separately on the assertion of management concerning the effectiveness of the corporate credit union's internal control structure and procedures for financial reporting.* * *

    (d) * * *

    (1)* * * Each corporate credit union must establish a supervisory committee, all of whose members must be independent.* * *

    § 704.18 [Amended]
    12. Amend § 704.18 by: a. Removing the words “core capital ratio” from the introductory text of paragraph (e)(1) and adding in their place “leverage ratio”; b. Removing the words “Core capital ratio” from the table heading of paragraph (e)(1) and adding in their place “Leverage ratio”; and c. Removing the words “of core capital” wherever they appear in the table in paragraph (e)(1) and adding in their place “of Tier 1 capital”. 13. Amend § 704.21 by revising paragraph (c) to read as follows:
    § 704.21 Enterprise risk management.

    (c) The ERMC must include at least one independent risk management expert. The risk management expert must have at least five years of experience in identifying, assessing, and managing risk exposures. This experience must be commensurate with the size of the corporate credit union and the complexity of its operations. The board of directors may hire the independent risk management expert to work full-time or part-time for the ERMC or as a consultant for the ERMC.

    Appendix A to Part 704—[Amended]
    14. Amend Appendix A to part 704 by: a. Removing Model Forms A, B, E, and F and redesignating Model Forms C, D, G, and H as Model Forms A, B, C, and D, respectively; and b. Removing the second sentence of the note in newly redesignated Model Form C. Appendix B to Part 704—[Amended] 15. Amend Appendix B to part 704 by: a. Removing the words “capital ratio” wherever they appear and adding in their place “leverage ratio”; b. Removing the words “corporate credit union's capital” wherever they appear and adding in their place “corporate credit union's total capital”; c. Removing the words “25 percent of capital” from paragraph (b)(3) of Part II and adding in their place “25 percent of total capital”; and d. Removing paragraph (e) from part 1. 16. Amend Appendix C to part 704 by: a. In part I(b): (i) Revising paragraph (8) of the definition of “Direct credit substitute”; (ii) Revising paragraph (8) of the definition of “Recourse”; and (iii) Revising paragraph (2) of the definition of “Residual interest”; b. In part II(a), revising paragraph (4)(xiii); c. In part II(b): (i) Removing paragraphs (1)(iv) and (4); (ii) Redesignating paragraphs (5) and (6) as paragraphs (4) and (5), respectively; (iii) Revising newly redesignated paragraph (4)(i); and (iv) Removing newly redesignated paragraph (5)(v)(C). d. In part II(c): (i) Removing paragraph (2)(i); (ii) Redesignating paragraphs (2)(ii) and (iii) as paragraphs (2)(i) and (ii), respectively; and (iii) Revising newly redesignated paragraph (2)(i) and the introductory text of newly redesignated paragraph (2)(ii).

    The revisions read as follows:

    Appendix C to Part 704—Risk-Based Capital Credit Risk-Weight Categories

    Part I: Introduction

    (b) Definitions

    Direct credit substitute* * *

    (8) Liquidity facilities that provide support to asset-backed commercial paper.

    Recourse * * *

    (8) Liquidity facilities that provide support to asset-backed commercial paper.

    Residual interest* * *

    (2) Residual interests generally include spread accounts, cash collateral accounts, retained subordinated interests (and other forms of overcollateralization), and similar assets that function as a credit enhancement. Residual interests further include those exposures that, in substance, cause the corporate credit union to retain the credit risk of an asset or exposure that had qualified as a residual interest before it was sold.

    Part II: Risk-Weightings

    (a) On-Balance Sheet Assets

    (4)* * *

    (xiii) Interest-only strips receivable;

    (b) Off-Balance Sheet Activities

    (4) * * * (i) Unused portions of commitments with an original maturity of one year or less;

    (c) Recourse Obligations, Direct Credit Substitutes, and Certain Other Positions

    (2)(i) Other residual interests. A corporate credit union must maintain risk-based capital for a residual interest equal to the face amount of the residual interest, even if the amount of risk-based capital that must be maintained exceeds the full risk-based capital requirement for the assets transferred.

    (ii) Residual interests and other recourse obligations. Where a corporate credit union holds a residual interest and another recourse obligation in connection with the same transfer of assets, the corporate credit union must maintain risk-based capital equal to the greater of:

    [FR Doc. 2015-10546 Filed 5-5-15; 8:45 am] BILLING CODE 7535-01-P
    FEDERAL TRADE COMMISSION 16 CFR Parts 3 and 4 Revisions to Rules of Practice AGENCY:

    Federal Trade Commission.

    ACTION:

    Final rules.

    SUMMARY:

    The Commission is revising certain of its rules of practice to accommodate changes to the Commission's electronic filing system, to eliminate outdated requirements, and to improve clarity.

    DATES:

    Effective date: These rule revisions are effective on May 12, 2015 and will govern all Commission adjudicatory proceedings that are commenced after that date. They will also govern all Commission adjudicatory proceedings that are pending on May 12, 2015, unless otherwise ordered by the Commission.

    FOR FURTHER INFORMATION CONTACT:

    Josephine Liu, Attorney, (202) 326-2170, Office of the General Counsel, Federal Trade Commission, 600 Pennsylvania Avenue NW., Washington, DC 20580.

    SUPPLEMENTARY INFORMATION:

    The Federal Trade Commission is revising certain rules in parts 3 and 4 of its rules of practice to reflect new features in the Commission's electronic filing system, eliminate outdated requirements for the filing and service of documents, and clarify the applicability of the rules.

    Because these rule revisions relate solely to agency procedure and practice, publication for notice and comment is not required under the Administrative Procedure Act. 5 U.S.C. 553(b).1 These rule revisions are effective on May 12, 2015 and will govern all Commission adjudicatory proceedings that are commenced after that date. They will also govern all Commission adjudicatory proceedings that are pending on May 12, 2015, unless otherwise ordered by the Commission.

    1 For this reason, the requirements of the Regulatory Flexibility Act are also inapplicable. 5 U.S.C. 601(2), 604(a). Likewise, the amendments do not modify any FTC collections of information within the meaning of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq.

    I. Revisions to Miscellaneous Rules (Part 4) Rule 4.2: Requirements as to Form, and Filing of Documents Other Than Correspondence

    The Commission is amending Rule 4.2(c) to specify that documents filed before the Commission or an Administrative Law Judge in an adjudicative proceeding under part 3 of the Commission's rules may be filed in either of two ways: In hard copy, or through the Commission's electronic filing system.

    Part 3 documents filed in hard copy must include a paper original, one paper copy, and one electronic copy in Adobe portable document format or other format specified by the Secretary. The Commission is eliminating the requirement to provide 12 paper copies for filings before the Commission.

    Part 3 documents filed through the electronic filing system must comply with the Secretary's directions for using that system. Additional information about the electronic filing system is available at https://ftcefile.gov/HomePage.aspx. Documents labeled “In Camera” or “Confidential” may be filed through the electronic filing system, although—as discussed further below—they may not be served through that system. Because the electronic filing system is now configured to accept “In Camera” or “Confidential” documents, the Commission is deleting the existing requirement that “In Camera” or “Confidential” documents be filed only in hard copy and be accompanied by an electronic copy on a CD or DVD.

    For other documents filed with the Commission that are governed by Rule 4.2(d)—including petitions to quash or limit compulsory process, reports of compliance, and requests to reopen—the Commission is eliminating the existing requirement to provide 12 paper copies and a CD or DVD containing an electronic copy of the document. Instead, such documents must include a paper original, one paper copy, and one electronic copy in Adobe portable document format, unless otherwise directed by the Secretary.

    In Rule 4.2(e), the Commission is deleting an outdated exception for briefs filed in support of appeals from initial decisions and an outdated cross-reference to formatting requirements for such briefs under Rule 3.52(e).

    In Rule 4.2(f), the Commission is adding an explanation of the acceptable signature methods for documents that are filed electronically.

    The Commission is also making other edits throughout Rule 4.2 so that the Rule's requirements are format-neutral.

    Rule 4.3: Time

    The Commission is amending Rule 4.3(c) so that, if a document is served electronically, there will be a 1-day extension for any parties required or permitted to respond within a prescribed period after service of the document. As discussed in more detail below, documents can now be filed through the electronically filing system until 11:59 p.m. For documents that are electronically filed and served late at night, it is unrealistic to expect opposing parties to read the service notification until the next morning. Rule 4.3(c) therefore provides a 1-day extension for responding to electronically served documents. Although the federal courts provide a 3-day extension for responding to electronically served documents, see Fed. R. Civ. P. 6(d), the Commission has decided—due to the way that time is computed under the Commission's rules—that a 1-day extension in Rule 4.3(c) would be more appropriate.

    The Commission is amending Rule 4.3(d)'s deadline for timely filing of documents. Although paper documents still must be received in the Office of the Secretary by 5:00 p.m. Eastern Time to be deemed filed that day, documents filed using the electronic filing system will be deemed timely filed as long as they are received by 11:59 p.m. Eastern Time. This change is consistent with Federal Rule of Civil Procedure 6(a)(4), which similarly provides a later deadline for electronic filing as compared to filing by other means.

    Rule 4.4: Service

    The Commission is amending Rule 4.4(a) to clarify which paragraphs govern which types of documents and to allow the Commission to use electronic delivery to serve certain types of documents in part 3 proceedings. The provision that permits service upon counsel to be deemed service upon the party represented by that counsel—former Rule 4.4(a)(4)—has been moved into a new paragraph so that it is applicable to all documents in Commission proceedings, not just documents served by the Commission. See new Rule 4.4(c).

    The Commission is amending Rule 4.4(b) to clarify that Rule 4.4(b) is the provision that governs service by complaint counsel, respondents, or third parties in adjudicative proceedings under part 3. The Commission is also clarifying, in new Rule 4.4(b)(1)(i), that service upon complaint counsel must be effected by serving lead complaint counsel; the Commission is eliminating the existing language that allowed service to be effected by instead serving the Assistant Director in the Bureau of Competition, the Associate Director in the Bureau of Consumer Protection, or the Director of the Regional Office of complaint counsel. In addition, Rule 4.4(b) is being revised to permit service by electronic delivery in accordance with new Rule 4.4(e).

    New Rule 4.4(e) governs service by electronic delivery in part 3 proceedings. Specifically, Rule 4.4(e)(1) governs parties who have elected to be served via the Commission's electronic filing system. For such parties, the electronic filing system may be used to serve them with documents labeled “Public,” and transmission of the notice of electronic filing provided by the electronic filing system will satisfy the service obligations of the serving party. A document will be deemed served on the date that the notice of electronic filing is transmitted, unless the serving party learns that the notice of electronic filing did not reach the person to be served.

    In Camera” or “Confidential” documents may not be served through the electronic filing system. In addition, for confidentiality reasons, the electronic filing system cannot be used to serve third parties. Third parties can use the electronic filing system to file and serve documents, but third parties cannot be served through the system.

    Rule 4.4(e)(2) therefore authorizes the Administrative Law Judge and the Secretary to allow other methods of service by electronic delivery, including service by email, in the following circumstances: For service of “In Camera” or “Confidential” documents, if the party to be served has not opted into service via the Commission's electronic filing system, if the document is to be served upon a third party, or if service through the electronic filing system is unavailable for technical reasons. If “In Camera” and “Confidential” documents are served by electronic delivery under Rule 4.4(e)(2), they must be encrypted prior to transit or transferred through a secure file transfer protocol.

    New Rule 4.4(f) contains language that was previously found in Rule 4.4(b) and that has been moved into a new paragraph for clarity.

    II. Revisions to Rules of Practice for Adjudicative Proceedings (Part 3) Rule 3.14: Intervention

    The Commission is amending Rule 3.14(a) to clarify that motions to intervene in Part 3 proceedings, as well as answers to such motions, must be served in accordance with Rule 4.4(b).

    Rule 3.83: Procedures for Considering Applicants

    The Commission is deleting Rule 3.83(a)'s discussion of the date of filing for an application for an award of fees and expenses under the Equal Access to Justice Act, because Rule 4.3(d) governs the date of filing for documents filed with the Commission.

    List of Subjects 16 CFR Part 3

    Administrative practice and procedure.

    16 CFR Part 4

    Administrative practice and procedure, Freedom of information, Public record.

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

    PART 3—RULES OF PRACTICE FOR ADJUDICATIVE PROCEEDINGS 1. The authority citation for part 3 continues to read as follows: Authority:

    15 U.S.C. 46, unless otherwise noted.

    2. Amend § 3.14 by revising paragraph (a) to read as follows:
    § 3.14 Intervention.

    (a) Any individual, partnership, unincorporated association, or corporation desiring to intervene in an adjudicative proceeding shall make written application in the form of a motion setting forth the basis therefor. Such application shall be served upon each party to the proceeding in accordance with the provisions of § 4.4(b) of this chapter. The answer filed by any party shall be served upon the applicant in accordance with the provisions of § 4.4(b). The Administrative Law Judge or the Commission may by order permit the intervention to such extent and upon such terms as are provided by law or as otherwise may be deemed proper.

    3. Amend § 3.83 by revising paragraph (a) to read as follows:
    § 3.83 Procedures for considering applicants.

    (a) Filing and service of documents. Any application for an award or other pleading or document related to an application shall be filed and served on all parties as specified in §§ 4.2 and 4.4(b) of this chapter, except as provided in § 3.82(b)(2) for confidential financial information.

    PART 4—MISCELLANEOUS RULES 4. The authority citation for part 4 continues to read as follows: Authority:

    15 U.S.C. 46, unless otherwise noted.

    5. Amend § 4.2 by revising paragraphs (c), (d), (e), and (f) to read as follows:
    § 4.2 Requirements as to form, and filing of documents other than correspondence.

    (c) Paper and electronic copies of filings before the Commission or an Administrative Law Judge in adjudicative proceedings under part 3 of this chapter. (1) Each document filed in an adjudicative proceeding under part 3, except documents covered by § 4.2(a)(1)(i), shall be filed with the Secretary of the Commission, shall be in 12-point font with 1-inch margins, and shall comply with the requirements of §§ 4.2(b) and (f) and 4.3(d). Documents may be filed with the Office of the Secretary either electronically or in hard copy.

    (i) Documents may be filed electronically by using the Office of the Secretary's electronic filing system and complying with the Secretary's directions for using that system. Documents filed electronically shall be in Adobe portable document format or such other format as the Secretary may direct.

    (ii) Documents filed in hard copy shall include a paper original, one paper copy, and an electronic copy in Adobe portable document format or such other format as the Secretary shall direct.

    (2) If the document is labeled “In Camera” or “Confidential”, it must include as an attachment either a motion requesting in camera or other confidential treatment, in the form prescribed by § 3.45 of this chapter, or a copy of a Commission, Administrative Law Judge, or federal court order granting such treatment. The document must also include as a separate attachment a set of only those pages of the document on which the in camera or otherwise confidential material appears and comply with all other requirements of § 3.45 and any other applicable rules governing in camera treatment. A document labeled “In Camera” or “Confidential” may be filed electronically using the electronic filing system.

    (3) Sensitive personal information, as defined in § 3.45(b) of this chapter, shall not be included in, and must be redacted or omitted from, filings where the filing party determines that such information is not relevant or otherwise necessary for the conduct of the proceeding.

    (4) A copy of each document filed in accordance with this section in an adjudicative proceeding under part 3 of this chapter shall be served by the party filing the document or person acting for that party on all other parties pursuant to § 4.4, at or before the time the original is filed.

    (d) Other documents filed with the Commission. (1) Each document filed with the Commission, and not covered by § 4.2(a)(1)(i) or (ii) or § 4.2(c), shall be filed with the Secretary of the Commission, and shall be clearly and accurately labeled as required by § 4.2(b).

    (2) Each such document shall be signed and shall comply with the requirements of § 4.2(f). Documents filed under this paragraph (d) shall include a paper original, one paper copy, and an electronic copy in Adobe portable document format, unless the Secretary shall otherwise direct.

    (3) Each such document labeled “Public” may be placed on the public record of the Commission at the time it is filed.

    (4) If such a document is labeled “Confidential”, and it is filed pursuant to § 2.10(a), § 2.41(f), or § 2.51 of this chapter, it will be rejected for filing pursuant to § 4.2(g), and will not stay compliance with any applicable obligation imposed by the Commission or the Commission staff, unless the filer simultaneously files:

    (i) An explicit request for confidential treatment that includes the factual and legal basis for the request, identifies the specific portions of the document to be withheld from the public record, provides the name and address of the person(s) who should be notified in the event the Commission determines to disclose some or all of the material labeled “Confidential”, and otherwise conforms to the requirements of § 4.9(c); and

    (ii) A redacted public version of the document that is clearly labeled “Public”.

    (e) Form. Paper documents filed with the Secretary of the Commission shall be printed, typewritten, or otherwise processed in permanent form and on good unglazed paper. A motion or other document filed in an adjudicative proceeding under part 3 of this chapter shall contain a caption setting forth the title of the case, the docket number, and a brief descriptive title indicating the purpose of the document.

    (f) Signature. (1) The original of each document filed shall be signed by an attorney of record for the filing party, or in the case of parties not represented by counsel, by the party itself, or by a partner if a partnership, or by an officer of the party if it is a corporation or an unincorporated association. For documents filed electronically using the Office of the Secretary's electronic filing system, documents must be signed using a scanned signature image, an “s/” followed by the name of the filer using the electronic filing system, or another signature method as the Secretary may direct.

    (2) Signing a document constitutes a representation by the signer that he or she has read it; that to the best of his or her knowledge, information, and belief, the statements made in it are true; that it is not interposed for delay; and that to the best of his or her knowledge, information, and belief, it complies with the rules in this part. If a document is not signed or is signed with intent to defeat the purpose of this section, it may be stricken as sham and false and the proceeding may go forward as though the document had not been filed.

    6. Amend § 4.3 by revising paragraphs (c) and (d) to read as follows:
    § 4.3 Time.

    (c) Additional time after certain kinds of service. Whenever a party in an adjudicative proceeding under part 3 of this chapter is required or permitted to do an act within a prescribed period after service of a document upon it and the document is served by first-class mail pursuant to § 4.4(a)(2) or (b), 3 days shall be added to the prescribed period. Whenever a party in an adjudicative proceeding under part 3 is required or permitted to do an act within a prescribed period after service of a document upon it and the document is served by electronic delivery pursuant to § 4.4(e), 1 day shall be added to the prescribed period.

    (d) Date of filing. Documents permitted to be filed using the electronic filing system must be received by 11:59 p.m. Eastern Time to be deemed timely filed that day. All other documents must be received in the Office of the Secretary by 5:00 p.m. Eastern Time to be deemed filed that day, and any such document received after 5:00 p.m. Eastern Time will be deemed filed the following business day.

    7. Revise § 4.4 to read as follows:
    § 4.4 Service.

    (a) By the Commission. (1) Service of complaints, initial decisions, final orders and other processes of the Commission under 15 U.S.C. 45 may be effected as follows:

    (i) By registered or certified mail. A copy of the document shall be addressed to the person, partnership, corporation or unincorporated association to be served at his, her or its residence or principal office or place of business, registered or certified, and mailed; service under this provision is complete upon delivery of the document by the Post Office; or

    (ii) By delivery to an individual. A copy thereof may be delivered to the person to be served, or to a member of the partnership to be served, or to the president, secretary, or other executive officer or a director of the corporation or unincorporated association to be served; service under this provision is complete upon delivery as specified herein; or

    (iii) By delivery to an address. A copy thereof may be left at the principal office or place of business of the person, partnership, corporation, or unincorporated association, or it may be left at the residence of the person or of a member of the partnership or of an executive officer or director of the corporation, or unincorporated association to be served; service under this provision is complete upon delivery as specified herein.

    (2) All documents served by the Commission or Administrative Law Judge in adjudicative proceedings under part 3 of this chapter, other than documents governed by paragraph (a)(1) of this section, may be served by personal delivery (including delivery by courier), by electronic delivery in accordance with § 4.4(e), or by first-class mail. Unless otherwise specified in § 4.4(e), documents shall be deemed served on the day of personal or electronic delivery or the day of mailing.

    (3) All other orders and notices, including subpoenas, orders requiring access, orders to file annual and special reports, and notices of default, may be served by any method reasonably certain to inform the affected person, partnership, corporation or unincorporated association, including any method specified in paragraph (a)(1) of this section, except that civil investigative demands may only be served in the manner provided by section 20(c)(7) of the FTC Act (in the case of service on a partnership, corporation, association, or other legal entity) or section 20(c)(8) of the FTC Act (in the case of a natural person). Service under this provision is complete upon delivery by the Post Office or upon personal delivery (including delivery by courier).

    (b) By parties or third parties in adjudicative proceedings under part 3 of this chapter. (1) Service of documents by complaint counsel, respondents, or third parties in adjudicative proceedings under part 3 shall be by delivering copies using the following methods.

    (i) Upon complaint counsel. A copy may be served by personal delivery (including delivery by courier), by electronic delivery in accordance with § 4.4(e), or by first-class mail to the lead complaint counsel, with a copy to the Administrative Law Judge.

    (ii) Upon a party other than complaint counsel or upon a third party. A copy may be served by personal delivery (including delivery by courier), by electronic delivery in accordance with § 4.4(e), or by first-class mail, with a copy to the Administrative Law Judge. If the party is an individual or partnership, delivery shall be to such individual or a member of the partnership; if a corporation or unincorporated association, to an officer or agent authorized to accept service of process therefor. Personal delivery includes handing the document to be served to the individual, partner, officer, or agent; leaving it at his or her office with a person in charge thereof; or, if there is no one in charge or if the office is closed or if the party has no office, leaving it at his or her dwelling house or usual place of abode with some person of suitable age and discretion then residing therein.

    (2) Unless otherwise specified in § 4.4(e), documents served in adjudicative proceedings under part 3 shall be deemed served on the day of personal delivery (including delivery by courier), the day of electronic delivery, or the day of mailing.

    (c) Service upon counsel. When counsel has appeared in a proceeding on behalf of a party, service upon such counsel of any document, other than a complaint, shall be deemed service upon the party. However, service of those documents specified in paragraph (a)(1) of this section shall be in accordance with paragraphs (a)(1)(i), (ii), and (iii) of this section.

    (d) Proof of service. In an adjudicative proceeding under part 3, documents presented for filing shall contain proof of service in the form of a statement of the date and manner of service and of the names of the persons served, certified by the person who made service. Proof of service must appear on or be affixed to the documents filed.

    (e) Service by electronic delivery in an adjudicative proceeding under part 3 of this chapter—(1) Service through the electronic filing system. A party may elect, for documents labeled “Public” pursuant to § 4.2(b), to be served via the electronic filing system provided by the Office of the Secretary. The electronic filing system cannot be used to serve third parties. For parties that have elected to be served via the electronic filing system:

    (i) Service of documents labeled “Public” pursuant to § 4.2(b) may be effected through the electronic filing system;

    (ii) Each such party thereby agrees that, for any document served through the electronic filing system, transmission of the notice of electronic filing provided by the electronic filing system shall satisfy the service obligations of the serving party; and

    (iii) A document served via the electronic filing system shall be deemed served on the date the notice of electronic filing is transmitted, unless the serving party learns that the notice of electronic filing did not reach the person to be served.

    (2) Service by other methods of electronic delivery. (i) In the following circumstances, service by other methods of electronic delivery (including service by email) may be effected as the Administrative Law Judge and the Secretary may direct:

    (A) The document to be served is labeled “In Camera” or “Confidential” pursuant to § 4.2(b);

    (B) The party to be served has not elected to be served via the electronic filing system;

    (C) The document is to be served upon a third party; or

    (D) Service under paragraph (e)(1) of this section is unavailable for technical reasons.

    (ii) If documents labeled “In Camera” or “Confidential” are being served under this paragraph (e)(2), the documents must be encrypted prior to transit or must be transferred through a secure file transfer protocol. Service of a document under this paragraph (e)(2) shall be complete upon transmission by the serving party, unless the serving party learns that the document did not reach the person to be served.

    (f) Service of process upon the Commission. Documents served upon the Commission may be served by personal delivery (including delivery by courier) or by first-class mail to the Office of the Secretary of the Commission.

    By direction of the Commission.

    Donald S. Clark, Secretary.
    [FR Doc. 2015-10517 Filed 5-5-15; 8:45 am] BILLING CODE 6750-01-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 174 [EPA-HQ-OPP-2014-0834; FRL-9926-99] Defensin Proteins (SoD2 and SoD7) Derived From Spinach (Spinacia oleracea L.) in Citrus Plants; Temporary Exemption From the Requirement of a Tolerance AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes a temporary exemption from the requirement of a tolerance for residues of SoD2 and SoD7, two defensin proteins derived from spinach (Spinacia oleracea L.), in or on citrus when used as plant-incorporated protectants (PIPs) in accordance with the terms of Experimental Use Permit (EUP) No. 88232-EUP-1. Southern Gardens Citrus submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting the temporary tolerance exemption. This regulation eliminates the need to establish a maximum permissible level for residues of SoD2 and SoD7 in or on citrus. The temporary tolerance exemption expires on April 18, 2018.

    DATES:

    This regulation is effective May 6, 2015. Objections and requests for hearings must be received on or before July 6, 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-2014-0834, 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:

    Robert McNally, Biopesticides and Pollution Prevention Division (7511P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

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

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

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

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

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

    C. 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-2014-0834 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 July 6, 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-2014-0834, by one of the following methods:

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

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

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

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

    II. Background and Statutory Framework

    In the Federal Register of January 28, 2015 (80 FR 4525) (FRL-9921-55), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 4F8289) by Southern Gardens Citrus, 1820 Country Road 833, Clewiston, FL 33440. The petition requested that 40 CFR part 174 be amended by establishing a temporary exemption from the requirement of a tolerance for residues of spinach defensin (SoD2 and SoD7) proteins in or on citrus. That document referenced a summary of the petition prepared by the petitioner Southern Gardens Citrus, which is available in the docket, http://www.regulations.gov. A comment was received on the notice of filing. EPA's response to this comment is discussed in Unit VII.C.

    Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe ” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require 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. . . .” Additionally, FFDCA section 408(b)(2)(D) requires that the Agency consider “available information concerning the cumulative effects of a particular pesticide's residues” and “other substances that have a common mechanism of toxicity.”

    EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

    III. Toxicological Profile

    Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability, and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

    Diverse defensin proteins are expressed by most eukaryotic species to combat various bacterial and fungal organisms. Homologous proteins have also diverged in evolution to provide functions related to plant stresses such as heat and drought.

    There is a long history of mammalian consumption of the entire spinach plant (both raw and cooked) as food, without causing any known deleterious human health effects or any evidence of toxicity. Spinach plant leaves have long been part of the human diet and there have been no findings that indicate toxicity or allergenicity of spinach proteins. Spinach is commonly regarded as a “super food” that serves as an excellent source of vitamins, minerals, and antioxidants. Recent U.S. consumption statistics indicate that, on average, 2 lbs. of spinach are consumed per person per year in the United States. “Spinach Profile,” Agricultural Marketing Resource Center (June 2013) (http://www.agmrc.org/commodities_products/vegetables/spinach-profile/). Similarly, citrus whole fruits and juices have been an important part of the American and international diets for centuries. “History of Citrus,” All Foods Natural (2013) (available online at: http://www.allfoodnatural.com/article/history-of-citrus.html). Available studies demonstrate that spinach defensin 2 (SoD2) and spinach defensin 7 (SoD7) proteins have very low oral toxicity. In an acute oral toxicity study conducted with a single dose of 5,000 milligram/kilogram (mg/kg) of microbial-produced SoD2 protein, no evidence of toxic or adverse effects was observed. Due to the high similarity between SoD2 and SoD7, the toxicity assessment is applicable to both proteins.

    In an in vitro study, microbial-produced SoD2 and SoD7 proteins were rapidly and extensively hydrolyzed in stimulated gastric and intestinal conditions in the presence of pepsin (at pH 1.2) and pancreatin, respectively. Both microbial-produced SoD2 and SoD7 proteins demonstrated half-lives of approximately five minutes when subjected to pepsin digest, and both proteins were completely proteolyzed to amino acids and small peptide fragments in less than one minute in the presence of 0.15 milligram/liter (mg/ml) pancreatin. These results indicate that both the SoD2 and SoD7 proteins are highly susceptible to degradation in conditions similar to the human digestive tract.

    A literature search was performed to identify any published studies that might implicate these spinach proteins as allergens. No scientific references were found to suggest possible allergenicity associated with these spinach proteins. Sequence comparisons were made between the novel proteins from spinach, SoD2 and SoD7, against those of known and putative allergens using FASTA3 to search the AllergenOnline.org database using full-length matches, sliding window of 80 amino acids and finally 8-mer identity searches. In addition, the sequences were searched against the National Center for Biotechnology Information (NCBI) Protein database without keyword limits to identify highly related proteins and with the keyword limit of allergen, to find any high scoring identity matches to proteins annotated as allergens, as a check on the AllergenOnline.org data. No significant sequence matches were found between either SoD2 or SoD7 and any allergens. Thus there are no potential safety concerns related to allergenicity that would require further testing.

    IV. Aggregate Exposures

    In examining aggregate exposure, FFDCA section 408 directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

    The Agency has considered available information on the aggregate exposure levels of consumers (and major identifiable subgroups of consumers) to the pesticide chemical residue and to other related substances. These considerations include dietary exposure under the tolerance exemption and all other tolerances or exemptions in effect for the plant-incorporated protectant chemical residue, and exposure from non-occupational sources. The Agency anticipates that there may be dietary exposure to the pesticide from the consumption of citrus products. In addition, people have a long history of consumption of spinach and will continue to be exposed to defensin proteins through consumption of spinach. Since the PIP is integrated into the plants genome, the Agency has concluded, based upon previous science reviews, that residues in drinking water will be extremely low or non-existent. Non-occupational exposure via the skin or inhalation is not likely since the plant-incorporated protectant is contained within plant cells, which essentially eliminates these exposure routes or reduces these exposure routes to negligible. In any event, there are no non-dietary non-occupational uses of SoD2 and SoD7 as it is only used in agricultural settings.

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

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

    Since SoD2 and SoD7 proteins do not act through a toxic mode of action nor do the SoD2 and SoD7 proteins appear to produce a toxic metabolite produced by other substances, the proteins do not have a common mechanism of toxicity with other substances; therefore, the requirements of section 408(b)(2)(D)(v) do not apply.

    VI. Determination of Safety for U.S. Population, Infants and Children

    FFDCA section 408(b)(2)(C) provides that, in considering the establishment of a tolerance or tolerance exemption for a pesticide chemical residue, EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues, and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) provides that EPA shall apply an additional tenfold (10X) margin of exposure (safety) for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines that a different margin of exposure (safety) will be safe for infants and children. This additional margin of exposure (safety) is commonly referred to as the Food Quality Protection Act Safety Factor (FQPA SF). In applying this provision, EPA either retains the default value of 10X or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

    Based on the information discussed in Unit III., EPA concludes that there are no threshold effects of concern to infants, children, or adults from exposure to the spinach defensin proteins SoD2 and SoD7. As a result, EPA concludes that no additional margin of exposure (safety) is necessary to protect infants and children and that not adding any additional margin of exposure (safety) will be safe for infants and children.

    Therefore, based on the discussion in Units III and IV, EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to the residues of spinach defensin proteins SoD2 and SoD7 in citrus, when it is used as a plant-incorporated protectant. Such exposure includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion based on a lack of toxicity and allergenicity of the SoD2 and SoD7 proteins.

    VII. Other Considerations A. Endocrine Disruptors

    The pesticidal active ingredient is a protein, derived from a source that is not known to exert an influence on the endocrine system. Therefore, the Agency is not requiring information on the endocrine effects of the plant-incorporated protectant at this time.

    B. Analytical Enforcement Methodology

    A standard operating procedure for an enzyme-linked immunosorbent assay for the detection and quantification of spinach defensin proteins SoD2 and SoD7 in citrus plant tissue has been judged useful for its intended purpose.

    C. Response to Comments

    EPA received one comment relevant to this petition. The comment supports this tolerance exemption and therefore warrants no response.

    VIII. Conclusion

    The Agency concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure residues of spinach defensin SoD2 and SoD7 proteins in or on citrus. This includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion because, as discussed previously no toxicity to mammals has been observed, nor is there any indication of allergenicity potential for the plant-incorporated protectant.

    Therefore, an exemption is established for residues of spinach defensin SoD2 and SoD7 proteins in or on citrus when the protein is used as a PIP in citrus plants.

    IX. Statutory and Executive Order Reviews

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

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

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

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

    X. 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 174

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

    Dated: April 28, 2015. Robert McNally, Director, Biopesticides and Pollution Prevention Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

    PART 174—[AMENDED] 1. The authority citation for part 174 continues to read as follows: Authority:

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

    2. Add § 174.535 to subpart W to read as follows:
    § 174.535 Spinach Defensin proteins; temporary exemption from the requirement of a tolerance.

    (a) Residues of the defensin protein SoD2 derived from spinach (Spinacia oleracea L.) in or on citrus food commodities are temporarily exempt from the requirement of a tolerance when used as a plant-incorporated protectant in citrus plants in accordance with the terms of Experimental Use Permit No. 88232-EUP-1. This temporary exemption from the requirement of a tolerance expires on April 18, 2018.

    (b) Residues of the defensin protein SoD7 derived from spinach (Spinacia oleracea L.) in or on citrus food commodities are temporarily exempt from the requirement of a tolerance when used as a plant-incorporated protectant in citrus plants in accordance with the terms of Experimental Use Permit No. 88232-EUP-1. This temporary exemption from the requirement of a tolerance expires on April 18, 2018.

    [FR Doc. 2015-10486 Filed 5-5-15; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 174 [EPA-HQ-OPP-2014-0454; FRL-9926-23] Bacillus thuringiensis Cry1A.105 Protein in Soybean; Exemption From the Requirement of a Tolerance AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes an exemption from the requirement of a tolerance for residues of the Bacillus thuringiensis (B.t.) Cry1A.105 protein in or on soybean when the protein is used as a plant-incorporated protectant (PIP) in soybean. Monsanto Company submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of B.t. Cry1A.105 protein in or on soybean.

    DATES:

    This regulation is effective May 6, 2015. Objections and requests for hearings must be received on or before July 6, 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-2014-0454, 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:

    Robert McNally, Biopesticides and Pollution Prevention Division (7511P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

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

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

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

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

    You may access a frequently updated electronic version of 40 CFR part 174 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(g), 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-2014-0454 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 July 6, 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-2014-0454, by one of the following methods:

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

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

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

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

    II. Background and Statutory Findings

    In the Federal Register initially on October 24, 2014 (79 FR 63596) (FRL-9916-03) and then again on December 17, 2014 (79 FR 75111) (FRL-9918-90), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 4F8275) by Monsanto Company, 800 North Lindbergh Blvd., St. Louis, MO 63167. The petition requested that 40 CFR part 174 be amended by establishing an exemption from the requirement of a tolerance for residues of the B.t. Cry1A.105 protein in or on all food commodities. That document referenced a summary of the petition prepared by the petitioner Monsanto Company, which is available in the docket, http://www.regulations.gov. A comment was received on the October 24, 2014, notice of filing. EPA's response to this comment is discussed in Unit VII.C.

    Based on available data, EPA is amending the existing exemption for residues of B.t. Cry1A.105 protein to include residues in soybean rather than all food commodities as requested. The reasons for this change are discussed in Unit VII.D.

    Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require 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. . . .”

    Additionally, FFDCA section 408(b)(2)(D) requires that the Agency consider “available information concerning the cumulative effects of a particular pesticide's residues” and “other substances that have a common mechanism of toxicity.”

    EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

    III. Toxicological Profile

    Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability, and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

    The acute oral toxicity data demonstrates the lack of mammalian toxicity at high levels of exposure to the pure B.t. Cry1A.105 protein. Further, amino acid sequence comparisons showed no similarities between the B.t. Cry1A.105 protein and known toxic proteins in protein databases. In addition, the B.t. Cry1A.105 protein was shown to be substantially degraded by heat when examined by immunoassay. This instability to heat would also lessen the potential dietary exposure to intact B.t. Cry1A.105 protein in cooked or processed foods. These biochemical features along with the lack of adverse results in the acute oral toxicity test support the conclusion that there is a reasonable certainty no harm from toxicity will result from dietary exposure to residues of the B.t. Cry1A.105 protein in the identified soybean commodities.

    Since the PIP is a protein, allergenic potential was also considered. Currently, no definitive tests for determining the allergenic potential of novel proteins exist. Therefore, EPA uses a weight-of-evidence approach where the following factors are considered: Source of the trait; amino acid sequence comparison with known allergens; and biochemical properties of the protein, including in-vitro digestibility in simulated gastric fluid (SGF) and glycosylation. This approach is consistent with the approach outlined in the Annex to the Codex Alimentarius, “Guideline for the Conduct of Food Safety Assessment of Foods Derived from Recombinant-DNA Plants.” The allergenicity assessment for the B.t. Cry1A.105 protein follows:

    1. Source of the trait. Bacillus thuringiensis is not considered to be a source of allergenic proteins.

    2. Amino acid sequence. A comparison of the amino acid sequence of the B.t. Cry1A.105 protein with known allergens showed no significant overall sequence similarity or identity at the level of eight contiguous amino acid residues.

    3. Digestibility. The B.t. Cry1A.105 protein was rapidly digested in less than 30 seconds in simulated mammalian gastric fluid containing pepsin.

    4. Glycosylation. The B.t. Cry1A.105 protein expressed in soybean was shown not to be glycosylated.

    5. Conclusion. Considering all of the available information, EPA has concluded that the potential for the B.t. Cry1A.105 protein to be a food allergen is minimal.

    The information on the safety of the pure B.t. Cry1A.105 protein provides adequate justification to address possible exposures in all soybean crops.

    IV. Aggregate Exposures

    In examining aggregate exposure, FFDCA section 408 directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

    The Agency considered available information on the aggregate exposure levels of consumers (and major identifiable subgroups of consumers) to the pesticide chemical residue and to other related substances. These considerations include dietary exposure under the tolerance exemption and all other exemptions in effect for the B.t. Cry1A.105 protein residue, and exposure from non-occupational sources. Oral exposure may occur at very low levels from ingestion of corn and soybean products. With respect to drinking water, since the PIP is integrated into the plant genome and based upon EPA's human health and environmental assessments for B.t. Cry1A.105 protein (Refs. 1 and 2), the Agency expects residues in drinking water to be extremely low or non-existent.

    Exposure via the skin or inhalation is not likely since the plant-incorporated protectant is contained within plant cells, which essentially eliminates these exposure routes or reduces exposure by these routes to negligible. Exposure to infants and children via residential or lawn use is also not expected because the use sites for the B.t. Cry1A.105 protein is agricultural.

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

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

    Since the B.t. Cry1A.105 protein does not act through a toxic mode of action, nor does the B.t. Cry1A.105 protein appear to produce a toxic metabolite produced by other substances, the protein does not have a common mechanism of toxicity with other substances; therefore, the requirements of section 408(b)(2)(D)(v) do not apply.

    VI. Determination of Safety for U.S. Population, Infants and Children

    FFDCA section 408(b)(2)(C) provides that, in considering the establishment of a tolerance or tolerance exemption for a pesticide chemical residue, EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues, and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) provides that EPA shall apply an additional tenfold (10X) margin of exposure (safety) for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure unless EPA determines that a different margin of exposure (safety) will be safe for infants and children. This additional margin of exposure (safety) is commonly referred to as the Food Quality Protection Act Safety Factor (FQPA SF). In applying this provision, EPA either retains the default value of 10X or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor.

    Based on the information discussed in Unit III., EPA concludes that there are no threshold effects of concern to infants, children, or adults from exposure to the B.t. Cry1A.105 protein. As a result, EPA concludes that no additional margin of exposure (safety) is necessary to protect infants and children and that not adding any additional margin of exposure (safety) will be safe for infants and children.

    Therefore, based on the discussion in Unit III. and the supporting documentation, EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to the residues of the B.t. Cry1A.105 protein in soybean, when it is used as a plant-incorporated protectant. Such exposure includes all anticipated dietary exposures and all other exposures for which there is reliable information.

    VII. Other Considerations A. Endocrine Disruptors

    The pesticidal active ingredient is a protein, derived from a source that is not known to exert an influence on the endocrine system. Therefore, the Agency is not requiring information on the endocrine effects of the plant-incorporated protectant at this time.

    B. Analytical Enforcement Methodology

    A standard operating procedure for an enzyme-linked Immunosorbent assay for the detection and quantification of the B.t. Cry1A.105 protein in soybean tissue has been submitted.

    C. Response to Comments

    EPA received one comment that is potentially relevant to this petition. The commenter generally opposed approval of the use of a Monsanto “B.t. pip,” but did not specify any particular PIP or any particular safety concern. As no specific basis for denying the petition was provided, the comment is not being further considered.

    D. Revisions to Petition for Tolerance

    Monsanto's petition requested an exemption for residues of the B.t. Cry1A.105 protein in or on all food and feed commodities. However, based on the data provided, the Agency can only support a safety finding for residues in or on soybean at this time. Currently, the Agency does not have adequate information for a full range of crops for an exemption for the B.t. Cry1A.105 protein in or on all food and feed commodities.

    VIII. Conclusions

    There is a reasonable certainty that no harm will result from aggregate exposure to the U.S. population, including infants and children, to residues of the B.t. Cry1A.105 protein in all food and feed commodities of soybean. This includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion because, as discussed in this unit, no toxicity to mammals has been observed, nor is there any indication of allergenicity potential for the plant-incorporated protectant.

    Therefore, an exemption is established for residues of the B.t. Cry1A.105 protein in or on soybean when the protein is used as a PIP in soybean. In addition, the Agency is removing the existing paragraph (b) contained in section 174.502 because that tolerance has expired.

    IX. References 1. U.S. EPA. 2014a. Review of Product Characterization and Human Health Data for Plant-Incorporated Protectant Bacillus thuringiensis (Bt) Cry2Ab2 and Cry1A.105 Insect Control Protein and the Genetic Material Necessary for Its Production in MON 87751 and the Combined-Trait Insect Protected Soybeans in Support for an Experimental Use Permit, Sec. 3 Registration and Exemptions from the Requirement of a Tolerance. Memorandum from J. Facey, Ph.D. through J. Kough, Ph.D. to K. Haymes, Ph.D., dated December 23, 2014. 2. U.S. EPA. 2014b. Environmental Risk Assessment for the FIFRA Section 3 Seed Increase Registration of the Plant-Incorporated Protectant (PIP), Bacillus thuringiensis (Bt) Cry1A.105 and Cry2Ab2 Insect Control Proteins and the Genetic Material (PV-GMIR13196) Necessary for Their Production in Event MON 87751 Soybean. Memorandum from I. You, Ph.D. through S. Borges to K. Haymes, Ph.D., dated December 16, 2014. X. Statutory and Executive Order Reviews

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

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

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

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

    XI. Congressional Review Act

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

    List of Subjects in 40 CFR Part 174

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

    Dated: April 22, 2015. Jack Housenger, Director, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

    PART 174—[AMENDED] 1. The authority citation for part 174 continues to read as follows: Authority:

    7 U.S.C. 136-136y; 21 U.S.C. 346a and 371.

    2. In § 174.502, revise paragraph (b) to read as follows:
    § 174.502 Bacillus thuringiensis Cry1A.105 protein; exemption from the requirement of a tolerance.

    (b) Residues of Bacillus thuringiensis Cry1A.105 protein in or on soybean are exempt from the requirement of a tolerance when used as a plant-incorporated protectant in the food and feed commodities of soybean.

    [FR Doc. 2015-10624 Filed 5-5-15; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2014-0353; FRL-9924-81] 1-Octanol; Exemption From the Requirement of a Tolerance AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes an exemption from the requirement of a tolerance for residues of the biochemical pesticide 1-octanol in or on root and tuber vegetables. D-I-1-4, Inc., a division of 1,4-Group, Inc., submitted a petition to EPA under the Federal Food, Drug, and Cosmetic Act (FFDCA), requesting an amendment to the exemption from the requirement of a tolerance. This regulation eliminates the need to establish a maximum permissible level for residues of 1-octanol in or on root and tuber vegetables.

    DATES:

    This regulation is effective May 6, 2015. Objections and requests for hearings must be received on or before July 6, 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-2014-0353, 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:

    Robert McNally, Biopesticides and Pollution Prevention Division (7511P), Office of Pesticide Programs, Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460-0001; main telephone number: (703) 305-7090; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

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

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

    • Crop production (NAICS code 111).

    • Animal production (NAICS code 112).

    • Food manufacturing (NAICS code 311).

    • Pesticide manufacturing (NAICS code 32532).

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

    You may access a frequently updated electronic version of 40 CFR part 180 through the Government Publishing Office's e-CFR site at http://www.ecfr.gov/cgi-bin/text-idx?&c=ecfr&tpl=/ecfrbrowse/Title40/40tab_02.tpl. To access the OCSPP test guidelines referenced in this document electronically, please go to http://www.epa.gov/ocspp and select “Test Methods and Guidelines.”

    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-2014-0353 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 July 6, 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-2014-0353, by one of the following methods:

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

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

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

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

    II. Background and Statutory Findings

    In the Federal Register of 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 tolerance petition (PP 3F8195) by D-I-1-4, Inc., a division of 1,4-Group, Inc. (the Petitioner), P.O. Box 860, Meridian, ID 83360. The petition requested that 40 CFR part 180 be amended by establishing an exemption from the requirement of a tolerance for residues of 1-octanol, applied post-harvest to stored potatoes and other sprouting root and tuber crops. That document referenced a summary of the petition prepared by the Petitioner, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing.

    Section 408(c)(2)(A)(i) of FFDCA allows EPA to establish an exemption from the requirement for a tolerance (the legal limit for a pesticide chemical residue in or on a food) only if EPA determines that the exemption is “safe.” Section 408(c)(2)(A)(ii) of FFDCA defines “safe” to mean that “there is a reasonable certainty that no harm will result from aggregate exposure to the pesticide chemical residue, including all anticipated dietary exposures and all other exposures for which there is reliable information.” This includes exposure through drinking water and in residential settings, but does not include occupational exposure. Pursuant to FFDCA section 408(c)(2)(B), in establishing or maintaining in effect an exemption from the requirement of a tolerance, EPA must take into account the factors set forth in FFDCA section 408(b)(2)(C), which require 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. . . . ” Additionally, EPA is required to take into account the factors set forth in FFDCA section 408(b)(2)(D).

    EPA performs a number of analyses to determine the risks from aggregate exposure to pesticide residues. First, EPA determines the toxicity of pesticides. Second, EPA examines exposure to the pesticide through food, drinking water, and through other exposures that occur as a result of pesticide use in residential settings.

    III. Toxicological Profile

    Consistent with FFDCA section 408(b)(2)(D), EPA has reviewed the available scientific data and other relevant information in support of this action and considered its validity, completeness and reliability, and the relationship of this information to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children.

    A. Overview of 1-Octanol

    1-Octanol, or octyl alcohol, is a linear saturated aliphatic alcohol containing eight carbons. It is classified as a biochemical pesticide and functions as a plant growth regulator (PGR) by inhibiting sprout growth on stored potatoes and other sprouting root and tuber crops when applied after harvesting.

    There is a significant history of human dietary exposure to 1-octanol. 1-Octanol occurs naturally in the essential oils of green tea, grapefruit, California orange, bitter orange, Turkish rose and Bulgarian rose. 1-Octanol has also been identified as a component of fried bacon, roasted filberts, raw and roasted earth almonds, mutton, chicken, pork, raw beef, frankfurters, nectarines, apple juice, common guava, Gruyere cheese and in foods processed from cassava root. The amount of 1-octanol has been quantified in some foods: Fermented soybean curds were found to contain 164.8 to 337.1 micrograms per kilogram (ug/kg) of 1-octanol, and duck meat and duck fat were found to contain 1-octanol as a volatile component at 8.88 parts per billion (ppb) and 12.69 ppb, respectively. 1-Octanol is approved by the FDA for use as a direct food additive under 21 CFR 172.230 in microcapsules for flavoring substances and under 21 CFR 172.515 as a synthetic flavoring substance and adjuvant.

    EPA has already determined under the FFDCA that there is a reasonable certainty that no harm will result from aggregate exposures to 1-octanol, when 1-octanol is used as an inert ingredient (specifically as a solvent or co-solvent) in pesticide products applied to food. In addition, 1-octanol has been registered for use as an active ingredient to control tobacco sucker and as an inert ingredient for nonfood and fragrance uses.

    For a summary of the data upon which EPA relied, and its human health risk assessment based on that data, please refer to the March 13, 2015 document entitled: “Federal Food, Drug, and Cosmetic Act (FFDCA) Considerations for 1-Octanol” available in the docket for this action.

    B. Biochemical Pesticide Toxicology Data Requirements

    All applicable mammalian toxicology data requirements supporting the petition to establish an exemption from the requirement of a tolerance for the use of 1-octanol as an active ingredient, post-harvest, on root and tuber vegetables have been fulfilled. No significant toxicological effects were observed in any of the acute toxicity studies and no toxic endpoints were established as a result of these studies. In addition, data and information submitted indicate that 1-octanol is not genotoxic. A developmental toxicity study (subchronic) revealed increased salivation (maternal) at 1,000 milligrams 1-octanol per kilogram body weight (mg/kg); however, the Agency does not consider this to be an adverse effect because the effect occurs at a very high dose, much higher dose than the level at which humans are likely to be exposed, given the half-life of this substance and the classification of the pesticide: A plant growth regulator intended for use before long-term storage. EPA concludes that 1-octanol has no subchronic toxic effects and is not a developmental toxicant. There are no known effects of 1-octanol on endocrine systems via oral, dermal, or inhalation routes of exposure.

    IV. Aggregate Exposures

    In examining aggregate exposure, FFDCA section 408 directs EPA to consider available information concerning exposures from the pesticide residue in food and all other non-occupational exposures, including drinking water from ground water or surface water and exposure through pesticide use in gardens, lawns, or buildings (residential and other indoor uses).

    A. Dietary Exposure

    The proposed use patterns may result in dietary exposure to 1-octanol, however, dietary exposure as a result of the application of 1-octanol to post-harvest potatoes and other root tubers is expected to be insignificant. 1-Octanol is volatile and is expected to degrade in the atmosphere by reaction with photochemically-produced hydroxyl radicals; its half-life is estimated to be from 3.5 minutes to 1.3 days. The typical length of time between application of the pesticide and consumption of the potatoes will exceed this half-life. Therefore, residues of 1-octanol are unlikely to occur at the time of consumption. No significant exposure via drinking water is expected from its use as an active ingredient in this pesticide as 1-octanol is applied indoors only. Some dietary exposure is expected from the use of 1-octanol as an inert ingredient in pesticide formulations.

    Some dietary exposure to 1-octanol might occur through other nonpesticidal sources as a result of its natural presence in other foods or from its use as a food additive and flavoring substance. Should exposure occur, however, minimal to no risk is expected for the general population, including infants and children, due to the low toxicity of 1-octanol.

    B. Other Non-Occupational Exposure

    Other non-occupational exposure to 1-octanol from pesticidal use may occur in tobacco products from its use on tobacco or in or on other food and non-food commodities, as a result of its use as a pesticide inert ingredient. However, minimal to no risk is expected for the general population, including infants and children, due to the low toxicity of this chemical as demonstrated in the data submitted and evaluated by the Agency, as fully explained in the March 13, 2015 document entitled: “Federal Food, Drug, and Cosmetic Act (FFDCA) Considerations for 1-Octanol” available in the docket for this action.

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

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

    EPA has not found 1-octanol to share a common mechanism of toxicity with any other substances, and 1-octanol does not appear to produce a toxic metabolite produced by other substances. For the purposes of this tolerance action, therefore, EPA has assumed that 1-octanol does not have a common mechanism of toxicity with other substances. For information regarding EPA's efforts to determine which chemicals have a common mechanism of toxicity and to evaluate the cumulative effects of such chemicals, see EPA's Web site at http://www.epa.gov/pesticides/cumulative.

    VI. Determination of Safety for U.S. Population, Infants and Children

    FFDCA section 408(b)(2)(C) provides that, in considering the establishment of a tolerance or tolerance exemption for a pesticide chemical residue, EPA shall assess the available information about consumption patterns among infants and children, special susceptibility of infants and children to pesticide chemical residues, and the cumulative effects on infants and children of the residues and other substances with a common mechanism of toxicity. In addition, FFDCA section 408(b)(2)(C) provides that EPA shall apply an additional tenfold (10X) margin of safety for infants and children in the case of threshold effects to account for prenatal and postnatal toxicity and the completeness of the database on toxicity and exposure, unless EPA determines that a different margin of safety will be safe for infants and children. This additional margin of safety is commonly referred to as the Food Quality Protection Act Safety Factor (FQPA)(SF). In applying this provision, EPA either retains the default value of 10X, or uses a different additional or no safety factor when reliable data are available to support a different additional or no safety factor.

    As part of its qualitative assessment, EPA evaluated the available toxicity and exposure data on 1-octanol and considered its validity, completeness, and reliability, as well as the relationship of this information to human risk. EPA considers the toxicity database to be complete and has identified no residual uncertainty with regard to prenatal and postnatal toxicity or exposure. No hazard was identified based on the available studies; therefore, EPA concludes that there are no threshold effects of concern to infants, children, or adults from 1-octanol. As a result, EPA concludes that no additional margin of exposure (safety) is necessary.

    VII. Analytical Enforcement Methodology

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

    VIII. Conclusion

    Based on its assessment of 1-octanol, 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 1-octanol. Therefore, an amendment to the exemption of a tolerance is established for residues of 1-octanol in or on root and tuber vegetables.

    The Agency is issuing the exemption for residues on root and tuber vegetables instead of limiting this exemption to post-harvest indoor applications to root and tuber vegetables because these restrictions are not relevant to the FFDCA safety finding for 1-octanol. Those limitations are related to the use of the pesticide and regulated under FIFRA.

    IX. Statutory and Executive Order Reviews

    This final rule establishes an exemption from the requirement of a tolerance under FFDCA section 408(d) in response to a petition submitted to the Agency. The Office of Management and Budget (OMB) has exempted these types of actions from review under Executive Order 12866, entitled “Regulatory Planning and Review” (58 FR 51735, October 4, 1993). Because this final rule has been exempted from review under Executive Order 12866, this final rule 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 final rule 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 exemption in this final rule, do not require the issuance of a proposed rule, the requirements of the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), do not apply.

    This final rule 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 final rule. In addition, this final rule does not impose any enforceable duty or contain any unfunded mandate as described under Title II of the Unfunded Mandates Reform Act of 1995 (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 of 1995 (NTTAA) (15 U.S.C. 272 note).

    X. 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 10, 2015. Robert McNally, Director, Biopesticides and Pollution Prevention 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. Add § 180.1330 to subpart D to read as follows:
    § 180.1330 1-Octanol; exemption from the requirement of a tolerance.

    An exemption from the requirement of a tolerance is established for residues of 1-octanol in or on root and tuber vegetables when applied as a plant growth regulator in accordance with label directions and good agricultural practices.

    [FR Doc. 2015-10364 Filed 5-5-15; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 180 [EPA-HQ-OPP-2006-0075; FRL-9925-97] Fenazaquin; Pesticide Tolerances AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    This regulation establishes tolerances for residues of fenazaquin in or on almonds and cherries. Gowan Company requested these tolerances under the Federal Food, Drug, and Cosmetic Act (FFDCA).

    DATES:

    This regulation is effective May 6, 2015. Objections and requests for hearings must be received on or before July 6, 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-2006-0075, 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-2006-0075 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 July 6, 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-2006-0075, 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 April 20, 2011 (76 FR 22067) (FRL-8869-7), 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 1F7825) by Gowan Company, P.O. Box 5569, Yuma, AZ 85366. The petition requested that 40 CFR 180.632 be amended by establishing tolerances for residues of the insecticide fenazaquin, 4-[2-[4-(1,1-dimethylethyl)phenyl]ethoxy]quinazoline, in or on fruit, pome group at 0.35 parts per million (ppm); cucurbit group at 0.25 ppm; almond, hulls at 4.5 ppm; apple, wet pomace at 0.6 ppm; berry fruit group at 0.6 ppm; vegetable, fruiting group at 0.25 ppm; grape at 0.9 ppm; hop at 2.0 ppm; mint at 6.0 ppm; stone fruit group at 1.5 ppm; strawberry at 1.5 ppm; tree nut group at 0.02 ppm; alfalfa, forage at 4.5 ppm; alfalfa, hay at 8.0 ppm; avocado at 0.15 ppm; citrus fruit group at 0.3 ppm; citrus, oil at 2.5 ppm; cotton, seed (undelinted) at 0.5 ppm; cotton, gin byproducts at 12.0 ppm; bean, shelled dry subgroup at 0.2 ppm; bean, edible podded subgroup at 0.3 ppm; beans and pea, succulent subgroup at 0.02 ppm; corn, field, grain at 0.15 ppm; corn, field, forage at 9.0 ppm; corn, field, stover at 30 ppm; corn, field, aspirated grain fractions at 9.0 ppm; corn, field, refined oil at 0.6 ppm; corn, sweet at 0.04 ppm; and corn, sweet, forage at 9.0 ppm. That document referenced a summary of the petition prepared by Gowan Company, 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 EPA review of the data supporting the petition, Gowan Company, the registrant, revised their petition by limiting their request for tolerances to almond and cherry. The reason for these changes are explained in Unit IV.C.

    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 fenazaquin including exposure resulting from the tolerances established by this action. EPA's assessment of exposures and risks associated with fenazaquin follows.

    A. Toxicological Profile

    EPA has evaluated the available toxicity data and considered its validity, completeness, and reliability as well as the relationship of the results of the studies to human risk. EPA has also considered available information concerning the variability of the sensitivities of major identifiable subgroups of consumers, including infants and children. The most consistently observed effects of fenazaquin exposure across species, genders, and treatment durations were decreases in body weight, food consumption, and food efficiency. Other effects noted were mild dehydration and certain clinical signs seen at relatively high dose levels in the acute neurotoxicity study. These clinical signs, which included increased foot splay, decreased motor activity, sluggish arousal, unusual posture, abnormal gait, and altered response to auditory stimuli were seen in the absence of any neuropathological changes and were not considered to be related to neurotoxicity. In a 90-day study in hamsters, treated animals had an increased incidence of testicular hypospermatogenesis and reduced testicular and prostate weight; however, these findings were not replicated in the hamster carcinogenicity study which suggest the effects were transient or reversible.

    Fenazaquin did not cause any developmental or reproductive toxicity at the doses tested in rats and rabbits. In the rat study, developmental toxicity was not observed in the presence of maternal toxicity (i.e. decreases in body weight gain, food consumption, and food efficiency). In the rabbit study, no developmental or maternal toxicity was seen. In the reproduction study, systemic toxicity manifested in parental animals as excessive salivation and decreased body weight and food intake; in offspring as decreased body weight gain; and there was no observed reproductive toxicity. Therefore, there is no developmental toxicity or reproductive susceptibility with respect to fetal and developing young animals with in utero and postnatal exposures.

    Carcinogenicity was evaluated in the hamster instead of the mouse because the hamster was found to be more sensitive to the effects of fenazaquin than mice due to slower elimination kinetics for hamster. In a three-month feeding study in the mouse, it was found that 6-22x higher dose levels were required to elicit a comparable effect in mice than in the hamster. The results of the rat and hamster carcinogenicity studies demonstrated no increase in treatment-related tumor incidence. Therefore, fenazaquin was classified as “Not likely to be Carcinogenic to Humans.”

    The database for fenazaquin shows no evidence of mutagenicity, genotoxicity, neurotoxicity, or immunotoxicity. Fenazaquin did not demonstrate any systemic toxicity in a 21-day dermal toxicity study in rabbits up to the limit dose (1,000 milligram/kilogram/day (mg/kg/day)).

    Fenazaquin has high acute oral toxicity, low acute toxicity by dermal and inhalation routes of exposure, is not a skin irritant, is minimally irritating to the eye, and is considered to be a dermal sensitizer.

    Specific information on the studies received and the nature of the adverse effects caused by fenazaquin as well as the no-observed-adverse-effect-level (NOAEL) and the lowest-observed-adverse-effect-level (LOAEL) from the toxicity studies can be found at http://www.regulations.gov in document Fenazaquin: Human Health Risk Assessment for Proposed New Uses on Almonds and Cherries on page 30 in docket ID number EPA-HQ-OPP-2006-0075.

    B. Toxicological Points of Departure/Levels of Concern

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

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

    Table 1—Summary of Toxicological Doses and Endpoints for Fenazaquin for Use in Human Health Risk Assessment Exposure/scenario Point of departure and
  • uncertainty/safety factors
  • RfD, PAD, LOC for
  • risk assessment
  • Study and toxicological effects
    Acute dietary (General population including infants and children and females 13-50 years of age) NOAEL = 15 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • Acute RfD = 0.15 mg/kg/day
  • aPAD = 0.15 mg/kg/day
  • [Immunotoxicity—Rat].
  • LOAEL = 30 mg/kg/day based on clinical signs (general ataxia/hypoactivity) observed in 1 animal on Day 02 and 3 animals on Day 03 of dosing.
  • Chronic dietary (All populations) NOAEL = 5 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • Chronic RfD = 0.05 mg/kg/day
  • cPAD = 0.05 mg/kg/day
  • Co-Critical: Subchronic Toxicity—Dog.
  • LOAEL = 15 mg/kg/day based on decreased body weight and food consumption/efficiency.
  • Chronic Toxicity—Dog.
  • LOAEL = 12 mg/kg/day based on decreased body weight and food consumption/efficiency.
  • Incidental oral short-term (1 to 30 days) NOAEL = 5 mg/kg/day
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 Co-Critical: Subchronic and Chronic Toxicity—Dog.
  • Same as Chronic Dietary.
  • Inhalation short-term (1 to 30 days) and Intermediate Term (1 to 6 months) Inhalation (or oral) study NOAEL = 5 mg/kg/day (inhalation absorption rate = 100%)
  • UFA = 10x
  • UFH = 10x
  • FQPA SF = 1x
  • LOC for MOE = 100 Co-Critical: Subchronic and Chronic Toxicity—Dog.
  • Same as Chronic Dietary.
  • Cancer (Oral, dermal, inhalation) Classification: “Not likely to be Carcinogenic to Humans” based on the absence of significant tumor increases in two adequate rodent carcinogenicity studies. FQPA SF = Food Quality Protection Act Safety Factor. LOAEL = lowest-observed-adverse-effect-level. LOC = level of concern. mg/kg/day = milligram/kilogram/day. MOE = margin of exposure. NOAEL = no-observed-adverse-effect-level. PAD = population adjusted dose (a = acute, c = chronic). RfD = reference dose. UF = uncertainty factor. UFA = extrapolation from animal to human (interspecies). UFDB = to account for the absence of data or other data deficiency. UFH = potential variation in sensitivity among members of the human population (intraspecies).
    C. Exposure Assessment

    1. Dietary exposure from food and feed uses. In evaluating dietary exposure to fenazaquin, EPA considered exposure under the petitioned-for tolerances as well as all existing fenazaquin tolerances in 40 CFR 180.632. EPA assessed dietary exposures from fenazaquin in food as follows:

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

    Such effects were identified for fenazaquin. In estimating acute dietary exposure, EPA used food consumption information from the United States Department of Agriculture (USDA) 2003-2008 National Health and Nutrition Examination Survey, What We Eat in America (NHANS/WWEIA). As to residue levels in food, EPA included tolerance level residues for all registered and proposed crops and 100 percent crop treated (PCT). Default processing factors were used for all processed commodities.

    ii. Chronic exposure. In conducting the chronic dietary exposure assessment EPA used the food consumption data from the USDA 2003-2008 National Health and Nutrition Examination Survey, What We Eat in America (NHANES/WWEIA). As to residue levels in food, EPA included tolerance level residues for all registered and proposed crops and 100 PCT. Default processing factors were used for all processed commodities.

    iii. Cancer. Based on the data summarized in Unit III.A., EPA has concluded that fenazaquin does not pose a cancer risk to humans. Therefore, a dietary exposure assessment for the purpose of assessing cancer risk is unnecessary.

    iv. Anticipated residue and percent crop treated (PCT) information. EPA did not use anticipated residue and/or PCT information in the dietary assessment for fenazaquin. Tolerance level residues and 100 PCT were assumed for all food commodities.

    2. Dietary exposure from drinking water. The Agency used screening level water exposure models in the dietary exposure analysis and risk assessment for fenazaquin in drinking water. These simulation models take into account data on the physical, chemical, and fate/transport characteristics of fenazaquin. Further information regarding EPA drinking water models used in pesticide exposure assessment can be found at http://www.epa.gov/oppefed1/models/water/index.htm.

    Based on the Tier II Pesticide Root Zone Model/Exposure Analysis Modeling System (PRZM/EXAMS) for surface water, the estimated drinking water concentrations (EDWCs) of fenazaquin for acute and chronic exposures were estimated to be 5.74 parts per billion (ppb) and 2.09 ppb, respectively, and were entered directly into the dietary exposure model. The groundwater EDWC from the screening concentration in ground water (SCI-GROW) model was estimated to be 0.704 ppb. The modeled estimates were corrected for the default percent cropped area of 0.87. The drinking water assessment was conducted using the total toxic residue (TTR) approach. The residues considered in the assessment include fenazaquin (parent), Metabolite 1, and Metabolite 29.

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

    Fenazaquin is currently registered for the following uses that could result in residential exposures: Ornamental uses. EPA assessed residential exposure using the following assumptions: EPA assessed potential exposures for residential handlers using several application methods including handwand and backpack sprayers to treat ornamental plants. MOEs were calculated for the inhalation route of exposure only since no systemic toxicity associated with dermal exposure to fenazaquin was observed. Adult post-applications exposures were not quantitatively assessed since no dermal hazard was identified for fenazaquin and inhalation exposures are typically negligible in outdoor settings. Furthermore, the inhalation exposure assessment performed for residential handlers is representative of worst case inhalation exposures and is considered protective for post-application inhalation scenarios. Since there is no residential incidental oral exposure expected for children 1<2 years old on ornamental plants, a post-application exposure assessment was not conducted and the aggregate assessment for children will only include exposure from food and water.

    Further information regarding EPA standard assumptions and generic inputs for residential exposures may be found at http://www.epa.gov/pesticides/trac/science/trac6a05.pdf.

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

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

    D. Safety Factor for Infants and Children

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

    2. Prenatal and postnatal sensitivity. Susceptibility/sensitivity in the developing animals was evaluated in developmental toxicity studies in rats and rabbits as well as a reproduction and fertility study in rats. The data showed no evidence of sensitivity/susceptibility in the developing or young animal. Clear NOAELs and LOAELs are available for all the parental and offspring effects. Therefore, there are no residual prenatal or postnatal concerns.

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

    i. The toxicity database for fenazaquin is considered complete and sufficient for assessing susceptibility to infants and children.

    ii. There is no indication that fenazaquin is a neurotoxic chemical and there is no need for a developmental neurotoxicity study or additional UFs to account for neurotoxicity.

    iii. There is no evidence that fenazaquin results in increased susceptibility in in utero rats or rabbits in the prenatal developmental studies or in young rats in the 2-generation reproduction study.

    iv. There are no residual uncertainties identified in the exposure databases. The dietary food exposure assessments were performed based on 100 PCT and tolerance-level residues. EPA made conservative (protective) assumptions in the ground and surface water modeling used to assess exposure to fenazaquin in drinking water. EPA also made conservative assumptions in the non-dietary residential exposures estimates including maximum application rates and standard values for unit exposures, amount handled. These assessments will not underestimate the exposure and risks posed by fenazaquin.

    E. Aggregate Risks and Determination of Safety

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

    1. Acute risk. Using the exposure assumptions discussed in this unit for acute exposure, the acute dietary exposure from food and water to fenazaquin will occupy 10% of the aPAD for children 1-2 years old, the population group receiving the greatest exposure.

    2. Chronic risk. Using the exposure assumptions described in this unit for chronic exposure, EPA has concluded that chronic exposure to fenazaquin from food and water will utilize 10% of the cPAD for children 1-2 years old the population group receiving the greatest exposure. Based on the explanation in Unit III.C.3., regarding residential use patterns, chronic residential exposure to residues of fenazaquin is not expected.

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

    Using the exposure assumptions described in this unit for short-term exposures, EPA has concluded the combined short-term food, water, and residential exposures result in aggregate MOEs of 5,200 for adults. Because EPA's level of concern for fenazaquin is a MOE of 100 or below, the MOE is not of concern. Since there is no residential exposure expected for children, there is no potential that a short-term aggregate risk for children could be higher than the dietary (food and drinking water) risk.

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

    An intermediate-term adverse effect was identified; however, fenazaquin is not registered for any use patterns that would result in intermediate-term residential exposure.

    Intermediate-term risk is assessed based on intermediate-term residential exposure plus chronic dietary exposure. Because there is no intermediate-term residential exposure and chronic dietary exposure has already been assessed under the appropriately protective cPAD (which is at least as protective as the POD used to assess intermediate-term risk), no further assessment of intermediate-term risk is necessary, and EPA relies on the chronic dietary risk assessment for evaluating intermediate-term risk for fenazaquin.

    5. Aggregate cancer risk for U.S. population. Based on the lack of evidence of carcinogenicity in two adequate rodent carcinogenicity studies, fenazaquin is not expected to pose a cancer risk to humans.

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

    IV. Other Considerations A. Analytical Enforcement Methodology

    Adequate enforcement methodology (high performance liquid chromatography and tandem mass spectrometry (HPLC-MS/MS)) 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 fenazaquin.

    C. Revisions to Petitioned-For Tolerances

    EPA's review of the data supporting the petition, showed that there was not sufficient data to support some of the tolerances originally proposed by the registrant. Gowan Company, the registrant, revised their petition by limiting their request for tolerances to almond and cherry, which are supported by the available data. The Organization of Economic Cooperation and Development (OECD) tolerance derivation procedures indicates the need for the following changes in the proposed tolerances: Cherries from 1.5 ppm to 2.0 ppm and almond hull from 0.6 ppm to 4.0 ppm. The Agency is also revising the tolerance expression to clarify that (1) as provided in FFDCA section 408(a)(3), the tolerance covers metabolites and degradates of fenazaquin not specifically mentioned and (2) compliance with the specified tolerance levels is to be determined by measuring only the specific compounds mentioned in the tolerance expression.

    V. Conclusion

    Therefore, tolerances are established for residues of fenazaquin, 4-[2-[4-(1,1-dimethylethyl)phenyl]ethoxy]quinazoline, in or on almond at 0.02 ppm, almond hulls at 4.0 ppm, and cherry at 2.0 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 27, 2015. Susan Lewis, Director, Registration Division, Office of Pesticide Programs.

    Therefore, 40 CFR chapter I is amended as follows:

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

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

    2. In § 180.632, the section heading and paragraph (a) are revised to read as follows:
    § 180.632 Fenazaquin; Tolerances for residues.

    (a) General. Tolerances are established for residues of the insecticide fenazaquin, including its metabolites and degradates, in or on the commodities in the table below. Compliance with the tolerance levels specified below is to be determined by measuring only fenazaquin, or 4-[2-[4-(1,1-dimethylethyl)phenyl]ethoxy]quinazoline.

    Commodity Parts per
  • million
  • Almond 0.02 Almond, hulls 4.0 Apple 0.2 Cherry 2.0 Citrus Oil 10 Fruit, Citrus, Group 10 except Grape fruit 0.5 Pear 0.2
    [FR Doc. 2015-10375 Filed 5-5-15; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Part 423 [CMS-6107-IFC] RIN 0938-AS60 Medicare Program; Changes to the Requirements for Part D Prescribers AGENCY:

    Centers for Medicare & Medicaid Services (CMS), HHS.

    ACTION:

    Interim final rule with comment period.

    SUMMARY:

    This interim final rule with comment period revises requirements related to beneficiary access to covered Part D drugs. Under these revised requirements, pharmacy claims and beneficiary requests for reimbursement for Medicare Part D prescriptions, written by prescribers other than physicians and eligible professionals who are permitted by state or other applicable law to prescribe medications, will not be rejected at the point of sale or denied by the plan if all other requirements are met. In addition, a plan sponsor will not reject a claim or deny a beneficiary request for reimbursement for a drug when prescribed by a prescriber who does not meet the applicable enrollment or opt-out requirement without first providing provisional coverage of the drug and individualized written notice to the beneficiary. This interim final rule with comment period also revises certain terminology to be consistent with existing policy and to improve clarity.

    DATES:

    Effective date: These regulations are effective on June 1, 2015.

    Applicability date: The provisions at § 423.120(c)(6) are applicable January 1, 2016.

    Comment date: To be assured consideration, comments must be received at one of the addresses provided below, no later than 5 p.m. on July 6, 2015.

    ADDRESSES:

    In commenting, please refer to file code CMS-6107-IFC. Because of staff and resource limitations, we cannot accept comments by facsimile (FAX) transmission.

    You may submit comments in one of four ways (please choose only one of the ways listed)

    1. Electronically. You may submit electronic comments on this regulation to http://www.regulations.gov. Follow the “Submit a comment” instructions.

    2. By regular mail. You may mail written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-6107-IFC, P.O. Box 8013, Baltimore, MD 21244-8013.

    Please allow sufficient time for mailed comments to be received before the close of the comment period.

    3. By express or overnight mail. You may send written comments to the following address ONLY: Centers for Medicare & Medicaid Services, Department of Health and Human Services, Attention: CMS-6107-IFC, Mail Stop C4-26-05, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    4. By hand or courier. Alternatively, you may deliver (by hand or courier) your written comments ONLY to the following addresses prior to the close of the comment period: a. For delivery in Washington, DC—Centers for Medicare & Medicaid Services, Department of Health and Human Services, Room 445-G, Hubert H. Humphrey Building, 200 Independence Avenue SW., Washington, DC 20201.

    (Because access to the interior of the Hubert H. Humphrey Building is not readily available to persons without Federal government identification, commenters are encouraged to leave their comments in the CMS drop slots located in the main lobby of the building. A stamp-in clock is available for persons wishing to retain a proof of filing by stamping in and retaining an extra copy of the comments being filed.)

    b. For delivery in Baltimore, MD—Centers for Medicare & Medicaid Services, Department of Health and Human Services, 7500 Security Boulevard, Baltimore, MD 21244-1850.

    If you intend to deliver your comments to the Baltimore address, call telephone number (410) 786-9994 in advance to schedule your arrival with one of our staff members.

    Comments erroneously mailed to the addresses indicated as appropriate for hand or courier delivery may be delayed and received after the comment period.

    For information on viewing public comments, see the beginning of the SUPPLEMENTARY INFORMATION section.

    FOR FURTHER INFORMATION CONTACT:

    Frank Whelan, (410) 786-1302 for enrollment issues.

    Lisa Thorpe, (410) 786-3048, for provisional coverage, notice, and all other issues.

    SUPPLEMENTARY INFORMATION:

    Inspection of Public Comments: All comments received before the close of the comment period are available for viewing by the public, including any personally identifiable or confidential business information that is included in a comment. We post all comments received before the close of the comment period on the following Web site as soon as possible after they have been received: http://regulations.gov. Follow the search instructions on that Web site to view public comments.

    Comments received timely will be also available for public inspection as they are received, generally beginning approximately 3 weeks after publication of a document, at the headquarters of the Centers for Medicare & Medicaid Services, 7500 Security Boulevard, Baltimore, Maryland 21244, Monday through Friday of each week from 8:30 a.m. to 4 p.m. To schedule an appointment to view public comments, phone 1-800-743-3951.

    I. Background A. Purpose

    Under this interim final rule with comment period (IFC), pharmacy claims and beneficiary requests for reimbursement for Medicare Part D prescriptions, written by prescribers other than physicians and eligible professionals who are permitted by state or other applicable law to prescribe medications, will not be rejected at the point of sale or denied by the plan if all other requirements are met. In addition, a plan sponsor will not reject a claim or deny a beneficiary request for reimbursement for a drug on the grounds that the prescriber has not enrolled in or opted out of Medicare without first providing provisional coverage of the drug and individualized written notice to the beneficiary. These changes are necessary to help make certain that Medicare beneficiaries continue to have access to needed Part D medications. As explained in section III. of this IFC, we believe that we have good cause to make these changes in an IFC because the ordinary notice-and-comment process would be contrary to the public interest; furthermore, we believe that notice-and-comment rulemaking for the technical changes we are making in this IFC (as described in sections II.D., II.E., and II.F. of this IFC) is unnecessary because these changes are not substantive and do not alter current policy.

    B. Legal Authority

    There are four principal statutory authorities for the provisions in this IFC.

    First, sections 1102 and 1871 of the Social Security Act (the Act) provide general authority for the Secretary to prescribe regulations for the efficient administration of the Medicare program.

    Second, section 1866(j) of the Act provides specific authority with respect to the Medicare enrollment process for providers and suppliers.

    Third, section 6405(c) of the Affordable Care Act gives the Secretary the authority to require that pharmacy claims and beneficiary reimbursement requests for covered Part D drugs prescribed by a physician (as defined in section 1861(r) of the Act) or eligible professional (as defined in section 1848(k)(3)(B) of the Act) are not payable unless the prescribing physician or eligible professional is enrolled in Medicare under section 1866(j) of the Act.

    Fourth, section 1860D-12(b)(3)(D) of the Act authorizes the Secretary to include in a contract with a Part D sponsor such other terms and conditions that are not inconsistent with Part D as the Secretary may find necessary and appropriate.

    C. Provider Enrollment Process

    The Medicare CMS-855 enrollment application collects information from providers and suppliers to confirm that they meet all Medicare requirements. Such data includes, but are not limited to, the provider's or supplier's licensure, tax identification number, National Provider Identifier (NPI), practice locations, final adverse action history, and owning and managing individuals and organizations. Upon receiving a CMS-855 application from a physician or eligible professional, the CMS contractor validates the information and performs various screening activities, such as reviewing the System for Award Management (SAM) to confirm that the individual is not debarred from receiving payments under any federal health program. As explained in section II. of this IFC, we have taken measures to improve the provider enrollment process to determine whether enrolling physicians and eligible professionals meet all Medicare requirements.

    D. Section 6405 of the Affordable Care Act and the May 23, 2014 Final Rule

    As noted previously, section 6405(c) of the Affordable Care Act gives the Secretary the authority to extend the requirements of sections 6405(a) and (b) of the Affordable Care Act to all other categories of items or services under title XVIII of the Act that are ordered, prescribed, or referred by a physician or eligible professional, including covered Part D drugs. Sections 6405(a) and (b) of the Affordable Care Act require physicians and eligible professionals who order or certify durable medical equipment, prosthetics, orthotics, supplies, or home health services to be enrolled in Medicare.

    In accordance with section 6405(c) of the Affordable Care Act, we established new § 423.120(c)(6) as part of a May 23, 2014 final rule titled, “Medicare Program; Contract Year 2015 Policy and Technical Changes to the Medicare Advantage and the Medicare Prescription Drug Benefit Programs” (79 FR 29843). Our objective was to help confirm that Part D drugs are prescribed only by physicians and eligible professionals who are qualified to do so under state law and under the requirements of the Medicare program. Section 423.120(c)(6) currently contains the following provisions:

    • A Part D sponsor must deny, or must require its pharmaceutical benefit manager (PBM) to deny, a pharmacy claim for a Part D drug if an active and valid physician or eligible professional National Provider Identifier (NPI) is not contained on the claim.

    • A Part D sponsor must deny, or must require its PBM to deny, a pharmacy claim for a Part D drug if the physician or eligible professional—is not enrolled in the Medicare program in an approved status; and does not have a valid opt-out affidavit on file with a Part A/B Medicare Administrative Contractor (MAC).

    • A Part D sponsor must deny, or must require its PBM to deny, a request for reimbursement from a Medicare beneficiary for a drug if the request is not for a Part D drug that was dispensed in accordance with a prescription written by a physician or eligible professional who is identified by his or her legal name in the request; and

    ++ Is enrolled in Medicare in an approved status; or

    ++ Has a valid opt-out affidavit on file with a Part A/B MAC.

    • In order for a Part D sponsor to submit to CMS a prescription drug event record (PDE), the PDE must contain an active and valid individual prescriber NPI and must pertain to a claim for a Part D drug that was dispensed in accordance with a prescription written by a physician or eligible professional who—is enrolled in Medicare in an approved status; or has a valid opt-out affidavit on file with a Part A/B MAC.

    These requirements apply as of June 1, 2015. However, on December 3, 2014, through the Health Plan Management System (HPMS), we announced an enforcement delay until December 1, 2015. We are now in this IFC making another change to make these requirements applicable on January 1, 2016. Accordingly, and as explained in section II.C. of this IFC, we are making conforming changes to the regulation text.

    II. Provisions of the Interim Final Rule With Comment Period A. Enrollment

    There are prescribers other than physicians and eligible professionals, such as pharmacists, who are legally authorized under state or other law to prescribe covered Part D drugs. For example, under a Pharmacist Collaborative Practice Agreement, pharmacists may be legally authorized to prescribe covered Part D under state or other law. However, pharmacists are not physicians under section 1861(r) of the Act or eligible professionals under section 1848(k)(3)(B) of the Act, and are therefore not eligible to enroll in or opt-out of Medicare. Under § 423.120(c)(6), as described previously in section I.D. of this IFC, beneficiaries who have been receiving necessary prescriptions from prescribers who are not Medicare-enrolled or opted-out physicians or eligible professionals will no longer be able to obtain Part D coverage for these prescriptions once the requirements of § 423.120(c)(6) are enforced. Changes to previously finalized policies regarding § 423.120(c)(6) are necessary to preserve beneficiaries' ability to obtain prescriptions for covered Part D drugs prescribed by certain practitioners ineligible to enroll in Medicare. We note that the definition of “physician” includes dentists, hence dentists are eligible to enroll in or opt-out of Medicare. Accordingly, this IFC revises § 423.120(c)(6)(ii), (iii), and (iv) such that prescriptions provided by “other authorized prescribers” (as defined in § 423.100) may be covered under Part D. In other words, Part D sponsors will not be required to reject pharmacy claims or deny beneficiary requests for reimbursement for prescriptions written by “other authorized prescribers” on the basis that the prescriber is not enrolled in or opted-out of Medicare. Therefore, Part D sponsors will continue to be able to cover pharmacy claims at the point of sale (POS) for prescriptions written by “other authorized prescribers,” provided all other existing Part D coverage requirements are met. We note, for example, that under § 423.120(c)(6)(i), an “other authorized prescriber” must have an active and valid NPI which is contained in the pharmacy claim. This change will help beneficiaries to continue to receive needed prescriptions.

    In § 423.100, we are defining “other authorized prescriber” as a person other than a physician (as defined in section 1861(r) of the Act) or eligible professional (as defined in section 1848(k)(3)(B) of the Act) who is authorized under state or other applicable law to write prescriptions. This definition, which applies to § 423.120(c)(6) only, will sufficiently protect the Medicare program because “other authorized prescribers” must have prescribing authority under state or other applicable law.

    B. Provisional Coverage and Notice

    We conclude that, in order to further minimize interruptions to Part D beneficiaries' access to needed medications, other changes are also needed to the May 23, 2014 final rule. This conclusion is based on our analysis of Medicare prescriber enrollment levels and trends since promulgation of the final rule and discussions with various stakeholders about their concerns regarding beneficiary access once the provisions of § 423.120(c)(6) are enforced. Thus, we are modifying the provisions of § 423.120(c)(6) to prohibit sponsors from rejecting claims or denying beneficiary requests for reimbursement for a drug on the basis of the prescriber's enrollment status, unless the sponsor has first covered a 3-month provisional supply of the drug and provided individualized written notice to the beneficiary that the drug is being covered on a provisional basis. Such provisional supply and notice will allow sufficient time for an eligible prescriber to enroll in Medicare (or submit an opt-out affidavit), so that a beneficiary can continue to receive Part D coverage for the drug if prescribed by the same prescriber, or for the beneficiary to find a prescriber who meets the Medicare requirements to write Part D prescriptions. Enrolling in Medicare to prescribe or filing an opt-out affidavit is a process that can typically be completed within 3 months. In presumably rare cases when the prescriber will not enroll in Medicare or submit an opt-out affidavit, we believe the beneficiary should have sufficient time to find a prescriber whose prescriptions are coverable by the Part D program, if the beneficiary wishes to continue to receive Part D coverage for the drug. Once the Part D sponsor has provided the written notice to the beneficiary that a drug is being covered on a provisional basis because of the prescriber's current Medicare status, and the sponsor has covered the required provisional supply of the drug, the sponsor will be required to reject future claims and deny future requests for reimbursement for the beneficiary for the same drug if the prescription is from the same prescriber (unless the prescriber has enrolled or opted out in the meantime). We will issue future guidance as necessary on how sponsors and their PBMs should operationalize the term “drug” in their adjudication systems in addition to other guidance, as needed.

    The following discussion provides the rationale for adopting a same drug/same prescriber policy. First, beneficiaries may not readily know which prescribers are enrolled in or opted-out of Medicare and which are not. Therefore, our policy means that beneficiaries will receive a provisional supply and written notice about each unenrolled prescriber they see. Second, beneficiaries may need to fill multiple prescriptions from the same unenrolled prescriber, and we are particularly concerned about instances when beneficiaries need to do so in a short time period before their prescriber has been able to enroll or they have been able to find an enrolled prescriber. Therefore, our policy allows beneficiaries to receive more than one provisional supply from the same unenrolled prescriber for a different drug.

    The pertinent regulation text in this IFC states that the Part D sponsor must do the following: “provide the beneficiary with . . . a 3-month provisional supply (as prescribed by the prescriber . . .).” This means that the Part D sponsor will be required to cover a full 3-month supply, if prescribed by the unenrolled practitioner, regardless of how the supply is dispensed. For example, a beneficiary may receive a provisional supply in accordance with a prescription written for a month's supply with two subsequent refills; a prescription written for a one-time 3-month's supply; or three prescriptions written for a 1-month's supply each. Conversely, an unenrolled prescriber might not prescribe a full 3-month's supply, and in such a case, the sponsor would of course not be required to provide a 3-month's provisional supply.

    In addition, certain prescriptions cannot be refilled, such as Schedule II controlled substances, and continuing supplies of such drugs are dispensed only upon a new prescription. For this reason, the regulation text also states that the provisional supply must be “allowed by applicable law.”

    We believe that a sponsor tracking dispensed provisional drug supplies is easier than tracking a timeframe after a dispensing event. Otherwise, in order to ensure a beneficiary receives a provisional supply of each drug prescribed by an unenrolled prescriber, Part D sponsors would have to keep track of rolling timeframes associated with the first dispensing event of each drug.

    We note that providing beneficiaries with a provisional supply of a drug is consistent with other CMS requirements and Part D policies designed to provide reasonable access to needed medications. Under the Part D transition policy, for example, sponsors are generally required to cover off-formulary drugs (including drugs that are on-formulary but require prior authorization or step therapy) when a beneficiary changes prescription drug benefit plans and in other circumstances, in order to give the beneficiary and his or her prescriber time to find a suitable on-formulary drug or pursue an exception to continue taking the same drug.

    The existing Part D transition policy is an example of an instance in which a beneficiary might not receive a full 3-months' supply under the provisions of this IFC, even when prescribed the full 3 months' supply, due to other existing Part D transition requirements which take precedence. If an unenrolled physician prescribes an off-formulary drug for a beneficiary that is subject to the transition requirements set forth in § 423.120(b)(3), and thus the provisional supply and notice requirements are simultaneously triggered, the beneficiary would not be able to receive more than a 30-day supply of the drug from a retail pharmacy, unless a formulary exception is approved, consistent with existing transition requirements. Conversely, if a formulary exception is approved, the beneficiary could receive the remaining provisional supply. We will issue guidance as to how sponsors should provide written notices to the beneficiary when the sponsor is required to issue a both a transition notice under § 423.120(b)(3)(iv) and a provisional supply notice under the revised requirements of § 423.120(c)(6).

    Other examples when a beneficiary might not receive a full 3-month's provisional supply, or any provisional supply at all, is when the prescriber does not have an active and valid NPI. Under § 423.120(c)(6)(i), the Part D sponsor or its PBM must reject a pharmacy claim unless it contains an active and valid prescriber NPI. Thus, a sponsor or its PBM cannot cover a provisional supply when the applicable pharmacy claim does not contain an active and valid prescriber NPI. Without a prescriber NPI, the sponsor or PBM would not be able to determine whether a drug should be covered on a provisional or regular basis, because the sponsor cannot determine the prescriber's Medicare enrollment or opt out status. An additional example is when the drug prescribed is subject to approved prior authorization or step therapy requirements by the plan. Such utilization management edits will still apply to provisional supplies. For these reasons, the regulation text in this IFC states that the Part D sponsor or its PBM must provide the beneficiary with a provisional supply and written notice “subject to all other Part D rules and plan coverage requirements.”

    In light of our previous discussion for provisional coverage, we have made the following changes to § 423.120(c)(6):

    • Revised paragraphs (c)(6)(ii)(A) and (c)(6)(iii) to add the clause “Except as provided in paragraph (c)(6)(v) of this section.” The revised paragraphs would otherwise require Part D sponsors and their PBMs to reject pharmacy claims and deny beneficiary requests for reimbursement based on the Medicare status of the prescriber.

    • Added new paragraph (c)(6)(v) to require that a Part D sponsor or its PBM not reject a pharmacy claim for a Part D drug under paragraphs (c)(6)(ii) or (c)(6)(iii) of this section unless the sponsor has provided the provisional coverage of the drug and written notice to the beneficiary required by paragraph (c)(6)(v)(B).

    • Added new paragraph (c)(6)(v)(B) to require that upon receipt of a pharmacy claim or beneficiary request for reimbursement for a Part D drug that a Part D sponsor would otherwise be required to reject or deny in accordance with paragraphs (c)(6)(ii) and (iii) of this section, a Part D sponsor or its PBM must provide the beneficiary with the following two things, subject to all other Part D rules and plan coverage requirements.

    • Added new paragraph (c)(6)(v)(B)(1)(i) to require a Part D sponsor to provide a 3-month provisional supply of the drug (as prescribed by the prescriber and if allowed by applicable law).

    • Added new paragraph (c)(6)(v)(B)(1)(ii) to require a Part D sponsor to provide written notice within 3 business days after adjudication of the claim or request in a form and manner specified by CMS.

    • Added new paragraph (c)(6)(v)(B)(2) to require that a Part D sponsor or its PBM must ensure that reasonable efforts are made to notify the prescriber of a beneficiary who was sent a notice.

    C. Revision to Dates in § 423.120(c)(5) and (c)(6)

    The requirements of § 423.120(c)(5), which address certain NPI submission and verification activities related to pharmacy claims for Part D drugs, apply before June 1, 2015. As mentioned in section I.C. of this IFC, the requirements of § 423.120(c)(6) apply beginning June 1, 2015. On December 3, 2014, we announced an enforcement delay of § 423.120(c)(6) until December 1, 2015. We are now in this IFC making another change to make these requirements applicable on January 1, 2016. This is to help make certain that stakeholders, such as beneficiaries and plan sponsors, have sufficient time to prepare for the requirements of § 423.120(c)(6).

    To prevent potential confusion over the applicability of § 423.120(c)(5) and (c)(6), we are revising the dates identified therein. The beginning of § 423.120(c)(5) will be changed from “Before June 1, 2015, the following are applicable” to “Before January 1, 2016, the following are applicable”. The beginning of § 423.120(c)(6) will be changed from “Beginning June 1, 2015, the following are applicable” to “Beginning January 1, 2016, the following are applicable”. We believe these revisions are necessary so that stakeholders will understand precisely when the requirements of § 423.120(c)(5) and (c)(6) apply to them.

    D. Rejection of Pharmacy Claims

    This IFC also makes a technical change to § 423.120(c)(6)(i) and (ii) by replacing language that requires plan sponsors to “deny” pharmacy claims that do not meet the requirements of § 423.120(c)(6) with language requiring plan sponsors to “reject” such claims. POS claim transactions are not considered coverage determinations under Part D program rules unless the plan chooses to treat the presentation of the prescription as a request for a coverage determination. Therefore, a Part D plan sponsor is not subject to the requirements for coverage determinations in part 423, subpart M, such as the timeframe and notification rules, nor to the requirements to conduct clinical review or to provide notice of appeal rights when a prescription cannot be filled under the Part D benefit at the POS. With the requirements finalized in the May 23, 2014 final rule (79 FR 29843), we did not intend to redefine the nature of POS transactions in the Part D program specifically for claims that are not paid at the POS because the prescriber does not meet the enrollment or opt-out requirements. We believe the word “deny” in the regulation text may incorrectly be interpreted to require plans to issue a standardized denial notice with appeal rights (OMB approval 0938-0976, “Notice of Denial of Medicare Prescription Drug Coverage”, CMS-10146) for rejected claims at POS, rather than follow our existing requirements at §§ 423.128(b)(7)(iii) and 423.562(a)(3). These provisions require plans to arrange with their network pharmacies to distribute a copy of the standardized pharmacy notice (OMB approval 0938-0975, “Medicare Prescription Drug Coverage and Your Rights”, CMS-10147) to the enrollee. We believe that this technical change will make the requirements at § 423.120(c)(6)(i) and (ii) consistent with our other requirements for POS claim transactions and existing National Council for Prescription Drug Programs guidance. We are retaining use of the term “deny” at § 423.120(c)(6)(iii), because plan sponsors are required to treat an enrollee request for reimbursement as a coverage determination under subpart M.

    E. Name on Beneficiary Reimbursement Requests

    We also made a technical change at § 423.120(c)(6)(iii) by replacing “legal name” with “name” for beneficiary reimbursement requests. Requiring that beneficiary requests for coverage include the prescriber's legal name is inconsistent with the existing standard required for coverage determination requests at § 423.568(a) and related subregulatory guidance and is overly burdensome for beneficiaries. Throughout Chapter 18 of the Medicare Prescription Drug Manual (particularly section 30.3), CMS guidance to plan sponsors includes an expectation that plan sponsors will make reasonable and diligent efforts to obtain any missing information required to process beneficiary requests when the request does not include all information needed to make a decision, such as the prescriber's legal name, if necessary to determine coverage under the prescriber enrollment requirements. Additionally, Chapter 5, section 90.2.2 contains language stating that plans can require beneficiary requests for reimbursement to include prescriber name (not “legal name”) and address or phone number or pharmacy name and phone number to assist the plan in locating the prescriber NPI necessary to submit the PDE to CMS. We recognize that the “legal name” standard was included in § 423.120(c)(6) because it was adopted for Part A/B ordering and referring claims at § 424.507(a)(2). However, given the regulations and manual guidance previously discussed, we do not believe this standard is appropriate for Part D beneficiary reimbursement requests.

    F. Other Technical Changes

    In addition to the previously described revisions, we are making the following minor technical changes to § 423.120(a)(6)(i) through (iv). (These changes will not affect the requirements or substance of these paragraphs.)

    • In paragraphs (c)(6)(i), (ii), and (iii), we replaced the word “if” with “unless,” and deleted the word “not.” The current versions of these paragraphs are written in the negative, which has caused confusion for some readers. We believe these changes will clarify these paragraphs.

    • In paragraphs (c)(6)(i) and (iv), we replaced references to “physicians” and “eligible professionals” with the term “prescriber.” The latter word is necessary to reflect that these paragraphs also apply to prescribing individuals other than physicians and eligible professionals.

    • In paragraph (c)(6)(ii), the current opening paragraph is incorporated into revised paragraph (c)(6)(ii)(A). Current paragraphs (c)(6)(ii)(A) and (B) are redesignated as new paragraphs (c)(6)(ii)(A)(1) and (2). The requirements pertaining to other authorized prescribers are addressed in revised paragraph (c)(6)(ii)(B). These organizational revisions of (c)(6)(ii) are necessary in order to incorporate the substantive and technical changes discussed in this IFC.

    • In the opening paragraph of (c)(6)(iii), we changed the language “for a drug if the request is not for a Part D drug that was dispensed in accordance with a prescription written by” to “unless the request pertains to a Part D drug that was prescribed by”. This is to make the paragraph clearer and more readable. We also—

    ++ Changed paragraph (c)(6)(iii)(A) from “Is identified by his or her legal name in the request” to “A physician or, when permitted by applicable State law, other eligible professional (as defined in section 1848(k)(3)(B) of the Act) who is identified by name in the request; and who”.

    ++ Redesignated current paragraphs (c)(6)(iii)(B)(1) and (2) as new paragraphs (A)(1) and (2). The requirements pertaining to other authorized prescribers are addressed in revised paragraph (c)(6)(iii)(B).

    These technical revisions to (c)(6)(iii) are needed to accommodate the substantive and technical revisions heretofore discussed in this IFC.

    • In paragraph (c)(6)(iv) we are making the following changes:

    ++ The opening paragraph is changed from “In order for a Part D sponsor to submit to CMS a prescription drug event record (PDE), the PDE must contain an active and valid individual prescriber NPI and must pertain to a claim for a Part D drug that was dispensed in accordance with a prescription written by a physician or, when permitted by applicable State law, an eligible professional (as defined in section 1848(k)(3)(B) of the Act) who” to”A Part D plan sponsor submitting a prescription drug event (PDE) to CMS must include on the PDE the active and valid individual NPI of the prescriber of the drug, who must”. We believe the new language is more concise and straightforward.

    ++ We have redesignated current paragraphs (c)(6)(iv)(A) and (B) as new paragraphs (c)(6)(iv)(A)(1) and (2). The requirements pertaining to other authorized prescribers are addressed in revised paragraph (c)(6)(iv)(B).

    These technical revisions to paragraph (c)(6)(iv) are needed to accommodate the substantive and technical revisions discussed in this IFC.

    III. Waiver of Proposed Rulemaking

    We ordinarily publish a notice of proposed rulemaking in the Federal Register and invite public comment on the proposed rule. The notice of proposed rulemaking includes a reference to the legal authority under which the rule is proposed and the terms and substance of the proposed rule or a description of the subjects and issues involved. However, this procedure can be waived if an agency finds good cause that a notice-and-comment procedure is impracticable, unnecessary, or contrary to the public interest and incorporates a statement of the finding and its reasons in the rule issued.

    We believe we have good cause to make our previously discussed changes in this IFC. Concerning the substantive changes, we believe that notice-and-comment rulemaking is contrary to the public interest for the reasons that follow.

    Several months after publication of the May 23, 2014 final rule that imposed the enrollment or opt-out requirement as of June 1, 2015, it was brought to our attention during implementation that there are prescribers who can and do prescribe Part D medications but who are also unable to enroll in Medicare to prescribe because they do not technically meet even the broad definition of “eligible health professional.” The May 23, 2014 final rule was not only complex and controversial, but with respect to the prescriber enrollment provisions themselves, we were focused on the fact that dentists can enroll and represent the largest group of unenrolled current Part D prescribers. Additionally, we did not receive any explicit comments on the pharmacist issue.

    Once we became aware of the issue, we promptly considered alternatives to address it, such as directing pharmacists to opt-out, but concluded that this is not permissible under the applicable statutory language. Ultimately, we came to the conclusion that the May 23, 2014 rule must be updated. The existing rule could cause an unintended disruption in beneficiaries' access to Part D drugs because under the current regulations, as of June 1, 2015, pharmacists' (and potentially certain other prescribers') prescriptions could not be filled.

    Additionally, we concluded that changes to the May 23, 2014 rule needed to include a provisional supply to prevent disruptions to beneficiaries' access to Part D drugs. This is based on our monitoring of prescriber enrollment levels and trends and meetings with stakeholders during implementation. Prescriber enrollment is a voluntary act, and while we remain confident that the Part D prescribers who need to enroll or opt-out will ultimately do so in large numbers, it will take some time. The non-dentist and non-pharmacist prescribers who need to enroll are ones who did not enroll to be able to order and certify under § 424.507. In addition, dentists are a group of providers that has not yet had a robust direct relationship with Medicare due to the fact that dentists generally do not bill Medicare for their services. Since it is in the public's interest that we make certain that beneficiary access to needed drugs will not be impaired when these important program integrity protections become applicable, we have also added the provisional supply provisions in this IFC. Without such swift action, we would be forced to either enforce the rule as written, which could cause beneficiary harm by disrupting access, or further delay enforcement, which also could cause beneficiary harm by continuing to permit unqualified individuals to prescribe Part D drugs. Both outcomes are contrary to the public interest. In addition, the provisional supply provisions include a written notice to the beneficiary. We believe that the written notices will result in beneficiaries' discussing the enrollment status issue with their prescribers, which will assist in our prescriber enrollment efforts. In addition, to resolve these problems, it is necessary to implement the provisions of this IFC prior to the Medicare Part D bid deadline for the 2016 contract year, which begins on January 1, 2016. The statutory bid deadline this year is June 1, 2015. Any changes to Part D requirements for contract year 2016 must be implemented prior to the bid deadline so that Part D sponsors may account for them in their bids; we cannot impose costly new requirements on the plans for a contract year that are not accounted for in their bids for that contract year under section 1860D-12(f)(2) of the Act. Thus, an IFC is the only means for ensuring that our requirements do not cause unintended disruption to beneficiary access to Part D drugs, while ensuring that the changes that will minimize such disruptions are incorporated into Part D sponsors' 2016 bids; the length of time involved with notice-and rulemaking would prevent us from accomplishing these objectives without further delaying enforcement of the existing regulations, which for the reasons discussed later in this section, could cause beneficiary harm. Moreover, a prompt publication is necessary to give Part D plan sponsors time to implement the operational changes needed for them to be prepared for these requirements in the 2016 contract year.

    If Part D sponsors were unable to account for these new requirements in their 2016 bids, we would have to delay the applicability date of the enrollment/opt-out requirements to no sooner than January 1, 2017. We believe that such an outcome similarly is contrary to the public interest because it would unduly delay the extremely important program integrity and basic quality assurance protection for Medicare beneficiaries that we implemented in our May 23, 2014 final rule, and beneficiaries could be harmed as a result. As we explained in the May 23, 2014 final rule, we have been concerned about instances where unqualified individuals are prescribing Part D drugs. In fact, in a June 2013 report the OIG found that the Part D program inappropriately paid for drugs ordered by individuals who did not appear to have the authority to prescribe. (See “Medicare Inappropriately Paid for Drugs Ordered by Individuals Without Prescribing Authority” (OEI-02-09-00608).) There have also been reports that the prescriptions of physicians with suspended licenses have been covered by the Part D program.

    The Centers for Disease Control and Prevention (CDC) has characterized prescription drug abuse as an epidemic, and found that an increase in painkiller prescribing is the key driver of the increase in prescription overdoses.1 The CDC reports that the drug overdose death rate has more than doubled from 1999 through 2013, and more than half of those deaths were related to pharmaceuticals.2 The Department of Health and Human Services has several initiatives to address prescription drug abuse; for instance, the National Institute on Drug Abuse, the National Institutes of Health, and the Substance Abuse and Mental Health Services Administration are working with public and private stakeholders to reduce opioid overdoses. CMS has also adopted an approach to reduce opioid overutilization in Medicare Part D.

    1http://www.cdc.gov/vitalsigns/pdf/2014-07-vitalsigns.pdf.

    2http://www.cdc.gov/homeandrecreationalsafety/overdose/facts.html.

    The new enrollment requirements addressed in the May 23, 2014 final rule represent an important component of this effort and are a crucial program integrity and basic quality assurance protection for Medicare beneficiaries, for the requirements help us to confirm that prescribers are qualified to prescribe Part D drugs. It is important that these protections are in place as soon as possible. We have identified 68,000 prescribers that have been removed from Medicare for reasons such as licensure issues, operational status, or exclusion by the OIG, and we have a responsibility to enforce these protections to beneficiaries as soon as possible without compromising continuity of care or beneficiary access to needed medications. The CDC has recommended swift regulatory action against health care providers acting outside the limits of accepted medical practice to decrease provider behaviors that contribute to prescription painkiller abuse, diversion, and overdose.3

    3http://www.cdc.gov/drugoverdose/pdf/policyimpact-prescriptionpainkillerod-a.pdf.

    Thus, for all of these reasons, we find good cause to waive prior notice and comment with respect to the substantive changes being made in this IFC.

    With respect to the technical changes being made in this IFC, we believe notice-and-comment rulemaking is unnecessary because these changes are not substantive and do not alter current policy.

    IV. Collection of Information Requirements

    Under the Paperwork Reduction Act of 1995, we are required to provide 60-day notice in the Federal Register and solicit public comment before a collection of information requirement is submitted to the Office of Management and Budget (OMB) for review and approval. In order to fairly evaluate whether an information collection should be approved by OMB, section 3506(c)(2)(A) of the Paperwork Reduction Act of 1995 requires that we solicit comment on the following issues:

    • The need for the information collection and its usefulness in carrying out the proper functions of our agency.

    • The accuracy of our estimate of the information collection burden.

    • The quality, utility, and clarity of the information to be collected.

    • Recommendations to minimize the information collection burden on the affected public, including automated collection techniques.

    We are soliciting public comment on the following section of this document that contains information collection requirements (ICRs).

    We believe the principal information collection requirement associated with this IFC is that some Part D sponsors and PBMs will need to collect information about which NPIs are for “other authorized prescribers” in order to properly adjudicate pharmacy claims containing such prescriber NPIs in light of the revised provisions of § 423.120(c)(6) in this IFC. However, we estimate that half of the 30 Part D sponsors and PBMs with Part D adjudications systems already collect information about the prescriptive authority of prescriber NPIs in order to mitigate current potential audit risks associated with submitting PDEs to CMS for Part D drugs that were not dispensed upon a valid prescription.

    In a CMS analysis of PDE data, there were just over 1.3 million prescribers writing Part D prescriptions in 2013. Approximately 17,000 of these prescribers have NPIs a taxonomy in the National Provider & Plan Enumeration System (NPPES) that would fall under the definition of “other authorized prescribers” (largely pharmacist taxonomies).

    NPIs and the addresses and taxonomy codes that pertain to them are publicly available information through the CMS Web site for NPPES. We estimated that collecting information about which NPIs are for “other authorized prescribers” would take an average of 30 minutes (0.5 hours) per NPI associated with a pharmacist or 8,500 hours, and the estimated total burden for 15 sponsors/PBMs to be 17,500 hours for 2016. The estimated total annual cost for this burden is $3,343,050. This is based upon the national median hourly rate of $26.22 for insurance claim and policy processing clerk multiplied by the number of burden hours in 2016. We did not estimate any burden in 2017 and 2018 for the collection of information about “other authorized prescriber” NPIs, as the number of new pharmacist NPIs and existing pharmacist NPIs becoming inactive will be negligible in light of the fact that there are only approximately 17,000 total “other authorized prescribers” writing Part D prescriptions in 2013.

    We note that since NPPES is not a provider credentialing system, but rather an enumeration system that contains self-reported credentials, Part D sponsors might not rely upon a taxonomy in NPPES as documentation that an NPI in fact belongs to a pharmacist with an active license who is permitted to prescribe. We have used data from NPPES to provide an estimate as to how many “other authorized prescribers” NPIs about which Part D sponsors and PBMs will need to collect information.

    In the alternative, we understand that Part D sponsors/PBMs may purchase prescriber ID validation services from a private company that can provide them with a list of “other authorized providers.” However, we do not provide a collection estimate for all options that sponsors/PBMs may have in implementing the provisions of this IFC.

    We also revised the provisions of § 423.120(c)(6) to require Part D sponsors to cover a provisional supply of a drug before they reject a claim based on a prescriber's Medicare status. These modifications will also require Part D sponsors to provide written notice to the beneficiary and take reasonable efforts to provide written notice to the prescriber. The burden associated with these modifications is the time and effort necessary for Part D adjudications systems to be programmed, model notices to be created, and such notices to be generated and disseminated to perform these tasks. We estimated that this will take 30 sponsors and PBMs with Part D adjudications systems 156,000 hours for software developers and programmers to program their systems in 2016 to comply with the modifications to § 423.120(c)(6) in this IFC. In 2017 and 2018, we estimated the total burden to be 83,000 hours for each year.

    We estimated the total hours by estimating a 6-month preparation and testing period. Six months includes approximately 1,040 full-time working hours. We estimated 5 full time staff (or 10 staff working half their hours on this project). Five staff × 1,040 hours × 30 sponsors/PBMs = 156,000 total hours. We estimated an hourly rate of $64.32 for such developers and programmers, which is $10,033,920 in total burden cost.

    We also estimated 212 parent organizations will create two template notices to notify beneficiaries and prescribers under the modifications of § 423.120(c)(6). We estimated this will take 3 hours per entity for a total of 636 hours. We estimated an hourly rate of $45.54 for a business operation specialist to create such notices. Thus, the total estimated burden cost for parent organizations to create two model notices is $28,963.44.

    Once the templates have been developed, we estimated that these notices would take an average of 5 minutes (0.083 hours) to prepare. Thus, we estimated the annual burden hours for 2016 to be 1,743,000 hours. This is based upon the national median hourly rate of $26.22 for an insurance claim and policy processing clerk multiplied by the number of burden hours. The estimated annual burden cost for 2016 is $45,701,460.

    Therefore, we estimated the total regulatory impact for these provisions in 2016 to be $55,764,343.44 ($10,033,920 + $28,963.44 + $45,701,460).

    Approximately 2 million beneficiaries enter the Part D program every year. If we assume that 25 percent of these new beneficiaries will see 1 prescriber who is not enrolled or opted out, and that prescriber prescribes 2 drugs, we anticipate that parent organizations will have to send 1 million notices in 2017 and 2018 each (250,000 beneficiaries × 2 prescriptions × 2 notices each = 1,000,000). We estimate these notices would take an average of 5 minutes (0.083 hours) to prepare. Thus, we estimate the total burden to be 83,000 hours for each year, and the annual cost to be $2,176,260. This is based upon the national median hourly rate of $26.22 for insurance claim and policy processing clerk multiplied by the number of burden hours.

    Table 1 outlines the projected costs of this IFC commencing 2016 through 2018:

    Table 1—Projected Burden Costs Programming Create notices Send notices Annual impact 2016 $10,033,920 $28,963.44 $45,701,460 $55,764,343.44 2017 N/A N/A 2,176,260 2,176,260 2018 N/A N/A 2,176,260 2,176,260

    If you comment on these information collection and recordkeeping requirements, please do either of the following:

    1. Submit your comments electronically as specified in the ADDRESSES section of this interim final rule with comment period; or

    2. Submit your comments to the Office of Information and Regulatory Affairs, Office of Management and Budget, Attention: CMS Desk Officer, [CMS-6107-IFC]; Fax: (202) 395-6974; or Email: [email protected]

    V. Response to Comments

    Because of the large number of public comments we normally receive on Federal Register documents, we are not able to acknowledge or respond to them individually. We will consider all comments we receive by the date and time specified in the DATES section of this preamble, and, when we proceed with a subsequent document, we will respond to the comments in the preamble to that document.

    VI. Regulatory Impact Statement

    We have examined the impacts of this rule as required by Executive Order 12866 on Regulatory Planning and Review (September 30, 1993), Executive Order 13563 on Improving Regulation and Regulatory Review (January 18, 2011), the Regulatory Flexibility Act (RFA) (September 19, 1980, Pub. L. 96-354), section 1102(b) of the Social Security Act, section 202 of the Unfunded Mandates Reform Act of 1995 (March 22, 1995; Pub. L. 104-4) and Executive Order 13132 on Federalism (August 4, 1999).

    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). A regulatory impact analysis (RIA) must be prepared for major rules with economically significant effects ($100 million or more in any 1 year). The impact of this IFC is directly associated with the information collection requirements discussed in section IV. of this IFC and will not exceed $100 million in any one year. Therefore, this is IFC is not a major rule.

    The average Part D beneficiary takes 9 drugs prescribed by three prescribers annually. Based on 2013 PDE data, approximately 380,000 (28 percent) Part D prescribers were not found in the Provider Enrollment, Chain, and Ownership System (PECOS) and are associated with just under 8,000,000 unique beneficiaries. Generally, PECOS is the CMS record database of all physicians and eligible professionals who are or were enrolled in or opted out of Medicare. Thus, these prescribers write prescriptions on average for 21 beneficiaries (8,000,000/380,000 = 21). For purposes of this analysis, we assumed that on January 1, 2016, 250,000 prescribers will still need to enroll in or opt-out of Medicare to prescribe coverable Part D drugs. We also assume that these 250,000 prescribers will write prescriptions for 5.25 million beneficiaries (250,000 × 21). We further assume that no beneficiaries will switch prescribers until they receive a notice that a drug is being covered on a provisional basis. Additionally, we assumed that these prescribers will write on average two prescriptions for each of these beneficiaries. We assumed that Part D parent organizations will be able to send each prescriber a notice. Finally, we did not offset our estimation in light of our expectation that, in some cases, transition and provisional supply notices will be combined into one notice. We estimated that parent organizations will send 21 million beneficiary and prescriber notices in accordance with the modifications to § 423.120(c)(6) in 2016 (5,250,000 beneficiaries × 2 prescriptions × 2 notices each = 21,000,000), which we expect to occur as a downward trend that we do not reflect in this analysis.

    Prescribers are expected to enroll on a steady basis throughout 2016 as a result of the prescriber enrollment requirements. By 2017, we expect that the majority of Part D prescribers will have enrolled in or opted out of Medicare in order for their prescriptions to be coverable by the Part D program. When a prescriber does not enroll or opt out, the beneficiary will either change to a prescriber who is enrolled or opted out, or the beneficiary will pay out of pocket for the prescriptions written by that prescriber. Nevertheless, parent organizations will have to send notices on an ongoing basis to beneficiaries who are new to the Part D program and receive a prescription from a prescriber who is not enrolled in or opted out of Medicare.

    The RFA requires agencies to analyze options for regulatory relief of small businesses. For purposes of the RFA, small entities include small businesses, nonprofit organizations, and small governmental jurisdictions. Most entities and most other providers and suppliers are small entities, either by nonprofit status or by having revenues between $7.5 million and $38.5 million in any 1 year. Individuals and states are not included in the definition of a small entity. We do not believe that this IFC would have a significant economic impact on a substantial number of small businesses, as Part D sponsors and parent organizations do not generally meet the definition of a small business.

    Section 1102(b) of the Act requires us to prepare a regulatory impact analysis if a rule may have a significant impact on the operations of a substantial number of small rural hospitals. This analysis must conform to the provisions of section 604 of the RFA. For purposes of section 1102(b) of the Act, we define a small rural hospital that is located outside of a Metropolitan Statistical Area for Medicare payment regulations and has fewer than 100 beds. We are not preparing an analysis for section 1102(b) of the Act because we have determined and the Secretary certified that this IFC would not have a significant impact on the operations of a substantial number of small rural hospitals.

    Section 202 of the Unfunded Mandates Reform Act of 1995 (UMRA) also requires that agencies assess anticipated costs and benefits before issuing any rule whose mandates require spending in any 1 year of $100 million in 1995 dollars, updated annually for inflation. In 2015, this is approximately $144 million. We believe that this IFC will have no consequential effect on state, local or tribal governments or on the private sector.

    Executive Order 13132 establishes certain requirements that an agency must meet when it promulgates a proposed rule (and subsequent final rule) that imposes substantial direct requirements or costs on state and local governments, preempts state law, or otherwise has federalism implications. Since this regulation does not impose any costs on state or local governments, the requirements of Executive Order 13132 are not applicable. In accordance with the provisions of Executive Order 12866, this IFC was reviewed by the Office of Management and Budget.

    List of Subjects in 42 CFR Part 423

    Administrative practice and procedure, Emergency medical services, Health facilities, Health maintenance organizations (HMO), Health professionals, Medicare, Penalties, Privacy, Reporting and recordkeeping requirements.

    For the reasons stated in the preamble of this interim final rule with comment period, the Centers for Medicare & Medicaid Services amends 42 CFR part 423 as follows:

    PART 423—VOLUNTARY MEDICARE PRESCRIPTION DRUG PROGRAM 1. The authority citation for part 423 continues to read as follows: Authority:

    Secs. 1102, 1106, 1860D-1 through 1860D-42, and 1871 of the Social Security Act (42 U.S.C. 1302, 1306, 1395w-101 through 1395w-152, and 1395hh).

    2. Amend § 423.100 by adding a definition of “Other authorized prescriber” in alphabetical order to read as follows:
    § 423.100 Definitions.

    Other authorized prescriber means, for purposes of § 423.120(c)(6) only, an individual other than a physician (as defined in section 1861(r) of the Act) or eligible professional (as defined in section 1848(k)(3)(B) of the Act) who is authorized under State or other applicable law to write prescriptions.

    3. Amend § 423.120 by revising paragraphs (c)(5) introductory text and (c)(6) to read as follows:
    § 423.120 Access to covered Part D drugs.

    (c) * * *

    (5) Before January 1, 2016, the following are applicable:

    (6) Beginning January 1, 2016, the following are applicable:

    (i) A Part D plan sponsor must reject, or must require its pharmaceutical benefit manager (PBM) to reject, a pharmacy claim for a Part D drug unless the claim contains the active and valid National Provider Identifier (NPI) of the prescriber who prescribed the drug.

    (ii)(A) Except as provided in paragraph (c)(6)(v) of this section, a Part D plan sponsor must reject, or must require its PBM to reject, a pharmacy claim for a Part D drug unless the physician or, when permitted by applicable State law, the eligible professional (as defined in section 1848(k)(3)(B) of the Act) who prescribed the drug—

    (1) Is enrolled in the Medicare program in an approved status; or

    (2) Has a valid opt-out affidavit on file with a Part A/B Medicare Administrative Contractor (MAC).

    (B) Pharmacy claims for Part D drugs prescribed by an other authorized prescriber (as defined in § 423.100) are not subject to the requirements specified in paragraph (c)(6)(ii)(A) of this section.

    (iii) Except as provided in paragraph (c)(6)(v) of this section, a Part D plan sponsor must deny, or must require its PBM to deny, a request for reimbursement from a Medicare beneficiary unless the request pertains to a Part D drug that was prescribed by—

    (A) A physician or, when permitted by applicable State law, other eligible professional (as defined in section 1848(k)(3)(B) of the Act) who is identified by name in the request and who—

    (1) Is enrolled in Medicare in an approved status; or

    (2) Has a valid opt-out affidavit on file with a Part A/B MAC; or

    (B) An other authorized prescriber (as defined in § 423.100) who is identified by name in the request.

    (iv) A Part D plan sponsor submitting a prescription drug event (PDE) to CMS must include on the PDE the active and valid individual NPI of the prescriber of the drug, who must—

    (A)(1) Be enrolled in Medicare in an approved status, or

    (2) Have a valid opt out affidavit on file with a Part A/B MAC; or

    (B) Be an other authorized prescriber (as defined in § 423.100).

    (v)(A) A Part D sponsor or its PBM must not reject a pharmacy claim for a Part D drug under paragraph (c)(6)(ii) of the section or deny a request for reimbursement under paragraph (c)(6)(iii) of this section unless the sponsor has provided the provisional coverage of the drug and written notice to the beneficiary required by paragraph (c)(6)(v)(B) of this section.

    (B) Upon receipt of a pharmacy claim or beneficiary request for reimbursement for a Part D drug that a Part D sponsor would otherwise be required to reject or deny in accordance with paragraphs (c)(6)(ii) or (iii) of this section, a Part D sponsor or its PBM must do the following:

    (1) Provide the beneficiary with the following, subject to all other Part D rules and plan coverage requirements:

    (i) A 3-month provisional supply of the drug (as prescribed by the prescriber and if allowed by applicable law).

    (ii) Written notice within 3 business days after adjudication of the claim or request in a form and manner specified by CMS.

    (2) Ensure that reasonable efforts are made to notify the prescriber of a beneficiary who was sent a notice under paragraph (c)(6)(v)(B)(1)(ii) of this section.

    Dated: April 17, 2015. Andrew M. Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services. Dated: April 29, 2015. Sylvia M. Burwell, Secretary, Department of Health and Human Services.
    [FR Doc. 2015-10545 Filed 5-1-15; 4:15 pm] BILLING CODE 4120-01-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 622 [Docket No. 120815345-3525-02] RIN 0648-XD901 Fisheries of the Caribbean, Gulf of Mexico, and South Atlantic; 2015 Commercial Accountability Measure and Closure for South Atlantic Gray Triggerfish AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Temporary rule; closure.

    SUMMARY:

    NMFS implements accountability measures for commercial gray triggerfish in the exclusive economic zone (EEZ) of the South Atlantic. NMFS projects commercial landings for gray triggerfish, will reach the commercial annual catch limit (ACL) on May 8, 2015. Therefore, NMFS is closing the commercial sector for gray triggerfish in the South Atlantic EEZ on May 8, 2015, and it will remain closed until NMFS announces the start of the next fishing season. This closure is necessary to protect the gray triggerfish resource.

    DATES:

    This rule is effective 12:01 a.m., local time, May 8, 2015, until NMFS announces the start of the next fishing season by publishing a document in the Federal Register.

    FOR FURTHER INFORMATION CONTACT:

    Catherine Hayslip, NMFS Southeast Regional Office, telephone: 727-824-5305, email: [email protected]

    SUPPLEMENTARY INFORMATION:

    The snapper-grouper fishery of the South Atlantic includes gray triggerfish and is managed under the Fishery Management Plan for the Snapper-Grouper Fishery of the South Atlantic Region (FMP). The FMP was prepared by the South Atlantic Fishery Management Council and is implemented by NMFS under the authority of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) by regulations at 50 CFR part 622.

    The commercial ACL for gray triggerfish in the South Atlantic is 272,880 lb (123,776 kg), round weight, for the current fishing year, January 1 through December 31, 2015, as specified in 50 CFR 622.193(q)(1)(i).

    Under 50 CFR 622.193(q)(1)(i), NMFS is required to close the commercial sector for gray triggerfish when the commercial ACL is reached, or is projected to be reached, by filing a notification to that effect with the Office of the Federal Register. NMFS has determined that the commercial ACL for South Atlantic gray triggerfish will be reached on May 8, 2015. Accordingly, the commercial sector for South Atlantic gray triggerfish is closed effective 12:01 a.m., local time, May 8, 2015, until NMFS announces the start of the next fishing season.

    The operator of a vessel with a valid commercial vessel permit for South Atlantic snapper-grouper having gray triggerfish on board must have landed and bartered, traded, or sold such gray triggerfish prior to 12:01 a.m., local time, May 8, 2015. During the closure, the bag limit specified in 50 CFR 622.187(b)(8), applies to all harvest or possession of gray triggerfish in or from the South Atlantic EEZ. During the closure, the possession limits specified in 50 CFR 622.187(c), apply to all harvest or possession of gray triggerfish in or from the South Atlantic EEZ. During the closure, the sale or purchase of gray triggerfish taken from the South Atlantic EEZ is prohibited.

    For a person on board a vessel for which a Federal commercial or charter vessel/headboat permit for the South Atlantic snapper-grouper fishery has been issued, the bag and possession limits and sale and purchase provisions of the commercial closure for gray triggerfish would apply regardless of whether the fish are harvested in state or Federal waters, as specified in 50 CFR 622.193(q)(1)(i).

    Classification

    The Regional Administrator, Southeast Region, NMFS, has determined this temporary rule is necessary for the conservation and management of gray triggerfish and the South Atlantic snapper-grouper fishery and is consistent with the Magnuson-Stevens Act and other applicable laws.

    This action is taken under 50 CFR 622.193(q)(1) and is exempt from review under Executive Order 12866.

    These measures are exempt from the procedures of the Regulatory Flexibility Act because the temporary rule is issued without opportunity for prior notice and comment.

    This action responds to the best scientific information available. The Assistant Administrator for Fisheries, NOAA (AA), finds that the need to immediately implement this action to close the commercial sector for gray triggerfish constitutes good cause to waive the requirements to provide prior notice and opportunity for public comment pursuant to the authority set forth in 5 U.S.C. 553(b)(B), as such procedures are unnecessary and contrary to the public interest. Such procedures are unnecessary because the rule itself has been subject to notice and comment, and all that remains is to notify the public of the closure. Such procedures are contrary to the public interest because of the need to immediately implement this action to protect gray triggerfish since the capacity of the fishing fleet allows for rapid harvest of the commercial ACL. Prior notice and opportunity for public comment would require time and would potentially result in a harvest well in excess of the established commercial ACL.

    For the aforementioned reasons, the AA also finds good cause to waive the 30-day delay in the effectiveness of this action under 5 U.S.C. 553(d)(3).

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: May 1, 2015. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2015-10595 Filed 5-1-15; 4:15 pm] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 140918791-4999-02] RIN 0648-XD929 Fisheries of the Economic Exclusive Zone Off Alaska; Groundfish Fishery by Non-Rockfish Program Catcher Vessels Using Trawl Gear in the Western and Central Regulatory Area of the Gulf of Alaska AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Temporary rule; closure.

    SUMMARY:

    NMFS is prohibiting directed fishing for groundfish, other than pollock, by non-Rockfish Program catcher vessels using trawl gear in the Western and Central Regulatory Areas of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2015 Chinook salmon prohibited species catch limit established for non-Rockfish Program catcher vessels using trawl gear and directed fishing for groundfish, other than pollock, in the Western and Central Regulatory Areas of the GOA.

    DATES:

    Effective 1200 hours, Alaska local time (A.l.t.), May 3, 2015, through 2400 hours, A.l.t., December 31, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Josh Keaton, 907-586-7228.

    SUPPLEMENTARY INFORMATION:

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

    The 2015 Chinook salmon prohibited species catch (PSC) limit for non-Rockfish Program catcher vessels directed fishing for groundfish, other than pollock, using trawl gear in the Western and Central Regulatory Areas of the GOA is 2,700 Chinook salmon (§ 679.21(i)(3)(i)(C)).

    In accordance with § 679.21(i)(7), the Regional Administrator has determined that the 2015 Chinook salmon PSC limit established for non-Rockfish Program catcher vessels directed fishing for groundfish, other than pollock, using trawl gear in the Western and Central Regulatory Areas of the GOA has been reached. Therefore, NMFS is prohibiting directed fishing for groundfish (except for pollock) by non-Rockfish Program catcher vessels using trawl gear in the Western and Central Regulatory Areas of the GOA.

    Classification

    This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay closing directed fishing for groundfish, other than pollock, by non-Rockfish Program catcher vessels using trawl gear in the Western and Central Regulatory Areas of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of April 30, 2015.

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

    This action is required by § 679.21 and is exempt from review under Executive Order 12866.

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: May 1, 2015. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2015-10601 Filed 5-1-15; 4:15 pm] BILLING CODE 3510-22-P
    80 87 Wednesday, May 6, 2015 Proposed Rules DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 900 [Docket No. AMS-FV-14-0072; FV14-900-2 PR] Clarification of United States Antitrust Laws, Immunity, and Liability Under Marketing Order Programs AGENCY:

    Agricultural Marketing Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    This proposal invites comments on an amendment to the general regulations for federal fruit, vegetable, and specialty crop marketing agreements and marketing orders that would accentuate the applicability of U.S. antitrust laws to marketing order programs' domestic and foreign activities. This action would also advise marketing order board and committee members and personnel of the restrictions, limitations, and liabilities imposed by those laws.

    DATES:

    Comments must be received by June 5, 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:

    Geronimo Quinones, Marketing Specialist, or Michelle P. Sharrow, Rulemaking Branch Chief, 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] 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 the general regulations for federal marketing agreements and orders (7 CFR part 900), effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” This action would add a new § 900.202 (Restrictions applicable to Committee personnel) under “Subpart—Miscellaneous Regulations” to accentuate the applicability of U.S. antitrust laws to marketing order program activities.

    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.

    Federal marketing order boards and committees have always been subject to U.S. antitrust laws. These boards and committees work with USDA in administering marketing order programs which, among other things, authorizes them, with approval of the Secretary, to establish and promote a program's domestic and foreign marketing activities. The Act immunizes board and committee members and employees from prosecution under U.S. antitrust laws so long as their conduct is authorized by the Act or provisions of a marketing order. This proposal is intended to accentuate the applicability of U.S. antitrust laws to marketing order board and committee members and personnel in light of changing global marketing and production trends as well as to advise boards and committees of the restrictions, limitations, and liabilities of those laws. Under these laws, Committee members and employees may not engage in any unauthorized agreement or concerted action that unreasonably restrains United States domestic or foreign commerce. Failing to adhere to antitrust laws may lead to prosecution under the antitrust laws by the United States Department of Justice and/or suit by injured private persons seeking treble damages, and may also result in expulsion of members from the Committee or termination of employment with the Committee.

    Initial Regulatory Flexibility Act

    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 1,090 handlers who are subject to regulation under the 28 federal marketing order programs and approximately 33,100 producers in the regulated areas. Small agricultural service firms 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). USDA estimates that many of these handlers and producers may be classified as small entities. This rule would accentuate the applicability of U.S. antitrust laws to marketing order programs' domestic and foreign activities. This action would also advise marketing order board and committee members and personnel of the restrictions, limitations, and liabilities imposed by those laws.

    Paperwork Reduction Act

    This rule contains no information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

    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.

    USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this proposed rule.

    AMS has discussed the changes to the regulations with all marketing order board and committee staff that it oversees. Moreover, AMS conducted refresher training on antitrust laws for marketing order board and committee staff and officers at the Marketing Order Management Conference on September 23-24, 2014. 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: 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 30-day comment period is provided to allow interested persons to respond to this proposal. Thirty days is deemed appropriate because federal marketing order boards and committees have always been subject to U.S. antitrust laws. AMS is simply updating the regulations to reemphasize the applicability of U.S. antitrust laws in light of global marketing and production trends. All written comments timely received will be considered before a final determination is made on this matter.

    List of Subjects in 7 CFR Part 900

    Administrative practice and procedure, Freedom of information, Marketing agreements, Reporting and recordkeeping requirements.

    For the reasons set forth above, 7 CFR part 900 is proposed to be amended as follows:

    PART 900—GENERAL REGULATIONS 1. The authority citation for 7 CFR part 900 continues to read as follows: Authority:

    7 U.S.C. 601-674 and 7 U.S.C. 7401.

    Subpart—Miscellaneous Regulations 2. The authority citation for Subpart—Miscellaneous Regulations continues to read as follows: Authority:

    Sec. 10, 48 Stat. 37, as amended; 7 U.S.C. 610.

    3. Add new section 900.202 to read as follows:
    § 900.202 Restrictions applicable to Committee personnel.

    Members and employees of Federal marketing order boards and committees are immune from prosecution under the United States antitrust laws only insofar as their conduct in administering the respective marketing order is authorized by the Agricultural Marketing Agreement Act of 1937, 7 U.S.C. 601-674, or the provisions of the respective order. Under the antitrust laws, Committee members and employees may not engage in any unauthorized agreement or concerted action that unreasonably restrains United States domestic or foreign commerce. For example, Committee members and employees have no authority to participate, either directly or indirectly, whether on an informal or formal, written or oral basis, in any bilateral or international undertaking or agreement with any competing foreign producer or seller or with any foreign government, agency, or instrumentality acting on behalf of competing foreign producers or sellers to (a) raise, fix, stabilize, or set a floor for commodity prices, or (b) limit the quantity or quality of commodity imported into or exported from the United States. Participation in any such unauthorized agreement or joint undertaking could result in prosecution under the antitrust laws by the United States Department of Justice and/or suit by injured private persons seeking treble damages, and could also result in expulsion of members from the Committee or termination of employment with the Committee.

    Dated: April 30, 2015. Rex A. Barnes, Associate Administrator, Agricultural Marketing Service.
    [FR Doc. 2015-10447 Filed 5-5-15; 8:45 am] BILLING CODE 3410-02-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-132634-14] RIN 1545-BM43 Qualifying Income From Activities of Publicly Traded Partnerships With Respect to Minerals or Natural Resources AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    This document contains proposed regulations under section 7704(d)(1)(E) of the Internal Revenue Code (Code) relating to qualifying income from exploration, development, mining or production, processing, refining, transportation, and marketing of minerals or natural resources. The proposed regulations affect publicly traded partnerships and their partners.

    DATES:

    Comments and requests for a public hearing must be received by August 4, 2015.

    ADDRESSES:

    Send submissions to: CC:PA:LPD:PR (REG-132634-14), Room 5203, Internal Revenue Service, 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-132634-14), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC, or sent electronically, via the Federal eRulemaking Portal at www.regulations.gov (IRS REG-132634-14).

    FOR FURTHER INFORMATION CONTACT:

    Concerning the proposed regulations, Caroline E. Hay at (202) 317-5279; concerning the submissions of comments and requests for a public hearing, Regina Johnson at (202) 317-6901 (not toll-free numbers).

    SUPPLEMENTARY INFORMATION:

    Background

    This document contains proposed amendments to the Income Tax Regulations (26 CFR part 1) under section 7704(d)(1)(E) regarding qualifying income from certain activities with respect to minerals or natural resources.

    Congress enacted section 7704 in the Omnibus Budget Reconciliation Act of 1987, Public Law 100-203 (101 Stat. 1330 (1987)), due to concerns that the rapid growth of certain publicly traded partnerships was eroding the corporate tax base. See H.R. Rep. No. 100-391, at 1065 (1987). Section 7704(a) provides that, as a general rule, publicly traded partnerships will be treated as corporations. In section 7704(c), Congress provided an exception from this rule if 90 percent or more of the partnership's gross income is “qualifying income.” Qualifying income is generally passive-type income, such as interest, dividends, and rent. Section 7704(d)(1)(E) provides, however, that qualifying income also includes income and gains derived from the exploration, development, mining or production, processing, refining, transportation, or marketing of minerals or natural resources. Section 7704(d)(1) defines the term “mineral or natural resource” as any product for which a deduction for depletion is allowed under section 611, except soil, sod, dirt, turf, water, mosses, or minerals from sea water, the air, or other similar inexhaustible sources.

    Regulations have been published providing guidance on (1) when a partnership is publicly traded (§ 1.7704-1), (2) transition rules for partnerships in existence prior to the effective date of section 7704 (§ 1.7704-2), and (3) qualifying income from certain financial products (§ 1.7704-3). No regulations have been issued under section 7704(d)(1)(E). Instead, questions about the specific application of section 7704(d)(1)(E) generally have been resolved by private letter ruling. However, the number of private letter ruling requests received has increased steadily from five or fewer requests per year for most years before 2008 to more than 30 requests received in 2013. Many of these requests seek rulings that income from support services provided to businesses engaged in the section 7704(d)(1)(E) activities is qualifying income for purposes of section 7704. The Treasury Department and the IRS are issuing these proposed regulations in response to this increased interest in the application of section 7704(d)(1)(E).

    These proposed regulations provide guidance on whether income from activities with respect to minerals or natural resources as defined in section 7704(d)(1) is qualifying income. These regulations do not address the transportation or storage of any fuel described in section 6426(b), (c), (d), or (e), or activities with respect to industrial source carbon dioxide, any alcohol fuel defined in section 6426(b)(4)(A), or any biodiesel fuel as defined in section 40A(d)(1). The Treasury Department and the IRS request comments concerning whether guidance is also needed with respect to those activities and, if so, the specific issues such guidance should address.

    Explanation of Provisions

    These proposed regulations use the term “qualifying activities” to describe activities relating to minerals or natural resources that generate qualifying income. Qualifying activities include: (1) The exploration, development, mining or production, processing, refining, transportation, or marketing of minerals or natural resources (section 7704(d)(1)(E) activities), and (2) certain limited support activities that are intrinsic to section 7704(d)(1)(E) activities (an “intrinsic activity”). These proposed regulations set forth the requirements under which an activity is a qualifying activity.

    1. Section 7704(d)(1)(E) Activities

    Section 7704(d)(1)(E) activities represent different stages in the extraction of minerals or natural resources and the eventual offering of products for sale. These stages include exploration, development, mining or production, processing, refining, transportation (including pipelines transporting gas, oil, or products thereof), and marketing of any mineral or natural resource (including fertilizer, geothermal energy, and timber). Each of these stages involves various types of operations. Based in part on discussions with IRS engineers specializing in the various oil and natural resource fields, the proposed regulations provide an exclusive list of operations that comprise the section 7704(d)(1)(E) activities for purposes of section 7704. This list may be expanded by published guidance. The Treasury Department and the IRS intend that this list represents only those activities that would be undertaken by an exploration and development company, a mining or production company, a refiner or processor, or a transporter or marketer of a mineral or natural resource. Services provided to those businesses are not section 7704(d)(1)(E) activities, although they may qualify as intrinsic activities. The Treasury Department and the IRS request comments concerning whether additional activities should be included in the list of section 7704(d)(1)(E) activities.

    A. Exploration

    These proposed regulations define exploration as an activity performed to ascertain the existence, location, extent, or quality of any deposit of mineral or natural resource before the beginning of the development stage of the natural deposit. A partnership is engaged in exploration if the partnership: (i) Drills an exploratory or stratigraphic type test well; (ii) conducts drill stem and production flow tests to verify commerciality of the deposit; (iii) conducts geological or geophysical surveys; or (iv) interprets data obtained from geological or geophysical surveys. For minerals, exploration also includes testpitting, trenching, drilling, driving of exploration tunnels and adits, and similar types of activities described in Rev. Rul. 70-287 (1970-1 CB 146) if conducted prior to development activities with respect to the minerals.

    B. Development

    These proposed regulations define development as an activity performed to make minerals or natural resources accessible. A partnership is engaged in development if the partnership: (i) Drills wells to access deposits of mineral or natural resources; (ii) constructs and installs drilling, production, or dual purpose platforms in marine locations (or constructs and installs any similar supporting structures necessary for extraordinary non-marine terrain such as swamps or tundra); (iii) completes wells including by installing lease and well equipment (such as pumps, flow lines, separators, and storage tanks) so that wells are capable of producing oil and gas, and the production can be removed from the premises; (iv) performs a development technique (for example, fracturing for oil and natural gas, or, with respect to minerals, stripping, benching and terracing, dredging by dragline, stoping, and caving or room-and-pillar excavation); or (v) constructs and installs gathering systems and custody transfer stations.

    C. Mining or Production

    These proposed regulations define mining or production as an activity performed to extract minerals or other natural resources from the ground. A partnership is engaged in mining or production if the partnership: (i) Operates equipment to extract natural resources from mines or wells, or (ii) operates equipment to convert raw mined products or raw well effluent to substances that can be readily transported or stored (including by passing crude oil through mechanical separators to remove gas, placing crude oil in settling tanks to recover basic sediment and water, dehydrating crude oil, and operating heater-treaters that separate raw oil well effluent into crude oil, natural gas, and salt water).

    D. Processing or Refining

    Because processing and refining activities vary with respect to different minerals or natural resources, these proposed regulations provide industry-specific rules (described herein) for when an activity qualifies as processing or refining. In general, however, these proposed regulations provide that an activity is processing or refining if it is done to purify, separate, or eliminate impurities. These proposed regulations further require that, for an activity to be treated as processing or refining, the partnership's position that an activity is processing or refining for purposes of section 7704 must be consistent with the partnership's designation of an appropriate Modified Accelerated Cost Recovery System (MACRS) class life for assets used in the activity in accordance with Rev. Rul. 87-56 (1987-2 CB 27) (for example, MACRS asset class 13.3 for petroleum refining facilities). In addition, except as specifically provided otherwise, processing or refining does not include activities that cause a substantial physical or chemical change in a mineral or natural resource, or that transform the extracted mineral or natural resource into new or different mineral products, including manufactured products. The Treasury Department and the IRS believe that this rule is consistent with definitions found elsewhere in the Code and regulations. See, for example, § 1.613-4(g)(5).

    With respect to natural gas, an activity is processing or refining only if the activity purifies natural gas, including by removal of oil or condensate, water, and non-hydrocarbon gases (including carbon dioxide, hydrogen sulfide, nitrogen, and helium), or separates natural gas into its constituents which are normally recovered in a gaseous phase (for example, methane and ethane) and those which are normally recovered in a liquid phase (for example, propane and butane, pentane and gas condensate). It is generally anticipated that activities that create the products listed in the 2012 version (the most recent version as of the date of publication of these proposed regulations) of North American Industry Classification System (NAICS) code 211112 concerning natural gas liquid extraction will be qualifying activities. Processing will also include converting methane in one integrated conversion into liquid fuels that are otherwise produced from the processing of crude oil, as described in the following paragraph.

    With respect to crude oil, an activity is processing or refining if the activity is performed to physically separate crude oil into its component parts, including, but not limited to, naphtha, gasoline, kerosene, fuel oil, lubricating base oils, waxes, and similar products. An activity that chemically converts the physically separated components is processing or refining of crude oil only if one or more of the products of the conversion are recombined with other physically separated components of crude oil in a manner that is necessary to the cost-effective production of gasoline or other fuels (for example, gas oil converted to naphtha through a cracking process that is hydrotreated and combined into gasoline). It is generally anticipated that activities within a refinery that create the products that are listed in the 2012 version (the most recent version as of the date of publication of these proposed regulations) of NAICS code 324110 concerning petroleum refineries will be qualifying activities, if those products are refinery grade products that are obtained in the steps required to make fuels, lubricating base oils, waxes, and similar products. Additionally, physically separating any product that is itself generated by the processing or refining of crude oil is a qualifying activity for purposes of section 7704(d)(1)(E).

    The production of plastics and similar petroleum derivatives does not give rise to qualifying income derived from processing or refining. See H.R. Rep. No. 100-495, at 947 (1987) (Conf. Rep.). The following products are also not qualifying products under this standard: (1) Heat, steam, or electricity produced by the refining processes; (2) products that are obtained from third parties or produced onsite for use in the refinery, such as hydrogen, if excess amounts are sold; and (3) any product that results from further chemical change of the product produced from the separation of the crude oil if it is not combined with other products separated from the crude oil (for example, production of petroleum coke from heavy (refinery) residuum qualifies, but any upgrading of petroleum coke (such as to anode-grade coke) does not qualify because it is further chemically changed).

    With respect to ores and minerals, an activity is processing or refining if the activity is listed in Treasury Regulation § 1.613-4(f)(1)(ii) or (g)(6)(iii). Generally, refining of ores and minerals is any activity that eliminates impurities or foreign matter from smelted or partially processed metallic and nonmetallic ores and minerals, as for example, the refining of blister copper.

    With respect to timber, an activity is processing if it merely modifies the physical form of timber. Processing includes the application of heat or pressure to timber without adding any foreign substances. Processing of timber does not include activities that use chemicals or other foreign substances to manipulate timber's physical or chemical properties, such as using a digester to produce pulp. Products that result from timber processing include wood chips, sawdust, untreated lumber, veneers (unless a foreign substance is added), wood pellets, wood bark, and rough poles. Products that are not the result of timber processing include pulp, paper, paper products, treated lumber, oriented strand board, plywood, and treated poles.

    These proposed regulations reserve the provisions relating to fertilizer. The Treasury Department and the IRS request comments on what activities should be included.

    E. Transportation

    These proposed regulations define transportation as the movement of minerals or natural resources and products produced from processing and refining, including by pipeline, barge, rail, or truck. Transportation also includes terminalling, providing storage services, and operating custody transfer stations and gathering systems. Transportation includes the construction of a pipeline only to the extent that a pipe is run to connect a client to a preexisting interstate or intrastate line owned by the publicly traded partnership (interconnect agreement). Transportation (except for pipeline transportation) does not include transportation of oil or gas (or oil or gas products) to a place that sells or dispenses to retail customers. See H.R. Rep. No. 100-795, at 401 (1988). The legislative history accompanying section 7704 clarifies that “a retail customer does not include a person who acquires the oil or gas for refining or processing, or partially refined or processed products thereof for further refining or processing, . . . [or a] utility providing power to customers.” See H. R. Rep. No. 100-1104, vol. 2, at 18 (1988) (Conf. Rep.). By contrast, “transporting refined petroleum products by truck to retail customers is not a qualifying activity.” Id. However, transportation includes bulk transportation, so long as the transportation is not to a place that sells or dispenses oil and gas (or oil and gas products) to retail customers. See S. Rep. No. 100-445, at 424 (1988).

    F. Marketing

    These proposed regulations define marketing as the activities undertaken to facilitate sale of minerals or natural resources, or products produced from processing and refining. Marketing may also include some additive blending into fuels provided to a customer's specification. The legislative history of section 7704 provides that marketing does not include activities and assets involved primarily in sales “to end users at the retail level.” S. Rep. No. 100-445, at 424 (1988). Therefore, marketing does not include retail sales (sales made in small quantities directly to end users). For example, gas station operations are not included in marketing for purposes of section 7704(d)(1)(E). Id. However, marketing includes bulk and wholesale sales made to end users. See, for example, H.R. Rep. 100-1104, at 18 (1988) (Conf. Rep.) (with respect to fertilizer) and incorporating in footnote 1, 133 Cong. Rec. 37957 (December 22, 1987) (statement of Sen. Bentsen with respect to propane).

    2. Intrinsic Activities

    The Treasury Department and the IRS believe that certain limited support activities intrinsic to section 7704(d)(1)(E) activities also give rise to qualifying income because the income is “derived from” the section 7704(d)(1)(E) activities. The proposed regulations set forth three requirements for a support activity to be intrinsic to section 7704(d)(1)(E) activities. An activity will qualify as an intrinsic activity only if the activity is specialized to support the section 7704(d)(1)(E) activity, is essential to the completion of the section 7704(d)(1)(E) activity, and requires the provision of significant services to support the section 7704(d)(1)(E) activity. If each of these requirements is met, the activity is an intrinsic activity, and any income received from the activity is qualifying income. The Treasury Department and IRS intend that intrinsic activities constitute active support of section 7704(d)(1)(E) activities, and not merely the supply of goods.

    A. Specialized

    An activity meets the first requirement of the intrinsic test if both the personnel performing the activity and any property used in the activity or sold to the customer performing the section 7704(d)(1)(E) activity are specialized. Personnel are specialized if they have received training unique to the mineral or natural resource industries that is of limited utility other than to perform or support a section 7704(d)(1)(E) activity. An activity cannot be an intrinsic activity without specialized service personnel because all intrinsic activities require the provision of significant services (as described in part 3.C of the Explanation of Provisions section of this Preamble). For example, catering services provided to employees at a drilling site would not give rise to qualifying income because catering services do not require skills (or equipment as explained below) limited to supporting a section 7704(d)(1)(E) activity. As such, catering services are not intrinsic activities and any income from those services is not qualifying income for purposes of section 7704(c).

    If an activity also involves the sale, provision, or use of property, then the property must qualify as specialized for the activity to be an intrinsic activity. The proposed regulations provide two alternative tests under which that property can qualify as specialized. Under the first test, property is specialized if it is used only in connection with section 7704(d)(1)(E) activities and has limited use outside of those activities. That property must also not be easily converted to a use other than performing or supporting a section 7704(d)(1)(E) activity. Whether property is easily converted is determined based on all facts and circumstances, including the cost to convert the property.

    Under the second test, property that can be used for purposes other than to perform or support a section 7704(d)(1)(E) activity will qualify as specialized to the extent that the property is used as an injectant to perform a section 7704(d)(1)(E) activity, and, as part of the activity, the partnership also collects and cleans, recycles, or otherwise disposes of the injectant after use in accordance with federal, state, or local regulations concerning waste products from mining or production activities. Injectants under this definition include, for example, water, lubricants, and sand used in connection with section 7704(d)(1)(E) activities.

    B. Essential

    An activity meets the second requirement of the intrinsic test if the activity is essential to a section 7704(d)(1)(E) activity. An activity is essential if it is necessary to (a) physically complete the section 7704(d)(1)(E) activity (including in a cost effective manner in order to make the activity economically viable), or (b) comply with federal, state or local law regulating the section 7704(d)(1)(E) activity. For example, water delivery and disposal services are essential when provided for use in fracturing because the water must be used to complete the drilling operations (a development activity under section 7704(d)(1)(E)) and because the water disposal services must be performed to comply with federal, state, or local law regulating drilling and fracturing. Legal, financial, consulting, accounting, insurance, and other similar services are not essential to a section 7704(d)(1)(E) activity because the connection to completion of the section 7704(d)(1)(E) activity is too attenuated.

    C. Significant Services

    An activity meets the third requirement of the intrinsic test if the activity includes the provision of significant services. A partnership provides significant services if its personnel have an ongoing or frequent presence at the site of the section 7704(d)(1)(E) activity and the activities of those personnel are necessary for the partnership to provide its services or to support the section 7704(d)(1)(E) activity. A partnership that provides the same services to multiple clients may satisfy this test by performing the activity through a rotating presence at multiple sites. For this purpose, determining whether services are ongoing or frequent is determined under all facts and circumstances, including recognized best practices in the relevant industry. The Treasury Department and the IRS request comments on whether and how this requirement could be set forth as an objective standard.

    In addition, the proposed regulations acknowledge that a qualifying activity in which the partnership engages could require extensive offsite services. Therefore, these proposed regulations provide that the services may be conducted offsite if the services are performed on an ongoing or frequent basis and offered exclusively for those engaged in one or more section 7704(d)(1)(E) activities. For example, monitoring services will satisfy the significant services requirement if the monitoring is done on an ongoing or frequent basis only to support persons engaged in one or more section 7704(d)(1)(E) activities.

    The proposed regulations also identify certain activities that do not qualify as significant services because they involve the manufacture and sale or temporary provision of a good. Thus, the design, construction, manufacturing, repair, maintenance, lease, rent, or temporary provision of assets is not taken into account when determining whether a partnership has provided significant services.

    Proposed Effective/Applicability Date and Transition Rules

    Except for rules concerning the Transition Period, these regulations are proposed to apply to income earned by a partnership in a taxable year beginning on or after the date these regulations are published as final regulations in the Federal Register. These regulations also provide for a Transition Period, which ends on the last day of the partnership's taxable year that includes the date that is ten years after the date that these regulations are published as final regulations in the Federal Register.

    The proposed regulations provide that a partnership may treat income from an activity as qualifying income during the Transition Period if the partnership received a private letter ruling from the IRS holding that income from the activity is qualifying income. In addition, a partnership may treat income from an activity as qualifying income during the Transition Period if, prior to May 6, 2015, the partnership was publicly traded, engaged in the activity, and treated the activity as giving rise to qualifying income under section 7704(d)(1)(E), and that income was qualifying income under the statute as reasonably interpreted prior to the issuance of these proposed regulations. In determining whether an interpretation was reasonable, the legislative history and interpretations applied by the IRS prior to the issuance of these proposed regulations are taken into account. An interpretation was not reasonable merely because a partnership had a reasonable basis for that position. With respect to an activity undertaken prior to May 6, 2015, no inference is intended that an activity that is not described in these proposed regulations as a qualifying activity did or did not produce qualifying income under the statute and legislative history.

    A partnership that is publicly traded and engages in an activity after May 6, 2015, but before the date these regulations are published as final regulations in the Federal Register may treat income from that activity as qualifying income during the Transition Period if the income from that activity is qualifying income under these proposed regulations.

    Special Analyses

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

    Comments and Requests for a Public Hearing

    Before these proposed regulations are adopted as final regulations, consideration will be given to any comments that are submitted timely to the IRS as prescribed in this preamble under the Addresses heading. The IRS and the Treasury Department request comments on all aspects of the proposed rules. All comments will be available at www.regulations.gov or upon request. A public hearing will be scheduled if requested in writing by any person that timely submits written comments. If a public hearing is scheduled, notice of the date, time, and place for the public hearing will be published in the Federal Register.

    Drafting Information

    The principal author of these proposed regulations is Caroline E. Hay, Office of the Associate Chief Counsel (Passthroughs and Special Industries). However, other personnel from the IRS and Treasury Department participated in their development.

    List of Subjects in 26 CFR Part 1

    Income taxes, Reporting and recordkeeping requirements.

    Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 1 is proposed to be amended as follows:

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

    26 U.S.C. 7805 * * *

    Par. 2. Section 1.7704-4 is added to read as follows:
    § 1.7704-4 Qualifying income—mineral and natural resources.

    (a) In general. For purposes of section 7704(d)(1)(E), qualifying income includes only income and gains from qualifying activities with respect to minerals or natural resources as defined in paragraph (b) of this section. For purposes of section 7704(d)(1)(E), qualifying activities include section 7704(d)(1)(E) activities (as described in paragraph (c) of this section) and intrinsic activities (as described in paragraph (d) of this section).

    (b) Mineral or natural resource. The term mineral or natural resource (including fertilizer, geothermal energy, and timber) means any product of a character with respect to which a deduction for depletion is allowable under section 611, except that such term does not include any product described in section 613(b)(7)(A) or (B) (soil, sod, dirt, turf, water, mosses, minerals from sea water, the air, or other similar inexhaustible sources). For purposes of this section, the term mineral or natural resource does not include industrial source carbon dioxide, fuels described in section 6426(b) through (e), any alcohol fuel defined in section 6426(b)(4)(A), or any biodiesel fuel as defined in section 40A(d)(1).

    (c) Section 7704(d)(1)(E) activities—(1) Definition. Section 7704(d)(1)(E) activities include the exploration, development, mining or production, processing, refining, transportation, or marketing of any mineral or natural resource as limited to those activities described in this paragraph (c) or as provided by the Commissioner by notice or in other forms of published guidance. No other activities qualify as section 7704(d)(1)(E) activities.

    (2) Exploration. An activity constitutes exploration if it is performed to ascertain the existence, location, extent, or quality of any deposit of mineral or natural resource before the beginning of the development stage of the natural deposit by:

    (i) Drilling an exploratory or stratigraphic type test well;

    (ii) Conducting drill stem and production flow tests to verify commerciality of the deposit;

    (iii) Conducting geological or geophysical surveys;

    (iv) Interpreting data obtained from geological or geophysical surveys; or

    (v) For minerals, testpitting, trenching, drilling, driving of exploration tunnels and adits, and similar types of activities described in Rev. Rul. 70-287 (1970-1 CB 146), (see § 601.601(d)(2)(ii)(b) of this chapter) if conducted prior to development activities with respect to the minerals.

    (3) Development. An activity constitutes development if it is performed to make accessible minerals or natural resources by:

    (i) Drilling wells to access deposits of mineral or natural resources;

    (ii) Constructing and installing drilling, production, or dual purpose platforms in marine locations, or any similar supporting structures necessary for extraordinary non-marine terrain (such as swamps or tundra);

    (iii) Completing wells, including by installing lease and well equipment, such as pumps, flow lines, separators, and storage tanks, so that wells are capable of producing oil and gas, and the production can be removed from the premises;

    (iv) Performing a development technique such as, for minerals, stripping, benching and terracing, dredging by dragline, stoping, and caving or room-and-pillar excavation, and for oil and natural gas, fracturing; or

    (vi) Constructing and installing gathering systems and custody transfer stations.

    (4) Mining or production. An activity constitutes mining or production if it is performed to extract minerals or other natural resources from the ground by:

    (i) Operating equipment to extract natural resources from mines and wells; or

    (ii) Operating equipment to convert raw mined products or raw well effluent to substances that can be readily transported or stored (for example, passing crude oil through mechanical separators to remove gas, placing crude oil in settling tanks to recover basic sediment and water, dehydrating crude oil, and operating heater-treaters that separate raw oil well effluent into crude oil, natural gas, and salt water).

    (5) Processing or refining—(i) In general. Except as otherwise provided in paragraph (c)(5) of this section, an activity is processing or refining if it is done to purify, separate, or eliminate impurities. For an activity to be treated as processing or refining for purposes of this section, the partnership's position that an activity is processing or refining for purposes of this section must be consistent with the partnership's designation of an appropriate Modified Accelerated Cost Recovery System (MACRS) class life for assets used in the activity in accordance with Rev. Rul. 87-56, 1987-2 CB 27 (see § 601.601(d)(2)(ii)(b) of this chapter). For example, for an activity to be processing or refining of crude oil under paragraph (c)(5)(iii) of this section, the assets used in that process must also have a MACRS class life of 13.3, Petroleum Refining. Unless otherwise provided in this paragraph (c)(5), an activity will not qualify as processing or refining if the activity causes a substantial physical or chemical change in a mineral or natural resource, or transforms the extracted mineral or natural resource into new or different mineral products or into manufactured products.

    (ii) Natural Gas. An activity constitutes processing of natural gas if it is performed to:

    (A) Purify natural gas, including by removal of oil or condensate, water, or non-hydrocarbon gases (including carbon dioxide, hydrogen sulfide, nitrogen, and helium);

    (B) Separate natural gas into its constituents which are normally recovered in a gaseous phase (methane and ethane) and those which are normally recovered in a liquid phase (propane, butane, pentane, and gas condensate); or

    (C) Convert methane in one integrated conversion into liquid fuels that are otherwise produced from petroleum.

    (iii) Petroleum—(A) Qualifying activities. An activity constitutes processing or refining of petroleum if the end products of these processes are not plastics or similar petroleum derivatives and the activity is performed to:

    (1) Physically separate crude oil into its component parts, including, but not limited to, naphtha, gasoline, kerosene, fuel oil, lubricating base oils, waxes and similar products;

    (2) Chemically convert the physically separated components if one or more of the products of the conversion are recombined with other physically separated components of crude oil in a manner that is necessary to the cost effective production of gasoline or other fuels (for example, gas oil converted to naphtha through a cracking process that is hydrotreated and combined into gasoline); or

    (3) Physically separate products created through activities described in paragraph (c)(5)(iii)(A)(1) or (2) of this section.

    (B) Non-qualifying activities. For purposes of this section, the following products are not obtained through processing of petroleum:

    (1) Heat, steam, or electricity produced by the refining processes;

    (2) Products that are obtained from third parties or produced onsite for use in the refinery, such as hydrogen, if excess amounts are sold; and

    (3) Any product that results from further chemical change of the product produced from the separation of the crude oil if it is not combined with other products separated from the crude oil (for example, production of petroleum coke from heavy (refinery) residuum qualifies, but any upgrading of petroleum coke (such as to anode-grade coke) does not qualify because it is further chemically changed).

    (iv) Ores and minerals. An activity constitutes processing or refining of ores and minerals if it meets the definition of mining processes under § 1.613-4(f)(1)(ii) or refining under § 1.613-4(g)(6)(iii). Generally, refining of ores and minerals is any activity that eliminates impurities or foreign matter from smelted or partially processed metallic and nonmetallic ores and minerals, as for example the refining of blister copper.

    (v) Timber. An activity constitutes processing of timber if it is performed to modify the physical form of timber, including by the application of heat or pressure to timber, without adding any foreign substances. Processing of timber does not include activities that add chemicals or other foreign substances to timber to manipulate its physical or chemical properties, such as using a digester to produce pulp. Products that result from timber processing include wood chips, sawdust, rough lumber, kiln-dried lumber, veneers, wood pellets, wood bark, and rough poles. Products that are not the result of timber processing include pulp, paper, paper products, treated lumber, oriented strand board/plywood, and treated poles.

    (vi) Fertilizer. [Reserved]

    (6) Transportation. Transportation is the movement of minerals or natural resources and products produced under paragraph (c)(4) or (5) of this section, including by pipeline, barge, rail, or truck, except for transportation (not including pipeline transportation) to a place that sells or dispenses to retail customers. Retail customers do not include a person who acquires oil or gas for refining or processing, or a utility. The following activities qualify as transportation—

    (i) Providing storage services;

    (ii) Terminalling;

    (iii) Operating gathering systems and custody transfer stations;

    (iv) Operating pipelines, barges, rail, or trucks; and

    (v) Construction of a pipeline only to the extent that a pipe is run to connect a producer or refiner to a preexisting interstate or intrastate line owned by the publicly traded partnership (interconnect agreements).

    (7) Marketing. An activity constitutes marketing if it is performed to facilitate sale of minerals or natural resources and products produced under paragraph (c)(4) or (5) of this section, including blending additives into fuels. Marketing does not include activities and assets involved primarily in retail sales (sales made in small quantities directly to end users), which includes, but is not limited to, operation of gasoline service stations, home heating oil delivery services, and local gas delivery services.

    (d) Intrinsic activities—(1) General requirements. An activity is an intrinsic activity only if the activity is specialized to support a section 7704(d)(1)(E) activity, is essential to the completion of the section 7704(d)(1)(E) activity, and requires the provision of significant services to support the section 7704(d)(1)(E) activity. Whether an activity is an intrinsic activity is determined on an activity-by-activity basis.

    (2) Specialization. An activity is a specialized activity if:

    (i) The partnership provides personnel to perform or support a section 7704(d)(1)(E) activity and those personnel have received training unique to the mineral or natural resource industry that is of limited utility other than to perform or support a section 7704(d)(1)(E) activity; and

    (ii) To the extent that the activity includes the sale, provision, or use of property, either:

    (A) The property is primarily tangible property that is dedicated to, and has limited utility outside of, section 7704(d)(1)(E) activities and is not easily converted (based on all the facts and circumstances, including the cost to convert the property) to another use other than supporting or performing the section 7704(d)(1)(E) activities; or

    (B) The property is used as an injectant to perform a section 7704(d)(1)(E) activity that is also commonly used outside of section 7704(d)(1)(E) activities (such as water, lubricants, and sand) and, as part of the activity, the partnership also collects and cleans, recycles, or otherwise disposes of the injectant after use in accordance with federal, state, or local regulations concerning waste products from mining or production activities.

    (3) Essential—(i) An activity is essential to the section 7704(d)(1)(E) activity if it is required to—

    (A) Physically complete a section 7704(d)(1)(E) activity (including in a cost effective manner, such as by making the activity economically viable), or

    (B) Comply with federal, state, or local law regulating the section 7704(d)(1)(E) activity.

    (ii) Legal, financial, consulting, accounting, insurance, and other similar services do not qualify as essential to a section 7704(d)(1)(E) activity.

    (4) Significant services—(i) An activity requires significant services to support the section 7704(d)(1)(E) activity if it must be conducted on an ongoing or frequent basis by the partnership's personnel at the site or sites of the section 7704(d)(1)(E) activities. Alternatively, those services may be conducted offsite if the services are performed on an ongoing or frequent basis and are offered exclusively to those engaged in one or more section 7704(d)(1)(E) activities. Whether services are conducted on an ongoing or frequent basis is determined based on all the facts and circumstances, including recognized best practices in the relevant industry.

    (ii) Partnership personnel perform significant services only if those services are necessary for the partnership to perform an activity that is essential to the section 7704(d)(1)(E) activity, or to support the section 7704(d)(1)(E) activity.

    (iii) An activity does not constitute significant services with respect to a section 7704(d)(1)(E) activity if the activity principally involves the design, construction, manufacturing, repair, maintenance, lease, rent, or temporary provision of property.

    (e) Examples. The following examples illustrate the provisions of this section:

    Example 1.

    Petrochemical products sourced from an oil and gas well. (i) Z, a publicly traded partnership, chemically converts a mixture of ethane and propane (obtained from physical separation of natural gas) into ethylene, propylene, and other gases through use of a steam cracker.

    (ii) Z's activities chemically convert physically separated components of natural gas. The chemical conversion of physically separated components of natural gas (ethane and propane) is not an activity that gives rise to qualifying income under paragraph (c)(5)(ii) of this section. Therefore, the income Z receives from the sale of ethylene and propylene is not qualifying income for purposes of section 7704(d)(1)(E).

    Example 2.

    Petroleum streams chemically converted into refinery grade olefins byproducts. (i) Y, a publicly traded partnership, owns a petroleum refinery. Y classifies Y's assets used in the activity described in this paragraph under MACRS class 13.3 (Petroleum Refining). The refinery physically separates crude oil, obtaining heavy gas oil. The refinery then uses a catalytic cracking unit to chemically convert the heavy gas oil into a liquid stream suitable for gasoline blending and a gas stream containing ethane, ethylene, and other gases. The refinery also further physically separates the gas steam without additional chemical change, resulting in refinery grade ethylene. Y sells the ethylene to a third party.

    (ii) Y's activities are performed to physically separate crude oil into its component parts and to chemically convert the separated heavy gas oil into a liquid stream for recombining with other physically separated components of crude oil. Y has classified its assets used in that activity under an appropriate MACRS code pursuant to paragraph (c)(5)(i) of this section. Income Y receives from the liquid stream is qualifying income pursuant to paragraph (c)(5)(iii)(A)(2) of this section. Y's further physical separation of the gas stream produces ethane, ethylene, and other gases. Pursuant to paragraph (c)(5)(iii)(A)(3), income Y receives from the physically separated gases is qualifying income because the heavy gas oil was chemically converted as part of a processing activity pursuant to paragraph (c)(5)(iii)(A)(2) of this section.

    Example 3.

    Processing methane gas into synthetic fuels through chemical change. (i) Y, a publicly traded partnership, chemically converts methane into methanol and synthesis gas, and further chemically converts those products into gasoline and diesel fuel. Y receives income from sales of gasoline and diesel created during the conversion processes, as well as from sales of methanol.

    (ii) With respect to the production of gasoline or diesel, Y is engaged in the processing of natural gas as provided in paragraph (c)(5)(ii)(C) of this section. The production and sale of methanol, an intermediate product in the conversion process, is not a section 7704(d)(1)(E) activity because methanol is not a liquid fuel otherwise produced from the processing of crude oil.

    Example 4.

    Delivery of refined products. (i) X, a publicly traded partnership, sells diesel and lubricating oils to a government entity at wholesale prices and delivers those goods in bulk.

    (ii) X's sale of refined products to the government entity is a section 7704(d)(1)(E) activity because it is a bulk transportation and sale as described in paragraphs (c)(6) and (7) of this section and is not a retail sale.

    Example 5.

    Delivery of water. (i) X, a publicly traded partnership, owns interstate and intrastate natural gas pipelines. X built a water delivery pipeline along the existing right of way for its natural gas pipeline to deliver water to A for use in A's fracturing activity. A uses the delivered water in fracturing to develop A's natural gas reserve in a cost-efficient manner. X earns income for transporting natural gas in the pipelines and for delivery of water.

    (ii) X's income from transporting natural gas in its interstate and intrastate pipelines is qualifying income for purposes of section 7704(c) because transportation of natural gas is a section 7704(d)(1)(E) activity as provided in paragraph (c)(6) of this section.

    (iii) The income X obtains from its water delivery services is not a section 7704(d)(1)(E) activity as provided in paragraph (c) of this section. However, because X's water delivery supports A's development of natural gas, a section 7704(d)(1)(E) activity, X's income from water delivery services may be qualifying income for purposes of section 7704(c) if the water delivery service is an intrinsic activity as provided in paragraph (d) of this section. An activity is an intrinsic activity if the activity is specialized to narrowly support the section 7704(d)(1)(E) activity, is essential to the completion of the section 7704(d)(1)(E) activity, and requires the provision of significant services to support the section 7704(d)(1)(E) activity. Under paragraph (d)(2)(ii)(B) of this section, the provision of water used in a section 7704(d)(1)(E) activity is specialized to that activity only if the partnership also collects and cleans, recycles, or otherwise disposes of the water after use in accordance with federal, state, or local regulations concerning waste products from mining or production activities. Because X does not collect and clean, recycle, or otherwise dispose of the delivered water after use, X's water delivery activities are not specialized to narrowly support the section 7704(d)(1)(E) activity. Thus, X's water delivery is not an intrinsic activity. Accordingly, X's income from the delivery of water is not qualifying income for purposes of section 7704(c).

    Example 6.

    Delivery of water and recovery and recycling of flowback. (i) Assume the same facts as in Example 5, except that X also collects and treats flowback at the drilling site in accordance with state regulations as part of its water delivery services and transports the treated flowback away from the site. In connection with these services, X provides personnel to perform these services on an ongoing or frequent basis that is consistent with best industry practices. X has provided these personnel with specialized training regarding the recovery and recycling of flowback produced during the development of natural gas, and this training is of limited utility other than to perform or support the development of natural gas.

    (ii) The income X obtains from its water delivery services is not a section 7704(d)(1)(E) activity as provided in paragraph (d) of this section. However, because X's water delivery supports A's development of natural gas, a section 7704(d)(1)(E) activity, X's income from water delivery services may be qualifying income for purposes of section 7704(c) if the water delivery service is an intrinsic activity as provided in paragraph (d) of this section.

    (iii) An activity is an intrinsic activity if the activity is specialized to narrowly support the section 7704(d)(1)(E) activity, is essential to the completion of the section 7704(d)(1)(E) activity, and requires the provision of significant services to support the section 7704(d)(1)(E) activity. Under paragraph (d)(2)(ii)(B) of this section, the provision of water used in a section 7704(d)(1)(E) activity is specialized to that activity only if the partnership also collects and cleans, recycles, or otherwise disposes of the water after use in accordance with federal, state, or local regulations concerning waste products from mining or production activities. X's provision of personnel is specialized because those personnel received training regarding the recovery and recycling of flowback produced during the development of natural gas, and this training is of limited utility other than to perform or support the development of natural gas. The provision of water is also specialized because water is an injectant used to perform a section 7704(d)(1)(E) activity, and X also collects and treats flowback in accordance with state regulations as part of its water delivery services. Therefore, X meets the specialized requirement. The delivery of water is essential to support A's development activity because the water is needed for use in fracturing to develop A's natural gas reserve in a cost-efficient manner. Finally, the water delivery and recovery and recycling activities require significant services to support the development activity because X's personnel provide services necessary for the partnership to perform the support activity at the development site on an ongoing or frequent basis that is consistent with best industry practices. Because X's delivery of water and X's collection, transport, and treatment of flowback is a specialized activity, is essential to the completion of a section 7704(d)(1)(E) activity, and requires significant services, the delivery of water and the transport and treatment of flowback is an intrinsic activity. X's income from the delivery of water and the collection, treatment, and transport of flowback is qualifying income for purposes of section 7704(c).

    (f) Proposed Effective/Applicability Date and Transition Rule—(i) Except as provided in paragraph (f)(ii) of this section, this section is proposed to apply to income earned by a partnership in a taxable year beginning on or after the date these regulations are published as final regulations in the Federal Register. Paragraph (f)(ii) of this section applies during the Transition Period, which ends on the last day of the partnership's taxable year that includes the date that is ten years after the date that these regulations are published as final regulations in the Federal Register.

    (ii) A partnership may treat income from an activity as qualifying income during the Transition Period if:

    (A) The partnership received a private letter ruling from the IRS holding that the income from that activity is qualifying income;

    (B) Prior to May 6, 2015, the partnership was publicly traded, engaged in the activity, and treated the activity as giving rise to qualifying income under section 7704(d)(1)(E), and that income was qualifying income under the statute as reasonably interpreted prior to the issuance of these proposed regulations; or

    (C) The partnership is publicly traded and engages in the activity after May 6, 2015 but before the date these regulations are published as final regulations in the Federal Register, and the income from that activity is qualifying income under these proposed regulations.

    John Dalrymple, Deputy Commissioner for Services and Enforcement.
    [FR Doc. 2015-10592 Filed 5-5-15; 8:45 am] BILLING CODE 4830-01-P
    FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 20 [PS Docket No. 08-51; FCC 15-43] 911 Call-Forwarding Requirements for Non-Service-Initialized Phones AGENCY:

    Federal Communications Commission.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Commission seeks comment on whether the obligation to transmit 911 calls from non-service-initialized (NSI) devices still serves an important public safety objective. Because the cumbersome call validation methods extant when the rules were adopted in the late 1990s are no longer in use, and because of the current ubiquity of low-cost options for wireless services, the Commission proposes to sunset the obligation to transmit 911 calls from an NSI device within six month, accompanied by consumer outreach and education. Public safety representatives have indicated that NSI devices are frequently used to make fraudulent or otherwise non-emergency calls, causing a significant waste of limited public safety resources.

    DATES:

    Submit comments on or before June 5, 2015 and reply comments by July 6, 2015. Written comments on the Paperwork Reduction Act proposed information collection requirements must be submitted by the public, Office of Management and Budget (OMB), and other interested parties on or before July 6, 2015.

    ADDRESSES:

    Submit comments to the Federal Communications Commission, 445 12th Street SW., Washington, DC 20554. Comments may be submitted electronically through the Federal Communications Commission's Web site: http://apps.fcc.gov/ecfs//. In addition to filing comments with the Secretary, a copy of any comments on the Paperwork Reduction Act information collection requirements contained herein should be submitted to the Federal Communications Commission via email to [email protected] For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

    FOR FURTHER INFORMATION CONTACT:

    Michael E. Connelly, Attorney Advisor, Public Safety and Homeland Security Bureau, (202) 418-0132 or [email protected] For additional information concerning the Paperwork Reduction Act information collection requirements contained in this document, contact Nicole Ongele, (202) 418-2991, or send an email to [email protected]

    SUPPLEMENTARY INFORMATION:

    This is a summary of the Commission's Notice of Proposed Rulemaking in PS Docket No. 08-51, released on April 1, 2015. The full text of this document is available for public inspection during regular business hours in the FCC Reference Center, Room CY-A257, 445 12th Street SW., Washington, DC 20554, or online at http://www.fcc.gov/document/fcc-seeks-comment-911-call-forwarding-requirements-nsi-phones. Parties may file comments and reply comments in response to this Notice of Proposed Rulemaking (NPRM) on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS).

    Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://apps.fcc.gov/ecfs//.

    Paper Filers: Parties that choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All paper filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission. All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

    Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

    U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington, DC 20554.

    Summary of the Notice of Proposed Rulemaking I. Introduction

    1. The Commission has a longstanding commitment to ensuring access to 911 for the American public. In support of this objective, the Commission's rules require commercial mobile radio service (CMRS) providers subject to the 911 rules to transmit all wireless 911 calls without respect to their call validation process. Thus, the rule requires providers to transmit both 911 calls originating from customers that have contracts with CMRS providers and calls originating from “non-service-initialized” (NSI) devices to Public Safety Answering Points (PSAPs). An NSI device is a mobile device for which there is no valid service contract with any CMRS provider. As such, NSI devices have no associated subscriber name and address, and do not provide Automatic Number Identification (ANI) or call-back features. As a result, when a caller uses a NSI device to call 911, the PSAP typically cannot identify the caller.

    2. In this Notice of Proposed Rulemaking (NPRM), the Commission seeks comment on whether the obligation to transmit 911 calls from NSI devices continues to serve an important public safety objective. A primary rationale for the initial adoption of the Commission's rule in the late 1990s was to expedite wireless calls to 911 that would otherwise have been delayed due to lengthy call validation processes for unidentified callers that were commonly used at the time. In the nearly two decades since the rule was adopted, however, the call validation methods of concern to the Commission are no longer in use. Moreover, the availability of low-cost options for wireless services has increased. These trends suggest that the NSI component of the requirement is no longer necessary to ensure that wireless callers have continued access to emergency services. Further, the inability to identify the caller creates considerable difficulty for PSAPs when a caller uses an NSI device to place fraudulent calls. Public safety representatives have indicated that NSI devices are frequently used to make such calls, causing a significant waste of limited public safety resources. For these reasons, the Commission proposes to sunset the NSI component of the rule after a six-month transition period that will allow for public outreach and education. The Commission also seeks comment on alternative approaches to addressing the issue of fraudulent calls from NSI devices.

    II. Background A. Adoption of the NSI Device Requirement

    3. In 1996, the Commission issued its E911 First Report and Order, which required covered carriers (now defined as CMRS providers) to transmit all 911 calls from wireless mobile handsets that transmit a code identification, without requiring any user or call validation or similar procedure. The Commission noted that user validation procedures, such as requiring a caller to provide credit card information, could be long and cumbersome, and that applying these procedures in emergencies could thus cause a dangerous delay or interruption of the 911 assistance process and, effectively, the denial of assistance in some cases. The Commission also required covered carriers to comply with PSAP requests for transmission of 911 calls made without code identification. Even at the time of adoption of the NSI requirement, however, the Commission recognized that there were disadvantages associated with requiring all 911 calls to be processed without regard to evidence that a call is emanating from an authorized user of some CMRS provider. The Commission acknowledged that placing 911 calls from handsets without a code identification has significant drawbacks, including the fact that ANI and call back features may not be usable, and hoax and false alarm calls may be facilitated. The Commission concluded, however, that public safety organizations are in the best position to determine whether acceptance of calls without code identification would help or hinder their efforts.

    4. In response to several petitions for reconsideration of the E911 First Report and Order, the Commission issued a stay of its rules and sought additional comment. On the basis of the updated record on reconsideration, in 1997 the Commission released its E911 First Memorandum Opinion and Order. In that order, the Commission determined that without applying validation procedures, then-present technology could not distinguish between code-identified and non-code-identified handsets. Accordingly, the E911 First Memorandum Opinion and Order required carriers to forward all 911 calls whether or not they transmit a code identification. The Commission also found that PSAPs should be able to screen out or identify many types of fraudulent calls or those where call back is not possible and also expressed the hope that PSAPs could implement call back technology for NSI devices.

    5. Since the adoption of the NSI requirement, the Commission has been aware of the continuing concern regarding fraudulent calls and the lack of call-back capabilities associated with NSI devices, and has taken various measures to address this issue. In 2002, the Commission required NSI handsets donated through carrier-sponsored programs, as well as newly manufactured “911-only” devices, to be programmed with the number 123-456-7890 as the “telephone number,” in order to alert PSAPs that call-back features were unavailable. The Commission also required that carriers complete any network programming necessary to deliver this programmed number to PSAPs. Later that year, the Commission clarified that its rules requiring carriers to forward all 911 calls to PSAPs did not preclude carriers from blocking fraudulent 911 calls from non-service initialized phones pursuant to applicable state and local law enforcement procedures. The Commission added that where a PSAP has identified a handset that is transmitting fraudulent 911 calls and makes a request to a wireless carrier to block 911 calls from that handset in accordance with applicable state and local law enforcement procedures, the carrier's compliance does not constitute a violation of Section 20.18(b).

    6. In its subsequent E911 Second Memorandum Opinion and Order, the Commission modified its rules to require that carrier-donated handsets and newly manufactured 911-only devices be programmed with the number “911,” followed by seven digits from the handset's unique identifier, such as the Electronic Serial Number (ESN) or International Mobile Station Equipment Identity (IMEI) (911+ESN/IMEI). The Commission took this action to facilitate identification of individual NSI devices used to make fraudulent or harassing calls, finding it “highly probable” that this form of identification would enable a PSAP to identify a suspected device and work with carriers and law enforcement to trace it and block further harassing calls from the device. The Commission further stated that it would continue monitoring the nature and extent of problems associated with 911 service for NSI devices.

    B. Notice of Inquiry

    7. In February 2008, a coalition of nine public safety organizations, including the National Emergency Number Association (NENA) and the Association of Public-Safety Communications Officials (APCO), and a software development firm (Petitioners), filed a petition for notice of inquiry (Petition) to address the problem of non-emergency calls placed to 911 by NSI devices. The Petition contended that while the E911 Second Memorandum Opinion and Order achieved the goal of helping PSAPs identify when 911 calls are from NSI devices, such calls continue to create severe problems for PSAPs. The Petition asserted that only a very small minority of the 911 calls from NSI devices were made to report actual emergencies, and that non-emergency NSI calls waste the limited and precious resources of the PSAPs and interfere with PSAPs' ability to answer emergency calls, as do subsequent efforts to locate or prosecute the callers.

    8. The Petition also asserted that when PSAPs and other authorities requested that CMRS providers block harassing 911 calls from NSI devices, the providers had declined, citing technical and legal concerns related to complying with such requests. Accordingly, the Petition requested that the Commission provide further clarification and guidance on this blocking option to stop harassing and fraudulent 911 calls from NSI devices. The Petition also asked the Commission to consider other options to address fraudulent calls from NSI devices, including identifying further call-back capabilities for NSI devices, the elimination of call-forwarding requirements for NSI devices, and/or requiring CMRS providers' donation programs to provide service-initialized devices. In the alternative, the Petition asked the Commission to seek comment on other solutions.

    9. On April 2008, the Commission granted the Petition and issued a Notice of Inquiry to enhance its understanding of the problems created by non-emergency 911 calls made from NSI devices and to explore potential solutions. In the Notice of Inquiry, the Commission requested comment on three specific areas: (1) The nature and extent of fraudulent 911 calls made from NSI devices; (2) concerns with blocking NSI devices used to make fraudulent 911 calls, and suggestions for making this a more viable option for CMRS providers; and (3) other possible solutions to the problem of fraudulent 911 calls from NSI devices. In response to the Notice of Inquiry, the Commission received comments from public safety representatives at state, county, and local government levels in twenty-one states, as well as comments from CMRS providers, third-party vendors, and others.

    C. 2013 Public Notice

    10. In their comments to the Notice of Inquiry, the Petitioners, including NENA, argued in favor of retaining the NSI call-forwarding requirement on the grounds that the public relied on the fact that NSI devices are 911-capable and that a significant number of calls to 911 from NSI devices are legitimate. However, in an ex parte filing submitted in 2013, NENA revised its view, stating that it now supported eliminating the 911 call-forwarding requirement, and that there was now a “consensus view” that requiring 911 call forwarding from NSI devices does more harm than good. In light of NENA's revised view on the necessity of retaining the 911 call-forwarding requirement, as well as the passage of time since the filing of comments in response to the Notice of Inquiry, in March 2013 the Commission released a public notice seeking to refresh the record on the foregoing issues (2013 PN). In response to the 2013 PN, the Commission received six comments from public safety entities and one from a CMRS provider.

    III. Discussion of Proposed Sunsetting of the Requirement To Transmit 911 Calls From NSI Devices

    11. The record received in response to the Notice of Inquiry and 2013 PN has helped to further define and document the problem of fraudulent 911 calls placed by users of NSI devices. As discussed below, the problem remains acute. At the same time, the evolution of the record and changes in wireless service offerings, including the expanded availability of low-cost wireless services, suggest there is now significantly less need for the NSI rule then when it was adopted in 1996. Accordingly, in this NPRM we propose to sunset the NSI rule after a six-month transition and outreach period. During the transition period, we would partner with industry and public interest organizations to educate consumers about the transition and the availability of alternative means to call 911. We seek comment on this proposal in the discussion below. We also seek comment on the relative costs and benefits of other potential approaches and solutions to the problem, including blocking calls from NSI devices.

    A. Public Policy Analysis and Comparative Benefits 1. The Extent of Fraudulent 911 Calls From NSI Devices and Associated Costs to Public Safety

    12. The record to date shows that fraudulent 911 calls from NSI devices continue to pose a major problem for PSAPs, imposing substantial costs while reducing their ability to respond to legitimate 911 calls. In the Notice of Inquiry in 2008, the Commission cited data from the Petitioners, generated in late 2006 from jurisdictions in four states, showing that between 3.5% and less than 1% of 911 calls placed by NSI devices were legitimate calls relating to actual emergencies. The Notice of Inquiry asked commenters to provide more recent and expansive data from the same and other jurisdictions, and also welcomed further evidence illustrating the extent of the problem, such as statements from knowledgeable parties and media reports. In response, public safety commenters provided additional evidence that the vast majority of 911 calls from NSI devices were not actual calls for help, and that these calls both wasted the limited resources of PSAPs and interfered with their ability to respond to legitimate emergency calls. For example, Indiana estimated that over 90% of all NSI calls received were not legitimate, while North Carolina similarly reported that between May 15, 2008 and June 15, 2008, PSAPs across the state received 159,129 calls from NSI devices, of which 132,885, or 83.51%, were non-emergency calls, and an additional 11,395, or 7.16%, were “malicious” non-emergency calls. Amelia County, Virginia also stated that NSI devices were the biggest problem we have with the E911 system, and that, at times, they had been inundated with phone calls from these phones with the only purpose being to harass the call takers/dispatchers. Washington State likewise indicated that by far, the majority of calls to 911 from NSI sets did not appear to be legitimate emergencies. Moreover, Washington estimated that reported NSI problems were very likely an understatement, due to lack of time and resources of PSAPs to respond to the Notice of Inquiry. Other public safety commenters reported similar patterns of frequent and recurring non-emergency calls from NSI devices.

    13. Subsequent to the close of the Notice of Inquiry comment period, the Commission continued to receive evidence that fraudulent 911 calls from NSI devices remain a large problem for PSAPs and other public safety entities. Comments received in response to the 2013 PN also indicate that the problem is continuing. For example, Tennessee states that during a three-month period in 2008, of over 10,000 NSI calls only 188 were valid emergencies. Sonoma County, California indicates that between April 2011 and April 2013 only approximately 8% of calls from NSI devices were to report an emergency or crime. Peoria, Illinois similarly asserts that it got numerous calls from NSI phones that were used to harass the 9-1-1 telecommunicators and pump as many as 25 calls per day into Peoria's system, while few if any actual 9-1-1 calls came from these types of phones. Media reports also indicate that this is a serious and continuing problem.

    14. The Commission seeks comment and updated data regarding the degree to which the issue of fraudulent calls from NSI devices has continued since the 2013 PN comments were filed, as well as any other data that will help clarify the extent of the problem. Have changes in mobile device technology or design had any impact on the overall numbers of fraudulent NSI 911 calls? Has the increased proliferation and use of smartphones added to or reduced the problem, and if so, how? What technological advancements, if any, might increase the ability to trace back individual NSI callers and thereby deter fraudulent calls?

    15. The Commission also seeks comment on the percentage of fraudulent 911 calls coming from particular types of NSI devices or subsets of NSI device users. Several commenters suggested that a disproportionate number of fraudulent 911 calls come from a relatively small subset of NSI devices. California, for example, stated that between October 1, 2007 and May 15, 2008, PSAPs across the state reported 266 active repetitive callers who placed over 77,000 calls to 911, mainly using NSI devices. Of the 266 callers identified, 85 had placed 200 or more calls, and eight callers had made more than 1,000 calls. Other commenters noted that such calling patterns were often related to the accessibility of NSI devices to minors. For example, Petitioners stated that donated phones appear to be only a small portion of the problem, with the bulk of troublesome devices being old equipment no longer in use, often given to children to play with. Is data available regarding the percentage of fraudulent NSI calls that come from minors? Are there other categories of NSI devices that are disproportionately associated with fraudulent calls? For example, how frequently do fraudulent calls originate from NSI devices that appear to have been purchased by individuals specifically for the purpose of placing such fraudulent calls (e.g., devices purchased on auction sites or at pawn shops)?

    16. Some public safety commenters have also argued that the NSI rule exposes PSAPs to the risk of coordinated efforts to overload or impair their operations. Clinton County, Illinois, for example, cited the possibility of a group of individuals perpetrating a wireless denial-of-service by placing large amounts of calls to 9-1-1 from NSI phones, with the potential of jamming or at the very least severely impairing the operations of the 9-1-1 system. Accordingly, the Commission seeks comment on the extent to which NSI devices could be used in a coordinated manner to deny 911 service.

    17. Finally, the Commission seeks further comment regarding the costs that fraudulent NSI calls to 911 continue to impose on public safety and on consumers. For example, in response to the Notice of Inquiry, Kentucky indicated that the time taken away from real emergency calls to deal with calls from NSI devices seriously threatens the safety of any citizen in true need of service. Amelia County, Virginia similarly stated that there have been times when it has been totally inundated with calls from NSI devices. Tennessee notes how calls from a single child in one night nearly immobilized the call center's ability to receive actual emergency calls. Spokane County, Washington noted receiving 911 calls from a non-initialized cellular phone that was an open line and therefore tied up one of our 911 trunks and made it unavailable for emergency calls. Laredo, Texas cited bomb threats made from NSI phones which, when they cannot be identified with absolute certainty as a hoax, require deployment of response agencies to the alleged target. The Commission asks commenters to provide instances of fraudulent NSI calls delaying the ability of public safety dispatchers to send help to callers in distress or otherwise negatively impacting the ability of first responders to respond to actual emergencies, and seeks examples of fraudulent NSI calls impeding public safety, such as whether prison inmates have used the 911-calling capability of NSI devices to harass PSAPs or to circumvent call blocking or managed access technologies designed to deter contraband cellphone use from inside prison facilities. In all of the above examples, the Commission seeks cost estimates of the losses—including financial or human capital resources—that PSAPs have incurred due to fraudulent calls.

    2. Decreasing Benefits of the NSI Rule

    18. At the same time that the NSI requirement imposes costs on public safety resources—by diverting much-needed resources from legitimate emergencies—the record suggests that the benefits of the NSI rule are diminishing and the need for the rule is decreasing. The Commission seeks comment on whether this is the case. For example, several commenters pointed out that service-initialized devices have become far more ubiquitous and inexpensive, as compared to when the Commission originally implemented the NSI rule, thereby decreasing public reliance on the ability of NSI devices to call 911. Washington State, for instance, noted that when the NSI rule was adopted, there were few opportunities for a customer to acquire a wireless device other than by signing a relatively expensive long-term contract. Thus, while the rule originally ensured access to 911-service for segments of the population that could not afford a long-term wireless subscription, Washington contended that service-initialized devices are now sufficiently ubiquitous and affordable to render the rule unnecessary. CTIA likewise indicated that wireless device prices in the U.S. keep dropping; since 2006, wireless CPI has fallen 8.0%, even as the CPI for all items has increased 16.7%. In this regard, the Commission notes that the Bureau of Labor Statistics' Wireless Price Index shows that the effective monthly cost of wireless service to consumers has fallen by more than 40% since December 1997. There has also been a proliferation of pre-paid devices since the Commission promulgated the NSI rule. For example, CTIA reported that 76.4 million consumers had prepaid plans in 2012, up from 71.7 million in 2011.

    19. Several commenters have also noted the potential of Lifeline-supported wireless services to provide a sufficient alternative to NSI phones. Accordingly, the Commission seeks comment on whether the increasing ubiquity and decreasing cost of service-initialized devices obviates the need for the NSI rule. Does the increased availability and use of pre-paid services provide a sufficient alternative?

    20. Many commenters also referenced a decrease in NSI handset donation programs. For example, NENA stated that most charities and domestic violence advocates have abandoned the practice of distributing NSI devices. APCO similarly indicated its understanding that current programs for at-risk individuals only distribute handsets that have at least limited carrier-subscription status and are `service initialized.' This also seems to indicate a decreasing need for the NSI rule due to fewer NSI devices in circulation.

    21. Two public safety commenters (King County, Washington, and Livingston County, New York, Sherriff's Department) also argued that eliminating the NSI requirement would eliminate false expectations among NSI device users who are unaware that NSI devices do not provide 911 call-back capability or Phase II location information. Other commenters, however, argued that the public has come to rely on the fact that NSI devices are 911-capable, and that eliminating the call-forwarding requirement could lead to tragic results given this public reliance. CTIA, for example, stated that the public now has a reasonable expectation that all wireless 911 calls will terminate at a PSAP. Likewise, the Petitioners noted that they while they were sympathetic to those calling for an outright FCC reversal of current rule, they could not support such a request at this time because there remain a significant number of legitimate 9-1-1 calls from NSI devices. California noted that calls from NSI phones have saved many lives, and Maryland indicated that 30% of calls to 911 from NSI handsets were legitimate in Montgomery County during the one-month period studied in 2008. Vermont also questions the availability of low-cost service-initialized devices, and adds that it is puzzled by the comment that calls on these devices do not include location information, as its review identified a high percentage of calls from NSI devices that arrive with Phase II location information.

    22. Accordingly, the Commission seeks comment on the extent to which the public, especially lower-income populations, the elderly, and other vulnerable segments of society, still rely on the use of NSI devices to seek emergency assistance. Has such reliance decreased, increased, or remained the same? Would consumers who presently use NSI devices to call 911 be able to effectively utilize other means of accessing 911? To what extent are “911-only” wireless handsets that rely on the NSI rule to enable a caller to reach a PSAP in use today? Are CMRS providers or third parties continuing to support NSI phone donation programs, and if so, are figures available for the number of phone donations within the last five years?

    B. Sunset of the NSI Requirement After a Reasonable Transition Period

    23. Background. In the E911 Second Report and Order, the Commission declined to eliminate the 911 call-forwarding requirement for NSI devices because abolishing the requirement at this stage would restrict basic 911 service and result in the inability of many non-initialized wireless phone users to reach help in the event of an emergency. However, in the subsequent Notice of Inquiry, the Commission noted that the evidence suggested that NSI devices were the source of an overwhelming number of fraudulent 911 calls and sought comment regarding whether it should eliminate the NSI requirement. In response to the Notice of Inquiry, a significant number of public safety commenters advocated for elimination of the rule. Washington, for example, asserted that there is no justification in retaining the rules permitting calls to 911 from non-initialized handsets; more recently, NENA stated that there is now a consensus view that the promotion of NSI devices does more harm than good.

    24. Accordingly, the 2013 PN sought comment, in particular, on whether other interested parties agree or disagree with NENA's view that the Commission should consider phasing out the call-forwarding requirement as it applies to NSI devices. The subsequent record indicates that APCO now also agrees that the FCC should eliminate the requirement that wireless carriers forward to PSAPs 9-1-1 calls from NSI handsets, as do some other public safety commenters.

    25. At the same time, some commenters continue to advocate retention of the NSI requirement, arguing that the public has come to rely on the fact that NSI devices are 911-capable, and that given this public reliance, eliminating the call-forwarding requirement could lead to tragic results.

    26. Discussion. The Commission believes that the concerns that led the Commission to adopt the NSI rule in 1996, and to retain it twelve years ago, are less relevant today, and that it is now in the public interest to sunset the requirement. The record suggests that fraudulent calls to 911 from NSI devices constitute a large and continuing drain on public safety resources and that the problem is not abating. Moreover, it appears there is now less public need for the NSI rule than at the time the Commission implemented it. Indeed, while the Commission implemented the NSI rule in large part at the urging of public safety entities, including NENA and APCO, both of these entities now favor elimination of the rule.

    27. Additionally, impending technological changes in carrier networks are likely to make the NSI call-forwarding rule less effective in protecting consumers while increasing the cost of implementation. As carriers migrate their networks away from legacy 2G technology, 2G-only NSI handsets will no longer be technically capable of supporting 911 call-forwarding. If we retain the NSI rule, this technological shift is likely to create confusion among the very consumers that have retained older-generation NSI handsets for their 911 capability. Moreover, retaining the rule will impose added costs on carriers to implement NSI call-forwarding capability in 3G and 4G networks. While the Commission recognizes that public safety interests are driven by more than economic considerations, it believes that avoiding these added costs by sunsetting the rule will have significant net cost benefits for carriers, in addition to eliminating the burden of fraudulent 911 calls on first responders. Conversely, the Commission believes that any cost to carriers associated with removing NSI call-forwarding capability from their networks will be relatively minor. For these reasons, the Commission believes that the costs of retaining the NSI rule appear to outweigh the benefits, and thus proposes to sunset the NSI rule after a six-month transition period.

    28. Based on the comments advocating for elimination of the rule, the Commission believes that a uniform, nationwide deadline to sunset the NSI requirement would best address the concerns that have been raised in the record regarding the prevalence of fraudulent calls from NSI devices. A uniform sunset date would provide the greatest certainty to the public, as well as to PSAPs and CMRS providers, and would be easiest for all parties to administer. The Commission also believes that any necessary consumer education and outreach regarding a uniform deadline would be less burdensome than for an alternative “phase-out” approach, as it would avoid public confusion with respect to timing and with regard to which NSI devices could and could not call 911; this method of eliminating the NSI requirement best balances the needs of the public, public safety, and CMRS providers.

    29. The Commission also seeks comment on other possible transition approaches. For example, NENA has suggested that the Commission phase out the NSI rule for devices and networks that no longer support legacy circuit-switched voice calling, reasoning that this will minimize stranded investments by carriers and consumers as carriers transition to fully IP-based architectures such as LTE and as consumers transition to IP-only devices that no longer support circuit-switched voice services. Alternatively, the Commission seeks comment on whether to eliminate the NSI requirement for new wireless devices sold after a particular date, thus grandfathering the 911 call-forwarding capability for existing NSI devices.

    30. In the event the Commission sunsets the NSI rule, it would seek to educate consumers during the transition on whether their particular NSI device will allow them to reach 911, and on how to ensure continued, uninterrupted access to 911. The Commission recognizes that the public is increasingly reliant on wireless technology for their basic communications needs and that many persons have elected to do without landline telephone service. With this in mind, the Commission believes that elimination of the NSI rule must be accompanied by sufficient public education and outreach to ensure that the public is aware that they can no longer call 911 from NSI devices prior to loss of that capability, but that there are low-cost options for replacing such devices. Accordingly, the Commission proposes to allow a six-month transition period for service providers, public interest organizations, and other interested parties to engage in this educational outreach process, and seek comment on this proposal. We also seek comment on the necessary components of such an education and outreach effort, and on implementation of these components.

    31. Finally, assuming that the NSI call-forwarding rule is eliminated after a transition period, should CMRS providers be allowed to forward 911 calls from NSI devices at their discretion on a voluntary basis, or should we prohibit NSI call forwarding? What is the likelihood that CMRS providers would voluntarily continue to forward 911 calls from NSI devices? Would allowing them to do so reduce the benefits of eliminating the NSI requirement?

    C. Protecting Calls to 911 From Service-Initialized Devices That May Appear To Be NSI Devices

    32. Background. The obligation of CMRS providers to transmit 911 calls without regard to their call validation process ensures that wireless customers are able to access life-saving emergency services without delay. This obligation to connect 911 calls from service-initialized devices ensures, for example, that customers have access to 911 when traveling in areas where service may be provided by another provider which does not have a roaming agreement with the customer's provider or when a wireless customer's provider is experiencing a network outage. The Commission does not propose to alter the obligation of CMRS providers to connect calls from devices that have a valid agreement with any CMRS provider at the time of the 911 call.

    33. The record indicates, however, that in certain circumstances a service-initialized device may appear to be an NSI device to a CMRS provider's network. For example, according to the Petitioners, devices can also become NSI in the following situations: (1) When a phone has not completed registration at the time a 9-1-1 call is placed; (2) when calls are placed from areas of weak or no signal for one carrier that receive a signal from another carrier; (3) when calls are made from a handset that selects the strongest signal, which may not be the subscriber's carrier; (4) for calls placed by consumers roaming in areas with or without automatic roaming agreements; (5) for calls placed on foreign phones; or (6) because of normal network events, system reboots, and other circumstances that can occur during mobile switching center (`MSC') to MSC handoffs, for several seconds after the phone is powered on, and as the phone recovers from loss of service in a tunnel. The Commission also observes that, when pre-paid phones have run out of minutes, they become de facto NSI devices until the user pays for more pre-paid minutes.

    34. Discussion. The Commission seeks comment on how calls to 911 from service-initialized devices that may appear to be NSI might be affected, in the event it sunsets the requirement to transmit calls from NSI devices. Is this an extensive issue of concern? For example, in what specific circumstances would a service-initialized device nevertheless appear to a CMRS network as an NSI device? If the Commission were to sunset the NSI requirement, is there a way to ensure that such service-initialized devices could still call 911? What would be the cost of implementing such a solution? The Commission is also concerned that consumers with service-initialized phones could be at risk if they were to lose 911-capability immediately following a CMRS provider's stoppage of service for non-payment. Would it be in the public interest to require all CMRS providers to continue to forward calls to 911 from such devices for a certain “grace period” following stoppage of service? If so, what would be the proper length of such a grace period? Should it differ based on whether the device is pre-paid or post-paid? Alternatively, rather than establishing a grace period, would it be sufficient for CMRS providers to send automated messages to pre-paid customers when their minutes are about to expire, warning them that if they do not extend their pre-paid service their devices will not support 911 calling?

    D. Technical and Operational Considerations Relating to Sunset of the NSI Rule

    35. The Commission seeks to determine what technical and operational changes, if any, CMRS providers and/or PSAPs would need to implement in conjunction with the sunset of the NSI rule, including the timeframe needed to implement any such changes, as well as the costs involved, as well as determining how these answers might vary depending on whether the Commission sunsets the rule on a date certain or whether it phases out the rule.

    36. What network modifications or other technical and operational changes would CMRS providers need to undertake, if any, if we were to sunset the NSI requirement as of a date certain? How long would it take to implement these changes? At what cost? Is the Commission's assumption that any costs associated with discontinuing call-forwarding of 911 calls from NSI devices as of the six-month sunset date proposed above would be relatively minor correct? The Commission also seeks comment on what, if anything, PSAPs would need to do to accommodate the sunset of the NSI requirement after six months. Would PSAPs incur any costs or are there timing considerations that the Commission should take into account? Alternatively, what technical and operational changes would CMRS providers and PSAPs need to implement if the Commission were to phase out the NSI requirement rather than sunset the rule on a uniform date?

    E. Alternative Approaches to the Problem of Fraudulent NSI 911 Calls

    37. The Commission recognizes that sunsetting the NSI rule is not the only means of reducing the incidence of fraudulent calls to 911 from such devices. In the Notice of Inquiry, the Commission examined the possibility of blocking NSI devices used to make fraudulent 911 calls while retaining the NSI rule itself, and sought comment on suggestions for making blocking a more viable option for CMRS providers, as well as on other possible solutions. The Commission seeks comment on whether call-blocking is a viable alternative to sunsetting the NSI rule. While Commission rules generally require CMRS providers to forward all 911 calls to PSAPs, including calls from NSI devices, they do not prohibit CMRS providers from blocking fraudulent 911 calls pursuant to applicable state and local law enforcement procedures. Nevertheless, the Petition asserted that CMRS providers refuse to honor PSAP blocking requests due to technical and legal concerns. In response to the Notice of Inquiry, many commenters—both CMRS provider and public safety—cited technical and legal problems that continue to make blocking calls difficult.

    38. In the Notice of Inquiry, the Commission requested comment on two other alternative approaches to address the problem of fraudulent 911 calls from NSI devices: (1) Implementing call-back capabilities for NSI devices, and (2) requiring CMRS provider-sponsored device donation programs to provide service-initialized devices. The Commission seeks further comment on the relative costs and benefits of these proposals as alternatives to sunsetting the NSI rule.

    IV. Procedural Matter F. Ex Parte Presentations

    39. The proceedings initiated by this NPRM shall be treated as “permit-but-disclose” proceedings in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must: (1) List all persons attending or otherwise participating in the meeting at which the ex parte presentation was made; and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda, or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

    G. Comment Filing Procedures

    40. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments in response to this NPRM on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

    Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

    Paper Filers: Parties that choose to file by paper must file an original and one copy of each filing. If more than one docket or rulemaking number appears in the caption of this proceeding, filers must submit two additional copies for each additional docket or rulemaking number.

    Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

    All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

    Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington, DC 20554.

    H. Accessible Formats

    41. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (TTY).

    I. Regulatory Flexibility Analysis

    42. An Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact on small entities of the policies and rules addressed in this document is located under section titled Initial Regulatory Flexibility Analysis. Written public comments are requested in the IRFA. These comments must be filed in accordance with the same filing deadlines as comments filed in response to this NPRM as set forth on the first page of this document, and have a separate and distinct heading designating them as responses to the IRFA.

    J. Paperwork Reduction Act Analysis

    43. This document contains proposed new information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by Paperwork Reduction Act of 1995 (PRA), Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, the Commission seeks specific comment on how it might further reduce the information collection burden for small business concerns with fewer than 25 employees.

    V. Initial Regulatory Flexibility Analysis

    44. As required by the Regulatory Flexibility Act of 1980, as amended (RFA), the Commission has prepared this present Initial Regulatory Flexibility Analysis (IRFA) of the possible significant economic impact of the proposal described in the attached Notice of Proposed Rulemaking on small entities. Written public comments are requested on this IRFA. Comments must be identified as responses to the IRFA and must be filed by the deadlines for comments in the Notice of Proposed Rulemaking. The Commission will send a copy of the Notice of Proposed Rulemaking, including this IRFA, to the Chief Counsel for Advocacy of the Small Business Administration (SBA). In addition, the Notice of Proposed Rulemaking and IRFA (or summaries thereof) will be published in the Federal Register.

    A. Need for, and Objectives of, the Proposed Rules

    45. In this NPRM, we address regulatory concerns raised by non-service initialized (NSI) devices. The Commission's rules require commercial mobile radio service (CMRS) providers subject to the 911 rules to transmit all wireless 911 calls, including those originated from “non-service-initialized” (NSI) devices, to Public Safety Answering Points (PSAPs). A NSI device is a mobile device for which there is no valid service contract with a CMRS provider. Examples of NSI devices include prepaid cell phones with expired minutes, devices under an expired contract, donated cell phones, and “911-only” devices that are configured solely to make emergency calls. NSI devices by their nature have no associated subscriber name and address, and do not provide Automatic Number Identification (ANI) or call-back features. As a result, when a caller uses a NSI device to call 911, the PSAP typically cannot identify the caller.

    46. While the 911 calling capability of NSI devices initially provided significant public safety benefits by increasing the public's access to 911, those benefits have greatly decreased due to changed call validation methods and the increase in low-cost options for wireless services. Moreover, the inability of PSAPs to identify the caller on an NSI device creates significant difficulty for them when a caller uses a NSI device to place fraudulent non-emergency calls to the PSAP. Numerous PSAPs around the nation have reported that fraudulent and harassing calls from NSI devices are a persistent and significant problem that requires action. In February 2008, a group of public safety entities filed a petition requesting that the Commission examine the issue. In response to the petition, the Commission adopted a Notice of Inquiry in April 2008 to enhance our understanding of fraudulent and harassing 911 calls made from NSI devices and to explore potential solutions.

    47. In this NPRM, the Commission proposes to sunset the NSI rule after a six month transition period that will allow for public outreach and education. It also seeks comment on alternative approaches to addressing the issue of fraudulent calls from NSI devices.

    B. Legal Basis

    48. The legal basis for any action that may be taken pursuant to this Notice of Proposed Rulemaking is contained in Sections 1, 4(i), 4(j), 303(r) and 332 of the Communications Act of 1934, 47 U.S.C. 151, 154(i), 154(j), 303(r), 332.

    C. Description and Estimate of the Number of Small Entities to Which the Proposed Rules Would Apply

    49. The RFA directs agencies to provide a description of and, where feasible, an estimate of the number of small entities that may be affected by the proposed rules. The RFA generally defines the term “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

    50. Small Businesses, Small Organizations, and Small Governmental Jurisdictions. Our action may, over time, affect small entities that are not easily categorized at present. We therefore describe here, at the outset, three comprehensive, statutory small entity size standards. First, nationwide, there are a total of approximately 27.5 million small businesses, according to the SBA. In addition, a “small organization” is generally any not-for-profit enterprise which is independently owned and operated and is not dominant in its field. Nationwide, as of 2007, there were approximately 1,621,315 small organizations. Finally, the term “small governmental jurisdiction” is defined generally as governments of cities, towns, townships, villages, school districts, or special districts, with a population of less than fifty thousand. Census Bureau data for 2011 indicate that there were 89,476 local governmental jurisdictions in the United States. We estimate that, of this total, as many as 88, 506 entities may qualify as “small governmental jurisdictions.” Thus, we estimate that most governmental jurisdictions are small.

    1. Telecommunications Service Entities a. Wireless Telecommunications Service Providers

    51. Pursuant to 47 CFR 20.18(a), the Commission's 911 service requirements are only applicable to Commercial Mobile Radio Service (CMRS) providers, excluding mobile satellite service operators, to the extent that they: (1) Offer real-time, two way switched voice service that is interconnected with the public switched network; and (2) Utilize an in-network switching facility that enables the provider to reuse frequencies and accomplish seamless hand-offs of subscriber calls. These requirements are applicable to entities that offer voice service to consumers by purchasing airtime or capacity at wholesale rates from CMRS licensees.

    52. Below, for those services subject to auctions, we note that, as a general matter, the number of winning bidders that qualify as small businesses at the close of an auction does not necessarily represent the number of small businesses currently in service. Also, the Commission does not generally track subsequent business size unless, in the context of assignments or transfers, unjust enrichment issues are implicated.

    53. Wireless Telecommunications Carriers (except Satellite). Since 2007, the Census Bureau has placed wireless firms within this new, broad, economic census category. Prior to that time, such firms were within the now-superseded categories of “Paging” and “Cellular and Other Wireless Telecommunications.” Under the present and prior categories, the SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. For the category of Wireless Telecommunications Carriers (except Satellite), Census data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that operated that year. Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small.

    54. Wireless Service Providers. The SBA has developed a small business size standard for wireless firms within the two broad economic census categories of “Paging” and “Cellular and Other Wireless Telecommunications.” Under both categories, the SBA deems a wireless business to be small if it has 1,500 or fewer employees. For the census category of Paging, Census Bureau data for 2002 show that there were 807 firms in this category that operated for the entire year. Of this total, 804 firms had employment of 999 or fewer employees, and three firms had employment of 1,000 employees or more. Thus, under this category and associated small business size standard, the majority of firms can be considered small. For the census category of Cellular and Other Wireless Telecommunications, Census Bureau data for 2002 show that there were 1,397 firms in this category that operated for the entire year. Of this total, 1,378 firms had employment of 999 or fewer employees, and 19 firms had employment of 1,000 employees or more. Thus, under this second category and size standard, the majority of firms can, again, be considered small.

    55. Incumbent Local Exchange Carriers (Incumbent LECs). Neither the Commission nor the SBA has developed a small business size standard specifically for incumbent local exchange services. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1000 or more. According to Commission data, 1,307 carriers reported that they were incumbent local exchange service providers. Of these 1,307 carriers, an estimated 1,006 have 1,500 or fewer employees and 301 have more than 1,500 employees. Consequently, the Commission estimates that most providers of local exchange service are small entities that may be affected by the rules and policies proposed in the Notice. Thus under this category and the associated small business size standard, the majority of these incumbent local exchange service providers can be considered small.

    56. A Competitive Local Exchange Carriers (Competitive LECs), Competitive Access Providers (CAPs), Shared-Tenant Service Providers, and Other Local Service Providers. Neither the Commission nor the SBA has developed a small business size standard specifically for these service providers. The appropriate size standard under SBA rules is for the category Wired Telecommunications Carriers. Under that size standard, such a business is small if it has 1,500 or fewer employees. Census Bureau data for 2007, which now supersede data from the 2002 Census, show that there were 3,188 firms in this category that operated for the entire year. Of this total, 3,144 had employment of 999 or fewer, and 44 firms had had employment of 1,000 employees or more. Thus under this category and the associated small business size standard, the majority of these Competitive LECs, CAPs, Shared-Tenant Service Providers, and Other Local Service Providers can be considered small entities. According to Commission data, 1,442 carriers reported that they were engaged in the provision of either competitive local exchange services or competitive access provider services. Of these 1,442 carriers, an estimated 1,256 have 1,500 or fewer employees and 186 have more than 1,500 employees. In addition, 17 carriers have reported that they are Shared-Tenant Service Providers, and all 17 are estimated to have 1,500 or fewer employees. In addition, 72 carriers have reported that they are Other Local Service Providers. Of the 72, seventy have 1,500 or fewer employees and two have more than 1,500 employees. Consequently, the Commission estimates that most providers of competitive local exchange service, competitive access providers, Shared-Tenant Service Providers, and Other Local Service Providers are small entities that may be affected by rules adopted pursuant to the Notice.

    57. Broadband Personal Communications Service. The broadband personal communications services (PCS) spectrum is divided into six frequency blocks designated A through F, and the Commission has held auctions for each block. The Commission initially defined a “small business” for C- and F-Block licenses as an entity that has average gross revenues of $40 million or less in the three previous calendar years. For F-Block licenses, an additional small business size standard for “very small business” was added and is defined as an entity that, together with its affiliates, has average gross revenues of not more than $15 million for the preceding three calendar years. These small business size standards, in the context of broadband PCS auctions, have been approved by the SBA. No small businesses within the SBA-approved small business size standards bid successfully for licenses in Blocks A and B. There were 90 winning bidders that claimed small business status in the first two C-Block auctions. A total of 93 bidders that claimed small business status won approximately 40 percent of the 1,479 licenses in the first auction for the D, E, and F Blocks. On April 15, 1999, the Commission completed the reauction of 347 C-, D-, E-, and F-Block licenses in Auction No. 22. Of the 57 winning bidders in that auction, 48 claimed small business status and won 277 licenses.

    58. On January 26, 2001, the Commission completed the auction of 422 C and F Block Broadband PCS licenses in Auction No. 35. Of the 35 winning bidders in that auction, 29 claimed small business status. Subsequent events concerning Auction 35, including judicial and agency determinations, resulted in a total of 163 C and F Block licenses being available for grant. On February 15, 2005, the Commission completed an auction of 242 C-, D-, E-, and F-Block licenses in Auction No. 58. Of the 24 winning bidders in that auction, 16 claimed small business status and won 156 licenses. On May 21, 2007, the Commission completed an auction of 33 licenses in the A, C, and F Blocks in Auction No. 71. Of the 12 winning bidders in that auction, five claimed small business status and won 18 licenses. On August 20, 2008, the Commission completed the auction of 20 C-, D-, E-, and F-Block Broadband PCS licenses in Auction No. 78. Of the eight winning bidders for Broadband PCS licenses in that auction, six claimed small business status and won 14 licenses.

    59. Narrowband Personal Communications Services. To date, two auctions of narrowband personal communications services (PCS) licenses have been conducted. For purposes of the two auctions that have already been held, “small businesses” were entities with average gross revenues for the prior three calendar years of $40 million or less. Through these auctions, the Commission has awarded a total of 41 licenses, out of which 11 were obtained by small businesses. To ensure meaningful participation of small business entities in future auctions, the Commission has adopted a two-tiered small business size standard in the Narrowband PCS Second Report and Order. A “small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $40 million. A “very small business” is an entity that, together with affiliates and controlling interests, has average gross revenues for the three preceding years of not more than $15 million. The SBA has approved these small business size standards.

    60. Specialized Mobile Radio. The Commission awards “small entity” bidding credits in auctions for Specialized Mobile Radio (SMR) geographic area licenses in the 800 MHz and 900 MHz bands to firms that had revenues of no more than $15 million in each of the three previous calendar years. The Commission awards “very small entity” bidding credits to firms that had revenues of no more than $3 million in each of the three previous calendar years. The SBA has approved these small business size standards for the 900 MHz Service. The Commission has held auctions for geographic area licenses in the 800 MHz and 900 MHz bands. The 900 MHz SMR was completed in 1996. Sixty bidders claiming that they qualified as small businesses under the $15 million size standard won 263 geographic area licenses in the 900 MHz SMR band. The 800 MHz SMR auction for the upper 200 channels was conducted in 1997. Ten bidders claiming that they qualified as small businesses under the $15 million size standard won 38 geographic area licenses for the upper 200 channels in the 800 MHz SMR band. A second auction for the 800 MHz band was conducted in 2002 and included 23 BEA licenses. One bidder claiming small business status won five licenses.

    61. The auction of the 1,050 800 MHz SMR geographic area licenses for the General Category channels was conducted in 2000. Eleven bidders won 108 geographic area licenses for the General Category channels in the 800 MHz SMR band qualified as small businesses under the $15 million size standard. In an auction completed in 2000, a total of 2,800 Economic Area licenses in the lower 80 channels of the 800 MHz SMR service were awarded. Of the 22 winning bidders, 19 claimed “small business” status and won 129 licenses. Thus, combining all three auctions, 40 winning bidders for geographic licenses in the 800 MHz SMR band claimed status as small business.

    62. In addition, there are numerous incumbent site-by-site SMR licensees and licensees with extended implementation authorizations in the 800 and 900 MHz bands. We do not know how many firms provide 800 MHz or 900 MHz geographic area SMR pursuant to extended implementation authorizations, nor how many of these providers have annual revenues of no more than $15 million. One firm has over $15 million in revenues. In addition, we do not know how many of these firms have 1500 or fewer employees. We assume, for purposes of this analysis, that all of the remaining existing extended implementation authorizations are held by small entities, as that small business size standard is approved by the SBA.

    63. AWS Services (1710-1755 MHz and 2110-2155 MHz bands (AWS-1); 1915-1920 MHz, 1995-2000 MHz, 2020-2025 MHz and 2175-2180 MHz bands (AWS-2); 2155-2175 MHz band (AWS-3)). For the AWS-1 bands, the Commission has defined a “small business” as an entity with average annual gross revenues for the preceding three years not exceeding $40 million, and a “very small business” as an entity with average annual gross revenues for the preceding three years not exceeding $15 million. In 2006, the Commission conducted its first auction of AWS-1 licenses. In that initial AWS-1 auction, 31 winning bidders identified themselves as very small businesses. Twenty-six of the winning bidders identified themselves as small businesses. In a subsequent 2008 auction, the Commission offered 35 AWS-1 licenses. Four winning bidders identified themselves as very small businesses, and three of the winning bidders identified themselves as a small business. For AWS-2 and AWS-3, although we do not know for certain which entities are likely to apply for these frequencies, we note that the AWS-1 bands are comparable to those used for cellular service and personal communications service. The Commission has not yet adopted size standards for the AWS-2 or AWS-3 bands but has proposed to treat both AWS-2 and AWS-3 similarly to broadband PCS service and AWS-1 service due to the comparable capital requirements and other factors, such as issues involved in relocating incumbents and developing markets, technologies, and services.

    64. Rural Radiotelephone Service. The Commission has not adopted a size standard for small businesses specific to the Rural Radiotelephone Service. A significant subset of the Rural Radiotelephone Service is the Basic Exchange Telephone Radio System (“BETRS”). In the present context, we will use the SBA's small business size standard applicable to Wireless Telecommunications Carriers (except Satellite), i.e., an entity employing no more than 1,500 persons. There are approximately 1,000 licensees in the Rural Radiotelephone Service, and the Commission estimates that there are 1,000 or fewer small entity licensees in the Rural Radiotelephone Service that may be affected by the rules and policies adopted herein.

    65. Wireless Communications Services. This service can be used for fixed, mobile, radiolocation, and digital audio broadcasting satellite uses in the 2305-2320 MHz and 2345-2360 MHz bands. The Commission defined “small business” for the wireless communications services (WCS) auction as an entity with average gross revenues of $40 million for each of the three preceding years, and a “very small business” as an entity with average gross revenues of $15 million for each of the three preceding years. The SBA has approved these definitions. The Commission auctioned geographic area licenses in the WCS service. In the auction, which commenced on April 15, 1997 and closed on April 25, 1997, there were seven bidders that won 31 licenses that qualified as very small business entities, and one bidder that won one license that qualified as a small business entity.

    66. 220 MHz Radio Service—Phase I Licensees. The 220 MHz service has both Phase I and Phase II licenses. Phase I licensing was conducted by lotteries in 1992 and 1993. There are approximately 1,515 such non-nationwide licensees and four nationwide licensees currently authorized to operate in the 220 MHz band. The Commission has not developed a small business size standard for small entities specifically applicable to such incumbent 220 MHz Phase I licensees. To estimate the number of such licensees that are small businesses, the Commission applies the small business size standard under the SBA rules applicable. The SBA has deemed a wireless business to be small if it has 1,500 or fewer employees. For this service, the SBA uses the category of Wireless Telecommunications Carriers (except Satellite). Census data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that operated that year. Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small.

    67. 220 MHz Radio Service—Phase II Licensees. The 220 MHz service has both Phase I and Phase II licenses. The Phase II 220 MHz service is a new service, and is subject to spectrum auctions. In the 220 MHz Third Report and Order, the Commission adopted a small business size standard for defining “small” and “very small” businesses for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. This small business standard indicates that a “small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $15 million for the preceding three years. A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that do not exceed $3 million for the preceding three years. The SBA has approved these small size standards. Auctions of Phase II licenses commenced on and closed in 1998. In the first auction, 908 licenses were auctioned in three different-sized geographic areas: three nationwide licenses, 30 Regional Economic Area Group (EAG) Licenses, and 875 Economic Area (EA) Licenses. Of the 908 licenses auctioned, 693 were sold. Thirty-nine small businesses won 373 licenses in the first 220 MHz auction. A second auction included 225 licenses: 216 EA licenses and 9 EAG licenses. Fourteen companies claiming small business status won 158 licenses. A third auction included four licenses: 2 BEA licenses and 2 EAG licenses in the 220 MHz Service. No small or very small business won any of these licenses. In 2007, the Commission conducted a fourth auction of the 220 MHz licenses. Bidding credits were offered to small businesses. A bidder with attributed average annual gross revenues that exceeded $3 million and did not exceed $15 million for the preceding three years (“small business”) received a 25 percent discount on its winning bid. A bidder with attributed average annual gross revenues that did not exceed $3 million for the preceding three years received a 35 percent discount on its winning bid (“very small business”). Auction 72, which offered 94 Phase II 220 MHz Service licenses, concluded in 2007. In this auction, five winning bidders won a total of 76 licenses. Two winning bidders identified themselves as very small businesses won 56 of the 76 licenses. One of the winning bidders that identified themselves as a small business won 5 of the 76 licenses won.

    68. 700 MHz Guard Band Licenses. In the 700 MHz Guard Band Order, the Commission adopted size standards for “small businesses” and “very small businesses” for purposes of determining their eligibility for special provisions such as bidding credits and installment payments. A small business in this service is an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. Additionally, a “very small business” is an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. SBA approval of these definitions is not required. In 2000, the Commission conducted an auction of 52 Major Economic Area (“MEA”) licenses. Of the 104 licenses auctioned, 96 licenses were sold to nine bidders. Five of these bidders were small businesses that won a total of 26 licenses. A second auction of 700 MHz Guard Band licenses commenced and closed in 2001. All eight of the licenses auctioned were sold to three bidders. One of these bidders was a small business that won a total of two licenses.

    69. Upper 700 MHz Band Licenses. In the 700 MHz Second Report and Order, the Commission revised its rules regarding Upper 700 MHz licenses. On January 24, 2008, the Commission commenced Auction 73 in which several licenses in the Upper 700 MHz band were available for licensing: 12 Regional Economic Area Grouping licenses in the C Block, and one nationwide license in the D Block. The auction concluded on March 18, 2008, with 3 winning bidders claiming very small business status (those with attributable average annual gross revenues that do not exceed $15 million for the preceding three years) and winning five licenses.

    70. Lower 700 MHz Band Licenses. The Commission previously adopted criteria for defining three groups of small businesses for purposes of determining their eligibility for special provisions such as bidding credits. The Commission defined a “small business” as an entity that, together with its affiliates and controlling principals, has average gross revenues not exceeding $40 million for the preceding three years. A “very small business” is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $15 million for the preceding three years. Additionally, the lower 700 MHz Service had a third category of small business status for Metropolitan/Rural Service Area (MSA/RSA) licenses—“entrepreneur”—which is defined as an entity that, together with its affiliates and controlling principals, has average gross revenues that are not more than $3 million for the preceding three years. The SBA approved these small size standards. An auction of 740 licenses (one license in each of the 734 MSAs/RSAs and one license in each of the six Economic Area Groupings (EAGs)) was conducted in 2002. Of the 740 licenses available for auction, 484 licenses were won by 102 winning bidders. Seventy-two of the winning bidders claimed small business, very small business or entrepreneur status and won licenses. A second auction commenced on May 28, 2003, closed on June 13, 2003, and included 256 licenses. Seventeen winning bidders claimed small or very small business status, and nine winning bidders claimed entrepreneur status. In 2005, the Commission completed an auction of 5 licenses in the Lower 700 MHz band. All three winning bidders claimed small business status.

    71. In 2007, the Commission reexamined its rules governing the 700 MHz band in the 700 MHz Second Report and Order. An auction of A, B and E block 700 MHz licenses was held in 2008. Twenty winning bidders claimed small business status (those with attributable average annual gross revenues that exceed $15 million and do not exceed $40 million for the preceding three years). Thirty three winning bidders claimed very small business status (those with attributable average annual gross revenues that do not exceed $15 million for the preceding three years).

    72. Offshore Radiotelephone Service. This service operates on several UHF television broadcast channels that are not used for television broadcasting in the coastal areas of states bordering the Gulf of Mexico. There are presently approximately 55 licensees in this service. The Commission is unable to estimate at this time the number of licensees that would qualify as small under the SBA's small business size standard for the category of Wireless Telecommunications Carriers (except Satellite). Under that standard. Under that SBA small business size standard, a business is small if it has 1,500 or fewer employees. Census data for 2007, which supersede data contained in the 2002 Census, show that there were 1,383 firms that operated that year. Of those 1,383, 1,368 had fewer than 100 employees, and 15 firms had more than 100 employees. Thus under this category and the associated small business size standard, the majority of firms can be considered small.

    73. Wireless Telephony. Wireless telephony includes cellular, personal communications services, and specialized mobile radio telephony carriers. As noted, the SBA has developed a small business size standard for Wireless Telecommunications Carriers (except Satellite). Under the SBA small business size standard, a business is small if it has 1,500 or fewer employees. According to Trends in Telephone Service data, 413 carriers reported that they were engaged in wireless telephony. Of these, an estimated 261 have 1,500 or fewer employees and 152 have more than 1,500 employees. Therefore, more than half of these entities can be considered small.

    74. Satellite Telecommunications Providers. Two economic census categories address the satellite industry. The first category has a small business size standard of $15 million or less in average annual receipts, under SBA rules. The second has a size standard of $25 million or less in annual receipts.

    75. The category of Satellite Telecommunications “comprises establishments primarily engaged in providing telecommunications services to other establishments in the telecommunications and broadcasting industries by forwarding and receiving communications signals via a system of satellites or reselling satellite telecommunications.” Census Bureau data for 2007 show that 512 Satellite Telecommunications firms that operated for that entire year. Of this total, 464 firms had annual receipts of under $10 million, and 18 firms had receipts of $10 million to $24,999,999. Consequently, the Commission estimates that the majority of Satellite Telecommunications firms are small entities that might be affected by our action.

    76. The second category, i.e. “All Other Telecommunications,” comprises “establishments primarily engaged in providing specialized telecommunications services, such as satellite tracking, communications telemetry, and radar station operation. This industry also includes establishments primarily engaged in providing satellite terminal stations and associated facilities connected with one or more terrestrial systems and capable of transmitting telecommunications to, and receiving telecommunications from, satellite systems. Establishments providing Internet services or Voice over Internet Protocol (VoIP) services via client-supplied telecommunications connections are also included in this industry.” For this category, Census Bureau data for 2007 show that there were a total of 2,383 firms that operated for the entire year. Of this total, 2,346 firms had annual receipts of under $25 million and 37 firms had annual receipts of $25 million to $49,999,999. Consequently, the Commission estimates that the majority of All Other Telecommunications firms are small entities that might be affected by our action.

    b. Equipment Manufacturers

    77. Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing. The Census Bureau defines this category as follows: “This industry comprises establishments primarily engaged in manufacturing radio and television broadcast and wireless communications equipment. Examples of products made by these establishments are: transmitting and receiving antennas, cable television equipment, GPS equipment, pagers, cellular phones, mobile communications equipment, and radio and television studio and broadcasting equipment.” The SBA has developed a small business size standard for Radio and Television Broadcasting and Wireless Communications Equipment Manufacturing which is: all such firms having 750 or fewer employees. According to Census Bureau data for 2007, there were a total of 939 establishments in this category that operated for part or all of the entire year. Of this total, 784 had less than 500 employees and 155 had more than 100 employees. Thus, under this size standard, the majority of firms can be considered small.

    78. Semiconductor and Related Device Manufacturing. These establishments manufacture computer storage devices that allow the storage and retrieval of data from a phase change, magnetic, optical, or magnetic/optical media. The SBA has developed a small business size standard for this category of manufacturing; that size standard is 500 or fewer employees storage and retrieval of data from a phase change, magnetic, optical, or magnetic/optical media. According to data from the 2007 U.S. Census, in 2007, there were 954 establishments engaged in this business. Of these, 545 had from 1 to 19 employees; 219 had from 20 to 99 employees; and 190 had 100 or more employees. Based on this data, the Commission concludes that the majority of the businesses engaged in this industry are small.

    D. Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements for Small Entities

    79. The Notice of Proposed Rulemaking does not propose any recordkeeping or reporting requirements.

    E. Steps Taken To Minimize Significant Economic Impact on Small Entities, and Significant Alternatives Considered

    80. The RFA requires an agency to describe any significant, specifically small business alternatives that it has considered in reaching its proposed approach, which may include the following four alternatives (among others): (1) The establishment of differing compliance or reporting requirements or timetables that take into account the resources available to small entities; (2) the clarification, consolidation, or simplification of compliance or reporting requirements under the rule for small entities; (3) the use of performance, rather than design, standards; and (4) and exemption from coverage of the rule, or any part thereof, for small entities.

    81. The Notice of Proposed Rulemaking proposes sunsetting the NSI rule after a six-month transition period, as well as seeking comment on a variety of possible alternatives to addressing the issue of fraudulent calls from NSI handsets. Because sunsetting the NSI rule will remove certain call-forwarding obligations on small entities, it is likely the method that would impose the least costs on these small entities.

    F. Federal Rules That May Duplicate, Overlap, or Conflict With the Proposed Rules

    82. None.

    VI. Ordering Clause

    83. The Federal Communications Commission ADOPTS, pursuant to Sections 1, 4(i), 4(j), 303(r) and 332 of the Communications Act of 1934, 47 U.S.C. 151, 154(i), 154(j), 303(r), 332, this Notice of Proposed Rulemaking.

    84. It is further ORDERED that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Analysis, to the Chief Counsel for Advocacy of the Small Business Administration.

    List of Subjects in 47 CFR Part 20

    Communications common carriers, Communications equipment.

    Federal Communications Commission. Marlene H. Dortch, Secretary. Proposed Rules

    For the reasons discussed in the preamble, the Federal Communications Commission proposes to amend 47 part 20 as follows:

    PART 20—COMMERCIAL MOBILE RADIO SERVICES 1. The authority citation for part 20 continues to read: Authority:

    47 U.S.C. 151, 152(a), 154(i), 157, 160, 201, 214, 222, 251(e), 301, 302, 303, 303(b), 303(r), 307, 307(a), 309, 309(j)(3), 316, 316(a), 332, 615, 615a, 615b, 615c.

    2. Section 20.18 is amended by revising paragraph (b) and adding paragraph (o)(4), to read as follows:
    § 20.18 911 Service.

    (b) Basic 911 Service. CMRS providers subject to this section must transmit all wireless 911 calls without respect to their call validation process to a Public Safety Answering Point, or, where no Public Safety Answering Point has been designated, to a designated statewide default answering point or appropriate local emergency authority pursuant to § 64.3001 of this chapter, provided that “all wireless 911 calls” is defined as “any call initiated by a wireless user dialing 911 on a phone using a compliant radio frequency protocol of the serving carrier.” After [insert date six months from the effective date of the Order], the requirements of this section will no longer apply to calls from non-service-initialized handsets as defined in paragraph (o)(3)(i) of this section.

    (o) * * *

    (4) Sunset. The requirements of this paragraph shall cease to be effective [insert date six months from the effective date of the Order].

    [FR Doc. 2015-10472 Filed 5-5-15; 8:45 am] BILLING CODE 6712-01-P
    FEDERAL COMMUNICATIONS COMMISSION 47 CFR Parts 36, 42, 54, 63, and 64 [WC Docket No. 15-33; FCC 15-13] Modernizing Common Carrier Rules AGENCY:

    Federal Communications Commission.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    In this document, the Federal Communications Commission (Commission) initiates a rulemaking that seeks to update the Commission's rules to better reflect current requirements and technology by removing outmoded regulations from the CFR. The Commission proposes to update the CFR by eliminating certain rules from which the Commission has forborn and eliminating references to telegraph service in certain rules. The Commission would clarify regulatory requirements, and modernize our rules to better reflect the state of the current telecommunications market.

    DATES:

    Submit comments on or before June 5, 2015. Submit reply comments on or before June 22, 2015.

    ADDRESSES:

    You may submit comments, identified by WC Docket No. 15-33 by any of the following methods:

    • Federal Communications Commission's Web site: http://fjallfoss.fcc.gov/ecfs2/. Follow the instructions for submitting comments.

    • People with Disabilities: Contact the FCC to request reasonable accommodations (accessible format documents, sign language interpreters, CART, etc.) by email: [email protected] or phone: 202-418-0530 or TTY: 202-418-0432.

    For detailed instructions for submitting comments and additional information on the rulemaking process, see the SUPPLEMENTARY INFORMATION section of this document.

    FOR FURTHER INFORMATION CONTACT:

    Alexis Johns, Wireline Competition Bureau, Competition Policy Division, (202) 418-1580, or send an email to [email protected].

    SUPPLEMENTARY INFORMATION:

    This is a summary of the Commission's Notice of Proposed Rulemaking in WC Docket No. 15-33, adopted February 2, 2015 and released February 6, 2015. The full text of this document is available for public inspection during regular business hours in the FCC Reference Information Center, Portals II, 445 12th Street SW., Room CY-A257, Washington, DC 20554. The document may also be purchased from the Commission's duplicating contractor, Best Copy and Printing, Inc., 445 12th Street SW., Room CY-B402, Washington, DC 20554, telephone (800) 378-3160 or (202) 863-2893, facsimile (202) 863-2898, or via the Internet at http://www.bcpiweb.com. It is available on the Commission's Web site at http://www.fcc.gov.

    I. Introduction

    1. This Notice of Proposed Rulemaking (NPRM) seeks to update our rules to better reflect current requirements and technology by removing outmoded regulations from the Code of Federal Regulations (CFR). The NPRM proposes to update the CFR by (1) eliminating certain rules from which the Commission has forborn, and (2) eliminating references to telegraph service in certain rules.

    2. The NPRM follows two orders adopted in 2013 that granted forbearance from 126 legacy wireline regulations, and the Process Reform Report, a Commission staff report that suggested eliminating or streamlining wireline rules that are unnecessary as a result of marketplace or technology changes. In this NPRM, we propose to address Recommendations 5.37 and 5.38 of the Process Reform Report.

    3. We propose to eliminate several rules from which the Commission has granted unconditional forbearance for all carriers. These are: (1) Section 64.804(c)-(g), which governs a carrier's recordkeeping and other obligations when it extends to federal candidates unsecured credit for communications service; (2) sections 42.4, 42.5, and 42.7, which require carriers to preserve certain records; (3) section 64.301, which requires carriers to provide communications service to foreign governments for international communications; (4) section 64.501, governing telephone companies' obligations when recording telephone conversations; (5) section 64.5001(a)-(c)(2), and (c)(4), which imposes certain reporting and certification requirements for prepaid calling card providers; and (6) section 64.1, governing traffic damage claims for carriers engaged in radio-telegraph, wire-telegraph, or ocean-cable service.

    4. We also propose to remove references to “telegraph” from certain sections of the Commission's rules. This proposal is consistent with Recommendation 5.38 of the Process Reform Report. Specifically, we propose to remove “telegraph” from: (1) Section 36.126 (separations); (2) section 54.706(a)(13) (universal service contributions); and (3) sections 63.60(c), 63.61, 63.62, 63.65(a)(4), 63.500(g), 63.501(g), and 63.504(k) (discontinuance).

    5. We seek comment on these proposed modifications. And for each of the rules addressed in this NPRM, we seek comment on whether there are other steps the Commission should or must take, along with elimination of the rule or the term “telegraph” from the CFR, in order to ensure that any telegraph service provider is not subject to unnecessary regulatory obligations. With this NPRM, we would clarify regulatory requirements, and modernize our rules to better reflect the state of the current telecommunications market.

    II. Discussion A. Deleting Rules From Which the Commission Granted Forbearance in the USTelecom Orders

    6. In 2012, USTelecom requested forbearance from an array of legacy regulations. In 2013, the Commission granted forbearance from many, but not all, of those rules. The rationale for those decisions is set forth in the USTelecom Orders, and we are not seeking to reopen the decisions therein. In many instances, the Commission granted unconditional forbearance from a requirement, but the forbearance orders did not alter the text of the codified rule or remove the rule from the CFR. Thus, the rules appear in the CFR even though the Commission has stated that it will forbear from applying such rules. Absent additional research, a carrier or a consumer might believe the regulations to be in force. We thus believe that deleting from the CFR the rules identified below, for which the Commission granted unconditional forbearance, will clarify carriers' regulatory obligations and make the CFR more accurately reflect the Commission's intended approach as to those rules. We therefore propose to eliminate from the CFR the rules listed below from which the Commission forbore in the USTelecom Orders.

    7. Sections 42.4, 42.5, and 42.7. Section 42.4 requires each carrier to maintain at its operating company headquarters a physical copy of its master index of records. Section 42.5 governs the preparation and preservation of the original records. Section 42.7 governs how long a carrier must retain the master index of records and when records must be added.

    8. Section 64.1. This section covers traffic damage claims for carriers engaged in radio-telegraph, wire-telegraph, or ocean-cable service.

    9. Section 64.301. This section requires that common carriers furnish communications services to a foreign government “upon reasonable demand” and deny communications services to a foreign government, upon order of the Commission, when such government “fails or refuses” to provide communications services to the U.S. government.

    10. Section 64.501. Section 64.501 is the present-day iteration of rules first promulgated in 1947 governing telephone companies' obligations when recording telephone conversations and precludes a telephone company from recording any telephone conversation with members of the public unless the recording is preceded by “verbal or written consent of all parties to the telephone conversation,” “preceded by verbal notification,” or “accompanied by an automatic tone warning device.” In the USTelecom Forbearance Long Order, the Commission concluded that unconditional forbearance for all carriers was warranted stating that “since we initiated the rule more than 60 years ago, the Federal Wiretap Act, as well as State laws, have addressed the same issue in a more comprehensive fashion.”

    11. Sections 64.804(c)-(g). These provisions require carriers to (1) obtain a signed application from the candidate for Federal office or a person on behalf of such candidate before extending credit; (2) serve written notice to the candidate for non-payment; (3) take appropriate action at law to collect any unpaid balance; (4) maintain certain associated records; and (5) carriers with revenues in excess of $1 million must file an annual report with the Commission.

    12. Sections 64.5001(a)-(c)(2), and (c)(4). Section 64.5001 establishes reporting and certification requirements for prepaid calling card providers. Sections 64.5001(a) and (b) require prepaid calling card providers to report to their transport providers specific information, including percentage of interstate usage (PIU) factors and call volumes for which these factors were calculated. Section 64.5001(c) requires the prepaid calling card provider to submit a quarterly certification statement signed by an officer of the company to the Commission with the following information: (1) The percentage of intrastate, interstate, and international calling card minutes for the reporting period; (2) the percentage of total prepaid calling card revenue attributable to interstate and international calls for the reporting period; (3) it is making the required Universal Service Fund contribution based on the reported information; and (4) has complied with the reporting requirements in 64.5001(a). We do not propose to delete section 64.5001(c)(3) because the Commission did not grant unconditional forbearance. Rather, it granted forbearance “only to those prepaid calling card providers that have a two-year track record of timely filing required annual and quarterly Telecommunications Reporting Worksheets (FCC Forms 499-A and 499-Q) [and] [o]nce a prepaid calling card provider has established that track record, it need not comply further with section 64.5001(c)(3).”

    B. Deleting Other Rules Relating to Telegraph Service

    13. In the Process Reform Report, Commission staff suggested deleting references to telegraph service from several wireline rules. The Process Reform Report recommended that the Wireline Competition Bureau delete section 64.1 and delete the word “telegraph” from the Commission's separations, universal service contributions, and discontinuance rules. We agree that the references to telegraph appear out of date, and propose to delete the word “telegraph” from the rules, as proposed in the Appendix, below. We seek comment on this proposal.

    14. In light of the evolution of technology away from the use of telegraphs, we believe that the references to telegraph service in the following rules are no longer necessary, and should be deleted. Continuing to include telegraph service in these rules appears unnecessary, and potentially confusing. We seek comment on whether there are any providers offering telegraph service today at all, and if so, whether such service offerings warrant retaining the term “telegraph” in the rules identified below. Would there be any practical impact if the Commission were to delete “telegraph” from these rules?

    15. Section 36.126 of the Separations Rules. Jurisdictional separations is the process by which incumbent local exchange carriers (LECs) apportion regulated costs between intrastate and interstate jurisdictions. Incumbent LECs assign regulated costs to various categories of plant and expenses, and the costs in each category are apportioned between the intrastate and interstate jurisdictions. As part of this process, section 36.126 identifies equipment that is considered “Circuit equipment—Category 4.” Section 36.126 lists “telegraph,” “telegraph system terminals,” “telegraph carrier terminals,” “telegraph private line services,” and “telegraph repeaters” as examples of such equipment. We propose to delete these terms throughout section 36.126. Would deletion have any practical impact? As noted in the Process Reform Report, we anticipate sharing this NPRM with the Federal-State Joint Board on Separations. We note that there is a pending referral to the Federal-State Joint Board on separations that welcomed input on “whether, how, and when the Commission's jurisdictional separations rules should be modified.” Thus, we need not specifically refer this discrete matter.

    16. Section 54.706(a)(13) of the Universal Service Rules. Section 54.706(a) requires providers of interstate telecommunications services to contribute to the universal service fund if they provide more than a de minimis amount of such service, and paragraph (a)(13) lists telegraph as an illustrative example of interstate telecommunications. We propose to delete the term “telegraph” from section 54.706(a)(13), and seek comment on this proposal. No entities filing FCC Form 499 indicate that they are providing telegraph service, and we are not aware of any interstate telegraph providers today. De minimis providers are required to register and file FCC Form 499 even if they do not contribute. If telegraph providers with more than a de minimis amount of service existed, they still would be required to contribute to the universal service fund, but this proposed rule change would update the rule to be in line with today's marketplace.

    17. Portions of Part 63 of the Discontinuance, Reduction, Outage and Impairment Rules. Section 214(a) of the Communications Act of 1934, as amended states in part that “[n]o carrier shall discontinue, reduce, or impair service to a community, or part of a community, unless and until there shall first have been obtained from the Commission a certificate that neither the present nor future public convenience and necessity will be adversely affected thereby.” Today, carriers providing telegraph service must comply with the Commission's Part 63 rules, which were adopted pursuant to section 214(a). We propose to delete references to “telegraph” as proposed in the Appendix below. To the extent that any entities are still providing telegraph service, we intend to exempt telegraph service from all exit regulation by exercising our forbearance authority and we seek comment on whether we should do so. We seek comment on this proposal.

    III. Procedural Matters A. Ex Parte Rules

    18. This proceeding shall be treated as a “permit-but-disclose” proceeding in accordance with the Commission's ex parte rules. Persons making ex parte presentations must file a copy of any written presentation or a memorandum summarizing any oral presentation within two business days after the presentation (unless a different deadline applicable to the Sunshine period applies). Persons making oral ex parte presentations are reminded that memoranda summarizing the presentation must (1) list all persons attending or otherwise participating in the meeting at which the ex parte presentation was made, and (2) summarize all data presented and arguments made during the presentation. If the presentation consisted in whole or in part of the presentation of data or arguments already reflected in the presenter's written comments, memoranda or other filings in the proceeding, the presenter may provide citations to such data or arguments in his or her prior comments, memoranda, or other filings (specifying the relevant page and/or paragraph numbers where such data or arguments can be found) in lieu of summarizing them in the memorandum. Documents shown or given to Commission staff during ex parte meetings are deemed to be written ex parte presentations and must be filed consistent with rule 1.1206(b). In proceedings governed by rule 1.49(f) or for which the Commission has made available a method of electronic filing, written ex parte presentations and memoranda summarizing oral ex parte presentations, and all attachments thereto, must be filed through the electronic comment filing system available for that proceeding, and must be filed in their native format (e.g., .doc, .xml, .ppt, searchable .pdf). Participants in this proceeding should familiarize themselves with the Commission's ex parte rules.

    B. Comment Filing Procedures

    19. Pursuant to sections 1.415 and 1.419 of the Commission's rules, 47 CFR 1.415, 1.419, interested parties may file comments and reply comments on or before the dates indicated on the first page of this document. Comments may be filed using the Commission's Electronic Comment Filing System (ECFS). See Electronic Filing of Documents in Rulemaking Proceedings, 63 FR 24121 (1998).

    Electronic Filers: Comments may be filed electronically using the Internet by accessing the ECFS: http://fjallfoss.fcc.gov/ecfs2/.

    Paper Filers: Parties who choose to file by paper must file an original and one copy of each filing. Filings can be sent by hand or messenger delivery, by commercial overnight courier, or by first-class or overnight U.S. Postal Service mail. All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission.

    All hand-delivered or messenger-delivered paper filings for the Commission's Secretary must be delivered to FCC Headquarters at 445 12th St. SW., Room TW-A325, Washington, DC 20554. The filing hours are 8:00 a.m. to 7:00 p.m. All hand deliveries must be held together with rubber bands or fasteners. Any envelopes and boxes must be disposed of before entering the building.

    Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743.

    U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington, DC 20554.

    C. Accessible Formats

    20. To request materials in accessible formats for people with disabilities (braille, large print, electronic files, audio format), send an email to [email protected] or call the Consumer & Governmental Affairs Bureau at 202-418-0530 (voice), 202-418-0432 (tty).

    D. Initial Regulatory Flexibility Certification

    21. The Regulatory Flexibility Act of 1980, as amended (RFA), requires that agencies prepare a regulatory flexibility analysis for notice-and-comment rulemaking proceedings, unless the agency certifies that “the rule will not have a significant economic impact on a substantial number of small entities.” The RFA generally defines “small entity” as having the same meaning as the terms “small business,” “small organization,” and “small governmental jurisdiction.” In addition, the term “small business” has the same meaning as the term “small business concern” under the Small Business Act. A small business concern is one which: (1) Is independently owned and operated; (2) is not dominant in its field of operation; and (3) satisfies any additional criteria established by the Small Business Administration (SBA).

    22. In the NPRM, the Commission seeks to update the CFR by (1) eliminating certain rules from which the Commission has forborn, and (2) eliminating references to telegraph service in certain rules. Specifically, the Commission proposes to eliminate several rules from which the Commission has granted unconditional forbearance for all carriers. These are: (1) Sections 64.804(c)-(g), which govern a carrier's recordkeeping and other obligations when it extends to federal candidates unsecured credit for communications service; (2) sections 42.4, 42.5, and 42.7, which require carriers to preserve certain records; (3) section 64.301, which requires carriers to provide communications service to foreign governments for international communications; (4) section 64.501 governing telephone companies' obligations when recording telephone conversations; (5) sections 64.5001(a)-(c)(2), and (c)(4), which impose certain reporting and certification requirements for prepaid calling card providers; and (6) section 64.1 governing traffic damage claims for carriers engaged in radio-telegraph, wire-telegraph, or ocean-cable service. The NPRM also seeks to remove references to “telegraph” from certain sections of the Commission's rules, consistent with Recommendation 5.38 of the Process Reform Report. Specifically, we propose to remove “telegraph” from (1) section 36.126 (separations); (2) section 54.706(a)(13) (universal service contributions); and (3) sections 63.60(c), 63.61, 63.62, 63.65(a)(4), 63.500(g), 63.501(g), and 63.504(k) (discontinuance).

    23. The rule changes proposed in the NPRM, if adopted by the Commission, would remove requirements governing reporting, recordkeeping, and other compliance obligations. All providers, including those deemed to be small entities under the SBA's standard will have reduced costs and burdens and would benefit by being relieved from compliance with these rules. Carriers are no longer required to comply with rules from which the Commission granted unconditional forbearance. Therefore, removing these rules is not likely to have any economic impact on carriers. While the NPRM also seeks to remove “telegraph” from several rule provisions not currently subject to forbearance, the number of telegraph service providers today is likely very small. As such, we do not believe the proposals in the NPRM would impact a substantial number of small entities.

    24. The Commission therefore certifies, pursuant to the RFA, that the proposals in this NPRM, if adopted, will not have a significant economic impact on a substantial number of small entities. If commenters believe that the proposals discussed in this NPRM require additional RFA analysis, they should include a discussion of these issues in their comments and additionally label them as RFA comments. The Commission will send a copy of this NPRM, including a copy of this initial regulatory flexibility certification, to the Chief Counsel for Advocacy of the SBA. In addition, a copy of this Notice of Proposed Rulemaking and this initial certification will be published in the Federal Register.

    E. Initial Paperwork Reduction Act of 1995 Analysis

    25. This document contains proposed modified information collection requirements. The Commission, as part of its continuing effort to reduce paperwork burdens, invites the general public and the Office of Management and Budget (OMB) to comment on the information collection requirements contained in this document, as required by the Paperwork Reduction Act of 1995, Public Law 104-13. In addition, pursuant to the Small Business Paperwork Relief Act of 2002, Public Law 107-198, see 44 U.S.C. 3506(c)(4), we seek specific comment on how we might further reduce the information collection burden for small business concerns with fewer than 25 employees.

    F. Contact Person

    26. For further information about this proceeding, please contact Alex Johns, FCC Wireline Competition Bureau, Competition Policy Division, Room 5-C317, 445 12th Street SW., Washington, DC 20554, (202) 418-1580, [email protected].

    IV. Ordering Clauses

    27. Accordingly, it is ordered, pursuant to sections 1, 2(a), 4(i), 4(j), 5, 10-11, 201-205, 214, 218-221, 225-228, 254, 303, 308, 403, 410, and 651 of the Communications Act of 1934, as amended, and section 706 of the Telecommunications Act of 1996, as amended, 47 U.S.C. §§ 151, 152(a), 154(i), 154(j), 155, 160-161, 201-205, 214, 218-221, 225-228, 254, 303, 308, 403, 410, 571, 1302, and section 401 of the Federal Election Campaign Act of 1971, as amended, 52 U.S.C. 30141, that this Notice of Proposed Rulemaking is adopted.

    28. It is further ordered that the Commission's Consumer and Governmental Affairs Bureau, Reference Information Center, SHALL SEND a copy of this Notice of Proposed Rulemaking, including the Initial Regulatory Flexibility Certification, to the Chief Counsel for Advocacy of the Small Business Administration.

    List of Subjects 47 CFR Part 36

    Communications common carriers, Reporting and recordkeeping requirements, Telephone, Uniform System of Accounts.

    47 CFR Part 42

    Communications common carriers, Radio, Reporting and recordkeeping requirements, Telegraph, Telephone.

    47 CFR Part 54

    Communications common carriers, Health facilities, Infants and children, Libraries, Reporting and recordkeeping requirements, Schools, Telecommunications, Telephone.

    47 CFR Part 63

    Cable television, Communications common carriers, Radio, Reporting and recordkeeping requirements, Telegraph, Telephone.

    47 CFR Part 64

    Civil defense, Claims, Communications common carriers, Computer technology, Credit, Foreign relations, Individuals with disabilities, Political candidates, Radio, Reporting and recordkeeping requirements, Telecommunications, Telegraph, Telephone.

    Federal Communications Commission. Marlene H. Dortch, Secretary. Proposed Rule

    For the reasons discussed in the preamble, the Federal Communications Commission amends 47 CFR parts 36, 42, 54, 63, and 64 to read as follows:

    PART 36—JURISDICTIONAL SEPARATIONS PROCEDURES; STANDARD PROCEDURES FOR SEPARATING TELECOMMUNICATIONS PROPERTY COSTS, REVENUES, EXPENSES, TAXES AND RESERVES FOR TELECOMMUNICATIONS COMPANIES 1. The authority citation for part 36 continues to read as follows: Authority:

    47 U.S.C. 151, 154(i) and (j), 205, 221(c), 254, 303(r), 403, 410, and 1302 unless otherwise noted.

    2. Amend § 36.126 by revising paragraphs (a)(1), (2), and (8), adding paragraph (b)(4), and revising paragraphs (d)(1), (e)(1), and (e)(3)(iii) to read as follows:
    § 36.126 Circuit equipment—Category 4.

    (a) * * *

    (1) Carrier telephone system terminals.

    (2) Telephone repeaters, termination sets, impedance compensators, pulse link repeaters, echo suppressors and other intermediate transmission amplification and balancing equipment except that included in switchboards.

    (8) Testboards, test desks, repair desks and patch bays, including those provided for test and control, and for transmission testing.

    (b) * * *

    (4) In addition, for the purpose of identifying and separating property associated with special services, circuit equipment included in Categories 4.12 (other than wideband equipment) 4.13 and 4.23 is identified as either basic circuit equipment, i.e., equipment that performs functions necessary to provide and operate channels suitable for voice transmission (telephone grade channels), or special circuit equipment, i.e., equipment that is peculiar to special service circuits. Carrier telephone terminals and carrier telephone repeaters are examples of basic circuit equipment in general use, while audio program transmission amplifiers, bridges, monitoring devices and volume indicators are examples of special circuit equipment in general use.

    (d) * * *

    (1) Interexchange Circuit Equipment Furnished to Another Company for Interstate Use—Category 4.21—This category comprises that circuit equipment provided for the use of another company as an integral part of its interexchange circuit facilities used wholly for interstate services. This category includes such circuit equipment as telephone carrier terminals and microwave systems used wholly for interstate services. The total cost of the circuit equipment in this category for the study area is assigned to the interstate operation

    (e) * * *

    (1) Interexchange Circuit Equipment Furnished to Another Company for Interstate Use—Category 4.21—This category comprises that circuit equipment provided for the use of another company as an integral part of its interexchange circuit facilities used wholly for interstate services. This category includes such circuit equipment as telephone carrier terminals and microwave systems used wholly for interstate services. The total cost of the circuit equipment in this category for the study area is assigned to the interstate operation.

    (3) * * *

    (iii) The cost of special circuit equipment is segregated among private line services based on an analysis of the use of the equipment and in accordance with § 36.126(b)(4). The special circuit equipment cost assigned to private line services is directly assigned to the appropriate operations.

    PART 42—PRESERVATION OF RECORDS OF COMMUNICATION COMMON CARRIERS 3. The authority citation for part 42 continues to read as follows: Authority:

    Sec. 4(i), 48 Stat. 1066, as amended, 47 U.S.C. 154(i). Interprets or applies secs. 219 and 220, 48 Stat. 1077-78, 47 U.S.C. 219, 220.

    § 42.4 [Removed]
    4. Remove § 42.4.
    § 42.5 [Removed]
    5. Remove § 42.5.
    § 42.7 [Removed]
    6. Remove § 42.7. PART 54—UNIVERSAL SERVICE 7. The authority citation for part 54 continues to read as follows: Authority:

    47 U.S.C. 151, 154(i), 155, 201, 205, 214, 219, 220, 254, 303(r), 403, and 1302 unless otherwise noted.

    § 54.706 [Amended]
    8. In § 54.706, remove and reserve paragraph (a)(13). PART 63—EXTENSION OF LINES, NEW LINES, AND DISCONTINUANCE, REDUCTION, OUTAGE AND IMPAIRMENT OF SERVICE BY COMMON CARRIERS; AND GRANTS OF RECOGNIZED PRIVATE OPERATING AGENCY STATUS 9. The authority citation for part 63 continues to read as follows: Authority:

    Sections 1, 4(i), 4(j), 10, 11, 201-205, 214, 218, 403 and 651 of the Communications Act of 1934, as amended, 47 U.S.C. 151, 154(i), 154(j), 160, 201-205, 214, 218, 403, and 571, unless otherwise noted.

    10. Amend § 63.60 by revising paragraph (c) to read as follows:
    § 63.60 Definitions.

    (c) Emergency discontinuance, reduction, or impairment of service means any discontinuance, reduction, or impairment of the service of a carrier occasioned by conditions beyond the control of such carrier where the original service is not restored or comparable service is not established within a reasonable time. For the purpose of this part, a reasonable time shall be deemed to be a period not in excess of the following: 10 days in the case of public coast stations; and 60 days in all other cases;

    11. Amend § 63.61 by revising the introductory text to read as follows:
    § 63.61 Applicability.

    Any carrier subject to the provisions of section 214 of the Communications Act of 1934, as amended, proposing to discontinue, reduce or impair interstate or foreign telephone service to a community, or a part of a community, shall request authority therefor by formal application or informal request as specified in the pertinent sections of this part:

    12. Amend § 63.62 by revising the section heading to read as follows:
    § 63.62 Type of discontinuance, reduction, or impairment of telephone service requiring formal application.
    § 63.65 [Amended]
    13. In § 63.65, remove and reserve paragraph (a)(4). 14. Amend § 63.500 by revising paragraph (g) to read as follows:
    § 63.500 Contents of applications to dismantle or remove a trunk line.

    (g) Name of any other carrier or carriers providing telephone service to the community;

    15. Amend § 63.501 by revising paragraph (g) to read as follows:
    § 63.501 Contents of applications to sever physical connection or to terminate or suspend interchange of traffic with another carrier.

    (g) Name of any other carrier or carriers providing telephone service to the community;

    16. Amend § 63.504 by revising paragraph (k) to read as follows:
    § 63.504 Contents of applications to close a public toll station where no other such toll station of the applicant in the community will continue service and where telephone toll service is not otherwise available to the public through a telephone exchange connected with the toll lines of a carrier.

    (k) Description of the service involved, including a statement of the number of toll telephone messages sent-paid and received-collect, and the revenues from such traffic, in connection with the service proposed to be discontinued for each of the past 6 months; and, if the volume of such traffic handled in the area has decreased during recent years, the reasons therefor.

    PART 64—MISCELLANEOUS RULES RELATING TO COMMON CARRIERS 17. The authority citation for part 64 continues to read as follows: Authority:

    47 U.S.C. 154, 254(k); 403(b)(2)(B), (c), Pub. L. 104-104, 110 Stat. 56. Interpret or apply 47 U.S.C. 201, 218, 222, 225, 226, 227, 228, 254(k), 616, 620, and the Middle Class Tax Relief and Job Creation Act of 2012, Pub. L. 112-96, unless otherwise noted.

    Subpart A—[Removed and Reserved] 18. Remove and reserve subpart A, consisting of § 64.1. Subpart C—[Removed and Reserved] 19. Remove and reserve subpart C, consisting of § 64.301. Subpart E—[Removed and Reserved] 20. Remove and reserve subpart E, consisting of § 64.501.
    § 64.804 [Amended]
    21. In § 64.804, remove and reserve paragraphs (c) through (g). 22. Revise § 64.5001 to read as follows:
    § 64.5001 Reporting and certification requirements.

    On a quarterly basis, every prepaid calling card provider must submit to the Commission a certification, signed by an officer of the company under penalty of perjury, stating that it is making the required Universal Service Fund contribution based on the reported information. This provision shall not apply to any prepaid calling card provider that has timely filed every FCC Form 499-A and 499-Q due during the preceding two-year period.

    [FR Doc. 2015-10470 Filed 5-5-15; 8:45 am] BILLING CODE 6712-01-P
    GENERAL SERVICES ADMINISTRATION 48 CFR Parts 501, 516, 538 and 552 [GSAR Case 2013-G504; Docket 2014-0020; Sequence 1] RIN 3090-AJ51 General Services Administration Acquisition Regulation (GSAR); Transactional Data Reporting; Extension of Time for Comments AGENCY:

    Office of Acquisition Policy, General Services Administration.

    ACTION:

    Proposed rule; extension of comment period.

    SUMMARY:

    The General Services Administration (GSA) issued a proposed rule on March 4, 2015, amending the General Services Administration Acquisition Regulation (GSAR) to include clauses that would require vendors to report transactional data from orders and prices paid by ordering activities. This includes orders placed against both Federal Supply Schedule (FSS) contract vehicles and GSA's non-FSS contract vehicles—Government-wide Acquisition Contracts (GWACs) and Government-wide Indefinite-Delivery, Indefinite-Quality (IDIQ) contracts. For FSS vehicles, the clause would be introduced in phases, beginning with a pilot for select products and commoditized services. The new clause will be paired with changes to the basis of award monitoring requirement of the existing price reductions clause, resulting in a burden reduction for participating FSS contractors. This rulemaking does not apply to the Department of Veterans Affairs (VA) FSS contract holders. The comment period is being extended to provide additional time for interested parties to provide comments for GSAR Case 2013-G504, Transactional Data Reporting, to May 11, 2015.

    DATES:

    For the proposed rule published on March 4, 2015 (80 FR 11619), submit comments by May 11, 2015.

    ADDRESSES:

    Submit comments in response to GSAR Case 2013-G504 by any of the following methods:

    Regulations.gov: http://www.regulations.gov. Submit comments by searching for “GSAR Case 2013-G504”. Select the link “Comment Now” and follow the instructions provided at the “You are commenting on” screen. Please include your name, company name (if any), and “GSAR Case 2013-G504”, on your attached document.

    Mail: General Services Administration, Regulatory Secretariat Division (MVCB), 1800 F Street NW., 2nd Floor, ATTN: Ms. Flowers, Washington, DC 20405-0001.

    Instructions: Please submit comments only and cite GSAR Case 2013-G504 in all correspondence related to this case. All comments received will be posted without change to http://www.regulations.gov, including any personal and/or business confidential information provided.

    FOR FURTHER INFORMATION CONTACT:

    Ms. Dana Munson, General Services Acquisition Policy Division, GSA, at 202-357-9652, or Mr. Matthew McFarland, General Services Acquisition Policy Division, GSA, at 202-690-9232, or email [email protected] for clarification of content. For information pertaining to status or publication schedules, contact the Regulatory Secretariat Division at 202-501-4755. Please cite GSAR Case 2013-G504.

    SUPPLEMENTARY INFORMATION:

    Background

    GSA published a proposed rule in the Federal Register at 80 FR 11619, March 4, 2015. The comment period is extended to provide additional time for interested parties to submit comments on the GSAR case until May 11, 2015.

    List of Subjects in 48 CFR Parts 501, 516, 538, and 552

    Government procurement.

    Dated: April 30, 2015. Jeffrey A. Koses, Senior Procurement Executive, Office of Acquisition Policy, Office of Government-wide Policy.
    [FR Doc. 2015-10637 Filed 5-5-15; 8:45 am] BILLING CODE 6820-61-P
    80 87 Wednesday, May 6, 2015 Notices DEPARTMENT OF AGRICULTURE Submission for OMB Review; Comment Request April 30, 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.

    Comments regarding this information collection received by June 5, 2015 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to: [email protected] or fax (202) 395-5806 and to Departmental Clearance Office, USDA, OCIO, Mail Stop 7602, Washington, DC 20250-7602. 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.

    Farm Service Agency

    Title: Data on Nonresident.

    OMB Control Number: 0560—New.

    Summary of Collection: 26 CFR Chapter 3 requires any individual to report taxes to the IRS. The Farm Service Agency (FSA) will be using the FSA-500 Data on Nonresident Applicants, to verify each applicant's citizenship, if applications for payments are filed by or for applicants who reside outside the United States, its territories or possessions, even if the application is filed by an agent of the applicant whose address is in the United States.

    Need and Use of the Information: The FSA-500 request the applicant's name, address, United States citizenship and signature of applicant or authorized agent. The data collected on the FSA-500 will assist in ensuring foreign taxes are collected and reported to the IRS accurately.

    Description of Respondents: Individuals or households.

    Number of Respondents: 55.

    Frequency of Responses: Reporting; on occasion.

    Total Burden Hours: 60.

    Ruth Brown, Departmental Information Collection Clearance Officer.
    [FR Doc. 2015-10529 Filed 5-5-15; 8:45 am] BILLING CODE 3410-05-P
    DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service [Docket No. APHIS-2015-0031] Notice of Request for Extension of Approval of an Information Collection; User Fee Regulations AGENCY:

    Animal and Plant Health Inspection Service, USDA.

    ACTION:

    Extension of approval of an information collection; comment request.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995, this notice announces the Animal and Plant Health Inspection Service's intention to request an extension of approval of an information collection associated with the collection of user fees.

    DATES:

    We will consider all comments that we receive on or before July 6, 2015.

    ADDRESSES:

    You may submit comments by either of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov/#!docketDetail;D=APHIS-2015-0031.

    Postal Mail/Commercial Delivery: Send your comment to Docket No. APHIS-2015-0031, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road Unit 118, Riverdale, MD 20737-1238.

    Supporting documents and any comments we receive on this docket may be viewed at http://www.regulations.gov/#!docketDetail;D=APHIS-2015-0031 or in our reading room, which is located in Room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading Room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 799-7039 before coming.

    FOR FURTHER INFORMATION CONTACT:

    For information on user fees, contact Ms. Serina Eckwood, Auditor, Review and Analysis Branch, Financial Management Division, APHIS, 4700 River Road Unit 55, Riverdale, MD 20737; (301) 851-2604. For copies of more detailed information on the information collection, contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

    SUPPLEMENTARY INFORMATION:

    Title: User Fee Regulations.

    OMB Control Number: 0579-0094.

    Type of Request: Extension of approval of an information collection.

    Abstract: Section 2509 of the Food, Agriculture, Conservation, and Trade Act of 1990, as amended, authorizes the Animal and Plant Health Inspection Service (APHIS) to collect user fees for agricultural quarantine and inspection (AQI) services, for providing for the inspection and certification of plants and plant products offered for export or transiting the United States, and for providing veterinary diagnostic services and services related to the importation and exportation of animals and animal products.

    Although certain AQI functions, but not the laws or regulations upon which they are premised, were transferred from APHIS to the Customs and Border Protection (CBP) bureau of the Department of Homeland Security in 2002, APHIS remains responsible for the regulations related to AQI activities, including the user fee regulations. APHIS also remains responsible for administration of the user fee programs.

    Neither APHIS nor CBP receives an appropriation to fund activities that are considered AQI services; instead, user fees are calculated and assessed to ensure full cost recovery of each user fee program. If the information was not collected, the agencies would not be able to perform the services since the fees collected are necessary to fund the work.

    Requesters of services usually are repeat customers, and, in many cases, request that we bill them for our services. Also, the 1996 Debt Collection Improvement Act requires that agencies collect tax identification numbers (TINs) from all persons doing business with the Government for purposes of collecting delinquent debts. Without a TIN, service cannot be provided on a credit basis.

    The requests for services are in writing, by telephone, or in person. The information contained in each request identifies the specific service requested and the time in which the requester wishes the service to be performed. This information is necessary in order for animal import centers and port offices to schedule the work and to calculate the fees due.

    APHIS is responsible for ensuring that fees collected are correct and that they are remitted in full and in a timely manner. To ensure this, the party (ticketing agents for transportation companies) responsible for collecting and remitting fees must allow APHIS personnel to verify the accuracy of the fees collected and remitted, and otherwise determine compliance with the statute and regulations. We also require that whoever is responsible for making fee payments advise us of the name, address, and telephone number of a responsible officer who is authorized to verify fee calculations, collections, and remittances.

    This information collection is necessary for APHIS to effectively collect fees, ensure remittances in a timely manner, and determine proper credit for payment of international air passenger, aircraft clearance, commercial truck, commercial railroad car, commercial vessel, phytosanitary certificate, import/export, and veterinary diagnostic user fees.

    For this extension of approval, we have adjusted the estimated annual number of respondents from 51,981 to 151,409, and we have increased the estimated annual number of responses from 295,881 to 6,965,268. As a result, the estimated total annual burden on respondents has increased from 15,998 hours to 270,225 hours. The increases are due to an increase in respondents because more people are participating in the animal import and export business.

    We are asking the Office of Management and Budget (OMB) to approve our use of these information collection activities for an additional 3 years.

    The purpose of this notice is to solicit comments from the public (as well as affected agencies) concerning our information collection. These comments will help us:

    (1) Evaluate 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;

    (2) Evaluate the accuracy of our estimate of the burden of the collection of information, including the validity of the methodology and assumptions used;

    (3) Enhance the quality, utility, and clarity of the information to be collected; and

    (4) Minimize the burden of the collection of information on those who are to respond, through use, as appropriate, of automated, electronic, mechanical, and other collection technologies; e.g., permitting electronic submission of responses.

    Estimate of burden: The public reporting burden for this collection of information is estimated to average 0.0388 hours per response.

    Respondents: Arriving international passengers, owners and operators of arriving international means of conveyances, and importers/exporters who import or export animals and animal products.

    Estimated annual number of respondents: 151,409.

    Estimated annual number of responses per respondent: 46.

    Estimated annual number of responses: 6,965,268.

    Estimated total annual burden on respondents: 270,225 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response.)

    All responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

    Done in Washington, DC, this 29th day of April 2015. Kevin Shea, Administrator, Animal and Plant Health Inspection Service.
    [FR Doc. 2015-10531 Filed 5-5-15; 8:45 am] BILLING CODE 3410-34-P
    DEPARTMENT OF AGRICULTURE Farm Service Agency Information Collection Request; Request for Aerial Photography AGENCY:

    Farm Service Agency, USDA.

    ACTION:

    Notice; request for comments.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995, the Farm Service Agency (FSA) is seeking comments from all interested individuals and organizations on an extension of a currently approved information collection associated with FSA Aerial Photography Program. The FSA Aerial Photography Field Office (APFO) uses the information from the form to collect the customer and photography information needed to produce and ship the various photographic products ordered.

    DATES:

    We will consider comments that we receive by July 6, 2015.

    ADDRESSES:

    We invite you to submit comments on this notice. In your comments, include the date, volume, and page number of this issue of the Federal Register, the OMB control number and the title of the information collection. You may submit comments by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the online instructions for submitting comments.

    Mail: David Parry, Supervisor, USDA, Farm Service Agency, APFO Customer Service Section, 2222 West 2300 South Salt Lake City, Utah 84119-2020.

    You may also send comments to the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20503. Copies of the information collection may be requested by contacting David Parry at the above address.

    FOR FURTHER INFORMATION CONTACT:

    David Parry, Supervisor, (801) 844-2923. Persons with disabilities who require alternative mean for communication (Braille, large print, audio tape, etc.) should contact the USDA's TARGET Center at (202) 720-2600 (Voice).

    SUPPLEMENTARY INFORMATION:

    Title: Request for Aerial Photography.

    OMB Control Number: 0560-0176.

    Expiration Date: November 30, 2015.

    Type of Request: Extension of a Currently Approved Information Collection.

    Abstract: The information collection is needed to enable the Department of Agriculture to effectively administer the Aerial Photography Program. APFO has the responsibility for conducting and coordinating the FSA's aerial photography, remote sensing programs, and the aerial photography flying contract programs. The digital and film imagery secured by FSA is public domain and reproductions of such imagery are available at cost to any customer with a need. All receipts from the sale of aerial photography products and services are retained by FSA. The FSA-441, Request for Aerial Photography, is the form FSA supplies to the customers for placing an order for aerial imagery products and services. There are no changes to the burden hours since the last OMB submission.

    The formula used to calculate the total burden hour is estimated average time per responses hours times total annual responses.

    Estimate of Burden: Public reporting burden for this information collection is estimated to average 19 minutes hours per response. The average travel time, which is included in the total burden, is estimated to be 1 hour per respondent.

    Respondents: Farmers, Ranchers and other USDA customers who wish to purchase imagery products and services.

    Estimated Number of Respondents: 12,120.

    Estimated Annual Number of Responses per Respondent: 1.

    Estimated Total Annual Responses. 12,120.

    Estimated Average Time per Response: 0.32.

    Estimated Total Annual Burden Hours on Respondents: 3,770 hours.

    We are requesting comments on all aspects of this information collection to help us to:

    (1) Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;

    (2) Evaluate the accuracy of the agency's estimate of the burden of the collection of information including the validity of the methodology and assumptions used;

    (3) Evaluate the quality, utility, and clarity of the information technology; and

    (4) Minimize the burden of the information collection on those who respond through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

    All comments received in response to this notice, including names and addresses where provided, will be made a matter of public record. Comments will be summarized and included in the request for OMB approval of the information collection.

    Signed on May 1, 2015. Val Dolcini, Administrator, Farm Service Agency.
    [FR Doc. 2015-10606 Filed 5-5-15; 8:45 am] BILLING CODE 3410-05-P
    DEPARTMENT OF AGRICULTURE Food Safety and Inspection Service [Docket No. FSIS-2015-0020] Notice of Request To Extend an Information Collection: (Consumer Complaint Monitoring System and the Food Safety Mobile Questionnaire) AGENCY:

    Food Safety and Inspection Service, USDA.

    ACTION:

    Notice and request for comments.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995 and Office of Management and Budget (OMB) regulations, the Food Safety and Inspection Service (FSIS) is announcing its intention to extend the currently approved information collection regarding both its Consumer Complaint Monitoring System (CCMS) web portal and its electronic Food Safety Mobile questionnaire. The approval for this information collection will expire on August 31, 2015. FSIS is making no changes to the currently approved collection. The public may comment on either the entire information collection or on one of its two parts.

    DATES:

    Submit comments on or before July 6, 2015.

    ADDRESSES:

    FSIS invites interested persons to submit comments on this information collection. Comments may be submitted by one of the following methods:

    • Federal eRulemaking Portal: This Web site provides the ability to type short comments directly into the comment field on this Web page or attach a file for lengthier comments. Go to http://www.regulations.gov. Follow the on-line instructions at that site for submitting comments.

    • Mail, including CD-ROMs, etc.: Send to Docket Clerk, U.S. Department of Agriculture, Food Safety and Inspection Service, Docket Clerk, Patriots Plaza 3, 1400 Independence Avenue SW., Mailstop 3782, Room 8-163A, Washington, DC 20250-3700.

    • Hand- or courier-delivered submittals: Deliver to Patriots Plaza 3, 355 E Street SW., Room 8-163A, Washington, DC 20250-3700.

    Instructions: All items submitted by mail or electronic mail must include the Agency name and docket number FSIS-2015-0020. Comments received in response to this docket will be made available for public inspection and posted without change, including any personal information, to http://www.regulations.gov.

    Docket: For access to background documents or comments received, go to the FSIS Docket Room at Patriots Plaza 3, 355 E Street SW., Room 8-164, Washington, DC 20250-3700 between 8:00 a.m. and 4:30 p.m., Monday through Friday.

    FOR FURTHER INFORMATION CONTACT:

    Gina Kouba, Paperwork Reduction Act Coordinator, Food Safety and Inspection Service, USDA, 1400 Independence Avenue SW., Room 6067, South Building, Washington, DC 20250; (202)690-6510.

    SUPPLEMENTARY INFORMATION:

    Title: Consumer Complaint Monitoring System; the Food Safety Mobile Questionnaire.

    OMB Control Number: 0583-0133.

    Expiration Date: 8/31/2015.

    Type of Request: Extension of an approved information collection.

    Abstract: FSIS, by delegation (7 CFR 2.18, 2.53), exercises the functions of the Secretary as specified in the Federal Meat Inspection Act (FMIA) (21 U.S.C. 601, et seq.), the Poultry Products Inspection Act (PPIA) (21 U.S.C. 451, et seq.), and the Egg Products Inspection Act (EPIA) (21 U.S.C. 1031, et seq.). These statutes mandate that FSIS protect the public by verifying that meat, poultry, and egg products are safe, wholesome, unadulterated, and properly labeled and packaged.

    FSIS tracks consumer complaints about meat, poultry, and egg products. Consumer complaints are usually filed because the food made the consumer sick, caused an allergic reaction, was not properly labeled (misbranded), or contained a foreign object. FSIS uses a web portal to allow consumers to electronically file a complaint with the Agency about a meat, poultry, or egg product. FSIS uses this information to look for trends that will enhance the Agency's food safety efforts.

    FSIS uses a Food Safety Mobile or USDA Food Safety Discovery Zone—a vehicle that travels throughout the continental United States, to educate consumers about the risks associated with the mishandling of food and the steps they can take to reduce their risk of foodborne illness. Organizations can request a visit from the FSIS Food Safety Mobile, although its availability is limited. To facilitate the scheduling of the Food Safety Mobile's visits when it is available, the Agency uses an electronic questionnaire on its Web site. The questionnaire solicits information about the person or organization requesting the visit, the timing of the visit, and the type of event at which the Food Safety Mobile is to appear.

    FSIS is requesting an extension of an approved information collection addressing paperwork and recordkeeping requirements regarding the Agency's CCMS web portal and regarding its electronic Food Safety Mobile questionnaire.

    FSIS has made the following estimates based upon an information collection assessment.

    Estimate of Burden: The public reporting burden for this collection of information is estimated to average .446 hours per response.

    Respondents: Consumers and organizations.

    Estimated Number of Respondents: The CCMS web portal will have approximately 1,000 respondents. The Food Safety Mobile questionnaire will have approximately 150 respondents.

    Estimated Number of Responses per Respondent: 1.

    Estimated Total Annual Burden on Respondents: The total annual burden time is estimated to be around 500 hours for respondents using CCMS web portal, and 13 hours for respondents using the Food Safety Mobile questionnaire. Thus, the total annual burden time for these two systems is 513 hours. Copies of this information collection assessment can be obtained from Gina Kouba, Paperwork Reduction Act Coordinator, Food Safety and Inspection Service, USDA, 1400 Independence, SW., Room 6077, South Building, Washington, DC 20250, (202)690-6510.

    Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of FSIS's functions, including whether the information will have practical utility; (b) the accuracy of FSIS's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the collection of information, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques, or other forms of information technology. Comments may be sent to both FSIS, at the addresses provided above, and the Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget, Washington, DC 20253.

    Responses to this notice will be summarized and included in the request for OMB approval. All comments will also become a matter of public record.

    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 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: May 1, 2015. Alfred V. Almanza, Acting Administrator.
    [FR Doc. 2015-10607 Filed 5-5-15; 8:45 am] BILLING CODE 3410-DM-P
    DEPARTMENT OF AGRICULTURE National Institute of Food and Agriculture Notice of Request for Applications for the Veterinary Medicine Loan Repayment Program AGENCY:

    National Institute of Food and Agriculture, USDA.

    ACTION:

    Notice.

    SUMMARY:

    The National Institute of Food and Agriculture (NIFA) is announcing the release of the Veterinary Medicine Loan Repayment Program (VMLRP). General information regarding the VMLRP can be obtained at: www.nifa.usda.gov/vmlrp.

    The Request for Applications (RFA) can be obtained at: http://nifa.usda.gov/vmlrp-request-applications-rfa.

    DATES:

    The fiscal year (FY) 2015 Veterinary Medicine Loan Repayment Program (VMLRP) application package will be available at: http://nifa.usda.gov/vmlrp-request-applications-rfa. Applications must be received by June 22, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Danielle Tack, VMLRP Program Manager, Program Coordinator, Institute of Food Production and Sustainability, National Institute of Food and Agriculture, U.S. Department of Agriculture, Washington, DC 20024; telephone: (202) 401-6802; fax: (202) 720-6486; email: [email protected].

    SUPPLEMENTARY INFORMATION:

    Background and Purpose

    In January 2003, the National Veterinary Medical Service Act (NVMSA) was passed into law adding section 1415A to the National Agricultural Research, Extension, and Teaching Policy Act of 1997 (NARETPA). This law established a new Veterinary Medicine Loan Repayment Program (7 U.S.C. 3151a) authorizing the Secretary of Agriculture to carry out a program of entering into agreements with veterinarians under which they agree to provide veterinary services in veterinarian shortage situations.

    On December 16, 2014, the President signed into law the Consolidated and Further Continuing Appropriations Act, 2015 (Pub. L. 113-235), which appropriated $5,000,000 for the VMLRP.

    Section 7105 of FCEA amended section 1415A to revise the determination of veterinarian shortage situations to consider (1) geographical areas that the Secretary determines have a shortage of veterinarians; and (2) areas of veterinary practice that the Secretary determines have a shortage of veterinarians, such as food animal medicine, public health, epidemiology, and food safety. This section also added that priority should be given to agreements with veterinarians for the practice of food animal medicine in veterinarian shortage situations.

    NARETPA section 1415A requires the Secretary, when determining the amount of repayment for a year of service by a veterinarian to consider the ability of USDA to maximize the number of agreements from the amounts appropriated and to provide an incentive to serve in veterinary service shortage areas with the greatest need. This section also provides that loan repayments may consist of payments of the principal and interest on government and commercial loans received by the individual for the attendance of the individual at an accredited college of veterinary medicine resulting in a degree of Doctor of Veterinary Medicine or the equivalent. This program is not authorized to provide repayments for any government or commercial loans incurred during the pursuit of another degree, such as an associate or bachelor degree. Loans eligible for repayment include educational loans made for one or more of the following: loans for tuition expenses; other reasonable educational expenses, including fees, books, and laboratory expenses, incurred by the individual; and reasonable living expenses as determined by the Secretary. In addition, the Secretary is directed to make such additional payments to participants as the Secretary determines appropriate for the purpose of providing reimbursements to participants for individual tax liability resulting from participation in this program. Finally, this section requires USDA to promulgate regulations within 270 days of the enactment of FCEA (i.e., June 18, 2008). The Secretary delegated the authority to carry out this program to NIFA.

    The final rule was published in the Federal Register on April 19, 2010 (75 FR 20239). Based on comments received during the 60-day comment period upon publication of the interim rule on July 9, 2009 (74 FR 32788), NIFA reconsidered the policy regarding individuals who consolidated their veterinary school loans with other educational loans (e.g., undergraduate) and their eligibility to apply for the VMLRP. NIFA will allow these individuals to apply for and receive a VMLRP award; however, only the eligible portion of the consolidation will be repaid by the VMLRP. Furthermore, applicants with consolidated loans will be asked to provide a complete history of their student loans from the National Student Loan Database System (NSLDS), a central database for student aid operated by the U.S. Department of Education. The NSLDS Web site can be found at www.nslds.ed.gov. Individuals who consolidated their DVM loans with non-educational loans or loans belonging to an individual other than the applicant, such as a spouse or child, will continue to be ineligible for the VMLRP.

    In FY 2010, NIFA announced its first funding opportunity for the VMLRP. In the five (5) program cycles since, NIFA has received 858 applications from which 291 VMLRP awards totaling $25,292,341 were issued. Consequently, up to $4,428,150 is available to support this program in FY 2015. Funding for future years will be based on annual appropriations and balances, if any, remaining from prior years. General information regarding the VMLRP can be obtained at the VMLRP Web site: http://www.nifa.usda.gov/vmlrp.

    The eligibility criteria for applicants and the application forms and associated instructions needed to apply for a VMLRP award can be viewed and downloaded from the VMLRP Web site at: http://nifa.usda.gov/vmlrp-request-applications-rfa.

    Done in Washington, DC, this 27th day of April, 2015. Sonny Ramaswamy, Director, National Institute of Food and Agriculture.
    [FR Doc. 2015-10287 Filed 5-5-15; 8:45 am] BILLING CODE 3410-22-P
    DEPARTMENT OF AGRICULTURE Natural Resources Conservation Service [Docket No. NRCS-2015-0003] Notice of Proposed Changes to the National Handbook of Conservation Practices for the Natural Resources Conservation Service AGENCY:

    Natural Resources Conservation Service (NRCS), USDA.

    ACTION:

    Notice of availability of proposed changes in the NRCS National Handbook of Conservation Practices for public review and comment.

    SUMMARY:

    Notice is hereby given of the intention of NRCS to issue a series of revised conservation practice standards in the National Handbook of Conservation Practices. These standards include: Amending Soil Properties with Gypsum Products (Code 333), Animal Mortality Facility (Code 316), Contour Orchards and Other Perennial Crops (Code 331), Controlled Traffic Farming (Code 334), Denitrifying Bioreactor (Code 605), Emergency Animal Mortality Management (Code 368), Field Operations Emissions Reduction (Code 376), Forest Stand Improvement (Code 666), Herbaceous Wind Barriers (Code 603), Irrigation System, Micro-irrigation (Code 441), Roofs and Covers (Code 367), Sprinkler System (Code 442), Vegetated Treatment Area (Code 635), and Vegetative Barrier (Code 601).

    NRCS State Conservationists who choose to adopt these practices for use within their States will incorporate them into Section IV of their respective electronic Field Office Technical Guide. These practices may be used in conservation systems that treat highly erodible land (HEL) or on land determined to be a wetland. Section 343 of the Federal Agriculture Improvement and Reform Act of 1996 requires NRCS to make available for public review and comment all proposed revisions to conservation practice standards used to carry out HEL and wetland provisions of the law.

    DATES:

    This is effective May 6, 2015. Submit comments on or before June 5, 2015. Final versions of these new or revised conservation practice standards will be adopted after the close of the 30-day period and after consideration of all comments.

    ADDRESSES:

    Mail or hand-deliver comments to Public Comments Processing, Attention: Regulatory and Agency Policy Team, Strategic Planning and Accountability, Natural Resources Conservation Service, 5601 Sunnyside Avenue, Building 1-1112D, Beltsville, Maryland 20705. Submit electronic comments via the Federal eRulemaking Portal at http://www.regulations.gov. All submitted comments should be identified by Docket Number NRCS-2015-0003.

    NRCS will post all comments on http://www.regulations.gov. In general, personal information provided with comments will be posted. If your comment includes your address, phone number, email, or other personal identifying information, your comments, including personal information, may be available to the public. You may ask in your comment that your personal identifying information be withheld from public view, but this cannot be guaranteed.

    FOR FURTHER INFORMATION CONTACT:

    Wayne Bogovich, Natural Resources Conservation Service, 1400 Independence Avenue Southwest, South Building, Room 6136, Washington, DC 20250.

    Electronic copies of the proposed revised standards are available through http://www.regulations.gov by accessing Docket No. NRCS-2015-0003. Alternatively, copies can be downloaded or printed from the following Web site: http://go.usa.gov/TXye. Requests for paper versions or inquiries may be directed to Emil Horvath, Natural Resources Conservation Service, Central National Technology Support Center, 501 West Felix Street, Fort Worth, Texas 76115.

    SUPPLEMENTARY INFORMATION:

    The amount of the proposed changes varies considerably for each of the conservation practice standards addressed in this notice. To fully understand the proposed changes, individuals are encouraged to compare these changes with each standard's current version as shown at: http://www.nrcs.usda.gov/wps/portal/nrcs/detailfull/national/technical/cp/ncps/?cid=nrcs143026849. To aid in this comparison, the following are highlights of some of the proposed revisions to each standard:

    Amending Soil Properties with Gypsum Products (Code 333): This is a new conservation practice standard using the technology of gypsum products to improve soil structure, and to reduce phosphorus runoff from fields and buffer areas.

    Animal Mortality Facility (Code 316): Criteria for catastrophic animal mortality has been removed and placed in Emergency Animal Mortality Management (368). The information provided on composting has been expanded. The language was changed to improve the readability of the standard.

    Contour Orchards and Other Perennial Crops (Code 331): Wind erosion was removed as one of the purposes, and the technology addresses only sheet and rill erosion from water. Edits were made to the purposes to align with NRCS' list of natural resource concerns. The criteria for additional temporary erosion control measures on sites that are disturbed was added. The allowable contour row grade was reduced from 10 percent to 4 percent. The criteria to improve sediment trapping on the slopes of inward-sloping benches was added. Minor edits where made throughout the standard to improve clarity.

    Controlled Traffic Farming (Code 334): This is a new conservation practice where heavy axle loads are confined to designated lanes or tramlines that will cover no more than 33 percent of the surface area of the field. The primary purpose is to reduce soil compaction.

    Denitrifying Bioreactor (Code 605): This proposed National standard is based on interim standards from Illinois and Iowa. These States have been using and refining this standard since 2009. As the interim standards are revised each year, new data becomes available. This summary of changes is brief.

    Emergency Animal Mortality Management (Code 368): This is a new conservation practice standard defined as a means or method for the management of animal carcasses from catastrophic mortality events.

    Field Operations Emissions Reduction (Code 376): This is a new conservation practice standard to address air particulate emissions (10 micrometers in diameter or smaller), especially in designated air quality impaired zones. The standard provides criteria to reduce emission of particulate matter from field operations; primarily from tillage and harvest operations.

    Forest Stand Improvement (Code 666): The agency added new language to the definition: “. . . to achieve a desired future condition or obtain ecosystem services.” Two purposes that refer to forest products where deleted because they do not refer to an environmental benefit. Purposes that refer to renewable energy systems, and aesthetics and recreation are moved to “Considerations” because they are not primary purposes for this practice. NRCS changed “Conditions where Practice Applies” from “All Forest land”, (with exceptions for some agroforestry practices), to “All land where the quantity and quality of trees can be enhanced.” Under “General Criteria Applicable to All Purposes,” NRCS changed the emphasis from silvicultural systems to achieving desired future conditions by altering the species composition or tree density. “Additional Criteria to Improve and Sustain Forest Health and Productivity” were added. Several new “Considerations” were added, including descriptions of silvicultural and carbon sequestration options. Several new references were also added.

    Herbaceous Wind Barriers (Code 603): The purpose and criteria to enhance snow deposition was removed because the vegetation during the winter period is not conducive to uniform snow deposition. Minor edits were made throughout the standard to improve clarity. The criteria for barrier height for the wind erosion period was increased to 1.5 feet from 0.5 feet.

    Irrigation System, Micro-irrigation (Code 441): The purpose of reduced energy use was removed. It would not be the primary purpose of planning a micro-irrigation system. There are also some minor editorial changes.

    Roofs and Covers (Code 367): The definition for the “Roofs and Covers” practice added agrichemical handling facilities to the waste management facilities specified. Criteria was added to include treated wood products and the type of associated fasteners, as was a table for geomembrane materials specified by cover purpose. Criteria was also added for appurtenant equipment associated with cover over liquid manure storage facilities for the safe collection, conveyance, treatment, or utilization of biogases.

    Sprinkler System (Code 442): “In absence of manufacturer's recommendations for pressure regulator operation, ensure line pressure upstream of regulators is at least 5 psi above rated regulator pressure” was added. There are also some minor editorial changes.

    Vegetated Treatment Area (Code 635): This standard was edited to improve clarity. Additionally, criteria was added to address pretreatment and erosion control measures, and the minimum flow length that affected the design of small facilities was removed.

    Vegetative Barrier (Code 601): The purpose and the criteria to use the vegetative barrier to control concentrated flow erosion was removed due to poor performance. Minor edits here made throughout the standard to improve clarity.

    Signed this 22nd day of April, 2015, in Washington, DC. Jason A. Weller, Chief, Natural Resources Conservation Service.
    [FR Doc. 2015-10476 Filed 5-5-15; 8:45 am] BILLING CODE 3410-16-P
    DEPARTMENT OF COMMERCE International Trade Administration Renewable Energy and Energy Efficiency Advisory Committee AGENCY:

    International Trade Administration, U.S. Department of Commerce.

    ACTION:

    Notice of an open meeting.

    SUMMARY:

    The Renewable Energy and Energy Efficiency Advisory Committee (RE&EEAC) will hold a meeting on Tuesday, June 23, 2015 at the Department of Commerce Herbert C. Hoover Building in Washington, DC. The meeting is open to the public and interested parties are requested to contact the Department of Commerce in advance of the meeting.

    DATES:

    June 23, 2015, from approximately 8:30 a.m. to 4 p.m. Daylight Saving Time (DST). Members of the public wishing to participate must notify Andrew Bennett at the contact information below by 5 p.m. DST on Friday, June 19, 2015, in order to pre-register.

    FOR FURTHER INFORMATION CONTACT:

    Andrew Bennett, Office of Energy and Environmental Industries (OEEI), International Trade Administration, U.S. Department of Commerce at (202) 482-5235; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Background: The Secretary of Commerce established the RE&EEAC pursuant to his discretionary authority and in accordance with the Federal Advisory Committee Act (5 U.S.C. App.) on July 14, 2010. The RE&EEAC was re-chartered on June 12, 2014. The RE&EEAC provides the Secretary of Commerce with consensus advice from the private sector on the development and administration of programs and policies to enhance the international competitiveness of the U.S. renewable energy and energy efficiency industries.

    During the June 23rd meeting of the RE&EEAC, committee members will discuss priority issues identified in advance by the Committee Chair and Sub-Committee leadership, and hear from interagency partners on issues impacting the competitiveness of the U.S. Renewable Energy and Energy Efficiency industries.

    A limited amount of time before the close of the meeting will be available for pertinent oral comments from members of the public attending the meeting. To accommodate as many speakers as possible, the time for public comments will be limited to two to five minutes per person (depending on number of public participants). Individuals wishing to reserve additional speaking time during the meeting must contact Mr. Bennett and submit a brief statement of the general nature of the comments, as well as the name and address of the proposed participant by 5 p.m. DST on Friday, June 19, 2015. If the number of registrants requesting to make statements is greater than can be reasonably accommodated during the teleconference, the International Trade Administration may conduct a lottery to determine the speakers. Speakers are requested to submit a copy of their oral comments by email to Mr. Bennett for distribution to the participants in advance of the teleconference.

    Any member of the public may submit pertinent written comments concerning the RE&EEAC's affairs at any time before or after the meeting. Comments may be submitted to the Renewable Energy and Energy Efficiency Advisory Committee, c/o: Andrew Bennett, Office of Energy and Environmental Industries, U.S. Department of Commerce, Mail Stop: 4053, 1401 Constitution Avenue NW., Washington, DC 20230. To be considered during the meeting, written comments must be received no later than 5 p.m. DST on Friday, June 19, 2015, to ensure transmission to the Committee prior to the teleconference. Comments received after that date will be distributed to the members but may not be considered on the teleconference.

    Copies of RE&EEAC meeting minutes will be available within 30 days following the meeting.

    Dated: April 29, 2015. Edward A. O'Malley, Director, Office of Energy and Environmental Industries.
    [FR Doc. 2015-10527 Filed 5-5-15; 8:45 am] BILLING CODE 3510-DR-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-580-867] Large Power Transformers From the Republic of Korea: Amended Final Results of Antidumping Duty Administrative Review; 2012-2013 AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the Department) is amending its final results in the administrative review of the antidumping duty order on large power transformers from the Republic of Korea (Korea) for the period February 16, 2012, through July 31, 2013, to correct certain ministerial errors.

    DATES:

    Effective date: May 6, 2015.

    FOR FURTHER INFORMATION CONTACT:

    Brian Davis (Hyosung) or David Cordell (Hyundai), 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) 482-7924 or (202) 482-0408, respectively.

    SUPPLEMENTARY INFORMATION:

    Background

    On March 31, 2015, the Department published its final results in the administrative review of the antidumping duty order on large power transformers from Korea.1 On March 30, 2015, ABB Inc. (Petitioner) submitted a ministerial error allegation.2 On March 30, 2015, Hyundai Heavy Industries Co., Ltd. (HHI) and Hyundai Corporation, USA (Hyundai USA) (collectively, Hyundai) filed a ministerial error allegation.3 On April 3, 2015, Hyosung Corporation and HICO America Sales and Technology, Inc. (collectively, Hyosung) submitted comments in reply to Petitioner's allegation.4 Based on our analysis of these allegations, we made changes to the calculation of the weighted-average dumping margins for Hyundai, Hyosung and for the non-individually examined respondents.

    1See Large Power Transformers From the Republic of Korea: Final Results of Antidumping Duty Administrative Review; 2012-2013, 80 FR 17034 (March 31, 2015) (Final Results).

    2See Letter from Petitioner to the Department, “Administrative Review of Large Power Transformers from Korea—Petitioner's Allegation on Ministerial Errors in the Department's Final Margin Calculation” dated March 30, 2015.

    3See Letter from Hyundai to the Department, “Antidumping Administrative Review of Large Power Transformers from Korea Ministerial Error Comments” dated March 30, 2015.

    4See Letter from Hyosung to the Department, “Large Power Transformers from the Republic of Korea: Reply to Petitioner's Allegation of Ministerial Errors” (April 3, 2015).

    Scope of the Order

    The scope of this order covers large liquid dielectric power transformers (LPTs) having a top power handling capacity greater than or equal to 60,000 kilovolt amperes (60 megavolt amperes), whether assembled or unassembled, complete or incomplete.

    Incomplete LPTs are subassemblies consisting of the active part and any other parts attached to, imported with or invoiced with the active parts of LPTs. The “active part” of the transformer consists of one or more of the following when attached to or otherwise assembled with one another: The steel core or shell, the windings, electrical insulation between the windings, the mechanical frame for an LPT.

    The product definition encompasses all such LPTs regardless of name designation, including but not limited to step-up transformers, step-down transformers, autotransformers, interconnection transformers, voltage regulator transformers, rectifier transformers, and power rectifier transformers.

    The LPTs subject to this order are currently classifiable under subheadings 8504.23.0040, 8504.23.0080 and 8504.90.9540 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of this order is dispositive.

    Ministerial Error

    Section 751(h) of the Tariff Act of 1930, as amended (the Act), and 19 CFR 351.224(f) define a “ministerial error” as an error “in addition, subtraction, or other arithmetic function, clerical error resulting from inaccurate copying, duplication, or the like, and any other similar type of unintentional error which the Secretary considers ministerial.”

    We agree with Hyundai that we made a ministerial error within the meaning of 19 CFR 351.224(f) with respect to one expense field. For sales of multiple units, the Department inadvertently used the total amounts of the expense for the relevant sales rather than the per-unit amounts. No other party commented on this issue.

    With respect to Petitioner's allegation that in the Department's margin program, the Department erred by failing to include all U.S. selling expenses in calculating the amount of CEP profit to deduct in its determination of the net U.S. price, the Department agrees that this is a ministerial error. However, for reasons outlined in the accompanying ministerial error memorandum and in the calculation memoranda,5 the Department has revised its CEP expense calculation using programming language that differs from that suggested by Petitioner in order to properly calculate CEP profit, net U.S. price, and normal value.

    5See Memoranda entitled “Amended Final Results of the Antidumping Duty Administrative Review of Large Power Transformers from the Republic of Korea; 2012-2013: Allegations of Ministerial Errors”; “Analysis of Data Submitted by Hyosung Corporation in the Amended Final Results of the Antidumping Duty Administrative Review of Large Power Transformers from the Republic of Korea; 2012-2013”; and “Analysis of Data Submitted by Hyundai Heavy Industries Co., Ltd. (HHI) and Hyundai Corporation, USA (Hyundai USA) (collectively, Hyundai) in the Amended Final Results of the Antidumping Duty Administrative Review of Large Power Transformers from the Republic of Korea; 2012-2013,” dated concurrently with this notice.

    Hyosung argues that the Department should reject Petitioner's allegation on the grounds that Petitioner could have raised the allegation in its case brief and it is, therefore, now untimely. Hyosung also argues that it is a belated attempt to raise a methodological issue with respect to the Department's calculations. Nevertheless, we find that we made an inadvertent error in not using the correct calculation string with respect to CEP expenses, and therefore, are correcting and amending the final results of review in accordance with section 751(h) of the Act and 19 CFR 351.224(e). As a result, the weighted-average dumping margin for Hyosung changes from 6.43 percent to 9.09 percent, and for Hyundai changes from 9.53 percent to 13.82 percent. Furthermore, the rate for the respondents not selected for individual examination, which is based on the weighted-average of the two respondents selected for individual examination, changes from 8.16 percent to 11.73 percent.6

    6 The rate applied to the non-selected companies (i.e., ILJIN, ILJIN Electric, and LSIS) is a weighted-average percentage margin calculated based on the publicly-ranged U.S. volumes of the two reviewed companies (both of which are affirmative dumping margins), for the period February 16, 2012, through July 31, 2013. See Memorandum to the File titled, “Large Power Transformers from the Republic of Korea: Amended Final Dumping Margin for Respondents Not Selected for Individual Examination,” through Angelica Townshend, Program Manager, dated concurrently with this notice.

    All Other's Rate

    The Department, in the Final Results, inadvertently stated “the cash deposit rate for all other manufacturers or exporters will continue to be 29.93 percent, the all-others rate established in the antidumping investigation.” 7 This should have read: “the cash deposit rate for all other manufacturers or exporters will continue to be 22.00 percent, the all-others rate established in the antidumping investigation.” 8

    7See Final Results, 80 FR at 17036.

    8See Large Power Transformers From the Republic of Korea: Antidumping Duty Order, 77 FR 53177 (August 31, 2012).

    Amended Final Results of the Review

    The Department determines that the following amended weighted-average dumping margins exist for the period February 16, 2012, through July 31, 2013:

    Company Weighted-average dumping margin (percent) Hyosung Corporation 9.09 Hyundai Heavy Industries Co., Ltd 13.82 ILJIN Electric Co., Ltd 11.73 ILJIN 11.73 LSIS Co., Ltd 11.73 Disclosure

    We will disclose the calculation memoranda used in our analysis to parties to this proceeding within five days of the date of the public announcement of these amended final results pursuant to 19 CFR 351.224(b).

    Duty Assessment

    The Department shall determine and U.S. Customs and Border Protection (CBP) shall assess antidumping duties on all appropriate entries.9 For any individually examined respondents whose weighted-average dumping margin is above de minimis, we calculated importer-specific ad valorem duty assessment rates based on the ratio of the total amount of dumping calculated for the importer's examined sales to the total entered value of those same sales in accordance with 19 CFR 351.212(b)(1). Upon issuance of the amended final results of this administrative review, if any importer-specific assessment rates calculated in the amended final results are above de minimis (i.e., at or above 0.5 percent), the Department will issue instructions directly to CBP to assess antidumping duties on appropriate entries.

    9 In these final 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 Proceedings: Final Modification, 77 FR 8101 (February 14, 2012).

    To determine whether the duty assessment rates covering the period were de minimis, in accordance with the requirement set forth in 19 CFR 351.106(c)(2), for each respondent we calculated importer (or customer)-specific ad valorem rates by aggregating the amount of dumping calculated for all U.S. sales to that importer or customer and dividing this amount by the total entered value of the sales to that importer (or customer). Where an importer (or customer)-specific ad valorem rate is greater than de minimis, and the respondent has reported reliable entered values, we apply the assessment rate to the entered value of the importer's/customer's entries during the review period.

    The Department clarified its “automatic assessment” regulation on May 6, 2003.10 This clarification will apply to entries of subject merchandise during the period of review (POR) produced by the respondent for which it did not know its merchandise was destined for the United States. In such instances, we will instruct CBP to liquidate unreviewed entries at the all-others rate if there is no rate for the intermediate company(ies) involved in the transaction. For a full discussion of this clarification, see the Automatic Assessment Clarification.

    10See Antidumping and Countervailing Duty Proceedings: Assessment of Antidumping Duties, 68 FR 23954 (May 6, 2003) (Automatic Assessment Clarification).

    We do not intend to issue assessment instructions to CBP because of the preliminary injunction that was issued after the issuance of the Final Results. See CBP Message Number 5111304.

    Cash Deposit Instructions

    The following cash deposit requirements will be effective upon publication of this notice for all shipments of subject merchandise entered, or withdrawn from warehouse, for consumption on or after the publication of these amended final results, as provided by section 751(a)(2) of the Act: (1) The cash deposit rate for respondents noted above will be the rate established in the amended final results of this administrative review; (2) for merchandise exported by manufacturers or exporters not covered in this administrative 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; (3) if the exporter is not a firm covered in this review, a prior review, or the original investigation, but the manufacturer is, the cash deposit rate will be the rate established for the most recently completed segment of this proceeding for the manufacturer of the subject merchandise; and (4) the cash deposit rate for all other manufacturers or exporters will continue to be 22.00 percent, the all-others rate established in the antidumping investigation.11 These cash deposit requirements, when imposed, shall remain in effect until further notice.

    11See Large Power Transformers From the Republic of Korea: Antidumping Duty Order, 77 FR 53177 (August 31, 2012).

    Notification to Importers Regarding the Reimbursement of Duties

    This notice also serves as a final reminder to importers of their responsibility under 19 CFR 351.402(f) to file a certificate regarding the reimbursement of antidumping and/or countervailing duties prior to liquidation of the relevant entries during the POR. Failure to comply with this requirement could result in the Department's presumption that reimbursement of antidumping and/or countervailing duties occurred and the subsequent assessment of doubled antidumping duties.

    Administrative Protective Order

    This notice also serves as a reminder to parties subject to administrative protective orders (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3), which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return/destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

    Notification to Interested Parties

    We are issuing and publishing these amended final results in accordance with section 751(h) of the Act and 19 CFR 351.224(f).

    Dated: April 28, 2015. Paul Piquado, Assistant Secretary for Enforcement and Compliance.
    [FR Doc. 2015-10512 Filed 5-5-15; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-201-805] Certain Circular Welded Non-Alloy Steel Pipe from Mexico: Rescission of Antidumping Duty Administrative Review; 2013-2014 AGENCY:

    Enforcement and Compliance, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the Department) is rescinding the administrative review of the antidumping duty order on certain circular welded non-alloy steel pipe from Mexico for the period November 1, 2013, through October 31, 2014.

    DATES:

    Effective Date: May 6, 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 and (202) 482-0649, respectively.

    SUPPLEMENTARY INFORMATION:

    Background

    On December 23, 2014, based on a timely request for review by Wheatland Tube Company (Wheatland), the Department published in the Federal Register a notice of initiation of an administrative review of the antidumping duty order on certain circular welded non-alloy steel pipe from Mexico covering the period November 1, 2013, through October 31, 2014.1 On March 23, 2015, Wheatland withdrew its request for an administrative review of all of the companies listed in its review request.2

    1See Initiation of Antidumping and Countervailing Duty Administrative Reviews, 79 FR 76956 (December 23, 2014).

    2See letter from Wheatland to the Secretary of Commerce entitled, “Circular Welded Non-Alloy Steel Pipe From Mexico: Withdrawal Of Request For Administrative Review,” date March 23, 2015.

    Rescission of Review

    Pursuant to 19 CFR 351.213(d)(1), the Department will rescind an administrative review, in whole or in part, if the party that requested the review withdraws its request within 90 days of the publication of the notice of initiation of the requested review. In this case, Wheatland timely withdrew its review request by the 90-day deadline, and no other party requested an administrative review of the antidumping duty order. As a result, we are rescinding the administrative review of certain circular welded non-alloy steel pipe from Mexico for the period November 1, 2013, through October 31, 2014.

    Assessment

    The Department will instruct U.S. Customs and Border Protection (CBP) to assess antidumping duties on all appropriate entries. Because the Department is rescinding this administrative review in its entirety, the entries to which this administrative review pertained shall be assessed antidumping duties at rates equal to the cash deposit of estimated antidumping duties required at the time of entry, or withdrawal from warehouse, for consumption, in accordance with 19 CFR 351.212(c)(1)(i). The Department intends to issue appropriate assessment instructions to CBP 41 days after the publication of this notice.

    Notifications

    This notice serves as a final 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 the antidumping duties occurred and the subsequent assessment of doubled antidumping duties.

    This notice also serves as a final reminder to parties subject to administrative protective order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305, which continues to govern business proprietary information in this segment of the proceeding. Timely written notification of the return/destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.

    This notice is issued and published in accordance with sections 751(a)(1) and 777(i)(1) of the Tariff Act of 1930, as amended, and 19 CFR 351.213(d)(4).

    Dated: April 30, 2015. Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty.
    [FR Doc. 2015-10623 Filed 5-5-15; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE National Institute of Standards and Technology Prospective Grant of Exclusive Patent License AGENCY:

    National Institute of Standards and Technology, Commerce.

    ACTION:

    Notice of prospective grant of exclusive patent license.

    SUMMARY:

    This is a notice in accordance with 35 U.S.C. 209(e) and 37 CFR 404.7(a)(1)(i) that the National Institute of Standards and Technology (“NIST”), U.S. Department of Commerce, is contemplating the grant of an exclusive license in the United States of America, its territories, possessions and commonwealths, to NIST's interest in the invention embodied in U.S. Patent No. 8,918,884, entitled “K-zero day safety,” (NIST Docket No. 12-017) to the George Mason Research Foundation, Inc. The grant of the license would be for all fields of use.

    FOR FURTHER INFORMATION CONTACT:

    Honeyeh Zube, National Institute of Standards and Technology, Technology Partnerships Office, 100 Bureau Drive, Stop 2200, Gaithersburg, MD 20899, (301) 975-2209, [email protected]

    SUPPLEMENTARY INFORMATION:

    The prospective exclusive license will be royalty bearing and will comply with the terms and conditions of 35 U.S.C. 209 and 37 CFR 404.7. The prospective exclusive license may be granted unless, within fifteen (15) days from the date of this published notice, NIST receives written evidence and argument which establish that the grant of the license would not be consistent with the requirements of 35 U.S.C. 209 and 37 CFR 404.7. U.S. Patent No. 8,918,884 is co-owned by George Mason University and the U.S. Government, as represented by the Secretary of the Department of Commerce. The patent, which issued on December 23, 2014, describes systems and methods for determining a safety level of a network vulnerable to attack.

    Kevin A. Kimball, Chief of Staff.
    [FR Doc. 2015-10497 Filed 5-5-15; 8:45 am] BILLING CODE 3510-13-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration NOAA RESTORE Act Science Program Science Plan AGENCY:

    National Ocean Service, National Oceanic and Atmospheric Administration, U.S. Department of Commerce.

    ACTION:

    Response to comments and release of final science plan.

    SUMMARY:

    The National Ocean Service (NOS) of the National Oceanic and Atmospheric Administration (NOAA) publishes this notice to announce the availability of response to comments and release of the final science plan for the NOAA RESTORE Act Science Program.

    ADDRESSES:

    The final science plan for the NOAA RESTORE Act Science Program will be available at http://restoreactscienceprogram.noaa.gov/science-plan. Inquiries about the plan may be addressed to Becky Allee at NOAA Office for Coastal Management, Gulf of Mexico Division, Bldg. 1100, Rm. 232, Stennis Space Center, MS 39529.

    FOR FURTHER INFORMATION CONTACT:

    For further information, contact: Becky Allee ([email protected], 228-688-1701).

    SUPPLEMENTARY INFORMATION:

    NOAA is publishing this Notice to announce Response to Comments received on the Draft Science Plan and release of the Final Science Plan for the NOAA RESTORE Act Science Program. The final plan will be posted on May 6, 2015. The Final Science Plan is being issued after careful consideration and adjudication of public comments received following a 45-day comment period from October 30, 2014—December 15, 2014.

    Section 1604 of the Resources and Ecosystems Sustainability, Tourist Opportunities, and Revived Economies of the Gulf Coast States Act of 2012 (RESTORE Act) establishes the Gulf Coast Ecosystem Restoration Science, Observation, Monitoring, and Technology Program (Science Program) to be administered by NOAA and to carry out research, observation, and monitoring to support the long-term sustainability of the ecosystem, fish stocks, fish habitat, and the recreational, commercial, and charter fishing industry in the Gulf of Mexico. The Final Science Plan for the NOAA RESTORE Act Science Program lays out the path forward for the program. The plan provides an overview of the program and its establishing legislation, describes our three short-term and 10 long‐term research priorities and the process by which they were determined, and summarizes the Program's structure and administration. The plan is organized in three sections. Section I includes: background on legislative requirements and mission; the vision, goal, and outcomes for the program; research scope and priorities; NOAA's roles; geographic scope; and approach to engagement. Section II describes each of the 10 long-term research priorities identified for the program. For each priority we include the management needs that drive the priority, desired outcomes, examples of key activities; and examples of potential outputs. This section also includes a brief discussion on the importance of synthesis and integration of the research conducted under these priorities. Section III, which describes the program's structure and administration, includes sections on program management, consultation and coordination, program parameters, funding opportunities and competitive process; environmental compliance, and data and information sharing.

    Response to Comments

    “NOAA received 19 sets of comments from organizations and private citizens (241 total recommendations). Many of the comments were supportive of the science plan as a whole while only offering minor editorial suggestions or requesting clarification on elements of the plan. The breakdown of the 19 submissions was 7 individuals, 6 non-governmental organizations or groups (represented 9 organizations), 2 federal agencies, 1 state agency, 1 academic institution, 1 regional ocean observing partnership, and 1 fishery management organization.” Of the comments addressing core components of the plan, the topics most frequently raised were NOAA's role in the program; the process for translating the long-term research priorities into future funding opportunities; prioritization of data synthesis; integration, communication, and coordination with other programs; and a process for measuring the success of the program and research carried out under the program. From the draft version of the plan to this final version of the plan, the key changes are a clearer description of NOAA's role in the program, additional information on the factors the program will consider in translating the long-term research priorities into future funding opportunities, and additional information on the geographic scope of the program.

    The following section, organized by category (1-9), presents a summary of the comments and NOAA's responses. The number of total recommendations (of the 241) is listed for each category. Editorial corrections will not be extensively addressed in this Notice; however a few examples have been provided. For further information on Response to Comments, contact: Becky Allee ([email protected], 228-688-1701).

    1. General Comments 2. NOAA' role 3. Program Scope 4. Research Priorities 5. Clarification of Priorities 6. Performance Measures 7. Coordination and Engagement 8. Funding, Eligibility and Prioritization 9. Editorial Category 1: General Comments (22 Recommendations)

    (a) Is there a mechanism to include previous research or outside research?

    (b) Cite the Coastal Protection and Restoration Authority's (CPRA) Coastal Master Plan in the references.

    Response 1

    Overall, the program received several comments supporting the goals and activities of the plan and complimenting the program on developing the plan. One comment queried the program's plan for inclusion of previous research or outside research. The revised plan highlights the immediate responsibility of the program to manage the data requirements of projects funded under the program. A comprehensive, integrated mechanism to pull all research together is the objective of one of the priorities presented in this plan. Other comments ranged from recommendations to include missing references (e.g., CPRA's Coastal Master Plan, considered a regionally significant accomplishment) or requests to update references cited in the plan (e.g., Gulf Councils updated list of research and priority needs for 2015-2019). The majority of the general comments were supportive of the programs draft plan. Many others, while acknowledged, did not warrant changes in the document.

    Category 2: NOAA's Role (4 Recommendations)

    Commenters asked for clarification on the role NOAA staff and scientists have in administering and carrying out the NOAA RESTORE Act Science Program, for example, involvement in research activities, processes for funding expenditures, participation in research results synthesis and integration activities, etc.

    Response 2

    The final science plan has a sub-section titled, “NOAA's Role” in Section I.4. This section restates the specific actions that NOAA will (or will not) carry out as authorized by the RESTORE Act [Section 1604(b)(4)]. Specifically regarding the question on synthesis and integration, a paragraph addressing this was added in Section II, “Long-term Research Priorities”.

    Category 3: Program Scope and Domain (34 Recommendations)

    (a) Include a section on adaptive management.

    (b) What is the geographical scope of the program?

    (c) Include further details and clarification on terms and species within plan.

    (d) Recommendations to include research areas.

    Response 3

    The Program received several comments on the need for more information and clarification on its scope. One comment encouraged the inclusion of an adaptive management discussion in the document. The Program recognizes the important role of adaptive management in addressing resource issues in the Gulf of Mexico; however, since the NOAA RESTORE Act Science Program is a research program and not a resource management program, we decided this was beyond the scope of the plan. The Program will not provide direct financial support to management activities, but will support science that intends to inform management decisions.

    Many comments inquired about the geographic scope (domain) of the program. They expressed concern that the domain extended too far inland or that offshore and deepwater environments and their associated biological communities were not included. We revised Section I.5, “Geographic Scope” to better define our intent, including extent of watershed activities. Further clarification on included species has been added throughout the plan. Following these revisions we determined that the “Program Scope” section was mostly redundant with information presented elsewhere in the plan so the section was removed in the final version.

    Category 4: Research Priorities (14 Recommendations)

    (a) Missing management needs, outcomes, example activities, or outputs for some aspects of research priorities.

    (b) Redundancy among example activities, outputs, and/or outcomes across research priorities.

    (c) Requests for expanded discussion on short-term priorities.

    (d) How will priorities be further “prioritized” or sequenced?

    Response 4

    (a) Management needs, outcomes, example activities, and outputs identified under each of the 10 long-term research priorities represent the types of activities and outputs that could be undertaken and developed in support of research and management needs and do not represent an exhaustive list. Rather, we have provided an initial list based on review of existing documents from the Gulf of Mexico, stakeholder input, conversations with partners, and expertise of program staff. Language in the plan that explained this use of examples was further clarified.

    (b) We agree with comments about redundancy among example activities, outputs, and/or outcomes across research priorities. Upon further review, we determined that some activities, outputs, and/or outcomes were not appropriate for the research priority under which they were listed and so they were removed. In other cases, simple edits were sufficient to address any issue(s). However, in some instances, redundancy should be expected. It is quite acceptable to expect like activities to occur in support of ecosystem research, recognizing that ultimately the activities are intended to answer different sets of questions.

    (c) Several comments requested that the plan elaborate and invest more discussion on short-term priorities. Since the short-term priorities were originally released in the Program's Framework document (December 2013), and subsequently were the focus of a federal funding opportunity (FFO), they are not covered in greater depth in this plan. The focus of this plan is to establish the long-term research priorities that will guide future implementation of this Program.

    (d) A considerable number of comments expressed concern over the Program's ability to address all of the long-term research priorities and requested information on the Program's plan for further prioritizing and sequencing priorities. Refer to Section III.4, “Funding Opportunities and Competitive Process”, for a revised list of factors that will inform sequencing among the Program's long-term research priorities.

    Category 5: Priority Clarification (42 Recommendations)

    (a) Provide greater detail.

    (b) Build on existing data/knowledge better.

    Response 5

    (a) A number of comments requested that the plan provide greater detail on the long-term research priorities, intended actions to be carried out under these priorities, and the anticipated outcomes. The plan identifies priorities for the Gulf of Mexico ecosystem that will add to our understanding of the condition of its living coastal and marine resources and wildlife populations, and the human coastal communities that are dependent upon this ecosystem. To achieve this holistic understanding requires a broad array of multi-disciplinary research projects that address both the natural and socioeconomic sciences. To address each in fine detail would be an immense undertaking, particularly for a new Program such as this one. At this early stage of the Program's development, the plan was purposefully written at a higher level with less detail to allow space for the Program to mature its own niche and fill unmet research needs in the region, all within the scope of the Program's authorization. This plan will be revised approximately every 5 years and more frequently if deemed necessary. As the Program matures, long-term research priorities may be refined.

    (b) Several comments requested that the plan recognize certain existing data and knowledge and seek to build off this previous work. We reviewed the plan and added additional references to previous work and mentioned additional opportunities to leverage ongoing or previous activities

    Category 6: Performance Measures (10 Recommendations)

    (a) What is the process for evaluating success?

    (b) How will performance be measured?

    (c) What are the metrics for success?

    Response 6

    There were several comments on performance management, many of which were focused on the long-term research priorities. We are currently developing our approach to performance management; however, it will not be completed in time for inclusion with the Final Science Plan. We will vet our approach for performance management with our internal and external advisory bodies (refer to Section III.1, “Program Management Structure” for more details on our advisory structure).

    Category 7: Coordination and Engagement (32 Recommendations)

    (a) Elaborate on the coordination and engagement process.

    (b) Coordinate with the Centers of Excellence Research Grants Program.

    (c) Emphasis placed on interactions with Gulf state agencies.

    (d) Will the science plan be revised to reflect finalized coordination plans?

    Response 7

    Additional text describing the Program's approach to coordination was added to the plan in Section III.2, “Consultation and Coordination.” That revised section addresses how we will meet legislative requirements for consultation and coordination with other Gulf of Mexico-focused programs. Avoiding duplication of effort is one of the main goals we will work on with our partner programs. The inclusion of citizen science was also recommended in several comments but did not require revisions to the plan. Refer to Section I.6, “Engagement”, for details on the Program's approach to stakeholder engagement.

    Category 8: Funding, Eligibility, and Prioritization (20 Recommendations)

    (a) Provide more details on FFOs, the decision process for proposal reviews, evaluation, and prioritization.

    (b) Who is eligible for support?

    (c) Explicitly state funding on upstream research.

    (d) Is there a contingency plan for research in response to future disasters?

    (e) Encouragement for the facilitation of student opportunities.

    Response 8

    The Program received several comments regarding the process we will use to develop FFOs. The Program has added language to clarify our approach to FFO development, including a list of factors that will inform the selection of topical priorities for specific funding opportunities. Refer to Section III.4, “Funding Opportunities and Competitive Process” for additional information on our approach to FFO development. This section also includes subsections that cover eligibility requirements for applying for funding, funding mechanisms, peer-review process, scientific integrity, and partnerships.

    Category 9: Editorial (63 Recommendations)

    (a) Typographical errors;

    (b) Grammatical errors; and

    (c) Recommendations for rewording or reorganizing.

    Response 9

    All typographical and grammatical errors pointed out in comments were corrected. In many cases, requests for rewording or reorganizing were accepted (e.g., outcomes, outputs, and example activities listed under each long-term research priority in Section II were reordered to example activities, example outputs, and outcomes); however, some requests would have required extensive rewriting of the plan or were beyond the scope of this document. In other cases, the requested information was already in the plan—this revised version improves the organization and alignment of information and section headers throughout the plan to make it easier to locate specific information. There were several comments regarding some confusion on information presented in appendices. Several appendices have been revised and their captions have been clarified. Non-essential appendices have been removed from the plan.

    Dated: April 27, 2015. Mary C. Erickson, Director, National Centers for Coastal Ocean Science, National Ocean Service, National Oceanic and Atmospheric Administration.
    [FR Doc. 2015-10453 Filed 5-5-15; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF AGRICULTURE Rural Utilities Service DEPARTMENT OF COMMERCE National Telecommunications and Information Administration Broadband Opportunity Council Webinar AGENCY:

    Rural Utilities Service, U.S. Department of Agriculture, and National Telecommunications and Information Administration, U.S. Department of Commerce.

    ACTION:

    Notice of public webinar.

    SUMMARY:

    In a request for comment (RFC) published in the Federal Register on April 29, 2015, the Departments of Agriculture and Commerce, which are co-chairing the Broadband Opportunity Council (Council), asked for public input on barriers that are hampering deployment of broadband, ways to promote public and private investment in broadband, challenges facing areas that lack access to broadband, and ways to measure broadband availability, adoption, and speed.1 To explain the RFC's purpose and objectives, and to allow an opportunity for members of the public to pose questions regarding the RFC, the Rural Utilities Service (RUS) and the National Telecommunications and Information Administration (NTIA) will host a webinar on May 20, 2015.

    1 Broadband Opportunity Council Notice and Request for Comment, 80 FR 23785 (April 29, 2015), available at www.ntia.doc.gov/federal-register-notice/2015/broadband-opportunity-council-notice-and-request-comment.

    DATES:

    The webinar will be held on May 20, 2015, from 4:00 p.m. until 5:00 p.m. Eastern Daylight Time.

    ADDRESSES:

    The webinar will be open to the public and press on a first-come, first-served basis. To help assure that adequate space is provided, all attendees are required to register for the webinar at https://attendee.gotowebinar.com/register/4277364480826458625 by May 13, 2015. Upon registration, webinar information will be distributed, including both the link to the webinar (video) as well as the dial-in information (sound). Due to the limited capacity, we encourage and request that parties at the same location share a webinar link. Refer to the Supplemental Information below and to http://www.rd.usda.gov and http://www.ntia.doc.gov/ for additional information on the webinar.

    FOR FURTHER INFORMATION CONTACT:

    Jennifer Holtz, National Telecommunications and Information Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW, Room 4878, Washington, DC 20230; telephone: (202) 482-2048; email: [email protected] or Denise Scott, Rural Development, Rural Utilities Service, U.S. Department of Agriculture, 1400 Independence Avenue SW, Washington, DC 20250; telephone: (202) 720-1910; email: [email protected] Please direct media inquiries to NTIA's Office of Public Affairs, (202) 482-7002.

    SUPPLEMENTARY INFORMATION: I. Background

    On January 13, 2015, President Obama announced new Administration efforts to help more people, in more communities around the country, gain access to fast and affordable broadband.2 With this effort, President Obama created an interagency Broadband Opportunity Council, which is seeking public comment on steps federal agencies can take to help promote broadband deployment, adoption and competition.

    2See FACT SHEET: Broadband That Works: Promoting Competition & Local Choice In Next-Generation Connectivity, White House, January 13, 2015, available at http://www.whitehouse.gov/the-press-office/2015/01/13/fact-sheet-broadband-works-promoting-competition-local-choice-next-gener.

    The Presidential Memorandum also directs the Council to consult with state, local, tribal, and territorial governments, as well as telecommunications companies, utilities, trade associations, philanthropic entities, policy experts, and other interested parties to identify and assess regulatory barriers and determine possible actions. This Notice seeks public participation, especially from the named stakeholders above, in the Council's RFC webinar to ensure that the RFC will bolster the Council's work and to improve the number and quality of ideas expressed in response to the RFC.

    II. Objectives of This Notice

    The RFC requests public input on: (i) Ways the federal government can promote best practices, modernize outdated regulations, promote coordination, and offer more services online; (ii) identification of regulatory barriers to broadband deployment, competition, and adoption; (iii) ways to promote public and private investment in broadband; (iv) ways to promote broadband adoption; (v) issues related to state, local, and tribal governments; (vi) issues related to vulnerable communities and communities with limited or no broadband; (vii) issues specific to rural areas; and (viii) ways to measure broadband availability, adoption, and speed.

    This Notice announces a public webinar on May 20, 2015 to inform all stakeholders and other interested parties on how they can share their perspectives and recommend actions that the federal government can take to promote broadband deployment, adoption, and competition, including by identifying and removing regulatory barriers unduly impeding investments in broadband technology. The webinar will educate stakeholders and other interested parties on the purpose and objectives of the RFC. It will also provide the public with information on how to participate in the RFC, while also allowing the public to ask any questions about the RFC.

    III. Public Webinar

    The purpose of the webinar is to inform the public of the Council's RFC and how interested parties may participate in the request. The webinar will be open to the public and press on a first-come, first-served basis. Refer to Addresses above for information on registration for the webinar. Should problems arise with webinar registration, please contact Jennifer Holtz at (202) 482-2048 or email [email protected] Copies of the presentations provided in the webinar will be available on the NTIA Web site within 30 days following the webinar.

    The webinar will be accessible to people with disabilities. Individuals requiring accommodations are asked to notify Theresa Thomas at (202) 482-7407 or [email protected] at least 5 business days before the webinar.

    Dated: May 1, 2015. Lisa Mensah, Under Secretary for Rural Development. Lawrence E. Strickling, Assistant Secretary for Communications and Information.
    [FR Doc. 2015-10580 Filed 5-5-15; 8:45 am] BILLING CODE 3510-60-P
    DEPARTMENT OF DEFENSE Office of the Secretary [Docket ID DoD-2015-HA-0039] Proposed Collection; Comment Request AGENCY:

    Office of the Assistant Secretary of Defense for Health Affairs, DoD.

    ACTION:

    Notice.

    SUMMARY:

    In compliance with the Paperwork Reduction Act of 1995, the Office of the Assistant Secretary of Defense for Health Affairs announces a proposed public information collection and seeks public comment on the provisions thereof. Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology.

    DATES:

    Consideration will be given to all comments received by July 6, 2015.

    ADDRESSES:

    You may submit comments, identified by docket number and title, by any of the following methods:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail: Department of Defense, Office of the Deputy Chief Management Officer, Directorate of Oversight and Compliance, Regulatory and Audit Matters Office, 9010 Defense Pentagon, Washington, DC 20301-9010.

    Instructions: All submissions received must include the agency name, docket number and title for this Federal Register document. The general policy for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at http://www.regulations.gov as they are received without change, including any personal identifiers or contact information. Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at http://www.regulations.gov for submitting comments. Please submit comments on any given form identified by docket number, form number, and title.

    FOR FURTHER INFORMATION CONTACT:

    To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Health Agency, Medical Benefits and Reimbursement Office, 16401 E. Centretech Pkwy, Attn: Sharon Seelmeyer, Aurora, CO 80011-9066, or call Defense Health Agency, Medical Benefits and Reimbursement Office at (303) 676-3690.

    SUPPLEMENTARY INFORMATION:

    Title; Associated Form; and OMB Number: Diagnosis Related Groups (DRG) Reimbursement; OMB Control Number: 0720-0017.

    Needs and Uses: The TRICARE/CHAMPUS contractors will use the information collected to reimburse hospitals for TRICARE/CHAMPUS share of capital and direct medical education costs.

    Affected Public: Individuals; business or other for-profit.

    Annual Burden Hours: 8,400.

    Number of Respondents: 5,600.

    Responses per Respondent: 1.

    Average Burden per Response: 90 minutes.

    Frequency: On occasion.

    The Department of Defense Authorization Act, 1984, Public Law 98-94 amended Title 10, section 1079(j)(2)(A) of the U.S.C. and provided the Civilian Health and Medical Program of the Uniform Services (CHAMPUS) with the statutory authority to reimburse institutional providers based on diagnosis-related groups (DRGs). The CHAMPUS DRG-based payment system, except for children's hospitals (whose capital and direct medical education costs are incorporated in the children's hospital differential), who want to be reimbursed for allowed capital and direct medical education costs must submit a request for payment to the TRICARE/CHAMPUS contractor. The request allows TRICARE to collect the information necessary to properly reimburse hospitals for its share of these costs. The information can be submitted in any form, most likely in the form of a letter. The contractor will calculate the TRICARE/CHAMPUS share of capital and direct medical educations costs and make a lump-sum payment to the hospital. The TRICARE/CHAMPUS DRG-based payment system is modeled on the Medicare Prospective Payment System (PPS) and was implemented on October 1, 1987. Initially, under 42 CFR 412.46 of the Medicare regulations, physicians was required to sign attestation and acknowledgment statements. These requirements were implemented to ensure a means of holding hospitals and physicians accountable for the information they submit on the Medicare claim forms. Being modeled on the Medicare PPS, CHAMPUS also adopted these requirements. The physicians attestation and physician acknowledgment required by Medicare under 42 CFR 412.46 are also required for TRICARE/CHAMPUS as a condition for payment and may be satisfied by the same statements as required for Medicare, with substitution or addition of “TRICARE/CHAMPUS” when the word “Medicare” is used. Physicians sign a physician acknowledgement, maintained by the institution, at the time the physician is granted admitting privileges. This acknowledgement indicates the physician understands the importance of a correct medical record, and misrepresentation may be subject to penalties.

    Dated: April 30, 2015. Aaron Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense.
    [FR Doc. 2015-10510 Filed 5-5-15; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Office of the Secretary [Docket ID: DoD-2015-HA-0040] Proposed Collection; Comment Request AGENCY:

    Office of the Assistant Secretary of Defense for Health Affairs, DoD.

    ACTION:

    Notice.

    SUMMARY:

    In compliance the Paperwork Reduction Act of 1995, the Office of the Assistant Secretary of Defense for Health Affairs announces a proposed public information collection and seeks public comment on the provisions thereof. Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology.

    DATES:

    Consideration will be given to all comments received by July 6, 2015.

    ADDRESSES:

    You may submit comments, identified by docket number and title, by any of the following methods:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail: Department of Defense, Office of the Deputy Chief Management Officer, Directorate of Oversight and Compliance, Regulatory and Audit Matters Office, 9010 Defense Pentagon, Washington, DC 20301-9010.

    Instructions: All submissions received must include the agency name, docket number and title for this Federal Register document. The general policy for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at http://www.regulations.gov as they are received without change, including any personal identifiers or contact information.

    Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at http://www.regulations.gov for submitting comments. Please submit comments on any given form identified by docket number, form number, and title.

    FOR FURTHER INFORMATION CONTACT:

    To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the TRICARE Dental Care Office, Health Plan Execution and Operation, Defense Health Agency (DHA), Rm. 3M451, ATTN: COL Colleen C. Shull, Falls Church, VA 22042 or call (703) 681-9517, DSN 761.

    SUPPLEMENTARY INFORMATION:

    Title; Associated Form; and OMB Number: Active Duty Dental Program (ADDP) Claim Form; OMB Control Number 0720-0053.

    Needs and Uses: The information collection is necessary to obtain and record the dental readiness of Service Members using the Active Duty Dental Program (ADDP) and at the same time submit the claim for the dental procedures provided so that claims can be processed and reimbursement made to the provider. Many Service Members are not located near a military dental treatment facility and receive their dental care in the private sector.

    Affected Public: Business or other for profit institutions; Not-for-profit institutions.

    Annual Burden Hours: 25,000.

    Number of Respondents: 75,000.

    Responses per Respondent: 4.

    Average Burden per Response: 5 minutes.

    Frequency: On occasion.

    Respondents are dental providers who submit claims in order to be reimbursed for delivered dental care. The ADDP Claim form allows civilian dental providers to submit the claim for dental procedures provided to active duty service members and to update their dental readiness classification at the same time. The completed form is forwarded to the ADDP contractor, United Concordia Companies, Inc. for reimbursement and the electronic update of the dental readiness. If the form is not available, civilian providers will not have a mechanism to submit dental claims with the information required for reimbursement to provide an updated dental readiness classification for the member. Dental readiness classification allows the Services to ensure that all Service Members are ready for worldwide deployment. Dental readiness is an integral part of medical readiness, and medical readiness is fundamental to the readiness of our forces.

    Dated: April 30, 2015. Aaron Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense.
    [FR Doc. 2015-10513 Filed 5-5-15; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Office of the Secretary [Docket ID: DoD-2015-HA-0038] Proposed Collection; Comment Request AGENCY:

    Office of the Assistant Secretary of Defense for Health Affairs, DoD.

    ACTION:

    Notice.

    SUMMARY:

    In compliance with the Paperwork Reduction Act of 1995, the Office of the Assistant Secretary of Defense for Health Affairs announces a proposed public information collection and seeks public comment on the provisions thereof. Comments are invited on: (a) Whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information shall have practical utility; (b) the accuracy of the agency's estimate of the burden of the proposed information collection; (c) ways to enhance the quality, utility, and clarity of the information to be collected; and (d) ways to minimize the burden of the information collection on respondents, including through the use of automated collection techniques or other forms of information technology.

    DATES:

    Consideration will be given to all comments received by July 6, 2015.

    ADDRESSES:

    You may submit comments, identified by docket number and title, by any of the following methods:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail: Department of Defense, Office of the Deputy Chief Management Officer, Directorate of Oversight and Compliance, Regulatory and Audit Matters Office, 9010 Defense Pentagon, Washington, DC 20301-9010.

    Instructions: All submissions received must include the agency name, docket number and title for this Federal Register document. The general policy for comments and other submissions from members of the public is to make these submissions available for public viewing on the Internet at http://www.regulations.gov as they are received without change, including any personal identifiers or contact information.

    Any associated form(s) for this collection may be located within this same electronic docket and downloaded for review/testing. Follow the instructions at http://www.regulations.gov for submitting comments. Please submit comments on any given form identified by docket number, form number, and title.

    FOR FURTHER INFORMATION CONTACT:

    To request more information on this proposed information collection or to obtain a copy of the proposal and associated collection instruments, please write to the Defense Health Agency, TRICARE, Medical Benefits & Reimbursement Office, 16401 E. Centretech Parkway, Aurora, CO 80011, ATTN: Amber Butterfield, or call TRICARE, Medical Benefits and Reimbursement Office at (303) 676-3565.

    SUPPLEMENTARY INFORMATION:

    Title; Associated Form; and OMB Number: Health Insurance Claim Form, CMS-1500 OMB Control Number 0720-0001.

    Needs and Uses: The information collection requirement is used by TRICARE to determine reimbursement for health care services or supplies rendered by individual professional providers to TRICARE beneficiaries. The requested information is used to determine beneficiary eligibility, appropriateness and cost of care, other health insurance liability and whether services received are covered benefits.

    Affected Public: Business or other for profit; Not-for-profit institutions, Federal government, state, local or tribal government.

    Annual Burden Hours: 22,108,225.

    Number of Respondents: 88,432,900.

    Responses per Respondent: 1.

    Average Burden per Response: 15 minutes.

    Frequency: On occasion.

    Respondents are individual professional providers or healthcare related providers, who file for reimbursement of civilian health care services or supplies provided to TRICARE beneficiaries under the Civilian Health and Medical Program of the Uniformed Services. TRICARE is a health benefits entitlement program for active duty, the dependents of active duty Uniformed Services member and deceased sponsors, retirees and their dependents, dependents of Department of Homeland Security (Coast Guard) sponsors, and certain North Atlantic Treaty Organizations, National Oceanic and Atmospheric Administration, and Public Health Service eligible beneficiaries. Use of this form continues TRICARE's commitment to use the national standard claim form for reimbursement of services/supplies provided by individual professional providers or healthcare related providers, and is accepted by all major commercial and government payers.

    Dated: April 30, 2015. Aaron Siegel, Alternate OSD Federal Register Liaison Officer, Department of Defense.
    [FR Doc. 2015-10509 Filed 5-5-15; 8:45 am] BILLING CODE 5001-06-P
    DEPARTMENT OF DEFENSE Department of the Army, Corps of Engineers Termination of Environmental Impact Statement for the Gray's Beach Restoration Project, Waikiki, Island of Oahu, Hawaii AGENCY:

    U.S. Army Corps of Engineers, DoD.

    ACTION:

    Notice of intent; withdrawal.

    SUMMARY:

    The U.S. Army Corps of Engineers (Corps), Honolulu District, is issuing this notice to advise Federal, state, and local governmental agencies and the public that the Corps is withdrawing its Notice of Intent (NOI) to prepare a Draft Environmental Impact Statement (EIS) for the Gray's Beach Restoration Project located in Waikiki on the Island of Oahu, Hawaii (Corps File No. POH-2007-00192).

    FOR FURTHER INFORMATION CONTACT:

    Susan Meyer, Senior Project Manager, Regulatory Office. Mailing address: U.S. Army Corps of Engineers, Honolulu District, CEPOH-RO (Attn: Ms. Susan Meyer), Building 230, Ft. Shafter, Hawaii 96858-5440. Email address: [email protected]

    SUPPLEMENTARY INFORMATION:

    The Corps published an NOI in the Federal Register on November 17, 2008 (73 FR 67847) to prepare a Draft EIS pursuant to the National Environmental Policy Act for the proposed Gray's Beach Restoration Project. A public scoping meeting was held on December 17, 2008 to solicit public input on the scope of analysis; significant issues to be evaluated in the Draft EIS; cooperating agencies; direct, indirect and cumulative impacts resulting from the proposed action; and proposed alternatives. Since that time, the project proponent has withdrawn its Department of the Army permit application and is no longer actively pursuing the proposed project. Therefore, the Corps is withdrawing the NOI to prepare a Draft EIS.

    Christopher W. Crary, Lieutenant Colonel, U.S. Army, District Engineer.
    [FR Doc. 2015-10618 Filed 5-5-15; 8:45 am] BILLING CODE 3720-58-P
    DEPARTMENT OF DEFENSE Department of the Navy Meeting of the U.S. Naval Academy Board of Visitors AGENCY:

    Department of the Navy, DoD.

    ACTION:

    Notice of partially closed meeting.

    SUMMARY:

    The U.S. Naval Academy Board of Visitors will meet to make such inquiry, as the Board shall deem necessary, into the state of morale and discipline, the curriculum, instruction, physical equipment, fiscal affairs, and academic methods of the Naval Academy. The executive session of this meeting from 11:00 a.m. to 12:00 p.m. on June 15, 2015, will include discussions of new and pending administrative/minor disciplinary infractions and non-judicial punishment proceedings involving Midshipmen attending the Naval Academy to include but not limited to individual honor/conduct violations within the Brigade; the disclosure of which would constitute a clearly unwarranted invasion of personal privacy. For this reason, the executive session of this meeting will be closed to the public.

    DATES:

    The open session of the meeting will be held on June 15, 2015, from 9:00 a.m. to 11:00 a.m. The executive session held from 11:00 a.m. to 12:00 p.m. will be the closed portion of the meeting.

    ADDRESSES:

    The meeting will be held at the U.S. Naval Academy, Annapolis, MD. The meeting will be handicap accessible.

    FOR FURTHER INFORMATION CONTACT:

    Lieutenant Commander Eric Madonia, USN, Executive Secretary to the Board of Visitors, Office of the Superintendent, U.S. Naval Academy, Annapolis, MD 21402-5000, (410) 293-1503.

    SUPPLEMENTARY INFORMATION:

    This notice of meeting is provided per the Federal Advisory Committee Act, as amended (5 U.S.C. App.). The executive session of the meeting from 11:00 a.m. to 12:00 p.m. on June 15, 2015, will consist of discussions of new and pending administrative/minor disciplinary infractions and non-judicial punishment proceedings involving Midshipmen attending the Naval Academy to include but not limited to individual honor/conduct violations within the Brigade. The discussion of such information cannot be adequately segregated from other topics, which precludes opening the executive session of this meeting to the public. Accordingly, the Department of the Navy/Assistant for Administration has determined in writing that the meeting shall be partially closed to the public because the discussions during the executive session from 11:00 a.m. to 12:00 p.m. will be concerned with matters protected under sections 552b(c) (5), (6), and (7) of title 5, United States Code.

    Authority:

    5 U.S.C. 552b.

    Dated: April 29, 2015. N.A. Hagerty-Ford, Commander, Judge Advocate General's Corps, U.S. Navy, Federal Register Liaison Officer.
    [FR Doc. 2015-10556 Filed 5-5-15; 8:45 am] BILLING CODE 3810-FF-P
    DEPARTMENT OF DEFENSE Department of the Navy Secretarial Authorization for a Member of the Department of the Navy To Serve on the Board of Directors, Navy-Marine Corps Relief Society AGENCY:

    Department of the Navy, DoD.

    ACTION:

    Notice.

    SUMMARY:

    Pursuant to 10 U.S.C. 1033, the Secretary of the Navy, with the concurrence of the Department of Defense General Counsel, has authorized Commander, Navy Installations Command, current incumbent Vice Admiral Dixon R. Smith, to serve without compensation on the Board of Directors of the Navy-Marine Corps Relief Society. Authorization to serve on the Board of Directors has been made for the purpose of providing oversight and advice to, and coordination with, the Navy-Marine Corps Relief Society.

    Participation of the above official in the activities of the Society will not extend to participation in day-to-day operations.

    FOR FURTHER INFORMATION CONTACT:

    Lieutenant Commander Abby Kagle, Office of the Judge Advocate General, Administrative Law Division, 703-614-7406.

    Dated: April 29, 2015. N.A. Hagerty-Ford, Commander, Judge Advocate General's Corps, U.S. Navy, Federal Register Liaison Officer.
    [FR Doc. 2015-10578 Filed 5-5-15; 8:45 am] BILLING CODE 3810-FF-P
    DEPARTMENT OF EDUCATION [Docket No.: ED-2015-ICCD-0059] Agency Information Collection Activities; Comment Request; Migrant Student Information Exchange (MSIX) AGENCY:

    Office of Elementary and Secondary Education (OESE), Department of Education (ED).

    ACTION:

    Notice.

    SUMMARY:

    In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 3501 et seq.), ED is proposing a reinstatement of a previously approved information collection.

    DATES:

    Interested persons are invited to submit comments on or before July 6, 2015.

    ADDRESSES:

    Comments submitted in response to this notice should be submitted electronically through the Federal eRulemaking Portal at http://www.regulations.gov by selecting Docket ID number ED-2015-ICCD-0059 or via postal mail, commercial delivery, or hand delivery. If the regulations.gov site is not available to the public for any reason, ED will temporarily accept comments at [email protected] Please note that comments submitted by fax or email and those submitted after the comment period will not be accepted; ED will ONLY accept comments during the comment period in this mailbox when the regulations.gov site is not available. Written requests for information or comments submitted by postal mail or delivery should be addressed to the Director of the Information Collection Clearance Division, U.S. Department of Education, 400 Maryland Avenue SW., LBJ, Mailstop L-OM-2-2E319, Room 2E115, Washington, DC 20202.

    FOR FURTHER INFORMATION CONTACT:

    For specific questions related to collection activities, please contact Patricia Meyertholen, (202) 260-1394.

    SUPPLEMENTARY INFORMATION:

    The Department of Education (ED), in accordance with the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3506(c)(2)(A)), provides the general public and Federal agencies with an opportunity to comment on proposed, revised, and continuing collections of information. This helps the Department assess the impact of its information collection requirements and minimize the public's reporting burden. It also helps the public understand the Department's information collection requirements and provide the requested data in the desired format. ED is soliciting comments on the proposed information collection request (ICR) that is described below. The Department of Education is especially interested in public comment addressing the following issues: (1) Is this collection necessary to the proper functions of the Department; (2) will this information be processed and used in a timely manner; (3) is the estimate of burden accurate; (4) how might the Department enhance the quality, utility, and clarity of the information to be collected; and (5) how might the Department minimize the burden of this collection on the respondents, including through the use of information technology. Please note that written comments received in response to this notice will be considered public records.

    Title of Collection: Migrant Student Information Exchange (MSIX).

    OMB Control Number: 1810-0683.

    Type of Review: A reinstatement of a previously approved information collection.

    Respondents/Affected Public: State, Local and Tribal Governments.

    Total Estimated Number of Annual Responses: 17,520.

    Total Estimated Number of Annual Burden Hours: 360,491.

    Abstract: The U.S. Department of Education (ED) is proposing new regulations to implement the Migrant Student Information Exchange (MSIX), a nationwide, electronic records exchange mechanism mandated under Title I, Part C of the Elementary and Secondary Education Act (ESEA), as amended by the No Child Left Behind Act. As a condition of receiving a grant of funds under the Migrant Education Program (MEP), each State educational agency (SEA) would be required to collect, maintain, and submit minimum health and education-related data to MSIX within established timeframes. The proposed regulations would facilitate timely school enrollment, placement, and accrual of secondary course credits for migratory children and help us determine accurate migratory child counts and meet other MEP reporting requirements. The MEP is authorized under sections 1301-1309 in Title I, Part C of the ESEA. MSIX and the minimum data elements (MDEs) are authorized specifically under section 1308(b) of the ESEA.

    This collection replaces the current collection for the MSIX MDEs under OMB No. 1810-0683. The burden hours and costs associated with this data collection are required to ensure that States implement and utilize MSIX for interstate migrant student records exchange, which will then enable the Department to meet the statutory mandate in section 1308(b) of the ESEA to facilitate the electronic exchange of MDEs by SEAs to address the educational and related needs of migratory children. The information collection addresses the following statutory requirements in the ESEA: Section 1304(b)(3), which requires SEAs to promote interstate and intrastate coordination of services for migratory children, including providing educational continuity through the timely transfer of pertinent school records (including health information) when children move from one school to another, whether or not the move occurs during the regular school year. Section 1308(b)(1), which requires ED to assist SEAs in providing for the electronic transfer of migrant student records. Section 1308(b)(2), which requires ED, in consultation with SEAs, to ensure the linkage of migrant student record systems for the purpose of electronically exchanging health and educational information regarding migrant children among States and determine the MDEs that each SEA shall collect and maintain for electronic exchange. Section 1309(2), which provides the statutory definition of a migratory child.

    Dated: April 30, 2015. Tomakie Washington, Acting Director, Information Collection Clearance Division, Office of the Chief Privacy Officer, Office of Management.
    [FR Doc. 2015-10514 Filed 5-5-15; 8:45 am] BILLING CODE 4000-01-P
    DEPARTMENT OF EDUCATION The Historically Black Colleges and Universities Capital Financing Advisory Board AGENCY:

    U.S. Department of Education, the Historically Black Colleges and Universities Capital Financing Board.

    ACTION:

    Announcement of an open meeting.

    SUMMARY:

    This notice sets forth the schedule and proposed agenda of an upcoming open meeting of the Historically Black Colleges and Universities Capital Financing Advisory Board (Board). The notice also describes the functions of the Board. Notice of this meeting is required by Section 10(a)(2) of the Federal Advisory Committee Act and is intended to notify the public of their opportunity to attend.

    DATES:

    The Board meeting will be held on Monday, May 18, 2015 10:00 a.m.-2:00 p.m., Central Time at Xavier University of Louisiana, The Convocation Annex, 7800 Washington Avenue, New Orleans, LA 70125.

    FOR FURTHER INFORMATION CONTACT:

    Donald E. Watson, Executive Director/Designated Federal Official, Historically Black College and University Capital Financing Program, 1990 K Street NW., Room 6040, Washington, DC 20006-8513. Telephone: (202) 219-7037 or by email: [email protected]

    SUPPLEMENTARY INFORMATION:

    The Historically Black College and University Capital Financing Advisory Board's Statutory Authority and Function: The Historically Black College and University Capital Financing Advisory Board is authorized by Title III, Part D, Section 347, of the Higher Education Act of 1965, as amended in 1998 (20 U.S.C. 1066f). The Board is established within the U.S. Department of Education to provide advice and counsel to the Secretary and the designated bonding authority as to the most effective and efficient means of implementing construction financing on historically Black college and university campuses and to advise Congress regarding the progress made in implementing the program. Specifically, the Board will provide advice as to the capital needs of Historically Black Colleges and Universities, how those needs can be met through the program, and what additional steps might be taken to improve the operation and implementation of the construction financing program.

    Meeting Agenda: The purpose of this meeting is to update the Board on current activities, set future meeting dates, and for the Board to make recommendations to the Secretary on the current capital needs of Historically Black Colleges and Universities.

    There will be an opportunity for public comment regarding the Board's activities on Friday, May 18, 2015, between 1:15 p.m.-1:45 p.m. Please be advised that comments cannot exceed five (5) minutes. Members of the public interested in submitting written comments may do so by submitting comments to the attention of Don E. Watson, 1990 K Street NW., Washington, DC, by Monday, May 11, 2015. Comments should pertain to the work of the Board and or the HBCU Capital Financing Program.

    Access to Records of the Meeting: Pursuant to FACA requirements, the public may also inspect the meeting materials at http://www2.ed.gov/about/bdscomm/list/hbcu-finance.html on Friday, July 17, 2015 by 9:00 a.m. ET. The official verbatim transcripts of the public meeting sessions will be available for public inspection no later than 60 calendar days following the meeting.

    Reasonable Accommodations: The meeting site is accessible to individuals with disabilities. If you will need an auxiliary aid or service to participate in the meeting (e.g., interpreting service, assistive listening device, or materials in an alternate format), notify the contact person listed in this notice at least one week before the scheduled meeting date. Although we will attempt to meet a request received after that date, we may not be able to make available the requested auxiliary aid or service because of insufficient time to arrange it.

    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.

    Authority:

    Title III, Part D, Section 347, of the Higher Education Act of 1965, as amended in 1998 (20 U.S.C. 1066f).

    Jamienne S. Studley, Deputy Under Secretary.
    [FR Doc. 2015-10596 Filed 5-5-15; 8:45 am] BILLING CODE P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 1121-118] Pacific Gas and Electric Company; Notice Of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:

    a. Type of Application: Amendment of License.

    b. Project No.: 1121-118.

    c. Date Filed: March 2, 2015.

    d. Applicant: Pacific Gas and Electric Company.

    e. Name of Project: Battle Creek.

    f. Location: On the mainstem Battle Creek, and on the North Fork and South Fork Battle Creek in Shasta and Tehama Counties, California.

    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a-825r.

    h. Applicant Contact: Ms. Lisa Whitman, Pacific Gas and Electric Company, P.O. Box No. 770000, San Francisco, CA 94177. Tel: (415) 973-7465.

    i. FERC Contact: Ms. Rebecca Martin, (202) 502-6012, [email protected].

    j. Deadline for filing comments, motions to intervene, and protests: June 1, 2015.

    All documents may be filed electronically via the Internet. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief comments up to 6,000 characters, without prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the end of your comments. For assistance, please contact FERC Online Support at [email protected], or toll free at 1-866-208-3676, or for TTY, (202) 502-8659. Although the Commission strongly encourages electronic filing, documents may be paper-filed. To paper-file, mail an original and seven copies to: Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426. Please include the project number (P-1121-118) on any comments or motions filed.

    The Commission's Rules of Practice and Procedure require all intervenors filing documents with the Commission to serve a copy of that document on each person whose name appears on the official service list for the project. Further, if an intervenor files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency.

    k. Description of Application: Pacific Gas and Electric Company (licensee or PG&E) is requesting that its license for the Battle Creek Hydroelectric Project be amended to support the Battle Creek Salmon and Steelhead Restoration Project (Restoration Project). The Restoration Project is a collaborative effort to restore fish habitat on Battle Creek and some of its tributaries through modification of the project facilities and operations, including instream flow releases. This collaborative effort is between PG&E, the U.S. Department of the Interior, Bureau of Reclamation, the U.S. Fish and Wildlife Service, the National Oceanic and Atmospheric Administration National Marine Fisheries Service, and the California Department of Fish and Game.

    The Restoration Project will reestablish approximately 42 miles of prime salmon and steelhead habitat in the North and South Forks of Battle Creek, plus an additional six miles of habitat on the tributaries of Battle Creek. The Restoration Project will be accomplished in three phases. The licensee is filing this license amendment application for approval and implementation of Phase 2 (third phase) of the Restoration Project. Proposed work for Phase 2 includes: (1) Installing a new fish screen and fish ladder at Inskip Diversion Dam; (2) installing a tailrace connector tunnel from South Powerhouse to Inskip Canal; (3) removing Lower Ripley Creek Feeder, Soap Creek Feeder and Coleman diversion dams; and (4) removing the South Diversion Dam and associated conveyance system.

    The licensee has submitted the Battle Creek Salmon and Steelhead Restoration Project Final Environmental Impact Statement/Environmental Impact Report (EIS/EIR), prepared in July 2005, as part of its application. The referenced EIS/EIR was a collaborative effort between PG&E, the Bureau of Reclamation, California State Water Resources Control Board, California Bay-Delta Authority, and the Federal Energy Regulatory Commission (Commission), to fulfill National Environmental Policy Act (NEPA) and California Environmental Quality Act requirements. The Commission intends to use the EIS/EIR to meet the NEPA requirements under the proposed action to amend the Battle Creek Project. The EIS/EIR is available for review at the Restoration Projects Web site (link: http://www.usbr.gov/mp/nepa/nepa_projdetails.cfm?Project_ID=99).

    l. Locations of the Application: A copy of the application is available for inspection and reproduction at the Commission's Public Reference Room, located at 888 First Street NE., Room 2A, Washington, DC 20426, Or by calling (202) 502-8371. This filing may also be viewed on the Commission's Web site at http://www.ferc.gov using the “eLibrary” link. Enter the docket number excluding the last three digits in the docket number field (P-1121) to access the document. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances related to this or other pending projects. A copy is also available for inspection and reproduction at the address in item (h) above.

    m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.

    n. Comments, Protests, or Motions to Intervene: Anyone may submit comments, a protest, or a motion to intervene in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211, and .214, respectively. In determining the appropriate action to take, the Commission will consider all protests or other comments filed, but only those who file a motion to intervene in accordance with the Commission's Rules may become a party to the proceeding. Any comments, protests, or motions to intervene must be received on or before the specified comment date for the particular application.

    o. Filing and Service of Documents: Any filing must (1) bear in all capital letters the title “COMMENTS”, “PROTEST”, or “MOTION TO INTERVENE” as applicable; (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person commenting, protesting or intervening; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, motions to intervene, or protests must set forth their evidentiary basis. Any filing made by an intervenor must be accompanied by a proof of service on all persons listed in the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 385.2010.

    Dated: April 30, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10573 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. ER15-1609-000] Kiyoshi Technologies, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding, of Kiyoshi Technologies, LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.

    Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.

    Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability is May 20, 2015.

    The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet access who will eFile a document and/or be listed as a contact for an intervenor must create and validate an eRegistration account using the eRegistration link. Select the eFiling link to log on and submit the intervention or protests.

    Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.

    The filings in the above-referenced proceeding(s) are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email [email protected] or call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.

    Dated: April 30, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10571 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 14628-001—Minnesota A-Mill Artist Lofts Hydroelectric Project] Minneapolis Lease Housing Associates IV, Limited Partnership; Notice of Revised Restricted Service List for a Programmatic Agreement for Managing Properties Included In or Eligible for Inclusion in the National Register of Historic Places

    On February 18, 2018, the Federal Energy Regulatory Commission (Commission) issued notice of a proposed restricted service list for the preparation of a programmatic agreement for managing properties included in, or eligible for inclusion in, the National Register of Historic Places at the proposed A-Mill Artist Lofts Hydroelectric Project No. 14628-001 (A-Mill Project). Rule 2010(d)(1) of the Commission's Rules of Practice and Procedure, 18 CFR 385.2010(d)(1) (2014), provides for the establishment of such a list for a particular phase or issue in a proceeding to eliminate unnecessary expense or improve administrative efficiency. Under Rule 385.2010(d)(4), persons on the official service list are to be given notice of any proposal to establish a restricted service list and an opportunity to show why they should also be included on the restricted service list or why a restricted service list should not be established.

    On April 7, 2015, Amy Burnette, Tribal Historic Preservation Officer for the Leech Lake Band of Ojibwe, filed a letter stating that the Leech Lake Band of Ojibwe does not have any known recorded sites of religious or cultural importance in the proposed project boundary, but they would like to be informed if any human remains or cultural importance objects are discovered.

    On February 20, 2015, the city of Minneapolis, requested to be a consulting party in that section 106 on the National Historic Preservation Act process so that it may stay apprised and provide project input.

    Under Rule 385.2010(d)(2), any restricted service list will contain the names of each person on the official service list, or the person's representative, who, in the judgment of the decisional authority establishing the list, is an active participant with respect to the phase or issue in the proceeding for which the list is established. The Leech Lake Band of Ojibwe and the city of Minneapolis have identified an interest in issues relating to the management of historic properties at the A-Mill Project. Therefore, they and their representatives will be added to the restrictive service list.

    Accordingly, the restricted service list issued on February 18, 2015, for the A-Mill Artist Lofts Project No. 14628 is revised to add the following persons:

    Amy Burnette or representative, Division of Resource Management, Leech Lake Tribal Historic Preservation Office, 190 Sailstar Drive NE., Cass Lake, MN 56633.

    Haila Maze, AICP, or representative, City of Minneapolis, Community Planning and Economic Development, 105 Fifth Avenue South—200, Minneapolis, MN 55401-2534.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10567 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. ER15-1612-000] Arrow Energy RRH, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding, of Arrow Energy RRH, LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.

    Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.

    Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability is May 20, 2015.

    The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet access who will eFile a document and/or be listed as a contact for an intervenor must create and validate an eRegistration account using the eRegistration link. Select the eFiling link to log on and submit the intervention or protests.

    Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.

    The filings in the above-referenced proceeding(s) are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email [email protected] or call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.

    Dated: April 30, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10572 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. CP15-115-000] National Fuel Gas Supply Corporation and Empire Pipeline, Inc.; Supplemental Notice of Intent To Prepare an Environmental Assessment for the Proposed Northern Access 2016 Project, Request for Comments on Environmental Issues, Notice of Environmental Site Review, and Notice of Public Scoping Meeting

    On October 22, 2014, the Federal Energy Regulatory Commission (FERC or Commission) issued in Docket No. PF14-18-000 a Notice of Intent to Prepare an Environmental Assessment for the Planned Northern Access 2016 Project, Request for Comments on Environmental Issues, and Notice of Public Scoping Meetings (NOI). In their application in the above-referenced docket, National Fuel Gas Supply Corporation (Supply) and Empire Pipeline Inc. (Empire) (collectively National Fuel) have since filed their proposed locations for one new compressor station and one natural gas dehydration facility in Niagara County, New York. This Supplemental Notice is being issued to seek comments on the new aboveground facilities and opens a new scoping period for interested parties to file comments on environmental issues specific to these facilities.

    The October 22, 2014 NOI announced that the FERC will prepare an environmental assessment (EA) to address the environmental impacts of the Northern Access 2016 Project (Project). Please refer to the NOI for more information about the facilities proposed by National Fuel in Pennsylvania and New York. The Commission will use this EA in its decision-making process to determine whether the project is in the public convenience and necessity.

    You can make a difference by providing us with your specific comments or concerns about the project. Your comments should focus on the potential environmental effects, reasonable alternatives, and measures to avoid or lessen environmental impacts. Your input will help Commission staff determine what issues they need to evaluate in the EA. To ensure that your comments are timely and properly recorded, please send your comments so that the Commission receives them in Washington, DC on or before May 29, 2015.

    The Commission previously solicited public input on the pipeline portion of the project in Pennsylvania and New York in the fall of 2014. We 1 are specifically seeking comments on the aboveground facilities to help the Commission staff determine what issues need to be evaluated in the EA. If you have previously submitted comments during the pre-filing review in docket no. PF14-18-000, you do not need to resubmit your comments at this time. Please note that this special scoping period will close on May 29, 2015.

    1 “We,” “us,” and “our” refer to the environmental staff of the Commission's Office of Energy Projects.

    This notice is being sent to the Commission's current environmental mailing list for this Project. State and local government representatives are asked to notify their constituents of this proposed Project and encourage them to comment on their areas of concern.

    A fact sheet prepared by the FERC entitled “An Interstate Natural Gas Facility on My Land? What Do I Need To Know?” is available for viewing on the FERC Web site (www.ferc.gov). This fact sheet addresses a number of typically-asked questions, including the use of eminent domain and how to participate in the Commission's proceedings.

    Public Participation

    For your convenience, there are three methods you can use to submit your comments to the Commission. The Commission will provide equal consideration to all comments received, whether filed in written form or provided verbally. The Commission encourages electronic filing of comments and has expert staff available to assist you at (202) 502-8258 or [email protected] Please carefully follow these instructions so that your comments are properly recorded.

    (1) You can file your comments electronically using the eComment feature located on the Commission's Web site (www.ferc.gov) under the link to Documents and Filings. This is an easy method for interested persons to submit brief, text-only comments on a project;

    (2) You can file your comments electronically using the eFiling feature located on the Commission's Web site (www.ferc.gov) under the link to Documents and Filings. With eFiling, you can provide comments in a variety of formats by attaching them as a file with your submission. New eFiling users must first create an account by clicking on “eRegister.” You must select the type of filing you are making. If you are filing a comment on a particular project, please select “Comment on a Filing”; or

    (3) You can file a paper copy of your comments by mailing them to the following address: Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Room 1A, Washington, DC 20426.

    (4) In lieu of sending written or electronic comments, the Commission invites you to attend the public scoping meeting its staff will conduct in the project area, scheduled as follows.

    FERC Public Scoping Meeting, Northern Access 2016 Project—Aboveground Facilities in NY, May 20, 2015, 7:00 p.m., Wendelville Fire Company, 7340 Campbell Boulevard, North Tonawanda, NY 14120.

    We will begin our sign up of speakers at 6:00 p.m. The scoping meeting will begin at 7:00 p.m. with a description of our environmental review process by Commission staff, after which speakers will be called. The meeting will end once all speakers have provided their comments or at 10:00 p.m., whichever comes first. Please note that there may be a time limit of three minutes to present comments, and speakers should structure their comments accordingly. If time limits are implemented, they will be strictly enforced to ensure that as many individuals as possible are given an opportunity to comment. The meetings are recorded by a stenographer to ensure comments are accurately recorded. Transcripts will be entered into the formal record of the Commission proceeding.

    National Fuel representatives will be present one hour prior to the start of the scoping meeting to provide additional information about the project and answer questions.

    Environmental Onsite Review

    Commission staff will conduct two environmental onsite reviews of National Fuel's proposed Pendleton Compressor Station site and its proposed Wheatfield Dehydration Facility. Notes from this onsite environmental site review will be posted to the docket.

    Summary of the Newly Proposed Facilities

    The aboveground facilities that are the focus of this notice are the new Pendleton Compressor Station and Wheatfield Dehydration Facility, both in Niagara County, New York. The general location of these proposed project facilities is shown in Appendix 1.2

    2 The appendices referenced in this notice are not being printed in the Federal Register. Copies of appendices were sent to all those receiving this notice in the mail and are available at www.ferc.gov using the link called “eLibrary” or from the Commission's Public Reference Room, 888 First Street NE., Washington, DC 20426, or call (202) 502-8371. For instructions on connecting to eLibrary, refer to the last page of this notice.

    The EA Process

    The National Environmental Policy Act (NEPA) requires the Commission to take into account the environmental impacts that could result from an action whenever it considers the issuance of a Certificate of Public Convenience and Necessity. NEPA also requires us to discover and address concerns the public may have about proposals. This process is referred to as scoping. The main goal of the scoping process is to focus the analysis in the EA on important environmental issues. By this notice, the Commission requests public comments on the scope of issues to address in the EA.

    In the EA, we will discuss impacts that could occur as a result of the construction and operation of the proposed Project under these general headings:

    • Geology;

    • soils;

    • water resources;

    • vegetation;

    • wildlife and aquatic resources;

    • fisheries and aquatic resources;

    • threatened, endangered, and other special-status species;

    • land use, recreation, special interest areas, and visual resources;

    • socioeconomics;

    • cultural resources;

    • air quality and noise;

    • reliability and safety; and

    • cumulative environmental impacts.

    We will also evaluate possible alternatives to the proposed Project or portions of the Project, and make recommendations on how to lessen or avoid impacts on the various resource areas.

    Please note that since National Fuel has filed an application for the proposed Project, a new docket number has been assigned (CP15-115-000). As part of our pre-filing review, we participated in public Open House meetings sponsored by National Fuel in the project area in August 2014 to explain the environmental review process to interested stakeholders. We also conducted public scoping meetings along the proposed pipeline route in November 2014. We have also contacted federal and state agencies to discuss their involvement in the scoping process and the preparation of the EA.

    The EA will present our independent analysis of the issues. We will publish and distribute the EA for public comment. After the comment period, we will consider all timely comments which will be addressed in the Commission's decisional order.

    With this notice, we are asking agencies with jurisdiction and/or special expertise with respect to environmental issues related to this Project to formally cooperate with us in the preparation of the EA. Agencies that would like to request cooperating agency status should follow the instructions for filing comments provided under the Public Participation section of this notice. Currently, the U.S. Army Corps of Engineers has expressed its intention to participate as a cooperating agency in the preparation of the EA to satisfy its NEPA responsibilities related to this Project.

    Consultations Under Section 106 of the National Historic Preservation Act

    In accordance with the Advisory Council on Historic Preservation's implementing regulations for section 106 of the National Historic Preservation Act, we are using this notice to initiate consultation with the applicable State Historic Preservation Offices and to solicit their views and those of other government agencies, interested Indian tribes, and the public on the Project's potential effects on historic properties.3 We will define the project-specific Area of Potential Effects in consultation with the State Historic Preservation Offices as the project develops. On natural gas facility projects, the Area of Potential Effects at a minimum encompasses all areas subject to ground disturbance (examples include construction right-of-way, contractor/pipe storage yards, compressor stations, and access roads). Our EA for this project will document our findings on the impacts on historic properties and summarize the status of consultations under section 106.

    3 The Advisory Council on Historic Preservation's regulations are at Title 36, Code of Federal Regulations, Part 800. Historic properties are defined in those regulations as any prehistoric or historic district, site, building, structure, or object included in or eligible for inclusion in the National Register of Historic Places.

    Environmental Mailing List

    The environmental mailing list includes federal, state, and local government representatives and agencies; elected officials; environmental and public interest groups; Native American Tribes; other interested parties; and local libraries and newspapers. This list also includes all affected landowners (as defined by the Commission's regulations) who are potential right-of-way grantors, whose property may be used temporarily for project purposes, or who own homes within certain distances of aboveground facilities, and anyone who submits comments on the Project. We will update the environmental mailing list as the analysis proceeds to ensure that we send the information related to this environmental review to all individuals, organizations, and government entities interested in and/or potentially affected by the proposed Project.

    Copies of the completed EA will be sent to the environmental mailing list for public review and comment. If you would prefer to receive a paper copy of the document instead of a CD version or would like to remove your name from the mailing list, please return the attached Information Request (appendix 2).

    Becoming an Intervenor

    In addition to involvement in the EA scoping process, you may want to become an “intervenor” which is an official party to the Commission's proceeding. Intervenors play a more formal role in the process and are able to file briefs, appear at hearings, and be heard by the courts if they choose to appeal the Commission's final ruling. An intervenor formally participates in the proceeding by filing a request to intervene. Instructions for becoming an intervenor are in the User's Guide under the “e-filing” link on the Commission's Web site.

    Additional Information

    Additional information about the Project is available from the Commission's Office of External Affairs, at (866) 208-FERC, or on the FERC Web site (www.ferc.gov) using the eLibrary link. Click on the eLibrary link, click on “General Search” and enter the docket number, excluding the last three digits in the Docket Number field (i.e., CP15-115). Be sure you have selected an appropriate date range. For assistance, please contact FERC Online Support at [email protected] or toll free at (866) 208-3676, or for TTY, contact (202) 502-8659. The eLibrary link also provides access to the texts of formal documents issued by the Commission, such as orders, notices, and rulemakings.

    In addition, the Commission offers a free service called eSubscription which allows you to keep track of all formal issuances and submittals in specific dockets. This can reduce the amount of time you spend researching proceedings by automatically providing you with notification of these filings, document summaries, and direct links to the documents. Go to www.ferc.gov/docs-filing/esubscription.asp.

    Public meetings or site visits will be posted on the Commission's calendar located at www.ferc.gov/EventCalendar/EventsList.aspx along with other related information.

    Finally, National Fuel has established a project contact (Emily Ciraolo), a toll-free phone number (1-800-634-5440 ext. 7861) and an email support address ([email protected]) so that parties can call them directly with questions about the project.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10557 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 137-178] Pacific Gas and Electric Company; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:

    a. Type of Application: Application for Temporary Variance of License Requirement.

    b. Project No.: 137-178.

    c. Date Filed: April 24, 2015, and supplemented April 29, 2015.

    d. Applicants: Pacific Gas and Electric Company (licensee).

    e. Name of Project: Mokelumne River Project.

    f. Location: Mokelumne River, South Fork Mokelumne River, Bear River, and their tributaries in Amador, Alpine, and Calaveras counties, California.

    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a-825r.

    h. Applicant Contact: Mr. Ezra Becker, License Coordinator, Pacific Gas and Electric Company, (415) 973-3082.

    i. FERC Contact: Mr. John Aedo, (415) 369-3335, or [email protected].

    j. Deadline for filing comments, motions to intervene, protests, and recommendations is 30 days from the issuance date of this notice by the Commission (April 29, 2015). The Commission strongly encourages electronic filing. Please file motions to intervene, protests, comments, or recommendations using the Commission's eFiling system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief comments up to 6,000 characters, without prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the end of your comments. For assistance, please contact FERC Online Support at [email protected], (866) 208-3676 (toll free), or (202) 502-8659 (TTY). In lieu of electronic filing, please send a paper copy to: Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426. Please include the project number (P-137-178) on any comments, motions to intervene, protests, or recommendations filed.

    k. Description of Request: The licensee requests Commission approval of a temporary variance of the minimum and pulse flow requirements at the project Upper Lakes under the requirements of the project license and Condition No. 7 of the U.S. Forest Service's (FS) section 4(e) Conditions. Specifically, the license requests that the 5 cubic feet per second (cfs) minimum flow requirement be reduced to 2 cfs below Lower Blue and Meadow Lakes from May 1, 2015 through the June 30, 2015. The licensee also requests Commission approval to forego the 5-day, 20 cfs pulse flow requirement in 2015 at Upper Blue, Lower Blue, and Meadow Lakes. The licensee states that the temporary variance is necessary to conserve water in order to ensure minimum flow releases through the fall and to maintain an adequate level to recreation opportunities at the Upper Lakes this summer.

    l. Locations of the Application: A copy of the application is available for inspection and reproduction at the Commission's Public Reference Room, located at 888 First Street, NE., Room 2A, Washington, DC 20426, or by calling (202) 502-8371. This filing may also be viewed on the Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number excluding the last three digits in the docket number field to access the document. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances related to this or other pending projects. For assistance, call 1-866-208-3676 or email [email protected], for TTY, call (202) 502-8659. A copy is also available for inspection and reproduction at the address in item (h) above.

    m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.

    n. Comments, Protests, or Motions to Intervene: Anyone may submit comments, a protest, or a motion to intervene in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211, .214. In determining the appropriate action to take, the Commission will consider all protests or other comments filed, but only those who file a motion to intervene in accordance with the Commission's Rules may become a party to the proceeding. Any comments, protests, or motions to intervene must be received on or before the specified comment date for the particular application.

    o. Filing and Service of Responsive Documents: Any filing must (1) bear in all capital letters the title “COMMENTS”, “PROTEST”, or “MOTION TO INTERVENE” as applicable; (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person protesting or intervening; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, motions to intervene, or protests must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). All comments, motions to intervene, or protests should relate to project works which are the subject of the license surrender. Agencies may obtain copies of the application directly from the applicant. A copy of any protest or motion to intervene must be served upon each representative of the applicant specified in the particular application. If an intervener files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency. A copy of all other filings in reference to this application must be accompanied by proof of service on all persons listed in the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10562 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 2101-096] Sacramento Municipal Utility District; Notice of Availability of Environmental Assessment

    In accordance with the National Environmental Policy Act of 1969 and the Federal Energy Regulatory Commission's (Commission) regulations, 18 CFR part 380 (Order No. 486, 52 FR 47897), the Office of Energy Projects has reviewed the application for amendment to authorize the construction of the new Slab Creek powerhouse and boating flow release valve for the Upper American River Hydroelectric Project. The project is located on Silver Creek and the Rubicon and South Fork American Rivers in El Dorado and Sacramento counties, California. The project occupies federal lands administered by the Bureau of Land Management and by the U.S. Forest Service within the Eldorado National Forest.

    The application, filed with the Commission on August 27, 2014, contains an Environmental Analysis in its Exhibit E (pages 49-143). On April 20, 2015, the licensee filed a supplemental biological resource analysis to its application. In staff's independent review of the licensee's Exhibit E and the April 20, 2015 supplement, staff has decided to adopt the licensee's Environmental Analysis and issue it as staff's Environmental Assessment (EA). The EA analyzes the potential environmental impacts of the project plus the proposed mitigation measures and concludes that granting the amendment to licensing would not constitute a major federal action that would significantly affect the quality of the human environment.

    A copy of the EA and the supplemental biological resource analysis is on file with the Commission and is available for public inspection. The EA and supplement may be viewed on the Commission's Web site at http://www.ferc.gov using the “eLibrary” link. Enter the docket number, excluding the last three digits in the docket number field, to access the document. For assistance, contact FERC Online Support at [email protected] or toll-free at 1-866-208-3676, or for TTY, (202) 502-8659.

    A copy of the EA may also be accessed using this link: http://elibrary.ferc.gov/IDMWS/common/opennat.asp?fileID=13623756.

    A copy of the supplement may also be accessed using this link: http://elibrary.ferc.gov/IDMWS/common/opennat.asp?fileID=13844884.

    You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances related to this or other pending projects. For assistance, contact FERC Online Support.

    All comments on the EA and supplement must be filed by May 29, 2015, and should reference Project No. 2101-096. The Commission strongly encourages electronic filing. Please file comments using the Commission's efiling system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief comments up to 6,000 characters, without prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the end of your comments. For assistance, please contact FERC Online Support. In lieu of electronic filing, please send a paper copy to: Kimberly D. Bose, Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.

    For further information, contact Rebecca Martin at (202) 502-6012 or [email protected]

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10563 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission Notice of Commission Staff Attendance

    The Federal Energy Regulatory Commission (Commission) hereby gives notice that members of the Commission's staff may attend the following meeting related to the transmission planning activities of the New York Independent System Operator, Inc.

    The New York Independent System Operator, Inc. Electric System Planning Working Group Meeting May 4, 2015, 10 a.m.-4:30 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/services/planning/index.jsp.

    The New York Independent System Operator, Inc. Electric System Planning Working Group Meeting May 12, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/services/planning/index.jsp.

    The New York Independent System Operator, Inc. Business Issues Committee Meeting May 13, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/committees/meeting_materials/index.jsp?com=bic.

    The New York Independent System Operator, Inc. Operating Committee Meeting May 14, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/committees/meeting_materials/index.jsp?com=oc.

    The New York Independent System Operator, Inc. Electric System Planning Working Group Meeting July 7, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/services/planning/index.jsp.

    The New York Independent System Operator, Inc. Electric System Planning Working Group Meeting July 30, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/services/planning/index.jsp.

    The New York Independent System Operator, Inc. Business Issues Committee Meeting August 12, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/committees/meeting_materials/index.jsp?com=bic.

    The New York Independent System Operator, Inc. Operating Committee Meeting August 13, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/committees/meeting_materials/index.jsp?com=oc.

    The New York Independent System Operator, Inc. Management Committee Meeting August 26, 2015, 10 a.m.-4 p.m. (EST)

    The above-referenced meeting will be via web conference and teleconference.

    The above-referenced meeting is open to stakeholders.

    Further information may be found at: http://www.nyiso.com/public/markets_operations/committees/meeting_materials/index.jsp?com=mc.

    The discussions at the meeting described above may address matters at issue in the following proceedings:

    Docket Nos. ER13-102, ER13-1942, ER13-1946, New York Independent System Operator, Inc. and New York Transmission Owners Docket No. ER13-1926, PJM Transmission Owners Docket Nos. ER13-1947, ER13-198, PJM Interconnection, L.L.C. Docket Nos. ER13-1957, ER13-193, ER13-196, ISO New England Inc. Docket No. ER13-1960, ISO New England Inc., Participating Transmission Owners Administrative Committee, and New England Power Pool Participants Committee

    For more information, contact James Eason, Office of Energy Market Regulation, Federal Energy Regulatory Commission at (202) 502-8622 or [email protected]

    Dated: April 30, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10577 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. ER15-1579-000] 67RK 8me LLC; Supplemental Notice that Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding, of 67RK 8me LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.

    Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.

    Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability is May 19, 2015.

    The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet access who will eFile a document and/or be listed as a contact for an intervenor must create and validate an eRegistration account using the eRegistration link. Select the eFiling link to log on and submit the intervention or protests.

    Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.

    The filings in the above-referenced proceeding(s) are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email [email protected] or call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10560 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. CP15-61-000] Northern Natural Gas Company; Notice of Withdrawal of Staff Protest to Proposed Blanket Certificate Activity

    Commission staff (Protestor) hereby withdraws its Protest to the Proposed Blanket Certificate Activity filed in the above-referenced proceeding on March 31, 2015.

    In its prior notice request filed on January 20, 2015 (in Docket No. CP15-61-000) and noticed on January 30, 2015,1 Northern Natural Gas Company (Northern) proposed to construct and abandon facilities in Clark and Codington Counties, South Dakota. Protestor protested the prior notice because the Sisseton-Wahpeton Oyate of the Lake Traverse Reservation indicated that it would be necessary to conduct a Traditional Cultural Properties (TCP) survey to ensure that no TCPs would be affected by construction. Northern had not provided the results of the TCP survey and/or updated communication with the tribe to ensure the project's compliance with the National Historic Preservation Act, as required under Appendix II to Subpart F of Part 157 of the Commission's regulations.

    1 Notice of the request was published in the Federal Register on February 5, 2015 (80 Fed. Reg. 6,512).

    Subsequent to the filing of the protest, Northern submitted communication from the Sisseton-Wahpeton Oyate of the Lake Traverse Reservation that stated the project would have no effect on historic resources, and revised alignment sheets to show the revised workspace to avoid the TCP site. Thus, Protestor's environmental concern has been satisfied. Accordingly, Protestor hereby withdraws its Protest to the Proposed Blanket Certificate Activity filed in the instant docket on March 31, 2015.

    Dated: April 30, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10569 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. EL14-37-000] PJM Interconnection, LLC; Notice Inviting Post-Technical Conference Comments

    On January 7, 2015, the Federal Energy Regulatory Commission (Commission) staff conducted a technical conference to evaluate whether: (1) PJM Interconnection, LLC's (PJM) Financial Transmission Rights (FTR) forfeiture rules as they apply to virtual transactions, including Up-to Congestion (UTC) transactions and INC/DEC transactions, are just and reasonable; and (2) PJM's current uplift allocation rules associated with UTC transactions and INCs/DECs are just and reasonable.

    All interested persons are invited to file post-technical conference comments on any or all of the questions listed in the attachment to this Notice. These comments must be filed with the Commission no later than 5:00 p.m. Eastern Time on May 29, 2015.

    For more information about this Notice, please contact:

    Carmen Gastilo Machuga (Legal Information), Office of the General Counsel, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8657, [email protected]. Elizabeth Topping (Technical Information), Office of Energy Policy and Innovation, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426 (202) 502-6731, [email protected]. Cathleen Colbert (Technical Information), Office of Enforcement, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, (202) 502-8997, [email protected]. Dated: April 29, 2015. Kimberly D. Bose, Secretary. Post-Technical Conference Questions for Comment

    In addition to any further responses to the questions posed in the Commission Staff's December 10, 2014 Supplemental Notice of Technical Conference,1 Commission Staff seeks responses to the following questions. Parties submitting comments need not respond to each question.

    1PJM Interconnection, L.L.C., Supplemental Notice of Technical Conference, Docket No. EL14-37-000 (December 10, 2014). http://elibrary.ferc.gov/idmws/common/opennat.asp?fileID=13707421.

    (1) FTR Forfeiture Rule

    (a) When calculating the contribution a virtual transaction (INC, DEC, or UTC) has to power flowing across a given constraint, how should the injection/withdrawal points for the virtual transaction be identified? Should the defined “worst case” node be limited to the market participant's own transactions? Additionally, should the impact threshold(s) used for triggering the forfeiture rule remain at 75 percent regardless of the injection/withdrawal points identified? Why or why not?

    (b) As an alternative to the current approach of assessing one virtual transaction at a time, should the FTR forfeiture rule collectively assess the net impact of a market participant's entire portfolio of INCs, DECs, and UTCs? Should it assess the net impact of all virtual transactions that clear the market? In addition to virtual transactions, should a market participant's portfolio of physical transactions be considered? Why or why not? If a portfolio approach were adopted, should the impact threshold(s) continue to be 75 percent, as used in the past, or is a different threshold(s) more appropriate? How could a portfolio approach be implemented?

    (c) Should counter-flow FTRs and bids that relieve congestion remain exempt from FTR forfeiture rule calculations? Should financial transactions that improve day-ahead and real-time market price convergence be exempt from the forfeiture rule? Why or why not? How, if at all, would these exemptions differ when assessing the impact of a market participant's portfolio as opposed to one INC, DEC, or UTC at a time? Are there any other currently exempt financial transactions that should be subject to FTR forfeiture calculations?

    (d) Should the application of the forfeiture rule to INCs, DECs and UTCs be revised in ways not addressed by these questions, and if so, describe in detail the proposed revision and justification for the change.

    (e) If you believe that changes to the current FTR Forfeiture Rule provisions of PJM's tariff are necessary, propose appropriate tariff language that you believe addresses your concern.

    (2) Uplift

    (a) Should UTCs be assessed uplift? Explain why or why not. If so, how, if at all, should this allocation differ from the allocation to individual INCs and DECs and “paired” INCs and DECs? Should INCs and DECs continue to be required to pay uplift charges? What effect does imposing these charges have on the ability of virtual traders to arbitrage day-ahead and real-time price differences?

    (b) Do UTCs impact unit commitment decisions? If so, how? Several views were expressed during the conference. For example, one panelist cited PJM documentation stating that UTCs are not included in commitment decisions.2 Other panelists expressed the view that both “paired” INCs and DECs and UTC's impact unit commitment.3

    2 January 7, 2015 Presentation of Wesley Allen, “Incremental Offers, Decrement Bids & Up To Congestion.” at pp 4-5.

    3 January 7, 2015 Technical Conference on Financial Transactions in PJM, Transcript 240:15-241:4 (Adam Keech); Id. at 242: 14-16 (Joseph Bowring).

    (c) Should market participants be allowed to net INC and DEC transactions for the purpose of uplift allocations? Why or why not? If yes, should netting within a market participant's portfolio (intra-market participant) be allowed or should market-wide (inter-market participant) netting be allowed? Should physical assets be included in the netting process? Please discuss the advantages and disadvantages to both approaches.

    (d) Are there other cost-causation approaches that should be considered? What advantages, disadvantages, and operational challenges would be associated with implementing such approaches in PJM?

    (e) If virtual transactions are assessed uplift, should the uplift be designed as a fixed amount known in advance to permit the traders to assess the costs of the trade versus the potential arbitrage differences between day-ahead and real-time?

    (f) If you believe that changes to the current Uplift provisions of PJM's tariff are necessary, propose appropriate tariff language that you believe addresses your concern.

    [FR Doc. 2015-10559 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 2323-206] TransCanada Hydro Northeast, Inc.; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:

    a. Type of Application: Request to Amend License Articles 409, 410, 411, and 413.

    b. Project No.: 2323-206.

    c. Date Filed: March 31, 2015.

    d. Applicant: TransCanada Hydro Northeast, Inc. (licensee).

    e. Name of Project: Deerfield River Hydroelectric Project.

    f. Location: Windham and Bennington counties, Vermont and Franklin and Berkshire counties, Massachusetts.

    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791(a)-825(r).

    h. Applicant Contact: John Ragonese, FERC License Manager, (603) 498-2851, or [email protected].

    i. FERC Contact: Alicia Burtner, (202) 502-8038, or [email protected].

    j. Deadline for filing comments, motions to intervene, protests, and recommendations is 30 days from the issuance date of this notice by the Commission.

    All documents may be filed electronically via the Internet. See, 18 CFR 385.2001(a)(1)(iii) and the instructions on the Commission's Web site at http://www.ferc.gov/docs-filing/efiling.asp. If unable to be filed electronically, documents may be paper-filed. To paper-file, an original and seven copies should be mailed to: Secretary, Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426. Commenters can submit brief comments up to 6,000 characters, without prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the end of your comments.

    Please include the project number (P-2323-206) on any comments, motions, or recommendations filed.

    k. Description of Request: The licensee requests the deletion or suspension of the requirements of license Articles 409, 410, 411, and 413 and the associated Atlantic Salmon Radio-Tagging Plan, as approved by the Commission on March 31, 1998. The requirements pertain to monitoring and restoring Atlantic salmon (Salmo salar) in the Connecticut River and its tributaries. Article 409 requires the licensee to construct, operate, and maintain a permanent upstream fish passage facility. Article 410 requires a plan to capture upstream migrating Atlantic salmon below the dam and transport them to river reaches above the dam or to hatchery facilities until permanent passage facilities, are completed. Article 411 requires monitoring of Atlantic salmon smolts through project fish passage facilities, and Article 413 requires an Atlantic Salmon Radio-Tagging Plan. The licensee indicates that the U.S. Fish and Wildlife Service, which had been actively stocking Atlantic salmon in the Connecticut River and its tributaries, has officially withdrawn support for the restoration program due to unsatisfactory results. The licensee indicates that its efforts under Articles 409, 410, 411, and 413 have no feasible chance of success without the U.S. Fish and Wildlife's stocking component.

    l. Locations of the Application: A copy of the application is available for inspection and reproduction at the Commission's Public Reference Room, located at 888 First Street NE., Room 2A, Washington, DC 20426, or by calling (202) 502-8371. This filing may also be viewed on the Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number excluding the last three digits in the docket number field to access the document. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances related to this or other pending projects. For assistance, call 1-866-208- 3676 or email [email protected], for TTY, call (202) 502-8659. A copy is also available for inspection and reproduction at the address in item (h) above.

    m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.

    n. Comments, Protests, or Motions to Intervene: Anyone may submit comments, a protest, or a motion to intervene in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211, .214. In determining the appropriate action to take, the Commission will consider all protests or other comments filed, but only those who file a motion to intervene in accordance with the Commission's Rules may become a party to the proceeding. Any comments, protests, or motions to intervene must be received on or before the specified comment date for the particular application.

    o. Filing and Service of Responsive Documents: Any filing must (1) bear in all capital letters the title “COMMENTS”, “PROTEST”, or “MOTION TO INTERVENE” as applicable; (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person protesting or intervening; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, motions to intervene, or protests must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). All comments, motions to intervene, or protests should relate to project works which are the subject of the variance. Agencies may obtain copies of the application directly from the applicant. A copy of any protest or motion to intervene must be served upon each representative of the applicant specified in the particular application. If an intervener files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency. A copy of all other filings in reference to this application must be accompanied by proof of service on all persons listed in the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.

    Dated: April 30, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10574 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 2310-207] Pacific Gas and Electric Company; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and Protests

    Take notice that the following hydroelectric application has been filed with the Commission and is available for public inspection:

    a. Type of Application: Application for Temporary Variance of License Requirement.

    b. Project No.: 2310-207.

    c. Date Filed: April 24, 2015.

    d. Applicants: Pacific Gas and Electric Company (licensee).

    e. Name of Project: Drum-Spaulding Project.

    f. Location: South Yuba River and Bear River in Placer and Nevada counties, California.

    g. Filed Pursuant to: Federal Power Act, 16 U.S.C. 791a-825r.

    h. Applicant Contact: Mr. Ezra Becker, License Coordinator, Pacific Gas and Electric Company, (415) 973-3082.

    i. FERC Contact: Mr. John Aedo, (415) 369-3335, or [email protected]

    j. Deadline for filing comments, motions to intervene, protests, and recommendations is 30 days from the issuance date of this notice by the Commission (April 29, 2015). The Commission strongly encourages electronic filing. Please file motions to intervene, protests, comments, or recommendations using the Commission's eFiling system at http://www.ferc.gov/docs-filing/efiling.asp. Commenters can submit brief comments up to 6,000 characters, without prior registration, using the eComment system at http://www.ferc.gov/docs-filing/ecomment.asp. You must include your name and contact information at the end of your comments. For assistance, please contact FERC Online Support at [email protected], (866) 208-3676 (toll free), or (202) 502-8659 (TTY). In lieu of electronic filing, please send a paper copy to: Secretary, Federal Energy Regulatory Commission, 888 First Street, NE., Washington, DC 20426. Please include the project number (P-2310-207) on any comments, motions to intervene, protests, or recommendations filed.

    k. Description of Request: The licensee requests a temporary variance of the minimum flow requirements at streamflow gage YB-292, located in Mormon Ravine above Newcastle Powerhouse. Specifically, the licensee requests that the instantaneous 5 cubic feet per second (cfs) minimum flow requirement be reduced to 3 cfs from May 11 to October 15, 2015. During this time the licensee would also maintain a target flow of 5 cfs, based on a 24-hour average flow at gage YB-292. The licensee states that the variance is necessary due to reduced water deliveries in the upstream canal system during the ongoing drought and the large fluctuations caused by irregular water withdrawals in the canal system made by other users.

    l. Locations of the Application: A copy of the application is available for inspection and reproduction at the Commission's Public Reference Room, located at 888 First Street NE., Room 2A, Washington, DC 20426, or by calling (202) 502-8371. This filing may also be viewed on the Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the docket number excluding the last three digits in the docket number field to access the document. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances related to this or other pending projects. For assistance, call 1-866-208- 3676 or email [email protected], for TTY, call (202) 502-8659. A copy is also available for inspection and reproduction at the address in item (h) above.

    m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.

    n. Comments, Protests, or Motions to Intervene: Anyone may submit comments, a protest, or a motion to intervene in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210, .211, .214. In determining the appropriate action to take, the Commission will consider all protests or other comments filed, but only those who file a motion to intervene in accordance with the Commission's Rules may become a party to the proceeding. Any comments, protests, or motions to intervene must be received on or before the specified comment date for the particular application.

    o. Filing and Service of Responsive Documents: Any filing must (1) bear in all capital letters the title “COMMENTS”, “PROTEST”, or “MOTION TO INTERVENE” as applicable; (2) set forth in the heading the name of the applicant and the project number of the application to which the filing responds; (3) furnish the name, address, and telephone number of the person protesting or intervening; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments, motions to intervene, or protests must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). All comments, motions to intervene, or protests should relate to project works which are the subject of the license surrender. Agencies may obtain copies of the application directly from the applicant. A copy of any protest or motion to intervene must be served upon each representative of the applicant specified in the particular application. If an intervener files comments or documents with the Commission relating to the merits of an issue that may affect the responsibilities of a particular resource agency, they must also serve a copy of the document on that resource agency. A copy of all other filings in reference to this application must be accompanied by proof of service on all persons listed in the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10564 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. ER15-1582-000] 65HK 8me LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 Authorization

    This is a supplemental notice in the above-referenced proceeding, of 65HK 8me LLC's application for market-based rate authority, with an accompanying rate schedule, noting that such application includes a request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability.

    Any person desiring to intervene or to protest should file with the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426, in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211 and § 385.214). Anyone filing a motion to intervene or protest must serve a copy of that document on the Applicant.

    Notice is hereby given that the deadline for filing protests with regard to the applicant's request for blanket authorization, under 18 CFR part 34, of future issuances of securities and assumptions of liability is May 19, 2015.

    The Commission encourages electronic submission of protests and interventions in lieu of paper, using the FERC Online links at http://www.ferc.gov. To facilitate electronic service, persons with Internet access who will eFile a document and/or be listed as a contact for an intervenor must create and validate an eRegistration account using the eRegistration link. Select the eFiling link to log on and submit the intervention or protests.

    Persons unable to file electronically should submit an original and 5 copies of the intervention or protest to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426.

    The filings in the above-referenced proceeding(s) are accessible in the Commission's eLibrary system by clicking on the appropriate link in the above list. They are also available for review in the Commission's Public Reference Room in Washington, DC. There is an eSubscription link on the Web site that enables subscribers to receive email notification when a document is added to a subscribed docket(s). For assistance with any FERC Online service, please email [email protected] or call (866) 208-3676 (toll free). For TTY, call (202) 502-8659.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10561 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Project No. 7856-027] Willow Creek Hydro, LLC; Notice of Termination Of License (Minor Project) by Implied Surrender and Soliciting Comments and Protests

    Take notice that the following hydroelectric proceeding has been initiated by the Commission:

    a. Type of Proceeding: Termination of license by implied surrender.

    b. Project No.: 7856-027.

    c. Date Initiated: April 29, 2015.

    d. Licensee: Willow Creek Hydro, LLC.

    e. Name and Location of Project: The Potosi Power Company Water Power Project, is located on the South Willow and Potosi Creeks, in Madison County, Montana and occupies 0.3 acres of federal lands within the Beaverhead National Forest.

    f. Filed Pursuant to: Standard Article 24.

    g. Licensee Contact Information: Ms. Jane Joslin, Willow Creek Hydro, LLC., 1 South Willow Creek, Pony, Montana 59747 and Mr. Darrin Brooks, Willow Creek Hydro, LLC., P.O. Box 267, Pony, Montana 59747, (406) 685-3330.

    h. FERC Contact: Ashish Desai, (202) 502-8370, [email protected].

    i. Deadline for filing comments and protests is 30 days from the issuance date of this notice by the Commission. Please file your submittal electronically via the Internet (eFiling) in lieu of paper. Please refer to the instructions on the Commission's Web site under http://www.ferc.gov/docs-filing/efiling.asp and filing instructions in the Commission's Regulations at 18 CFR 385.2001(a)(1)(iii). To assist you with eFilings you should refer to the submission guidelines document at http://www.ferc.gov/help/submission-guide/user-guide.pdf. In addition, certain filing requirements have statutory or regulatory formatting and other instructions. You should refer to a list of these “qualified documents” at http://www.ferc.gov/docs-filing/efiling/filing.pdf. You must include your name and contact information at the end of your comments. Please include the project number (P-7856-027) on any documents or motions filed. The Commission strongly encourages electronic filings; otherwise, you should submit an original and seven copies of any submittal to the following address: The Secretary, Federal Energy Regulatory Commission, Mail Code: DHAC, PJ-12, 888 First Street NE., Washington, DC 20426.

    j. Description of Project Facilities: (1) A 6-foot-high diversion structure; (2) a 2,300-foot-long penstock; (3) a powerhouse containing two generating units with a combined installed capacity of 300 kW; (4) a 10,000-foot-long underground transmission line; (5) a 2.5-mile-long, 12.5-kV overhead transmission line; and (6) appurtenant facilities.

    k. Description of Proceeding: The licensee is in violation of Article 24 of its license, which was issued October 7, 1985 (33 FERC ¶ 62,017). Article 24 states in part: If the Licensee shall abandon or discontinue good faith operation of the project or refuse or neglect to comply with the terms of the license and the lawful orders of the Commission, the Commission will deem it to be the intent of the Licensee to surrender the license.

    Commission records indicate that the project has not operated since the project penstock ruptured in 1994. After several years of correspondence regarding restoring project operation, the licensee has become non-responsive. The licensee most recently filed a plan and schedule to restore project operation with the Commission on February 6, 2014. By letter dated March 6, 2014, the Commission acknowledged the filing and required the licensee to file progress reports January 1 and June 1 of each year to ensure the licensee's continued progress towards restoring project operation. The licensee did not file the first progress report due on June 1, 2014. By letter dated November 12, 2014, the Commission indicated the licensee must file the overdue progress report, failure to do so would result in an implied surrender of the project license. To date, the licensee has not filed a response and the project remains inoperable.

    l. This notice is available for review and reproduction at the Commission in the Public Reference Room, Room 2A, 888 First Street NE., Washington, DC 20426. The filing may also be viewed on the Commission's Web site at http://www.ferc.gov/docs-filing/elibrary.asp. Enter the Docket number (P-7856-027) excluding the last three digits in the docket number field to access the notice. You may also register online at http://www.ferc.gov/docs-filing/esubscription.asp to be notified via email of new filings and issuances related to this or other pending projects. For assistance, call toll-free 1-866-208-3676 or email [email protected] For TTY, call (202) 502-8659.

    m. Individuals desiring to be included on the Commission's mailing list should so indicate by writing to the Secretary of the Commission.

    n. Comments and Protests—Anyone may submit comments or protests in accordance with the requirements of Rules of Practice and Procedure, 18 CFR 385.210 and 385.211. In determining the appropriate action to take, the Commission will consider all protests filed. Any protests must be received on or before the specified deadline date for the particular proceeding.

    o. Filing and Service of Responsive Documents—Any filing must (1) bear in all capital letters the title “COMMENTS or “PROTEST,” as applicable; (2) set forth in the heading the project number of the proceeding to which the filing responds; (3) furnish the name, address, and telephone number of the person commenting or protesting; and (4) otherwise comply with the requirements of 18 CFR 385.2001 through 385.2005. All comments or protests must set forth their evidentiary basis and otherwise comply with the requirements of 18 CFR 4.34(b). All comments or protests should relate to project works which are the subject of the termination of license. A copy of any protest must be served upon each representative of the licensee specified in item g above. A copy of all other filings in reference to this notice must be accompanied by proof of service on all persons listed in the service list prepared by the Commission in this proceeding, in accordance with 18 CFR 4.34(b) and 385.2010.

    p. Agency Comments—Federal, state, and local agencies are invited to file comments on the described proceeding. If any agency does not file comments within the time specified for filing comments, it will be presumed to have no comments.

    Dated: April 29, 2015. Kimberly D. Bose, Secretary.
    [FR Doc. 2015-10566 Filed 5-5-15; 8:45 am] BILLING CODE 6717-01-P
    DEPARTMENT OF ENERGY Federal Energy Regulatory Commission [Docket No. EL15-62-000] Chevron U.S.A. Inc.; Notice of Petition for Declaratory Order

    Take notice that on April 29, 2015, pursuant to Rule 207 of the Federal Energy Regulatory Commission's (Commission) Rules of Practice and Procedure, 18 CFR 385.207, Chevron U.S.A. Inc. (Petitioner) filed a petition for declaratory order requesting that the Commission confirm that certain qualifying cogeneration facilities indirectly owned by or affiliated with the Petitioner are exempt from section 203 of the Federal Power Act under 18 CFR 292.601(c), as more fully explained in the petition.

    Any person desiring to intervene or to protest this filing must file in accordance with Rules 211 and 214 of the Commission's Rules of Practice and Procedure (18 CFR 385.211, 385.214). Protests will be considered by the Commission in determining the appropriate action to be taken, but will not serve to make protestants parties to the proceeding. Any person wishing to become a party must file a notice of intervention or motion to intervene, as appropriate. Such notices, motions, or protests must be filed on or before the comment date. Anyone filing a motion to intervene or protest must serve a copy of that document on the Petitioner.

    The Commission encourages electronic submission of protests and interventions in lieu of paper using the “eFiling” link at http://www.ferc.gov. Persons unable to file electronically should submit an original and 5 copies of the protest or intervention to the Federal Energy Regulatory Commission, 888 First Street NE., Washington, DC 20426

    This filing is accessible on-line at http://www.ferc.gov, using the “eLibrary” link and is avai