Federal Register Vol. 81, No.146,

On September 30, 2015, President Obama signed into law the Agriculture Reauthorizations Act of 2015, Public Law 114-54 (The Reauthorization Act). In addition to extending certain provisions of the USGSA (7 U.S.C. 71-87k) to 2020, the Reauthorization Act also made several changes to the existing law. Therefore, GIPSA issued a proposed rule in the Federal Register to amend 7 CFR part 800 to comply with the amendments made by the Reauthorization Act and solicited comments from interested parties (81 FR 3970). Specifically, GIPSA proposed to:

• Remove the requirement to officially weigh inbound barge shipments at export port locations (§ 800.15 and § 800.216);

• approve requests for waivers of official inspection and weighing requirements for export grain in “emergencies or other circumstances that would not impair the objectives of the [USGSA] whenever the parties to a contract for such shipment mutually agree to the waiver and documentation of such agreement is provided to the Secretary prior to shipment” (§ 800.18);

• base the portion of fees assessed on tonnage on the 5-year rolling average of export tonnage volume (§ 800.71);

• adjust fees annually to maintain a 3 to 6 month operating reserve for inspection and supervision services (§ 800.71);

• remove the provision that allows applicants to request service from an official agency outside an assigned geographic region after 90 days of nonuse of service (§ 800.117);

• waive the geographic boundaries established for official agencies between two adjacent official agencies if both official agencies agree in writing to the waiver (§ 800.117);

• without changing current termination dates, terminate inspection licenses every 5 years instead of every 3 years (§ 800.175);

• require delegated States to notify GIPSA of any intent to temporarily discontinue official inspection or weighing services at least 72 hours in advance, except in the case of a major disaster (§ 800.195);

• review delegated states every 5 years and certify that they comply with the requirements for delegation under the USGSA (§ 800.195);

• require designated official agencies to respond to concerns identified during GIPSA's consultations with customers as part of the renewal of a designation (§ 800.196); and

• extend the minimum length of designation for official agencies from 3 years to 5 years (§ 800.196).

GIPSA last made changes to its fee schedule on May 1, 2013 (78 FR 22151-66). At that time, GIPSA determined that the existing fee schedule for inspection and weighing services would not generate sufficient revenue to adequately cover program costs through fiscal year 2017. To correct this problem and to build an operating reserve, GIPSA increased fees by 5 percent in fiscal year 2013 and an additional 2 percent for each successive year through fiscal year 2017.

In addition, GIPSA restructured its tonnage fees to more accurately reflect the administrative and supervisory costs at the national and local level. In order to establish an equitable tonnage fee for all export tonnage utilizing the official system, GIPSA began assessing the national tonnage fee on all export grain inspected and/or weighed (excluding land carrier shipments to Canada and Mexico) by delegated States and designated agencies. GIPSA also shifted workers compensation costs from the national to the local level to fully reflect where those workers compensation costs originated.

Prior to the Reauthorization Act, GIPSA used projected future tonnage volumes as a basis to calculate tonnage fees. The Reauthorization Act amended the USGSA to require that tonnage fees be based on the five-year rolling average of export tonnage volumes. In order to comply with this new tonnage fee requirement, GIPSA proposed to adjust both the national and local tonnage fees on a yearly basis. GIPSA proposed that the national tonnage fee would be the national program administrative costs (the costs of management and support of official inspection and weighing) for the previous fiscal year divided by the average export tonnage for the previous 5 fiscal years. Also, the local tonnage fees would be the Field Office administrative costs (the costs of management, support, and maintenance of each Field Office) for the previous fiscal year divided by the average tonnage serviced by that Field Office for the previous 5 fiscal years.

The Reauthorization Act further requires adjustment of all of GIPSA's fees for the performance, supervision, and administration of official inspection and weighing services at least annually to maintain a 3 to 6 month operating reserve. Given that the number of requests for official inspection and weighing services varies with the amount of grain produced and exported from year to year, an operating reserve allows funding of operations in periods during which revenue may not equal or exceed costs. In order to maintain an appropriate level of operating reserve, GIPSA proposed to increase or decrease inspection and weighing fees when the operating reserve is less than 3 times or more than 6 times monthly operating expenses. For each $1 million that the operating reserve is below 3 months or above 6 months of the operating expenses, GIPSA would increase or decrease fees by 2 percent, respectively. GIPSA also proposed to set a 5 percent limit on changes to fees for service per calendar year. GIPSA's annual user fee revenue for performance, supervision, and administration of official inspection and weighing is approximately $40 million. Therefore, an increase or decrease of 2 to 5 percent would approximately equal between $0.8 and $2 million annually.

In addition to these annual reviews of fees, GIPSA will continue to evaluate the financial status of the official inspection and weighing services to ensure that the revenue for each service covers the cost to GIPSA of providing that service. Also, GIPSA will continue to seek out cost saving measures and implement appropriate changes to reduce costs and minimize the need for fee increases.

This action is authorized under the USGSA (7 U.S.C. 79(j)), which provides for the establishment and collection of fees that are reasonable and, as nearly as practicable, cover the costs of the services rendered, including associated administrative and supervisory costs. The tonnage fees cover the GIPSA administrative and supervisory costs for the performance of GIPSA's official inspection and weighing services; including personnel compensation and benefits, travel, rent, communications, utilities, contractual services, supplies, and equipment.

The Reauthorization Act requires changes to GIPSA's exception program for official agencies to operate outside of their geographically assigned areas. Prior to the Reauthorization Act, the regulations provided for three types of exceptions: Timely service, nonuse of service for 90 consecutive days, and barge probe inspections. The Reauthorization Act amended the USGSA to eliminate the nonuse of service exception and add a provision for geographically adjacent agencies to provide service in each other's assigned geographic territories at an applicant's request if both agencies agree in writing. GIPSA proposed to revise the current regulations to comply with the changes to the USGSA by the Reauthorization Act.

GIPSA currently has 95 agreements for agencies to operate outside of their assigned territories and GIPSA will continue to honor those agreements. Under GIPSA's proposed rule, an agency would be permitted to provide service at a location in another adjacent agency's territory, provided that both agencies and the applicant for service submit an agreement in writing to GIPSA.

As required by the Reauthorization Act, GIPSA proposed to impose new requirements on State agencies that GIPSA delegates to perform export inspection and weighing services at export port locations under the USGSA. The Reauthorization Act requires the Secretary to certify that State agencies continue to meet statutory requirements. Accordingly, GIPSA will review each delegated state every 5 years to determine that it meets the criteria for delegation set forth in the USGSA. GIPSA proposed to implement a process mirroring the existing process that GIPSA uses to renew the designations of official agencies. The Reauthorization Act also requires that a delegated State must notify GIPSA in writing of any intent to discontinue providing official service at least 72 hours prior to discontinuation. GIPSA proposed to add this requirement to the section of the regulations concerning responsibilities of delegated States (7 CFR 800.195(f)).

The Reauthorization Act amended the USGSA (7 U.S.C 77(a)(1)) to state, “The Secretary shall waive the foregoing requirement [that all grain exported from the U.S. be officially inspected and weighed] in emergency or other circumstances that would not impair the objectives of this chapter whenever the parties to a contract for such shipment mutually agree to the waiver and documentation of such agreement is provided to the Secretary prior to shipment.” This change to the USGSA substituted the word “shall” in place of the former word “may,” indicating that GIPSA no longer has discretion to approve waivers of official inspection and weighing requirements in emergencies. For this reason, GIPSA determined that it is important to clarify what constitutes an emergency.

In the proposed rule, GIPSA proposed to define the term “emergency” in 7 CFR 800.00 as “a situation outside the control of the Service or a delegated State that prevents prompt issuance of certificates in accordance with § 800.160(c).” The proposed rule linked the definition of “emergency” to the timely issuance of certificates. Upon further reflection, linking waivers to certification does not cover situations where no service is provided. Certificates would never be issued in circumstances where no official inspection or weighing occurs. Accordingly, GIPSA is revising the definition of “emergency” from the proposed rule to more closely tie emergency situations to the ability of GIPSA or a delegated State to provide official services in a timely manner when requested. The issuance of certificates, as described in 7 CFR 800.160(c), provides that a certificate must be issued by the close of business on the next business day after inspection or weighting. The proposed regulation incorporated that time period. Currently, 7 CFR 800.18(b)(6) provides a 24-hour period for granting a waiver for circumstances in which service is not available. Because GIPSA is no longer linking emergency waivers with only the issuance of certificates in 800.160(c), GIPSA has decided to set the determination for emergency waivers based on this same time frame as 800.18(b)(6).

Timely service delivery ensures that GIPSA will continue to facilitate the marketing of cereals and oilseeds and issue certificates in accordance with the regulations. To that end, the emergency waiver provisions provide a mechanism for grain shipments to continue in a situation that prevents service delivery within 24 hours of the scheduled service time.

GIPSA received nine comments in response to the proposed rule published January 25, 2016, in the Federal Register (81 FR 3970). One comment was a request for extension of the comment period, which GIPSA granted on February 24, 2016 (81 FR 9122). Two grain industry associations submitted a joint comment, which was supported by an additional submission from several other grain industry associations. Other comments were submitted by an association of official inspection agencies, a farm organization, a grain elevator operator, and two private individuals, one of whom submitted two separate comments. Two of the eight comments concerned quinoa and rice standards, commodities which are not covered under the USGSA and this rulemaking. All comments were supportive of the proposed rule, with some suggested changes to the proposed regulations. Suggestions are addressed below in the order they appear in the regulations.

Several commenters suggested changes to GIPSA's proposed definition of the term “emergency.” The grain industry associations suggested that GIPSA remove the terms “outside of the control of the Service or a delegated State” from the definition. They felt this would allow GIPSA to use excuses to avoid issuing emergency waivers. The farm organization commented that waivers of official inspection and weighing, even in emergency situations, could impair the objectives of the USGSA. They suggested that GIPSA define “emergency,” as narrowly as possible.

GIPSA notes that the intent of Congress in changing the language of the USGSA is to remove the Secretary's discretionary authority to deny emergency waivers. But, GIPSA does not agree with the industry associations' comment that GIPSA does not have the authority to define the term through the rulemaking process. Without a concrete definition, what constitutes an emergency is ambiguous and requires clarification.

For example, the industry associations' suggestion that any situation that prevents service should constitute an emergency is far too broad. This suggestion makes possible “emergency” situations in cases where the applicant or other interested party could have otherwise taken steps to allow official inspection or weighing to occur. GIPSA does agree, however, with the industry associations' comment that whether the situation is under the control of GIPSA should not matter for determining an emergency. But, GIPSA also agrees with the farm organization's comment that excessive waivers could impair the USGSA as they allow grain to be exported from the U.S. without official inspection or weighing.

Therefore, GIPSA finds it important to define “emergency” in the regulations to prevent future confusion over what does and does not constitute an emergency. GIPSA is adopting a definition of “emergency” to describe situations outside of the control of the applicant for service, as defined in the regulations. Under this definition, applicants would still be responsible for complying with the requirements for obtaining official service listed in 7 CFR 800.46.

The industry associations and farm organization both addressed the issuance of waivers in circumstances other than emergencies. The industry associations point out that the language of the USGSA provides for mandatory waivers in instances other than emergencies for “other circumstances that would not impair the objectives of the USGSA when the buyer and seller agree to waive official inspection and weighing requirements.” The associations requested that GIPSA revise the language in 7 CFR 800.18(b)(7)(A) and (B) to be inclusive of this. The associations contend that waivers must be granted regardless of whether an “emergency” exists. The farm organization maintains that by allowing grain to ship without certification of quality or quantity, waivers impair the objectives of the USGSA and should not be granted in non-emergency situations.

7 CFR 800.18 provides for two categories of waivers: (1) Emergency and (2) other circumstances that do not impair the objectives of the USGSA. The Reauthorization Act removed GIPSA's discretionary authority to approve such waivers but added to the second category the condition that the parties to a contract must mutually agree to the waiver and provide documentation to GIPSA. The proposed rule incorporated portions of this language in 7 CFR 800.18, but review of the comments showed that this interpretation would be misconstrued to connect “emergency waivers” with the “other circumstances” waivers.

In the Congressional findings and declaration of policy (7 U.S.C. 74), the objectives of the USGSA include “that grain may be marketed in an orderly and timely manner and that trading in grain may be facilitated” and “that the primary objective of the official United States standards for grain is to certify the quality of grain as accurately as practicable.”

GIPSA already provides for waivers in “other circumstances that would not impair objectives of [the USGSA]” in 7 CFR 800.18. GIPSA provides waivers for: Elevators that ship fewer than 15,000 metric tons in a calendar year, grain exported for seeding purposes, grain shipped in bond, grain exported by rail or truck to Canada or Mexico, grain not sold by grade (7 U.S.C. 77 provides for this specific category of waiver), service not available, and high quality specialty grain shipped in containers. GIPSA has determined that these circumstances, as described in the regulations, do not impair the objectives of the USGSA and that granting them helps facilitate the marketing of U.S. grain. GIPSA has historically used the notice-and-comment process of the Federal Register to determine which circumstances do not impair the objectives of the USGSA. Soliciting public opinion is the best method for determining other classes of waivers that do not impair the objectives of the USGSA. GIPSA agrees with the farm organization that waivers run counter to the objective of certifying grain as accurately as practicable and that excessive waivers would lead to a loss of confidence in U.S. exports. Provided that parties reach mutual agreement and provide notice to GIPSA, the amended USGSA requires GIPSA to consider what other circumstances for waivers would not impair the objectives of the USGSA. Additional general regulation is not required. For these reasons, GIPSA is omitting the proposed sections 800.118(b)(7)(B) & (C) from the final rule and is not adding a new blanket category of waivers for situations in which the buyer and seller agree to waive official inspection or Class X weighing.

The grain industry associations recommend that GIPSA use the midpoint of the 3 to 6 month reserve figure as the determination of when fees are to be adjusted. They suggest that fees should be raised or lowered based on whether they exceed or fall below 4.5 months reserve. They agreed with GIPSA's proposal of 2 percent increase per $1 million above or below the target amount, though they disagreed with GIPSA's proposal of a 5 percent limit per year on increases or decreases and suggested there be no limit.

GIPSA agrees with the recommendation of setting the trigger for adjusting fees at the midpoint of 4.5 months reserve. This target should better help GIPSA to maintain a 3 to 6 month operating reserve. GIPSA disagrees with the grain industry associations' suggestion that there be no limit. GIPSA believes that a yearly limit on fee increases and decreases is necessary to provide a more stable fee structure from year to year, which affects all sectors of the industry. While a large decrease would likely be welcomed by producers, marketers, and consumers, GIPSA believes that the possibility of a large increase in future years would be untenable to these same groups. In the April 15, 2013, fee rule (78 FR 22151), GIPSA increased fees by 5 percent in the first year and by 2 percent in each ensuing year, in order to minimize the impact of a large increase. GIPSA feels that the annual 5 percent cap follows this precedent of minimizing the impact of large fee changes. Moreover, if the monthly operating reserve falls outside the 3 to 6 month reserve by an amount that cannot be adjusted by the automatic corrections established in this regulation, then GIPSA will reconsider the fees through additional rulemaking.

The grain industry associations recommended that GIPSA suspend the fee for supervision of official agency inspection and weighing, which GIPSA has done with a notice in the June 28, 2016, edition of the Federal Register (81 FR 41790). Their recommendations for changes to fees for rice and commodity inspections fall outside the scope of this rulemaking.

The grain industry associations recommended that GIPSA perform annual reviews of all fees in Schedule A of 7 CFR 800.71 in order to keep them in balance with each other. GIPSA currently conducts such a review approximately every five years. GIPSA proposed adding language to the regulations declaring its intent to continue periodic reviews. These reviews are intended to ensure that the fees for service are closely aligned with GIPSA's costs to provide these services. These reviews, along with departmental approval, comment solicitation, and comment review are often lengthy and costly processes. Because the automatic increases and decreases of all fees should maintain a 3 to 6 month operating reserve, GIPSA believes a complete review of fees every year would impose unnecessary time and money costs that would exceed any potential gain to stakeholders.

The grain industry associations recommended that GIPSA perform an annual review of expenses and work to bring those expenses down. They also mentioned that GIPSA should publish financial data for the preceding fiscal year by the beginning of the ensuing calendar year.

GIPSA is aware that the export grain industry is highly competitive and operates on slim margins. Accordingly, GIPSA takes measures to reduce costs whenever possible. In the recent past, GIPSA reduced cost by taking advantage of employee attrition to not fill positions after retirement, using intermittent and seasonal employees in export offices, and using alternative work schedules in order to reduce employee overtime hours. GIPSA publishes extensive financial data in its annual report to Congress. Additionally, GIPSA has made and will continue to make financial information available on its public Web site prior to the release of the annual report to Congress.

The commenter representing an official inspection agency association recommended that GIPSA change the proposed language in 7 CFR 800.117(b)(3) to reflect the intent of Congress to remove GIPSA's discretion to approve waivers of official agency boundaries based on signed agreements. They acknowledge that GIPSA must still be notified of such agreements and review the agreements for compliance with the USGSA. Another commenter expressed support for allowing such agreements between adjacent official agencies. Since the Reauthorization Act amended the USGSA to read that “the Secretary shall allow a designated official agency to cross boundary lines” if certain provisions are met (7 U.S.C. 79(f)(2)), GIPSA agrees with the recommendation and is changing the language contained in the proposed rule.

The grain industry association commenters recommended a few changes to GIPSA's proposed rule language concerning delegations of State agencies. They recommended that a delegated State must notify all affected export port locations and elevator operators, in addition to notifying GIPSA, 72 hours in advance of any intent to discontinue service. They also recommended including language requiring GIPSA to notify Congress within 24 hours of any disruption.

The Reauthorization Act only requires delegated States to notify GIPSA of any intent to discontinue service, while requiring GIPSA to “immediately take such actions as are necessary to address the disruption and resume inspections or weighings” (7 U.S.C. 77(d)(1)). Under such circumstances, it would fall on GIPSA to provide notification to customers. GIPSA declines to include language in the regulations concerning its requirement to notify Congress, as that is already required by the USGSA (7 U.S.C. 77(d)(2)) and inclusion in the regulations is unnecessary.

Additionally, the industry commenters recommended that the reviews of delegated States should start no later than September 30, 2016, and that funding for the reviews be derived solely from appropriated funds. GIPSA intends to conduct formal reviews for each of the five delegated States mirroring the existing process that GIPSA uses to renew the designations of official agencies. GIPSA intends to conduct the first review prior to September 30, 2016, and plans to conduct reviews for every State before certain provisions of the USGSA are set to expire on October 1, 2020. GIPSA finds that the inclusion of language in the regulations concerning the funding of delegation review through appropriated funds to be unnecessary. The USGSA only authorizes user fees to cover the costs incidental to official inspection and weighing and related supervision and administration activities (7 U.S.C. 79(j) and 7 U.S.C. 79a(l)). Appropriated funds are authorized to perform compliance activities (7 U.S.C. 87h), which includes delegation reviews.

Based on the above review of comments received in response to 81 FR 3970, GIPSA is amending the regulations of 7 CFR part 800 as outlined in the proposed rule, with exceptions noted in the comment review.

The Office of Management and Budget has designated this rulemaking as not significant under Executive Order 12866, “Regulatory Planning and Review” and Executive Order 13563, “Improving Regulation and Regulation Review.” Since grain export volume can vary significantly from year to year, estimating the impact in any future fee changes can be difficult. GIPSA recognizes the need to provide predictability to the industry for inspection and weighing fees. While not required by the Reauthorization Act, this rulemaking limits the impact of a large annual change in fees by setting an annual cap of 5 percent for increases or decreases in inspection and weighing fees. The statutory requirement to maintain an operating reserve between 3 and 6 months of operating expenses ensures that GIPSA can adequately cover its costs without imposing an undue burden on its customers.

Currently, GIPSA regularly reviews its user-fee financed programs to determine if the fees charged for performing official inspection and weighing services adequately cover the cost of providing those services. This policy remains unchanged in this proposed regulation. GIPSA will continue to seek out cost saving measures and implement appropriate changes to reduce its costs to provide alternatives to fee increases.

This rulemaking is unlikely to have an annual effect of $100 million or more or adversely affect the economy. The changes to the regulation in this rulemaking are a direct response to Congressional action. Also, under the requirements set forth in the Regulatory Flexibility Act (RFA) (5 U.S.C. 601-12), GIPSA has considered the economic impact of this rulemaking on small entities. The purpose of the Regulatory Flexibility Act is to fit regulatory actions to the scale of businesses subject to such actions. This ensures that small businesses will not be unduly or disproportionately burdened. GIPSA is issuing this rulemaking solely because the Reauthorization Act amended the USGSA, which requires that the regulations be updated to reflect the changes made to the USGSA by the Reauthorization Act.

The Small Business Administration (SBA) defines small businesses by their North American Industry Classification System Codes (NAICS). This rulemaking affects customers of GIPSA's official inspection and weighing services in the domestic and export grain markets (NAICS code 115114). Fees for that program are in Schedules A (Tables 1-3) and B of section 800.71 of GIPSA's regulations (7 CFR 800.71).

Under the USGSA, all grain exported from the United States must be officially inspected and weighed. GIPSA provides mandatory inspection and weighing services at 45 export facilities in the United States and 7 facilities for U.S. grain transshipped through Canadian ports. Five delegated State agencies provide mandatory inspection and weighing services at 13 facilities. All of these facilities are owned by multi-national corporations, large cooperatives, or public entities that do not meet the requirements for small entities established by the SBA. Further, the provisions of this rulemaking apply equally to all entities. The USGSA requires the registration of all persons engaged in the business of buying grain for sale in foreign commerce. In addition, those persons who handle, weigh, or transport grain for sale in foreign commerce must also register. The regulations found at 7 CFR 800.30 define a foreign commerce grain business as persons who regularly engage in buying for sale, handling, weighing, or transporting grain totaling 15,000 metric tons or more during the preceding or current calendar year. Currently, there are 108 businesses registered to export grain, most of which are not small businesses.

Most users of the official inspection and weighing services do not meet the SBA requirements for small entities. Further, GIPSA is required by statute to make services available to all applicants and to recover the costs of providing such services as nearly as practicable, while maintaining a 3 to 6 month operating reserve. There are no additional reporting, record keeping, or other compliance requirements imposed upon small entities as a result of this rulemaking. GIPSA has not identified any other federal rules which may duplicate, overlap, or conflict with this rulemaking. Because this rulemaking does not have a significant economic impact on a substantial number of small entities, an initial regulatory flexibility analysis is not provided.

This rulemaking has been reviewed under Executive Order 12988, “Civil Justice Reform.” This rulemaking does not preempt State or local laws, regulations, or policies unless they represent an irreconcilable conflict with this rulemaking. This rulemaking does not have retroactive effect.

This rulemaking has been reviewed under Executive Order 13132, “Federalism.” The policies in this rulemaking do not have any substantial direct effect on States, on the relationship between federal government and the States, or on the distribution of power and responsibilities among various levels of government, except as required by law. This rulemaking does not impose substantial direct compliance costs on State and local governments. Because States already retain records for their ordinary operations, § 800.195(g)(4) should not have a significant impact on State governments. Therefore, consultation with the States is not required.

This rulemaking has been reviewed under Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” To our knowledge, this rulemaking does not have tribal implications that require tribal consultation under Executive Order 13175. If a Tribe requests consultation, GIPSA will work with the USDA Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions, and modifications identified in this rulemaking are not expressly mandated by the Reauthorization Act.

In compliance with the Paperwork Reduction Act of 1995 (44 U.S.C. chapter 35), the information collection and record keeping requirements included in this rulemaking have been approved by the OMB under control number 0580-0013, which expires on January 31, 2018.

GIPSA is committed to complying with the Government Paperwork Elimination Act, which requires Government agencies in general to provide the public the option of submitting information or transacting business electronically to maximum extent possible.

GIPSA 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.

For the reasons set out in the preamble, GIPSA amends 7 CFR part 800 as follows:

Each year the NRC staff develops the NRC's Common Prioritization of Rulemaking report, which is used to develop rulemaking program budget estimates and to determine the relative priority of rulemaking activities. During the most recent review of ongoing and potential rulemaking activities, the NRC staff identified seven rulemaking activities in various stages of development, which the Commission approved to be discontinued. For transparency, the NRC staff is including in this action an additional eighth activity that the Commission has already provided initial direction to discontinue.

A discussion of the NRC's decision to discontinue these eight rulemaking activities is provided in Sections III through X of this document.

When the NRC staff identifies a rulemaking activity that can be discontinued, they will request, through a Commission paper, approval from the Commission to discontinue it. The Commission provides its decision in an SRM. If the Commission approves discontinuing the rulemaking activity, the NRC will inform the public of the decision to discontinue it.

A rulemaking activity may be discontinued at any stage in the rulemaking process. For a rulemaking activity that has received public comments, the NRC will consider those comments before discontinuing the rulemaking activity; however, the NRC will not provide individual comment responses.

After Commission approval to discontinue the rulemaking activity, in the next edition of the Unified Agenda, the NRC will update the entry for the rulemaking activity to indicate that it is no longer being pursued. The rulemaking activity will appear in the completed section of that edition of the Unified Agenda but will not appear in future editions.

The NRC began an enhanced participatory process to evaluate alternative courses of action for control of solid materials at NRC-licensed facilities that have very low amounts of, or no amount of, radioactivity. As part of this process, the NRC published an Issues Paper in the Federal Register on June 30, 1999 (64 FR 35090), requesting public comment on various alternatives. The NRC also held a series of public meetings during the fall of 1999. The Issues Paper described the following process alternatives: (1) Continue the current NRC practice of case-by-case consideration of licensee requests for release of solid material and consider updating existing guidance; or (2) conduct a rulemaking to establish criteria for control of solid materials. The Issues Paper indicated that a rulemaking could have three technical approaches: (1) Permit release of solid materials for unrestricted use if the potential dose to the public from this use is less than a specified level determined during the rulemaking process; (2) restrict release of solid materials to only certain authorized uses; or (3) do not permit either unrestricted or restricted release of solid materials that have been in an area where radioactive material has been used or stored, and instead require all these materials to go to a licensed low-level waste disposal facility.

The agency received over 900 comment letters containing around 2,379 individual comments on the Issues Paper, in addition to those summarized from the public meeting transcripts. The comments were summarized in NUREG/CR-6682, “Summary and Categorization of Public Comments on Controlling the Disposition of Solid Materials,” published in September 2000 (ADAMS Accession No. ML040720691). Comments were received from essentially every stakeholder group, including environmental and citizen's groups, members of the general public, scrap and recycling companies, steel and cement manufacturers, hazardous and solid waste management facilities, U.S. Department of Energy, State agencies, Tribal governments, scientific organizations, international organizations, NRC licensees, and licensee organizations. Most of the comments focused on the specific technical approach or criteria that should be developed and reflected a broad spectrum of viewpoints on the issues related to control of solid materials. The NRC staff considered all the comments received.

The NRC staff submitted a draft proposed rule to the Commission, SECY-05-0054, “Proposed Rule: Radiological Criteria for Controlling the Disposition of Solid Materials,” dated March 31, 2005 (ADAMS Package Accession No. ML041550790). The NRC staff proposed this rule to the Commission because the NRC wanted to improve the efficiency and effectiveness of the NRC regulatory process by establishing criteria for the disposition of solid materials in the regulations. This proposed rule would have added radiological criteria for controlling the disposition of solid materials that have no, or very small amounts of, residual radioactivity resulting from licensed operations, and which originate in restricted or impacted areas of NRC-licensed facilities. In the SRM for SECY-05-0054, dated June 1, 2005 (ADAMS Accession No. ML051520185), the Commission disapproved publication of the proposed rule at that time [emphasis added] because the NRC was “faced with several high priority and complex tasks, the current approach to review specific cases on an individual basis is fully protective of public health and safety, and the immediate need for this rule has changed due to the shift in timing for reactor decommissioning.”

This rulemaking continued to be on hold while the Commission was focused on enhancing security and emergency preparedness and response as well as beginning preparations for new authorizations under the Energy Policy Act of 2005, including new nuclear facility licensing and regulation.

The NRC has decided not to proceed with this rulemaking activity because, even though there has been a recent increase in decommissioning, the current regulatory framework provides for case by case approval of alternate disposal procedures under 10 CFR 20.2002. To date, the NRC has received a limited number of licensee requests per year. The NRC staff is conducting a low-level waste programmatic assessment. As part of this assessment, the NRC staff will conduct a scoping study of various low-level waste issues. If the NRC staff determines a need to pursue rulemaking as a result of this study, then the NRC staff will request Commission approval for the rulemaking.

The NRC published an advance notice of proposed rulemaking (ANPR) in the Federal Register (66 FR 52551; October 16, 2001) to request public comment on the issues surrounding the feasibility of entombment. The ANPR was published because the NRC was considering an amendment to its regulations that would have clarified the use of entombment for power reactors. The NRC had determined that entombment of power reactors was a technically viable decommissioning alternative and could be accomplished safely. The ANPR also included dose criteria for license termination. The dose criteria given in the ANPR included a provision that would have permitted license termination under restricted and unrestricted release conditions.

The agency received 19 comment letters on the ANPR from States, licensees, the Nuclear Energy Institute, the U.S. Environmental Protection Agency (EPA), the Conference of Radiation Control Program Directors' E-24 Committee, the Southeast Compact Commission, and a private individual. There was no consensus on a preferred option; some commenters supported the entombment option while other commenters did not. In general, comments from the eight utilities and the Nuclear Energy Institute stated that they would like to have entombment available as a decommissioning option; however, none committed to using entombment as a decommissioning process.

The NRC has decided not to proceed with this rulemaking activity because the three decommissioning options, which include entombment for power reactors, are currently being considered within the rulemaking for reactor decommissioning. Specifically, in the SRM for SECY-14-0118, “Request by Duke Energy Florida, Inc., for Exemptions from Certain Emergency Planning Requirements,” dated December 30, 2014 (ADAMS Accession No. ML14364A111), the Commission directed the NRC staff to proceed with rulemaking on reactor decommissioning.

On August 28, 2002 (67 FR 55175), the NRC published a proposed rule in the Federal Register that would have required prior NRC approval for transfers of source material derived from licensees' specifically licensed material to ensure that these transfers do not pose a health and safety concern.

The NRC received 25 comments from individuals, industrial groups, environmental organizations, and State and Federal government agencies. A summary of comments and issues raised by commenters includes the following: (1) Proposed release limits were inconsistent with part 20 of title 10 of the Code of Federal Regulations (10 CFR); (2) better clarification was needed regarding doses applied to non-disposal transfers; (3) the only technical basis discussed was based on an overly conservative assessment; (4) the proposed rule was inconsistent with the existing exemption in 10 CFR 40.13(a); (5) these transfers could impact public health and safety; (6) the environmental assessment was insufficient and the NRC should develop an environmental impact statement; (7) more information was needed about implementation of the rule; (8) the policy was inconsistent with past documents issued by the Commission on this subject; (9) the rule should also apply to general licensees; (10) there should be a minimum quantity level below which approvals for transfer would not be needed; (11) the number of transfers were underestimated; (12) the NRC underestimated the impact to industry because Agreement State licensees were not included in the regulatory analysis; and (13) differing commenter opinions on whether to include the word “disposes” in the authorized activities in 10 CFR 40.13(a). Several commenters commented on the agency's question on whether the regulations should include new requirements specifically prohibiting intentional dilution. Several commenters were against including new regulations for dilution because they believed that it would potentially lead to additional, unnecessary burdens for industry. Several commenters thought that regulations should be added to prevent intentional dilution for purposes of waste treatment and disposal. Some of these commenters thought that “intentional dilution” needed to be better defined. The NRC staff considered all the comments received.

The NRC has decided not to proceed with this rulemaking activity because the concerns are being considered in other regulatory processes. Specifically, there is ongoing work related to SECY-03-0068, “Interagency Jurisdictional Working Group Evaluating the Regulation of Low-Level Source Material or Materials Containing Less than 0.05 Percent by Weight Concentration Uranium and/or Thorium,” dated May 1, 2003 (ADAMS Package Accession No. ML030920468), and recent discussions with the U.S. Environmental Protection Agency that would allow certain low-level wastes to be disposed of in Resource Conservation and Recovery Act (commonly known as RCRA) sites. In addition, the NRC has decided not to proceed with this rulemaking activity because the NRC has, on a case-by-case basis, successfully dealt with the issues this rulemaking activity would have addressed.

On May 4, 2006 (71 FR 26267), the NRC published an ANPR in the Federal Register to request public comment on an approach that would have established a comprehensive set of risk-informed and performance-based requirements applicable for all nuclear power reactor technologies as an alternative to current requirements. At the time the ANPR was published, the NRC already had an ongoing effort to revise some specific regulations to make them risk-informed and performance-based. The rulemaking would have used operating experience, lessons learned from the rulemaking activities, and advances in the use of risk-informed technology to focus NRC and industry resources on the most risk-significant aspects of plant operations to better protect public health and safety. The set of new alternative requirements would have been intended primarily for new nuclear power reactors, although they would have been available to existing reactor licensees.

The ANPR included 73 questions about the proposed rulemaking scope and plan. The NRC received 15 comment submittals from the regulated industry, consensus standard committees, private individuals, and a foreign regulatory body. Many of the public comments supported the concept of a risk-informed, performance-based regulatory framework and the development of technology-neutral regulations. Some public comments recommended that it was too soon to develop the proposed framework and that the NRC and the industry needed to pilot the licensing of advanced reactor technology using the current 10 CFR parts 50 and 52 frameworks to identify challenges. Some comments did not support the framework as described in the ANPR because it did not require specific design standards and asserted that it did not adequately employ consensus standards that have been demonstrated as adequate and safe for existing reactors. The NRC staff considered all the comments received.

In SECY-07-0101, “Staff Recommendations Regarding a Risk-Informed and Performance-Based Revision to 10 CFR part 50,” dated June 14, 2007 (ADAMS Package Accession No. ML070790253), the NRC staff requested that the Commission defer the rulemaking activity until after the development of the licensing strategy for the Next Generation Nuclear Plant (NGNP) or receipt of an application for design certification or a license for the Pebble Bed Modular Reactor. In the SRM for SECY-07-0101, dated September 10, 2007 (ADAMS Accession No. ML072530501), the Commission approved the NRC staff's recommendation to defer the rulemaking activity. In the same SRM, the Commission approved the NRC staff's proposal to provide a recommendation on initiating a rulemaking 6 months after the development of the licensing strategy for the NGNP was finalized. In 2011, the U.S. Department of Energy decided not to proceed with Phase 2 design activities because of fiscal constraints, competing priorities, projected cost of the prototype, and inability to reach a cost share agreement with the industry. As a result, the NRC no longer has a viable demonstration project to reference. Therefore, the NRC has decided not to proceed with this rulemaking activity or continue to expend resources tracking this rulemaking, which is now 10 years old. The NRC has several initiatives underway that would further risk-inform and performance-base the regulatory framework. Discontinuing this particular rulemaking would not preclude other ongoing or future risk-informed, performance-based initiatives.

The NRC is open to new opportunities to explore a risk-informed, performance-based licensing strategy. In the past 2 years, there has been renewed U.S. industry and Executive Branch interest in advanced non-light water reactors (LWRs). The NRC is working to develop a regulatory process to address the unique aspects of these designs within the current regulatory framework. A new risk-informed, performance-based framework has the potential to address some of these unique aspects assuming that the necessary supporting data is available. Currently the advanced non-LWR designs have not reached a level of maturity that would support development of a regulatory basis for rulemaking.

When supporting data is available, the NRC staff would reevaluate the need for rulemaking.

On April 11, 2008, the NRC published a proposed rule in the Federal Register (73 FR 19749) that would have expanded the current National Source Tracking System (NSTS) to include certain additional sealed sources. This rule would have required licensees to report certain transactions involving these sealed sources to the NSTS; these transactions included the manufacture, transfer, receipt, disassembly, or disposal of the nationally tracked source. Each licensee would have had to provide its initial inventory of nationally tracked sources to the NSTS and annually verify and reconcile the information in the system with the licensee's actual inventory.

The NRC received 19 comment letters from States, licensees, industry organizations, and individuals. Almost all of the comment letters were opposed to expanding the NSTS as proposed for the following reasons: (1) The rule is premature and should be delayed to allow time to refine the burden estimates in the regulatory analysis using actual experience from the current NSTS; (2) the NSTS should be fully operational and successfully tracking currently required sources before the NRC adds additional sources to NSTS; and (3) there needs to be additional justification of the security risks posed by these sources before incurring the additional regulatory burden. The NRC staff considered all the comments received.

Based on public comments, the NRC staff requested the Commission to defer completion of the NSTS final rule (SECY-09-0011, “Deferral of Rulemaking: Expansion of National Source Tracking System (RIN 3150-AI29),” dated January 15, 2009 (ADAMS Accession No. ML083540566)).

On May 11, 2009, a copy of a draft final rule was provided to the Agreement States for review. The Executive Boards of the Organization of Agreement States and the Conference of Radiation Control Program Directors provided comments. The agency received 26 comments from individual states. All of the comments received from the States, except one, opposed the NSTS expansion final rule. Most of the commenters cited a risk that implementing the rule would shift limited personnel resources away from what they believe are more near-term and tangible health and safety aspects of radiation protection.

The Commission was unable to reach a decision on the NRC staff's recommendation to defer the NSTS final rule (SRM for SECY-09-0011, dated May 28, 2009 (ADAMS Accession No. ML091480775)). Instead, the Commission directed the NRC staff to conduct a data and system operations and performance analysis of the NSTS based on system operation with Category 1 and 2 sources and report to the Commission. The NRC staff conducted these analyses and reported to the Commission.

The NRC has decided not to proceed with this rulemaking activity because the existing regulatory basis, draft proposed rule, and final proposed rule are now out of date. This rulemaking was developed and proposed as the NSTS was being developed and deployed in late 2008. Since 2009, the NRC published 10 CFR part 37, “Physical Protection of Category 1 and Category 2 Quantities of Radioactive Material” (78 FR 16922; March 19, 2013); gained significant experience in the management and operation of the National Source Tracking System (see http://www.nrc.gov/security/byproduct/ismp/nsts.html); and deployed two on-line applications to support validation of licenses, the Web-Based Licensing System (see http://www.nrc.gov/security/byproduct/ismp/wbl.html) and the License Verification System (see http://www.nrc.gov/security/byproduct/ismp/lvs.html). The NRC staff is conducting a program review of 10 CFR part 37, which includes an assessment of whether additional measures are warranted for Category 3 materials. Following completion of the 10 CFR part 37 assessment, if the NRC staff determines that the NSTS should be expanded, then the NRC staff will request Commission approval for the rulemaking. The NRC staff will be reporting to the Commission and the Congress on this review in 2016.

In SECY-12-0066, “Criminal Penalties for the Unauthorized Introduction of Weapons into Facilities Designated by the U.S. Nuclear Regulatory Commission and for Sabotage of Nuclear Facilities or Fuel,” dated April 26, 2012 (ADAMS Accession No. ML120200150), the NRC staff recommended, in part, that the Commission defer a decision on whether to proceed with a rulemaking to revise 10 CFR 73.81, “Criminal penalties,” to add certain radioactive material or other property to the scope of criminal penalties for sabotage authorized under in Section 236, “Sabotage of Nuclear Facilities or Fuel,” of the Atomic Energy Act of 1954, as amended (AEA).

In SECY-12-0066, the NRC staff noted that the NRC had not previously issued regulations to implement the authority of Section 236 of the AEA. Instead, the NRC has viewed the language of this statute as plain enough to enable the U.S. Department of Justice (DOJ) to initiate prosecutions for criminal acts, particularly involving the most significant facilities that the NRC regulates, including nuclear power reactors and fuel cycle facilities. This rulemaking would have allowed the NRC to identify certain radioactive material or other property for inclusion within the scope of Section 236.a(7) of the AEA if the Commission determined that this material or other property was significant to public health and safety or common defense and security. The NRC staff evaluated whether further rulemaking was needed to expand nuclear facilities, nuclear waste, or nuclear fuel covered under the scope of Section 236 of the AEA. The NRC staff evaluated (1) materials in 10 CFR part 73, appendix I, “Category 1 and 2 Radioactive Materials” (material list in appendix A to 10 CFR part 37); (2) production reactor spent nuclear fuel and naval reactor spent nuclear fuel, and (3) source material in the physical form of uranium hexafluoride.

In SECY-12-0066, the NRC staff discussed why these materials were chosen for evaluation and the application of Section 236.a(3) of the AEA. The NRC staff stated that “Including certain radioactive material or other property within the scope of the criminal penalties in Section 236 of the AEA may provide DOJ with additional tools for combating terrorists and other malevolent actors.” However, the NRC staff noted that a determination of the list of radionuclides and quantities to use in a subsequent rulemaking would need to be coordinated with NRC activities to implement Recommendation 2 of the 2010 Radiation Source Protection and Security Task Force Report [task force recommendations appear in SECY-11-0169, “U.S. Nuclear Regulatory Commission Implementation Plan for the Radiation Source Protection and Security Task Force Report” (ADAMS Package Accession No. ML113070551)], as well as consideration of ongoing actions related to chemical security. The NRC staff indicated that it could not develop the required regulatory basis for a rulemaking to expand the scope of Section 236 of the AEA to include these materials until these activities are completed. The Commission approved the NRC staff's recommendation in the SRM for SECY-12-0066, dated June 18, 2012 (ADAMS Accession No. ML121700765).

The NRC staff completed the additional activities discussed in SECY-12-0066 and informed the Commission that there was no compelling reason to revise 10 CFR 73.81 to implement the scope authority provided by Section 236 of the AEA to provide criminal sanctions for sabotage of nuclear facilities, nuclear waste, and nuclear fuel or other property.

The NRC has decided not to proceed with this rulemaking activity because the NRC staff has concluded that a rulemaking to modify 10 CFR 73.81 to implement the new authority of Section 236 of the AEA would not serve as an effective deterrent for individuals intent on committing sabotage of nuclear facilities, nuclear waste, or nuclear fuel or other property and is not warranted at this time.

In COMSECY-04-0037, “Fitness-for-Duty Orders to Address Fatigue of Nuclear Facility Security Force Personnel,” dated June 21, 2004 (ADAMS Accession No. ML040790094), the NRC staff requested Commission approval to issue security orders concerning fitness-for-duty enhancements to address fatigue concerns for security force personnel at five classes of NRC-licensed facilities: (1) Independent Spent Fuel Storage Installations, (2) Decommissioning Reactors, (3) Category I Fuel Cycle Facilities, (4) Gaseous Diffusion Plants, and (5) the Natural Uranium Conversion Facility. In the SRM for COMSECY-04-0037, dated September 1, 2004 (ADAMS Accession No. ML042450533), the Commission directed the NRC staff to pursue the rulemaking process rather than issuing security orders for those materials facilities and personnel for whom the NRC staff believes fatigue related requirements are necessary.

On June 18, 2014 (FR 79 34641), the NRC published a draft regulatory basis for public comment in the Federal Register to support the potential amendments to revise a number of existing security-related regulations relating to physical protection of special nuclear material at NRC-licensed facilities and in transit, as well as the fitness for duty programs for security officers at Category I fuel cycle facilities. The draft regulatory basis encompassed three separate rulemaking efforts: (1) Enhanced Security at Fuel Cycle Facilities, (2) Special Nuclear Material Transportation Security, and (3) Security-Force Fatigue at Category I Fuel Cycle Facilities.

During the public comment period the two Category I fuel cycle licensees proposed an alternative to the Security-Force Fatigue rulemaking. Specifically, the affected licensees proposed adding a fatigue management program for security officers into their security plans. On April 22, 2015 (80 FR 22434), the NRC published the final regulatory basis that explained that the NRC had decided to separate the regulatory basis activities for the Security-Force Fatigue at Category I Fuel Cycle Facilities to allow staff time to explore the alternative to rulemaking proposal.

The NRC has decided not to proceed with the Security-Force Fatigue rulemaking activity because, after reviewing the two licensees' proposed changes to their security plans to manage security officer fatigue, NRC licensing staff considers the proposal a viable option because it will establish fatigue requirements that can be readily inspected and enforced for the two Category I fuel cycle licensees within their security plans.

On May 17, 2011 (76 FR 28336), the NRC published a proposed rule in the Federal Register, proposing to amend its regulations by adding additional requirements for source material licensees who possess significant quantities of uranium hexafluoride (UF6). The proposed amendments would require these licensees to conduct integrated safety analyses (ISAs) similar to the ISAs performed by 10 CFR part 70 licensees; set possession limits for UF6 for determining licensing authority (NRC or Agreement States); add defined terms; add an additional evaluation criterion for applicants who submit an evaluation in lieu of an emergency plan; require the NRC to perform a backfit analysis under specified circumstances; and make administrative changes to the structure of the regulations. The NRC held a public meeting on February 22, 2008, to discuss the scope of the proposed rulemaking and to seek public input on the proposed threshold quantities for determining when a facility will be regulated by the NRC or an Agreement State.

The agency received nine comment letters addressing multiple issues. Comments on the proposed rule were submitted on behalf of several affected States, by industry representatives, NRC licensees, and an individual. The comments and responses were grouped into eight areas: General, procedural, definitions, performance requirements, jurisdiction/authority, backfitting, reporting, and corrections. Most of the comments were generally opposed to the proposed changes to the regulations. Several comments questioned the cost amounts used in the regulatory analysis. All the commenters opposed the probabilistic risk assessment. The NRC staff considered all the comments received.

The NRC staff submitted a draft final rule to the Commission in SECY-12-0071, “Final Rule: Domestic Licensing of Source Material—Amendments/Integrated Safety Analysis (RIN 3150-A150),” dated May 7, 2012 (ADAMS Accession No. ML12094A344). The draft final rule was revised from the proposed rule based on comments from Agreement States and the public. In the SRM for SECY-12-0071, dated May 3, 2013 (ADAMS Accession No. ML13123A127), the Commission disapproved publication of the draft final rule. The Commission directed the NRC staff to revise the rule and associated guidance to address issues given in the SRM and to resubmit the rule for Commission consideration.

In COMSECY-15-0002, “Termination of Rulemaking to Revise Title 10 of The Code of Federal Regulations Part 40, ‘Domestic Licensing of Source Material' and Staff Plans to Address Other Items in Staff Requirements Memorandum for SECY-12-0071 (RIN 3150-A150)” (ADAMS Accession No. ML13331A559), the NRC staff proposed termination of this rulemaking. The NRC staff based this recommendation on: (1) Honeywell's existing uranium conversion facility, and the licensed but as yet un-built uranium deconversion facility to be operated by International Isotopes; both already have newly approved ISAs as required by their licenses, (2) the NRC does not anticipate new applications for 10 CFR part 40 uranium conversion or deconversion facilities in the foreseeable future, (3) the hazards at Honeywell's uranium conversion facility and the hazards at International Isotopes planned uranium deconversion facility are facility-specific and sufficiently controlled, (4) the NRC staff's reanalysis of the rule has reduced the priority of the rulemaking, and (5) consideration of the cumulative effects of regulation. The agency plans to develop Interim Staff Guidance related to 10 CFR part 70 facilities. The Commission approved termination of this rulemaking in the SRM for COMSECY-15-0002, dated April 17, 2015 (ADAMS Accession No. ML15107A488).

The NRC staff is including discussion of this decision in this document to inform members of the public.

The NRC is no longer pursuing the eight rulemaking activities for the reasons discussed in this document. In the next edition of the Unified Agenda, the NRC will update the entry for these rulemaking activities with reference to this document to indicate that they are no longer being pursued. These rulemaking activities will appear in the completed section of that edition of the Unified Agenda but will not appear in future editions. Should the NRC determine to pursue anything in these areas in the future, it will inform the public through a new rulemaking entry in the Unified Agenda.

The U.S. Department of Energy (DOE) published a final rule in the Federal Register on July 18, 2016 (“the July 18 final rule”), that established a final coverage determination and test procedures for miscellaneous refrigeration products. 81 FR 46767. In that rulemaking, DOE made drafting errors in the preamble and regulatory text. Specifically, DOE inadvertently amended 10 CFR 430.23 to add paragraph (dd) to coolers and combination cooler refrigeration products. That paragraph, however, is already assigned to portable air conditioners. Accordingly, references to paragraph (dd) must be corrected to refer to paragraph (ff). In order to remedy this error, DOE is correcting the preamble on page 46783, section 2., second paragraph where DOE references 10 CFR 430.23(dd). DOE is also correcting amendatory instruction 10.b. on page 46792, and the reference to paragraph (dd) on page 46794. The effective date for this rule is August 17, 2016.

In final rule FR Doc. 2016-14389, published in the issue of Monday, July 18, 2016, (80 FR 46767), the following corrections are made:

1. On page 46783, first column, second paragraph, 5th line, the existing text “10 CFR 430.23 (dd)” is corrected to read as “10 CFR 430.23 (ff)”.

2. On page 46792, third column, amendatory instruction 10.b. is corrected to read as follows:

The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is impracticable because these procedures would significantly delay issuance of the design approval and thus delivery of the affected airplanes.

In addition, the substance of these special conditions has been subject to the public-comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon publication in the Federal Register.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On March 26, 2015, Embraer applied for a type design change for their new Model EMB-545 and EMB-550 airplanes. These airplanes, currently approved under type certificate no. TC00062IB, are conventional configurations with low wing and T-tail empennage. The primary structure is metal with composite empennage and control surfaces. The EMB-545 is designed for a maximum of 9 passengers and the EMB-550 is designed for a maximum of 12 passengers. Both are equipped with two Honeywell HTF7500-E medium-bypass-ratio turbofan engines mounted on aft-fuselage pylons.

Both airplane models have an interior configuration that includes single- and multiple-place side-facing seats (both seating configurations referred to as side-facing seats) that include an airbag system in the shoulder belt for these seats, per special conditions no. 25-495-SC; and an airbag system to limit the axial rotation of the upper leg (femur).

Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Embraer must show that the Model EMB-545 and EMB-550 airplanes meet the applicable provisions of the regulations listed in type certificate no. TC00062IB, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Model EMB-545 and EMB-550 airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Model EMB-545 and EMB-550 airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

The Model EMB-545 and EMB-550 airplanes will incorporate the following novel or unusual design features:

An airbag system designed to limit the axial rotation of the upper leg on single-place and multiple-place side-facing seats.

The FAA has developed a methodology to address all fully side-facing seats (seats positioned in the airplane with the occupant facing 90 degrees to the direction of airplane travel), and documented those requirements in special conditions 25-495-SC specifically for these airplanes, including special conditions for the installation of airbag systems in shoulder belts. Special condition 2(e) of those special conditions contain safety criteria to address the potential for serious upper-leg injuries.

Serious leg injuries, such as femur fracture, can occur in aviation side-facing seats. Such injuries could threaten the occupant's life directly or eliminate the occupant's ability to evacuate the airplane. Limiting upper-leg axial rotation to a conservative limit of 35 degrees (approximately the 50-percentile range of motion) should limit the risk of serious leg injury. Research suggests that the angle of rotation can be determined by observing lower-leg flailing in typical high-speed video of the dynamic tests. Alternately, the anthropomorphic test dummy could be instrumented to directly measure upper-leg axial rotation. This requirement complies with the intent of the § 25.562(a) injury criteria in preventing serious leg injury.

To comply with special condition 2(e) on some seat positions, Embraer proposes to install leg-flail airbags. This airbag is not addressed in special conditions 25-495-SC. Therefore, the FAA must issue new special conditions to address this leg-flail airbag installation. These special conditions are similar to other special conditions previously issued for airbags.

The FAA has issued special conditions in the past for airbag systems on lap belts for some forward-facing seats. These special conditions for the airbag system in the shoulder belt are based on the previous special conditions for airbag systems on lap belts with some changes to address the specific issues of side-facing seats. The special conditions are not an installation approval. Therefore, while the special conditions relate to each such system installed, the overall installation approval is a separate finding, and must consider the combined effects of all such systems installed.

These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

As discussed above, these special conditions are applicable to Model EMB-545 and EMB-550 airplanes. Should Embraer apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well.

This action affects only certain novel or unusual design features on one model series of airplanes. It is not a rule of general applicability.

The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would significantly affect the certification of the airplane, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon publication in the Federal Register. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for Embraer Model EMB-550 and Model-545 series airplanes.

In addition to the requirements of §§ 25.562 and 25.785, and special conditions no. 25-495-SC, the following special conditions are part of the type certification basis for the Embraer Model EMB-545 and EMB-550 series airplanes with leg-flail airbags installed on side-facing seats.

1. For seats with a leg-flail airbag system, the system must deploy and provide protection under crash conditions where it is necessary to prevent serious injury. The means of protection must take into consideration a range of stature from a 2-year-old child to a 95th-percentile male. At some buttock popliteal length and effective seat-bottom depth, the lower legs will not be able to form a 90-degree angle relative to the upper leg; at this point, the lower leg flail would not occur. The leg-flail airbag system must provide a consistent approach to prevention of leg flail throughout that range of occupants whose lower legs can form a 90-degree angle relative to the upper legs when seated upright in the seat. Items that need to be considered include, but are not limited to, the range of occupants' popliteal height, the range of occupants' buttock popliteal length, the design of the seat effective height above the floor, and the effective depth of the seat-bottom cushion.

2. The leg-flail airbag system must provide adequate protection for each occupant regardless of the number of occupants of the seat assembly, considering that unoccupied seats may have an active leg-flail airbag system.

3. The leg-flail airbag system must not be susceptible to inadvertent deployment as a result of wear and tear, or inertial loads resulting from in-flight or ground maneuvers (including gusts and hard landings), and other operating and environmental conditions (vibrations, moisture, etc.) likely to occur in service.

4. Deployment of the leg-flail airbag system must not introduce injury mechanisms to the seated occupant, or result in injuries that could impede rapid egress.

5. Inadvertent deployment of the leg-flail airbag system, during the most critical part of the flight, must either meet the requirement of § 25.1309(b), or not cause a hazard to the airplane or its occupants.

6. The leg-flail airbag system must not impede rapid egress of occupants from the airplane 10 seconds after airbag deployment.

7. The leg-flail airbag system must be protected from lightning and high-intensity radiated fields (HIRF). The threats to the airplane specified in existing regulations regarding lightning (§ 25.1316) and HIRF (§ 25.1317) are incorporated by reference for the purpose of measuring lightning and HIRF protection.

8. The leg-flail airbag system must function properly after loss of normal airplane electrical power, and after a transverse separation of the fuselage at the most critical location. A separation at the location of the leg-flail airbag system does not have to be considered.

9. The leg-flail airbag system must not release hazardous quantities of gas or particulate matter into the cabin.

10. The leg-flail airbag system installation must be protected from the effects of fire such that no hazard to occupants will result.

11. A means must be available to verify the integrity of the leg-flail airbag system's activation system prior to each flight, or the leg-flail airbag system's activation system must reliably operate between inspection intervals. The FAA considers that the loss of the leg-flail airbag system's deployment function alone (i.e., independent of the conditional event that requires the leg-flail airbag system's deployment) is a major-failure condition.

12. The airbag inflatable material may not have an average burn rate of greater than 2.5 inches per minute when tested using the horizontal flammability test defined in part 25, appendix F, part I, paragraph (b)(5).

13. The leg-flail airbag system, once deployed, must not adversely affect the emergency-lighting system (i.e., block floor-proximity lights to the extent that the lights no longer meet their intended function).

The FAA has determined that notice of, and opportunity for prior public comment on, these special conditions is impracticable because these procedures would significantly delay issuance of the design approval, and thus delivery, of the affected airplanes.

In addition, the substance of these special conditions has been subject to the public-comment process in several prior instances with no substantive comments received. The FAA therefore finds that good cause exists for making these special conditions effective upon publication in the Federal Register.

We invite interested people to take part in this rulemaking by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We may change these special conditions based on the comments we receive.

On March 2, 2016, ATR applied for a change to type certificate no. A53EU for the installation of seats constructed of non-traditional, non-metallic materials in the Model ATR-42-200/-300/-320/-500, and ATR-72-102/-202/-212/-212A airplanes.

The Model ATR-42/-72 series airplanes are twin-engine, turbopropeller-powered, transport-category airplanes with maximum passenger capacity up to 74, depending upon airplane model.

Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, ATR must show that the Model ATR-42-200/-300/-320/-500 and ATR-72-102/-202/-212/-212A airplanes, as changed, continue to meet the applicable provisions of the regulations listed in type certificate no. A53EU, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Model ATR-42-200/-300/-320/-500 and ATR-72-102/-202/-212/-212A airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

Special conditions are initially applicable to the model for which they are issued. Should the type certificate for that model be amended later to include any other model that incorporates the same novel or unusual design feature, or should any other model already included on the same type certificate be modified to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

In addition to the applicable airworthiness regulations and special conditions, the Model ATR-42-200/-300/-320/-500 and ATR-72-102/-202/-212/-212A airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

The FAA issues special conditions, as defined in 14 CFR 11.19, in accordance with § 11.38, and they become part of the type certification basis under § 21.101.

The Model ATR-42-200/-300/-320/-500 and ATR-72-102/-202/-212/-212A airplanes will incorporate the following novel or unusual design feature:

Passenger seats that incorporate non-traditional, large, non-metallic panels in lieu of the traditional metal frame covered by fabric.

In the early 1980s, the FAA conducted extensive research on the effects of post-crash flammability in the passenger cabin. As a result of this research and service experience, the FAA adopted new standards for interior surfaces associated with large surface-area parts. Specifically, the rules require measurement of heat release and smoke emission (part 25, Appendix F, parts IV and V) for the affected parts. Heat release has been shown to have a direct correlation with post- crash-fire survival time. Materials that comply with the standards (i.e., § 25.853, “Compartment interiors” at Amendment 25-61 and Amendment 25-66) extend survival time by approximately 2 minutes over materials that do not comply.

At the time these standards were written, the potential application of the requirements of seat heat release and smoke emission was explored. The seat frame itself was not a concern because it was primarily made of aluminum and only small amounts of non-metallic materials. Research determined that the overall effect on survivability was negligible, whether or not the food trays met the heat-release and smoke-emission requirements. The requirements therefore did not address seats. The preambles to both the Notice of Proposed Rule Making (NPRM), Notice No. 85-10 (50 FR 15038, April 16, 1985), and the Final Rule at Amendment 25-61 (51 FR 26206, July 21, 1986), specifically note that seats were excluded “because the recently adopted standards for flammability of seat cushions will greatly inhibit involvement of the seats.”

Subsequently, the Final Rule at Amendment 25-83 (60 FR 6615, March 6, 1995) clarified the definition of minimum panel size: “It is not possible to cite a specific size that will apply in all installations; however, as a general rule, components with exposed surface areas of one square foot or less may be considered small enough that they do not have to meet the new standards. Components with exposed surface areas greater than two square feet may be considered large enough that they do have to meet the new standards. Those with exposed surface areas greater than one square foot, but less than two square feet, must be considered in conjunction with the areas of the cabin in which they are installed before a determination could be made.”

In the late 1990s, the FAA issued Policy Memorandum 97-112-39, “Guidance for Flammability Testing of Seat/Console Installations,” October 17, 1997 (http://rgl.faa.gov). That memo was issued when it became clear that seat designs were evolving to include large, non-metallic panels with surface areas that would impact survivability during a cabin-fire event, comparable to partitions or galleys. The memo noted that large-surface-area panels must comply with heat-release and smoke-emission requirements, even if they were attached to a seat. If the FAA had not issued such policy, seat designs could have been viewed as a loophole to the airworthiness standards that would result in an unacceptable decrease in survivability during a cabin-fire event.

In October of 2004, an issue was raised regarding the appropriate flammability standards for passenger seats that incorporated non-traditional, large, non-metallic panels in lieu of the traditional metal covered by fabric. The FAA Seattle Aircraft Certification Office and Transport Standards Staff reviewed this design, and determined that it represented the kind and quantity of material that should be required to pass the heat-release and smoke-emissions requirements. The FAA has determined that special conditions would be issued to apply the standards defined in 14 CFR 25.853(d) to seats with large, non-metallic panels in their design. Traditional seat panels would not be covered by the special conditions.

These special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

As discussed above, these special conditions are applicable to the Model ATR-42-200/-300/-320/-500 and ATR-72-102/-202/-212/-212A airplanes. Should ATR apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to that model as well. These special conditions apply to new seat-certification programs. Previously approved seats are not affected by these special conditions.

This action affects only certain novel or unusual design features on two model series of airplanes. It is not a rule of general applicability.

The substance of these special conditions has been subjected to the notice and comment period in several prior instances and has been derived without substantive change from those previously issued. It is unlikely that prior public comment would result in a significant change from the substance contained herein. Therefore, because a delay would significantly affect the certification of the airplane, which is imminent, the FAA has determined that prior public notice and comment are unnecessary and impracticable, and good cause exists for adopting these special conditions upon publication in the Federal Register. The FAA is requesting comments to allow interested persons to submit views that may not have been submitted in response to the prior opportunities for comment described above.

The authority citation for these special conditions is as follows:

Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the type certification basis for ATR Model ATR-42-200/-300/-320/-500 and ATR-72-102/-202/-212/-212A airplanes for new seat-certification programs.

1. Compliance with 14 CFR part 25 Appendix F, parts IV and V, “Heat release and smoke emission,” is required for seats that incorporate non-traditional, large, non-metallic panels that may be either a single component or multiple components in a concentrated area in their design.

2. The applicant may designate up to and including 1.5 square feet of non-traditional, non-metallic panel material per seat place that does not have to comply with special condition 1, above. A triple seat assembly may have a total of 4.5 square feet excluded on any portion of the assembly (e.g., outboard seat place, 1 sq. ft.; middle, 1 sq. ft.; and inboard, 2.5 sq. ft.)

3. Seats need not meet the test requirements of 14 CFR part 25 Appendix F, parts IV and V, when installed in compartments that are not otherwise required to meet these requirements. Examples include airplanes:

a. With passenger capacities of 19 or fewer;

b. that do not have smoke-emission and heat-release test requirements in their certification basis, and that are not required by 14 CFR 121.312 to conduct such tests; or

c. that are exempted from smoke-emission and heat-release testing.

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all The Boeing Company Model 757-200 and -200CB series airplanes. The NPRM published in the Federal Register on March 1, 2016 (81 FR 10533) (“the NPRM”). The NPRM was prompted by an evaluation by the DAH indicating that the lap splices at stringer S-14R, lower fastener row, are subject to WFD. The NPRM proposed to require repetitive external DFEC or internal HFEC inspections of the lap splice, inner skin fasteners, at stringer S-14R, STA 440 through STA 540, and corrective action if necessary. We are issuing this AD to detect and correct cracking of the fuselage skin lap splice. Such cracking could result in reduced structural integrity of the airplane.

We gave the public the opportunity to participate in developing this AD. The following presents the comments received on the NPRM and the FAA's response to each comment. Boeing indicated its support for the NPRM.

United Airlines generally concurred with the NPRM, but requested that repairs be incorporated into a subsequent revision of Boeing Alert Service Bulletin 757-53A0102, dated October 8, 2015. According to United Airlines, the lack of certain approved repairs adds a significant level of burden on the operators.

We acknowledge United Airlines' comment and concerns. We have been advised that Boeing is working on revising the referenced service information to include repair information, but Boeing cannot provide a fixed date when the next revision will be published. To delay this AD until this service information is available is inappropriate since we have determined that an unsafe condition exists and that inspections must be conducted to ensure continued safety. If the updated service information is approved and published, any operator may request approval of an alternative method of compliance (AMOC) as specified in paragraph (j) of this AD. We may also consider further rulemaking after reviewing any updated service information. We have not changed this AD regarding this issue.

United Airlines requested that the note under step 3.B.1. of the Accomplishment Instructions of Boeing Alert Service Bulletin 757-53A0102, dated October 8, 2015, be changed so that any FAA-approved repair that meets the minimum 3 rows on either side of the lap splice would qualify as exempt from the initial and repeat inspections. United Airlines stated that this change would remove the need to request approval of an AMOC.

The FAA does not make changes to service bulletins. The commenter's request could be incorporated into the AD, but we do not agree with the requested change because each existing repair affected by this AD needs to be evaluated in accordance with paragraph (g) of this AD. For any repair in the affected area, operators may request approval of an AMOC as specified in paragraph (j) of this AD. We have not changed this AD regarding this issue.

Aviation Partners Boeing stated that accomplishing the supplemental type certificate (STC) ST01518SE does not affect the actions specified in the NPRM.

We agree with the commenter. We have redesignated paragraph (c) of the NPRM as (c)(1) and added new paragraph (c)(2) to this final rule to state that installation of STC ST01518SE does not affect the ability to accomplish the actions required by this final rule. Therefore, for airplanes on which STC ST01518SE is installed, a “change in product” AMOC approval request is not necessary to comply with the requirements of 14 CFR 39.17.

Paragraph (h)(2) of the NPRM describes a standard service information exception; however that exception does not apply to Boeing Alert Service Bulletin 757-53A0102, dated October 8, 2015. Therefore, we have removed paragraph (h)(2) of the NPRM from this AD.

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

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

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

We reviewed Boeing Alert Service Bulletin 757-53A0102, dated October 8, 2015. The service information describes procedures for performing repetitive external DFEC or internal HFEC inspections of the lap splice, inner skin fasteners, at stringer S-14R, STA 440—STA 540, and corrective action if necessary. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 572 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

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

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

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701, & 702), Model CL-600-2D15 (Regional Jet Series 705), Model CL-600-2D24 (Regional Jet Series 900), and Model CL-600-2E25 (Regional Jet Series 1000) airplanes. The NPRM published in the Federal Register on April 12, 2016 (81 FR 21503) (“the NPRM”). The NPRM was prompted by reports of corrosion found on the slat and flap torque tubes in the slat and flap control system. The NPRM proposed to require replacement of the slat and flap torque tubes in the slat and flap control system. We are issuing this AD to prevent rupture of a corroded slat or flap torque tube. This condition could result in an inoperative slat or flap system and consequent reduced controllability of the airplane.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF-2016-03R1, dated February 18, 2016 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model CL-600-2C10 (Regional Jet Series 700, 701, & 702), Model CL-600-2D15 (Regional Jet Series 705), Model CL-600-2D24 (Regional Jet Series 900), and Model CL-600-2E25 (Regional Jet Series 1000) airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5463.

We gave the public the opportunity to participate in developing this AD. We considered the comment received. The commenter supported the NPRM.

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

• Are consistent with the intent that was proposed in the NPRM for correcting the unsafe condition; and

• Do not add any additional burden upon the public than was already proposed in the NPRM.

We reviewed Bombardier Service Bulletin 670BA-27-067, Revision A, dated February 23, 2015. This service information describes procedures for replacement of the slat and flap torque tubes in the slat and flap control system. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 509 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

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

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

1. Pursuant to section 215(d)(5) of the Federal Power Act (FPA),1 the Commission directs the North American Electric Reliability Corporation (NERC) to develop a new or modified Reliability Standard that addresses supply chain risk management for industrial control system hardware, software, and computing and networking services associated with bulk electric system operations. The new or modified Reliability Standard is intended to mitigate the risk of a cybersecurity incident affecting the reliable operation of the Bulk-Power System.

2. The record developed in this proceeding supports our determination under FPA section 215(d)(5) that it is appropriate to direct the creation of mandatory requirements that protect aspects of the supply chain that are within the control of responsible entities and that fall within the scope of our authority under FPA section 215. Specifically, we direct NERC to develop a forward-looking, objective-based Reliability Standard to require each affected entity to develop and implement a plan that includes security controls for supply chain management for industrial control system hardware, software, and services associated with bulk electric system operations.2 The new or modified Reliability Standard should address the following security objectives, discussed in detail below: (1) Software integrity and authenticity; (2) vendor remote access; (3) information system planning; and (4) vendor risk management and procurement controls. In making this directive, the Commission does not require NERC to impose any specific controls, nor does the Commission require NERC to propose “one-size-fits-all” requirements. The new or modified Reliability Standard should instead require responsible entities to develop a plan to meet the four objectives, or some equally efficient and effective means to meet these objectives, while providing flexibility to responsible entities as to how to meet those objectives.

3. Section 215 of the FPA requires a Commission-certified Electric Reliability Organization (ERO) to develop mandatory and enforceable Reliability Standards, subject to Commission review and approval. Reliability Standards may be enforced by the ERO, subject to Commission oversight, or by the Commission independently.3 Pursuant to section 215 of the FPA, the Commission established a process to select and certify an ERO,4 and subsequently certified NERC.5

4. The NOPR, inter alia, identified as a reliability concern the potential risks to bulk electric system reliability posed by the “supply chain” (i.e., the sequence of processes involved in the production and distribution of, inter alia, industrial control system hardware, software, and services). The NOPR explained that changes in the bulk electric system cyber threat landscape, exemplified by recent malware campaigns targeting supply chain vendors, have highlighted a gap in the Critical Infrastructure Protection (CIP) Reliability Standards.6 To address this gap, the NOPR proposed to direct that NERC develop a forward-looking, objective-driven Reliability Standard that provides security controls for supply chain management for industrial control system hardware, software, and services associated with bulk electric system operations.7

5. Recognizing that developing supply chain management requirements would likely be a significant undertaking and require extensive engagement with stakeholders to define the scope, content, and timing of the Reliability Standard, the Commission sought comment on: (1) the general proposal to direct that NERC develop a Reliability Standard to address supply chain management; (2) the anticipated features of, and requirements that should be included in, such a standard; and (3) a reasonable timeframe for development of a Reliability Standard.8

6. In response to the NOPR, thirty-four entities submitted comments on the NOPR proposal regarding supply chain risk management. A list of these commenters appears in Appendix A.

7. On January 28, 2016, Commission staff led a Technical Conference to facilitate a dialogue on supply chain risk management issues that were identified by the Commission in the NOPR. The January 28 Technical Conference addressed: (1) The need for a new or modified Reliability Standard; (2) the scope and implementation of a new or modified Reliability Standard; and (3) current supply chain risk management practices and collaborative efforts.

8. Twenty-four entities representing industry, government, vendors, and academia participated in the January 28 Technical Conference through written comments and/or presentations.9

9. We address below the comments submitted in response to the NOPR and comments made as part of the January 28 Technical Conference.

10. Pursuant to section 215(d)(5) of the FPA, the Commission determines that it is appropriate to direct NERC to develop a new or modified Reliability Standard(s) that address supply chain risk management for industrial control system hardware, software, and computing and networking services associated with bulk electric system operations.10 Based on the comments received in response to the NOPR and at the technical conference, we determine that the record in this proceeding supports the development of mandatory requirements for the protection of aspects of the supply chain that are within the control of responsible entities and that fall within the scope of our authority under FPA section 215.

11. In its NOPR comments, NERC acknowledges that “supply chains for information and communications technology and industrial control systems present significant risks to [Bulk-Power System] security, providing various opportunities for adversaries to initiate cyberattacks.” 11 Several other commenters also recognized the risks posed to the bulk electric system by supply chain security issues and generally support, or at least do not oppose, Commission action to address the reliability gap.12 For example, in prepared remarks submitted for the January 28 Technical Conference, one panelist noted that attacks targeting the supply chain are on the rise, particularly attacks involving third party service providers.13 In addition, it was noted that, while many responsible entities are already independently assessing supply chain risks and asking vendors to address the risks, these individual efforts are likely to be less effective than a mandatory Reliability Standard.14

12. We recognize, however, that most commenters oppose development of Reliability Standards addressing supply chain management for various reasons. These commenters contend that Commission action on supply chain risk management would, among other things, address or influence activities beyond the scope of the Commission's FPA section 215 jurisdiction.15 Commenters also assert that the existing CIP Reliability Standards adequately address potential risks to the bulk electric system from supply chain issues.16 In addition, commenters claim that responsible entities have minimal control over their suppliers and are not able to identify all potential vulnerabilities associated with each of their products or parts; therefore, even if a responsible entity identifies a vulnerability created by a supplier, the responsible entity does not necessarily have any authority, influence or means to require the supplier to apply mitigation.17 Other commenters argue that the Commission's proposal may unintentionally inhibit innovation.18 A number of commenters assert that voluntary guidelines would be more effective at addressing the Commission's concerns.19 Finally, commenters are concerned that the contractual flexibility necessary to effectively address supply chain concerns does not fit well with a mandatory Reliability Standard.20

13. As discussed below, we conclude that our directive falls within the Commission's authority under FPA section 215. We also determine that, notwithstanding the concerns raised by commenters opposed to the NOPR proposal, it is appropriate to direct the development of mandatory requirements to protect industrial control system hardware, software, and computing and networking services associated with bulk electric system operations. Many of the commenters' concerns are addressed by the flexibility inherent in our directive to develop a forward-looking, objective-based Reliability Standard that includes specific security objectives that a responsible entity must achieve, but affords flexibility in how to meet these objectives. The Commission does not require NERC to impose any specific controls nor does the Commission require NERC to propose “one-size-fits-all” requirements. The new or modified Reliability Standard should instead require responsible entities to develop a plan to meet the four objectives, or some equally efficient and effective means to meet these objectives, while providing flexibility to responsible entities as to how to meet those objectives. Moreover, our directive comports well with the NOPR comments submitted by NERC, in which NERC explained what it believes would be the features of a workable supply chain management Reliability Standard.21

14. We address below the following issues raised in the NOPR, NOPR comments, and January 28 Technical Conference comments: (1) the Commission's authority to direct the ERO to develop supply chain management Reliability Standards under FPA section 215(d)(5); and (2) the need for supply chain management Reliability Standards, including the risks posed by the supply chain, objectives of a supply chain management Reliability Standard, existing CIP Reliability Standards, and responsible entities' ability to affect the supply chain.

15. In the NOPR, the Commission stated that it anticipates that a Reliability Standard addressing supply chain management security would, inter alia, respect FPA Section 215 jurisdiction by only addressing the obligations of responsible entities and not directly imposing obligations on suppliers, vendors, or other entities that provide products or services to responsible entities.22

16. Commenters contend that the Commission's proposal to direct NERC to develop mandatory Reliability Standards to address supply chain risks could exceed the Commission's jurisdiction under FPA section 215. The Trade Associations state that the NOPR discussion “appears to suggest a new mandate, over and above Section 215 for energy security, integrity, quality, and supply chain resilience, and the future acquisition of products and services.” 23 The Trade Associations assert that the Commission's NOPR proposal does not provide any reasoning that connects energy security and integrity with reliable operations for Bulk-Power System reliability. The Trade Associations seek clarification that the Commission does not intend to define energy security as a new policy mandate.24

17. Southern states that it agrees with the Trade Associations that expanding the focus of the NERC Reliability Standards “to include concepts such as security, integrity, and supply chain resilience is beyond the statutory authority granted in Section 215.” 25 Southern contends that while these areas “have an impact on the reliable operation of the bulk power system, [. . .] they are areas that are beyond the scope of [the Commission's] jurisdiction under Section 215.” 26 NIPSCO raises a similar argument, stating that the existing CIP Reliability Standards should address the Commission's concerns “without involving processes and industries outside of the Commission's jurisdiction under section 215 of the Federal Power Act.” 27

18. Southern questions how a mandatory Reliability Standard that achieves all of the objectives specified in the NOPR “could effectively address [the Commission's] concerns and still stay within the bounds of [the Commission's] scope and mission under Section 215.” 28 Southern asserts that “a reading of Section 215 indicates that [the Commission's] mission and authority under Section 215 is focused on the operation of the bulk power system elements, not on the acquisition of those elements and associated procurement practices.” 29 In support of its assertion, Southern points to the definition in FPA section 215 of “reliability standard,” noting the use and meaning of the terms “reliable operation” and “operation.” Southern contends that “Section 215 standards should ensure that a given BES Cyber System asset is protected from vulnerabilities once connected to the BES, and should not be concerned about how the Responsible Entity works with its vendors and suppliers to ensure such reliability (such as higher financial incentives or greater contractual penalties).” 30

19. The Trade Associations and Southern also observe that, while the NOPR indicates that the Commission has no direct oversight authority over third-party suppliers or vendors and cannot indirectly assert authority over them through jurisdictional entities, the NOPR proposal appears to assert that authority.31 The Trade Associations maintain that such an extension of the Commission's authority would be unlawful and, therefore, seek clarification that “the Commission will avoid seeking to extend its authority since such an extension would set a troubling precedent.” 32 CEA raises a concern that the NOPR proposal “appears to lend itself to the interpretation that authority is indirectly being asserted over non-jurisdictional entities.” 33

20. The Trade Associations also maintain that the Commission's use of the term “industrial control system” in the scope of its proposal suggests that the Commission is seeking to address issues beyond CIP and cybersecurity-related issues. The Trade Associations seek clarification that the Commission does not intend for NERC broadly to address industrial control systems, such as fuel procurement and delivery systems or system protection devices, but intends for its proposal to be limited to CIP and cybersecurity-related issues.34

21. We are satisfied that FPA section 215 provides the Commission with the authority to direct NERC to address the reliability gap concerning supply chain management risks identified in the NOPR. We reject the contention that our directive could be read to address issues outside of the Commission's FPA section 215 jurisdiction. However, to be clear, we reiterate the statement in the NOPR that any action taken by NERC in response to the Commission's directive to address the supply chain-related reliability gap should respect “section 215 jurisdiction by only addressing the obligations of responsible entities” and “not directly impose obligations on suppliers, vendors or other entities that provide products or services to responsible entities.” 35 The Commission expects that NERC will adhere to this instruction as it works with stakeholders to develop a new or modified Reliability Standard to address the Commission's directive. As discussed below, we reject the remaining comments regarding the Commission's authority to direct the development of supply chain management Reliability Standards under FPA section 215(d)(5).

22. Our directive does not suggest, as the Trade Associations contend, a new mandate above and beyond FPA section 215. The Commission's directive to NERC to address supply chain risk management for industrial control system hardware, software, and computing and networking services associated with bulk electric system operations is not intended to “define `energy security' as a new policy mandate” under the CIP Reliability Standards.36 Instead, our directive is meant to enhance bulk electric system cybersecurity by addressing the gap in the CIP Reliability Standards identified in the NOPR relating to supply chain risk management for industrial control system hardware, software, and computing and networking services associated with bulk electric system operations. This directive is squarely within the statutory definition of a “reliability standard,” which includes requirements for “cybersecurity protection.” 37

23. We reject Southern's argument that FPA section 215 limits the scope of the NERC Reliability Standards to “ensur[ing] that a given BES Cyber System asset is protected from vulnerabilities once connected” to the bulk electric system.38 While Southern's comment implies that the Commission should only be concerned with real-time operations based on the definition of the term “reliable operation,” the definition of “reliability standard” in FPA section 215 also includes requirements for “the design of planned additions or modifications” to bulk electric system facilities “necessary to provide for reliable operation of the bulk-power system.” 39 Moreover, as noted, FPA section 215 is clear that maintaining reliable operation also includes protecting the bulk electric system from cybersecurity incidents.40 Indeed, our findings and directives in the Final Rule are intended to better protect the Bulk-Power System from potential cybersecurity incidents that could adversely affect reliable operation of the Bulk-Power System. Accordingly, we would not be carrying out our obligations under FPA section 215 if the Commission determined that cybersecurity incidents resulting from gaps in supply chain risk management were outside the scope of FPA section 215.

24. With regard to concerns that the NOPR's use of the term “industrial control system” signals the Commission's intent to address issues beyond the CIP Reliability Standards or cybersecurity controls, we clarify that our directive is only intended to address the protection of hardware, software, and computing and networking services associated with bulk electric system operations from supply chain-related cybersecurity threats and vulnerabilities.

25. In the NOPR, the Commission observed that the global supply chain, while providing an opportunity for significant benefits to customers, enables opportunities for adversaries to directly or indirectly affect the operations of companies that may result in risks to the end user. The NOPR identified supply chain risks including the insertion of counterfeits, unauthorized production, tampering, theft, or insertion of malicious software, as well as poor manufacturing and development practices. The NOPR pointed to changes in the bulk electric system cyber threat landscape, evidenced by recent malware campaigns targeting supply chain vendors, which highlighted a gap in the protections under the current CIP Reliability Standards.41

26. Specifically, the NOPR identified two focused malware campaigns identified by the Department of Homeland Security's Industry Control System—Computer Emergency Readiness Team (ICS-CERT) in 2014.42 The NOPR stated that this new type of malware campaign is based on the injection of malware while a product or service remains in the control of the hardware or software vendor, prior to delivery to the customer.43

27. NERC acknowledges the NOPR's concerns regarding the threats posed by supply chain management risks to the Bulk-Power System. NERC states that “the supply chains for information and communications technology and industrial control systems present significant risks to [Bulk-Power System] security, providing various opportunities for adversaries to initiate cyberattacks.” 44 NERC further explains that “supply chains risks are . . . complex, multidimensional, and constantly evolving, and may include, as the Commission states, insertion of counterfeits, unauthorized production, tampering, theft, insertion of malicious software and hardware, as well as poor manufacturing and development practices.” 45 NERC states, however, that as to these supply chains, there are “significant challenges to developing a mandatory Reliability Standard consistent with [FPA] Section 215 . . . .” 46

28. IRC, Peak, Idaho Power, CyberArk, NEMA, Resilient Societies and other commenters share the NOPR's concern that supply chain risks pose a threat to bulk electric system reliability. IRC states that it supports the Commission's efforts to address the risks associated with supply chain management.47 Peak explains that “the security risk of supply chain management is a real threat, and . . . a CIP standard for supply chain management may be necessary.” 48 Peak notes, for example, that it is possible for a malware campaign to infect industrial control software with malicious code while the product or service is in the control of the hardware and software vendor, and states that, “[w]ithout proper controls, the vendor may deliver this infected product or service, unknowingly passing the risk onto the utility industry customer.” 49 Isologic and Resilient Societies comments that supply chain vulnerabilities are one of the most difficult areas of cybersecurity because, among other concerns, entities “are seldom aware of the risks [supply chain vulnerabilities] pose.” 50

29. Idaho Power agrees “that the supply chain could pose an attack vector for certain risks to the bulk electric system.” 51 CyberArk states that “infection of vendor Web sites is just one of the potential ways a supply chain management attack could be executed” and notes that network communications links between a vendor and its customer could be used as well.52 NEMA agrees with the NOPR that “keeping the electric sector supply chain free from malware and other cybersecurity risks is essential.” 53 NEMA highlights a number of principles it represents as vendor best practices, and encourages the Commission and NERC to reference those principles as the effort to address supply chain risks progresses.54

30. Other commenters do not agree that the risks identified in the NOPR support the Commission's NOPR proposal. The Trade Associations, Southern, and NIPSCO contend that the two malware campaigns identified by ICS-CERT and cited in the NOPR do not actually represent a changed threat landscape that defines a reliability gap. Specifically, the Trade Associations state that the two identified malware campaigns “seek to inject malware, while a product is in the control of and in use by the customer and not, as the NOPR suggests, the vendor.” 55 In support of this position, the Trade Associations note that the ICS-CERT mitigation measures for the two alerts “focused on the customer and do not address security controls, while the products are under control of the vendors.” 56

31. The Trade Associations and Southern also contend that there is no information from various NERC programs and activities that leads to a reasonable conclusion that supply chain management issues have caused events or disturbances on the bulk electric system.57 Luminant states that it “does not perceive the same reliability gap that is expressed in the NOPR concerning risks associated with supply chain management” and contends that it is important to understand the potential risks and cost impacts related to any potential mitigation efforts before developing any additional security controls.58 KCP&L states that it does not share the Commission's view of the supply chain-related reliability gap described in the NOPR and, therefore, does not support the Commission's proposal.59

32. We find ample support in the record to conclude that supply chain management risks pose a threat to bulk electric system reliability. As NERC commented, “the supply chains for information and communications technology and industrial control systems present significant risks to [Bulk-Power System] security, providing various opportunities for adversaries to initiate cyberattacks.” 60 The malware campaigns analyzed by ICS-CERT and identified in the NOPR are only examples of such risks (i.e., supply chain attacks targeting supply chain vendors). Commenters identified additional supply chain-related threats,61 including events targeting electric utility vendors.62

33. Even among the comments opposed to the NOPR, there is acknowledgment that supply chain reliability risks exist. The Trade Associations state that their “respective members have identified security issues associated with potential supply chain disruption or compromise as being a significant threat.” 63 Recognizing that such risks exist, we reject the assertion by the Trade Associations and Southern that there is an inadequate basis for the Commission to take action because “[t]he Trade Associations can find nothing within various NERC programs and activities that lead to a reasonable conclusion that supply chain management issues have caused events or disturbances on the bulk power system.” 64

34. We disagree with the Trade Associations' arguments suggesting that the two malware campaigns identified in the NOPR do not represent a change in the threat landscape to the bulk electric system. First, while the Trade Associations are correct that the ICS-CERT alerts referenced in the NOPR describe remediation steps for customers to take in the event of a breach, the vulnerabilities exploited by those campaigns were the direct result of vendor decisions about: (1) How to deliver software patches to their customers and (2) the necessary degree of remote access functionality for their information and communications technology products.65 Second, the malware campaigns also demonstrate that attackers have expanded their efforts to include the execution of broad access campaigns targeting vendors and software applications, rather than just individual entities. The targeting of vendors and software applications with potentially broad access to BES Cyber Systems 66 marks a turning point in that it is no longer sufficient to focus protection strategies exclusively on post-acquisition activities at individual entities. Instead, we believe that attention should also be focused on minimizing the attack surfaces of information and communications technology products procured to support bulk electric system operations.

35. The NOPR stated that the reliability goal of a supply chain risk management Reliability Standard should be a forward-looking, objective-driven Reliability Standard that encompasses activities in the system development life cycle: from research and development, design and manufacturing stages (where applicable), to acquisition, delivery, integration, operations, retirement, and eventual disposal of the responsible entity's information and communications technology and industrial control system supply chain equipment and services. The NOPR explained that the Reliability Standard should support and ensure security, integrity, quality, and resilience of the supply chain and the future acquisition of products and services.67

36. The NOPR recognized that, due to the breadth of the topic and the individualized nature of many aspects of supply chain management, a Reliability Standard pertaining to supply chain management security should:

• Respect FPA section 215 jurisdiction by only addressing the obligations of responsible entities. A Reliability Standard should not directly impose obligations on suppliers, vendors or other entities that provide products or services to responsible entities.

• Be forward-looking in the sense that the Reliability Standard should not dictate the abrogation or re-negotiation of currently-effective contracts with vendors, suppliers or other entities.

• Recognize the individualized nature of many aspects of supply chain management by setting goals (the “what”), while allowing flexibility in how a responsible entity subject to the Reliability Standard achieves that goal (the “how”).

• Given the types of specialty products involved and the diversity of acquisition processes, the Reliability Standard may need to allow exceptions (e.g., to meet safety requirements and fill operational gaps if no secure products are available).

• Provide enough specificity so that compliance obligations are clear and enforceable. In particular, the Commission anticipated that a Reliability Standard that simply requires a responsible entity to “have a plan” addressing supply chain management would not suffice. Rather, to adequately address the concerns identified in the NOPR, the Commission stated a Reliability Standard should identify specific controls.68

37. The NOPR recognized that, because security controls for supply chain management likely vary greatly with each responsible entity due to variations in individual business practices, the right set of supply chain management security controls should accommodate, inter alia, an entity's: (1) Procurement process; (2) vendor relations; (3) system requirements; (4) information technology implementation; and (5) privileged commercial or financial information. As examples of controls that may be instructional in the development of any new Reliability Standard, the NOPR identified the following Supply Chain Risk Management controls from NIST SP 800-161: (1) Access Control Policy and Procedures; (2) Security Assessment Authorization; (3) Configuration Management; (4) Identification and Authentication; (5) System Maintenance Policy and Procedures; (6) Personnel Security Policy and Procedures; (7) System and Services Acquisition; (8) Supply Chain Protection; and (9) Component Authenticity.69

38. NERC states that a Commission directive requiring the development of a supply chain risk management Reliability Standard: (1) Should provide a minimum of two years for Reliability Standard development activities; (2) should clarify that any such Reliability Standard build on existing protections in the CIP Reliability Standards and the practices of responsible entities, and focus primarily on those procedural controls that responsible entities can reasonably be expected to implement during the procurement of products and services associated with bulk electric system operations to manage supply chain risks; and (3) must be flexible to account for differences in the needs and characteristics of responsible entities, the diversity of bulk electric system environments, technologies, risks, and issues related to the limited applicability of mandatory NERC Reliability Standards.70

39. While sharing the Commission's concern that supply chain risks pose a threat to bulk electric system reliability, some commenters suggest that the Commission address certain threshold issues before moving forward with the NOPR proposal. IRC notes its concern that the NOPR proposal is overly broad, which IRC states could hamper industry's ability to address the Commission's concerns.71 Idaho Power expresses a concern “that tightening purchasing controls too tightly could also pose a risk because there are limited vendors” available to industry.72 Idaho Power states that any supply chain Reliability Standard “should be laid out in terms of requirements built around controls that are developed by the regulated entity rather than prescriptive requirements like many other CIP standards.” 73 ISO-NE supports the development of procedural controls “such as requirements that Registered Entities must transact with organizations that meet certain criteria, use specified procurement language in contracts, and review and validate vendors' security practices.” 74 Peak notes that “the number of vendors for certain hardware, software and services may be limited” and, therefore, a supply chain-related Reliability Standard should grant responsible entities the flexibility “to show preference for, but not the obligation to use, vendors who demonstrate sound supply chain security practices.” 75

40. NERC, the Trade Associations, Southern, Gridwise, and other commenters request that, should the Commission find it reasonable to direct NERC to develop a new or modified Reliability Standard for supply chain management, the Commission adopt certain principles for NERC to follow in the standards development process. As an initial matter, NERC and other commenters state that the Commission should identify the risks that it intends NERC to address.76 In addition, NERC, SPP RE, and AEP state that the Commission should ensure that any new or modified supply chain-related Reliability Standard carefully considers the risk being addressed against the cost of mitigating that risk.77

41. NERC states that the focus of any supply chain risk management Reliability Standard “should be a set of requirements outlining those procedural controls that entities should take, as purchasers of products and services, to design more secure products and modify the security practices of suppliers, vendors, and other parties throughout the supply chain.” 78 Similarly, SPP RE notes that, while one responsible entity alone may not have adequate leverage to make a vendor or supplier adopt adequate security practices, “the collective application of the procurement language across a broad collection of Responsible Entities may achieve the intended improvement in security safeguards.” 79 Isologic and Resilient Societies recommends limiting the Reliability Standard requirements to a few that are immediately necessary, such as: (1) Preventing the installation of cyber related system or grid components which have been reported by ICS-CERT to be provably vulnerable to a supply chain attack, unless the vulnerability has been corrected; (2) removing from operation any system or component reported by ICS-CERT as containing an exploitable vulnerability; and (3) subjecting hardware and software to penetration testing prior to installation on the grid.80

42. In post-technical conference comments, while still opposing the NOPR proposal, APPA suggests certain parameters that should govern the development of any supply chain-related Reliability Standard.81 Specifically, APPA states that a supply chain-related Reliability Standard should be risk-based and “must embody an approach that enables utilities to perform a risk assessment of the hardware and systems that create potential vulnerabilities,” similar to the approach taken in Reliability Standard CIP-014-2, Requirement R1 (Physical Security).82 In addition, APPA states that a supply chain-related Reliability Standard should not require responsible entities to actively manage third-party vendors or their processes since that would risk involving utilities in areas that are outside of their core expertise. APPA also argues that “it would be unreasonable for any standard that FERC directs to hold utilities liable for the actions of third-party vendors or suppliers.” 83 Finally, APPA states that responsible entities should be able to rely on a credible attestation by a vendor or supplier that it complied with identified supply chain security process. APPA contends that this would be the most efficient way to “establish a standard of care on the suppliers' part.” 84

43. We direct that NERC, pursuant to section 215(d)(5) of the FPA, develop a forward-looking, objective-driven new or modified Reliability Standard to require each affected entity to develop and implement a plan that includes security controls for supply chain management for industrial control system hardware, software, and services associated with bulk electric system operations. Our directive is consistent with the NOPR comments advocating flexibility as to what form the Commission's directive should take.

44. We agree with NERC and other commenters that a supply chain risk management Reliability Standard should be flexible and fall within the scope of what is possible using Reliability Standards under FPA section 215. The directive discussed below, we believe, is consistent with both points. In particular, the flexibility inherent in our directive should account for, among other things, differences in the needs and characteristics of responsible entities and the diversity of BES Cyber System environments, technologies and risks. For example, the new or modified Reliability Standard may allow a responsible entity to meet the security objectives discussed below by having a plan to apply different controls based on the criticality of different assets. And by directing NERC to develop a new or modified Reliability Standard, the Commission affords NERC the option of modifying existing Reliability Standards to satisfy our directive. Finally, we direct NERC to submit the new or modified Reliability Standard within one year of the effective date of this Final Rule.85

45. The plan required by the new or modified Reliability Standard developed by NERC should address, at a minimum, the following four specific security objectives in the context of addressing supply chain management risks: (1) Software integrity and authenticity; (2) vendor remote access; (3) information system planning; and (4) vendor risk management and procurement controls. Responsible entities should be required to achieve these four objectives but have the flexibility as to how to reach the objective (i.e., the Reliability Standard should set goals (the “what”), while allowing flexibility in how a responsible entity subject to the Reliability Standard achieves that goal (the “how”)).86 Alternatively, NERC can propose an equally effective and efficient approach to address the issues raised in the objectives identified below. In addition, while in the discussion below we identify four objectives, NERC may address additional supply chain management objectives in the standards development process, as it deems appropriate.

46. The new or modified Reliability Standard should also require a periodic reassessment of the utility's selected controls. Consistent with or similar to the requirement in Reliability Standard CIP-003-6, Requirement R1, the Reliability Standard should require the responsible entity's CIP Senior Manager to review and approve the controls adopted to meet the specific security objectives identified in the Reliability Standard at least every 15 months. This periodic assessment should better ensure that the required plan remains up-to-date, addressing current and emerging supply chain-related concerns and vulnerabilities.

47. Also, consistent with this reliance on an objectives-based approach, and as part of this periodic review and approval, the responsible entity's CIP Senior Manager should consider any guidance issued by NERC, the U.S. Department of Homeland Security (DHS) or other relevant authorities for the planning, procurement, and operation of industrial control systems and supporting information systems equipment since the prior approval, and identify any changes made to address the recent guidance. This periodic reconsideration will help ensure an ongoing, affirmative process for reviewing and, when appropriate, incorporating such guidance.

48. The new or modified Reliability Standard must address verification of: (1) The identity of the software publisher for all software and patches that are intended for use on BES Cyber Systems; and (2) the integrity of the software and patches before they are installed in the BES Cyber System environment.

49. This objective is intended to reduce the likelihood that an attacker could exploit legitimate vendor patch management processes to deliver compromised software updates or patches to a BES Cyber System. One of the two focused malware campaigns identified by ICS-CERT in 2014 utilized similar tactics, executing what is commonly referred to as a “Watering Hole” attack 87 to exploit affected information systems. Similar tactics appear to have been used in a recently disclosed attack targeting electric sector infrastructure in Japan.88 These types of attacks might have been prevented had the affected entities applied adequate integrity and authenticity controls to their patch management processes.

50. As NERC recognizes in its NOPR comments, NIST SP-800-161 “establish[es] instructional reference points for NERC and its stakeholders to leverage in evaluating the appropriate framework for and security controls to include in any mandatory supply chain management Reliability Standard.” 89 NIST SP-800-161 includes a number of security controls which, when taken together, reduce the probability of a successful Watering Hole or similar cyberattack in the industrial control system environment and thus could assist in addressing this objective. For example, in the System and Information Integrity (SI) control family, control SI-7 suggests that the integrity of information systems and components should be tested and verified using controls such as digital signatures and obtaining software directly from the developer. In the Configuration Management (CM) control family, control CM-5(3) requires that the information system prevent the installation of firmware or software without verification that the component has been digitally signed to ensure that hardware and software components are genuine and valid. NIST SP-800-161, while not meant to be definitive, provides examples of controls for addressing the Commission's directive regarding this first objective. Other security controls also could meet this objective.

51. The new or modified Reliability Standard must address responsible entities' logging and controlling all third-party (i.e., vendor) initiated remote access sessions. This objective covers both user-initiated and machine-to-machine vendor remote access.

52. This objective addresses the threat that vendor credentials could be stolen and used to access a BES Cyber System without the responsible entity's knowledge, as well as the threat that a compromise at a trusted vendor could traverse over an unmonitored connection into a responsible entity's BES Cyber System. The theft of legitimate user credentials appears to have been a critical aspect to the successful execution of the 2015 cyberattack on Ukraine's power grid.90 In addition, controls adopted under this objective should give responsible entities the ability to rapidly disable remote access sessions in the event of a system breach.

53. DHS noted the importance of controlling vendor remote access in its alert on the Ukrainian cyberattack: “Remote persistent vendor connections should not be allowed into the control network. Remote access should be operator controlled, time limited, and procedurally similar to “lock out, tag out.” The same remote access paths for vendor and employee connections can be used; however, double standards should not be allowed.” 91

54. NIST SP-800-53 and NIST SP-800-161 provide several security controls which, when taken together, reduce the probability that an attacker could use legitimate third-party access to compromise responsible entity information systems. In the Systems and Communications (SC) control family, for example, control SC-7 addressing boundary protection requires that an entity implement appropriate monitoring and control mechanisms and processes at the boundary between the entity and its suppliers, and that provisions for boundary protections should be incorporated into agreements with suppliers. These protections are applied regardless of whether the remote access session is user-initiated or interactive in nature.

55. In the Access Control (AC) control family, control AC-17 requires usage restrictions, configuration/connection requirements, and monitoring and control for remote access sessions, including the entity's ability to expeditiously disconnect or disable remote access. In the Identification and Authentication (IA) control family, control IA-5 requires changing default “authenticators” (e.g., passwords) prior to information system installation. In the System and Information Integrity (SI) control family, control SI-4 addresses monitoring of vulnerabilities resulting from past information and communication technology supply chain compromises, such as malicious code implanted during software development and set to activate after deployment. These sources, while not meant to be definitive, provide examples of controls for addressing the Commission's directive regarding objective two. Other security controls also could meet this objective.

56. The new or modified Reliability Standard must address how a responsible entity will include security considerations as part of its information system planning and system development lifecycle processes. As part of this objective, the new or modified Reliability Standard must address a responsible entity's CIP Senior Manager's (or delegate's) identification and documentation of the risks of proposed information system planning and system development actions. This objective is intended to ensure adequate consideration of these risks, as well as the available options for hardening the responsible entity's information system and minimizing the attack surface.

57. This third objective addresses the risk that responsible entities could unintentionally plan to procure and install unsecure equipment or software within their information systems, or could unintentionally fail to anticipate security issues that may arise due to their network architecture or during technology and vendor transitions. For example, the BlackEnergy malware campaign identified by ICS-CERT and referenced in the NOPR resulted from the remote exploitation of previously unidentified vulnerabilities, which allowed attackers to remotely execute malicious code on remotely accessible devices.92 According to ICS-CERT, this attack might have been mitigated if affected entities had taken steps during system development and planning to: (1) Minimize network exposure for all control system devices/subsystems; (2) ensure that devices were not accessible from the internet; (3) place devices behind firewalls; and (4) utilize secure remote access techniques.93 The third objective also supports, where appropriate, the need for strategic technology refreshes as recommended by ICS-CERT in response to the 2015 Ukraine cybersecurity incident.94

58. NIST SP 800-53 and SP 800-161 provide several controls which, when taken together, reduce the likelihood that an information system will be deployed and/or remain in service with potential vulnerabilities that have not been identified or adequately considered. For example, in the NIST SP 800-53 Systems Acquisition (SA) control family, control SA-3 provides that organizations should: (1) Manage information systems using an organizationally-defined system development life cycle that incorporates information security considerations; and (2) integrate the organizational information security risk management process into system development life cycle activities.95 Similarly, control SA-8 recommends using secure engineering principles during the planning and acquisition phases of future projects such as: (1) Developing layered protections; (2) establishing sound security policy, architecture, and controls as the foundation for design; (3) incorporating security requirements into the system development life cycle; and (4) reducing risk to acceptable levels, thus enabling informed risk management decisions.96 Finally, control SA-22 provides controls to address unsupported system components, recommending the replacement of information and communication technology components when support is no longer available, or the justification and approval of an unsupported system component to meet specific business needs. These sources, while not meant to be definitive, provide examples of controls for addressing the Commission's directive regarding objective three. Other security controls also could meet this objective.

59. The new or modified Reliability Standard must address the provision and verification of relevant security concepts in future contracts for industrial control system hardware, software, and computing and networking services associated with bulk electric system operations. Specifically, NERC must address controls for the following topics: (1) Vendor security event notification processes; (2) vendor personnel termination notification for employees with access to remote and onsite systems; (3) product/services vulnerability disclosures, such as accounts that are able to bypass authentication or the presence of hardcoded passwords; (4) coordinated incident response activities; and (5) other related aspects of procurement. NERC should also consider provisions to help responsible entities obtain necessary information from their vendors to minimize potential disruptions from vendor-related security events.

60. This fourth objective addresses the risk that responsible entities could enter into contracts with vendors who pose significant risks to their information systems, as well as the risk that products procured by a responsible entity fail to meet minimum security criteria. In addition, this objective addresses the risk that a compromised vendor would not provide adequate notice and related incident response to responsible entities with whom that vendor is connected.

61. The Department of Energy (DOE) Cybersecurity Procurement Language for Energy Delivery Systems document outlines security principles and controls for entities to consider when designing and procuring control system products and services (e.g., software, systems, maintenance, and networks), and provides example language that could be incorporated into procurement specifications. The procurement language encourages buyers to incorporate baseline procurement language that ensures the supplier establishes, documents and implements risk management practices for supply chain delivery of hardware, software, and firmware.97 In addition, NIST SP 800-161 encourages buyers to use the Information and Communications Technology supply chain risk management (ICT SCRM) plans for their respective systems and missions throughout their acquisition activities.98 The controls in the ICT SCRM plans can be applied in different life cycle processes.

62. NIST SP 800-161 also provides specific recommendations in control SA-4 pertaining to systems acquisition processes, which are relevant for consideration during the standards development process, including but not limited to: (1) Defining requirements that cover regulatory requirements (i.e., telecommunications or IT), technical requirements, chain of custody, transparency and visibility, sharing information on supply chain security incidents throughout the supply chain, rules for disposal or retention of elements such as components, data, or intellectual property, and other relevant requirements; (2) defining requirements for critical elements in the supply chain to demonstrate a capability to remediate emerging vulnerabilities based on open source information and other sources; and (3) defining requirements for the expected life span of the system and ensuring that suppliers can provide insights into their plans for the end-of-life of components. Other relevant provisions can be found in the System and Communications Protection (SC) control family under control SC-18 addressing SCRM guidance for mobile code, which recommends that organizations employ rigorous supply chain protection techniques in the acquisition, development, and use of mobile code to be deployed in information systems.99 These sources, while not meant to be definitive, provide examples of controls for addressing the Commission's directive regarding objective four. Other security controls also could meet this objective.

63. NERC comments that although the CIP Reliability Standards do not explicitly address supply chain procurement practices, existing requirements mitigate the supply chain risks identified in the NOPR. In particular, NERC states that requirements in Reliability Standards CIP-004-6, CIP-005-5, CIP-006-6, CIP-007-6, CIP-008-5, CIP-009-6, CIP-010-2, and CIP-011-2 “include controls that correspond to controls in NIST SP 800-161.” 100

64. For example, NERC explains that responsible entity compliance with Reliability Standard CIP-004-6, addressing the implementation of cybersecurity awareness programs, may include reinforcement of cybersecurity practices to mitigate supply chain risks. NERC also states that requirements in Reliability Standard CIP-004-6 (addressing personnel risk assessment) and requirements in Reliability Standards CIP-004-6, CIP-005-5, CIP-006-6, CIP-007-6, and CIP-010-2 (addressing electronic and physical access) apply to any outside vendors or contractors.

65. The Trade Associations, Arkansas, G&T Cooperatives, NIPSCO, Luminant, Southern, NextEra, and SCE contend that the existing CIP Reliability Standards, at least partly, address supply chain risks that are within a responsible entity's control.

66. The Trade Associations state that, while the existing CIP Reliability Standards do not contain explicit provisions addressing supply chain management, “transmission owners and operators already have significant responsibilities to perform under various Commission-approved CIP standards that already address supply chain issues.” 101 Specifically, the Trade Associations, NIPSCO, and others state that Reliability Standard CIP-010-2 establishes requirements for cyber asset change management that mandate extensive baseline configuration testing and change monitoring, as well as vulnerability assessments, prior to connecting a new cyber asset to a High Impact BES Cyber Asset.102

We are amending our regulations in 21 CFR parts 1, 5, 70, 71, 73, 80, 100, 101, 102, 106, 107, 108, 109, 110, 112, 117, 118, 130, 161, 170, 171, 172, 173, 175, 176, 177, 178, 180, 181, 184, 189, 190, 211, 507, 701, 710, 720, and 1250 to reflect a change in the address for CFSAN. The street address listed currently in our regulations for CFSAN is 5100 Paint Branch Pkwy., College Park, MD 20740. The street has been renamed and the street number has been changed; the new street address is 5001 Campus Dr., College Park, MD 20740. Consequently, we are amending our regulations to reflect the new street address.

Publication of this document constitutes final action on these changes under the Administrative Procedure Act (5 U.S.C. 553). Notice and public procedure are unnecessary because we are merely updating the street address for CFSAN.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR parts 1, 5, 70, 71, 73, 80, 100, 101, 102, 106, 107, 108, 109, 110, 112, 117, 118, 130, 161, 170, 171, 172, 173, 175, 176, 177, 178, 180, 181, 184, 189, 190, 211, 507, 701, 710, 720, and 1250 are amended as follows:

With this final rule, ONRR amends the four designated areas to define them as follows:

1. North Fort Berthold—all lands within the Fort Berthold Reservation boundary north of the Missouri River, including the Turtle Mountain public domain lease lands north of the Missouri River that the Fort Berthold Agency of the Bureau of Indian Affairs (BIA) administers, with the dividing line of the Missouri River being the county lines that follow the Missouri River.

2. South Fort Berthold—all lands within the Fort Berthold Reservation boundary south of the Missouri River, including the Turtle Mountain public domain lease lands south of the Missouri River that the Fort Berthold Agency of the BIA administers, with the dividing line of the Missouri River being the county lines that follow the Missouri River.

3. Uintah & Ouray—Emery, Uintah, and Grand Counties.

4. Uintah & Ouray—Duchesne, Wasatch, and Carbon Counties.

Under the new Indian Oil Valuation Amendments to 30 CFR 1206.54 (80 FR 24794 dated May 1, 2015), ONRR uses designated areas to calculate index-based major portion prices for lessees to comply with the major portion provisions in their leases. Designated areas are those areas ONRR identifies as unique based on their location and the crude type produced from their respective Indian lands.

When ONRR proposed the new Indian Oil Valuation Amendments, it proposed sixteen initial designated areas. Generally, these designated areas were the Indian reservation boundaries. However, there were five designated areas which were not the reservation boundaries: Oklahoma; North Fort Berthold; South Fort Berthold; Uintah & Ouray: Uintah and Grand Counties; and Uintah and Ouray: Duchesne County.

Under the new Indian Oil Valuation Amendments, to modify or change an existing designated area, ONRR must convene a technical conference. In implementing the new Indian Oil Valuation Amendments, ONRR discovered two potential issues. First, the preamble describes the dividing line between the North Fort Berthold Designated Area and the South Fort Berthold Designated Area as the Little Missouri River. Second, ONRR found at least one producing Indian lease that is in Wasatch County in the Uintah and Ouray Reservation, which is outside of both of the designated areas listed in the Uintah and Ouray Reservation. ONRR also identified two other counties—Carbon and Emery Counties—in the Uintah and Ouray Reservation that were not in the listed designated areas that do not currently have Indian leases but could in the future.

To address these issues, ONRR held two technical conferences. ONRR published notice of the technical conferences in the Federal Register on October 29, 2015. 80 FR 66417. The first technical conference was held in person on November 20, 2015, at 9:00 a.m., Mountain Time in Denver, Colorado, at the Office of Natural Resources Revenue, Denver Federal Center, 6th Avenue and Kipling Street, Building 85, Auditoriums A-D, Denver, Colorado 80226. The second technical conference was a teleconference on November 20, 2015, at 2:00 p.m. Mountain Time. Fifteen people attended the technical conferences, of which seven were from ONRR, three from Tribes, and five from industry.

ONRR also solicited comments on the proposed changes through November 30, 2015. On February 17, 2016, ONRR consulted with the Ute Indian Tribe on adding the Wasatch, Carbon, and Emery Counties to the two Uintah and Ouray Designated Areas. Also, on March 4, 2016, ONRR consulted with representatives of the Three Affiliated Tribes on changing the boundary line between the North Fort Berthold and South Fort Berthold Designated Areas.

Public Comments: Generally, the parties attending the technical conference and consultations agreed with ONRR's proposal to modify the definition of the (1) Uintah and Ouray Designated Areas to include Wasatch, Carbon, and Emery Counties; and (2) North Fort Berthold and South Fort Berthold Designated Areas to use the Missouri River as the boundary line between the two designated areas rather than the Little Missouri River. ONRR received three additional comments: One from industry, one from an individual Indian mineral owner, and one from a Tribe.

Public Comment: The individual Indian mineral owner sent a comment stating he did not support dividing the Fort Berthold Reservation into two designated areas for five reasons: (1) The idea of selling price by field is an anachronism; (2) the price must be the highest in the world wherever that may be because industry uses the tax code, hedging, swaps, etc. in order to obtain the highest price; (3) this attempt to reduce price is a taking under Hodel because this regulation denies the beneficiary the difference between the market rate and major portion; (4) there is no basis for allowing a transportation deduction because typical carriers charge consumers for transportation rather than the mineral owner; and (5) North Dakota recovered millions because deductions were not in their leases and, likewise, Indian leases do not authorize this illegality.

ONRR Response: The technical conference was simply to discuss amending the Fort Berthold designated areas to use the Missouri River rather than the Little Missouri River to divide the two designated areas. These comments apply to the Indian Oil Valuation Amendments as a whole and do not directly relate to the appropriate boundary for the two Fort Berthold designated areas. ONRR addressed comments similar to the one above in the preamble of the final rule, which can be found at 80 FR 24,794 (May 1, 2015).

Public Comment: The industry commenter suggested that ONRR take this opportunity to divide the Fort Berthold Reservation into three designated areas: The first designated area would include lands north of the Missouri River, the second would include the lands south of the Missouri River and north of the Little Missouri River, and the third would include the lands south of the Little Missouri River. The commenter believes the available transportation infrastructures support dividing the Fort Berthold Reservation into three designated areas because the lands north of the Little Missouri River have evolving pipeline facilities that can transport production from the lease, whereas leases south of the Little Missouri River do not have the same available infrastructure.

ONRR Response: Dividing the Fort Berthold into two designated areas was a compromise negotiated by the Indian Oil Negotiated Rulemaking Committee (Committee). Generally, industry advocated using specific fields as designated areas. Alternatively, Tribes and individual Indian mineral owners promoted a broader area. Ultimately, the Committee agreed to divide Fort Berthold into two designated areas as a compromise. To date, ONRR has found no reason to ignore the conclusions of the Committee.

The final rule and the preamble of the proposed rule specifically allow lessees/operators, Tribes, and Indian mineral owners to petition ONRR to convene a technical conference to review, modify, or add designated areas where there is a significant change that affects the location and quality differentials. The rule has not yet been in effect for a period of time sufficient to demonstrate that there has been a significant change in the market on the Fort Berthold Reservation. Should the markets change in the future, the lessees/operators, Tribes, or individual Indian mineral owners can petition ONRR to change the designated areas in the future. The purpose of this technical conference was to change the boundary between the two Fort Berthold designated areas, not to add another designated area. Therefore, adding a designated area was outside the scope of this technical conference.

Public Comment: The Ute Indian Tribe indicated it would prefer to have Wasatch and Carbon Counties added to the Uintah & Ouray-Duchesne County Designated Area and Emery County added to the Uintah & Ouray-Grand and Uintah Counties Designated Area. The Tribe indicated the infrastructure on the Uintah & Ouray Reservation supported this configuration.

ONRR Response: ONRR agrees with this comment and has modified the definition of the two designated areas in the Uintah and Ouray Reservation by adding Wasatch and Carbon Counties to the Uintah & Ouray-Duchesne County Designated Area and Emery County the Uintah & Ouray-Grand and Uintah Counties Designated Area.

The Virginia Department of Transportation, who owns and operates the SR 156/Benjamin Harrison Memorial Bridge across the James River, mile 65.0, at Hopewell, VA, has requested a temporary deviation from the current operating regulations set out in 33 CFR 117.5, to facilitate replacement of the service elevators for both lift towers, install new electrical wiring, bird screens, and structural steel of the bridge. Under this temporary deviation, the bridge will be in the closed-to-navigation position from 8 p.m. to 6 a.m.; Monday through Thursday; July 25, 2016 to July 29, 2016; August 1, 2016 to August 5, 2016; September 5, 2016 to September 9, 2016; September 12, 2016 to September 16, 2016; and alternative dates from September 19, 2016 to September 23, 2016; and September 26, 2016 to September 30, 2016. The bridge will open for vessels on signal during scheduled closure periods, if at least 24 hours notice is given. The bridge is a vertical lift bridge has a vertical clearance of 50 feet in the closed-to-navigation position above mean water.

The James River is used by a variety of vessels including deep-draft vessels, tug and barge traffic, and recreational vessels. The Coast Guard has carefully coordinated the restrictions with waterway users in publishing this temporary deviation.

Vessels able to pass through the bridge in the closed-to-navigation position may do so at anytime. The bridge will be able to open for emergencies during scheduled closure periods, if at least 30 minutes notice is given. The Coast Guard will also inform the users of the waterway through our Local Notice and Broadcast Notices to Mariners of the change in operating schedule for the bridge so that vessel operators can arrange their transits to minimize any impact caused by the temporary deviation.

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

Tropospheric ozone, commonly known as smog, occurs when VOC and nitrogen oxides (NOX) react in the atmosphere in the presence of sunlight. Because of the harmful health effects of ozone, EPA and state governments limit the amount of VOCs and NOX that can be released into the atmosphere. VOC are those compounds of carbon (excluding carbon monoxide, carbon dioxide, carbonic acid, metallic carbides or carbonates, and ammonium carbonate) that form ozone through atmospheric photochemical reactions. Compounds of carbon (or organic compounds) have different levels of reactivity; they do not react at the same speed or do not form ozone to the same extent.

Section 302(s) of the CAA specifies that EPA has the authority to define the meaning of “VOC,” and hence what compounds shall be treated as VOC for regulatory purposes. It has been EPA's policy that compounds of carbon with negligible reactivity need not be regulated to reduce ozone and should be excluded from the regulatory definition of VOC. See 42 FR 35314 (July 8, 1977), 70 FR 54046 (September 13, 2005). EPA determines whether a given carbon compound has “negligible” reactivity by comparing the compound's reactivity to the reactivity of ethane. EPA lists these compounds in its regulations at 40 CFR 51.100(s) and excludes them from the definition of VOC. The chemicals on this list are often called “negligibly reactive.” EPA may periodically revise the list of negligibly reactive compounds to add or delete compounds.

EPA issued final rules approving the addition of three compounds to the list of those compounds excluded from the regulatory definition of VOC. The three compounds are: trans 1-chloro-3,3,3-trifluoroprop-1-ene (SolsticeTM 1233zd(E)), 78 FR 53029 (August 28, 2013); 2,3,3,3-tetrafluoropropene, 78 FR 62451 (October 22, 2013); and 2-amino-2-methyl-1-propanol (AMP), 79 FR 17037 (March 27, 2014). Alabama is updating its SIP to be consistent with those changes to federal regulations.

On October 26, 2015, ADEM submitted a SIP revision 1 to EPA for review and approval. The revision modifies the definition of VOC found at Alabama Administrative Code section 335-3-1-.02(gggg). Specifically, the revision adds three compounds—trans 1-chloro-3,3,3-trifluoroprop-1-ene (SolsticeTM 1233zd(E)); 2,3,3,3-tetrafluoropropene; and 2-amino-2-methyl-1-propanol (AMP)—to the list of those excluded from the VOC definition on the basis that each of these compounds makes a negligible contribution to tropospheric ozone formation.

These changes are consistent with section 110 of the CAA and meet the regulatory requirements pertaining to SIPs. Pursuant to CAA section 110(l), the Administrator shall not approve a revision of a plan if the revision would interfere with any applicable requirement concerning attainment and reasonable further progress (as defined in CAA section 171), or any other applicable requirement of the Act. The revision to Rule 335-3-1-.02(gggg) is approvable under section 110(l) because it reflects changes to federal regulations based on findings that the three aforementioned compounds are negligibly reactive.

In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of Alabama Regulation section 335-3-1-.02 “Definitions,” effective November 24, 2015, which revised the definition of VOC. Therefore, this material has been approved by EPA for inclusion in the State implementation plan, has been incorporated by reference by EPA into that plan, is fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.2 EPA has made, and will continue to make, these materials generally available through www.regulations.gov and/or at the EPA Region 4 Office (please contact the person identified in the “For Further Information Contact” section of this preamble for more information).

Pursuant to section 110 of the CAA, EPA is approving the revision to the Alabama SIP changing the VOC definition. EPA has evaluated Alabama's October 26, 2015, submittal and has determined that it meets the applicable requirements of the CAA and EPA regulations and is consistent with EPA policy.

EPA is publishing this rule without prior proposal because the Agency views this as a noncontroversial submittal and anticipates no adverse comments. However, in the proposed rules section of this Federal Register publication, EPA is publishing a separate document that will serve as the proposal to approve the SIP revision should adverse comments be filed. This rule will be effective September 27, 2016 without further notice unless the Agency receives adverse comments by August 29, 2016.

If EPA receives such comments, then EPA will publish a document withdrawing the final rule and informing the public that the rule will not take effect. All public comments received will then be addressed in a subsequent final rule based on the proposed rule. EPA will not institute a second comment period. Parties interested in commenting should do so at this time. If no such comments are received, the public is advised that this rule will be effective on September 27, 2016 and no further action will be taken on the proposed rule.

Under the CAA, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable federal regulations. See 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, EPA's role is to approve state choices, provided that they meet the criteria of the CAA. Accordingly, this action merely approves state law as meeting federal requirements and does not impose additional requirements beyond those imposed by state law. For that reason, this action:

• Is not a significant regulatory action subject to review by the Office of Management and Budget under Executive Orders 12866 (58 FR 51735, October 4, 1993) and 13563 (76 FR 3821, January 21, 2011);

• does not impose an information collection burden under the provisions of the Paperwork Reduction Act (44 U.S.C. 3501 et seq.);

• is certified as not having a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.);

• does not contain any unfunded mandate or significantly or uniquely affect small governments, as described in the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4);

• does not have Federalism implications as specified in Executive Order 13132 (64 FR 43255, August 10, 1999);

• is not an economically significant regulatory action based on health or safety risks subject to Executive Order 13045 (62 FR 19885, April 23, 1997);

• is not a significant regulatory action subject to Executive Order 13211 (66 FR 28355, May 22, 2001);

• is not subject to requirements of Section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) because application of those requirements would be inconsistent with the CAA; and

• does not provide EPA with the discretionary authority to address, as appropriate, disproportionate human health or environmental effects, using practicable and legally permissible methods, under Executive Order 12898 (59 FR 7629, February 16, 1994).

The SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), nor will it impose substantial direct costs on tribal governments or preempt tribal law.

The Congressional Review Act, 5 U.S.C. 801 et seq., as added by the Small Business Regulatory Enforcement Fairness Act of 1996, generally provides that before a rule may take effect, the agency promulgating the rule must submit a rule report, which includes a copy of the rule, to each House of the Congress and to the Comptroller General of the United States. EPA will submit a report containing this action and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the United States prior to publication of the rule in the Federal Register. A major rule cannot take effect until 60 days after it is published in the Federal Register. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by September 27, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. Parties with objections to this direct final rule are encouraged to file a comment in response to the parallel notice of proposed rulemaking for this action published in the proposed rules section of today's Federal Register, rather than file an immediate petition for judicial review of this direct final rule, so that EPA can withdraw this direct final rule and address the comment in the proposed rulemaking. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows: