Federal Register Vol. 81, No.150,

Federal Register Volume 81, Issue 150 (August 4, 2016)

Page Range51297-51772
FR Document

81_FR_150
Current View
Page and SubjectPDF
81 FR 51511 - Sunshine Act Meetings; National Science BoardPDF
81 FR 51491 - Advisory Committee on Increasing Competitive Integrated Employment for Individuals With Disabilities; Notice of MeetingPDF
81 FR 51440 - Farm Credit Administration Board; Sunshine Act; Regular MeetingPDF
81 FR 51510 - Sunshine Act MeetingsPDF
81 FR 51537 - U.S. Nationals Entitled to Pension From the Government of BelgiumPDF
81 FR 51536 - 60-Day Notice of Proposed Information Collection: Statement of Claim Related to Pensions Provided by the Kingdom of BelgiumPDF
81 FR 51462 - Environmental Assessment for Commercial Wind Leasing and Site Assessment Activities on the Outer Continental Shelf (OCS) Offshore the Island of Oahu, Hawaii; Extension of Comment Period MMAA104000PDF
81 FR 51447 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding CompanyPDF
81 FR 51447 - Formations of, Acquisitions by, and Mergers of Bank Holding CompaniesPDF
81 FR 51537 - 2016 Meetings of the Equip 2020 Plenary and Working Groups; Supplemental NoticePDF
81 FR 51379 - Fisheries of the Exclusive Economic Zone Off Alaska; Dusky Rockfish in the Western Regulatory Area of the Gulf of AlaskaPDF
81 FR 51380 - Fisheries of the Exclusive Economic Zone Off Alaska; Northern Rockfish in the Western Regulatory Area of the Gulf of AlaskaPDF
81 FR 51379 - Fisheries of the Exclusive Economic Zone Off Alaska; Pacific Ocean Perch in the Western Regulatory Area of the Gulf of AlaskaPDF
81 FR 51426 - Plan for Periodic Review of RegulationsPDF
81 FR 51460 - National Flood Insurance Program (NFIP); Assistance to Private Sector Property Insurers, Availability of FY 2017 ArrangementPDF
81 FR 51447 - Agency Information Collection Activities: Announcement of Board Approval Under Delegated Authority and Submission to OMBPDF
81 FR 51548 - Pipeline Safety: Information Collection ActivitiesPDF
81 FR 51461 - Oklahoma; Major Disaster and Related DeterminationsPDF
81 FR 51462 - Texas; Amendment No. 5 to Notice of a Major Disaster DeclarationPDF
81 FR 51453 - Agency Information Collection Activities; Announcement of Office of Management and Budget Approval; Food Labeling: Nutrition Facts and Supplement Facts Label and Reference Amounts Customarily Consumed per Eating OccasionPDF
81 FR 51453 - Medical Devices; Availability of Safety and Effectiveness Summaries for Premarket Approval ApplicationsPDF
81 FR 51441 - Guidelines for Appeals of Material Supervisory DeterminationsPDF
81 FR 51440 - Agency Information Collection Activities: Submission for OMB Review; Comment Request (3064-0070, -0079, -0103, -0139 & -0192)PDF
81 FR 51465 - United States v. Anheuser-Busch InBev SA/NV et al.; Proposed Final Judgment and Competitive Impact StatementPDF
81 FR 51459 - Agency Information Collection Activities: Record of Vessel Foreign Repair or Equipment PurchasePDF
81 FR 51449 - Announcement of the Intent to Award a Supplemental Grant to the National Safe Place Network in Louisville, KYPDF
81 FR 51541 - Qualification of Drivers; Exemption Applications; Diabetes MellitusPDF
81 FR 51538 - Qualification of Drivers; Exemption Applications; Epilepsy and Seizure DisordersPDF
81 FR 51540 - Qualification of Drivers; Exemption Applications; DiabetesPDF
81 FR 51430 - Notice of Request for Extension of a Currently Approved Information CollectionPDF
81 FR 51439 - Virginia Electric and Power Company; Notice of Institution of Section 206 Proceeding and Refund Effective DatePDF
81 FR 51434 - Combined Notice of Filings #1PDF
81 FR 51433 - Rover Pipeline, LLC; Panhandle Eastern Pipe Line Company, LP; Trunkline Gas Company, LLC; Notice of Availability of the Final Environmental Impact Statement for the Proposed Rover Pipeline, Panhandle Backhaul, and Trunkline Backhaul ProjectsPDF
81 FR 51438 - Otter Tail Power Company; Notice of Intent To File License Application, Filing of Pre-Application Document (PAD), Commencement of Pre-Filing Process, and Scoping; Request for Comments on the PAD and Scoping Document, and Identification of Issues and Associated Study RequestsPDF
81 FR 51436 - Golden Pass Pipeline, LLC; Golden Pass Products, LLC; Notice of Availability of the Final Environmental Impact Statement for the Proposed Golden Pass LNG Export ProjectPDF
81 FR 51374 - Fisheries of the Northeastern United States; Recreational Management Measures for the Summer Flounder, Scup, and Black Sea Bass Fisheries; Fishing Year 2016PDF
81 FR 51489 - Agency Information Collection Activities; Proposed Collection Comments Requested; New collection: Arrest-Related Deaths ProgramPDF
81 FR 51433 - Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Experimental Sites Data Collection InstrumentPDF
81 FR 51488 - Notice of Filing of Notice of Settlement Under the Comprehensive Environmental Response, Compensation, and Liability Act and the Resource Conservation and Recovery ActPDF
81 FR 51510 - Legal Services Corporation Strategic Plan Update 2017-2020; Request for CommentsPDF
81 FR 51527 - Joint Industry Plan; Notice of Designation of Longer Period for Commission Action on the Proposed National Market System Plan Governing the Consolidated Audit Trail by BATS Exchange, Inc., BATS-Y Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Incorporated, Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., International Securities Exchange, LLC, the Investors' Exchange, LLC, ISE Gemini, LLC, ISE Mercury, LLC, Miami International Securities Exchange LLC, NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, The NASDAQ Stock Market LLC, National Stock Exchange, Inc., New York Stock Exchange LLC, NYSE MKT LLC, and NYSE Arca, Inc.PDF
81 FR 51532 - Self-Regulatory Organizations; ICE Clear Credit LLC; Notice of Filing of Proposed Rule Change To Revise the ICC Risk Management Model Description Document and the ICC Risk Management FrameworkPDF
81 FR 51528 - Self-Regulatory Organizations; Investors Exchange LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Correct Typographical Errors in Certain Referenced Time FramesPDF
81 FR 51530 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Provide Web-Based Delivery of the Continuing Education ProgramPDF
81 FR 51513 - Self-Regulatory Organizations; Chicago Stock Exchange, Inc.; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Adopt the Securities Trader Registration Category and the Series 57 Securities Trader Examination Registration RequirementPDF
81 FR 51533 - Self-Regulatory Organizations; BOX Options Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change To Detail How Complex Orders Will Execute Through the Facilitation Auction MechanismPDF
81 FR 51517 - Self-Regulatory Organizations; The NASDAQ Stock Market LLC; Order Granting Approval of Proposed Rule Change Relating to the Listing and Trading of the Shares of the First Trust Strategic Mortgage REIT ETF of First Trust Exchange-Traded Fund VIIIPDF
81 FR 51521 - Self-Regulatory Organizations; New York Stock Exchange LLC; Notice of Designation of a Longer Period for Commission Action on a Proposed Rule Change Amending NYSE Rule 6A To Exclude the Physical Area Within Fully Enclosed Telephone Booths Located in 18 Broad Street From the Definition of Trading FloorPDF
81 FR 51522 - Notice of Applications for Deregistration Under Section 8(f) of the Investment Company Act of 1940PDF
81 FR 51523 - Bain Capital Specialty Finance, Inc., et al.; Notice of ApplicationPDF
81 FR 51512 - Investment Managers Series Trust and SilverPepper LLC; Notice of ApplicationPDF
81 FR 51446 - Agency Information Collection Activities: Submission for OMB Review; Comment RequestPDF
81 FR 51463 - Certain Recombinant Factor VIII Products; Determination To Review In Part a Final Initial Determination Finding No Violation of Section 337 and a Summary Determination; Schedule for Filing Written Submissions on One Issue Under Review and on Remedy, the Public Interest, and BondingPDF
81 FR 51455 - Agency Information Collection Activities; Proposed Collection; Comment Request; Certification of Identity for Freedom of Information Act and Privacy Act RequestsPDF
81 FR 51693 - Technical Guidance for Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing-Underwater Acoustic Thresholds for Onset of Permanent and Temporary Threshold ShiftsPDF
81 FR 51449 - Insanitary Conditions at Compounding Facilities; Draft Guidance for Industry; AvailabilityPDF
81 FR 51431 - Proposed Collection; Comment RequestPDF
81 FR 51437 - North American Power Business, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
81 FR 51439 - Antelope DSR 1, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
81 FR 51437 - Combined Notice of Filings #2PDF
81 FR 51436 - Combined Notice of Filings #1PDF
81 FR 51490 - Notice of Lodging of Proposed Consent Decree Under the Comprehensive Environmental Response, Compensation, and Liability ActPDF
81 FR 51386 - Thresholds for De Minimis Activity and Exemptions From Licensing Under the Animal Welfare ActPDF
81 FR 51297 - U.S. Standards for Grades of Fresh Fruits and Vegetables, Fruits and Vegetables for Processing, Nuts, and Specialty CropsPDF
81 FR 51332 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 51430 - Notice of Public Meeting of the Minnesota Advisory Committee for a New Committee Orientation Meeting, To Discuss Civil Rights Issues in the State, and To Plan Future ActivitiesPDF
81 FR 51381 - Importation of Fresh Mango Fruit From Vietnam Into the Continental United StatesPDF
81 FR 51339 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 51337 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 51461 - Agency Information Collection Activities: Submission for OMB Review; Comment Request; Public Assistance ProgramPDF
81 FR 51432 - Agency Information Collection Activities; Submission to the Office of Management and Budget for Review and Approval; Comment Request; Generic Clearance for Federal Student Aid Customer Satisfaction Surveys and Focus Groups Master PlanPDF
81 FR 51456 - Announcement of Requirements and Registration for the “MRC Serves” Video ChallengePDF
81 FR 51450 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; National Direct-to-Consumer Advertising SurveyPDF
81 FR 51370 - Fisheries of the Northeastern United States; Atlantic Bluefish Fishery; 2016-2018 Atlantic Bluefish SpecificationsPDF
81 FR 51334 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 51499 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Employee Benefit Plan Claims Procedure Under the Employee Retirement Income Security ActPDF
81 FR 51496 - Sherwin Alumina Company, LLC Including On-Site Leased Workers From CCC Group, McWhorter Electric, MMR Constructors, Inc., Dols Managed Workforce, First Instrument Solutions, T. Parker Host, Rexco, GP Strategies, JM Davidson, Palacios Marine & Industrial, All Specialty, LK Jordan, Strom, and St. James Stevedoring Partners, LLC Including Workers Whose Unemployment Insurance (UI) Wages Are Reported Through Host Terminals, Gregory, Texas: Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
81 FR 51497 - Modine Manufacturing Company Including On-Site Leased Workers From Seek Professionals, LLC, Securitas Security Services USA, Inc., and Entegee, Washington, Iowa: Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
81 FR 51493 - Notice of Determinations Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
81 FR 51496 - GE Industrial Solutions Service Engineering Organization Atlanta, Georgia: Notice of Revised Determination After Statutory ReconsiderationPDF
81 FR 51491 - Investigations Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
81 FR 51493 - General Electric Company; Transportation Division; Including On-Site Leased Workers From Adecco, YOH Services LLC, CH2MHILL, and GGS Information Services Erie, Pennsylvania; Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
81 FR 51491 - Cooper Power Systems, Power Delivery Division, an Eaton Corporation Company, Formerly Cooper Industries Including On-Site Leased Workers From Manpower, TEC Staffing, Infotree Services and Advantage Resourcing, Fayetteville, Arkansas; Amended Certification Regarding Eligibility To Apply for Worker Adjustment AssistancePDF
81 FR 51497 - Foxconn Assembly, LLC, Houston, Texas: Notice of Affirmative Determination Regarding Application for ReconsiderationPDF
81 FR 51497 - Agency Information Collection Activities; Comment Request; Work Opportunity Tax Credit (WOTC)PDF
81 FR 51499 - Newport News Shipbuilding; Grant of a Permanent VariancePDF
81 FR 51341 - Approval and Promulgation of Implementation Plans; Louisiana; Revisions to the New Source Review State Implementation Plan; Air Permit Procedure RevisionsPDF
81 FR 51425 - Notification of Submission to the Secretary of Agriculture; Procedural Rule Amendment; Required Use of Federal Register NoticesPDF
81 FR 51348 - Endangered and Threatened Wildlife and Plants; Determination of Critical Habitat for the Marbled MurreletPDF
81 FR 51413 - Estate, Gift, and Generation-Skipping Transfer Taxes; Restrictions on Liquidation of an InterestPDF
81 FR 51412 - Ensuring Program Uniformity at the Hearing and Appeals Council Levels of the Administrative Review ProcessPDF
81 FR 51413 - Application of Section 409A to Nonqualified Deferred Compensation Plans; CorrectionPDF
81 FR 51298 - Pecans Grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas; Order Regulating HandlingPDF
81 FR 51330 - Airworthiness Directives; Pacific Aerospace Limited AirplanesPDF
81 FR 51343 - On-Time Performance Under Section 213 of the Passenger Rail Investment and Improvement Act of 2008PDF
81 FR 51314 - Airworthiness Directives; Fokker Services B.V. AirplanesPDF
81 FR 51320 - Airworthiness Directives; Airbus AirplanesPDF
81 FR 51312 - HUBZone and National Defense Authorization Act for Fiscal Year 2016 AmendmentsPDF
81 FR 51323 - Airworthiness Directives; Bombardier, Inc. AirplanesPDF
81 FR 51328 - Airworthiness Directives; Fokker Services B.V. AirplanesPDF
81 FR 51325 - Airworthiness Directives; Airbus AirplanesPDF
81 FR 51317 - Airworthiness Directives; Dassault Aviation AirplanesPDF
81 FR 51383 - Cranberries Grown in the States of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York; Proposed Amendment to Marketing OrderPDF
81 FR 51404 - Truth in Lending (Regulation Z)PDF
81 FR 51400 - Consumer Leasing (Regulation M)PDF
81 FR 51394 - Appraisals for Higher-Priced Mortgage Loans Exemption ThresholdPDF
81 FR 51725 - Data Collection for Analytics and Surveillance and Market-Based Rate PurposesPDF
81 FR 51549 - Endangered and Threatened Wildlife and Plants; Amending the Formats of the Lists of Endangered and Threatened Wildlife and PlantsPDF
81 FR 51607 - Disclosure Update and SimplificationPDF

Issue

81 150 Thursday, August 4, 2016 Contents Agricultural Marketing Agricultural Marketing Service RULES Grade Standards: Fruits and Vegetables for Processing, Nuts, and Specialty Crops, 51297-51298 2016-18451 Orders Regulating Handling: Pecans Grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, 51298-51312 2016-18346 PROPOSED RULES Marketing Orders: Cranberries Grown in the States of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island, NY, 51383-51386 2016-18115 Agriculture Agriculture Department See

Agricultural Marketing Service

See

Animal and Plant Health Inspection Service

See

Rural Business—Cooperative Service

Animal Animal and Plant Health Inspection Service PROPOSED RULES Importation of Fresh Mango Fruit From Vietnam Into the Continental United States, 51381-51383 2016-18439 Thresholds for De Minimis Activity and Exemptions From Licensing Under the Animal Welfare Act, 51386-51394 2016-18452 Antitrust Division Antitrust Division NOTICES Final Judgments and Competitive Impact Statements: United States v. Anheuser-Busch InBev SA/NV et al., 51465-51488 2016-18504 Consumer Financial Protection Bureau of Consumer Financial Protection PROPOSED RULES Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 51394-51400 2016-18058 Consumer Leasing (Regulation M), 51400-51404 2016-18059 Truth in Lending (Regulation Z), 51404-51412 2016-18062 Children Children and Families Administration NOTICES Funding Availability: Supplemental Grant to the National Safe Place Network in Louisville, KY, 51449 2016-18502 Civil Rights Civil Rights Commission NOTICES Meetings: Minnesota Advisory Committee, 51430-51431 2016-18440 Commerce Commerce Department See

National Oceanic and Atmospheric Administration

Comptroller Comptroller of the Currency PROPOSED RULES Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 51394-51400 2016-18058 Defense Department Defense Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 2016-18458 51431-51432 2016-18460 Disability Disability Employment Policy Office NOTICES Meetings: Advisory Committee on Increasing Competitive Integrated Employment for Individuals with Disabilities, 51491 2016-18615 Education Department Education Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Experimental Sites Data Collection Instrument, 51433 2016-18481 Generic Clearance for Federal Student Aid Customer Satisfaction Surveys and Focus Groups Master Plan, 51432-51433 2016-18429 Employment and Training Employment and Training Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Work Opportunity Tax Credit, 51497-51499 2016-18405 Worker Adjustment Assistance Eligibility; Amended Certifications: Cooper Power Systems, Power Delivery Division, et al., Fayetteville, AR, 51491 2016-18407 General Electric Co., Transportation Division, et al., Erie, PA, 51493 2016-18408 Modine Manufacturing Co., et al., Washington, IA, 51497 2016-18412 Sherwin Alumina Co., LLC, et al., Gregory, TX, 51496 2016-18413 Worker Adjustment Assistance Eligibility; Determinations, 2016-18406 51493-51497 2016-18411 Worker Adjustment Assistance Eligibility; Reconsiderations: GE Industrial Solutions Service Engineering Organization Atlanta, GA, 51496-51497 2016-18410 Worker and Alternative Trade Adjustment Assistance; Investigations, 51491-51493 2016-18409 Energy Department Energy Department See

Federal Energy Regulatory Commission

Environmental Protection Environmental Protection Agency RULES Air Quality State Implementation Plans; Approvals and Promulgations: Louisiana; Revisions to the New Source Review State Implementation Plan; Air Permit Procedure Revisions, 51341-51343 2016-18397 PROPOSED RULES Procedural Rule Amendment; Required Use of Federal Register Notices, Submission to the Secretary of Agriculture, 51425-51426 2016-18393 Farm Credit Farm Credit Administration NOTICES Meetings; Sunshine Act, 51440 2016-18606 Federal Aviation Federal Aviation Administration RULES Airworthiness Directives: Airbus Airplanes, 2016-18168 51320-51322, 51325-51328 2016-18254 Bombardier, Inc. Airplanes, 51323-51325 2016-18172 Dassault Aviation Airplanes, 51317-51320 2016-18167 Fokker Services B.V. Airplanes, 2016-18171 51314-51317, 51328-51330 2016-18255 Pacific Aerospace Limited Airplanes, 51330-51332 2016-18265 Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures: Miscellaneous Amendments, 51332-51341 2016-18423 2016-18435 2016-18438 2016-18444 NOTICES Meetings: Equip 2020 Plenary and Working Groups; Supplemental Notice, 51537-51538 2016-18525 Federal Deposit Federal Deposit Insurance Corporation NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 51440-51441 2016-18506 Guidelines for Appeals of Material Supervisory Determinations, 51441-51446 2016-18507 Federal Emergency Federal Emergency Management Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Public Assistance Program, 51461-51462 2016-18430 Major Disaster Declarations: Texas; Amendment No. 5, 51462 2016-18511 Major Disasters and Related Determinations: Oklahoma, 51461 2016-18512 National Flood Insurance Program: Assistance to Private Sector Property Insurers, Availability of FY 2017 Arrangement, 51460 2016-18517 Federal Energy Federal Energy Regulatory Commission PROPOSED RULES Data Collection for Analytics and Surveillance and Market-Based Rate Purposes, 51726-51772 2016-17839 NOTICES Applications: Otter Tail Power Co., 51438-51439 2016-18490 Combined Filings, 2016-18455 51434-51438 2016-18456 2016-18494 Environmental Impact Statements; Availability, etc.: Golden Pass LNG Export Project, 51436-51437 2016-18489 Proposed Rover Pipeline, Panhandle Backhaul, and Trunkline Backhaul Projects: Rover Pipeline, LLC; et al., 51433-51434 2016-18491 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: Antelope DSR 1, LLC, 51439-51440 2016-18457 North American Power Business, LLC, 51437 2016-18459 Refund Effective Dates: Virginia Electric and Power Co., 51439 2016-18495 Federal Maritime Federal Maritime Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 51446-51447 2016-18465 Federal Motor Federal Motor Carrier Safety Administration NOTICES Qualification of Drivers; Exemption Applications: Diabetes, 51540-51541 2016-18498 Diabetes Mellitus, 51541-51548 2016-18501 Epilepsy and Seizure Disorders, 51538-51540 2016-18499 Federal Reserve Federal Reserve System PROPOSED RULES Appraisals for Higher-Priced Mortgage Loans Exemption Threshold, 51394-51400 2016-18058 Consumer Leasing (Regulation M), 51400-51404 2016-18059 Truth in Lending (Regulation Z), 51404-51412 2016-18062 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 51447-51448 2016-18515 Changes in Bank Control: Acquisitions of Shares of a Bank or Bank Holding Company, 51447 2016-18527 Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 51447 2016-18526 Fish Fish and Wildlife Service RULES Endangered and Threatened Wildlife and Plants: Amending the Formats of the Lists of Endangered and Threatened Wildlife and Plants, 51550-51605 2016-17322 Determination of Critical Habitat for the Marbled Murrelet, 51348-51370 2016-18376 Food and Drug Food and Drug Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Certification of Identity for Freedom of Information Act and Privacy Act Requests, 51455-51456 2016-18463 Food Labeling: Nutrition Facts and Supplement Facts Label and Reference Amounts Customarily Consumed Per Eating Occasion, 51453 2016-18509 National Direct-to-Consumer Advertising Survey, 51450-51453 2016-18425 Guidance: Insanitary Conditions at Compounding Facilities, 51449-51450 2016-18461 Medical Devices: Availability of Safety and Effectiveness Summaries for Premarket Approval Applications, 51453-51455 2016-18508 Health and Human Health and Human Services Department See

Children and Families Administration

See

Food and Drug Administration

NOTICES MRC Serves Video Challenge Requirements and Registration, 51456-51459 2016-18427
Homeland Homeland Security Department See

Federal Emergency Management Agency

See

U.S. Customs and Border Protection

Interior Interior Department See

Fish and Wildlife Service

See

Ocean Energy Management Bureau

Internal Revenue Internal Revenue Service PROPOSED RULES Application of Section 409A to Nonqualified Deferred Compensation Plans; Correction, 51413 2016-18355 Estate, Gift, and Generation-skipping Transfer Taxes: Restrictions on Liquidation of an Interest, 51413-51425 2016-18370 International Trade Com International Trade Commission NOTICES Determinations: Certain Recombinant Factor VIII Products, 51463-51465 2016-18464 Justice Department Justice Department See

Antitrust Division

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Arrest-Related Deaths Program, 51489-51490 2016-18484 Proposed Consent Decrees Under CERCLA, 51490-51491 2016-18454 Settlements Under CERCLA and the Resource Conservation and Recovery Act, 51488-51489 2016-18479
Labor Department Labor Department See

Disability Employment Policy Office

See

Employment and Training Administration

See

Occupational Safety and Health Administration

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Employee Benefit Plan Claims Procedure Under the Employee Retirement Income Security Act, 51499 2016-18414
Legal Legal Services Corporation NOTICES Strategic Plan Update 2017-2020, 51510 2016-18478 Mississippi Mississippi River Commission NOTICES Meetings; Sunshine Act, 51510-51511 2016-18605 National Oceanic National Oceanic and Atmospheric Administration RULES Fisheries of the Exclusive Economic Zone Off Alaska: Dusky Rockfish in the Western Regulatory Area of the Gulf of Alaska, 51379 2016-18524 Northern Rockfish in the Western Regulatory Area of the Gulf of Alaska, 51380 2016-18523 Pacific Ocean Perch in the Western Regulatory Area of the Gulf of Alaska, 51379-51380 2016-18522 Fisheries of the Northeastern United States: Atlantic Bluefish Fishery; 2016-2018 Atlantic Bluefish Specifications, 51370-51374 2016-18424 Recreational Management Measures for the Summer Flounder, Scup, and Black Sea Bass Fisheries; Fishing Year 2016, 51374-51379 2016-18485 PROPOSED RULES Plan for Periodic Review of Regulations, 51426-51429 2016-18521 NOTICES Assessing the Effects of Anthropogenic Sound on Marine Mammal Hearing: Underwater Acoustic Thresholds for Onset of Permanent and Temporary Threshold Shifts; Technical Guidance, 51694-51724 2016-18462 National Science National Science Foundation NOTICES Meetings; Sunshine Act, 51511-51512 2016-18663 Occupational Safety Health Adm Occupational Safety and Health Administration NOTICES Variances: Newport News Shipbuilding, 51499-51510 2016-18404 Ocean Energy Management Ocean Energy Management Bureau NOTICES Environmental Assessments; Availability, etc.: Commercial Wind Leasing and Site Assessment Activities, Outer Continental Shelf Offshore the Island of Oahu, HI, 51462 2016-18528 Pipeline Pipeline and Hazardous Materials Safety Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 51548 2016-18513 Rural Business Rural Business-Cooperative Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 51430 2016-18497 Securities Securities and Exchange Commission PROPOSED RULES Disclosure Update and Simplification, 51608-51692 2016-16964 NOTICES Applications for Deregistration, 51522-51523 2016-18468 Applications: Bain Capital Specialty Finance, Inc., et al., 51523-51527 2016-18467 Investment Managers Series Trust and SilverPepper LLC, 51512-51513 2016-18466 Self-Regulatory Organizations; Proposed Rule Changes: BATS Exchange, Inc., BATS-Y Exchange, Inc., BOX Options Exchange LLC, C2 Options Exchange, Inc., et al., 51527-51528 2016-18477 BOX Options Exchange LLC, 51533-51536 2016-18471 Chicago Stock Exchange, Inc., 51513-51517, 51530-51532 2016-18472 2016-18473 ICE Clear Credit LLC, 51532-51533 2016-18475 Investors Exchange LLC, 51528-51530 2016-18474 New York Stock Exchange LLC, 51521-51522 2016-18469 The NASDAQ Stock Market LLC, 51517-51521 2016-18470 Small Business Small Business Administration RULES HUBZone and National Defense Authorization Act for Fiscal Year 2016 Amendments, 51312-51314 2016-18251 Social Social Security Administration PROPOSED RULES Ensuring Program Uniformity at the Hearing and Appeals Council Levels of the Administrative Review Process, 51412-51413 2016-18367 State Department State Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Statement of Claim Related to Pensions Provided by the Kingdom of Belgium, 51536-51537 2016-18529 U.S. Nationals Entitled to Pension from the Government of Belgium, 51537 2016-18536 Surface Transportation Surface Transportation Board RULES On-Time Performance Under the Passenger Rail Investment and Improvement Act, 51343-51348 2016-18256 Transportation Department Transportation Department See

Federal Aviation Administration

See

Federal Motor Carrier Safety Administration

See

Pipeline and Hazardous Materials Safety Administration

Treasury Treasury Department See

Comptroller of the Currency

See

Internal Revenue Service

Customs U.S. Customs and Border Protection NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Record of Vessel Foreign Repair or Equipment Purchase, 51459-51460 2016-18503 Separate Parts In This Issue Part II Interior Department, Fish and Wildlife Service, 51550-51605 2016-17322 Part III Securities and Exchange Commission, 51608-51692 2016-16964 Part IV Commerce Department, National Oceanic and Atmospheric Administration, 51694-51724 2016-18462 Part V Energy Department, Federal Energy Regulatory Commission, 51726-51772 2016-17839 Reader Aids

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

To subscribe to the Federal Register Table of Contents LISTSERV electronic mailing list, go to http://listserv.access.thefederalregister.org and select Online mailing list archives, FEDREGTOC-L, Join or leave the list (or change settings); then follow the instructions.

81 150 Thursday, August 4, 2016 Rules and Regulations DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 51 [Doc. Number AMS-FV-14-0090, FV-16-327] U.S. Standards for Grades of Fresh Fruits and Vegetables, Fruits and Vegetables for Processing, Nuts, and Specialty Crops AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final notice.

SUMMARY:

The Agricultural Marketing Service (AMS) of the U.S. Department of Agriculture (USDA) is revising 41 U.S. Standards for Grades of fresh fruits and vegetables, fruits and vegetables for processing, nuts, and specialty crops by removing the “Unclassified” category from each standard. This revision brings these grade standards in line with other recently amended standards and current terminology. The change also updates the standards to more accurately represent today's marketing practices and provide the industry with greater flexibility.

DATES:

September 6, 2016.

ADDRESSES:

Standardization Branch, Specialty Crops Inspection Division, Specialty Crops Program, Agricultural Marketing Service, U.S. Department of Agriculture, National Training and Development Center, Riverside Business Park, 100 Riverside Parkway, Suite 101, Fredericksburg, VA 22406.

FOR FURTHER INFORMATION CONTACT:

Olivia Vernon, Standardization Branch, Specialty Crops Inspection Division, at the address above or by telephone at (540) 361-2743; fax (540) 361-1199; or, email [email protected] The current U.S. Standards for Grades are available on the AMS Web site at http://www.ams.usda.gov/grades-standards.

SUPPLEMENTARY INFORMATION:

Section 203(c) of the Agricultural Marketing Act of 1946 (7 U.S.C. 1621-1627), as amended, directs and authorizes the Secretary of Agriculture “to develop and improve standards of quality, condition, quantity, grade and packaging, and recommend and demonstrate such standards in order to encourage uniformity and consistency in commercial practices.” AMS is committed to carrying out this authority in a manner that facilitates the marketing of agricultural commodities and makes copies of official grade standards available upon request. The U.S. Standards for Grades of Fruits and Vegetables not connected with Federal Marketing Orders or U.S. import requirements no longer appear in the Code of Federal Regulations (CFR), but are maintained by USDA, AMS, Specialty Crops Program, and are available on the Internet at http://www.ams.usda.gov/grades-standards.

AMS is revising these voluntary U.S. standards for grades using the procedures in part 36, title 7 of the Code of Federal Regulations (7 CFR part 36).

Background

AMS is eliminating the “Unclassified” section in 41 U.S. grade standards that were issued under the Agricultural Marketing Act of 1946.

The fresh fruit and vegetable grade standards covered by these changes are: Sweet anise, lima beans, beets, Brussels sprouts, cabbage, cucumbers, endive, garlic, collard greens or broccoli greens, mustard greens and turnip greens, horseradish roots, greenhouse leaf lettuce, mushrooms, common green onions, onion sets, parsnips, fresh peas, southern peas, rhubarb, romaine, bunched shallots, spinach plants, summer squash, turnips or rutabagas, dewberries and blackberries, American (eastern type) grapes, juice grapes (European or vinifera type), and raspberries.

In the Proposed Notice, AMS inadvertently included celery, honey dew and honey ball type melons, Persian limes, summer and fall pears, and winter pears in this rulemaking. The grade standards for these commodities are published in the CFR at 7 CFR part 51 whereas the standards for the 41 commodities addressed here are not published in the CFR. AMS ultimately intends to remove celery, honey dew and honey ball type melons, Persian limes, summer and fall pears, and winter pears standards from the CFR. At that time, the “Unclassified” section will be removed from the grade standards for celery, honey dew and honey ball type melons, Persian limes, summer and fall pears, and winter pears. The fresh fruit and vegetable for processing grade standards covered by these changes are spinach, berries, blueberries, red sour cherries for manufacture, sweet cherries for canning or freezing, cranberries for processing, currants, raspberries, growers' stock strawberries for manufacture, and washed and sorted strawberries for freezing.

The nut and specialty crops grade standards covered by these changes are: Brazil nuts in the shell, cut peonies in the bud, and tomato plants.

AMS continually reviews all fruit, vegetable, nut and specialty crop grade standards to ensure their usefulness to the industry. AMS determined that the “Unclassified” section should be eliminated from the aforementioned 41 U.S. Standards for Grade as the category is not a grade and only serves to show that no grade has been applied to the lot. It is no longer considered necessary.

On September 9, 2015, AMS published a Proposed Notice in the Federal Register (80 FR 53021) soliciting comments on removing the term “Unclassified” from the standards. Seven comments were received by November 2, 2015, the closing date of the public comment period, from six private citizens and one individual associated with a U.S. university.

The six private citizen commenters supported the revisions as a positive step forward for the USDA that will offer produce companies and everyday shoppers a clearer idea of the quality of produce they are purchasing. The final commenter suggested that making this change to the standards would create the need for additional grades and categories to cover all variants with in different commodities. The USDA stands by its decision to remove the unclassified category because there is no evidence of use of the category by industry, and for the reason that commodities would fall into one of the established grades currently listed in the standards.

Based on the information gathered, AMS is removing the “Unclassified” category from the aforementioned U.S. Standards for Grade. The revision brings these grade standards in line with other recently amended standards and current terminology, and updates the standards to more accurately represent today's marketing practices and provide the industry with greater flexibility.

Authority:

7 U.S.C. 1621-1627.

Dated: July 29, 2016. Elanor Starmer, Administrator, Agricultural Marketing Service.
[FR Doc. 2016-18451 Filed 8-3-16; 8:45 am] BILLING CODE 3410-02-P
DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 986 [Docket No. AO-FV-15-0139; AMS-FV-15-0023; FV15-986-1] Pecans Grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas; Order Regulating Handling AGENCY:

Agricultural Marketing Service, USDA.

ACTION:

Final rule.

SUMMARY:

This rule establishes a marketing agreement and order (order) for pecans grown in the states of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas. The order provides authority to collect industry data and to conduct research and promotion activities. In addition, the order provides authority for the industry to recommend grade, quality and size regulation, as well as pack and container regulation, subject to approval by the Department of Agriculture (USDA). The program will be financed by assessments on handlers of pecans grown in the production area and will be locally administered, under USDA oversight, by a Council of seventeen growers and shellers (handlers) nominated by the industry and appointed by USDA.

DATES:

This rule is effective August 5, 2016.

ADDRESSES:

Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, Washington, DC 20250-0237.

FOR FURTHER INFORMATION CONTACT:

Melissa Schmaedick, Senior Marketing Specialist; Telephone: (202) 557-4783, Fax: (435) 259-1502, or Michelle Sharrow, Rulemaking Branch Chief; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected] or [email protected]

Small businesses may request information on this proceeding by contacting Antoinette Carter, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected]

SUPPLEMENTARY INFORMATION:

Prior documents in this proceeding: Notice of Hearing issued on June 26, 2015, and published in the July 2, 2015, issue of the Federal Register (80 FR 38021); Recommended Decision and Opportunity to File Written Exceptions issued on October 20, 2015, and published in the October 28, 2015, issue of the Federal Register (80 FR 66372); and Secretary's Decision and Referendum Order issued on February 22, 2016, and published in the February 29, 2016, issue of the Federal Register (81 FR 10138).

This administrative action is governed by the provisions of sections 556 and 557 of title 5 of the United States Code and, therefore, is excluded from the requirements of Executive Orders 12866, 13563, and 13175. Notice of this rulemaking action was provided to tribal governments through USDA's Office of Tribal Relations; no comments have been received.

Preliminary Statement

The marketing agreement and order regulating the handling of pecans grown in the states of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas is based on the record of public hearing held July 20 through July 21, 2015, in Las Cruces, New Mexico; July 23 through July 24, 2015, in Dallas, Texas; and, July 27 through July 29, 2015, in Tifton, Georgia. The hearing was held to receive evidence on the marketing order from growers, handlers, and other interested parties located throughout the production area. The hearing was held pursuant to the provisions of the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act,” and the applicable rules of practice and procedure governing the formulation of marketing agreements and orders (7 CFR part 900). The marketing order is authorized under section 8(c) of the Act. Notice of this hearing was published in the Federal Register on July 2, 2015.

The proposal was submitted for consideration to the Department on May 22, 2015, by the American Pecan Board (Board), a proponent group established in 2013 to represent the interests of growers and handlers throughout the fifteen-state production area. A subsequent, modified draft of the regulatory text was submitted on June 10, 2015.

The order provides the pecan industry with tools to assist the industry in addressing a number of challenges, including: a lack of organized representation of industry-wide interests in a single organization; a lack of accurate data to assist the industry in its analysis of production, demand and prices; a lack of coordinated domestic promotion or research; and a forecasted increase in production as a result of new plantings.

Upon the basis of evidence introduced at the hearing and the record thereof, the Administrator of AMS on October 20, 2015, filed with the Hearing Clerk, USDA, a Recommended Decision and Opportunity to File Written Exceptions thereto by November 27, 2015. No exceptions were filed. That document also announced AMS's intent to request approval of new information collection requirements to implement the program. Written comments on the proposed information collection requirements were due by December 28, 2015. None were filed.

However, USDA provided two conforming changes to the order language as published in the Recommended Decision. These conforming changes replaced the word “redefining” in § 986.55 (c)(6) with “reestablishment,” and the word “redefining” in § 986.33(b) with “reestablishment,” thereby conforming to the terminology used in § 986.58.

Further, USDA provided a correction to the Regulatory Flexibility Act (RFA) analysis published in the Recommended Decision. The RFA incorrectly referenced a Small Business Administration (SBA) threshold of $7 million in annual receipts to identify small handler entities, while hearing testimony correctly identified a $7.5 million threshold.

The specifics of these corrections were addressed in the Secretary's Decision and Referendum Order issued on February 22, 2016, and published in the February 29, 2016, issue of the Federal Register.

That document also directed that a referendum be conducted during the period of March 9 through March 30, 2016, among growers who produced a minimum average, annual amount of 50,000 pounds of inshell pecans between August 1, 2011, and July 31, 2015, or who owned a minimum of 30 pecan acres, to determine whether they favored issuance of the order. In the referendum, the order was favored by more than two-thirds of the growers voting in the referendum by number and volume.

The marketing agreement was mailed to all pecan shellers (handlers) in the production area for approval. The marketing agreement was approved by more than 50 percent of the volume of pecans handled by all shellers (handlers) during the representative period of August 1, 2014, and July 31, 2015.

Small Business Considerations

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

The purpose of the RFA is to fit regulatory actions to the scale of business subject to such actions so that small businesses will not be unduly or disproportionately burdened. Small agricultural producers have been defined by the Small Business Administration (SBA) (13 CFR 121.201) as those having annual receipts of less than $750,000. Small agricultural service firms, which include handlers that will be regulated under the order, are defined as those with annual receipts of less than $7,500,000.

Interested persons were invited to present evidence at the hearing on the probable regulatory and informational impact of the order on small businesses. The record evidence is that while the program will impose some costs on the regulated parties, those costs will be outweighed by the benefits expected to accrue to the U.S. pecan industry.

Specific evidence on the number of large and small pecan farms (above and below the SBA threshold figure of $750,000 in annual sales) was not presented at the hearing. However, percentages can be estimated based on record evidence.

The 2014 season average grower prices per pound for improved and native seedling pecans were $2.12 and $0.88, respectively. A weighted grower price of $1.85 is computed by applying as weights the percentage split between improved and native acreage on a representative U.S. pecan farm, which are 78 and 22 percent, respectively. The average yield on the representative farm is 1,666.67 pounds per acre. Multiplying the $1.85 price by the average yield gives a total revenue per acre figure of $3,080. Dividing the $750,000 SBA annual sales threshold figure by the revenue per acre figure of $3,080 gives an estimate of 243 acres as the size of farm that would have annual sales about equal to $750,000, given the previous assumptions. Any farm of that size or larger would qualify as a large farm under the SBA definition.

Data presented in the record show that about 52 percent of commercial U.S. pecan farms have 250 or more acres of pecans. Since the 243 acre estimate above is close to 250 acres, it can be extrapolated that 52 percent is a reasonable approximation of the proportion of large farms and 48 percent is the proportion of small pecan farms. According to the record, this estimate does not include “backyard” production.

According to record evidence, there are an estimated 250 handlers in the U.S. Of these handlers, which include accumulators, there are an estimated 50 commercially viable shellers with production over 1 million pounds of inshell pecans operating within the production area. Fourteen of these shellers meet the SBA definition for large business entity and the remaining 36 are small business entities.

Record evidence indicates that implementing the order would not represent a disproportionate burden on small businesses. An economic impact study of the authority for generic promotion presented at the hearing provided that the program would likely benefit all industry participants.

Impact of Generic Promotion Through a Marketing Order

The record shows that generic promotion over a wide variety of agricultural products stimulates product demand and translates into higher prices for growers than would have been the case without promotion.

Promotional impact studies of other tree nuts (almonds and walnuts), and of Texas pecans, show price increases as high as 6 percent, but the record indicates that 0 to 3 percent is a more representative range. Since the other tree nut promotion programs are well-established, the record shows that a representative middle (most likely) scenario would be a price increase from promotion of 1.5 percent for the early years of a new pecan promotion program. Low and high scenarios were 0.5 and 3.0 percent, respectively.

The record indicates that an analytical method used historical yearly prices from 1997 to 2014 in a simulation covering that period to obtain an expected average price without promotion. In a subsequent step, the simulation applied a demand increase of 1.5 percent to the entire distribution of prices to represent the impact of promotion. The projected increases in grower prices from promotion for improved and native pecans were 6.3 and 3.6 cents per pound, respectively, as shown in Table 1. These two price increase projections represent a range of results. Based on a range of simulated price increases as high as 3 percent, the low and high price increase projections for improved pecans were 4.0 and 9.6 cents, respectively. For native varieties, the results ranged from 2.7 to 4.2 cents.

The record indicates that a key analytical step was developing an example farm with specific characteristics to explain market characteristics and marketing order impacts. An important characteristic of this “representative farm” is the acreage allocation between improved and native pecans of 78 and 22 percent, respectively. This is similar to the proportion of the U.S. pecan crop in recent years allocated to improved and native varieties. Average yield per acre of the representative farm (covering all states and varieties) is 1,666.67 pounds per acre.

The acreage split of 78 and 22 percent are used as weights to compute weighted average prices (combining improved and native pecans) of 5.7 and 2.3 cents, respectively, as shown in the fourth column of Table 1.

The record shows that the initial ranges of marketing order assessments per pound are 2 to 3 cents for improved pecans and 1 to 2 cents for native pecans. The midpoints of these ranges (2.5 and 1.5 cents, respectively) are used to compute a benefit-cost ratio from promotion, with a weighted average assessment cost of 2.3 cents, as shown in Table 2. Assessments would be collected from handlers, not growers, but for purposes of this analysis, it is assumed that 100 percent of the assessment cost would be passed through to growers.

Table 1 shows that dividing the projected benefit of 5.7 cents per pound (weighted price increase from promotion) by the estimated assessment cost of 2.3 cents (weighted assessment rate per pound), yields a benefit-cost ratio of 2.5. Each dollar spent on pecan promotion through a Federal marketing order is expected to result in $2.50 in increased revenue to the pecan growers of the United States.

Table 1—Estimated Benefit-Cost Ratio of Pecan Promotion Through a Federal Marketing Order Improved
  • pecans
  • Native pecans Weighted
    Benefit: Projected price increase from pecan promotion (cents per pound) 6.3 3.6 5.7 Cost: FMO Assessment rate (cents per pound) 2.5 1.5 2.3 Benefit-cost ratio 2.52 2.40 2.50 * Weights for improved and native pecans are 78% and 22%, respectively, which is the acreage allocation of a representative U.S. pecan farm, according to the record.

    Examining potential costs and benefits from promotion across different farm sizes is done in Table 2. Record evidence showed that the minimum size of a commercial pecan farm is 30 acres, and that a representative average yield across the entire production area is 1,666.67 pounds per acre. This combination of acreage and yield results in a minimum threshold level of commercial production of 50,000 pounds. Witnesses stated that expenditures for the minimum necessary level of inputs for commercial pecan production cannot be justified for any operation smaller than this.

    In Table 2, a very small farm is defined as being at the minimum commercial threshold level of 30 acres and 50,000 pounds. Small and large farms are represented by farm size levels of 175 and 500 acres, respectively. Multiplying those acreage levels by the average yield for the entire production area gives total annual production level estimates of 291,667 and 833,335 pounds, respectively.

    Multiplying the 2014 grower price per pound of $2.14 by the 291,677 pounds of production from the small farm (175 acres) yields an annual crop value estimate of about $618,000. This computation shows that the small farm definition from the record is consistent with the SBA definition of a small farm (annual sales value of up to $750,000).

    Table 2 shows for the three representative pecan farm sizes the allocation of total production levels between improved and native varieties (78 and 22 percent, respectively).

    Although marketing order assessments are paid by handlers, not growers, it is nevertheless useful to estimate the impact on growers, based on the assumption that handlers may pass part or all of the assessment cost onto growers from whom they purchase pecans. To compute the marketing order burden for each farm size, the improved and native production quantities are multiplied by 2.5 and 1.5 cents per pound of improved and native pecans, respectively. For the representative small farm (175 acres), summing the improved and native assessments yields a total annual assessment cost of $6,650. For the large farm, the total assessment cost is $19,000.

    A parallel computation is made to obtain the total dollar benefit for each farm size. The improved and native quantities for the representative farm sizes are multiplied by the corresponding projected price increases of 6.3 and 3.6 cents. Summing the improved and native benefits for the small and large farm size yields projected annual total benefits for the small and large representative farm sizes of $16,643 and $47,550, respectively. The results of dividing the benefits for each farm size by the corresponding costs is 2.5, which equals the benefit-cost ratio shown in Table 2.

    Table 2—Costs and Benefits of Promotion for Three Sizes of Representative U.S. Pecan Farms Very small farm Small farm Large farm Representative Pecan Farms: Acres and Production Acres per farm 30 175 500 Production on Representative Farms (Acres multiplied by estimated U.S. average yield of 1666.67 pounds per acre) 50,000 291,667 833,335 Improved pecan production (78% of farm acres) 39,000 227,500 650,001 Native pecan production (22% of farm acres) 11,000 64,167 183,334 Cost per farm: Grower burden of program represented as cost per pound Improved (2.5 cents) $975 $5,688 $16,250 Native (1.5 cents) $165 $963 $2,750 Total Estimated Cost per Farm $1,140 $6,650 $19,000 Benefit per farm: Price increase per pound from pecan promotion multiplied by improved and native production Improved (6.3 cents) $2,457 $14,333 $40,950 Native (3.6 cents) $396 $2,310 $6,600 Total Estimated Benefit per Farm $2,853 $16,643 $47,550

    The computations in Table 2 provide an illustration, based on evidence from the record, that there would be no disproportionate impact on smaller size farms from establishing a marketing order and implementing a promotion program. Costs are assessed per pound and thus represent an equal burden regardless of size. The projected benefits from promotion are realized through increases in price per pound and are thus distributed proportionally among different sizes of farms.

    All of the grower and handler witnesses, both large and small, testified that the projected price increases from promotion of pecans (6.3 and 3.6 cents per pound for improved and native pecans, respectively) were reasonable estimates of the benefits from generic promotion of pecans. A number of them expressed the view that the price increase estimates were conservative and that, over time, the price impact would be larger.

    As mentioned above, marketing order assessments are paid by handlers, not growers. However, since handlers may pass some or all of the assessment cost onto growers, it is useful to provide this illustration of potential impact on both growers and handlers.

    Using the most recent three years of prices as examples of typical U.S. annual grower prices, Table 3 summarizes evidence from the record that shows the marketing order assessment rates as percentages of grower and handler prices received. Based on record evidence that a representative handler margin is 57.5 cents per pound, handler prices are estimated by summing the grower price and handler margin.

    Table 3—Marketing Order Assessment Rates as a Percentage of Prices for Pecans Received by Growers and Handlers Grower and handler prices 2012 2013 2014 Assessment rates * * * Assessment rates as a % of prices received 2012 2013 2014 Grower price * Improved $1.73 $1.90 $2.12 $0.025 1.4% 1.3% 1.2% Native 0.88 0.92 0.88 0.015 1.7 1.6 1.7 Handler price * * Improved 2.31 2.48 2.70 0.025 1.08 1.01 0.93 Native 1.46 1.50 1.46 0.015 1.03 1.00 1.03 * Season average grower price per pound from NASS/USDA. * * Grower price plus average handler margin of 57.5 cents per pound, based on hearing evidence. * * * Midpoints of initial marketing order assessment rates: Improved (2 to 3 cents); Native (1 to 2 cents). For growers this represents the cost of the marketing order burden and for handlers this represents the cost of the assessment paid.

    For both improved and native pecans, using 2012 to 2014 prices as examples, Table 3 shows that the potential burden of the program can be calculated at between 1 and 2 percent of operating expenses for growers and are approximately 1 percent of operating expenses for handlers. Grower and handler witnesses, both large and small, covering both improved and native pecans, testified that the initial marketing order assessment rates would not represent a significant burden to their businesses and that the benefits of the generic promotion program substantially outweigh the cost. Sheller witnesses (large and small) that would likely become handlers under a Federal marketing order testified that the additional recordkeeping required to collect assessments to send to the marketing order board (American Pecan Council) would not be a significant additional burden and that the benefits would substantially outweigh the costs. Several witnesses stated that one reason that collecting the assessments would have only a minor impact is that they already perform similar functions for promotion and other pecan-related programs (or other commodity programs) organized under state law.

    Additional Marketing Order Program Benefits

    Statements of support for additional benefits that could come from a Federal marketing order came from grower and handler witnesses, both large and small, covering both improved and native pecans. The additional benefits cited included: (1) Additional and more accurate market information, including data on production, inventory, and total supplies, (2) funding of research on health and nutrition aspects of pecans, improved technology relating to the pecan supply chain and crop health, consumer trends, and other topics, and (3) uniform, industry-wide quality standards for pecans, as well as packaging standards and shipping protocols. Witnesses testified that the burden of funding and participating in marketing order programs with these features would be minor, and that the benefits would substantially outweigh the costs.

    The order will impose some reporting and recordkeeping requirements on handlers. However, testimony indicated that the expected burden that will be imposed with respect to these requirements would be negligible. Most of the information that will be reported to the Council is already compiled by handlers for other uses and is readily available. Reporting and recordkeeping requirements issued under other tree nut programs impose an average annual burden on each regulated handler of about 8 hours. It is reasonable to expect that a similar burden may be imposed under this marketing order on the estimated 250 handlers of pecans in the production area.

    The record evidence also indicates that the benefits to small as well as large handlers are likely to be greater than would accrue under the alternatives to the order; namely, no marketing order.

    In determining that the order and its provisions will not have a disproportionate economic impact on a substantial number of small entities, all of the issues discussed above were considered. Based on hearing record evidence and USDA's analysis of the economic information provided, the order provisions have been carefully reviewed to ensure that every effort has been made to eliminate any unnecessary costs or requirements.

    Although the order may impose some additional costs and requirements on handlers, it is anticipated that the order will help to strengthen demand for pecans. Therefore, any additional costs would be offset by the benefits derived from expanded sales benefiting handlers and growers alike. Accordingly, it is determined that the order will not have a disproportionate economic impact on a substantial number of small handlers or growers.

    Paperwork Reduction Act

    In compliance with OMB regulations (5 CFR part 1320) which implement the Paperwork Reduction Act of 1995 (Pub. L. 104-13), the forms to be used for nomination and selection of the initial administrative council will be submitted to OMB for approval. Any additional information collection and recordkeeping requirements that may be imposed under the order as a result of future council recommendations and rulemaking would also be submitted to OMB for approval. Those requirements would not become effective prior to OMB approval.

    Civil Justice Reform

    The provisions of the marketing agreement and order have been reviewed under Executive Order 12988, Civil Justice Reform. They are not intended to have retroactive effect. The agreement and order will not preempt any State or local laws, regulations, or policies, unless they present an irreconcilable conflict with this rule.

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

    Findings and Determinations

    (a) Findings upon the basis of the hearing record. Pursuant to the provisions of the Agricultural Marketing Agreement of 1937, as amended (7 U.S.C. 601 et seq.) and the applicable rules of practice and procedure effective thereunder (7 CFR part 900), a public hearing was held upon a proposed marketing agreement and order regulating the handling of pecans grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas.

    Upon the basis of evidence introduced at such hearing and the record thereof, it is found that:

    (1) The marketing agreement and order, and all of the terms and conditions thereof, will tend to effectuate the declared policy of the Act;

    (2) The marketing agreement and order regulate the handling of pecans grown in the production area in the same manner as, and are applicable only to, persons in the respective classes of commercial and industrial activity specified in the marketing agreement and order upon which a hearing has been held;

    (3) The marketing agreement and order are limited in its application to the smallest regional production area that is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several orders applicable to subdivisions of the production area would not effectively carry out the declared policy of the Act;

    (4) The marketing agreement and order prescribe, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of pecans grown in the production area; and

    (5) All handling of pecans grown in the production area as defined in the marketing agreement and order is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce.

    (b) Additional findings. It is necessary and in the public interest to make the provisions of this order effective not later than one day after publication in the Federal Register. A later date would unnecessarily delay implementation of the program, which is expected to benefit the pecan industry. Making the program effective as specified would allow for the nomination, selection and organization of the initial administrative council in advance of the 2016 harvest season. It also allows time for the council to recommend a budget and any administrative rules and regulations deemed necessary to operate the program.

    In view of the foregoing, it is hereby found and determined that good cause exists for making the order provisions effective one day after publication in the Federal Register, and that it would be contrary to the public interest to delay the effective date for 30 days after publication in the Federal Register (Sec. 553(d), Administrative Procedure Act; 5 U.S.C. 551-559).

    (c) Determinations. It is hereby determined that:

    (1) The “Marketing Agreement Regulating the Handling of Pecans Grown in Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas,” upon which the aforesaid public hearing was held, has been signed by handlers who during the period of August 1, 2014, through July 31, 2015 handled not less than 50 percent of the volume of such pecans covered by the order, and

    (2) The issuance of this order is favored or approved by at least two-thirds of the producers who participated in a referendum on the question of its approval and, who produced a minimum average, annual amount of 50,000 pounds of inshell pecans between August 1, 2011, and July 31, 2015, (which has been determined to be a representative period) or who owned a minimum of 30 pecan acres. Such producers also produced for market at least two-thirds of the volume of pecans represented in the referendum.

    List of Subjects in 7 CFR Part 986

    Marketing agreements, Pecans, Reporting and recordkeeping requirements.

    Order Relative to Handling

    It is therefore ordered, That on and after the effective date hereof, all handling of pecans grown in the States of Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Missouri, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas, shall be in conformity to, and in compliance with, the terms and conditions of the said order as follows:

    The provisions of the marketing agreement and order are set forth in full herein.

    Title 7, chapter IX is amended by adding part 986 to read as follows: PART 986—PECANS GROWN IN THE STATES OF ALABAMA, ARKANSAS, ARIZONA, CALIFORNIA, FLORIDA, GEORGIA, KANSAS, LOUISIANA, MISSOURI, MISSISSIPPI, NORTH CAROLINA, NEW MEXICO, OKLAHOMA, SOUTH CAROLINA, AND TEXAS Subpart A—Order Regulating Handling of Pecans Definitions Sec. 986.1 Accumulator. 986.2 Act. 986.3 Affiliation. 986.4 Blowouts. 986.5 To certify. 986.6 Confidential data or information. 986.7 Container. 986.8 Council. 986.9 Crack. 986.10 Cracks. 986.11 Custom harvester. 986.12 Department or USDA. 986.13 Disappearance. 986.14 Farm Service Agency. 986.15 Fiscal year. 986.16 Grade and size. 986.17 Grower. 986.18 Grower-cleaned production. 986.19 Handler. 986.20 To handle. 986.21 Handler inventory. 986.22 Handler-cleaned production. 986.23 Hican. 986.24 Inshell pecans. 986.25 Inspection service. 986.26 Inter-handler transfer. 986.27 Merchantable pecans. 986.28 Pack. 986.29 Pecans. 986.30 Person. 986.31 Production area. 986.32 Proprietary capacity. 986.33 Regions. 986.34 Representative period. 986.35 Secretary. 986.36 Sheller. 986.37 Shelled pecans. 986.38 Stick-tights. 986.39 Trade supply. 986.40 Unassessed inventory. 986.41 Varieties. 986.42 Warehousing. 986.43 Weight. Administrative Body 986.45 American Pecan Council. 986.46 Council nominations and voting. 986.47 Alternate members. 986.48 Eligibility. 986.49 Acceptance. 986.50 Term of office. 986.51 Vacancy. 986.52 Council expenses. 986.53 Powers. 986.54 Duties. 986.55 Procedure. 986.56 Right of the Secretary. 986.57 Funds and other property. 986.58 Reapportionment and reestablishment of regions. Expenses, Assessments, and Marketing Policy 986.60 Budget. 986.61 Assessments. 986.62 Inter-handler transfers. 986.63 Contributions. 986.64 Accounting. 986.65 Marketing policy. Authorities Relating to Research, Promotion, Data Gathering, Packaging, Grading, Compliance, and Reporting 986.67 Recommendations for regulations. 986.68 Authority for research and promotion activities. 986.69 Authorities regulating handling. 986.70 Handling for special purposes. 986.71 Safeguards. 986.72 Notification of regulation. Reports, Books, and Other Records 986.75 Reports of handler inventory. 986.76 Reports of merchantable pecans handled. 986.77 Reports of pecans received by handlers. 986.78 Other handler reports. 986.79 Verification of reports. 986.80 Certification of reports. 986.81 Confidential information. 986.82 Books and other records. Administrative Provisions 986.86 Exemptions. 986.87 Compliance. 986.88 Duration of immunities. 986.89 Separability. 986.90 Derogation. 986.91 Liability. 986.92 Agents. 986.93 Effective time. 986.94 Termination. 986.95 Proceedings after termination. 986.96 Amendments. 986.97 Counterparts. 986.98 Additional parties. 986.99 Order with marketing agreement. Subpart B—Reserved Authority:

    7 U.S.C. 601-674.

    Definitions
    § 986.1 Accumulator.

    Accumulator means a person who compiles inshell pecans from other persons for the purpose of resale or transfer.

    § 986.2 Act.

    Act means Public Act No. 10, 73d Congress, as amended and as reenacted and amended by the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601 et seq.).

    § 986.3 Affiliation.

    Affiliation. This term normally appears as “affiliate of” or “affiliated with,” and means a person such as a grower or sheller who is: A grower or handler that directly, or indirectly through one or more intermediaries, owns or controls, or is controlled by, or is under common control with the grower or handler specified; or a grower or handler that directly, or indirectly through one or more intermediaries, is connected in a proprietary capacity, or shares the ownership or control of the specified grower or handler with one or more other growers or handlers. As used in this part, the term “control” (including the terms “controlling,” “controlled by,” and “under the common control with”) means the possession, direct or indirect, of the power to direct or cause the direction of the management and policies of a handler or a grower, whether through voting securities, membership in a cooperative, by contract or otherwise.

    § 986.4 Blowouts.

    Blowouts mean lightweight or underdeveloped inshell pecan nuts that are considered of lesser quality and market value.

    § 986.5 To certify.

    To certify means the issuance of a certification of inspection of pecans by the inspection service.

    § 986.6 Confidential data or information.

    Confidential data or information submitted to the Council consists of data or information constituting a trade secret or disclosure of the trade position, financial condition, or business operations of a particular entity or its customers.

    § 986.7 Container.

    Container means a box, bag, crate, carton, package (including retail packaging), or any other type of receptacle used in the packaging or handling of pecans.

    § 986.8 Council.

    Council means the American Pecan Council established pursuant to § 986.45, American Pecan Council.

    § 986.9 Crack.

    Crack means to break, crack, or otherwise compromise the outer shell of a pecan so as to expose the kernel inside to air outside the shell.

    § 986.10 Cracks.

    Cracks refer to an accumulated group or container of pecans that have been cracked in harvesting or handling.

    § 986.11 Custom harvester.

    Custom harvester means a person who harvests inshell pecans for a fee.

    § 986.12 Department or USDA.

    Department or USDA means the United States Department of Agriculture.

    § 986.13 Disappearance.

    Disappearance means the difference between the sum of grower-cleaned production and handler-cleaned production (whether from improved orchards or native and seedling groves) and the sum of inshell and shelled merchantable pecans reported on an inshell weight basis.

    § 986.14 Farm Service Agency.

    Farm Service Agency or FSA means that agency of the U.S. Department of Agriculture.

    § 986.15 Fiscal year.

    Fiscal year means the twelve months from October 1 to September 30, both inclusive, or any other such period deemed appropriate by the Council and approved by the Secretary.

    § 986.16 Grade and size.

    Grade and size means any of the officially established grades of pecans and any of the officially established sizes of pecans as set forth in the United States standards for inshell and shelled pecans or amendments thereto, or modifications thereof, or other variations of grade and size based thereon recommended by the Council and approved by the Secretary.

    § 986.17 Grower.

    (a) Grower is synonymous with producer and means any person engaged within the production area in a proprietary capacity in the production of pecans if such person:

    (1) Owns an orchard and harvests its pecans for sale (even if a custom harvester is used); or

    (2) Is a lessee of a pecan orchard and has the right to sell the harvest (even if the lessee must remit a percentage of the crop or rent to a lessor).

    (b) The term “grower” shall only include those who produce a minimum of 50,000 pounds of inshell pecans during a representative period (average of four years) or who own a minimum of 30 pecan acres according to the FSA, including acres calculated by the FSA based on pecan tree density. In the absence of any FSA delineation of pecan acreage, the regular definition of an acre will apply. The Council may recommend changes to this definition subject to the approval of the Secretary.

    § 986.18 Grower-cleaned production.

    Grower-cleaned production means production harvested and processed through a cleaning plant to determine volumes of improved pecans, native and seedling pecans, and substandard pecans to transfer to a handler for sale.

    § 986.19 Handler.

    Handler means any person who handles inshell or shelled pecans in any manner described in § 986.20.

    § 986.20 To handle.

    To handle means to receive, shell, crack, accumulate, warehouse, roast, pack, sell, consign, transport, export, or ship (except as a common or contract carrier of pecans owned by another person), or in any other way to put inshell or shelled pecans into any and all markets in the stream of commerce either within the area of production or from such area to any point outside thereof. The term “to handle” shall not include: sales and deliveries within the area of production by growers to handlers; grower warehousing; custom handling (except for selling, consigning or exporting) or other similar activities paid for on a fee-for-service basis by a grower who retains the ownership of the pecans; or transfers between handlers.

    § 986.21 Handler inventory.

    Handler inventory means all pecans, shelled or inshell, as of any date and wherever located within the production area, then held by a handler for their account.

    § 986.22 Handler-cleaned production.

    Handler-cleaned production is production that is received, purchased or consigned from the grower by a handler prior to processing through a cleaning plant, and then subsequently processed through a cleaning plant so as to determine volumes of improved pecans, native and seedling pecans, and substandard pecans.

    § 986.23 Hican.

    Hican means a tree resulting from a cross between a pecan and some other type of hickory (members of the genus Carya) or the nut from such a hybrid tree.

    § 986.24 Inshell pecans.

    Inshell pecans are nuts whose kernel is maintained inside the shell.

    § 986.25 Inspection Service.

    Inspection service means the Federal-State Inspection Service or any other inspection service authorized by the Secretary.

    § 986.26 Inter-handler transfer.

    Inter-handler transfer means the movement of inshell pecans from one handler to another inside the production area for the purposes of additional handling. Any assessments or requirements under this part with respect to inshell pecans so transferred may be assumed by the receiving handler.

    § 986.27 Merchantable pecans.

    (a) Inshell. Merchantable inshell pecans mean all inshell pecans meeting the minimum grade regulations that may be effective pursuant to § 986.69, Authorities regulating handling.

    (b) Shelled. Merchantable shelled pecans means all shelled pecans meeting the minimum grade regulations that may be effective pursuant to § 986.69, Authorities regulating handling.

    § 986.28 Pack.

    Pack means to clean, grade, or otherwise prepare pecans for market as inshell or shelled pecans.

    § 986.29 Pecans.

    (a) Pecans means and includes any and all varieties or subvarieties of Genus: Carya, Species: illinoensis, expressed also as Carya illinoinensis (syn. C. illinoenses) including all varieties thereof, excluding hicans, that are produced in the production area and are classified as:

    (1) Native or seedling pecans harvested from non-grafted or naturally propagated tree varieties;

    (2) Improved pecans harvested from grafted tree varieties bred or selected for superior traits of nut size, ease of shelling, production characteristics, and resistance to certain insects and diseases, including but not limited to: Desirable, Elliot, Forkert, Sumner, Creek, Excel, Gracross, Gratex, Gloria Grande, Kiowa, Moreland, Sioux, Mahan, Mandan, Moneymaker, Morrill, Cunard, Zinner, Byrd, McMillan, Stuart, Pawnee, Eastern and Western Schley, Wichita, Success, Cape Fear, Choctaw, Cheyenne, Lakota, Kanza, Caddo, and Oconee; and

    (3) Substandard pecans that are blowouts, cracks, stick-tights, and other inferior quality pecans, whether native or improved, that, with further handling, can be cleaned and eventually sold into the stream of commerce.

    (b) The Council, with the approval of the Secretary, may recognize new or delete obsolete varieties or sub-varieties for each category.

    § 986.30 Person.

    Person means an individual, partnership, corporation, association, or any other business unit.

    § 986.31 Production area.

    Production area means the following fifteen pecan-producing states within the United States: Alabama, Arkansas, Arizona, California, Florida, Georgia, Kansas, Louisiana, Mississippi, Missouri, North Carolina, New Mexico, Oklahoma, South Carolina, and Texas.

    § 986.32 Proprietary capacity.

    Proprietary capacity means the capacity or interest of a grower or handler that, either directly or through one or more intermediaries or affiliates, is a property owner together with all the appurtenant rights of an owner, including the right to vote the interest in that capacity as an individual, a shareholder, member of a cooperative, partner, trustee or in any other capacity with respect to any other business unit.

    § 986.33 Regions.

    (a) Regions within the production area shall consist of the following:

    (1) Eastern Region, consisting of: Alabama, Florida, Georgia, North Carolina, South Carolina

    (2) Central Region, consisting of: Arkansas, Kansas, Louisiana, Mississippi, Missouri, Oklahoma, Texas

    (3) Western Region, consisting of: Arizona, California, New Mexico

    (b) With the approval of the Secretary, the boundaries of any region may be changed pursuant to § 986.58, Reapportionment and reestablishment of regions.

    § 986.34 Representative period.

    Representative period is the previous four fiscal years for which a grower's annual average production is calculated, or any other period recommended by the Council and approved by the Secretary.

    § 986.35 Secretary.

    Secretary means the Secretary of Agriculture of the United States, or any other officer or employee of the United States Department of Agriculture who is, or who may be, authorized to perform the duties of the Secretary of Agriculture of the United States.

    § 986.36 Sheller.

    Sheller refers to any person who converts inshell pecans to shelled pecans and sells the output in any and all markets in the stream of commerce, both within and outside of the production area; Provided, That the term “sheller” shall only include those who shell more than 1 million pounds of inshell pecans in a fiscal year. The Council may recommend changes to this definition subject to the approval of the Secretary.

    § 986.37 Shelled pecans.

    Shelled pecans are pecans whose shells have been removed leaving only edible kernels, kernel pieces or pecan meal. Shelled pecans are synonymous with pecan meats.

    § 986.38 Stick-tights.

    Stick-tights means pecans whose outer shuck has adhered to the shell causing their value to decrease or be discounted.

    § 986.39 Trade supply.

    Trade supply means the quantity of merchantable inshell or shelled pecans that growers will supply to handlers during a fiscal year for sale in the United States and abroad or, in the absence of handler regulations § 986.69 setting forth minimum grade regulations for merchantable pecans, the sum of handler-cleaned and grower-cleaned production.

    § 986.40 Unassessed inventory.

    Unassessed inventory means inshell pecans held by growers or handlers for which no assessment has been paid to the Council.

    § 986.41 Varieties.

    Varieties mean and include all cultivars, classifications, or subdivisions of pecans.

    § 986.42 Warehousing.

    Warehousing means to hold assessed or unassessed inventory.

    § 986.43 Weight.

    Weight means pounds of inshell pecans, received by handler within each fiscal year; Provided, That for shelled pecans the actual weight shall be multiplied by two to obtain an inshell weight.

    Administrative Body
    § 986.45 American Pecan Council.

    The American Pecan Council is hereby established consisting of 17 members selected by the Secretary, each of whom shall have an alternate member nominated with the same qualifications as the member. The 17 members shall include nine (9) grower seats, six (6) sheller seats, and two (2) at-large seats allocated to one accumulator and one public member. The grower and sheller nominees and their alternates shall be growers and shellers at the time of their nomination and for the duration of their tenure. Grower and sheller members and their alternates shall be selected by the Secretary from nominees submitted by the Council. The two at-large seats shall be nominated by the Council and appointed by the Secretary.

    (a) Each region shall be allocated the following member seats:

    (1) Eastern Region: Three (3) growers and two (2) shellers;

    (2) Central Region: Three (3) growers and two (2) shellers;

    (3) Western Region: Three (3) growers and two (2) shellers.

    (b) Within each region, the grower and sheller seats shall be defined as follows:

    (1) Grower seats: Each region shall have a grower Seat 1 and Seat 2 allocated to growers whose acreage is equal to or exceeds 176 pecan acres. Each region shall also have a grower Seat 3 allocated to a grower whose acreage is less than 176 pecan acres.

    (2) Sheller seats: Each region shall have a sheller Seat 1 allocated to a sheller who handles more than 12.5 million pounds of inshell pecans in the fiscal year preceding nomination, and a sheller Seat 2 allocated to a sheller who handles less than or equal to 12.5 million pounds of inshell pecans in the fiscal year preceding nomination.

    (c) The Council may recommend, subject to the approval of the Secretary, revisions to the above requirements for grower and sheller seats to accommodate changes within the industry.

    § 986.46 Council nominations and voting.

    Nomination of Council members and alternate members shall follow the procedure set forth in this section, or as may be changed as recommended by the Council and approved by the Secretary. All nominees must meet the requirements set forth in §§ 986.45, American Pecan Council, and 986.48, Eligibility, or as otherwise identified by the Secretary, to serve on the Council.

    (a) Initial members. Nominations for initial Council members and alternate members shall be conducted by the Secretary by either holding meetings of shellers and growers, by mail, or by email, and shall be submitted on approved nomination forms. Eligibility to cast votes on nomination ballots, accounting of nomination ballot results, and identification of member and alternate nominees shall follow the procedures set forth in this section, or by any other criteria deemed necessary by the Secretary. The Secretary shall select and appoint the initial members and alternate members of the Council.

    (b) Successor members. Subsequent nominations of Council members and alternate members shall be conducted as follows:

    (1) Call for nominations. (i) Nominations for the grower member seats for each region shall be received from growers in that region on approved forms containing the information stipulated in this section.

    (ii) If a grower is engaged in producing pecans in more than one region, such grower shall nominate in the region in which they grow the largest volume of their production.

    (iii) Nominations for the sheller member seats for each region shall be received from shellers in that region on approved forms containing the information stipulated in this section.

    (iv) If a sheller is engaged in handling in more than one region, such sheller shall nominate in the region in which they shelled the largest volume in the preceding fiscal year.

    (2) Voting for nominees. (i) Only growers, through duly authorized officers or employees of growers, if applicable, may participate in the nomination of grower member nominees and their alternates. Each grower shall be entitled to cast only one nomination ballot for each of the three grower seats in their region.

    (ii) If a grower is engaged in producing pecans in more than one region, such grower shall cast their nomination ballot in the region in which they grow the largest volume of their production. Notwithstanding this stipulation, such grower may vote their volume produced in any or all of the three regions.

    (iii) Only shellers, through duly authorized officers or employees of shellers, if applicable, may participate in the nomination of the sheller member nominees and their alternates. Each sheller shall be entitled to cast only one nomination ballot for each of the two sheller seats in their region.

    (iv) If a sheller is engaged in handling in more than one region, such sheller shall cast their nomination ballot in the region in which they shelled the largest volume in the preceding fiscal year. Notwithstanding this stipulation, such sheller may vote their volume handled in all three regions.

    (v) If a person is both a grower and a sheller of pecans, such person may not participate in both grower and sheller nominations. Such person must elect to participate either as a grower or a sheller.

    (3) Nomination procedure for grower seats. (i) The Council shall mail to all growers who are on record with the Council within the respective regions a grower nomination ballot indicating the nominees for each of the three grower member seats, along with voting instructions. Growers may cast ballots on the proper ballot form either at meetings of growers, by mail, or by email as designated by the Council. For ballots to be considered, they must be submitted on the proper forms with all required information, including signatures.

    (ii) On the ballot, growers shall indicate their vote for the grower nominee candidates for the grower seats and also indicate their average annual volume of inshell pecan production for the preceding four fiscal years.

    (iii) Seat 1 (growers with equal to or more than 176 acres of pecans). The nominee for this seat in each region shall be the grower receiving the highest volume of production (pounds of inshell pecans) votes from the respective region, and the grower receiving the second highest volume of production votes shall be the alternate member nominee for this seat. In case of a tie vote, the nominee shall be selected by a drawing.

    (iv) Seat 2 (growers with equal to or more than 176 acres of pecans). The nominee for this seat in each region shall be the grower receiving the highest number of votes from their respective region, and the grower receiving the second highest number of votes shall be the alternate member nominee for this seat. In case of a tie vote, the nominee shall be selected by a drawing.

    (v) Seat 3 (grower with less than 176 acres of pecans). The nominee for this seat in each region shall be the grower receiving the highest number of votes from the respective region, and the grower receiving the second highest number of votes shall be the alternate member nominee for this seat. In case of a tie vote, the nominee shall be selected by a drawing.

    (4) Nomination procedure for sheller seats. (i) The Council shall mail to all shellers who are on record with the Council within the respective regions the sheller ballot indicating the nominees for each of the two sheller member seats in their respective regions, along with voting instructions. Shellers may cast ballots on approved ballot forms either at meetings of shellers, by mail, or by email as designated by the Council. For ballots to be considered, they must be submitted on the approved forms with all required information, including signatures.

    (ii) Seat 1 (shellers handling more than 12.5 million lbs. of inshell pecans in the preceding fiscal year). The nominee for this seat in each region shall be assigned to the sheller receiving the highest number of votes from the respective region, and the sheller receiving the second highest number of votes shall be the alternate member nominee for this seat. In case of a tie vote, the nominee shall be selected by a drawing.

    (iii) Seat 2 (shellers handling equal to or less than 12.5 million lbs. of inshell pecans in the preceding fiscal year). The nominee for this seat in each region shall be assigned to the sheller receiving the highest number of votes from the respective region, and the sheller receiving the second highest number of votes shall be the alternate member nominee for this seat. In case of a tie vote, the nominee shall be selected by a drawing.

    (5) Reports to the Secretary. Nominations in the foregoing manner received by the Council shall be reported to the Secretary on or before 15 of each July of any year in which nominations are held, together with a certified summary of the results of the nominations and other information deemed by the Council to be pertinent or requested by the Secretary. From those nominations, the Secretary shall select the fifteen grower and sheller members of the Council and an alternate for each member, unless the Secretary rejects any nomination submitted. In the event the Secretary rejects a nomination, a second nomination process may be conducted to identify other nominee candidates, the resulting nominee information may be reported to the Secretary after July 15 and before September 15. If the Council fails to report nominations to the Secretary in the manner herein specified, the Secretary may select the members without nomination. If nominations for the public and accumulator at-large members are not submitted by September 15 of any year in which their nomination is due, the Secretary may select such members without nomination.

    (6) At-large members. The grower and sheller members of the Council shall select one public member and one accumulator member and respective alternates for consideration, selection and appointment by the Secretary. The public member and alternate public member may not have any financial interest, individually or corporately, or affiliation with persons vested in the pecan industry. The accumulator member and alternate accumulator member must meet the criteria set forth in § 986.1, Accumulator, and may reside or maintain a place of business in any region.

    (7) Nomination forms. The Council may distribute nomination forms at meetings, by mail, by email, or by any other form of distribution recommended by the Council and approved by the Secretary.

    (i) Grower nomination forms. Each nomination form submitted by a grower shall include the following information:

    (A) The name of the nominated grower;

    (B) The name and signature of the nominating grower;

    (C) Two additional names and respective signatures of growers in support of the nomination;

    (D) Any other such information recommended by the Council and approved by the Secretary.

    (ii) Sheller nomination forms. Each nomination form submitted by a sheller shall include the following:

    (A) The name of the nominated sheller;

    (B) The name and signature of the nominating sheller;

    (C) One additional name and signature of a sheller in support of the nomination;

    (D) Any other such information recommended by the Council and approved by the Secretary.

    (8) Changes to the nomination and voting procedures. The Council may recommend, subject to the approval of the Secretary, a change to these procedures should the Council determine that a revision is necessary.

    § 986.47 Alternate members.

    (a) Each member of the Council shall have an alternate member to be nominated in the same manner as the member.

    (b) An alternate for a member of the Council shall act in the place and stead of such member in their absence or in the event of their death, removal, resignation, or disqualification, until the next nomination and elections take place for the Council or the vacancy has been filled pursuant to § 986.48, Eligibility.

    (c) In the event any member of the Council and their alternate are both unable to attend a meeting of the Council, any alternate for any other member representing the same group as the absent member may serve in the place of the absent member.

    § 986.48 Eligibility.

    (a) Each grower member and alternate shall be, at the time of selection and during the term of office, a grower or an officer, or employee, of a grower in the region and in the classification for which nominated.

    (b) Each sheller member and alternate shall be, at the time of selection and during the term of office, a sheller or an officer or employee of a sheller in the region and in the classification for which nominated.

    (c) A grower can be a nominee for only one grower member seat. If a grower is nominated for two grower member seats, he or she shall select the seat in which he or she desires to run, and the grower ballot shall reflect that selection.

    (d) Any member or alternate member who at the time of selection was employed by or affiliated with the person who is nominated shall, upon termination of that relationship, become disqualified to serve further as a member and that position shall be deemed vacant.

    (e) No person nominated to serve as a public member or alternate public member shall have a financial interest in any pecan grower or handling operation.

    § 986.49 Acceptance.

    Each person to be selected by the Secretary as a member or as an alternate member of the Council shall, prior to such selection, qualify by advising the Secretary that if selected, such person agrees to serve in the position for which that nomination has been made.

    § 986.50 Term of office.

    (a) Selected members and alternate members of the Council shall serve for terms of four years: Provided, That at the end of the first four (4) year term and in the nomination and selection of the second Council only, four of the grower member and alternate seats and three of the sheller member and alternate seats shall be seated for terms of two years so that approximately half of the memberships' and alternates' terms expire every two years thereafter. Member and alternate seats assigned two-year terms for the seating of the second Council only shall be as follows:

    (1) Grower member Seat 2 in all regions shall be assigned a two-year term;

    (2) Grower member Seat 3 in all regions shall, by drawing, identify one member seat to be assigned a two-year term; and,

    (3) Sheller Seat 2 in all regions shall be assigned a two-year term.

    (b) Council members and alternates may serve up to two consecutive, four-year terms of office. Subject to paragraph (c) of this section, in no event shall any member or alternate serve more than eight consecutive years on the Council as either a member or an alternate. However, if selected, an alternate having served up to two consecutive terms may immediately serve as a member for two consecutive terms without any interruption in service. The same is true for a member who, after serving for up to two consecutive terms, may serve as an alternate if nominated without any interruption in service. A person having served the maximum number of terms as set forth above may not serve again as a member or an alternate for at least twelve consecutive months. For purposes of determining when a member or alternate has served two consecutive terms, the accrual of terms shall begin following any period of at least twelve consecutive months out of office.

    (c) Each member and alternate member shall continue to serve until a successor is selected and has qualified.

    (d) A term of office shall begin as set forth in the by-laws or as directed by the Secretary each year for all members.

    (e) The Council may recommend, subject to approval of the Secretary, revisions to the start day for the term of office, the number of years in a term, and the number of terms a member or an alternate can serve.

    § 986.51 Vacancy.

    Any vacancy on the Council occurring by the failure of any person selected to the Council to qualify as a member or alternate member due to a change in status making the member ineligible to serve, or due to death, removal, or resignation, shall be filled, by a majority vote of the Council for the unexpired portion of the term. However, that person shall fulfill all the qualifications set forth in this part as required for the member whose office that person is to fill. The qualifications of any person to fill a vacancy on the Council shall be certified in writing to the Secretary. The Secretary shall notify the Council if the Secretary determines that any such person is not qualified.

    § 986.52 Council expenses.

    The members and their alternates of the Council shall serve without compensation, but shall be reimbursed for the reasonable and necessary expenses incurred by them in the performance of their duties under this part.

    § 986.53 Powers.

    The Council shall have the following powers:

    (a) To administer the provisions of this part in accordance with its terms;

    (b) To make bylaws, rules and regulations to effectuate the terms and provisions of this part;

    (c) To receive, investigate, and report to the Secretary complaints of violations of this part; and

    (d) To recommend to the Secretary amendments to this part.

    § 986.54 Duties.

    The duties of the Council shall be as follows:

    (a) To act as intermediary between the Secretary and any handler or grower;

    (b) To keep minute books and records which will clearly reflect all of its acts and transactions, and such minute books and records shall at any time be subject to the examination of the Secretary;

    (c) To furnish to the Secretary a complete report of all meetings and such other available information as he or she may request;

    (d) To appoint such employees as it may deem necessary and to determine the salaries, define the duties, and fix the bonds of such employees;

    (e) To cause the books of the Council to be audited by one or more certified public accountants at least once for each fiscal year and at such other times as the Council deems necessary or as the Secretary may request, and to file with the Secretary three copies of all audit reports made;

    (f) To investigate the growing, shipping and marketing conditions with respect to pecans and to assemble data in connection therewith;

    (g) To investigate compliance with the provisions of this part; and,

    (h) To recommend by-laws, rules and regulations for the purpose of administering this part.

    § 986.55 Procedure.

    (a) The members of the Council shall select a chairman from their membership, and shall select such other officers and adopt such rules for the conduct of Council business as they deem advisable.

    (b) The Council may provide for meetings by telephone, or other means of communication, and any vote cast at such a meeting shall be confirmed promptly in writing. The Council shall give the Secretary the same notice of its meetings as is given to members of the Council.

    (c) Quorum. A quorum of the Council shall be any twelve voting Council members. The vote of a majority of members present at a meeting at which there is a quorum shall constitute the act of the Council; Provided, That:

    (1) Actions of the Council with respect to the following issues shall require a two-thirds (12 members) concurring vote of the Council:

    (i) Establishment of or changes to by-laws;

    (ii) Appointment or administrative issues relating to the program's manager or chief executive officer;

    (iii) Budget;

    (iv) Assessments;

    (v) Compliance and audits;

    (vi) Reestablishment of regions and reapportionment or reallocation of Council membership;

    (vii) Modifying definitions of grower and sheller;

    (viii) Research or promotion activities under § 986.68;

    (ix) Grade, quality and size regulation under § 986.69(a)(1) and (2);

    (x) Pack and container regulation under § 986.69(a)(3); and,

    (2) Actions of the Council with respect to the securing of commercial bank loans for the purpose of financing start-up costs of the Council and its activities or securing financial assistance in emergency situations shall require a unanimous vote of all members present at an in-person meeting; Provided, That in the event of an emergency that warrants immediate attention sooner than a face-to-face meeting is possible, a vote for financing may be taken. In such event, the Council's first preference is a videoconference and second preference is phone conference, both followed by written confirmation of the members attending the meeting.

    § 986.56 Right of the Secretary.

    The members and alternates for members and any agent or employee appointed or employed by the Council shall be subject to removal or suspension by the Secretary at any time. Each and every regulation, decision, determination, or other act shall be subject to the continuing right of the Secretary to disapprove of the same at any time, and, upon such disapproval, shall be deemed null and void, except as to acts done in reliance thereon or in compliance therewith prior to such disapproval by the Secretary.

    § 986.57 Funds and other property.

    (a) All funds received pursuant to any of the provisions of this part shall be used solely for the purposes specified in this part, and the Secretary may require the Council and its members to account for all receipts and disbursements.

    (b) Upon the death, resignation, removal, disqualification, or expiration of the term of office of any member or employee, all books, records, funds, and other property in their possession belonging to the Council shall be delivered to their successor in office or to the Council, and such assignments and other instruments shall be executed as may be necessary to vest in such successor or in the Council full title to all the books, records, funds, and other property in the possession or under the control of such member or employee pursuant to this subpart.

    § 986.58 Reapportionment and reestablishment of regions.

    The Council may recommend, subject to approval of the Secretary, reestablishment of regions, reapportionment of members among regions, and may revise the groups eligible for representation on the Council. In recommending any such changes, the following shall be considered:

    (a) Shifts in acreage within regions and within the production area during recent years;

    (b) The importance of new production in its relation to existing regions;

    (c) The equitable relationship between Council apportionment and regions;

    (d) Changes in industry structure and/or the percentage of crop represented by various industry entities; and

    (e) Other relevant factors.

    Expenses, Assessments, and Marketing Policy
    § 986.60 Budget.

    As soon as practicable before the beginning of each fiscal year, and as may be necessary thereafter, the Council shall prepare a budget of income and expenditures necessary for the administration of this part. The Council may recommend a rate of assessment calculated to provide adequate funds to defray its proposed expenditures. The Council shall present such budget to the Secretary with an accompanying report showing the basis for its calculations, and all shall be subject to Secretary approval.

    § 986.61 Assessments.

    (a) Each handler who first handles inshell pecans shall pay assessments to the Council. Assessments collected each fiscal year shall defray expenses which the Secretary finds reasonable and likely to be incurred by the Council during that fiscal year. Each handler's share of assessments paid to the Council shall be equal to the ratio between the total quantity of inshell pecans handled by them as the first handler thereof during the applicable fiscal year, and the total quantity of inshell pecans handled by all regulated handlers in the production area during the same fiscal year. The payment of assessments for the maintenance and functioning of the Council may be required under this part throughout the period it is in effect irrespective of whether particular provisions thereof are suspended or become inoperative. Handlers may avail themselves of an inter-handler transfer, as provided for in § 986.62, Inter-handler transfers.

    (b) Based upon a recommendation of the Council or other available data, the Secretary shall fix three base rates of assessment for inshell pecans handled during each fiscal year. Such base rates shall include one rate of assessment for any or all varieties of pecans classified as native and seedling; one rate of assessment for any or all varieties of pecans classified as improved; and one rate of assessment for any pecans classified as substandard.

    (c) Upon implementation of this part and subject to the approval of the Secretary, initial assessment rates per classification shall be set within the following prescribed ranges: Native and seedling classified pecans shall be assessed at one-cent to two-cents per pound; improved classified pecans shall be assessed at two-cents to three-cents per pound; and, substandard classified pecans shall be assessed at one-cent to two-cents per pound. These assessment ranges shall be in effect for the initial four years of the order.

    (d) Subsequent assessment rates shall not exceed two percent of the aggregate of all prices in each classification across the production area based on Council data, or the average of USDA reported average price received by growers for each classification, in the preceding fiscal year as recommended by the Council and approved by the Secretary. After four years from the implementation of this part, the Council may recommend, subject to the approval of the Secretary, revisions to this calculation or assessment ranges.

    (e) The Council, with the approval of the Secretary, may revise the assessment rates if it determines, based on information including crop size and value, that the action is necessary, and if the revision does not exceed the assessment limitation specified in this section and is made prior to the final billing of the assessment.

    (f) In order to provide funds for the administration of the provisions of this part during the first part of a fiscal year, before sufficient operating income is available from assessments, the Council may accept the payment of assessments in advance and may also borrow money for such purposes; Provided, That no loan may amount to more than 50 percent of projected assessment revenue projected for the year in which the loan is secured, and the loan must be repaid within five years.

    (g) If a handler does not pay assessments within the time prescribed by the Council, the assessment may be increased by a late payment charge and/or an interest rate charge at amounts prescribed by the Council with approval of the Secretary.

    (h) On August 31 of each year, every handler warehousing inshell pecans shall be identified as the first handler of those pecans and shall be required to pay the assessed rate on the category of pecans in their possession on that date. The terms of this paragraph may be revised subject to the recommendation of the Council and approval by the Secretary.

    (i) On August 31 of each year, all inventories warehoused by growers from the current fiscal year shall cease to be eligible for inter-handler transfer treatment. Instead, such inventory will require the first handler that handles such inventory to pay the assessment thereon in accordance with the prevailing assessment rates at the time of transfer from the grower to the said handler. The terms of this paragraph may be revised subject to the recommendation of the Council and approval by the Secretary.

    § 986.62 Inter-handler transfers.

    Any handler inside the production area, except as provided for in § 986.61(h) and (i), Assessments, may transfer inshell pecans to another handler inside the production area for additional handling, and any assessments or other marketing order requirements with respect to pecans so transferred may be assumed by the receiving handler. The Council, with the approval of the Secretary, may establish methods and procedures, including necessary reports, to maintain accurate records for such transfers. All inter-handler transfers will be documented by forms or electronic transfer receipts approved by the Council, and all forms or electronic transfer receipts used for inter-handler transfers shall require that copies be sent to the selling party, the receiving party, and the Council. Such forms must state which handler has the assessment responsibilities.

    § 986.63 Contributions.

    The Council may accept voluntary contributions. Such contributions may only be accepted if they are free from any encumbrances or restrictions on their use and the Council shall retain complete control of their use. The Council may receive contributions from both within and outside of the production area.

    § 986.64 Accounting.

    (a) Assessments collected in excess of expenses incurred shall be accounted for in accordance with one of the following:

    (1) Excess funds not retained in a reserve, as provided in paragraph (a)(2) of this section shall be refunded proportionately to the persons from whom they were collected; or

    (2) The Council, with the approval of the Secretary, may carry over excess funds into subsequent fiscal periods as reserves: Provided, That funds already in reserves do not equal approximately three fiscal years' expenses. Such reserve funds may be used:

    (i) To defray expenses during any fiscal period prior to the time assessment income is sufficient to cover such expenses;

    (ii) To cover deficits incurred during any fiscal period when assessment income is less than expenses;

    (iii) To defray expenses incurred during any period when any or all provisions of this part are suspended or are inoperative; and

    (iv) To cover necessary expenses of liquidation in the event of termination of this part.

    (b) Upon such termination, any funds not required to defray the necessary expenses of liquidation shall be disposed of in such manner as the Secretary may determine to be appropriate. To the extent practical, such funds shall be returned pro rata to the persons from whom such funds were collected.

    (c) All funds received by the Council pursuant to the provisions of this part shall be used solely for the purposes specified in this part and shall be accounted for in the manner provided for in this part. The Secretary may at any time require the Council and its members to account for all receipts and disbursements.

    (d) Upon the removal or expiration of the term of office of any member of the Council, such member shall account for all receipts and disbursements and deliver all property and funds in their possession to the Council, and shall execute such assignments and other instruments as may be necessary or appropriate to vest in the Council full title to all of the property, funds, and claims vested in such member pursuant to this part.

    (e) The Council may make recommendations to the Secretary for one or more of the members thereof, or any other person, to act as a trustee for holding records, funds, or any other Council property during periods of suspension of this subpart, or during any period or periods when regulations are not in effect and if the Secretary determines such action appropriate, he or she may direct that such person or persons shall act as trustee or trustees for the Council.

    § 986.65 Marketing policy.

    By the end of each fiscal year, the Council shall make a report and recommendation to the Secretary on the Council's proposed marketing policy for the next fiscal year. Each year such report and recommendation shall be adopted by the affirmative vote of at least two-thirds (2/3) of the members of the Council and shall include the following and, where applicable, on an inshell basis:

    (a) Estimate of the grower-cleaned production and handler-cleaned production in the area of production for the fiscal year;

    (b) Estimate of disappearance;

    (c) Estimate of the improved, native, and substandard pecans;

    (d) Estimate of the handler inventory on August 31, of inshell and shelled pecans;

    (e) Estimate of unassessed inventory;

    (f) Estimate of the trade supply, taking into consideration imports, and other factors;

    (g) Preferable handler inventory of inshell and shelled pecans on August 31 of the following year;

    (h) Projected prices in the new fiscal year;

    (i) Competing nut supplies; and

    (j) Any other relevant factors.

    Authorities Relating to Research, Promotion, Data Gathering, Packaging, Grading, Compliance, and Reporting
    § 986.67 Recommendations for regulations.

    Upon complying with § 986.65, Marketing policy, the Council may propose regulations to the Secretary whenever it finds that such proposed regulations may assist in effectuating the declared policy of the Act.

    § 986.68 Authority for research and promotion activities.

    The Council, with the approval of the Secretary, may establish or provide for the establishment of production research, marketing research and development projects, and marketing promotion, including paid generic advertising, designed to assist, improve, or promote the marketing, distribution, and consumption or efficient production of pecans including product development, nutritional research, and container development. The expenses of such projects shall be paid from funds collected pursuant to this part.

    § 986.69 Authorities regulating handling.

    (a) The Council may recommend, subject to the approval of the Secretary, regulations that:

    (1) Establish handling requirements or minimum tolerances for particular grades, sizes, or qualities, or any combination thereof, of any or all varieties or classifications of pecans during any period;

    (2) Establish different handling requirements or minimum tolerances for particular grades, sizes, or qualities, or any combination thereof for different varieties or classifications, for different containers, for different portions of the production area, or any combination of the foregoing, during any period;

    (3) Fix the size, capacity, weight, dimensions, or pack of the container or containers, which may be used in the packaging, transportation, sale, preparation for market, shipment, or other handling of pecans; and

    (4) Establish inspection and certification requirements for the purposes of (a)(1) through (3) of this section.

    (b) Regulations issued hereunder may be amended, modified, suspended, or terminated whenever it is determined:

    (1) That such action is warranted upon recommendation of the Council and approval by the Secretary, or other available information; or

    (2) That regulations issued hereunder no longer tend to effectuate the declared policy of the Act.

    (c) The authority to regulate as put forward in this subsection shall not in any way constitute authority for the Council to recommend volume regulation, such as reserve pools, producer allotments, or handler withholding requirements which limit the flow of product to market for the purpose of reducing market supply.

    (d) The Council may recommend, subject to the approval of the Secretary, rules and regulations to effectuate this subpart.

    § 986.70 Handling for special purposes.

    Regulations in effect pursuant to § 986.69, Authorities regulating handling, may be modified, suspended, or terminated to facilitate handling of pecans for:

    (a) Relief or charity;

    (b) Experimental purposes; and

    (c) Other purposes which may be recommended by the Council and approved by the Secretary.

    § 986.71 Safeguards.

    The Council, with the approval of the Secretary, may establish through rules such requirements as may be necessary to establish that shipments made pursuant to § 986.70, Handling for special purposes, were handled and used for the purpose stated.

    § 986.72 Notification of regulation.

    The Secretary shall promptly notify the Council of regulations issued or of any modification, suspension, or termination thereof. The Council shall give reasonable notice thereof to industry participants.

    Reports, Books, and Other Records
    § 986.75 Reports of handler inventory.

    Each handler shall submit to the Council in such form and on such dates as the Council may prescribe, reports showing their inventory of inshell and shelled pecans.

    § 986.76 Reports of merchantable pecans handled.

    Each handler who handles merchantable pecans at any time during a fiscal year shall submit to the Council in such form and at such intervals as the Council may prescribe, reports showing the quantity so handled and such other information pertinent thereto as the Council may specify.

    § 986.77 Reports of pecans received by handlers.

    Each handler shall file such reports of their pecan receipts from growers, handlers, or others in such form and at such times as may be required by the Council with the approval of the Secretary.

    § 986.78 Other handler reports.

    Upon request of the Council made with the approval of the Secretary each handler shall furnish such other reports and information as are needed to enable the Council to perform its duties and exercise its powers under this part.

    § 986.79 Verification of reports.

    For the purpose of verifying and checking reports filed by handlers on their operations, the Secretary and the Council, through their duly authorized representatives, shall have access to any premises where pecans and pecan records are held. Such access shall be available at any time during reasonable business hours. Authorized representatives of the Council or the Secretary shall be permitted to inspect any pecans held and any and all records of the handler with respect to matters within the purview of this part. Each handler shall maintain complete records on the receiving, holding, and disposition of all pecans. Each handler shall furnish all labor necessary to facilitate such inspections at no expense to the Council or the Secretary. Each handler shall store all pecans held by him in such manner as to facilitate inspection and shall maintain adequate storage records which will permit accurate identification with respect to inspection certificates of respective lots and of all such pecans held or disposed of theretofore. The Council, with the approval of the Secretary, may establish any methods and procedures needed to verify reports.

    § 986.80 Certification of reports.

    All reports submitted to the Council as required in this part shall be certified to the Secretary and the Council as to the completeness and correctness of the information contained therein.

    § 986.81 Confidential information.

    All reports and records submitted by handlers to the Council, which include data or information constituting a trade secret or disclosing the trade position, or financial condition or business operations of the handler shall be kept in the custody of one or more employees of the Council and shall be disclosed to no person except the Secretary.

    § 986.82 Books and other records.

    Each handler shall maintain such records of pecans received, held and disposed of by them as may be prescribed by the Council for the purpose of performing its duties under this part. Such books and records shall be retained and be available for examination by authorized representatives of the Council and the Secretary for the current fiscal year and the preceding three (3) fiscal years.

    Additional Provisions
    § 986.86 Exemptions.

    (a) Any handler may handle inshell pecans within the production area free of the requirements of this part if such pecans are handled in quantities not exceeding 1,000 inshell pounds during any fiscal year.

    (b) Any handler may handle shelled pecans within the production area free of the requirements of this part if such pecans are handled in quantities not exceeding 500 shelled pounds during any fiscal year.

    (c) Mail order sales are not exempt sales under this part.

    (d) The Council, with the approval of the Secretary, may establish such rules, regulations, and safeguards, and require such reports, certifications, and other conditions, as are necessary to ensure compliance with this part.

    § 986.87 Compliance.

    Except as provided in this subpart, no handler shall handle pecans, the handling of which has been prohibited by the Secretary in accordance with provisions of this part, or the rules and regulations thereunder.

    § 986.88 Duration of immunities.

    The benefits, privileges, and immunities conferred by virtue of this part shall cease upon termination hereof, except with respect to acts done under and during the existence of this part.

    § 986.89 Separability.

    If any provision of this part is declared invalid, or the applicability thereof to any person, circumstance, or thing is held invalid, the validity of the remaining provisions and the applicability thereof to any other person, circumstance, or thing shall not be affected thereby.

    § 986.90 Derogation.

    Nothing contained in this part is or shall be construed to be in derogation of, or in modification of, the rights of the Secretary or of the United States to exercise any powers granted by the Act or otherwise, or, in accordance with such powers, to act in the premises whenever such action is deemed advisable.

    § 986.91 Liability.

    No member or alternate of the Council nor any employee or agent thereof, shall be held personally responsible, either individually or jointly with others, in any way whatsoever, to any party under this part or to any other person for errors in judgment, mistakes, or other acts, either of commission or omission, as such member, alternate, agent or employee, except for acts of dishonesty, willful misconduct, or gross negligence. The Council may purchase liability insurance for its members and officers.

    § 986.92 Agents.

    The Secretary may name, by designation in writing, any person, including any officer or employee of the USDA or the United States to act as their agent or representative in connection with any of the provisions of this part.

    § 986.93 Effective time.

    The provisions of this part and of any amendment thereto shall become effective at such time as the Secretary may declare, and shall continue in force until terminated in one of the ways specified in § 986.94.

    § 986.94 Termination.

    (a) The Secretary may at any time terminate this part.

    (b) The Secretary shall terminate or suspend the operation of any or all of the provisions of this part whenever he or she finds that such operation obstructs or does not tend to effectuate the declared policy of the Act.

    (c) The Secretary shall terminate the provisions of this part applicable to pecans for market or pecans for handling at the end of any fiscal year whenever the Secretary finds, by referendum or otherwise, that such termination is favored by a majority of growers; Provided, That such majority of growers has produced more than 50 percent of the volume of pecans in the production area during such fiscal year. Such termination shall be effective only if announced on or before the last day of the then current fiscal year.

    (d) The Secretary shall conduct a referendum within every five-year period beginning from the implementation of this part, to ascertain whether continuance of the provisions of this part applicable to pecans are favored by two-thirds by number or volume of growers voting in the referendum. The Secretary may terminate the provisions of this part at the end of any fiscal year in which the Secretary has found that continuance of this part is not favored by growers who, during an appropriate period of time determined by the Secretary, have been engaged in the production of pecans in the production area: Provided, That termination of this part shall be effective only if announced on or before the last day of the then current fiscal year.

    (e) The provisions of this part shall, in any event, terminate whenever the provisions of the Act authorizing them cease to be in effect.

    § 986.95 Proceedings after termination.

    (a) Upon the termination of this part, the Council members serving shall continue as joint trustees for the purpose of liquidating all funds and property then in the possession or under the control of the Council, including claims for any funds unpaid or property not delivered at the time of such termination.

    (b) The joint trustees shall continue in such capacity until discharged by the Secretary; from time to time accounting for all receipts and disbursements; delivering all funds and property on hand, together with all books and records of the Council and of the joint trustees to such person as the Secretary shall direct; and, upon the request of the Secretary, executing such assignments or other instruments necessary and appropriate to vest in such person full title and right to all of the funds, property, or claims vested in the Council or in said joint trustees.

    (c) Any funds collected pursuant to this part and held by such joint trustees or such person over and above the amounts necessary to meet outstanding obligations and the expenses necessarily incurred by the joint trustees or such other person in the performance of their duties under this subpart, as soon as practicable after the termination hereof, shall be returned to the handlers pro rata in proportion to their contributions thereto.

    (d) Any person to whom funds, property, or claims have been transferred or delivered by the Council, upon direction of the Secretary, as provided in this part, shall be subject to the same obligations and duties with respect to said funds, property, or claims as are imposed upon said joint trustees.

    § 986.96 Amendments.

    Amendments to this part may be proposed from time to time by the Council or by the Secretary.

    § 986.97 Counterparts.

    Handlers may sign an agreement with the Secretary indicating their support for this marketing order. This agreement may be executed in multiple counterparts by each handler. If more than fifty percent of the handlers, weighted by the volume of pecans handled during an appropriate period of time determined by the Secretary, enter into such an agreement, then a marketing agreement shall exist for the pecans marketing order. This marketing agreement shall not alter the terms of this part. Upon the termination of this part, the marketing agreement has no further force or effect.

    § 986.98 Additional parties.

    After this part becomes effective, any handler may become a party to the marketing agreement if a counterpart is executed by the handler and delivered to the Secretary.

    § 986.99 Order with marketing agreement.

    Each signatory handler hereby requests the Secretary to issue, pursuant to the Act, an order for regulating the handling of pecans in the same manner as is provided for in this agreement.

    Subpart B—[Reserved] Dated: July 27, 2016. Elanor Starmer, Administrator, Agricultural Marketing Service.
    [FR Doc. 2016-18346 Filed 8-3-16; 8:45 am] BILLING CODE 3410-02-P
    SMALL BUSINESS ADMINISTRATION 13 CFR Part 126 RIN 3245-AG81 HUBZone and National Defense Authorization Act for Fiscal Year 2016 Amendments AGENCY:

    U.S. Small Business Administration.

    ACTION:

    Direct final rule.

    SUMMARY:

    This direct final rule contains several amendments to the regulations governing the HUBZone Program. The U.S. Small Business Administration (SBA) is making changes to its regulations to implement section 866 of the National Defense Authorization Act for Fiscal Year 2016 (2016 NDAA). Section 866 of the 2016 NDAA made the following changes to the HUBZone program: authorized Native Hawaiian Organizations to own HUBZone small business concerns; expanded the definition of “base closure area” under the HUBZone program; and authorized the inclusion of “qualified disaster areas” under the HUBZone program. This direct final rule would implement these changes in SBA's regulations.

    DATES:

    This rule is effective on October 3, 2016 without further action, unless significant adverse comment is received by September 6, 2016. If significant adverse comment is received, SBA will publish a timely withdrawal of the rule in the Federal Register.

    ADDRESSES:

    You may submit comments, identified by RIN 3245-AG81 by any of the following methods:

    Federal Rulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail or Hand Delivery/Courier: Mariana Pardo, Director, HUBZone Program, 409 Third Street SW., Washington, DC 20416.

    SBA will post all comments on http://www.Regulations.gov. If you wish to submit confidential business information (CBI) as defined in the User Notice at http://www.Regulations.gov, please submit the information to Mariana Pardo, Director, HUBZone Program, 409 Third Street SW., Washington, DC 20416 and highlight the information that you consider to be CBI and explain why you believe this information should be held confidential. SBA will review the information and make a final determination of whether the information will be published or not.

    FOR FURTHER INFORMATION CONTACT:

    Mariana Pardo, Director, HUBZone Program, 409 Third Street SW., Washington, DC 20416, 202-205-2985, [email protected]

    SUPPLEMENTARY INFORMATION:

    This direct final rule implements several conforming amendments to SBA regulations from the National Defense Authorization Act for Fiscal Year 2016, Public Law 114-92, 129 Stat. 726, November 25, 2015 (2016 NDAA). The 2016 NDAA became effective on November 25, 2015. Section 866 of the 2016 NDAA made the following changes to the HUBZone program: authorized Native Hawaiian Organizations (NHOs) to own HUBZone small business concerns; expanded the definition of “base closure area” under the HUBZone program; and authorized the inclusion of “qualified disaster areas” under the HUBZone program.

    SBA seeks to amend its HUBZone regulations to mirror the changes the 2016 NDAA made to the Small Business Act, and to avoid public confusion and possible misinterpretations of SBA's HUBZone program. Since these are conforming amendments, with no extraneous interpretation or other expanded materials, SBA expects no significant adverse comments. Based on that fact, SBA has decided to proceed with a direct final rule giving the public 30 days to comment. If SBA receives a significant adverse comment during the comment period, SBA will withdraw the rule, and proceed with a new proposed rule. The statute makes the following changes:

    General Summary—Expands the HUBZone program to assist small businesses in disasters areas and base closure areas and provides equal treatment under the HUBZone program for small businesses owned by NHOs.

    • “Major Disaster” Areas—Treats major disaster areas as HUBZones for a period of 5 years. Applies to census tracts and nonmetropolitan counties (NMC) located in “major disaster” areas, if such census tract or NMC lost its HUBZone eligibility within the past 5 years or will lose its HUBZone eligibility within 2 years after the major disaster.

    • “Catastrophic Incident” Areas—Treats areas where catastrophic incidents occurred as HUBZones for a period of 10 years. Applies to census tracts and NMCs located in areas where catastrophic incidents occurred, if such census tract or NMC lost its HUBZone eligibility within the past 5 years or will lose its HUBZone eligibility within 2 years after the catastrophic incident.

    Base Closures Areas (BRAC)—Extends HUBZone eligibility for BRACs to 8 years (up from 5) and expands HUBZone eligibility to census tracts and NMCs that (1) contain BRACs, (2) intersect with BRACs, (3) are contiguous to BRACs, or (4) are contiguous to any census tract or NMC described in (1) through (3).

    Native Hawaiian Organizations (NHO)—Allows small businesses owned by NHOs to qualify as HUBZone companies.

    In order to implement the changes made by section 866 of the 2016 NDAA, SBA is amending §§ 126.103 and 126.200 of its regulations.

    SBA is amending § 126.103 by revising the definitions of the terms “Base closure area”, “HUBZone”, “HUBZone small business concern (HUBZone SBC)”, and “Qualified base closure area”, and by adding new definitions for the terms “Native Hawaiian Organization (NHO)” and “Qualified disaster area”. This rules adopts the definitions of these terms provided in amended sections 3(p)(1), 3(p)(3), 3(p)(4)(D), and new section 3(p)(4)(E), of the Small Business Act, 15 U.S.C. 632(p)(1), 632(p)(3), 632(p)(4)(D), 632(p)(4)(E).

    SBA is amending § 126.200 by revising paragraph (b)(1) to implement the statutory authority for HUBZone small business concerns to be wholly or partly owned by NHOs. This rule adopts the language provided in new section 3(p)(3)(D) of the Small Business Act, 15 U.S.C. 632(p)(3)(D).

    Compliance With Executive Orders 12866, 12988, and 13132, the Paperwork Reduction Act (44 U.S.C. Ch. 35) and the Regulatory Flexibility Act (5 U.S.C. 601-612) Executive Order 12866

    The Office of Management and Budget (OMB) has determined that this direct final rule does not constitute a significant regulatory action under Executive Order 12866. This rule is also not a major rule under the Congressional Review Act, 5 U.S.C. 800.

    Executive Order 12988

    This action meets applicable standards set forth in Sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to minimize litigation, eliminate ambiguity, and reduce burden. The action does not have retroactive or preemptive effect.

    Executive Order 13132

    For the purposes of Executive Order 13132, SBA has determined that this direct final rule will not have substantial, direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, for the purpose of Executive Order 13132, Federalism, SBA has determined that this direct final rule has no federalism implications warranting preparation of a federalism assessment.

    Paperwork Reduction Act, 44 U.S.C., Ch. 35

    SBA has determined that this direct final rule does not impose additional reporting or recordkeeping requirements under the Paperwork Reduction Act, 44 U.S.C., Chapter 35.

    Regulatory Flexibility Act, 5 U.S.C. 601-612

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601, requires administrative agencies to consider the effect of their actions on small entities, small non-profit enterprises, and small local governments. Pursuant to the RFA, when an agency issues a rulemaking, the agency must prepare a regulatory flexibility analysis which describes the impact of the rule on small entities. However, section 605 of the RFA allows an agency to certify a rule, in lieu of preparing an analysis, if the rulemaking is not expected to have a significant economic impact on a substantial number of small entities. Within the meaning of RFA, SBA certifies that this direct rule will not have a significant economic impact on a substantial number of small entities.

    List of Subjects in 13 CFR Part 126

    Administrative practice and procedure, Government procurement, Small businesses.

    Accordingly, for the reasons stated in the supplementary information, SBA amends 13 CFR part 126 as follows:

    PART 126—HUBZONE PROGRAM 1. The authority for 13 CFR part 126 continues to read as follows: Authority:

    15 U.S.C. 632(a), 632(j), 632(p), 644 and 657a.

    2. Amend § 126.103 by revising the definitions of “Base closure area”, “HUBZone”, “HUBZone small business concern (HUBZone SBC)”, and “Qualified base closure area” and by adding new definitions alphabetically for the terms “Native Hawaiian Organization (NHO)” and “Qualified disaster area”, to read as follows:
    §  126.103 What definitions are important in the HUBZone program?

    Base closure area means:

    (1) Lands within the external boundaries of a military installation that were closed through a privatization process under the authority of:

    (i) The Defense Base Closure and Realignment Act of 1990 (part A of title XXIX of division B of Pub. L. 101-510; 10 U.S.C. 2687 note);

    (ii) Title II of the Defense Authorization Amendments and Base Closure and Realignment Act (Pub. L. 100-526; 10 U.S.C. 2687 note);

    (iii) 10 U.S.C. 2687; or

    (iv) Any other provision of law authorizing or directing the Secretary of Defense or the Secretary of a military department to dispose of real property at the military installation for purposes relating to base closures of redevelopment, while retaining the authority to enter into a leaseback of all or a portion of the property for military use;

    (2) The census tract or nonmetropolitan county (excluding any qualified census tract and any qualified non-metropolitan county) in which the lands described in paragraph (1) of this definition are wholly contained;

    (3) A census tract or nonmetropolitan county (excluding any qualified census tract and any qualified non-metropolitan county) the boundaries of which intersect the area described in paragraph (1) of this definition; and

    (4) A census tract or nonmetropolitan county (excluding any qualified census tract and any qualified non-metropolitan county) the boundaries of which are contiguous to the area described in paragraph (2) or paragraph (3) of this definition.

    HUBZone means a historically underutilized business zone, which is an area located within one or more:

    (1) Qualified census tracts;

    (2) Qualified non-metropolitan counties;

    (3) Lands within the external boundaries of an Indian reservation;

    (4) Qualified base closure areas;

    (5) Redesignated areas; or

    (6) Qualified disaster areas.

    HUBZone small business concern (HUBZone SBC) means an SBC that is:

    (1) At least 51% owned and controlled by 1 or more persons, each of whom is a United States citizen;

    (2) An ANC owned and controlled by Natives (as determined pursuant to section 29(e)(1) of the ANCSA, 43 U.S.C. 1626(e)(1));

    (3) A direct or indirect subsidiary corporation, joint venture, or partnership of an ANC qualifying pursuant to section 29(e)(1) of the ANCSA, 43 U.S.C. 1626(e)(1)), if that subsidiary, joint venture, or partnership is owned and controlled by Natives (as determined pursuant to section 29(e)(2) of the ANCSA, 43 U.S.C. 1626(e)(2));

    (4) Wholly owned by one or more Indian Tribal Governments, or by a corporation that is wholly owned by one or more Indian Tribal Governments;

    (5) An SBC that is owned in part by one or more Indian Tribal Governments or in part by a corporation that is wholly owned by one or more Indian Tribal Governments, if all other owners are either United States citizens or SBCs;

    (6) An SBC that is wholly owned by a CDC or owned in part by one or more CDCs, if all other owners are either United States citizens or SBCs;

    (7) An SBC that is a small agricultural cooperative organized or incorporated in the United States, wholly owned by one or more small agricultural cooperatives organized or incorporated in the United States or owned in part by one or more small agricultural cooperatives organized or incorporated in the United States, provided that all other owners are small business concerns or United States citizens;

    (8) Wholly owned by one or more Native Hawaiian Organizations, or by a corporation that is wholly owned by one or more Native Hawaiian Organizations; or

    (9) Owned in part by one or more Native Hawaiian Organizations or by a corporation that is wholly owned by one or more Native Hawaiian Organizations, if all other owners are either United States citizens or small business concerns.

    Native Hawaiian Organization (NHO) means any community service organization serving Native Hawaiians in the State of Hawaii which is a not-for-profit organziation chartered by the State of Hawaii, is controlled by Native Hawaiians, and whose business activities will principally benefit such Native Hawaiians.

    Qualified base closure area means:

    (1) A base closure area that is treated as a HUBZone for a period of not less than 8 years, beginning on the date the military installation undergoes final closure and ending on the latter of the following:

    (i) The date the Administrator makes a final determination as to whether or not to implement the applicable designations in accordance with the results of the decennial census conducted after the area was initially designated as a base closure area; or

    (ii) The date 8 years after the base closure area was initially designated as a HUBZone.

    (2) However, if a base closure area was treated as a HUBZone at any time after 2010, it shall be treated as a HUBZone until such time as the Administrator makes a final determination as to whether or not to implement the applicable designations in accordance with the results of the 2020 decennial census.

    Qualified disaster area means any census tract or nonmetropolitan county located in an area for which the President has declared a major disaster under section 401 of the Robert T. Stafford Disaster Relief and Emergency Assistance Act (42 U.S.C. 5170), or located in an area in which a catastrophic incident has occurred if such census tract or nonmetropolitan county ceased to be categorized as either a qualified census tract or qualified nonmetropolitan county, as applicable, during the period beginning 5 years before the date on which the President declared the major disaster or the catastrophic incident occurred and ending 2 years after such date. However, the following exceptions apply:

    (1) In the case of a major disaster declared by the President, a census tract or nonmetropolitan county may be a qualified disaster area only during the 5-year period beginning on the date on which the President declared the major disaster for the area in which the census tract or nonmetropolitan county is located; and

    (2) In the case of a catastrophic incident, a census tract or nonmetropolitan county may be a qualified disaster area only during the 10-year period beginning on the date on which the catastrophic incident occurred in the area in which the census tract or nonmetropolitan county is located.

    3. Amend § 126.200 by revising paragraph (b)(1) to read as follows:
    § 126.200 What requirements must a concern meet to receive SBA certification as a qualified HUBZone SBC?

    (b) Concerns owned by U.S. citizens, ANCs, NHOs, or CDCs.—(1) Ownership. (i) The concern must be at least 51% unconditionally and directly owned and controlled by persons who are United States citizens;

    Example:

    A concern that is a partnership owned 50% by an individual who is a United States citizen and 50% by someone who is not a United States citizen, is not an eligible concern because it is not at least 51% owned by United States citizens.

    (ii) The concern must be an ANC owned and controlled by Natives (determined pursuant to section 29(e)(1) of the ANCSA); or a direct or indirect subsidiary corporation, joint venture, or partnership of an ANC qualifying pursuant to section 29(e)(1) of ANCSA, if that subsidiary, joint venture, or partnership is owned and controlled by Natives (determined pursuant to section 29(e)(2)) of the ANCSA);

    (iii) The concern must be wholly owned by one or more NHOs, or by a corporation that is wholly owned by one or more NHOs, or owned in part by one or more NHOs, if all other owners are either United States citizens or small business concerns; or

    (iv) The concern must be wholly owned by a CDC, or owned in part by one or more CDCs, if all other owners are either United States citizens or SBCs.

    Dated: July 22, 2016. Maria Contreras-Sweet, Administrator.
    [FR Doc. 2016-18251 Filed 8-3-16; 8:45 am] BILLING CODE 8025-01-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-8472; Directorate Identifier 2014-NM-106-AD; Amendment 39-18603; AD 2016-16-05] RIN 2120-AA64 Airworthiness Directives; Fokker Services B.V. Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for all Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes. This AD was prompted by a design review that revealed a hot spot may develop in the main fuel tank under certain failure conditions of the solenoid of the level control pilot valve, the reed switch of the main tank overflow valve, the level float switch of the collector tank, or the solenoid of the main tank fueling shut-off valve. This AD requires installing fuses in the wiring of the solenoid of the level control pilot valve, the reed switch of the main tank overflow valve, the level float switch of the collector tank, and the solenoid of the main tank fueling shut-off valve, as applicable. This AD also requires accomplishing concurrent actions and revising the airplane maintenance or inspection program, as applicable, by incorporating fuel airworthiness limitation items and critical design configuration control limitations (CDCCLs). We are issuing this AD to prevent an ignition source in the main fuel tank vapor space, which could result in a fuel tank explosion and consequent loss of the airplane.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 8, 2016.

    ADDRESSES:

    For service information identified in this final rule, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email [email protected]; Internet http://www.myfokkerfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8472.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8472; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    FOR FURTHER INFORMATION CONTACT:

    Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1149.

    SUPPLEMENTARY INFORMATION:

    Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes. The NPRM published in the Federal Register on January 20, 2016 (81 FR 3042) (“the NPRM”).

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0107, dated May 7, 2014 (referred to after this the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes. The MCAI states:

    Prompted by an accident * * *, the Federal Aviation Administration (FAA) published Special Federal Aviation Regulation (SFAR) 88 [(66 FR 23086, May 7, 2001)], and the Joint Aviation Authorities (JAA) published Interim Policy INT/POL/25/12.

    The review conducted by Fokker Services on the Fokker F28 design in response to these regulations revealed that, under certain failure conditions of the solenoid of the level control pilot valve, the main tank overflow valve reed switch, the collector tank level float switch or the main tank fuelling shut-off valve solenoid, a hot spot may develop in the tank.

    This condition, if not corrected, could create an ignition source in the main tank vapour space, possibly resulting in a fuel tank explosion and consequent loss of the aeroplane.

    To address this potential unsafe condition, Fokker Services developed a modification to the wiring (installation of fuses) of the affected components.

    For the reasons described above, this [EASA] AD requires the installation of fuses in the wiring of the affected components [the solenoid of the level control pilot valve, the reed switch of the main tank overflow valve, the level float switch of the collector tank, and the solenoid of the main tank fuelling shut-off valve] and, subsequently, the implementation of the associated Critical Design Configuration Control Limitations (CDCCL) items [and revision of the maintenance or inspection program].

    More information on this subject can be found in Fokker Services All Operators Message AOF28.038#02.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8472.

    Comments

    We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

    Explanation of Changes Made to This AD

    We revised certain document citations throughout this AD to meet the Office of the Federal Register's requirements for materials incorporated by reference. These changes are for formatting purposes and do not affect the requirements of this AD.

    Conclusion

    We reviewed the relevant data 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.

    Related Service Information Under 1 CFR Part 51

    Fokker Services B.V. has issued Manual Change Notification—Maintenance Documentation MCNM-F28-035, Rev 1, dated January 9, 2014; and Fokker Service Bulletin SBF28-28-049, Revision 2, dated November 3, 2014. This service information describes procedures for installing fuses packed in jiffy junctions (i.e., crimped wire in-line junction device(s)).

    Fokker Services B.V. has also issued Manual Change Notification—Maintenance Documentation MCNM-F28-034 Rev 1, dated January 9, 2014; and Service Bulletin SBF28-28-051, Revision 2, dated November 3, 2014. This service information describes procedures for reworking the wiring and installing fuses packed in jiffy junctions in the power supply wire of the solenoid in the left and right level control pilot valves.

    In addition, Fokker Services B.V. has issued Proforma Service Bulletin SBF28-28-056, dated January 9, 2014; and F28 Appendix Service Bulletin SBF28-28-056/APP01, dated July 15, 2014. This service information describes procedures for installing fuses in the wiring of the solenoid of the level control pilot valve, the reed switch of the main tank overflow valve, the level float switch of the collector tank, and the solenoid of the main tank fueling shut-off valve. This service information also describes certain CDCCLs.

    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.

    Costs of Compliance

    We estimate that this AD affects 5 airplanes of U.S. registry.

    We estimate the following costs to comply with this AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S. operators
    Installation of fuses and revision to maintenance or inspection program 21 work-hours × $85 per hour = $1,785 $5,320 $7,105 $35,525
    Authority for This Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]

    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-16-05 Fokker Services B.V.: Amendment 39-18603; Docket No. FAA-2015-8472; Directorate Identifier 2014-NM-106-AD. (a) Effective Date

    This AD is effective September 8, 2016.

    (b) Affected ADs

    This AD affects AD 2011-17-03, Amendment 39-16767 (76 FR 50115, August 12, 2011) (“AD 2011-17-03”); and AD 2011-21-01, Amendment 39-16824 (76 FR 63156, October 12, 2011) (“AD 2011-21-01”).

    (c) Applicability

    This AD applies to Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes, certificated in any category, all serial numbers.

    (d) Subject

    Air Transport Association (ATA) of America Code 28, Fuel.

    (e) Reason

    This AD was prompted by a design review that revealed a hot spot may develop in the main fuel tank under certain failure conditions of the solenoid of the level control pilot valve, the reed switch of the main tank overflow valve, the level float switch of the collector tank, or the solenoid of the main tank fueling shut-off valve. We are issuing this AD to prevent an ignition source in the main fuel tank vapor space, which could result in a fuel tank explosion and consequent loss of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Modification of Main Fuel Tank Wiring

    Within 24 months after the effective date of this AD, install fuses in the wiring of the solenoid of the level control pilot valve, the reed switch of the main tank overflow valve, the level float switch of the collector tank, and the solenoid of the main tank fueling shut-off valve, as applicable, in accordance with the Accomplishment Instructions of Fokker F28 Appendix Service Bulletin SBF28-28-056/APP01, dated July 15, 2014, and Fokker Proforma Service Bulletin SBF28-28-056, dated January 9, 2014.

    (h) Concurrent Requirements

    Prior to or concurrently with accomplishing the requirements of paragraph (g) of this AD, do the actions specified in paragraphs (h)(1) and (h)(2) of this AD. Accomplishment of the actions in this paragraph terminates the requirement of paragraph (g) of AD 2011-17-03.

    (1) Install fuses packed in jiffy junctions (i.e., crimped wire in-line junction device(s)), in accordance with the Accomplishment Instructions of the service information identified in paragraph (h)(1)(i) and the instructions of the service information identified in paragraph (h)(1)(ii) of this AD.

    (i) Fokker Service Bulletin SBF28-28-049, Revision 2, dated November 3, 2014.

    (ii) Fokker Manual Change Notification—Maintenance Documentation MCNM-F28-035, Rev 1, dated January 9, 2014.

    Note 1 to paragraph (h)(1) of this AD:

    Accomplishment of this action is required by AD 2011-17-03.

    (2) Rework the wiring and install fuses packed in jiffy junctions in the power supply wire of the solenoid in the left and right level control pilot valves, in accordance with the Accomplishment Instructions of the service information identified in paragraph (h)(2)(i) and the instructions of the service information identified in paragraph (h)(2)(ii) of this AD. Accomplishment of the actions in this paragraph terminates the requirement of paragraph (g) of AD 2011-21-01, for the actions specified in the Accomplishment Instructions of the service information identified in paragraph (h)(2)(i) and the instructions of the service information identified in paragraph (h)(2)(ii) of this AD only.

    (i) Fokker Manual Change Notification—Maintenance Documentation

    MCNM-F28-034, Rev 1, dated January 9, 2014.

    (ii) Fokker Service Bulletin SBF28-28-051, Revision 2, dated November 3, 2014.

    Note 2 to paragraph (h)(2) of this AD: Accomplishment of this action is required by AD 2011-21-01.

    (i) Revision of Maintenance or Inspection Program

    Before further flight after completing the installation specified in paragraph (g) of this AD, or within 30 days after the effective date of this AD, whichever occurs later: Revise the airplane maintenance or inspection program, as applicable, by incorporating the critical design configuration control limitations (CDCCLs) specified in paragraph 1.L.(1)(c) of Fokker Proforma Service Bulletin SBF28-28-056, dated January 9, 2014.

    (j) No Alternative CDCCLs

    After accomplishing the revision required by paragraph (i) of this AD, no alternative CDCCLs may be used unless the CDCCLs are approved as an alternative method of compliance (AMOC) in accordance with the procedures specified in paragraph (k)(1) of this AD.

    (k) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance: The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1149. Information may be emailed to: [email protected]. Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Fokker Services B.V.'s EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (l) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0107, dated May 7, 2014, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8472.

    (m) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Fokker F28 Appendix Service Bulletin SBF28-28-056/APP01, dated July 15, 2014.

    (ii) Fokker Manual Change Notification—Maintenance Documentation MCNM-F28-034 Rev 1, dated January 9, 2014.

    (iii) Fokker Manual Change Notification—Maintenance Documentation MCNM-F28-035, Rev 1, dated January 9, 2014.

    (iv) Fokker Proforma Service Bulletin SBF28-28-056, dated January 9, 2014.

    (v) Fokker Service Bulletin SBF28-28-049, Revision 2, dated November 3, 2014.

    (vi) Fokker Service Bulletin SBF28-28-051, Revision 2, dated November 3, 2014.

    (3) For service information identified in this AD, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email [email protected]; Internet http://www.myfokkerfleet.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on July 21, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18255 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-5594; Directorate Identifier 2014-NM-169-AD; Amendment 39-18596; AD 2016-15-05] RIN 2120-AA64 Airworthiness Directives; Dassault Aviation Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for all Dassault Aviation Model FALCON 900EX and FALCON 2000EX airplanes. This AD was prompted by a review that identified a nonconformity between the torque value applied to the screw-nuts of aileron servo actuators, and the torque value specified by the type design. This AD requires replacing certain aileron servo actuators with serviceable servo actuators. We are issuing this AD to prevent desynchronization between two servo actuator barrels, which could lead to reduced control of the airplane during roll maneuvers at low altitude.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 8, 2016.

    ADDRESSES:

    For service information identified in this final rule, contact Dassault Falcon Jet, P.O. Box 2000, South Hackensack, NJ 07606; telephone 201-440-6700; Internet http://www.dassaultfalcon.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5594.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5594; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    FOR FURTHER INFORMATION CONTACT:

    Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1139.

    SUPPLEMENTARY INFORMATION: Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Dassault Aviation Model FALCON 900EX and FALCON 2000EX airplanes. The NPRM published in the Federal Register on April 20, 2016 (81 FR 23214) (“the NPRM”).

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0184, dated August 7, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Dassault Aviation Model FALCON 900EX and FALCON 2000EX airplanes. The MCAI states:

    A quality review of recently delivered aeroplanes identified a non-conformity concerning the torque value applied to screw-nuts of aileron servo actuators, which was inconsistent with the value specified by the type design.

    The subsequent investigation demonstrated that the washer which is bent on nut and rod ensures the affected selector synchronisation between two servo actuator barrels for a minimum of 2,000 flight hours (FH). After this period, a possible de-synchronization of the affected selector assembly may occur.

    This condition, if not corrected, could lead to reduced control of the aeroplane during roll manoeuvers at low altitude.

    To address this potential unsafe condition, Dassault Aviation issued Service Bulletin (SB) F900EX-476 Revision 1 and SB F2000EX-350 to provide replacement instructions for the affected aileron servo actuators, as applicable to aeroplane type.

    For the reasons described above, this [EASA] AD requires replacement of affected aileron servo actuators with serviceable parts. This [EASA] AD also identifies that the affected aileron servo actuators can be re-qualified as serviceable parts only after a refurbishment accomplished by an approved maintenance organization.

    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-2016-5594.

    Comments

    We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

    Conclusion

    We reviewed the relevant data 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.

    Related Service Information Under 1 CFR Part 51

    We reviewed Dassault Service Bulletins F900EX-476, Revision 1, dated June 25, 2014; and F2000EX-350, dated April 9, 2014. The service information describes procedures for removing the aileron servo actuator. 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.

    Costs of Compliance

    We estimate that this AD affects 284 airplanes of U.S. registry.

    We also estimate that it will take about 14 work-hours per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Required parts will cost about $43,460 per product. Based on these figures, we estimate the cost of this AD on U.S. operators to be $12,680,600, or $44,650 per product.

    Authority for This Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-15-05 Dassault Aviation: Amendment 39-18596; Docket No. FAA-2016-5594; Directorate Identifier 2014-NM-169-AD. (a) Effective Date

    This AD is effective September 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to all Dassault Aviation Model FALCON 900EX and FALCON 2000EX airplanes, certificated in any category.

    (d) Subject

    Air Transport Association (ATA) of America Code 27, Flight Controls.

    (e) Reason

    This AD was prompted by a review that identified a nonconformity between the torque value applied to the screw-nuts of aileron servo actuators, and the torque value specified by the type design. We are issuing this AD to prevent desynchronization between two servo actuator barrels, which could lead to reduced control of the airplane during roll maneuvers at low altitude.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Replacement of Aileron Servo Actuator

    At the later of the applicable times specified in paragraphs (g)(1) and (g)(2) of this AD: Replace each affected aileron servo actuator, as identified in figure 1 to paragraph (g) of this AD (for Model FALCON 900EX airplanes) or figure 2 to paragraph (g) of this AD (for Model FALCON 2000EX airplanes), with a serviceable part in accordance with the Accomplishment Instructions of Dassault Service Bulletin F900EX-476, Revision 1, dated June 25, 2014; or Dassault Service Bulletin F2000EX-350, dated April 9, 2014; except where Dassault Service Bulletin F900EX-476, Revision 1, dated June 25, 2014; or F2000EX-350, dated April 9, 2014; specify to “remove” the applicable aileron servo actuator, this AD requires replacement of the applicable aileron servo actuator. A serviceable part is one that is specified in the “New P/N” column in the table of paragraph 3., “Material Information,” of Dassault Service Bulletin F900EX-476, Revision 1, dated June 25, 2014; or Dassault Service Bulletin F2000EX-350, dated April 9, 2014.

    (1) For airplanes on which the aileron servo actuator was not replaced during maintenance: At the later of the times specified in paragraphs (g)(1)(i) and (g)(1)(ii) of this AD.

    (i) Within 25 months or 1,640 flight hours, whichever occurs first, since the date of issuance of the original airworthiness certificate or date of issuance for the original export certificate of airworthiness.

    (ii) Within 30 days after the effective date of this AD.

    (2) For airplanes on which the aileron servo actuator was replaced during maintenance: At the later of the times specified in paragraphs (g)(2)(i) and (g)(2)(ii) of this AD.

    (i) Within 1,640 flight hours after replacement of the aileron servo actuator during maintenance.

    (ii) Within 30 days after the effective date of this AD.

    Note 1 to paragraph (g) of this AD:

    The affected aileron servo actuators are known to be installed before airplane delivery on Model FALCON 900EX airplanes having serial numbers (S/Ns) 265 through 270 inclusive, S/N 272 and S/N 273; Model FALCON 2000EX airplanes having S/N 243, S/Ns 246 through 258 inclusive, S/Ns 260 through 263 inclusive, S/Ns 702 through 710 inclusive and S/N 714; and during a maintenance operation on Model FALCON 900EX airplane having S/N 177, after airplane delivery.

    Figure 1 to Paragraph (g) of This AD—Affected Actuators on Model FALCON 900EX Airplanes Model FALCON 900EX airplane having S/N— With actuator
  • part number
  • (P/N)—
  • And actuator
  • S/N—
  • 177 103117-06 5003 265 103117-06 5002 266 103117-05 5000 103117-06 5007 267 103117-05 5001 268 103117-05 5004 269 103117-05 5005 103117-06 5011 270 103117-06 5012 103117-13 5017 272 103117-05 5010 103117-14 5016 273 103117-13 5014 103117-14 5020
    Figure 2 to Paragraph (g) of This AD—Affected Actuators on Model FALCON 2000EX Airplanes Model FALCON 2000EX airplane having S/N— With actuator
  • P/N—
  • And actuator
  • S/N—
  • 243 103151-08 5002 246 103151-07
  • 103151-08
  • 5000
  • 5003
  • 247 103151-07
  • 103151-08
  • 5001
  • 5006
  • 248 103151-07
  • 103151-08
  • 5004
  • 5007
  • 249 103151-07
  • 103151-08
  • 5005
  • 5012
  • 250 103151-07
  • 103151-08
  • 5008
  • 5013
  • 251 103151-07
  • 103151-08
  • 5009
  • 5014
  • 252 103151-07
  • 103151-08
  • 5011
  • 5016
  • 253 103151-07
  • 103151-08
  • 5010
  • 5015
  • 254 103151-08
  • 103151-07
  • 5017
  • 5018
  • 255 103151-07
  • 103151-08
  • 5019
  • 5022
  • 256 103151-07
  • 103151-08
  • 5021
  • 5023
  • 257 103151-08
  • 103151-07
  • 5024
  • 5026
  • 258 103151-07
  • 103151-08
  • 5027
  • 5033
  • 260 103151-08
  • 103151-07
  • 5032
  • 5035
  • 261 103151-08
  • 103151-07
  • 5037
  • 5041
  • 262 103151-08
  • 103151-07
  • 5039
  • 5047
  • 263 103151-08
  • 103151-09
  • 5044
  • 5064
  • 702 103151-07 5029 703 103151-07
  • 103151-08
  • 5034
  • 5042
  • 704 103151-08
  • 103151-07
  • 5036
  • 5040
  • 705 103151-08
  • 103151-07
  • 5038
  • 5046
  • 706 103151-08
  • 103151-07
  • 5043
  • 5048
  • 707 103151-07
  • 103151-08
  • 5054
  • 5057
  • 708 103151-08
  • 103151-07
  • 5045
  • 5050
  • 709 103151-08 5074 710 103151-07
  • 103151-08
  • 5051
  • 5053
  • 714 103151-09
  • 103151-10
  • 5065
  • 5067
  • (h) Parts Installation Limitation

    As of the effective date of this AD, no aileron servo actuator having a P/N and S/N listed in figure 1 to paragraph (g) of this AD or figure 2 to paragraph (g) of this AD is allowed to be installed on any airplane, unless the mark “D1” is included on the actuator repair placard.

    Note 2 to paragraph (h) of this AD:

    The mark “D1” on an aileron servo actuator repair placard indicates that the affected part has been refurbished by an approved maintenance organization and is qualified as a serviceable part.

    (i) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, ANM-116, International Branch, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1139. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Dassault Aviation's EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (j) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0184, dated August 7, 2014, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5594.

    (k) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Dassault Service Bulletin F900EX-476, Revision 1, dated June 25, 2014.

    (ii) Dassault Service Bulletin F2000EX-350, dated April 9, 2014.

    (3) For service information identified in this AD, contact Dassault Falcon Jet, P.O. Box 2000, South Hackensack, NJ 07606; telephone 201-440-6700; Internet http://www.dassaultfalcon.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on July 21, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18167 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-0466; Directorate Identifier 2014-NM-188-AD; Amendment 39-18604; AD 2016-16-06] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for certain Airbus Model A300 B4-603, B4-605R, and B4-622R airplanes; and Model A310-304, -324, and -325 airplanes. This AD was prompted by a report of a crack found on door frame (FR) 73A between stringers 24 and 25. This AD requires inspections around the rivet heads of the seal retainer run-out holes at certain frames and corrective actions if necessary. We are issuing this AD to detect and correct cracking of the door frame, which could result in reduced structural integrity of the airplane.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 8, 2016.

    ADDRESSES:

    For service information identified in this final rule, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-0466.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-0466; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    FOR FURTHER INFORMATION CONTACT:

    Dan Rodina, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-2125; fax 425-227-1149.

    SUPPLEMENTARY INFORMATION: Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Airbus Model A300 B4-603, B4-605R, and B4-622R airplanes; and Model A310-304, -324, and -325 airplanes. The NPRM published in the Federal Register on February 18, 2016 (81 FR 8155) (“the NPRM”). The NPRM was prompted by a report of a crack found on door FR 73A between stringers 24 and 25. The NPRM proposed to require inspections around the rivet heads of the seal retainer run-out holes at certain frames and corrective actions if necessary. We are issuing this AD to detect and correct cracking of the door frame, which could result in reduced structural integrity of the airplane.

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA AD 2014-0202R1, dated September 19, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus Model A300 B4-603, B4-605R, and B4-622R airplanes; and Model A310-304, -324, and -325 airplanes The MCAI states:

    During the preparation phase for conversion of an A300-600 aeroplane from passenger to freighter configuration, a crack was detected on door frame (FR) 73A, between stringer (STRG) 24 and STRG 25.

    DGAC [Direction Générale de l'Aviation Civile] France had issued AD 1999-013-276R1 to require inspections at FR 73A in accordance with the instructions of Airbus Service Bulletin (SB) A310-53-2107 or SB A300-53-6116, as applicable. However, the new crack was found in an area not covered by the existing inspection and is therefore addressed by this new [EASA] AD. (DGAC France AD 1999-013-276R1 remains in place).

    Further investigations identified that, on A300-600 aeroplanes, the areas at FR 56A and FR 57A have the same design and material as at FR 73A.

    This condition, if not detected and corrected, could affect the structural integrity of the airframe.

    For the reasons described above, this [EASA] AD requires repetitive [high frequency eddy current (HFEC)] inspections of the rivet heads of the seal retainer run out holes to detect cracks and, depending on findings, accomplishment of corrective actions [repair].

    Even though no crack has been identified at FR 56A and FR 57A, as a preventive measure, the inspection is extended to these areas. On A310 aeroplanes, only the area at FR 73A needs to be inspected.

    This [EASA] AD is revised to reduce the applicability to aeroplanes in post-MOD 06924 configuration.

    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-2016-0466.

    Comments

    We gave the public the opportunity to participate in developing this AD. The following presents the comment received on the NPRM and the FAA's response to the comment.

    Request To Reduce Compliance Time

    An anonymous commenter asked why the NPRM has not yet been enacted. The commenter stated that they do not want to be on a plane that lacks structural integrity because of cracks on the door frame.

    ADs are federal regulations that have the force and effect of law. In simple terms, the Administrative Procedure Act (APA), Title 5 of the United States Code (5 U.S.C.) § 553, requires all regulatory agencies such as the FAA to provide the public with notice and time for comment prior to issuing a regulation. ADs are issued in accordance with the public rulemaking procedures of the APA, FAA procedures in 14 CFR part 11, and several other relevant regulations. For this AD, we did not substantiate that a critical, immediate safety of flight problem exists that would warrant issuing a rule without prior notice or opportunity for public comment. We have not changed this AD in this regard.

    Conclusion

    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.

    Related Service Information Under 1 CFR Part 51

    Airbus has issued Service Bulletins A300-53-6175 and A310-53-2138, both dated May 28, 2014. The service information describes procedures for doing HFEC inspections around the rivet heads of the seal retainer run-out holes at certain frame locations on the left-hand and right-hand sides. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    Costs of Compliance

    We estimate that this AD affects 24 airplanes of U.S. registry.

    We estimate the following costs to comply with this AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators Inspection 11 work-hours × $85 per hour = $935 per inspection cycle $0 $935 per inspection cycle $22,440 per inspection cycle.

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

    Authority for this Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-16-06 Airbus: Amendment 39-18604; Docket No. FAA-2016-0466; Directorate Identifier 2014-NM-188-AD. (a) Effective Date

    This AD is effective September 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Airbus Model A300 B4-603, A300 B4-605R, A300 B4-622R, A310-304, A310-324, and A310-325 airplanes; certificated in any category; all manufacturer serial numbers (MSNs) in post-modification (MOD) 06924 configuration, except MSNs 464, 477, 479, 481, 482, 483, 484, and 488.

    Note 1 to paragraph (c) of this AD: MSNs 464, 477, 479, 481, 482, 483, 484 and 488 partially embodied MOD 06924 by means of modification proposal D05902.

    (d) Subject

    Air Transport Association (ATA) of America Code 53, Fuselage.

    (e) Reason

    This AD was prompted by a report of a crack found on door frame (FR) 73A between stringers 24 and 25. We are issuing this AD to detect and correct cracking of the door frame, which could result in reduced structural integrity of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Inspections for Cracking

    At the later of the compliance times specified in paragraphs (g)(1) and (g)(2) of this AD: Do a high frequency eddy current (HFEC) inspection for any crack around the rivet heads of the seal retainer run-out holes at FR 56A, FR 57A, and FR 73A, left-hand (LH) and right-hand (RH) sides on Model A300-600 airplanes; and at FR 73A, LH and RH sides on Model A310 airplanes; in accordance with the Accomplishment Instructions of Airbus Service Bulletin A310-53-2138, dated May 28, 2014; or Airbus Service Bulletin A300-53-6175, dated May 28, 2014; as applicable. Repeat the HFEC inspection thereafter at intervals not to exceed 7,500 flight cycles.

    (1) Before the accumulation of 32,000 total flight cycles.

    (2) Within 36 months after the effective date of this AD, or before the accumulation of 36,000 total flight cycles, whichever occurs first.

    (h) Corrective Actions

    If any crack is found during any inspection required by paragraph (g) of this AD, repair before further flight using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).

    (i) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Dan Rodina, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-2125; fax 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; EASA; or Airbus's EASA DOA. If approved by the DOA, the approval must include the DOA-authorized signature.

    (3) Required for Compliance (RC): Except as required by paragraph (h) of this AD: If any service information contains procedures or tests that are identified as RC, those procedures and tests must be done to comply with this AD; any procedures or tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC require approval of an AMOC.

    (j) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2014-0202R1, dated September 19, 2014, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-0466.

    (k) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Airbus Service Bulletin A300-53-6175, dated May 28, 2014.

    (ii) Airbus Service Bulletin A310-53-2138, dated May 28, 2014.

    (3) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone +33 5 61 93 36 96; fax +33 5 61 93 44 51; email [email protected]; Internet http://www.airbus.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on July 21, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18254 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-5459; Directorate Identifier 2015-NM-148-AD; Amendment 39-18597; AD 2016-15-06] RIN 2120-AA64 Airworthiness Directives; Bombardier, Inc. Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for certain Bombardier, Inc. Model BD-700-1A10 and BD-700-1A11 airplanes. This AD was prompted by a design review, which found that the burst pressure of the flexible hose used to vent oxygen from the high-pressure relief valve of the oxygen cylinder overboard is lower than the opening pressure of the high-pressure relief valve. This AD requires replacement of flexible relief hoses for the crew oxygen bottles with new metal design relief hoses. We are issuing this AD to prevent the accumulation of excess oxygen in an enclosed space, which could, if near a source of ignition, cause an uncontrolled oxygen-fed fire.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 8, 2016.

    ADDRESSES:

    For service information identified in this final rule, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email [email protected]; Internet http://www.bombardier.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5459.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5459; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    FOR FURTHER INFORMATION CONTACT:

    Fabio Buttitta, Aerospace Engineer, Airframe and Mechanical Systems Branch, ANE-171, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7303; fax 516-794-5531.

    SUPPLEMENTARY INFORMATION:

    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 BD-700-1A10 and BD-700-1A11 airplanes. The NPRM published in the Federal Register on April 12, 2016 (81 FR 21491) (“the NPRM”). The NPRM was prompted by a design review, which found that the burst pressure of the flexible hose used to vent oxygen from the high-pressure relief valve of the oxygen cylinder overboard is lower than the opening pressure of the high-pressure relief valve. This pressure difference could cause the flexible hose to burst before it is able to vent excess oxygen overboard. The NPRM proposed to require replacement of flexible relief hoses for the crew oxygen bottles with new metal design relief hoses. We are issuing this AD to prevent the accumulation of excess oxygen in an enclosed space, which could, if near a source of ignition, cause an uncontrolled oxygen-fed fire.

    Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2015-25, dated September 10, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier, Inc. Model BD-700-1A10 and BD-700-1A11 airplanes. The MCAI states:

    A design review found that the burst pressure of the flexible hose used to vent oxygen from the high-pressure relief valve of the oxygen cylinder overboard is lower than the opening pressure of the high-pressure relief valve. This could cause the flexible hose to burst before it is able to vent the excess oxygen overboard. If an ignition source is present, the accumulation of oxygen in an enclosed space may result in an uncontrolled oxygen-fed fire.

    This [Canadian] AD mandates the replacement of the oxygen [flexible] hose assembly with a new design oxygen [metal] hose assembly.

    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-2016-5459.

    Comments

    We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public. We reviewed the relevant data 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.

    Related Service Information Under 1 CFR Part 51

    Bombardier, Inc. has issued the following service information:

    • Service Bulletin 700-35-013, Revision 01, dated July 22, 2015.

    • Service Bulletin 700-35-5001, Revision 01, dated July 22, 2015;

    • Service Bulletin 700-35-6001, Revision 01, dated July 22, 2015; and

    • Service Bulletin 700-1A11-35-012, Revision 01, dated July 22, 2015.

    The service information describes procedures to replace the flexible oxygen hoses with metal hoses. 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.

    Costs of Compliance

    We estimate that this AD affects 73 airplanes of U.S. registry.

    We estimate the following costs to comply with this AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S.
  • operators
  • Modification 3 work-hours × $85 per hour = $255 $14,483 $14,738 $1,075,874

    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.

    Authority for This Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-15-06 Bombardier, Inc.: Amendment 39-18597; Docket No. FAA-2016-5459; Directorate Identifier 2015-NM-148-AD. (a) Effective Date

    This AD is effective September 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Bombardier, Inc. Model BD-700-1A10 and BD-700-1A11 airplanes, certificated in any category, having serial numbers (S/Ns) 9002 through 9704 inclusive, and 9998.

    (d) Subject

    Air Transport Association (ATA) of America Code 35, Oxygen.

    (e) Reason

    This AD was prompted by a design review, which found that the burst pressure of the flexible hose used to vent oxygen from the high-pressure relief valve of the oxygen cylinder overboard is lower than the opening pressure of the high-pressure relief valve. This pressure difference could cause the flexible hose to burst before it is able to vent excess oxygen overboard. We are issuing this AD to prevent the accumulation of excess oxygen in an enclosed space, which could, if near a source of ignition, cause an uncontrolled oxygen-fed fire.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Modification

    Within 2,500 flight hours or 42 months, whichever occurs first, after the effective date of this AD, incorporate Bombardier Modsum R700T400542 by replacing the oxygen flexible relief hoses for the crew oxygen bottles with new metal design hoses, in accordance with the Accomplishment Instructions of the applicable service information specified in paragraphs (g)(1) through (g)(4) of this AD. Airplanes with serial numbers listed in table 1 of paragraph 1, “Planning information,” of the service information specified in paragraphs (g)(2) and (g)(4) of this AD have incorporated Modsum R700T400542 and meet the requirements of this paragraph.

    (1) For Model BD-700-1A10 airplanes having S/Ns 9002 through 9312 inclusive, 9314 through 9380 inclusive, and 9384 through 9429 inclusive: Bombardier Service Bulletin 700-35-013, Revision 01, dated July 22, 2015.

    (2) For Model BD-700-1A10 airplanes having S/Ns 9313, 9381, and 9432 through 9704 inclusive: Bombardier Service Bulletin 700-35-6001, Revision 01, dated July 22, 2015.

    (3) For Model BD-700-1A11 airplanes having S/Ns 9127 through 9383 inclusive, 9389 through 9400 inclusive, 9404 through 9431 inclusive, and 9998: Bombardier Service Bulletin 700-1A11-35-012, Revision 01, dated July 22, 2015.

    (4) For Model BD-700-1A11 airplanes having S/Ns 9386, 9401, and 9445 through 9702 inclusive: Bombardier Service Bulletin 700-35-5001, Revision 01, dated July 22, 2015.

    (h) Parts Installation Prohibition

    As of the effective date of this AD, no person may install on any airplane oxygen hoses in the low-pressure/high-pressure discharge system with part numbers listed in the “Used Part No.” column of Section 3.A, “Kit,” of the applicable service information specified in paragraphs (g)(1) through (g)(4) of this AD.

    (i) Credit for Previous Actions

    This paragraph provides credit for actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using the applicable service information identified in paragraphs (i)(1) through (i)(4) of this AD, which are not incorporated by reference in this AD.

    (1) Bombardier Service Bulletin 700-35-013, dated February 20, 2015;

    (2) Bombardier Service Bulletin 700-35-5001, dated February 20, 2015;

    (3) Bombardier Service Bulletin 700-35-6001, dated February 20, 2015; and

    (4) Bombardier Service Bulletin 700-1A11-35-012, dated February 20, 2015.

    (j) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, New York Aircraft Certification Office (ACO), ANE-170, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the ACO, send it to ATTN: Program Manager, Continuing Operational Safety, FAA, New York ACO, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7300; fax 516-794-5531. Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, New York ACO, ANE-170, FAA; or Transport Canada Civil Aviation (TCCA); or Bombardier, Inc.'s TCCA Design Approval Organization (DAO). If approved by the DAO, the approval must include the DAO-authorized signature.

    (k) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF-2015-25, dated September 10, 2015, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5459.

    (l) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Bombardier, Inc. Service Bulletin 700-35-013, Revision 01, dated July 22, 2015.

    (ii) Bombardier, Inc. Service Bulletin 700-35-5001, Revision 01, dated July 22, 2015.

    (iii) Bombardier Service Bulletin 700-35-6001, Revision 01, dated July 22, 2015.

    (iv) Bombardier Service Bulletin 700-1A11-35-012, Revision 01, dated July 22, 2015.

    (3) For service information identified in this AD, contact Bombardier, Inc., 400 Côte-Vertu Road West, Dorval, Québec H4S 1Y9, Canada; telephone 514-855-5000; fax 514-855-7401; email [email protected]; Internet http://www.bombardier.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on July 21, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18172 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-5460; Directorate Identifier 2015-NM-188-AD; Amendment 39-18599; AD 2016-16-01] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for certain Airbus Model A330-200 Freighter, -200, and -300 series airplanes. This AD was prompted by a report of a manufacturing defect that affects the durability of affected parts in the cargo and cabin compartment. This AD requires an inspection of affected structural parts in the cargo and cabin compartments to determine if proper heat treatment has been done, and replacement if necessary. We are issuing this AD to prevent crack initiation and propagation, which could result in reduced structural integrity of the fuselage.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 8, 2016.

    ADDRESSES:

    For service information identified in this final rule, contact Airbus SAS, Airworthiness Office-EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 45 80; email: [email protected]; Internet: http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5460.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5460; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    FOR FURTHER INFORMATION CONTACT:

    Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1138; fax: 425-227-1149.

    SUPPLEMENTARY INFORMATION:

    Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Airbus Model A330-200 Freighter, -200, and -300 series airplanes. The NPRM published in the Federal Register on April 12, 2016 (81 FR 21486) (“the NPRM”). The NPRM was prompted by a report of a manufacturing defect that affects the durability of affected parts in the cargo and cabin compartment. The NPRM proposed to require an inspection of affected structural parts in the cargo and cabin compartments to determine if proper heat treatment has been done, and replacement if necessary. We are issuing this AD to prevent crack initiation and propagation, which could result in reduced structural integrity of the fuselage.

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued European Airworthiness Directive 2015-0212, dated November 4, 2015, to correct an unsafe condition for all Airbus Model A330-200 Freighter, -200, and -300 series airplanes. The MCAI states:

    Airbus quality controls identified that several structural parts, intended for cargo or cabin compartment installation, were manufactured from improperly heat-treated materials. Subsequent review identified that some of those parts were installed on airplanes manufactured between November 2011 and February 2013. From February 2013, Airbus implemented measures into manufacturing processes to ensure detection and to prevent installation of such non-conforming parts.

    A detailed safety assessment was accomplished to identify the possible impact of affected parts on the airplane structure. The result of this structural analysis demonstrated the capability of the affected structure to sustain static limit loads, but failed to confirm that the affected structures met the certified fatigue life.

    This condition, if not detected and corrected, could lead to crack initiation and propagation, possibly resulting in reduced structural integrity of the fuselage.

    To address this potentially unsafe condition, Airbus issued Service Bulletin (SB) SB A330-53-3227 and SB A330-53-3228 to provide inspection instructions for affected cargo and cabin structural parts respectively.

    For the reasons described above, this [EASA] AD requires a one-time Special Detailed Inspection (SDI) [eddy current inspection] to measure the electrical conductivity of affected structural parts, to identify the presence or absence of heat treatment, and, depending on findings, corrective action [replacement].

    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-2016-5460.

    Comments

    We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

    Conclusion

    We reviewed the relevant data 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.

    Related Service Information Under 1 CFR Part 51

    Airbus has issued the following service information:

    • Airbus Service Bulletin A330-53-3227, dated August 18, 2015. The service information describes procedures to inspect affected structural parts in the cargo compartment to determine if proper heat treatment has been done, and replacement of parts; and

    • Airbus Service Bulletin A330-53-3228, dated August 18, 2015. The service information describes procedures to inspect affected structural parts in the cabin compartment to determine if proper heat treatment has been done, and replacement of parts.

    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.

    Costs of Compliance

    We estimate that this AD affects 20 airplanes of U.S. registry.

    We estimate the following costs to comply with this AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S.
  • operators
  • Inspection 11 work-hours × $85 per hour = $935 $0 $935 $18,700

    We estimate the following costs to do any necessary replacements that will be required based on the results of the required inspection. We have received no definitive data that will enable us to provide the cost of replacement parts for the on-condition actions specified in this AD, nor the cost of repairs. We have no way of determining the number of aircraft that might need this action.

    On-Condition Costs Action Labor cost Parts cost Cost per product Replacement 45 work-hours × $85 per hour = $3,825 Not Available Not Available.

    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 available costs in our cost estimate.

    Authority for This Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-16-01 Airbus: Amendment 39-18599; Docket No. FAA-2016-5460; Directorate Identifier 2015-NM-188-AD. (a) Effective Date

    This AD is effective September 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to the Airbus airplanes identified in paragraphs (c)(1), (c)(2), and (c)(3) of this AD, certificated in any category, manufacturer serial numbers 1175, 1180, 1287 through 1475 inclusive, 1478, 1480, 1483, and 1506.

    (1) Model A330-223F and -243F airplanes.

    (2) Model A330-201, -202, -203, -223, and -243 airplanes.

    (3) Model A330-301, -302, -303, -321, -322, -323, -341, -342, and -343 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 53, Fuselage.

    (e) Reason

    This AD was prompted by a report of a manufacturing defect (i.e. improperly heat treated materials) that affects the durability of affected parts in the cargo and cabin compartment. We are issuing this AD to prevent crack initiation and propagation, which could result in reduced structural integrity of the fuselage.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Inspection of Affected Structure in the Cargo Compartment

    Within 72 months since first flight of the airplane, do an eddy current inspection (i.e., conductivity measurement) of affected structural parts in the cargo compartment to determine if proper heat treatment has been done as identified in, and in accordance with, the Accomplishment Instructions of Airbus Service Bulletin A330-53-3227, dated August 18, 2015.

    (h) Replacement of Non-Conforming Parts in the Cargo Compartment

    If, during the inspection required by paragraph (g) of this AD, an affected structural part in the cargo compartment is identified to have a measured value greater than 26 megasiemens per meter (MS/m), or greater than 44.8% International Annealed Copper Standard (IACS), before further flight, replace the affected structural part with a serviceable part, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-53-3227, dated August 18, 2015.

    (i) Repair of Non-Conforming Parts in the Cargo Compartment

    If, during the inspection required by paragraph (g) of this AD, an affected structural part in the cargo compartment is identified to have a measured value other than those specified in Figure A-GFAAA, Sheet 01, “Inspection Flowchart,” of Airbus Service Bulletin A320-53-3227, dated August 18, 2015, before further flight, repair using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).

    (j) Inspection of Affected Structure in the Cabin Compartment

    Within 72 months since first flight of the airplane, do an eddy current inspection of affected structural parts in the cabin compartment to determine if proper heat treatment has been done as identified in, and in accordance with, the Accomplishment Instructions of Airbus Service Bulletin A330-53-3228, dated August 18, 2015.

    (k) Replacement of Non-Conforming Parts in the Cabin Compartment

    If, during the inspection required by paragraph (j) of this AD, an affected structural part in the cabin compartment is identified to have a measured value greater than 26 MS/m or greater than 44.8% IACS, before further flight, replace the affected structural part with a serviceable part, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A330-53-3228, dated August 18, 2015.

    (l) Repair of Non-Conforming Parts in the Cabin Compartment

    If, during the inspection required by paragraph (j) of this AD, an affected structural part in the cabin compartment is identified to have a measured value other than those specified in Figure A-GFAAA, Sheet 01, “Inspection Flowchart,” of Airbus Service Bulletin A320-53-3228, dated August 18, 2015, before further flight, repair using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the EASA; or Airbus's EASA DOA.

    (m) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Vladimir Ulyanov, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone: 425-227-1138; fax: 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the EASA; or Airbus's EASA DOA. If approved by the DOA, the approval must include the DOA-authorized signature.

    (3) Required for Compliance (RC): If any service information contains procedures or tests that are identified as RC, those procedures and tests must be done to comply with this AD; any procedures or tests that are not identified as RC are recommended. Those procedures and tests that are not identified as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the procedures and tests identified as RC can be done and the airplane can be put back in an airworthy condition. Any substitutions or changes to procedures or tests identified as RC require approval of an AMOC.

    (n) Related Information

    Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2015-0212, dated November 4, 2015, for related information. You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5460.

    (o) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Airbus Service Bulletin A330-53-3227, dated August 18, 2015.

    (ii) Airbus Service Bulletin A330-53-3228, dated August 18, 2015.

    (3) For service information identified in this AD, contact Airbus SAS, Airworthiness Office—EAL, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 45 80; email: [email protected]; Internet: http://www.airbus.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on July 21, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18168 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-8469; Directorate Identifier 2014-NM-105-AD; Amendment 39-18602; AD 2016-16-04] RIN 2120-AA64 Airworthiness Directives; Fokker Services B.V. Airplanes AGENCY:

    Federal Aviation Administration (FAA), Department of Transportation (DOT).

    ACTION:

    Final rule.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for all Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes. This AD was prompted by a design review that revealed insufficient measures were taken to ensure the correct locking of the attachments of the fuel quantity tank units (FQTUs) in each wing tank. When an FQTU becomes loose, this could lead to insufficient clearance between the FQTU and the adjacent tank structure or other metal parts, and under certain conditions, create an ignition source inside the wing fuel vapor space. This AD requires modifying the FQTUs by applying sealant to cover the nuts, washers, and stud ends at the FQTU attachments in each main wing tank. This AD also requires revising the maintenance or inspection program, as applicable, by incorporating a fuel airworthiness limitation item and a critical design configuration control limitation (CDCCL). We are issuing this AD to prevent an ignition source in the wing fuel tank vapor space, which could result in a wing fuel tank explosion and consequent loss of the airplane.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publications listed in this AD as of September 8, 2016.

    ADDRESSES:

    For service information identified in this final rule, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email [email protected]; Internet http://www.myfokkerfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8469.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8469; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    FOR FURTHER INFORMATION CONTACT:

    Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1149.

    SUPPLEMENTARY INFORMATION: Discussion

    We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes. The NPRM published in the Federal Register on January 20, 2016 (81 FR 3056) (“the NPRM”).

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2014-0106, dated May 7, 2014 (referred to after this the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes. The MCAI states:

    Prompted by an accident * * *, the Federal Aviation Administration (FAA) published Special Federal Aviation Regulation (SFAR) 88 [(66 FR 23086, May 7, 2001)], and the Joint Aviation Authorities (JAA) published Interim Policy INT/POL/25/12.

    The review conducted by Fokker Services on the Fokker F28 design, in response to these regulations, revealed that insufficient measures were taken to ensure the correct locking of the attachments of the Fuel Quantity Tank Units (FQTUs). When a FQTU becomes loose, this could lead to insufficient clearance between the FQTU and the adjacent tank structure or other metal parts and, under certain conditions, create an ignition source inside the wing fuel tank vapour space.

    This condition, if not detected and corrected, could result in a wing fuel tank explosion and consequent loss of the aeroplane.

    To address this potential unsafe condition, Fokker Services developed a modification to ensure that each FQTU remains properly attached.

    For the reasons described above, this [EASA] AD requires the application of sealant covering the nuts, washers and stud ends at the FQTU attachment in each wing tank [and a revision to the maintenance or inspection program, as applicable, to incorporate a fuel airworthiness limitation item and a CDCCL]. More information on this subject can be found in Fokker Services All Operators Message AOF28.038#02.

    You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8469.

    Comments

    We gave the public the opportunity to participate in developing this AD. We received no comments on the NPRM or on the determination of the cost to the public.

    Conclusion

    We reviewed the relevant data 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.

    Related Service Information Under 1 CFR Part 51

    Fokker Services B.V. has issued Service Bulletin SBF28-28-050, Revision 3, dated December 11, 2014. The service information describes the fuel airworthiness limitation item and the CDCCL. Fokker Services B.V. has also issued Service Bulletin SBF28-28-054, Revision 1, dated January 9, 2014, which describes procedures for applying sealant to the attachment nuts, washers, and stud ends of the FQTU; and Manual Change Notification—Maintenance Documentation MCNM-F28-037, Rev 1, dated January 9, 2014, which describes related changes in the affected maintenance documents.

    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.

    Costs of Compliance

    We estimate that this AD affects 5 airplanes of U.S. registry.

    We estimate the following costs to comply with this AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S.
  • operators
  • Modification and maintenance program revision 7 work-hours × $85 per hour = $595 $0 $595 $2,975
    Authority for This Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-16-04 Fokker Services B.V.: Amendment 39-18602; Docket No. FAA-2015-8469; Directorate Identifier 2014-NM-105-AD. (a) Effective Date

    This AD is effective September 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Fokker Services B.V. Model F.28 Mark 1000, 2000, 3000, and 4000 airplanes, certificated in any category, all serial numbers.

    (d) Subject

    Air Transport Association (ATA) of America Code 28, Fuel.

    (e) Reason

    This AD was prompted by a design review that revealed insufficient measures were taken to ensure the correct locking of the attachments of the fuel quantity tank units (FQTUs) in each wing tank. When an FQTU becomes loose, this could lead to insufficient clearance between the FQTU and the adjacent tank structure or other metal parts, and under certain conditions, create an ignition source inside the wing fuel vapor space. We are issuing this AD to prevent an ignition source in the wing fuel tank vapor space, which could result in a wing fuel tank explosion and consequent loss of the airplane.

    (f) Compliance

    Comply with this AD within the compliance times specified, unless already done.

    (g) Modification of the FQTUs

    At the next scheduled opening of the fuel tanks after the effective date of this AD, but no later than 84 months after the effective date of this AD, modify the FQTU in each main wing tank by applying sealant to cover the nuts, washers, and stud ends of the FQTU attachments, and do an inspection for leakage of the tank access panels, in accordance with the Accomplishment Instructions of Fokker Service Bulletin SBF28-28-054, Revision 1, dated January 9, 2014; and the information in Fokker Manual Change Notification—Maintenance Documentation MCNM-F28-037, Rev 1, dated January 9, 2014. If any fuel leakage is found, before further flight, reapply the sealant, in accordance with the Accomplishment Instructions of Fokker Service Bulletin SBF28-28-054, Revision 1, dated January 9, 2014; and the information in Fokker Manual Change Notification—Maintenance Documentation MCNM-F28-037, Rev 1, dated January 9, 2014.

    (h) Revision of Maintenance or Inspection Program

    Before further flight after completing the modification specified in paragraph (g) of this AD, or within 30 days after the effective date of this AD, whichever occurs later: Revise the airplane maintenance or inspection program, as applicable, by incorporating the fuel airworthiness limitation item and critical design configuration control limitation (CDCCL) specified in paragraph 1.L.(1)(c) of Fokker Service Bulletin SBF28-28-054, Revision 1, dated January 9, 2014. The initial compliance times for these tasks are at the latest of the times specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD.

    (1) At the applicable time specified in Fokker Service Bulletin SBF28-28-050, Revision 3, dated December 11, 2014.

    (2) Before further flight after completing the modification specified in paragraph (g) of this AD.

    (3) Within 30 days after the effective date of this AD.

    (i) No Alternative Actions, Intervals, and CDCCLs

    After accomplishing the revision required by paragraph (h) of this AD, no alternative actions (e.g., inspections), intervals, or CDCCLs may be used unless the actions, intervals, or CDCCLs are approved as an alternative method of compliance (AMOC) in accordance with the procedures specified in paragraph (k)(1) of this AD.

    (j) Credit for Previous Actions

    This paragraph provides credit for actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Fokker Service Bulletin SBF28-28-054, dated June 30, 2010.

    (k) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Tom Rodriguez, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1137; fax 425-227-1149. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (2) Contacting the Manufacturer: For any requirement in this AD to obtain corrective actions from a manufacturer, the action must be accomplished using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Fokker Services B.V.'s EASA Design Organization Approval (DOA). If approved by the DOA, the approval must include the DOA-authorized signature.

    (l) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA Airworthiness Directive 2014-0106, dated May 7, 2014, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8469.

    (2) Service information identified in this AD that is not incorporated by reference is available at the addresses specified in paragraphs (m)(3) and (m)(4) of this AD.

    (m) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Fokker Manual Change Notification—Maintenance Documentation MCNM-F28-037, Rev 1, dated January 9, 2014.

    (ii) Fokker Service Bulletin SBF28-28-050, Revision 3, dated December 11, 2014.

    (iii) Fokker Service Bulletin SBF28-28-054, Revision 1, dated January 9, 2014.

    (3) For service information identified in this AD, contact Fokker Services B.V., Technical Services Dept., P.O. Box 1357, 2130 EL Hoofddorp, the Netherlands; telephone +31 (0)88-6280-350; fax +31 (0)88-6280-111; email [email protected]; Internet http://www.myfokkerfleet.com.

    (4) You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Renton, Washington, on July 21, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18171 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-8838; Directorate Identifier 2016-CE-020-AD; Amendment 39-18601; AD 2016-16-03] RIN 2120-AA64 Airworthiness Directives; Pacific Aerospace Limited Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule; request for comments.

    SUMMARY:

    We are adopting a new airworthiness directive (AD) for Pacific Aerospace Limited Models FU24-954 and FU24A-954 airplanes. This AD results from mandatory continuing airworthiness information (MCAI) issued by the aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as cracked elevator torque tubes. We are issuing this AD to require actions to address the unsafe condition on these products.

    DATES:

    This AD is effective September 8, 2016.

    The Director of the Federal Register approved the incorporation by reference of certain publication listed in this AD as of September 8, 2016.

    We must receive comments on this AD by September 19, 2016.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov. Follow the instructions for submitting comments.

    Fax: (202) 493-2251.

    Mail: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

    Hand Delivery: U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this AD, contact Pacific Aerospace Limited, Airport Road, Hamilton, Private Bag 3027, Hamilton 3240, New Zealand; telephone: +64 7 843 6144; facsimile: +64 7 843 6134; email: [email protected]; Internet: www.aerospace.co.nz. You may review copies of the referenced service information at the FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call (816) 329-4148. It is also available on the Internet at http://www.regulations.gov by searching for locating Docket No. FAA-2016-8838.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-8838; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone (800) 647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Karl Schletzbaum, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4123; fax: (816) 329-4090; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Discussion

    The Civil Aviation Authority (CAA), which is the aviation authority for New Zealand, has issued AD No. DCA/FU24/184, dated July 7, 2016 (referred to after this as “the MCAI”), to correct an unsafe condition for Pacific Aerospace Limited Models FU24-954 and FU24A-954 airplanes and was based on mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country. The MCAI states:

    This AD is prompted by two reports received by the CAA of finding a crack in the elevator torque tube on two Cresco 08-600 aircraft. The same P/N elevator torque tube if fitted to FU24 and FU24A series aircraft. The AD is issued to prevent failure of the elevator torque tube due to possible fatigue, which could result in cracks, and loss of elevator and aileron control.

    The MCAI requires inspecting the elevator torque tube for cracks and replacing the elevator torque tube is any cracks are found. You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-8838.

    Related Service Information Under 1 CFR Part 51

    Pacific Aerospace Limited (previously Pacific Aerospace Corporation Ltd.) has issued Chapter 27, Flight Controls, dated May 1980, of the Maintenance Manual for the Fletcher FU24 and FU24A Post-954. The information in Chapter 27 of the referenced maintenance manual describes procedures for replacing the elevator torque tube. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section of this AD.

    FAA's Determination and Requirements of This AD

    This product has been approved by the aviation authority of another country, and is approved for operation in the United States. Pursuant to our bilateral agreement with this State of Design Authority, they have notified us of the unsafe condition described in the MCAI and service information referenced above. We are issuing this AD because we evaluated all information provided by the State of Design Authority and determined the unsafe condition exists and is likely to exist or develop on other products of the same type design.

    FAA's Determination of the Effective Date

    An unsafe condition exists that requires the immediate adoption of this AD. The FAA has found that the risk to the flying public justifies waiving notice and comment prior to adoption of this rule because there are no airplanes currently on the U.S. registry and thus, does not have any impact upon the public. Therefore, we find that notice and opportunity for prior public comment are unnecessary.

    Comments Invited

    This AD is a final rule that involves requirements affecting flight safety, and we did not precede it by notice and opportunity for public comment. We invite you to send any written relevant data, views, or arguments about this AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-8838; Directorate Identifier 2016-CE-020-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this AD. We will consider all comments received by the closing date and may amend this AD because of those comments.

    We will post all comments we receive, without change, to http://www.regulations.gov, including any personal information you provide. We will also post a report summarizing each substantive verbal contact we receive about this AD.

    Costs of Compliance

    We estimate that this AD will affect 0 products of U.S. registry. We also estimate that it will take about .5 work-hour per product to comply with the basic inspection requirement of this AD. The average labor rate is $85 per work-hour.

    Based on these figures, we estimate the cost of the inspection requirement of this AD on U.S. operators to be $42.50 per product.

    In addition, we estimate that any necessary follow-on actions will take about 4 work-hours and require parts costing $3,012, for a cost of $3,352 per product.

    Authority for This Rulemaking

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

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

    Regulatory Findings

    We determined that this 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.

    List of Subjects in 14 CFR Part 39

    Air transportation, Aircraft, Aviation safety, Incorporation by reference, Safety.

    Adoption of the Amendment

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

    PART 39—AIRWORTHINESS DIRECTIVES 1. The authority citation for part 39 continues to read as follows: Authority:

    49 U.S.C. 106(g), 40113, 44701.

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new AD: 2016-16-03 Pacific Aerospace Limited: Amendment 39-18601; Docket No. FAA-2016-8838; Directorate Identifier 2016-CE-020-AD. (a) Effective Date

    This airworthiness directive (AD) becomes effective September 8, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Pacific Aerospace Limited Models FU24-954 and FU24A-954 airplanes, all serial numbers, that are:

    (1) Equipped with an elevator torque tube, part number (P/N) 242837, 242527, 242835, or 242646; and

    (2) Certificated in any category.

    (d) Subject

    Air Transport Association of America (ATA) Code 27: Flight Controls.

    (e) Reason

    This AD results from mandatory continuing airworthiness information (MCAI) originated by an aviation authority of another country to identify and correct an unsafe condition on an aviation product. The MCAI describes the unsafe condition as cracks found in the elevator torque tubes. We are issuing this AD to prevent failure of the elevator torque tube, which could cause loss of elevator and aileron control.

    (f) Actions and Compliance

    Unless already done, do the following actions.

    (1) Within the next 25 hours time-in-service after September 8, 2016 (the effective date of this AD), do a detailed visual inspection of the elevator torque tube for cracks.

    (2) Before further flight after the inspection required in paragraph (f)(1) of this AD, replace the elevator torque tube with a serviceable elevator torque tube if any cracks are found. Do the replacement following Chapter 27, Flight Controls, dated May 1980, of the Maintenance Manual for the Fletcher FU24 and FU24A Post-954, Pacific Aerospace Corporation, Ltd.

    Note 1 to paragraph (f) of this AD:

    This AD does not affect the required repetitive inspections of the control column/elevator torque tubes as specified in the FAA-approved maintenance program.

    (g) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, Standards Office, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. Send information to ATTN: Karl Schletzbaum, Aerospace Engineer, FAA, Small Airplane Directorate, 901 Locust, Room 301, Kansas City, Missouri 64106; telephone: (816) 329-4123; fax: (816) 329-4090; email: [email protected] Before using any approved AMOC on any airplane to which the AMOC applies, notify your appropriate principal inspector (PI) in the FAA Flight Standards District Office (FSDO), or lacking a PI, your local FSDO.

    (2) Airworthy Product: For any requirement in this AD to obtain corrective actions from a manufacturer or other source, use these actions if they are FAA-approved. Corrective actions are considered FAA-approved if they are approved by the State of Design Authority (or their delegated agent). You are required to assure the product is airworthy before it is returned to service.

    (h) Special Flight Permit

    Special flight permits are prohibited.

    (i) Related Information

    Refer to MCAI Civil Aviation Authority (CAA) AD No. DCA/FU24/184, dated July 7, 2016, for related information. You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-8838.

    (j) Material Incorporated by Reference

    (1) The Director of the Federal Register approved the incorporation by reference (IBR) of the service information listed in this paragraph under 5 U.S.C. 552(a) and 1 CFR part 51.

    (2) You must use this service information as applicable to do the actions required by this AD, unless this AD specifies otherwise.

    (i) Chapter 27, Flight Controls, dated May 1980, of the Maintenance Manual for the Fletcher FU24 and FU24A Post-954, Pacific Aerospace Corporation, Ltd.

    (ii) Reserved.

    (3) For Pacific Aerospace Limited (previously Pacific Aerospace Corporation Ltd.) service information identified in this AD, contact Pacific Aerospace Limited, Airport Road, Hamilton, Private Bag 3027, Hamilton 3240, New Zealand; telephone: +64 7 843 6144; facsimile: +64 7 843 6134; email: [email protected]; Internet: www.aerospace.co.nz.

    (4) You may view this service information at FAA, Small Airplane Directorate, 901 Locust, Kansas City, Missouri 64106. For information on the availability of this material at the FAA, call 816-329-4148. It is also available on the Internet at http://www.regulations.gov by searching for locating Docket No. FAA-2016-8838.

    (5) You may view this service information that is incorporated by reference at the National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Issued in Kansas City, Missouri, on July 26, 2016. Pat Mullen, Acting Manager, Small Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-18265 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31087; Amdt. No. 3705] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule.

    SUMMARY:

    This rule establishes, amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures (ODPs) for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.

    DATES:

    This rule is effective August 4, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

    The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of August 4, 2016.

    ADDRESSES:

    Availability of matters incorporated by reference in the amendment is as follows:

    For Examination

    1. U.S. Department of Transportation, Docket Ops-M30, 1200 New Jersey Avenue SE., West Bldg., Ground Floor, Washington, DC 20590-0001.

    2. The FAA Air Traffic Organization Service Area in which the affected airport is located;

    3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,

    4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Availability

    All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center at nfdc.faa.gov to register. Additionally, individual SIAP and Takeoff Minimums and ODP copies may be obtained from the FAA Air Traffic Organization Service Area in which the affected airport is located.

    FOR FURTHER INFORMATION CONTACT:

    Thomas J. Nichols, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Divisions, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK 73125) Telephone: (405) 954-4164.

    SUPPLEMENTARY INFORMATION:

    This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPs, Takeoff Minimums and/or ODPs. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part § 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

    The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

    Availability and Summary of Material Incorporated by Reference

    The material incorporated by reference is publicly available as listed in the ADDRESSES section.

    The material incorporated by reference describes SIAPs, Takeoff Minimums and/or ODPs as identified in the amendatory language for part 97 of this final rule.

    The Rule

    This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

    The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

    Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making some SIAPs effective in less than 30 days.

    The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

    List of Subjects in 14 CFR Part 97

    Air traffic control, Airports, Incorporation by reference, Navigation (air).

    Issued in Washington, DC, on July 15, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

    Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

    PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722.

    2. Part 97 is amended to read as follows: Effective 18 AUGUST 2016 Las Cruces, NM, Las Cruces Intl, ILS OR LOC RWY 30, Amdt 3 Las Cruces, NM, Las Cruces Intl, RNAV (GPS) RWY 12, Amdt 2 Las Cruces, NM, Las Cruces Intl, RNAV (GPS) RWY 30, Amdt 2 Las Cruces, NM, Las Cruces Intl, Takeoff Minimums and Obstacle DP, Amdt 2 Fond Du Lac, WI, Fond Du Lac County, RNAV (GPS) RWY 18, Orig-A Effective 15 SEPTEMBER 2016 Sylacauga, AL. Merkel Field Sylacauga Muni, RNAV (GPS) RWY 9, Amdt 2 Sylacauga, AL. Merkel Field Sylacauga Muni, RNAV (GPS) RWY 27, Amdt 2 Livermore, CA, Livermore Muni, RNAV (GPS) RWY 25R, Amdt 1 San Carlos, CA, San Carlos, RNAV (GPS) Y RWY 30, Orig-A San Carlos, CA, San Carlos, RNAV (GPS) Z RWY 30, Amdt 1A San Diego, CA, San Diego Intl, RNAV (GPS) RWY 27, Amdt 3E Sterling, CO, Sterling Muni, NDB RWY 33, Amdt 3B Sterling, CO, Sterling Muni, RNAV (GPS) RWY 15, Orig-B Orlando, FL. Executive, ILS OR LOC RWY 7, Amdt 24 Orlando, FL. Executive, ILS OR LOC RWY 25, Amdt 1 Orlando, FL. Executive, RNAV (GPS) RWY 7, Amdt 2 Orlando, FL. Executive, RNAV (GPS) RWY 25, Amdt 3 Albany, GA, Southwest Georgia Rgnl, ILS OR LOC RWY 4, Amdt 11A Albany, GA, Southwest Georgia Rgnl, LOC BC RWY 22, Amdt 8A Albany, GA, Southwest Georgia Rgnl, VOR OR TACAN RWY 16, Amdt 27A Athens, GA, Athens/Ben Epps, ILS OR LOC/DME RWY 27, Amdt 2B Athens, GA, Athens/Ben Epps, VOR RWY 2, Amdt 11C Athens, GA, Athens/Ben Epps, VOR RWY 27, Amdt 13B Atlanta, GA, Covington Muni, RNAV (GPS) RWY 28, Amdt 1C Elberton, GA, Elbert County-Patz Field, VOR/DME RWY 11, Amdt 4B Hampton, GA, Henry County Airport, RNAV (GPS) RWY 6, Amdt 2 Hampton, GA, Henry County Airport, RNAV (GPS) RWY 24, Amdt 2 Hampton, GA, Henry County Airport, Takeoff Minimums and Obstacle DP, Amdt 2 Jefferson, GA, Jackson County, VOR/DME RWY 35, Amdt 3A Madison, GA, Madison Muni, VOR/DME-A, Amdt 8A Monroe, GA, Monroe-Walton County, NDB-A, Amdt 1B Washington, GA, Washington-Wilkes County, VOR/DME RWY 13, Amdt 3A Winder, GA, Barrow County, ILS OR LOC RWY 31, Orig-D Winder, GA, Barrow County, NDB RWY 31, Amdt 9C Winder, GA, Barrow County, RNAV (GPS) RWY 23, Orig-B Winder, GA, Barrow County, RNAV (GPS) RWY 31, Amdt 1C Osceola, IA, Osceola Muni, RNAV (GPS) RWY 36, Orig-B Kokomo, IN, Kokomo Muni, VOR RWY 23, Amdt 20, CANCELED Olathe, KS, New Century Aircenter, RNAV (GPS) RWY 4, Orig Olathe, KS, New Century Aircenter, RNAV (GPS) RWY 22, Orig Tallulah, LA, Vicksburg Tallulah Rgnl, ILS OR LOC RWY 36, Orig Tallulah, LA, Vicksburg Tallulah Rgnl, LOC RWY 36, Amdt 4A, CANCELED Tallulah, LA, Vicksburg Tallulah Rgnl, RNAV (GPS) RWY 18, Amdt 3 Tallulah, LA, Vicksburg Tallulah Rgnl, RNAV (GPS) RWY 36, Amdt 4 Helena, MT, Helena Rgnl, NDB-D, Amdt 3B, CANCELED Helena, MT, Helena Rgnl, RNAV (GPS) RWY 23, Orig-A, CANCELED Sidney, MT, Sidney-Richland Muni, NDB RWY 1, Amdt 3, CANCELED Aurora, NE, Aurora Muni-AL Potter Field, RNAV (GPS) RWY 16, Amdt 1A Kimball, NE, Kimball Muni/Robert E Arraj Field, RNAV (GPS) RWY 28, Amdt 1B Ogallala, NE, Searle Field, VOR/DME RWY 26, Amdt 1C Oshkosh, NE, Garden County, NDB RWY 12, Amdt 1C Oshkosh, NE, Garden County, RNAV (GPS) RWY 12, Amdt 2A Sidney, NE, Sidney Muni/Lloyd W Carr Field, VOR/DME RWY 13, Amdt 5B Sidney, NE, Sidney Muni/Lloyd W Carr Field, VOR/DME RWY 31, Amdt 5B Whitefield, NH, Mount Washington Rgnl, LOC RWY 10, Amdt 7A, CANCELED Newark, OH, Newark-Heath, RNAV (GPS) RWY 9, Orig Newark, OH, Newark-Heath, RNAV (GPS) RWY 27, Amdt 1 Lancaster, PA, Lancaster, VOR/DME RWY 26, Amdt 10B Mount Joy/Marietta, PA, Donegal Springs Airpark, RNAV (GPS) RWY 28, Orig-B Mount Joy/Marietta, PA, Donegal Springs Airpark, VOR RWY 28, Amdt 1A Philadelphia, PA, Philadelphia Intl, RNAV (GPS) RWY 35, Amdt 4 Pittsburgh, PA, Allegheny County, VOR-A, Orig, CANCELED Reading, PA, Reading Rgnl/Carl A Spaatz Field, ILS OR LOC RWY 13, Amdt 1C Reading, PA, Reading Rgnl/Carl A Spaatz Field, ILS OR LOC RWY 36, Amdt 30C Anderson, SC, Anderson Rgnl, ILS OR LOC RWY 5, Amdt 1A Houston, TX, Ellington, ILS OR LOC RWY 22, Amdt 3G Houston, TX, Ellington, ILS OR LOC RWY 35L, Amdt 6B La Porte, TX, La Porte Muni, VOR-A, Orig-A Terrell, TX, Terrell Muni, NDB RWY 17, Amdt 4, CANCELED Bridgewater, VA, Bridgewater Air Park, RNAV (GPS) RWY 15, Amdt 1 Bridgewater, VA, Bridgewater Air Park, RNAV (GPS) RWY 33, Amdt 1 Charlotte Amalie, VI, Cyril E King, ILS OR LOC RWY 10, Amdt 1B Afton, WY, Afton Muni, AFTON THREE Graphic DP

    RESCINDED: On July 11, 2016 (81 FR 44765), the FAA published an Amendment in Docket No. 31082, Amdt No. 3701 to Part 97 of the Federal Aviation Regulations. The following entry, effective July 21, 2016, is hereby rescinded in its entirety:

    Hailey, ID, Friedman Memorial, RNAV (GPS) X RWY 31, Amdt 1, CANCELED

    [FR Doc. 2016-18444 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31086; Amdt. No. 3704] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule.

    SUMMARY:

    This rule amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide for the safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.

    DATES:

    This rule is effective August 4, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

    The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of August 4, 2016.

    ADDRESSES:

    Availability of matter incorporated by reference in the amendment is as follows:

    For Examination

    1. U.S. Department of Transportation, Docket Ops-M30, 1200 New Jersey Avenue SE., West Bldg., Ground Floor, Washington, DC 20590-0001;

    2. The FAA Air Traffic Organization Service Area in which the affected airport is located;

    3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,

    4. The National Archives and Records Administration (NARA).

    For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Availability

    All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center online at nfdc.faa.gov to register. Additionally, individual SIAP and Takeoff Minimums and ODP copies may be obtained from the FAA Air Traffic Organization Service Area in which the affected airport is located.

    FOR FURTHER INFORMATION CONTACT:

    Thomas J. Nichols, Flight Procedure Standards Branch (AFS-420) Flight Technologies and Procedures Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK 73125) telephone: (405) 954-4164.

    SUPPLEMENTARY INFORMATION:

    This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary. This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

    Availability and Summary of Material Incorporated by Reference

    The material incorporated by reference is publicly available as listed in the ADDRESSES section.

    The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

    The Rule

    This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

    The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

    The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

    Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

    The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

    List of Subjects in 14 CFR Part 97

    Air traffic control, Airports, Incorporation by reference, Navigation (air).

    Issued in Washington, DC, on July 1, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

    Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal regulations, part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

    PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722.

    2. Part 97 is amended to read as follows:
    §§ 97.23, 97.25, 97.27, 97.29, 97.31, 97.33, 97.35 [AMENDED]

    By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, ILS/DME, MLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, Identified as follows:

    * * * Effective Upon Publication AIRAC date State City Airport FDC No. FDC date Subject 18-Aug-16 NJ Hammonton Hammonton Muni 5/2106 6/22/16 VOR-B, Amdt 2A. 18-Aug-16 NJ Hammonton Hammonton Muni 5/2107 6/22/16 RNAV (GPS) RWY 3, Amdt 1A. 18-Aug-16 TN Murfreesboro Murfreesboro Muni 5/2767 6/20/16 NDB RWY 18, Amdt 1B. 18-Aug-16 AL Evergreen Middleton Field 5/9975 6/15/16 RNAV (GPS) RWY 28, Amdt 1A. 18-Aug-16 AL Evergreen Middleton Field 5/9977 6/15/16 RNAV (GPS) RWY 10, Amdt 1A. 18-Aug-16 AL Evergreen Middleton Field 5/9978 6/15/16 RNAV (GPS) RWY 19, Amdt 1A. 18-Aug-16 AL Evergreen Middleton Field 5/9979 6/15/16 VOR/DME RWY 10, Amdt 3. 18-Aug-16 NC Smithfield Johnston Regional 6/0302 6/22/16 ILS Y OR LOC Y RWY 3, Amdt 1. 18-Aug-16 KS Topeka Topeka Rgnl 6/0612 6/20/16 ILS OR LOC RWY 31, Amdt 9F. 18-Aug-16 KS Topeka Topeka Rgnl 6/0613 6/20/16 NDB RWY 13, Amdt 7B. 18-Aug-16 KS Topeka Topeka Rgnl 6/0614 6/20/16 RNAV (GPS) RWY 13, Orig-A. 18-Aug-16 KS Topeka Topeka Rgnl 6/0615 6/20/16 RNAV (GPS) RWY 21, Amdt 1A. 18-Aug-16 KS Topeka Topeka Rgnl 6/0616 6/20/16 RNAV (GPS) RWY 3, Amdt 1A. 18-Aug-16 KS Topeka Topeka Rgnl 6/0617 6/20/16 RNAV (GPS) RWY 31, Orig-A. 18-Aug-16 KS Topeka Topeka Rgnl 6/0622 6/20/16 VOR/DME OR TACAN RWY 21, Amdt 7A. 18-Aug-16 KS Topeka Topeka Rgnl 6/0623 6/20/16 VOR/DME OR TACAN RWY 3, Amdt 6B. 18-Aug-16 KS Topeka Topeka Rgnl 6/0624 6/20/16 Takeoff Minimums and (Obstacle) DP, Orig. 18-Aug-16 IN Winamac Arens Field 6/1100 6/15/16 VOR/DME-A, Amdt 6. 18-Aug-16 OH Harrison Cincinnati West 6/1575 6/21/16 RNAV (GPS) RWY 19, Orig. 18-Aug-16 OH Harrison Cincinnati West 6/1576 6/21/16 VOR RWY 19, Amdt 4. 18-Aug-16 IL Peoria General Downing—Peoria Intl 6/1640 6/15/16 ILS OR LOC RWY 13, Amdt 6E. 18-Aug-16 WI East Troy East Troy Muni 6/1764 6/15/16 VOR/DME-A, Amdt 1. 18-Aug-16 WI East Troy East Troy Muni 6/1766 6/15/16 RNAV (GPS) RWY 8, Orig-A. 18-Aug-16 WI East Troy East Troy Muni 6/1767 6/15/16 RNAV (GPS) RWY 26, Orig-A. 18-Aug-16 PA St Marys St Marys Muni 6/1822 6/22/16 RNAV (GPS) RWY 10, Amdt 1. 18-Aug-16 PA St Marys St Marys Muni 6/1829 6/22/16 RNAV (GPS) RWY 28, Amdt 1B. 18-Aug-16 PA St Marys St Marys Muni 6/1831 6/22/16 LOC/DME RWY 28, Amdt 4B. 18-Aug-16 PA St Marys St Marys Muni 6/1833 6/22/16 VOR RWY 28, Amdt 7A. 18-Aug-16 WI Amery Amery Muni 6/2851 6/21/16 Takeoff Minimums and (Obstacle) DP, Amdt 1A. 18-Aug-16 MO Jefferson City Jefferson City Memorial 6/3595 6/21/16 ILS OR LOC RWY 30, Amdt 5C. 18-Aug-16 MO Jefferson City Jefferson City Memorial 6/3596 6/21/16 RNAV (GPS) RWY 30, Orig. 18-Aug-16 MO Jefferson City Jefferson City Memorial 6/3597 6/21/16 RNAV (GPS) RWY 12, Amdt 1. 18-Aug-16 OH Elyria Elyria 6/3625 6/21/16 VOR OR GPS-A, Amdt 7B. 18-Aug-16 NV Lovelock Derby Field 6/3634 6/22/16 Takeoff Minimums and (Obstacle) DP, Orig-B. 18-Aug-16 MN Minneapolis Anoka County—Blaine Arpt (Janes Field) 6/3652 6/21/16 RNAV (GPS) RWY 27, Orig-A. 18-Aug-16 WI Solon Springs Solon Springs Muni 6/4068 6/15/16 RNAV (GPS) RWY 19, Orig. 18-Aug-16 NE Omaha Eppley Airfield 6/4778 6/22/16 ILS OR LOC/DME RWY 14L, Amdt 1C. 18-Aug-16 NE Omaha Eppley Airfield 6/4782 6/22/16 ILS OR LOC RWY 32R, ILS RWY 32R (CAT II), ILS 32R (CAT III), Orig-D. 18-Aug-16 NE Omaha Eppley Airfield 6/4784 6/22/16 RNAV (GPS) Y RWY 14L, Amdt 1B. 18-Aug-16 OK Poteau Robert S Kerr 6/4841 6/15/16 RNAV (GPS) RWY 18, Orig-B. 18-Aug-16 TX Eagle Pass Maverick County Memorial Intl 6/4945 6/15/16 RNAV (GPS) RWY 31, Orig. 18-Aug-16 IN Auburn De Kalb County 6/5467 6/21/16 RNAV (GPS) RWY 9, Orig-C. 18-Aug-16 MO Trenton Trenton Muni 6/6403 6/15/16 RNAV (GPS) RWY 18, Orig-A. 18-Aug-16 MO Cape Girardeau Cape Girardeau Rgnl 6/6659 6/15/16 LOC/DME BC RWY 28, Amdt 8A. 18-Aug-16 NY Montgomery Orange County 6/6840 6/20/16 RNAV (GPS) RWY 21, Amdt 1. 18-Aug-16 NY Montgomery Orange County 6/6841 6/20/16 RNAV (GPS) RWY 26, Amdt 1A. 18-Aug-16 NY Montgomery Orange County 6/6842 6/20/16 RNAV (GPS) RWY 3, Amdt 1. 18-Aug-16 NY Montgomery Orange County 6/6843 6/20/16 RNAV (GPS) RWY 8, Amdt 1. 18-Aug-16 NY Montgomery Orange County 6/6862 6/20/16 ILS OR LOC RWY 3, Amdt 3C. 18-Aug-16 ME Brunswick Brunswick Executive 6/6996 6/15/16 RNAV (GPS) RWY 1R, Amdt 1. 18-Aug-16 NE Hartington Hartington Muni/Bud Becker Fld 6/7000 6/15/16 VOR/DME RWY 31, Orig-B. 18-Aug-16 VA Front Royal Front Royal—Warren County 6/7066 6/20/16 RNAV (GPS)-A, Orig-A. 18-Aug-16 VA Front Royal Front Royal—Warren County 6/7067 6/22/16 VOR (GPS)-B, Orig-A. 18-Aug-16 TN Nashville Nashville Intl 6/7096 6/15/16 ILS OR LOC/DME RWY 2R, ILS RWY 2R (SA CAT I), ILS RWY 2R (CAT II), ILD RWY 2R (CAT III), Amdt 8A. 18-Aug-16 TN Nashville Nashville Intl 6/7097 6/15/16 VOR/DME RWY 13, Amdt 13C. 18-Aug-16 GA Lawrenceville Gwinnett County—Briscoe Field 6/7926 6/20/16 NDB RWY 25, Amdt 1A. 18-Aug-16 GA Lawrenceville Gwinnett County—Briscoe Field 6/7927 6/20/16 RNAV (GPS) RWY 25, Orig-B. 18-Aug-16 GA Lawrenceville Gwinnett County—Briscoe Field 6/7928 6/20/16 RNAV (GPS) RWY 7, Orig-A. 18-Aug-16 GA Lawrenceville Gwinnett County—Briscoe Field 6/7930 6/20/16 RNAV (GPS)-A, Orig-A. 18-Aug-16 TX Port Isabel Port Isabel—Cameron County 6/8476 6/21/16 Takeoff Minimums and (Obstacle) DP, Amdt 2. 18-Aug-16 WI Rhinelander Rhinelander—Oneida County 6/8728 6/15/16 ILS OR LOC RWY 9, Amdt 8A. 18-Aug-16 WI Rhinelander Rhinelander—Oneida County 6/8730 6/15/16 RNAV (GPS) RWY 15, Amdt 1A. 18-Aug-16 WI Rhinelander Rhinelander—Oneida County 6/8735 6/15/16 RNAV (GPS) RWY 27, Amdt 1A. 18-Aug-16 WI Rhinelander Rhinelander—Oneida County 6/8736 6/15/16 VOR/DME RWY 27, Orig-F. 18-Aug-16 WI Rhinelander Rhinelander—Oneida County 6/8789 6/15/16 RNAV (GPS) RWY 33, Amdt 1. 18-Aug-16 IL Moline Quad City Intl 6/8933 6/15/16 RNAV (GPS) RWY 13, Amdt 1A. 18-Aug-16 WI Rhinelander Rhinelander—Oneida County 6/9593 6/15/16 RNAV (GPS) RWY 9, Amdt 1A. 18-Aug-16 MO Mountain Grove Mountain Grove Memorial 6/9743 6/15/16 RNAV (GPS) RWY 26, Orig-A. 18-Aug-16 MO Mountain Grove Mountain Grove Memorial 6/9744 6/15/16 RNAV (GPS) RWY 8, Orig.
    [FR Doc. 2016-18423 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31088; Amdt. No. 3706] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule.

    SUMMARY:

    This rule amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide for the safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.

    DATES:

    This rule is effective August 4, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

    The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of August 4, 2016.

    ADDRESSES:

    Availability of matter incorporated by reference in the amendment is as follows:

    For Examination

    1. U.S. Department of Transportation, Docket Ops-M30, 1200 New Jersey Avenue SE., West Bldg., Ground Floor, Washington, DC 20590-0001;

    2. The FAA Air Traffic Organization Service Area in which the affected airport is located;

    3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,

    4. The National Archives and Records Administration (NARA).

    For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Availability

    All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center online at nfdc.faa.gov to register. Additionally, individual SIAP and Takeoff Minimums and ODP copies may be obtained from the FAA Air Traffic Organization Service Area in which the affected airport is located.

    FOR FURTHER INFORMATION CONTACT:

    Thomas J. Nichols, Flight Procedure Standards Branch (AFS-420) Flight Technologies and Procedures Division, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd., Oklahoma City, OK. 73169 (Mail Address: P.O. Box 25082 Oklahoma City, OK. 73125) telephone: (405) 954-4164.

    SUPPLEMENTARY INFORMATION:

    This rule amends Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) by amending the referenced SIAPs. The complete regulatory description of each SIAP is listed on the appropriate FAA Form 8260, as modified by the National Flight Data Center (NFDC)/Permanent Notice to Airmen (P-NOTAM), and is incorporated by reference under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR 97.20. The large number of SIAPs, their complex nature, and the need for a special format make their verbatim publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, but refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP contained on FAA form documents is unnecessary.

    This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

    Availability and Summary of Material Incorporated by Reference

    The material incorporated by reference is publicly available as listed in the ADDRESSES section.

    The material incorporated by reference describes SIAPs, Takeoff Minimums and ODPs as identified in the amendatory language for part 97 of this final rule.

    The Rule

    This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP and Takeoff Minimums and ODP as amended in the transmittal. For safety and timeliness of change considerations, this amendment incorporates only specific changes contained for each SIAP and Takeoff Minimums and ODP as modified by FDC permanent NOTAMs.

    The SIAPs and Takeoff Minimums and ODPs, as modified by FDC permanent NOTAM, and contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these changes to SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied only to specific conditions existing at the affected airports. All SIAP amendments in this rule have been previously issued by the FAA in a FDC NOTAM as an emergency action of immediate flight safety relating directly to published aeronautical charts.

    The circumstances that created the need for these SIAP and Takeoff Minimums and ODP amendments require making them effective in less than 30 days.

    Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making these SIAPs effective in less than 30 days.

    The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT regulatory Policies and Procedures (44 FR 11034; February 26, 1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

    List of Subjects in 14 CFR Part 97

    Air Traffic Control, Airports, Incorporation by reference, Navigation (air).

    Issued in Washington, DC, on July 15, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

    Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, part 97, (14 CFR part 97), is amended by amending Standard Instrument Approach Procedures and Takeoff Minimums and ODPs, effective at 0901 UTC on the dates specified, as follows:

    PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722.

    2. Part 97 is amended to read as follows:
    §§ 97.23, 97.25, 97.27, 97.29, 97.31, 97.33, 97.35 [AMENDED]

    By amending: § 97.23 VOR, VOR/DME, VOR or TACAN, and VOR/DME or TACAN; § 97.25 LOC, LOC/DME, LDA, LDA/DME, SDF, SDF/DME; § 97.27 NDB, NDB/DME; § 97.29 ILS, ILS/DME, MLS, MLS/DME, MLS/RNAV; § 97.31 RADAR SIAPs; § 97.33 RNAV SIAPs; and § 97.35 COPTER SIAPs, Identified as follows:

    * * * Effective Upon Publication AIRAC date State City Airport FDC No. FDC date Subject 18-Aug-16 MO Trenton Trenton Muni 6/6403 5/12/16 This NOTAM, published in TL 16-17, is hereby rescinded in its entirety. 18-Aug-16 NJ Toms River Ocean County 6/0283 6/29/16 VOR/DME RWY 24, Amdt 4B. 18-Aug-16 NJ Toms River Ocean County 6/0288 6/29/16 ILS OR LOC RWY 6, Amdt 2B. 18-Aug-16 NJ Toms River Ocean County 6/0289 6/29/16 RNAV (GPS) RWY 6, Orig-B. 18-Aug-16 NJ Toms River Ocean County 6/0307 6/29/16 VOR RWY 6, Amdt 7B. 18-Aug-16 NJ Toms River Ocean County 6/0308 6/29/16 RNAV (GPS) RWY 24, Orig-B. 18-Aug-16 MI Menominee Menominee-Marinette Twin County 6/0328 7/7/16 RNAV (GPS) RWY 21, Orig-A. 18-Aug-16 MI Menominee Menominee-Marinette Twin County 6/0329 7/7/16 VOR-A, Amdt 3A. 18-Aug-16 OK Chickasha Chickasha Muni 6/1087 6/27/16 VOR/DME-A, Amdt 1. 18-Aug-16 TX Beeville Beeville Muni 6/1195 6/27/16 RNAV (GPS) RWY 30, Orig. 18-Aug-16 TX Beeville Beeville Muni 6/1196 6/27/16 RNAV (GPS) RWY 12, Orig. 18-Aug-16 TX Beeville Beeville Muni 6/1202 6/27/16 VOR/DME RWY 12, Amdt 6. 18-Aug-16 AL Evergreen Middleton Field 6/1266 6/29/16 RNAV (GPS) RWY 1, Amdt 1A. 18-Aug-16 OH Akron Akron Fulton Intl 6/1392 7/7/16 NDB RWY 25, Amdt 14. 18-Aug-16 OH Akron Akron Fulton Intl 6/1393 7/7/16 RNAV (GPS) RWY 25 , Orig. 18-Aug-16 SD Madison Madison Muni 6/1852 7/11/16 RNAV (GPS) RWY 33, Orig-A. 18-Aug-16 PA Pottstown Heritage Field 6/2499 7/1/16 RNAV (GPS) RWY 28, Orig-A. 18-Aug-16 TX College Station Easterwood Field 6/2707 7/1/16 RNAV (GPS) RWY 16, Amdt 1. 18-Aug-16 IA Decorah Decorah Muni 6/2794 7/7/16 RNAV (GPS) RWY 11, Orig-B. 18-Aug-16 IA Decorah Decorah Muni 6/2795 7/11/16 VOR RWY 29, Amdt 3C. 18-Aug-16 MO Joplin Joplin Rgnl 6/2844 7/11/16 LOC BC RWY 31, Amdt 21B. 18-Aug-16 MO Joplin Joplin Rgnl 6/2845 7/11/16 ILS OR LOC/NDB RWY 13, Orig-A. 18-Aug-16 MO Joplin Joplin Rgnl 6/2846 7/11/16 RNAV (GPS) RWY 36, Orig-A. 18-Aug-16 MO Joplin Joplin Rgnl 6/2847 7/11/16 RNAV (GPS) RWY 18, Orig. 18-Aug-16 NC Pinehurst/Southern Pines Moore County 6/3175 6/27/16 Takeoff Minimums and (Obstacle) DP, Orig. 18-Aug-16 SC Hartsville Hartsville Rgnl 6/3343 6/29/16 RNAV (GPS) RWY 3, Orig-B. 18-Aug-16 SC Hartsville Hartsville Rgnl 6/3346 6/29/16 RNAV (GPS) RWY 21, Orig-B. 18-Aug-16 SC Hartsville Hartsville Rgnl 6/3347 6/29/16 NDB RWY 21, Amdt 1A. 18-Aug-16 MO Clinton Clinton Rgnl 6/3629 7/11/16 RNAV (GPS) RWY 18, Orig. 18-Aug-16 MO Clinton Clinton Rgnl 6/3631 7/11/16 RNAV (GPS) RWY 36, Orig. 18-Aug-16 FL Defuniak Springs Defuniak Springs 6/5256 6/29/16 RNAV (GPS) RWY 27, Amdt 1A. 18-Aug-16 MN Tower Tower Muni 6/5453 7/1/16 RNAV (GPS) RWY 26, Orig. 18-Aug-16 OH Carrollton Carroll County-Tolson 6/5722 6/27/16 VOR-A, Amdt 1. 18-Aug-16 MI Pellston Pellston Rgnl Airport of Emmet County 6/6126 7/1/16 RNAV (GPS) RWY 23, Orig-B. 18-Aug-16 TX Mineola Mineola Wisener Field 6/6132 7/1/16 VOR-A, Amdt 6. 18-Aug-16 ND Kindred Robert Odegaard Field 6/6141 7/1/16 RNAV (GPS) RWY 29, Amdt 1B. 18-Aug-16 ND Kindred Robert Odegaard Field 6/6142 7/1/16 RNAV (GPS) RWY 11, Amdt 1B. 18-Aug-16 ND Mandan Mandan Muni 6/6647 7/7/16 RNAV (GPS) RWY 13, Orig. 18-Aug-16 ND Mandan Mandan Muni 6/6648 7/7/16 VOR-A, Amdt 2. 18-Aug-16 ND Mandan Mandan Muni 6/6649 7/7/16 RNAV (GPS) RWY 31, Orig. 18-Aug-16 ND Mandan Mandan Muni 6/6650 7/7/16 RADAR-1, Amdt 5. 18-Aug-16 KS Elkhart Elkhart-Morton County 6/6886 6/27/16 RNAV (GPS) RWY 35, Amdt 1. 18-Aug-16 KS Elkhart Elkhart-Morton County 6/6887 6/27/16 RNAV (GPS) RWY 22, Amdt 1. 18-Aug-16 KS Elkhart Elkhart-Morton County 6/6888 6/27/16 RNAV (GPS) RWY 17, Amdt 1. 18-Aug-16 KS Elkhart Elkhart-Morton County 6/6889 6/27/16 RNAV (GPS) RWY 4, Amdt 1. 18-Aug-16 KS Elkhart Elkhart-Morton County 6/6890 6/27/16 NDB RWY 35, Amdt 2. 18-Aug-16 SC Clemson Oconee County Rgnl 6/6955 6/27/16 RNAV (GPS) RWY 25, Amdt 3A. 18-Aug-16 SC Clemson Oconee County Rgnl 6/6956 6/27/16 RNAV (GPS) RWY 7, Amdt 3. 18-Aug-16 SC Clemson Oconee County Rgnl 6/6957 6/27/16 NDB RWY 25, Amdt 1. 18-Aug-16 FL Bartow Bartow Muni 6/6958 6/29/16 VOR/DME RWY 9L, Amdt 2C. 18-Aug-16 MI Midland Jack Barstow 6/7674 7/1/16 RNAV (GPS) RWY 6, Amdt 1. 18-Aug-16 MI Midland Jack Barstow 6/7676 7/1/16 VOR-A, Amdt 7. 18-Aug-16 RI Providence Theodore Francis Green State 6/8252 6/29/16 RNAV (GPS) RWY 16, Orig-C. 18-Aug-16 RI Providence Theodore Francis Green State 6/8253 6/29/16 VOR/DME RWY 16, Amdt 4D. 18-Aug-16 RI Providence Theodore Francis Green State 6/8257 6/29/16 VOR/DME RWY 34, Amdt 5E. 18-Aug-16 RI Providence Theodore Francis Green State 6/8266 6/29/16 VOR RWY 34, Amdt 4E. 18-Aug-16 GA Savannah Savannah/Hilton Head Intl 6/8592 6/29/16 RNAV (RNP) Y RWY 28, Amdt 1.
    [FR Doc. 2016-18435 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31085; Amdt. No. 3703] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Final rule.

    SUMMARY:

    This rule establishes, amends, suspends, or removes Standard Instrument Approach Procedures (SIAPs) and associated Takeoff Minimums and Obstacle Departure Procedures (ODPs) for operations at certain airports. These regulatory actions are needed because of the adoption of new or revised criteria, or because of changes occurring in the National Airspace System, such as the commissioning of new navigational facilities, adding new obstacles, or changing air traffic requirements. These changes are designed to provide safe and efficient use of the navigable airspace and to promote safe flight operations under instrument flight rules at the affected airports.

    DATES:

    This rule is effective August 4, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

    The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of August 4, 2016.

    ADDRESSES:

    Availability of matters incorporated by reference in the amendment is as follows:

    For Examination

    1. U.S. Department of Transportation, Docket Ops-M30, 1200 New Jersey Avenue SE., West Bldg., Ground Floor, Washington, DC 20590-0001.

    2. The FAA Air Traffic Organization Service Area in which the affected airport is located;

    3. The office of Aeronautical Navigation Products, 6500 South MacArthur Blvd., Oklahoma City, OK 73169 or,

    4. The National Archives and Records Administration (NARA). For information on the availability of this material at NARA, call 202-741-6030, or go to: http://www.archives.gov/federal_register/code_of_federal_regulations/ibr_locations.html.

    Availability

    All SIAPs and Takeoff Minimums and ODPs are available online free of charge. Visit the National Flight Data Center at nfdc.faa.gov to register. Additionally, individual SIAP and Takeoff Minimums and ODP copies may be obtained from the FAA Air Traffic Organization Service Area in which the affected airport is located.

    FOR FURTHER INFORMATION CONTACT:

    Thomas J. Nichols, Flight Procedure Standards Branch (AFS-420), Flight Technologies and Programs Divisions, Flight Standards Service, Federal Aviation Administration, Mike Monroney Aeronautical Center, 6500 South MacArthur Blvd. Oklahoma City, OK 73169 (Mail Address: P.O. Box 25082, Oklahoma City, OK 73125) Telephone: (405) 954-4164.

    SUPPLEMENTARY INFORMATION:

    This rule amends Title 14 of the Code of Federal Regulations, Part 97 (14 CFR part 97), by establishing, amending, suspending, or removes SIAPS, Takeoff Minimums and/or ODPS. The complete regulatory description of each SIAP and its associated Takeoff Minimums or ODP for an identified airport is listed on FAA form documents which are incorporated by reference in this amendment under 5 U.S.C. 552(a), 1 CFR part 51, and 14 CFR part 97.20. The applicable FAA forms are FAA Forms 8260-3, 8260-4, 8260-5, 8260-15A, and 8260-15B when required by an entry on 8260-15A.

    The large number of SIAPs, Takeoff Minimums and ODPs, their complex nature, and the need for a special format make publication in the Federal Register expensive and impractical. Further, airmen do not use the regulatory text of the SIAPs, Takeoff Minimums or ODPs, but instead refer to their graphic depiction on charts printed by publishers of aeronautical materials. Thus, the advantages of incorporation by reference are realized and publication of the complete description of each SIAP, Takeoff Minimums and ODP listed on FAA form documents is unnecessary. This amendment provides the affected CFR sections and specifies the types of SIAPs, Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure, and the amendment number.

    Availability and Summary of Material Incorporated by Reference

    The material incorporated by reference is publicly available as listed in the ADDRESSES section.

    The material incorporated by reference describes SIAPS, Takeoff Minimums and/or ODPS as identified in the amendatory language for part 97 of this final rule.

    The Rule

    This amendment to 14 CFR part 97 is effective upon publication of each separate SIAP, Takeoff Minimums and ODP as Amended in the transmittal. Some SIAP and Takeoff Minimums and textual ODP amendments may have been issued previously by the FAA in a Flight Data Center (FDC) Notice to Airmen (NOTAM) as an emergency action of immediate flight safety relating directly to published aeronautical charts.

    The circumstances that created the need for some SIAP and Takeoff Minimums and ODP amendments may require making them effective in less than 30 days. For the remaining SIAPs and Takeoff Minimums and ODPs, an effective date at least 30 days after publication is provided.

    Further, the SIAPs and Takeoff Minimums and ODPs contained in this amendment are based on the criteria contained in the U.S. Standard for Terminal Instrument Procedures (TERPS). In developing these SIAPs and Takeoff Minimums and ODPs, the TERPS criteria were applied to the conditions existing or anticipated at the affected airports. Because of the close and immediate relationship between these SIAPs, Takeoff Minimums and ODPs, and safety in air commerce, I find that notice and public procedure under 5 U.S.C. 553(b) are impracticable and contrary to the public interest and, where applicable, under 5 U.S.C. 553(d), good cause exists for making some SIAPs effective in less than 30 days.

    The FAA has determined that this regulation only involves an established body of technical regulations for which frequent and routine amendments are necessary to keep them operationally current. It, therefore—(1) is not a “significant regulatory action” under Executive Order 12866; (2) is not a “significant rule” under DOT Regulatory Policies and Procedures (44 FR 11034; February 26,1979); and (3) does not warrant preparation of a regulatory evaluation as the anticipated impact is so minimal. For the same reason, the FAA certifies that this amendment will not have a significant economic impact on a substantial number of small entities under the criteria of the Regulatory Flexibility Act.

    List of Subjects in 14 CFR part 97:

    Air Traffic Control, Airports, Incorporation by reference, Navigation (air).

    Issued in Washington, DC, on July 1, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

    Accordingly, pursuant to the authority delegated to me, Title 14, Code of Federal Regulations, Part 97 (14 CFR part 97) is amended by establishing, amending, suspending, or removing Standard Instrument Approach Procedures and/or Takeoff Minimums and Obstacle Departure Procedures effective at 0901 UTC on the dates specified, as follows:

    PART 97—STANDARD INSTRUMENT APPROACH PROCEDURES 1. The authority citation for part 97 continues to read as follows: Authority:

    49 U.S.C. 106(f), 106(g), 40103, 40106, 40113, 40114, 40120, 44502, 44514, 44701, 44719, 44721-44722.

    2. Part 97 is amended to read as follows: Effective 18 August 2016 Albia, IA, Albia Muni, VOR-A, Amdt 4A Coldwater, KS, Comanche County, RNAV (GPS) RWY 35, Orig Effective 15 September 2016 Anchorage, AK, Ted Stevens Anchorage Intl, ILS RWY 15, Amdt 6C Anchorage, AK, Ted Stevens Anchorage Intl, RNAV (RNP) RWY 33, Orig-B Anchorage, AK, Ted Stevens Anchorage Intl, RNAV (RNP) Z RWY 7R, Orig-B Galena, AK, Edward G Pitka Sr, VOR/DME RWY 7, Amdt 8A, CANCELED Galena, AK, Edward G Pitka Sr, VOR/DME RWY 25, Amdt 11A, CANCELED Kipnuk, AK, Kipnuk, RNAV (GPS) RWY 15, Orig, CANCELED Kipnuk, AK, Kipnuk, RNAV (GPS) RWY 33, Orig, CANCELED Nulato, AK, Nulato, RNAV (GPS) RWY 20, Orig-B Willow, AK, Willow, BIG LAKE TWO Graphic DP Arcata/Eureka, CA, Arcata, VOR/DME RWY 1, Amdt 8A, CANCELED Bishop, CA, Bishop, VOR/DME OR GPS-B, Amdt 4B, CANCELED Concord, CA, Buchanan Field, LDA RWY 19R, Amdt 7E Grass Valley, CA, Nevada County Air Park, GPS RWY 7, Orig-A, CANCELED Lancaster CA, General WM J Fox Airfield, NDB-C, Amdt 3A, CANCELED Pueblo, CO, Pueblo Memorial, RNAV (GPS) RWY 17, Orig-A Fort Myers, FL, Southwest Florida Intl, RNAV (GPS) RWY 6, Amdt 2 Americus, GA, Jimmy Carter Rgnl, ILS OR LOC RWY 23, Amdt 1B Blakely, GA, Early County, LOC/NDB RWY 23, Amdt 1B Nashville, GA, Berrien Co, Takeoff Minimums and Obstacle DP, Amdt 1A Kamuela, HI, Waimea-Kohala, RNAV (GPS) RWY 22, Orig-B Kamuela, HI, Waimea-Kohala, VOR/DME-A, Orig-A Coeur D'Alene, ID, Coeur D'Alene-Pappy Boyington Field, NDB RWY 6, Amdt 2E, CANCELED Lyons, KS, Lyons-Rice County Muni, GPS RWY 17R, Orig, CANCELED Lyons, KS, Lyons-Rice County Muni, GPS RWY 35L, Orig, CANCELED Lyons, KS, Lyons-Rice County Muni, NDB RWY 17R, Amdt 6, CANCELED Lyons, KS, Lyons-Rice County Muni, RNAV (GPS) RWY 17R, Orig Lyons, KS, Lyons-Rice County Muni, RNAV (GPS) RWY 35L, Orig Lyons, KS, Lyons-Rice County Muni, Takeoff Minimums and Obstacle DP, Orig Lyons, KS, Lyons-Rice County Muni, VOR-A, Amdt 4 Russellville, KY, Russellville-Logan County, VOR/DME RWY 24, Amdt 7A, CANCELED Lake Charles, LA, Lake Charles Rgnl, ILS OR LOC RWY 15, Amdt 22 Lake Charles, LA, Lake Charles Rgnl, LOC BC RWY 33, Amdt 20 Ruston, LA, Ruston Rgnl, NDB RWY 36, Orig-A, CANCELED Benton Harbor, MI, Southwest Michigan Rgnl, NDB RWY 28, Amdt 10C, CANCELED Ennis, MT, Ennis-Big Sky, RNAV (GPS) RWY 16, Amdt 1 Ennis, MT, Ennis-Big Sky, RNAV (GPS) RWY 34, Orig Burwell, NE, Cram Field, NDB RWY 15, Amdt 1A, CANCELED Corvallis, OR, Corvallis Muni, Takeoff Minimums and Obstacle DP, Amdt 6A Carlisle, PA, Carlisle, NDB-B, Orig-B Harrisburg, PA, Harrisburg Intl, ILS OR LOC RWY 31, Amdt 1C Lancaster, PA, Lancaster, ILS OR LOC RWY 8, Amdt 2B Lancaster, PA, Lancaster, RNAV (GPS) RWY 31, Amdt 1B Lancaster, PA, Lancaster, VOR RWY 8, Amdt 21B Lancaster, PA, Lancaster, VOR RWY 31, Amdt 16B Lancaster, PA, Lancaster, VOR/DME RWY 8, Amdt 6B Lancaster, PA, Lancaster, VOR/DME RWY 31, Amdt 4C Pittsburgh, PA, Allegheny County, Takeoff Minimums and Obstacle DP, Amdt 8A Pittsburgh, PA, Pittsburgh Intl, Takeoff Minimums and Obstacle DP, Amdt 5 Ponce, RQ, Mercedita, Takeoff Minimums and Obstacle DP, Amdt 5 Columbia/Mount, TN, Maury County, VOR/DME-A, Amdt 4, CANCELED Somerville, TN, Fayette County, NDB RWY 19, Amdt 1C, CANCELED Corpus Christi, TX, Corpus Christi Intl, RNAV (GPS) RWY 18, Amdt 2 Killeen, TX, Skylark Field, ILS OR LOC RWY 1, Amdt 3, CANCELED Killeen, TX, Skylark Field, LOC RWY 1, Orig Killeen, TX, Skylark Field, RNAV (GPS) RWY 1, Amdt 1 Laredo, TX, Laredo Intl, NDB RWY 17L, Amdt 3A, CANCELED Laredo, TX, Laredo Intl, VOR OR TACAN RWY 32, Amdt 11 Farmville, VA, Farmville Rgnl, Takeoff Minimums and Obstacle DP, Amdt 1A Morgantown, WV, Morgantown Muni-Walter L Bill Hart Fld, VOR-A, Amdt 13, CANCELED Rawlins, WY, Rawlins Muni/Harvey Field, Takeoff Minimums and Obstacle DP, Amdt 5
    [FR Doc. 2016-18438 Filed 8-3-16; 8:45 am] BILLING CODE 4910-13-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-OAR-2014-0821; FRL-9950-18-Region 6] Approval and Promulgation of Implementation Plans; Louisiana; Revisions to the New Source Review State Implementation Plan; Air Permit Procedure Revisions AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is approving portions of revisions to the Louisiana New Source Review (NSR) State Implementation Plan (SIP) submitted by the Louisiana Department of Environmental Quality. These revisions to the Louisiana SIP provide updates to the minor NSR and nonattainment new source review (NNSR) permit programs in Louisiana contained within the Chapter 5 Permit Procedures and Chapter 6 Regulations on Control of Emissions through the Use of Emission Reduction Credits (ERC) Banking rules.

    DATES:

    This final rule is effective on September 6, 2016.

    ADDRESSES:

    The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2014-0821. All documents in the docket are listed on the http://www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through http://www.regulations.gov or in hard copy at the EPA Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733.

    FOR FURTHER INFORMATION CONTACT:

    Stephanie Kordzi, 214-665-7520, [email protected]

    SUPPLEMENTARY INFORMATION:

    Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.

    I. Background

    The background for this action is discussed in detail in our April 20, 2016, proposal (81 FR 23232). In that document, we proposed to approve portions of ten SIP submittals for the State of Louisiana. These amendments enhance the SIP by (1) defining insignificant activities that will not require permitting; (2) correcting contradictory language in the insignificant activities list; (3) providing edits to the Permit Procedure Rule as requested by the EPA; (4) including procedures for incorporating test results; (5) unifying and streamlining name and ownership changes for all media; and (6) revising references to various LDEQ divisions. This action is being taken under section 110 of the Act. We did not receive any comments regarding our proposal although the LDEQ did send a letter to the EPA on July 14, 2016, to update information on sections 525, 527, and 529.

    II. Final Action

    We are approving the revisions to the Louisiana SIP as proposed in our April 20, 2016, proposal (81 FR 23232), with the exception of sections 525, 527, and 529, as discussed below. This includes SIP submittals from the State of Louisiana submitted on November 15, 1993, November 10, 1994, July 25, 1997, June 22, 1998, June 27, 2003, May 5, 2006, November 9, 2007, August 14, 2009, August 29, 2013, and November 3, 2014. These revisions provide clarity to the rules, correct contradictory language, update permit application and fee requirements, revise the rules to conform to the latest Louisiana laws, and add to the “Insignificant Activities List”. We approve the revisions to the SIP that meet CAA requirements. Specifically, we are approving revisions to the Louisiana SIP pertaining to the following sections:

    • LAC 33:III.501 as submitted on November 15, 1993, November 10, 1994, June 22, 1998, June 27, 2003, May 5, 2006, November 9, 2007, August 14, 2009; and November 3, 2014;

    • LAC 33:III.502 as submitted on November 15, 1993, and November 3, 2014;

    • LAC 33:III.503 as submitted on November 15, 1993, and November 3, 2014;

    • LAC 33:III.504 as submitted on November 3, 2014;

    • LAC 33:III.511 as submitted on November 15, 1993;

    • LAC 33:III.513 as submitted on November 15, 1993, and November 9, 2007;

    • LAC 33:III.515 as submitted on November 15, 1993;

    • LAC 33:III.517 as submitted on November 15, 1993, November 10, 1994, July 25, 1997, June 22, 1998, and May 5, 2006;

    • LAC 33:III.519 as submitted on November 15, 1993;

    • LAC 33:III.521 as submitted on November 10, 1994, and May 5, 2006;

    • LAC 33:III.523 as submitted on November 15, 1993, August 29, 2013, and November 3, 2014;

    • LAC 33:III.601 as submitted on November 3, 2014;

    • LAC 33:III.603 as submitted on November 3, 2014;

    • LAC 33:III.605 as submitted on November 3, 2014;

    • LAC 33:III.607 as submitted on November 3, 2014;

    • LAC 33:III.615 as submitted on November 3, 2014; and

    • LAC 33:III.619 as submitted on November 3, 2014.

    The EPA is not taking final action as proposed on the Louisiana SIP at this time pertaining to the following sections based on LDEQ's letter of July 14, 2016, which withdrew portions of sections 525, 527, and 529 because they apply exclusively to part 70 sources. The letter specifically identified citations that are already approved into Louisiana's Operating Permits program. EPA will take action on the portion of the citations in these sections that have not been withdrawn in a future action:

    • LAC 33:III.525 as submitted on November 15, 1993;

    • LAC 33:III.527 as submitted on November 15, 1993, and November 10, 1994; and

    • LAC 33:III.529 as submitted on November 15, 1993.

    This action is being taken under section 110 of the Act.

    III. Incorporation by Reference

    In this rule, we are finalizing regulatory text that includes incorporation by reference. In accordance with the requirements of 1 CFR 51.5, we are finalizing the incorporation by reference of the revisions to the Louisiana regulations as described in the Final Action section above. We have made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the EPA Region 6 office.

    IV. Statutory and Executive Order Reviews

    Under the Clean Air Act, the Administrator is required to approve a SIP submission that complies with the provisions of the Act and applicable Federal regulations. 42 U.S.C. 7410(k); 40 CFR 52.02(a). Thus, in reviewing SIP submissions, the EPA's role is to approve state choices, provided that they meet the criteria of the Clean Air Act. 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 Clean Air Act; 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).

    In addition, 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 and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

    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 Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 3, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purpose 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. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

    List of Subjects in 40 CFR Part 52

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

    Authority:

    42 U.S.C. 7401 et seq.

    Dated: July 26, 2016. Ron Curry, Regional Administrator, Region 6.

    40 CFR part 52 is amended as follows:

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

    42 U.S.C. 7401 et seq.

    Subpart T—Louisiana 2. In § 52.970(c), the table titled “EPA Approved Louisiana Regulations in the Louisiana SIP” is amended by revising the entries for Sections 501, 503, 504, 601, 603, 605, 607, 615, and 619 and adding entries in numerical order for Sections 502, 511, 513, 515, 517, 519, 521, and 523 to read as follows:
    § 52.970 Identification of plan.

    (c) * * *

    EPA-Approved Louisiana Regulations in the Louisiana SIP State citation Title/subject State approval date EPA approval date Comments *         *         *         *         *         *         * Section 501 Scope and Applicability 5/20/2011 8/4/2016 [Insert Federal Register citation] The SIP does not include LAC 33:III.501.B.1.d. and LAC 33:III.501.B.2.d.i.(a). Section 502 Definitions 5/20/2011 8/4/2016 [Insert Federal Register citation] Section 503 Minor Source Permit Requirements 4/20/2011 8/4/2016 [Insert Federal Register citation] Section 504 Nonattainment New Source Review (NNSR) Procedures 11/20/2012 8/4/2016 [Insert Federal Register citation] The SIP does not include LAC 33:III.504.M. *         *         *         *         *         *         * Section 511 Emission Reductions 11/20/1993 8/4/2016 [Insert Federal Register citation] Section 513 General Permits, Temporary Sources, and Relocation of Portable Facilities 10/20/2006 8/4/2016 [Insert Federal Register citation] The SIP does not include LAC 33:III.513.A.1. Section 515 Oil and Gas Wells and Pipelines Permitting Provisions 11/20/1993 8/4/2016 [Insert Federal Register citation] Section 517 Permit Applications and Submittal of Information 12/20/1997 8/4/2016 [Insert Federal Register citation] Section 519 Permit Issuance Procedures for New Facilities, Initial Permits, Renewals and Significant Modifications 11/20/1993 8/4/2016 [Insert Federal Register citation] The SIP does not include LAC 33:III.519.C. Section 521 Administrative Amendments 5/20/2005 8/4/2016 [Insert Federal Register citation] Section 523 Procedures for Incorporating Test Results 4/20/2011 8/4/2016 [Insert Federal Register citation] Chapter 6—Regulations on Control of Emissions Reduction Credits Banking Section 601 Purpose 11/20/2012 8/4/2016 [Insert Federal Register citation] Section 603 Applicability 11/20/2012 8/4/2016 [Insert Federal Register citation] Section 605 Definitions 11/20/2012 8/4/2016 [Insert Federal Register citation] Section 607 Determination of Creditable Emission Reductions 11/20/2012 8/4/2016 [Insert Federal Register citation] *         *         *         *         *         *         * Section 615 Schedule for Submitting Applications 11/20/2012 8/4/2016 [Insert Federal Register citation] *         *         *         *         *         *         * Section 619 Emission Reduction Credit Bank 11/20/2012 8/4/2016 [Insert Federal Register citation] *         *         *         *         *         *         *
    [FR Doc. 2016-18397 Filed 8-3-16; 8:45 am] BILLING CODE 6560-50-P
    SURFACE TRANSPORTATION BOARD 49 CFR Part 1040 [Docket No. EP 726] On-Time Performance Under Section 213 of the Passenger Rail Investment and Improvement Act of 2008 AGENCY:

    Surface Transportation Board.

    ACTION:

    Final rule.

    SUMMARY:

    The Surface Transportation Board (STB or Board) is adopting a final rule to define “on time” and specify the formula for calculating “on-time performance” for purposes of Section 213 of the Passenger Rail Investment and Improvement Act of 2008. The Board will use these regulations only for the purpose of determining whether the “less than 80 percent” threshold that Congress set for bringing an on-time performance complaint has been met. In light of comments received on the Board's notice of proposed rulemaking issued on December 28, 2015, the proposed rule has been modified to deem a train's arrival at, or departure from, a given station “on time” if it occurs no later than 15 minutes after its scheduled time and to adopt an “all-stations” calculation of “on-time performance.”

    DATES:

    This rule is effective on August 27, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Scott M. Zimmerman at (202) 245-0386. Assistance for the hearing impaired is available through the Federal Information Relay Service (FIRS) at (800) 877-8339.

    SUPPLEMENTARY INFORMATION:

    The National Railroad Passenger Corporation (Amtrak) was established by Congress in 1970 to preserve passenger services and routes on the Nation's railroads. See Lebron v. Nat'l R.R. Passenger Corp., 513 U.S. 374, 383-384 (1995); Nat'l R.R. Passenger Corp. v. Atchison, Topeka, & Santa Fe R.R., 470 U.S. 451, 454 (1985); see also Rail Passenger Serv. Act of 1970, Public Law 91-518, 84 Stat. 1328 (1970). As a condition of relieving the railroad companies of their common carrier obligation to provide passenger service, Congress required them to permit Amtrak to operate over their tracks and use their facilities. See 45 U.S.C. 561, 562 (1970 ed.). Since 1973, Congress has required railroads to give Amtrak trains preference over freight service when using their lines and facilities: “Except in an emergency, intercity and commuter rail passenger transportation provided by or for Amtrak has preference over freight transportation in using a rail line, junction, or crossing . . . .” 49 U.S.C. 24308(c); see Amtrak Improvement Act of 1973, Public Law 93-146, section 10(2), 87 Stat. 552 (initial version).

    Prior to 2008, the Board was not involved in the adjudication of Amtrak's preference rights. The only way that Amtrak could enforce its preference rights was by asking the Attorney General to bring a civil action for equitable relief. 49 U.S.C. 24103. Further, the Secretary of Transportation had the authority under section 24308(c) to grant a host rail carrier relief from the preference obligation and to establish the usage rights between Amtrak and the host carrier if the Secretary found that Amtrak's preference materially lessened the quality of freight transportation provided to shippers. In 2008, Congress enacted Section 213 of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA), 49 U.S.C. 24308(f), to address, among other things, the concern that one cause of Amtrak's inability to achieve reliable on-time performance was the failure of host railroads to honor Amtrak's right to preference. See Passenger Rail Inv. & Improvement Act, Public Law 110-432, Div. B, 122 Stat. 4907 (2008); S. Rep. No. 67, 110th Cong., 1st Sess. 25-26 (2007). Section 207 of PRIIA, 49 U.S.C. 24101 note, charged Amtrak and the Federal Railroad Administration (FRA) with “jointly” developing new, or improving existing, metrics and standards for measuring the performance of intercity passenger rail operations, including on-time performance and train delays incurred on host railroads.

    PRIIA also transferred from the Secretary of Transportation to the Board the administration and enforcement of Amtrak's preference rights. Thus, PRIIA amended 49 U.S.C. 24308(c) to provide that: “Except in an emergency, intercity and commuter rail passenger transportation provided by or for Amtrak has preference over freight transportation in using a rail line, junction, or crossing unless the Board orders otherwise under this subsection” (emphasis added). Congress likewise transferred to the Board the authority under section 24308(c) to determine if “preference for intercity and commuter rail passenger transportation materially will lessen the quality of freight transportation provided to shippers” on a freight carrier's line, and, if so, to “establish the rights of the carrier and Amtrak on reasonable terms.”

    Under Section 213(a) of PRIIA, 49 U.S.C. 24308(f)(1), if the “on-time performance” (OTP) of any intercity passenger train averages less than 80% for any two consecutive calendar quarters, the Board may initiate an investigation, or upon complaint by Amtrak or another eligible complainant, the Board “shall” do so. The purpose of such an investigation is to determine whether and to what extent delays are due to causes that could reasonably be addressed by the passenger rail operator or the host railroad. Following the investigation, should the Board determine that Amtrak's substandard performance is “attributable to” the rail carrier's “failure to provide preference to Amtrak over freight transportation as required” by 49 U.S.C. 24308(c), the Board may “award damages” or other appropriate relief from a host railroad to Amtrak. 49 U.S.C. 24308(f )(2). If the Board finds it appropriate to award damages to Amtrak, Amtrak must use the award “for capital or operating expenditures on the routes over which delays” were the result of the host railroad's failure to grant the statutorily required preference to passenger transportation. 49 U.S.C. 24308(f )(4).

    Thus, 49 U.S.C. 24308(f) sets up a two-stage process involving, first, a “less than 80 percent” threshold to indicate whether a train's OTP allows for an investigation; and second, if this prerequisite is satisfied, the Board may investigate (or on complaint, shall investigate) the causes of the deficient OTP, which could lead to findings, recommendations, and other possible relief as detailed in the statute.

    On May 15, 2015, the Board instituted this rulemaking proceeding in response to a petition filed by the Association of American Railroads (AAR). See On-Time Performance Under Sec. 213 of the Passenger Rail Inv. & Improvement Act of 2008, EP 726 (STB served May 15, 2015). In that decision, the Board stated that a rulemaking would provide clarity regarding the “less than 80 percent” OTP threshold in all applicable cases and allow the Board to obtain the full range of stakeholder perspectives in one docket and avoid the potential relitigation of the issue in each case, thereby conserving party and agency resources.1

    1 By that point Amtrak had filed two complaints (both pending, but in abeyance based on this rulemaking) requesting that the Board initiate an investigation pursuant to section 24308(f), and claiming that host Class I carriers have not given Amtrak preference as required under section 24308(c). See Nat'l R.R. Passenger Corp.—Sec. 213 Investigation of Substandard Performance on Rail Lines of Canadian Nat'l Ry., NOR 42134; Nat'l R.R. Passenger Corp.—Investigation of Substandard Performance of the Capitol Ltd., NOR 42141.

    On December 28, 2015, the Board issued a Notice of Proposed Rulemaking (NPRM) that proposed a definition for OTP derived from a previous definition used by our predecessor, the Interstate Commerce Commission (ICC).2 The Board's proposed rule read: “A train is `on time' if it arrives at its final terminus no more than five minutes after its scheduled arrival time per 100 miles of operation, or 30 minutes after its scheduled arrival time, whichever is less.” NPRM, slip op. at 4-9. The Board sought comments on this definition but also encouraged the public to propose other alternatives, including the alternative adopted here: factoring into the calculation a train's punctuality at intermediate stops rather than the final terminus only. See NPRM, slip op. at 6. The Board also established a procedural schedule providing for comments and replies.

    2 The NPRM contains additional background on the court and agency litigation and controversies that led the Board to initiate the rulemaking.

    The Board received 121 comments and replies on its proposed rule from the railroad industry (both passenger and freight), states, the U.S. Department of Transportation, elected officials at all levels of government, individual members of the traveling public, and various stakeholder groups.

    Shortly after the comment period in this docket closed, in Association of American Railroads v. Department of Transportation, 821 F.3d 19 (D.C. Cir. 2016), the United States Court of Appeals for the District of Columbia Circuit held that the structure of Section 207 of PRIIA violates the Due Process Clause of the U.S. Constitution because, in the court's view, it authorized Amtrak, “an economically self-interested actor,” to “regulate its competitors”—that is, the railroads that host Amtrak passenger trains outside the Northeast Corridor. Accordingly, the FRA and Amtrak metrics are currently invalid.

    Discussion of Issues Raised in Response to the NPRM.

    The Board's Authority. Several freight rail interests argue that—even though section 24308(f)(1) allows, and in some circumstances requires, the Board to investigate the causes of poor “on time performance,” including whether a host rail carrier has failed to provide preference to Amtrak over its rail line as required by section 24308(c)—the Board lacks authority to give meaning to the term “on-time performance.” They argue this even though PRIIA provides that if the on-time performance of an Amtrak passenger train falls below 80% for two consecutive quarters, such performance may warrant an investigation by the Board.

    Although regulatory agencies like the Board typically have the authority to define the terms in provisions of the statutes that they administer, AAR and freight railroad commenters (Canadian National Railway Company (CN), CSX Transportation, Inc. (CSXT), and Norfolk Southern Railway Company (NS)) argue that the Board does not have the authority to define on-time performance because Congress gave that responsibility jointly to Amtrak and FRA in Section 207 of PRIIA. We disagree.

    In National Railroad Passenger Corp.—Section 213 Investigation of Substandard Performance on Rail Lines of Canadian National Railway (Illini/Saluki), NOR 42134, slip op. at 2 (STB served Dec. 19, 2014), the Board concluded that the unconstitutionality of Section 207 of PRIIA does not prevent the Board from initiating investigations of on-time performance problems under section 24308(c). Indeed, the only way for the Board now to fulfill its responsibilities under 49 U.S.C. 24308(f) is to define OTP as a threshold for such investigations.

    CN and AAR in their initial comments (see CN Feb. 8 Comment 4; AAR Feb. 8 Comment 6) raise concerns that host freight railroads may be faced with two inconsistent sets of regulations (i.e., issued by (1) FRA/Amtrak and (2) the Board) if section 24308(f) investigations are instituted using the OTP definition established in this final rule and the courts ultimately uphold the validity of the PRIIA Section 207 metrics and standards. However, at present there are not two different operative standards, and there may never be. We will, therefore, address the issue of conflicting OTP definitions if and when the issue should arise.

    CN and AAR argue that the issue is not whether section 24308(f) survives if Section 207 of PRIIA is unconstitutional, but whether Congress delegated to the Board in section 24308(f)(1) the authority to define on-time performance. They contend that because Congress explicitly delegated the authority to define on-time performance to FRA and Amtrak in Section 207 of PRIIA, the Board lacks that authority even if FRA and Amtrak are found not to have the legal authority to meet the statutory command.3

    3 In support, they cite National Railroad Passenger Corp. v. National Association of Railroad Passengers, 414 U.S. 453, 458 (1974) (“When a statute limits a thing to be done in a particular mode, it includes the negative of any other mode.”) and Bayou Lawn & Landscape Services v. Secretary of Labor, 713 F.3d 1080 (11th Cir. 2013). But neither case has any bearing on the Board's authority to fill the definitional gap exposed by the invalidation of a statutory provision. National Railroad Passenger Corp. did not involve agency delegation; that case addressed the question whether the predecessor to 49 U.S.C. 24103, which allows the Attorney General to bring suit against Amtrak or host freight railroads to enforce obligations related to Amtrak, created a private right of action to allow third parties to sue to prevent what they regarded as the unlawful discontinuance of certain passenger trains. In Bayou Lawn, the court held that the Department of Labor's general rulemaking authority did not give it delegated authority to issue legislative rules for visa applications for non-agricultural workers where Congress had expressly delegated that authority to the Department of Homeland Security. There was no suggestion there that the express delegation to Homeland Security had been invalidated, or that Homeland Security was otherwise incapable of carrying out the Congressional delegation.

    An agency has implied authority to implement “a particular statutory provision . . . when it appears that Congress delegated authority to the agency generally to make rules carrying the force of law, and that the agency interpretation claiming deference was promulgated in the exercise of that authority.” United States v. Mead Corp., 533 U.S. 218, 226-27 (2001).4 “Sometimes, the legislative delegation to an agency on a particular question is implicit rather than explicit.” Chevron U.S.A., Inc. v. Natural Res. Def. Council, Inc., 467 U.S. 837, 844 (1984). Several federal courts of appeals have held that an administrative agency with rulemaking authority has implicit authority to fill a gap exposed by the Supreme Court's invalidation of a portion of a statute. See Pittston Co. v. United States, 368 F.3d 385, 403-04 (4th Cir. 2004); Sidney Coal Co. v. Social Security Admin., 427 F.3d 336, 346 (6th Cir. 2005).5

    4See ICC v. Am. Trucking Assns., 467 U.S. 354, 364-67 (1984) (agency may “modify express remedies in order to achieve specific statutory purposes” if the “discretionary power . . . further[s] a specific statutory mandate [and] the exercise of that power [is] directly and closely tied to that mandate”); W. Coal Traffic League v. STB, 216 F.3d 1168 (D.C. Cir. 2000).

    5 CN argues that the Fifth Circuit held in Texas v. United States, 497 F.3d 491, 504 (5th Cir. 2007) that a later court decision cannot affect or create ambiguity for purposes of Chevron delegation. But Chief Judge Jones' opinion cited by CN is not the majority opinion on the issue of implicit delegation. Both Judge King, who concurred in the result, and Judge Denis, who dissented, agreed that a court decision invalidating a portion of a statute creates implicit authority to the agency administering the statute to engage in gap-filling. 497 F.3d at 511-12, 513-14. Judge King and Judge Denis disagreed over whether the agency's authority to fill gaps included overriding portions of the statute that remained in effect. There is no such problem here because the Board is simply defining the term “on-time performance,” which remains in effect.

    Here, as in Pittston and Sidney Coal, the invalidation of Section 207 of PRIIA leaves a gap that the Board has the delegated authority to fill by virtue of its authority to adjudicate complaints brought by Amtrak against host freight railroads for violations of Amtrak's statutory preference and to award damages where a preference violation is found. Any other result would gut the remedial scheme, a result that Congress clearly did not intend.

    All-Stations OTP. As summarized below, the Board's NPRM proposed to calculate OTP solely on the basis of train arrivals at endpoint termini (Endpoint OTP). The Board proposed Endpoint OTP as an appropriate threshold for bringing OTP cases under 49 U.S.C. 24308(f)(1) because it would be “clear and relatively easy to apply,” i.e., comprehensible to the traveling public and simple to describe and implement. In addition, Amtrak's public OTP data 6 suggest that under either an Endpoint OTP or All-Stations OTP standard, the threshold for initiating a case could be triggered in a comparable number of cases, if long-established trends continue. Nevertheless, many commenters perceived that in proposing an Endpoint OTP threshold, the Board was devoting insufficient attention to intermediate stations, their passengers, and even the states in which the intermediate stations are located. That was not the Board's intent; rather, the intent was solely to set a threshold for accepting cases.

    6See Amtrak's Monthly Performance Reports on Amtrak.com, as well as the quarterly OTP statistics published by the Federal Railroad Administration (http://www.fra.dot.gov/Page/P0532).

    Except for the freight railroad industry, virtually all commenters urge the Board to define “on time” based on train punctuality at all stations, rather than just at the endpoints (as originally proposed), because the majority of the traveling public are destined for intermediate rather than endpoint stations. (See, e.g., Amtrak Feb. 8 Comment 7.) Moreover, the examples provided by individual passengers—e.g., of waiting for hours at unattended stations in remote or unsecured locations at night for late trains that would be deemed “on time” at their endpoints—convince us that an “all-stations” definition will more appropriately reflect the principle that rail passengers destined for every station along a line, regardless of its size, should have the same expectation of punctuality. This principle underlies the Congressional aspiration that “Amtrak shall . . . operate Amtrak trains, to the maximum extent feasible, to all station stops within 15 minutes of the time established in public timetables.” 49 U.S.C. 24101(c)(4) (emphasis added).7 We therefore will incorporate an all-stations calculation in the threshold for bringing cases to the Board under 49 U.S.C. 24308(f).

    7See also Adequacy of Intercity Rail Passenger Serv., 351 I.C.C. 883 (1976).

    As the freight railroads point out, and as FRA and Amtrak themselves acknowledged in their final metrics and standards under PRIIA Section 207 (in which they deferred application of an all-stations test for OTP for two years to allow for schedule adjustments), some schedules, particularly for long-distance trains, may need to be modified to more realistically distribute recovery time in light of an all-stations threshold. (See CN Mar. 30 Reply 3-4; AAR Mar. 30 Reply 6-7.) For example, as CSXT notes, considerable care must be exercised in distributing recovery time along a route, to avoid site-specific operational concerns. (See CSXT Mar. 30 Reply 10.) Moreover, a number of current passenger rail schedules insert a very large share of recovery time between the last stations on a route. To support all stations OTP on such a route could require a reevaluation and potential reallocation of recovery time across the entire route. We are confident, however, that following adoption of an all-stations approach to OTP in this rulemaking, rail operations planners from all affected parties will be able to devise appropriate, realistic, and up-to-date modifications to published schedules that are consistent both with all-stations OTP and with Congress' explicit intent in PRIIA to improve intercity passenger rail service. Furthermore, considerations regarding the published schedules may enter into the investigation stage of the two-stage process contemplated in the statute.

    The 15-Minute Allowance. In the NPRM, the Board proposed that an Amtrak train would be considered on-time if it arrives at its final terminus no more than five minutes after its scheduled arrival time per 100 miles of operation, or 30 minutes after its scheduled arrival time, whichever is less. Based on the comments received,8 the Board has decided to deem a train's arrival or departure “on time” if it occurs no later than 15 minutes after its scheduled time. In our view, this 15-minute allowance has several advantages. First, it is consistent with the Congressional goal set forth in 49 U.S.C. 24101(c)(4).9 Second, in comparison with the tiered proposal, it is simple and easy to apply. Third, it treats all stations and all passengers equally. Finally, Amtrak has long been calculating All-Stations OTP with a constant 15-minute allowance at each station,10 so the data needed to apply this final rule are readily available to the public and stakeholders.

    8See, e.g., Capital Corridor Joint Powers Authority March 30 Reply 4 n.3; Amtrak February 8 Comment 8; Virginia Rail Policy Institute February 8 Comment 1.

    9 “Amtrak shall . . . operate Amtrak trains, to the maximum extent feasible, to all station stops within 15 minutes of the time established in public timetables.”

    10 The only exception is Amtrak's Acela service in the Northeast Corridor, to which Amtrak applies a 10-minute lateness allowance.

    Contract On-Time Performance Versus Published Schedules. The freight railroads generally argue that OTP should be measured in accordance with the criteria contained in their private contracts with Amtrak (contract OTP) rather than the published Amtrak timetables. (See Union Pac. R.R. (UP) Feb. 8 Comment 3; AAR Feb. 8 Comment 10; CN Feb. 8 Comment 5.) However, the Congressional goal at 49 U.S.C. 24101(c)(4) refers to the “time established in public timetables.” In addition to being consistent with the Congressional goal, a comparison of publicly scheduled train timings with actual train timings is also the simplest and most transparent way to compare a train's OTP, as experienced by the traveling public, with the “less than 80 percent” threshold mandated in 49 U.S.C. 24308(f)(1). Although the private contracts between Amtrak and its host carriers will not enter into the threshold stage of an OTP case, such contracts could be relevant in the investigation stage.

    Several freight railroads and AAR claim that if the Board does not account for the problems with the schedules and simply relies on the published schedules as they are, it could result in an avalanche of complaints and “false positives”—trains that technically fall below the OTP threshold but are not necessarily poor performers because the schedules are allegedly “unrealistic.” (See AAR Mar. 30 Reply; CN Mar. 30 Reply; UP Mar. 30 Reply; NS Mar. 30 Reply; CSXT Mar. 30 Reply.) Because the complainant has the primary burden of proving its case and litigation is resource intensive, the adopted approach is not expected to result in an overwhelming number of claims.

    Finally, some commenters (e.g., Virginia DOT, Michigan DOT, States for Passenger Rail Coalition) argue that the Board should set standards for the development of route schedules or conduct further study of the schedules prior to adopting rules. However, while section 24308(f) permits the Board, in conducting a particular investigation, to review the extent to which scheduling may contribute to the delays being investigated and to identify reasonable measures to improve OTP, the statute does not include generalized authority, outside a particular investigation, for the Board to set standards for the development of schedules. Thus, what these commenters are asking the Board to do is beyond the scope of our authority and this rulemaking.

    Third-Party (State) Agreements. A number of states and others expressed concern that the Board's OTP rule could undermine or preempt separate agreements entered into between states, operators, hosts, and others for the improvement of passenger rail service in specific corridors—for example, service outcomes agreements under FRA's High-Speed Intercity Passenger Rail (HSIPR) Program. (See States for Passenger Rail Coalition, Inc. Feb. 8 Comment 3; Cal. State Transp. Agency Feb. 8 Comment 3.) We reiterate, however, that the Board is defining “on time” and describing the calculation of OTP only for the purpose of determining whether the “less than 80 percent” threshold for bringing an OTP complaint has been met. The Board neither intends nor expects that its OTP definition here will have any applicability beyond that limited purpose.

    Multicarrier Routes. Several commenters, including freight railroad interests, argue that for routes where there are multiple host carriers, OTP should not be measured for the entire route, but for each host carrier's segment. The commenters argue that this would allow the Board to determine if the delays are occurring on one carrier's segment and, if so, to properly narrow the investigation solely to that carrier's conduct. The commenters argue that if the Board does not do so, a carrier that is meeting its statutory duty could be unfairly drawn into an investigation.

    Although the Board understands that concern, the attribution of delays to hosts and specific causes more properly pertains to—indeed, would likely be among the initial topics addressed in—the investigatory phase of a case. Moreover, the statutory mandate (49 U.S.C. 24308(f)) specifically refers to the “on-time performance of any intercity passenger train,” irrespective of the number of host carriers involved in the train's operation. Therefore, the adopted approach is consistent with the statute.

    Calculation of OTP. Two individuals take issue with the Board's proposal to exclude from the OTP analysis any train that does not operate “from its scheduled origin to its scheduled destination.” The commenters argue that these trains should be accounted for, because they might represent instances of the most severe service failures.

    The changes adopted in this final rule will lessen the potential impact of this issue. Endpoint OTP, as proposed in the NPRM, would not have included any train that does not serve both its scheduled endpoints. By contrast, under the all-stations calculation method, every departure from origin and every arrival at subsequent stations that actually occurs—regardless of whether the train originates at its scheduled origin or completes its run to its scheduled destination—will enter into the denominator. The Board will exclude, from its prescribed calculation method, only trains that do not operate at all, or stations on a curtailed train's route that do not actually receive service. This is consistent with the statute, which provides that Congressionally-mandated investigations in 49 U.S.C. 24308(f)(1) should analyze “delays” (not cancellations). In addition, in a train operation that does not take place, there typically would be no practical way to determine whether preference (the focus of 49 U.S.C. 24308(f)(2)) was granted or withheld. Finally, because Amtrak generally cancels or curtails its services only in the event of emergencies or extreme weather events (such as the severe flooding in South Carolina in the Fall of 2015), it is doubtful that inclusion of such incidents in the denominator of the calculation would shed light on what is taking place under typical operating conditions for a particular train. To clarify this point, language is being added to the final rule making clear that the OTP calculation includes only “actual” arrivals and departures.

    Additional issues, including the following, were raised by certain commenters, but the issues are beyond the scope of this rulemaking.

    Per-Train vs. Per-Route Calculation. Some railroad interests argue that the Board should not calculate OTP for all trains on the route, but rather, for each individual train that operates on that route. This argument goes to the question of what constitutes a “train,” an issue that this rulemaking does not address and was not intended to address.

    International Service. Some commenters note that the proposed OTP standard rule does not provide any guidance for cross-border routes (i.e., those that go into Canada). No such issue has arisen in a case brought to the Board, and this issue goes to the question of what constitutes a “train,” an issue that, again, this rulemaking does not address and was not intended to address.

    Eligible Complainants. The Michigan Association of Railroad Passengers argues that the Board should expand the pool of the parties that can file complaints to include passengers. However, the parties eligible to bring complaints under section 24308(f) are specified by that statute, and we are not at liberty to expand it in this rulemaking.

    Time Limits on Data. Some freight railroad commenters also state that without a time limit on the period during which the OTP deficiency at issue is alleged to have occurred (e.g., the most recent four quarters), outdated and unnecessary claims could be filed regarding a train that is currently performing well. (See CN Feb. 8 Comment 6; AAR Feb. 8 Comment 14.) This issue, too, is beyond the scope of this rulemaking, which was intended solely to define “on time” and specify the formula for calculating OTP for purposes of 49 U.S.C. 24308(f).

    Summary of the Final Rule

    For the reasons discussed above, we are modifying the rule as initially proposed and adopting the all-stations approach. This approach will be codified at 49 CFR 1040. The final regulations are attached at the end of this decision.

    Section 1040.1 makes explicit the strictly limited purpose of the rulemaking, as discussed above: To define “on time” and specify the formula for calculating OTP so as to trigger implementation of 49 U.S.C. 24308(f).

    Section 1040.2 states that a train's arrival at or departure from a particular station is “on time” if it occurs no later than 15 minutes after its scheduled time. This section embodies the 15-minute allowance contained in the longstanding Congressional goal for Amtrak at 49 U.S.C. 24101(c)(4).

    Section 1040.3 implements the “all-stations” option that was suggested as an alternative to endpoint OTP in the NPRM. Pursuant to 49 U.S.C. 24308(f)(1), which states that a train can be the subject of an OTP complaint if its OTP “averages less than 80 percent for any two consecutive calendar quarters,” Section 1040.3 describes the method for calculating a train's OTP in each quarter. Specifically, OTP is the percentage equivalent to the fraction (1) whose denominator is the total number of the train's actual (a) departures from its origin station, (b) arrivals at all intermediate stations, and (c) arrivals at its destination station, during that calendar quarter, and (2) whose numerator is the total number of such actual departures and arrivals that are “on time” under § 1040.2—i.e., that occur no later than 15 minutes after their scheduled time.

    Regulatory Flexibility Act Statement

    The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, generally requires a description and analysis of new rules that would have a significant economic impact on a substantial number of small entities. In drafting a rule, an agency is required to: (1) Assess the effect that its regulation will have on small entities; (2) analyze effective alternatives that may minimize a regulation's impact; and (3) make the analysis available for public comment. 5 U.S.C. 601-604. Under section 605(b), an agency is not required to perform an initial or final regulatory flexibility analysis if it certifies that the proposed or final rules will not have a “significant impact on a substantial number of small entities.”

    Because the goal of the RFA is to reduce the cost to small entities of complying with federal regulations, the RFA requires an agency to perform a regulatory flexibility analysis of small entity impacts only when a rule directly regulates those entities. In other words, the impact must be a direct impact on small entities “whose conduct is circumscribed or mandated” by the proposed rule. White Eagle Coop. Ass'n v. Conner, 553 F.3d 467, 478, 480 (7th Cir. 2009). An agency has no obligation to conduct a small entity impact analysis of effects on entities that it does not regulate. United Distrib. Cos. v. FERC, 88 F.3d 1105, 1170 (D.C. Cir. 1996).

    In the NPRM, the Board already certified under 5 U.S.C. 605(b) that the proposed rule would not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. The Board explained that the proposed rule would not place any additional burden on small entities, but rather clarify an existing obligation. The Board further explained that, even assuming for the sake of argument that the proposed regulation were to create an impact on small entities, which it would not, the number of small entities so affected would not be substantial. A copy of the NPRM was served on the U.S. Small Business Administration (SBA).

    The final rule adopted here uses a different measure of “on time” and “on-time performance” for purposes of Section 213 of PRIIA than those proposed in the NPRM. However, the same basis for the Board's certification of the proposed rule applies to the final rule adopted here. The final rule would not create a significant impact on a substantial number of small entities. Host carriers have been required to allow Amtrak to operate over their rail lines since the 1970s. Moreover, an investigation concerning delays to intercity passenger traffic is a function of Section 213 of PRIIA rather than this rulemaking. The final rule only defines “on-time performance” for the purpose of implementing the rights and obligations already established in Section 213 of PRIIA. Thus, the rule does not place any additional burden on small entities, but rather clarifies an existing obligation. Moreover, even assuming, for the sake of argument, that the final rule were to create an impact on small entities, which it does not, the number of small entities so affected would not be substantial. The final rule applies in proceedings involving Amtrak, currently the only provider of intercity passenger rail transportation subject to PRIIA, and its host railroads. For almost all of its operations, Amtrak's host carriers are Class I rail carriers, which are not small businesses under the Board's new definition for RFA purposes.11 Currently, out of the several hundred Class III railroads (“small businesses” under the Board's new definition) nationwide, only approximately 10 host Amtrak traffic.12 Therefore, the Board certifies under 5 U.S.C. 605(b) that the final rule will not have a significant economic impact on a substantial number of small entities within the meaning of the RFA. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416.

    11 At the time the Board issued the NPRM, the Board used the SBA's size standard for rail transportation, which is based on number of employees. See 13 CFR 121.201 (industry subsector 482). Subsequently, however, pursuant to 5 U.S.C. 601(3) and after consultation with SBA, the Board (with Commissioner Begeman dissenting) established a new definition of “small business” for the purpose of RFA analysis. Under that new definition, the Board defines a small business as a rail carrier classified as a Class III rail carrier under 49 CFR 1201.1-1. See Small Entity Size Standards Under the Regulatory Flexibility Act, EP 719 (STB served June 30, 2016).

    12 This number is derived from Amtrak's Monthly Performance Report for May 2015, historical on-time performance records, and system timetable, all of which are available on Amtrak's Web site.

    The final rule is categorically excluded from environmental review under 49 CFR 1105.6(c).

    List of Subjects in 49 CFR Part 1040

    On-time performance of intercity passenger rail service.

    It is ordered:

    1. The final rule set forth below is adopted and will be effective on August 27, 2016. Notice of the rule adopted here will be published in the Federal Register.

    2. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration.

    3. This decision is effective on the date of service.

    Decided: July 28, 2016.

    By the Board, Chairman Elliott, Vice Chairman Miller, and Commissioner Begeman.

    Kenyatta Clay, Clearance Clerk.

    For the reasons set forth in the preamble, the Surface Transportation Board amends title 49, chapter X, subchapter A, of the Code of Federal Regulations by adding part 1040 as follows:

    PART 1040: ON-TIME PERFORMANCE OF INTERCITY PASSENGER RAIL SERVICE Sec. 1040.1 Purpose. 1040.2 Definition of “on time”. 1040.3 Calculation of quarterly on-time performance. Authority:

    49 U.S.C. 1321 and 24308(f).

    § 1040.1. Purpose.

    This part defines “on time” and specifies the formula for calculating on-time performance for the purpose of implementing Section 213 of the Passenger Rail Investment and Improvement Act of 2008, 49 U.S.C. 24308(f).

    § 1040.2. Definition of “on time.”

    An intercity passenger train's arrival at, or departure from, a given station is on time if it occurs no later than 15 minutes after its scheduled time.

    § 1040.3. Calculation of quarterly on-time performance.

    In any given calendar quarter, an intercity passenger train's on-time performance shall be the percentage equivalent to the fraction calculated using the following formula:

    (a) The denominator shall be the total number of the train's actual: Departures from its origin station, arrivals at all intermediate stations, and arrivals at its destination station, during that calendar quarter; and

    (b) The numerator shall be the total number of the train's actual: Departures from its origin station, arrivals at all intermediate stations, and arrivals at its destination station, during that calendar quarter, that are on time as defined in § 1040.2.

    [FR Doc. 2016-18256 Filed 8-3-16; 8:45 am] BILLING CODE 4915-01-P
    DEPARTMENT OF THE INTERIOR Fish and Wildlife Service 50 CFR Part 17 [Docket No. FWS-R1-ES-2015-0070; 4500030114] RIN 1018-BA91 Endangered and Threatened Wildlife and Plants; Determination of Critical Habitat for the Marbled Murrelet AGENCY:

    Fish and Wildlife Service, Interior.

    ACTION:

    Final determination.

    SUMMARY:

    We, the U.S. Fish and Wildlife Service (Service), determine the critical habitat for the marbled murrelet (Brachyramphus marmoratus), as designated in 1996 and revised in 2011, meets the statutory definition of critical habitat under the Endangered Species Act of 1973, as amended (Act). The current designation includes approximately 3,698,100 acres (1,497,000 hectares) of critical habitat in the States of Washington, Oregon, and California.

    DATES:

    This final determination confirms the effective date of the final rule published at 61 FR 26256 and effective on June 24, 1996, as revised at 76 FR 61599, and effective on November 4, 2011.

    ADDRESSES:

    This final rule is available on the internet at http://www.regulations.gov and http://www.fws.gov/wafwo. Comments and materials we received, as well as some of the supporting documentation we used in preparing this final rule, are available for public inspection at http://www.regulations.gov. All of the comments, materials, and documentation that we considered in this rulemaking are available by appointment, during normal business hours at: U.S. Fish and Wildlife Service, Washington Fish and Wildlife Office, 510 Desmond Drive SE., Suite 102, Lacey, WA 98503-1273 (telephone 360-753-9440; facsimile 360-753-9008). The critical habitat designation for the marbled murrelet as affirmed by this final determination is in the Code of Federal Regulations at 50 CFR 17.95(b). The coordinates for this critical habitat rule were provided in the Federal Register in 1996 and 2011 and can be found at 61 FR 26256 and 76 FR 61599.

    FOR FURTHER INFORMATION CONTACT:

    Eric V. Rickerson, State Supervisor, U.S. Fish and Wildlife Service, Washington Fish and Wildlife Office, 510 Desmond Drive SE., Suite 102, Lacey, WA 98503-1273 (telephone 360-753-9440, facsimile 360-753-9008); Paul Henson, State Supervisor, U.S. Fish and Wildlife Service, Oregon Fish and Wildlife Office, 2600 SE 98th Avenue, Suite 100, Portland, OR 97266, telephone 503-231-6179, facsimile 503-231-6195; Bruce Bingham, Field Supervisor, U.S. Fish and Wildlife Service, Arcata Fish and Wildlife Office, 1655 Heindon Road, Arcata, CA 95521, telephone 707-822-7201, facsimile 707-822-8411; Jennifer Norris, Field Supervisor, U.S. Fish and Wildlife Service, Sacramento Fish and Wildlife Office, 2800 Cottage Way, Room W-2605, Sacramento, CA 95825, telephone 916-414-6700, facsimile 916-414-6713; or Stephen P. Henry, Field Supervisor, U.S. Fish and Wildlife Service, Ventura Fish and Wildlife Office, 2493 Portola Road, Suite B, Ventura, CA 93003, telephone 805-644-1766, facsimile 805-644-3958. If you use a telecommunications device for the deaf (TDD), call the Federal Information Relay Service (FIRS) at 800-877-8339.

    SUPPLEMENTARY INFORMATION:

    Executive Summary

    Purpose of this document. On May 24, 1996, we published in the Federal Register a final rule designating 3,887,800 acres (ac) (1,573,340 hectares (ha)) of critical habitat for the marbled murrelet in the States of Washington, Oregon, and California (61 FR 26256). On October 5, 2011, we published in the Federal Register a final rule revising critical habitat for the marbled murrelet (76 FR 61599), resulting in the removal of approximately 189,671 ac (76,757 ha) of critical habitat in the States of Oregon and California. In a proposed rule published in the Federal Register August 25, 2015 (80 FR 51506), we reconsidered the 1996 final rule, as revised in 2011, for the purpose of assessing whether all of the designated areas meet the statutory definition of critical habitat. We did not propose any changes to the boundaries of the specific areas identified as critical habitat.

    Why we needed to reconsider the rule. In 2012, the American Forest Resource Council (AFRC) and other parties filed suit against the Service, challenging the designation of critical habitat for the marbled murrelet, among other things. After this suit was filed, the Service concluded that the 1996 rule that first designated critical habitat for the marbled murrelet, as well as the 2011 rule that revised that designation, did not comport with recent case law holding that the Service should specify which areas were occupied at the time of listing, and should further explain why unoccupied areas are essential for conservation of the species. Hence, the Service moved for a voluntary remand of the critical habitat rule, requesting until September 30, 2015, to issue a proposed rule, and until September 30, 2016, to issue a final rule. On September 5, 2013, the court granted the Service's motion, leaving the current critical habitat rule in effect pending completion of the remand.

    The basis for our action. Under the Act, any species that is determined to be an endangered or threatened species shall, to the maximum extent prudent and determinable, have habitat designated that is considered to be critical habitat. Section 4(b)(2) of the Act states that the Secretary shall designate and make revisions to critical habitat on the basis of the best scientific data available after taking into consideration the economic impact, national security impact, and any other relevant impact of specifying any particular area as critical habitat. Section 4 of the Act and its implementing regulations in part 424 of title 50 of the Code of Federal Regulations (50 CFR part 424) set forth the procedures for designating or revising critical habitat for listed species.

    We considered the economic impacts of the proposed rule. We provided our evaluation of the potential economic impacts of the proposed determination regarding critical habitat for the marbled murrelet in the proposed rule. Following the close of the comment period, we reviewed and evaluated all information submitted during the comment period that may pertain to our consideration of the probable incremental economic impacts of the proposed determination. We have incorporated the comments into this final determination.

    Public comment. The comment period on our proposed rule and our evaluation of probable economic impacts of the proposed rule was open for 60 days, beginning with the publication of the proposed rule on August 25, 2015 (80 FR 51506), through October 26, 2015. We considered all substantive and relevant comments and information received from the public during the comment period.

    Previous Federal Actions

    For additional information on previous Federal actions concerning the marbled murrelet, refer to the final listing rule published in the Federal Register on October 1, 1992 (57 FR 45328), the final rule designating critical habitat published in the Federal Register on May 24, 1996 (61 FR 26256), and the final revised critical habitat rule published in the Federal Register on October 5, 2011 (76 FR 61599). In the 1996 final critical habitat rule, we designated 3,887,800 ac (1,573,340 ha) of critical habitat in 32 units on Federal and non-Federal lands. On September 24, 1997, we completed a recovery plan for the marbled murrelet in Washington, Oregon, and California (USFWS 1997, entire). On January 13, 2003, we entered into a settlement agreement with AFRC and the Western Council of Industrial Workers, whereby we agreed to review the marbled murrelet critical habitat designation and make any revisions deemed appropriate after a revised consideration of economic and any other relevant impacts of designation. On April 21, 2003, we published in the Federal Register a notice initiating a 5-year review of the marbled murrelet (68 FR 19569) and published a second information request for the 5-year review on July 25, 2003 (68 FR 44093). The 5-year review evaluation report was finished in March 2004 (McShane et al. 2004), and the 5-year review was completed on August 31, 2004.

    On September 12, 2006, we published in the Federal Register a proposed revision to critical habitat for the marbled murrelet, which included adjustments to the original designation and proposed several exclusions under section 4(b)(2) of the Act (71 FR 53838). On June 26, 2007, we published in the Federal Register a document announcing the availability of a draft economic analysis (72 FR 35025) related to the September 12, 2006, proposed critical habitat revision (71 FR 53838). On March 6, 2008, we published a document in the Federal Register (73 FR 12067) stating that the critical habitat for marbled murrelet should not be revised due to uncertainties regarding U.S. Bureau of Land Management (BLM) revisions to its District Resource Management Plans in western Oregon, and that document fulfilled our obligations under the settlement agreement.

    On July 31, 2008, we published in the Federal Register a proposed rule to revise currently designated critical habitat for the marbled murrelet by removing approximately 254,070 ac (102,820 ha) in northern California and Oregon from the 1996 designation (73 FR 44678). A second 5-year review was completed on June 12, 2009. On January 21, 2010, in response to a May 28, 2008, petition to delist the California/Oregon/Washington distinct population segment (DPS) of the marbled murrelet and our subsequent October 2, 2008, 90-day finding concluding that the petition presented substantial information (73 FR 57314; October 2, 2008), we published a 12-month finding notice in the Federal Register (75 FR 3424) determining that removing the marbled murrelet from the Federal List of Endangered and Threatened Wildlife (50 CFR 17.11) was not warranted. We also found that the Washington/Oregon/California population of the marbled murrelet is a valid DPS in accordance with the discreteness and significance criteria in our 1996 DPS policy (February 7, 1996; 61 FR 4722) and concluded that the DPS continues to meet the definition of a threatened species under the Act.

    On October 5, 2011, we published in the Federal Register a final rule revising the critical habitat designation for the marbled murrelet (76 FR 61599). This final rule removed approximately 189,671 ac (76,757 ha) in northern California and southern Oregon from the 1996 designation, based on new information indicating these areas did not meet the definition of critical habitat for the marbled murrelet; this action resulted in a final revised designation of approximately 3,698,100 ac (1,497,000 ha) of critical habitat in Washington, Oregon, and California.

    On January 24, 2012, AFRC filed suit against the Service to delist the marbled murrelet and vacate critical habitat. On March 30, 2013, the U.S. District Court for the District of Columbia granted in part AFRC's motion for summary judgment and denied a joint motion for vacatur of critical habitat pending completion of a voluntary remand. Following this ruling, the Service moved for a remand of the critical habitat rule, without vacatur, in light of recent case law setting more stringent requirements on the Service for specifying how designated areas meet the definition of critical habitat. On September 5, 2013, the district court ordered the voluntary remand without vacatur of the critical habitat rule, and set deadlines of September 30, 2015, for a proposed rule and September 30, 2016, for a final rule. The court ruled in favor of the Service regarding the Service's denial of plaintiffs' petition to delist the species, and that ruling was affirmed on appeal. See American Forest Resource Council v. Ashe, 946 F. Supp. 2d 1 (D.D.C. 2013), aff'd 2015 U.S. App. LEXIS 6205 (D.C. Cir., Feb. 27, 2015).

    The Service, in conjunction with the National Marine Fisheries Service, published a rule revising 50 CFR 424.12, the criteria for designating critical habitat, on February 11, 2016 (81 FR 7413); the rule became effective on March 14, 2016. The revised regulations clarify, interpret, and implement portions of the Act concerning the procedures and criteria used for adding species to the Lists of Endangered and Threatened Wildlife and Plants and designating and revising critical habitat. Specifically, the amendments make minor edits to the scope and purpose, add and remove some definitions, and clarify the criteria and procedures for designating critical habitat. These amendments are intended to clarify expectations regarding critical habitat and provide for a more predictable and transparent critical habitat designation process.

    As stated in the revised version of § 424.12, the regulatory provisions in that section apply only to rulemaking actions for which the proposed rule is published after that effective date. Thus, the prior version of § 424.12 will continue to apply to any rulemaking actions for which a proposed rule was published before that date. Since the proposed rule for marbled murrelet critical habitat was published on August 25, 2015, this final rule follows the version of § 424.12 that was in effect prior to March 14, 2016.

    Summary of Changes From Proposed Rule

    Based upon our evaluation of the best scientific data available and considering all information and comments received during the public comment period, we conclude that our evaluation and description of how all areas currently designated as critical habitat for the marbled murrelet meet the statutory definition under the Act is accurate as described in the proposed rule. Furthermore, we conclude that our description of the probable incremental impacts of our proposed rulemaking is accurate as described in the proposed rule. Therefore, there are no changes from the proposed rule in this final rule.

    Background

    A final rule designating critical habitat for the marbled murrelet was published in the Federal Register on May 24, 1996 (61 FR 26256). A final rule revising the 1996 designation of critical habitat for the marbled murrelet was published in the Federal Register on October 5, 2011 (76 FR 61599). Both of these rules are available under the “Supporting Documents” section for this docket in the Federal eRulemaking Portal: http://www.regulations.gov at Docket Number FWS-R1-ES-2015-0070. It is our intent to discuss only those topics directly relevant to the 1996 and revised 2011 designations of critical habitat for the marbled murrelet. A complete description of the marbled murrelet, including a discussion of its life history, distribution, ecology, and habitat, can be found in the May 24, 1996, final rule (61 FR 26256) and the final recovery plan (USFWS 1997).

    In this document, we have reconsidered our previous critical habitat designation for the marbled murrelet (May 24, 1996; 61 FR 26256, as revised on October 5, 2011; 76 FR 61599). The current designation consists of approximately 3,698,100 ac (1,497,000 ha) of critical habitat in Washington, Oregon, and California. The critical habitat consists of 101 subunits: 37 in Washington, 33 in Oregon, and 31 in California. We have reconsidered the final rule for the purpose of evaluating whether all areas currently designated meet the definition of critical habitat under the Act. We have described and assessed each of the elements of the definition of critical habitat, and evaluated whether these statutory criteria apply to the current designation of critical habitat for the marbled murrelet. Here we present the following information relevant to our evaluation:

    I. The statutory definition of critical habitat.

    II. A description of the physical or biological features essential to the conservation of the marbled murrelet, for the purpose of evaluating whether the areas designated as critical habitat provide these essential features.

    III. The primary constituent elements for the marbled murrelet.

    IV. A description of why those primary constituent elements may require special management considerations or protection.

    V. Our standard for defining the geographical areas occupied by the species at the time of listing.

    VI. The evaluation of those specific areas within the geographical area occupied at the time of listing for the purpose of determining whether designated critical habitat meets the definition under section 3(5)(A)(i) of the Act.

    VII. An additional evaluation of all critical habitat to determine whether the designated units meet the standard of being essential to the conservation of the species, under section 3(5)(A)(ii) of the Act. We conducted this analysis to assess whether all areas of critical habitat meet the statutory definition under either of the definition's prongs, regardless of occupancy. This approach is consistent with the ruling in Home Builders Ass'n of Northern California v. U.S. Fish and Wildlife Service, 616 F.3d 983 (9th Cir.), cert. denied 131 S.Ct. 1475 (2011), in which the court upheld a critical habitat rule in which the Service had determined that the areas designated, whether occupied or not, met the more demanding standard of being essential for conservation.

    VIII. Restated correction to preamble language in 1996 critical habitat rule.

    IX. Effects of critical habitat designation under section 7 of the Act.

    X. As required by section 4(b)(2) of the Act, consideration of the potential economic impacts of the rule.

    XI. Final determination that all areas currently designated as critical habitat for the marbled murrelet meet the statutory definition under the Act.

    XII. Summary of Comments and Responses

    I. Critical Habitat

    Critical habitat is defined in section 3 of the Act as:

    (1) The specific areas within the geographical area occupied by the species, at the time it is listed in accordance with the Act, on which are found those physical or biological features.

    (a) Essential to the conservation of the species, and

    (b) Which may require special management considerations or protection; and

    (2) Specific areas outside the geographical area occupied by the species at the time it is listed, upon a determination that such areas are essential for the conservation of the species.

    Under the first prong of the Act's definition of critical habitat in section 3(5)(a)(i), areas within the geographical area occupied by the species at the time it was listed may be included in critical habitat if they contain physical or biological features: (1) Which are essential to the conservation of the species; and (2) which may require special management considerations or protection. For these areas, critical habitat designations identify, to the extent known using the best scientific data available, those physical or biological features that are essential to the conservation of the species (such as space, food, cover, and protected habitat). In identifying those physical and biological features within an area, we focus on the primary biological or physical constituent elements (primary constituent elements such as roost sites, nesting grounds, seasonal wetlands, water quality, tide, soil type) that are essential to the conservation of the species. Primary constituent elements (PCEs) are those specific elements of the physical or biological features that provide for a species' life-history processes and are essential to the conservation of the species.

    Under the second prong of the Act's definition of critical habitat in section 3(5)(A)(ii), we can designate critical habitat in areas outside the geographical area occupied by the species at the time it is listed, upon the Secretary's determination that such areas are essential for the conservation of the species. For example, an area currently occupied by the species but that was not occupied at the time of listing may be essential for the conservation of the species and may be included in the critical habitat designation. In addition, if critical habitat is designated or revised subsequent to listing, we may designate areas as critical habitat that may currently be unoccupied but that were occupied at the time of listing. We designate critical habitat in areas outside the geographical area presently occupied by a species only when a designation limited to its present range would be inadequate to ensure the conservation of the species.

    II. Physical or Biological Features

    We identified the specific physical or biological features essential for the conservation of the marbled murrelet from studies of this species' habitat, ecology, and life history as described below. Additional information can be found in the final listing rule published in the Federal Register on October 1, 1992 (57 FR 45328), and the Recovery Plan for the Marbled Murrelet (USFWS 1997). In the 1996 final critical habitat rule (May 24, 1996; 61 FR 26256), we relied on the best available scientific information to describe the terrestrial habitat used for nesting by the marbled murrelet. For this 2016 rule reconsideration, the majority of the following information is taken directly from the 1996 final critical habitat rule, where the fundamental physical or biological features essential to the marbled murrelet as described therein (in the section titled Ecological Considerations) remain valid (May 24, 1996; 61 FR 26256).

    Where newer scientific information is available that refutes or validates the information presented in the 1996 final critical habitat rule, that information is provided here and is so noted. However, this final rule does not constitute a complete summary of all new scientific information on the biology of the marbled murrelet since 1996. Because this rule reconsideration addresses the 1996 final critical habitat, as revised in 2011 (October 5, 2011; 76 FR 61599), which designated critical habitat only in the terrestrial environment, the following section will solely focus on the terrestrial nesting habitat features. Forested areas with conditions that are capable of supporting nesting marbled murrelets are referred to as “suitable nesting habitat.” Loss of such nesting habitat was the primary basis for listing the marbled murrelet as threatened; hence protection of such habitat is essential to the conservation of the species. We consider the information provided here to represent the best available scientific data with regard to the physical or biological features essential for the marbled murrelet's use of terrestrial habitat.

    Throughout the forested portion of the species' range, marbled murrelets typically nest in forested areas containing characteristics of older forests (Binford et al. 1975, p. 305; Quinlan and Hughes 1990, entire; Hamer and Cummins 1991, pp. 9-13; Kuletz 1991, p. 2; Singer et al. 1991, pp. 332-335; Singer et al. 1992, entire; Hamer et al. 1994, entire; Hamer and Nelson 1995, pp. 72-75; Ralph et al. 1995a, p. 4). The marbled murrelet population in Washington, Oregon, and California nests in most of the major types of coniferous forests (Hamer and Nelson 1995, p. 75) in the western portions of these States, wherever older forests remain inland of the coast. Although marbled murrelet nesting habitat characteristics may vary throughout the range of the species, some general habitat attributes are characteristic throughout its range, including the presence of nesting platforms, adequate canopy cover over the nest, landscape condition, and distance to the marine environment (Binford et al. 1975, pp. 315-316; Hamer and Nelson 1995, pp. 72-75; Ralph et al. 1995b, p. 4; McShane et al. 2004, p. 4-39).

    Individual tree attributes that provide conditions suitable for nesting (i.e., provide a nesting platform) include large branches (ranging from 4 to 32 inches (in) (10 to 81 centimeters (cm)), with an average of 13 in (32 cm) in Washington, Oregon, and California) or forked branches, deformities (e.g., broken tops), dwarf mistletoe infections, witches' brooms, and growth of moss or other structures large enough to provide a platform for a nesting adult marbled murrelet (Hamer and Cummins 1991, p. 15; Singer et al. 1991, pp. 332-335; Singer et al. 1992, entire; Hamer and Nelson 1995, p. 79). These nesting platforms are generally located greater or equal to 33 feet (ft) (10 meters (m)) above ground (reviewed in Burger 2002, pp. 41-42 and McShane et al. 2004, pp. 4-55-4-56). These structures are typically found in old-growth and mature forests, but may be found in a variety of forest types including younger forests containing remnant large trees. Since 1996, research has confirmed that the presence of platforms is considered the most important characteristic of marbled murrelet nesting habitat (Nelson 1997, p. 6; reviewed in Burger 2002, pp. 40, 43; McShane et al. 2004, pp. 4-45-4-51, 4-53, 4-55, 4-56, 4-59; Huff et al. 2006, pp. 12-13, 18). Platform presence is more important than the size of the nest tree because tree size alone may not be a good indicator of the presence and abundance of platforms (Evans Mack et al. 2003, p. 3). Tree diameter and height can be positively correlated with the size and abundance of platforms, but the relationship may change depending on the variety of tree species and forest types that marbled murrelets use for nesting (Huff et al. 2006, p. 12). Overall, nest trees in Washington, Oregon, and northern California have been greater than 19 in (48 cm) diameter at breast height (dbh) and greater than 98 ft (30 m) tall (Hamer and Nelson 1995, p. 81; Hamer and Meekins 1999, p. 10; Nelson and Wilson 2002, p. 27).

    Northwestern forests and trees typically require 200 to 250 years to attain the attributes necessary to support marbled murrelet nesting, although characteristics of nesting habitat sometimes develop in younger coastal redwood (Sequoia sempervirens) and western hemlock (Tsuga heterophylla) forests. Forests with older residual trees remaining from previous forest stands may also develop into nesting habitat more quickly than those without residual trees. These remnant attributes can be products of fire, windstorms, or previous logging operations that did not remove all of the trees (Hansen et al. 1991, p. 383; McComb et al. 1993, pp. 32-36). Other factors that may affect the time required to develop suitable nesting habitat characteristics include site productivity and microclimate.

    Through the 1995 nesting season, 59 active or previously used tree nests had been located in Washington (9 nests), Oregon (36 nests), and California (14 nests) (Hamer and Nelson 1995, pp. 70-71; Nelson and Wilson 2002, p. 134; Washington Department of Fish and Wildlife murrelet database; California Department of Fish and Game murrelet database). All of the nests for which data were available in 1996 in Washington, Oregon, and California were in large trees that were more than 32 in (81 cm) dbh (Hamer and Nelson 1995, p. 74). Of the 33 nests for which data were available, 73 percent were on a moss substrate and 27 percent were on litter, such as bark pieces, conifer needles, small twigs, or duff (Hamer and Nelson 1995, p. 74). The majority of nest platforms were created by large or deformed branches (Hamer and Nelson 1995, p. 79). Nests found subsequently have characteristics generally consistent with these tree diameter and platform sources (McShane et al. 2004, pp. 4-50 to 4-59; Bloxton and Raphael 2009, p. 8). However, in Oregon, nests were found in smaller diameter trees (as small as 19 in (49 cm)) that were distinguished by platforms provided by mistletoe infections (Nelson and Wilson 2002, p. 27). In Washington, one nest was found on a cliff (i.e., ground nest) that exhibited features similar to a tree platform, such as vertical and horizontal cover (Bloxton and Raphael 2009, pp. 8 and 33). In central California, nest platforms were located on large limbs and broken tops with 32.3 percent mean moss cover on nest limbs (Baker et al. 2006, p. 944).

    More than 94 percent of the nests for which data were available in 1996 were in the top half of the nest trees, which may allow easy nest access and provide shelter from potential predators and weather. Canopy cover directly over the nests was typically high (average 84 percent; range 5 to 100 percent) in Washington, Oregon, and California (Hamer and Nelson 1995, p. 74). This cover may provide protection from predators and weather. Such canopy cover may be provided by trees adjacent to the nest tree, or by the nest tree itself. Canopy closure of the nest stand/site varied between 12 and 99 percent and averaged 48 percent (Hamer and Nelson 1995, p. 73). Information gathered subsequent to 1996 confirms that additional attributes of the platform are important including both vertical and horizontal cover and substrate. Known nest sites have platforms that are generally protected by branches above (vertical cover) or to the side (horizontal cover) (Huff et al. 2006, p. 14). Marbled murrelets appear to select limbs and platforms that provide protection from predation (Marzluff et al. 2000, p. 1135; Luginbuhl et al 2001, p. 558; Raphael et al. 2002a, pp. 226, 228) and inclement weather (Huff et al. 2006, p. 14). Substrate, such as moss, duff, or needles on the nest limb is important for protecting the egg and preventing it from falling (Huff et al. 2006, p. 13).

    Nests have been located in forested areas dominated by coastal redwood, Douglas-fir (Pseudotsuga menziesii), mountain hemlock (Tsuga mertensiana), Sitka spruce (Picea sitchensis), western hemlock, and western red cedar (Thuja plicata) (Binford et al. 1975, p. 305; Quinlan and Hughes 1990, entire; Hamer and Cummins 1991, p. 15; Singer et al. 1991, p. 332, Singer et al.1992, p. 2; Hamer and Nelson 1995, p. 75). Individual nests in Washington, Oregon, and California have been located in Douglas-fir, coastal redwood, western hemlock, western red cedar, and Sitka spruce trees (Hamer and Nelson 1995, p. 74).

    For nesting habitat to be accessible to marbled murrelets, it must occur close enough to the marine environment for marbled murrelets to fly back and forth. The farthest inland distance for a site with nesting behavior detections is 52 mi (84 km) in Washington. The farthest known inland sites with nesting behavior detections in Oregon and California are 40 and 24 mi (65 and 39 km), respectively (Evans Mack et al. 2003, p. 4). Additionally, as noted below in the section titled Definition of Geographical Area Occupied at the Time of Listing, presence detections have been documented farther inland in Washington, Oregon, and California (Evans Mack et al. 2003, p. 4).

    Prior to Euroamerican settlement in the Pacific Northwest, nesting habitat for the marbled murrelet was well distributed, particularly in the wetter portions of its range in Washington, Oregon, and California. This habitat was generally found in large, contiguous blocks of forest (Ripple 1994, p. 47) as described under the Management Considerations section of the 1996 final critical habitat rule (May 24, 1996; 61 FR 26256).

    Areas where marbled murrelets are concentrated at sea during the breeding season are likely determined by a combination of terrestrial and marine conditions. However, nesting habitat appears to be the most important factor affecting marbled murrelet distribution and numbers. Marine survey data confirmed conclusions made in the supplemental proposed critical habitat rule (August 10, 1995; 60 FR 40892) that marine observations of marbled murrelets during the nesting season generally correspond to the largest remaining blocks of suitable forest nesting habitat (Nelson et al. 1992, p. 64; Varoujean et al. 1994, entire; Ralph et al. 1995b, pp. 5-6; Ralph and Miller 1995, p. 358).

    Consistent with Varoujean et al.'s (1994) 1993 and 1994 aerial surveys, Thompson (1996, p. 11) found marbled murrelets to be more numerous along Washington's northern outer coast and less abundant along the southern coast. Thompson reported that this distribution appears to be correlated with: (1) Proximity of old-growth forest, (2) the distribution of rocky shoreline/substrate versus sandy shoreline/substrate, and (3) abundance of kelp (Thompson 1996, p. 11). In British Columbia, Canada, Rodway et al. (1995, pp. 83, 85, 86) observed marbled murrelets aggregating on the water close to breeding areas at the beginning of the breeding season and, for one of their two study areas, again in July as young were fledging. Burger (1995, pp. 305-306) reported that the highest at-sea marbled murrelet densities in both 1991 and 1993 were seen immediately adjacent to two tracts of old-growth forest, while areas with very low densities of marbled murrelets were adjacent to heavily logged watersheds. More recent evidence supports that detections of marbled murrelets at inland sites and densities offshore were higher in or adjacent to areas with large patches of old-growth, and in areas of low fragmentation and low isolation of old-growth patches (Raphael et al. 1995, pp. 188-189; Burger 2002, p. 54; Meyer and Miller 2002, pp. 763-764; Meyer et al. 2002, pp. 109-112; Miller et al. 2002, p. 100; Raphael et al. 2002a, p. 221; Raphael et al. 2002b, p. 337). Overall, landscapes with detections indicative of nesting behavior tended to have large core areas of old-growth and low amounts of overall edge (Meyer and Miller 2002, pp. 763-764; Raphael et al. 2002b, p. 331).

    In contrast, where nesting habitat is limited in southwest Washington, northwest Oregon, and portions of California, few marbled murrelets are found at sea during the nesting season (Ralph and Miller 1995, p. 358; Varoujean and Williams 1995, p. 336; Thompson 1996, p. 11). For instance, as of 1996, the area between the Olympic Peninsula in Washington and Tillamook County in Oregon (100 mi (160 km)) had few sites with detections indicative of nesting behavior or sightings at sea of marbled murrelets. In California, approximately 300 mi (480 km) separate the large breeding populations to the north in Humboldt and Del Norte Counties from the southern breeding population in San Mateo and Santa Cruz Counties. This reach contained few marbled murrelets during the breeding season; however, the area likely contained significant numbers of marbled murrelets before extensive logging (Paton and Ralph 1988, p. 11, Larsen 1991, pp. 15-17). More recent at-sea surveys confirm the low numbers of marbled murrelets in marine areas adjacent to inland areas that have limited nesting habitat (Miller et al. 2012, p. 775; Raphael et al. 2015, p. 21).

    Dispersal mechanisms of marbled murrelets are not well understood; however, social interactions may play an important role. The presence of marbled murrelets in a forest stand may attract other pairs to currently unused habitat within the vicinity. This may be one of the reasons marbled murrelets have been observed in habitat not currently suitable for nesting, but in close proximity to known nesting sites (Hamer and Cummins 1990, p. 14; Hamer et al. 1994, entire). Although marbled murrelets appear to be solitary in their nesting habits (Nelson and Peck 1995, entire), they are frequently detected in groups above the forest, especially later in the breeding season (USFWS 1995, pp. 14-16). Two active nests discovered in Washington during 1990 were located within 150 ft (46 m) of each other (Hamer and Cummins 1990, p. 47), and two nests discovered in Oregon during 1994 were located within 100 ft (33 m) of each other (USFWS 1995, p. 14). Therefore, unused habitat in the vicinity of known nesting habitat may be more important for recovering the species than suitable habitat isolated from known nesting habitat (USFWS 1995; USFWS 1997, p. 20). Similarly, marbled murrelets are more likely to discover newly developing habitat in proximity to sites with documented nesting behaviors. Because the presence of marbled murrelets in a forest stand may attract other pairs to currently unused habitat within the vicinity, the potential use of these areas may depend on how close the new habitat is to known nesting habitat, as well as distance to the marine environment, population size, and other factors (McShane et al. 2004, p. 4-78).

    Marbled murrelets are believed to be highly vulnerable to predation when on the nesting grounds, and the species has evolved a variety of morphological and behavioral characteristics indicative of selection pressures from predation (Ralph et al. 1995b, p. 13). For example, plumage and eggshells exhibit cryptic coloration, and adults fly to and from nests by indirect routes and often under low-light conditions (Nelson and Hamer 1995a, p. 66). Potential nest predators include the great horned owl (Bubo virginianus), Cooper's hawk (Accipiter cooperii), barred owl (Strix varia), northwestern crow (Corvus caurinus), American crow (Corvus brachyrhynchos), and gray jay (Perisoreus canadensis) (Nelson and Hamer 1995b, p. 93; Marzluff et al. 1996, p. 22; McShane et al. 2004, p. 2-17). The common raven (Corvus corax), Steller's jay (Cyanocitta stelleri), and sharp-shinned hawk (Accipiter striatus) are known predators of eggs or chicks (Nelson and Hamer 1995b, p. 93, McShane et al. 2004, pp. 2-16-2-17). Based on experimental work with artificial nests, predation on eggs and chicks by squirrels and mice may also occur (Luginbuhl et al. 2001, p. 563; Bradley and Marzluff 2003, pp. 1183-1184). In addition, a squirrel has been documented rolling a recently abandoned egg off a nest (Malt and Lank 2007, p. 170).

    From 1974 through 1993, of those marbled murrelet nests in Washington, Oregon, and California where nest success or failure was documented, approximately 64 percent of the nests failed. Of those nests, 57 percent failed due to predation (Nelson and Hamer 1995b, p. 93). Continuing research further supports predation as a significant cause of nest failure (McShane et al. 2004, pp. 2-16 to 2-19; Peery et al. 2004, pp. 1093-1094; Hebert and Golightly 2006, pp. 98-99; Hebert and Golightly 2007, pp. 222-223; Malt and Lank 2007, p. 165). The relatively high predation rate could be biased because nests near forest edges may be more easily located by observers and also more susceptible to predation, and because observers may attract predators. However, Nelson and Hamer (1995b, p. 94) believed that researchers had minimal impacts on predation in most cases because the nests were monitored from a distance and relatively infrequently, and precautions were implemented to minimize predator attraction. More recent research has relied on remotely operated cameras for observing nests, rather than people, in order to reduce the possible effects of human attraction (Hebert and Golightly 2006, p. 12; Hebert and Golightly 2007, p. 222).

    Several possible reasons exist for the high observed predation rates of marbled murrelet nests. One possibility is that these high predation rates are normal, although it is unlikely that a stable population could have been maintained historically under the predation rates observed (Beissinger 1995, p. 390).

    In the 1996 rule we hypothesized that populations of marbled murrelet predators such as corvids (jays, crows, and ravens) and great horned owls are increasing in the western United States, largely in response to habitat changes and food sources provided by humans (Robbins et al. 1986, pp. 43-46; Johnson 1993, pp. 58-60; Marzluff et al. 1994, pp. 214-216; National Biological Service 1996, entire), resulting in increased predation rates on marbled murrelets. Subsequent to the 1996 rule, surveys have confirmed that corvid populations are indeed increasing in western North America as a result of land use and urbanization (Marzluff et al. 2001, pp. 332-333; McShane et al. 2004, pp. 6-11; Sauer et al. 2013, pp. 18-19). However, breeding bird surveys in North America indicate that great horned owls are declining in 40 percent of the areas included in the surveys (Sauer et al. 2013, p. 17). Barred owls (Strix varia), foraging generalists that may prey on marbled murrelets, were not considered in 1996, but have subsequently been shown to be significantly increasing in numbers and distribution (Sauer et al. 2013, p. 17).

    In the 1996 rule, we also posited that creation of greater amounts of forest edge habitat may increase the vulnerability of marbled murrelet nests to predation and ultimately lead to higher rates of predation. Edge effects have been implicated in increased forest bird nest predation rates for other species of birds (Chasko and Gates 1982, pp. 21-23; Yahner and Scott 1988, p. 160). In a comprehensive review of the many studies on the potential relationship between forest fragmentation, edge, and adverse effects on forest nesting birds, Paton (1994, p. 25) concluded that “strong evidence exists that avian nest success declines near edges.” Small patches of habitat have a greater proportion of edge than do large patches of the same shape. However, many of the studies Paton (1994, entire) reviewed involved lands where forests and agricultural or urban areas interface, or they involved experiments with ground nests that are not readily applicable to canopy nesters such as marbled murrelets. Paton (1994, p. 25), therefore, stressed the need for studies specific to forests fragmented by timber harvest in the Pacific Northwest and elsewhere.

    Some research on this topic has been conducted in areas dominated by timber production and using nests located off the ground (Ratti and Reese 1988, entire; Rudnicky and Hunter 1993, entire; Marzluff et al. 1996, entire; Vander Haegen and DeGraaf in press, entire). Vander Haegen and DeGraaf (in press, p. 8; 1996, pp. 175-176) found that nests in shrubs less than 75 m (246 ft) from an edge were three times as likely to be depredated than nests greater than 75 m (264 ft) from an edge. Likewise, Rudnicky and Hunter (1993, p. 360) found that shrub nests on the forest edge were depredated almost twice as much as shrub nests located in the forest interior. They also observed that shrub nests were taken primarily by avian predators such as crows and jays, which is consistent with the predators believed to be impacting marbled murrelets, while ground nests were taken by large mammals such as raccoons and skunks. Ratti and Reese (1988, entire) did not find the edge relationship documented by Rudnicky and Hunter (1993, entire), Vander Haegen and DeGraaf (in press), and others cited in Paton (1994, entire). However, Ratti and Reese (1988, p. 488) did observe lower rates of predation near “feathered” edges compared to “abrupt” edges (e.g., clearcut or field edges), and suggested that the vegetative complexity of the feathered edge may better simulate natural edge conditions than do abrupt edges. These authors also concluded that their observations were consistent with Gates and Gysel's (1978, p. 881) hypothesis that birds are poorly adapted to predator pressure near abrupt artificial edge zones.

    Studies of artificial and natural nests conducted in Pacific Northwest forests also indicate that predation of forest bird nests may be affected by habitat fragmentation, forest management, and land development (Hansen et al. 1991, p. 388; Vega 1993, pp. 57-61; Bryant 1994, pp. 14-16; Nelson and Hamer 1995b, pp. 95-97; Marzluff et al. 1996, pp. 31-35). Nelson and Hamer (1995b, p. 96) found that successful marbled murrelet nests were further from edge than unsuccessful nests. Marzluff et al. (1996, entire) conducted experimental predation studies that used simulated marbled murrelet nests, and more recent research documented predation of artificial marbled murrelet nests by birds and arboreal mammals (Luginbuhl et al. 2001, pp. 562-563; Bradley and Marzluff 2003, pp. 1183-1884; Marzluff and Neatherlin 2006, p. 310; Malt and Lank 2007, p. 165). Additionally, more recent research indicates proximity to human activity and landscape contiguity may interact to determine rate of predation (Marzluff et al. 2000, pp. 1136-1138, Raphael et al. 2002a, entire; Zharikov et al. 2006, p. 117; Malt and Lank 2007, p. 165). Interior forest nests in contiguous stands far from human activity appear to experience the least predation (Marzluff et al. 1996, p. 29; Raphael et al. 2002a, pp. 229-231).

    More recent information indicates that marbled murrelets locate their nests throughout forest stands and fragments, including along various types of natural and human-made edges (Hamer and Meekins 1999, p. 1; Manley 1999, p. 66; Bradley 2002, pp. 42, 44; Burger 2002, p. 48; Nelson and Wilson 2002, p. 98). In California and southern Oregon, areas with abundant numbers of marbled murrelets were farther from roads, occurred more often in parks protected from logging, and were less likely to occupy old-growth habitat if they were isolated (greater than 3 mi (5 km)) from other nesting marbled murrelets (Meyer et al. 2002, pp. 95, 102-103). Marbled murrelets no longer occur in areas without suitable forested habitat, and they appear to abandon highly fragmented areas over time (areas highly fragmented before the late 1980s generally did not support marbled murrelets by the early 1990s) (Meyer et al. 2002, p. 103).

    The conversion of large tracts of native forest to small, isolated forest patches with large edge can create changes in microclimate, vegetation species, and predator-prey dynamics—such changes are often collectively referred to as “edge effects.” Unfragmented, older-aged forests have lower temperatures and solar radiation and higher humidity compared to clearcuts and other open areas (e.g., Chen et al. 1993, p. 219; Chen et al. 1995, p. 74). Edge habitat is also exposed to increased temperatures and light, high evaporative heat loss, increased wind, and decreased moisture. Fundamental changes in the microclimate of a stand have been recorded at least as far as 787 ft (240 m) from the forest edge (Chen et al. 1995, p. 74). The changes in microclimate regimes with forest fragmentation can stress an old-growth associate species, especially a cold-water adapted seabird such as the marbled murrelet (Meyer and Miller 2002, p. 764), and can affect the distribution of epiphytes that marbled murrelets use for nesting. Branch epiphytes or substrate have been identified as a key component of marbled murrelet nests (Nelson et al. 2003, p. 52; McShane et al. 2004, pp. 4-48, 4-89, 4-104). While there are no data on the specific effects of microclimate changes on the availability of marbled murrelet nesting habitat at the scale of branches and trees, as discussed in the references above, the penetration of solar radiation and warm temperatures into the forest could change the distribution of epiphytes, and wind could blow moss off nesting platforms.

    A large body of research indicates that marbled murrelet productivity is greatest in large, complex-structured forests far from human activity due to the reduced levels of predation present in such landscapes. Marbled murrelet productivity is lowest in fragmented landscapes; therefore, marbled murrelet nesting stands may be more productive if surrounded by simple-structured forests, and minimal human recreation and settlement. Human activities can significantly compromise the effectiveness of the forested areas surrounding nests to protect the birds and/or eggs from predation (Huhta et al. 1998, p. 464; Marzluff et al. 1999, pp. 3-4; Marzluff and Restani 1999, pp. 7-9, 11; Marzluff et al. 2000, pp. 1136-1138; De Santo and Willson 2001, pp. 145-147; Raphael et al. 2002a, p. 221; Ripple et al. 2003, p. 80).

    In addition to studies of edge effects, some research initiated prior to 1996 looked at the importance of stand size. Among all Pacific Northwest birds, the marbled murrelet is considered to be one of the most sensitive to forest fragmentation (Hansen and Urban 1992, p. 168). Marbled murrelet nest stand size in Washington, Oregon, and California varied between 7 and 2,717 ac (3 and 1,100 ha) and averaged 509 ac (206 ha) (Hamer and Nelson 1995, p. 73). Nelson and Hamer (1995b, p. 96) found that successful marbled murrelets tended to nest in larger stands than did unsuccessful marbled murrelets, but these results were not statistically significant. Miller and Ralph (1995, entire) compared marbled murrelet survey detection rates among four stand size classes in California. Recording a relatively consistent trend, they observed that a higher percentage of large stands (33.3 percent) had nesting behavior detections when compared to smaller stands (19.8 percent), while a greater percentage of the smallest stands (63.9 percent) had no presence or nesting behavior detections when compared to the largest stands (52.4 percent) (Miller and Ralph 1995, pp. 210-212). However, these results were not statistically significant, and the authors did not conclude that marbled murrelets preferentially select or use larger stands. The authors suggested the effects of stand size on marbled murrelet presence and use may be masked by other factors such as stand history and proximity of a stand to other old-growth stands. Rodway et al. (1993, p. 846) recommended caution when interpreting marbled murrelet detection data, such as that used by Miller and Ralph (1995), because numbers of detections at different sites may be affected by variation caused by weather, visibility, and temporal shifts.

    In addition to stand size, general landscape condition may influence the degree to which marbled murrelets nest in an area. In Washington, marbled murrelet detections increased when old-growth/mature forests make up more than 30 percent of the landscape (Hamer and Cummins 1990, p. 43). Hamer and Cummins (1990, p. 43) found that detections of marbled murrelets decreased in Washington when the percentage of clear-cut/meadow in the landscape increased above 25 percent. Additionally, Raphael et al. (1995, p. 177) found that the percentage of old-growth forest and large sawtimber was significantly greater within 0.5 mi (0.8 km) of sites (501-ac (203-ha) circles) that were used by nesting marbled murrelets than at sites where they were not detected. Raphael et al. (1995, p. 189) suggested tentative guidelines based on this analysis that sites with 35 percent old-growth and large sawtimber in the landscape are more likely to be used for nesting. In California, Miller and Ralph (1995, pp. 210-211) found that the density of old-growth cover and the presence of coastal redwood were the strongest predictors of marbled murrelet presence.

    In summary, the best scientific information available strongly suggests that marbled murrelet reproductive success may be adversely affected by forest fragmentation associated with either natural disturbances, such as severe fire or windthrow, or certain land management practices, generally associated with timber harvest or clearing of forest. Based on this information, the Service concluded that the maintenance and development of suitable habitat in relatively large contiguous blocks as described in the 1996 rule and the draft Marbled Murrelet (Washington, Oregon, and California Population) Recovery Plan (draft recovery plan) (USFWS 1995, pp. 70-71, finalized in 1997) would contribute to the recovery of the marbled murrelet. These blocks of habitat should contain the structural features and spatial heterogeneity naturally found at the landscape level, the stand level, and the individual tree level in Pacific Northwest forest ecosystems (Hansen et al. 1991, pp. 389-390; Hansen and Urban 1992, pp. 171-172; Ripple 1994, p. 48; Bunnell 1995, p. 641; Raphael et al. 1995, p. 189). Newer information further supports the conclusion that the maintenance of suitable nesting habitat in relatively large, contiguous blocks will be needed to recover the marbled murrelet (Meyer and Miller 2002, pp. 763-764; Meyer et al. 2002, p. 95; Miller et al. 2002, pp. 105-107; Raphael et al. 2011, p. 44).

    Summary of Physical or Biological Features Essential to the Conservation of the Marbled Murrelet

    Therefore, based on the information presented in the 1996 final critical habitat rule and more recent data that continue to confirm the conclusions drawn in that rule, we consider the physical or biological features essential to the conservation of the marbled murrelet to include forests that are capable of providing the characteristics required for successful nesting by marbled murrelets. Such forests are typically coniferous forests in contiguous stands with large core areas of old-growth or trees with old-growth characteristics and a low ratio of edge to interior. However, due to timber harvest history we recognize that, in some areas, such as south of Cape Mendocino in California, coniferous forests with relatively smaller core areas of old-growth or trees with old-growth characteristics are essential for the conservation of the marbled murrelet because they are all that remain on the landscape. Forests capable of providing for successful nesting throughout the range of the listed DPS are typically dominated by coastal redwood, Douglas-fir, mountain hemlock, Sitka spruce, western hemlock, or western red cedar, and must be within flight distance to marine foraging areas for marbled murrelets.

    The most important characteristic of marbled murrelet nesting habitat is the presence of nest platforms. These structures are typically found in old-growth and mature forests, but can also be found in a variety of forest types including younger forests containing remnant large trees. Potential nesting areas may contain fewer than one suitable nesting tree per acre and nest trees may be scattered or clumped throughout the area. Large areas of unfragmented forest are necessary to minimize edge effects and reduce the impacts of nest predators to increase the probability of nest success. Forests are dynamic systems that occur on the landscape in a mosaic of successional stages, both as the result of natural disturbances (fire, windthrow) or anthropogenic management (timber harvest). On a landscape basis, forests with a canopy height of at least one-half the site-potential tree height in proximity to potential nest trees contribute to the conservation of the marbled murrelet. Trees of at least one-half the site-potential height are tall enough to reach up into the lower canopy of nest trees, which provides nesting murrelets more cover from predation. The site-potential tree height is the average maximum height for trees given the local growing conditions, and is based on species-specific site index tables. The earlier successional stages of forest also play an essential role in providing suitable nesting habitat for the marbled murrelet, as they proceed through successional stages and develop into the relatively large, unfragmented blocks of suitable nesting habitat needed for the conservation of the species.

    III. Primary Constituent Elements for the Marbled Murrelet

    As stated above under Previous Federal Actions, the rule revising 50 CFR 424.12 was published on February 11, 2016 (81 FR 7413), and became effective on March 14, 2016, and the revised version of § 424.12 applies only to rulemakings for which the proposed rule is published after that date. Thus, the prior version of § 424.12 will continue to apply to any rulemakings for which a proposed rule was published before that date. Because the proposed rule for marbled murrelet critical habitat was published on August 25, 2015, this final rule follows the version of § 424.12 that was in effect prior to March 14, 2016.

    According to 50 CFR 424.12(b), we are required to identify the physical or biological features essential to the conservation of the marbled murrelet within the geographical area occupied at the time of listing, focusing on the “primary constituent elements” (PCEs) of those features. We consider PCEs to be those specific elements of the physical or biological features that provide for a species' life-history processes and are essential to the conservation of the species. For the marbled murrelet, those life-history processes associated with terrestrial habitat are specifically related to nesting. Therefore, as previously described in our designation of critical habitat for the marbled murrelet (61 FR 26256; May 24, 1996), and further supported by more recent information, our designation of critical habitat focused on the following PCEs specific to the marbled murrelet:

    (1) Individual trees with potential nesting platforms, and

    (2) forested areas within 0.5 mile (0.8 kilometer) of individual trees with potential nesting platforms, and with a canopy height of at least one-half the site-potential tree height. This includes all such forest, regardless of contiguity.

    These PCEs are essential to provide and support suitable nesting habitat for successful reproduction of the marbled murrelet.

    IV. Special Management Considerations or Protection

    In our evaluation of whether the current designation meets the statutory definition of critical habitat, we assessed not only whether the specific areas within the geographical area occupied by the species at the time of listing contain the physical or biological features essential to the conservation of the species, but also whether those features may require special management considerations or protection. Here we describe the special management considerations or protections that apply to the physical or biological features and PCEs identified for the marbled murrelet.

    As discussed above and in the 1996 final rule designating critical habitat (May 24, 1996; 61 FR 26261-26263), marbled murrelets are found in forests containing a variety of forest structure, which is in part the result of varied management practices and natural disturbance (Hansen et al. 1991, p. 383; McComb et al. 1993, pp. 32-36). In many areas, management practices have resulted in fragmentation of the remaining older forests and creation of large areas of younger forests that have yet to develop habitat characteristics suitable for marbled murrelet nesting (Hansen et al. 1991, p. 387). Past and current forest management practices have also resulted in a forest age distribution skewed toward younger even-aged stands at a landscape scale (Hansen et al. 1991, p. 387; McComb et al. 1993, p. 31). Bolsinger and Waddell (1993, p. 2) estimated that old-growth forest in Washington, Oregon, and California had declined by two-thirds statewide during the previous five decades.

    Current and historical loss of marbled murrelet nesting habitat is generally attributed to timber harvest and land conversion practices, although, in some areas, natural catastrophic disturbances such as forest fires have caused losses (Hansen et al. 1991, pp. 383, 387; Ripple 1994, p. 47; Bunnell 1995, pp. 638-639; Raphael et al. 2011, pp. 34-39; Raphael et al. 2015 in prep, pp. 94-96). Reduction of the remaining older forest has not been evenly distributed in western Washington, Oregon, and California. Timber harvest has been concentrated at lower elevations and in the Coast Ranges (Thomas et al. 1990, p. 63), generally overlapping the range of the marbled murrelet. In California today, more than 95 percent of the original old-growth redwood forest has been logged, and 95 percent of the remaining old-growth is now in parks or reserves (Roa 2007, p. 169).

    Some of the forests that were affected by past natural disturbances, such as forest fires and windthrow, currently provide suitable nesting habitat for marbled murrelets because they retain scattered individual or clumps of large trees that provide structure for nesting (Hansen et al. 1991, 383; McComb et al. 1993, p. 31; Bunnell 1995, p. 640). This is particularly true in coastal Oregon where extensive fires occurred historically. Marbled murrelet nests have been found in remnant old-growth trees in mature and young forests in Oregon. Forests providing suitable nesting habitat and nest trees generally require 200 to 250 years to develop characteristics that supply adequate nest platforms for marbled murrelets. This time period may be shorter in redwood and western hemlock forests and in areas where significant remnants of the previous stand remain. Intensively managed forests in Washington, Oregon, and California have been managed on average cutting rotations of 70 to 120 years (USDI 1984, p. 10). Cutting rotations of 40 to 50 years are common for some private lands. Timber harvest strategies on Federal lands and some private lands have emphasized dispersed clear-cut patches and even-aged management. Forest lands that are intensively managed for wood fiber production are generally prevented from developing the characteristics required for marbled murrelet nesting. In addition, suitable nesting habitat that remains under these harvest patterns is highly fragmented.

    Within the range of the marbled murrelet on Federal lands, the Northwest Forest Plan (NWFP) (USDA and USDI 1994, entire) designated a system of Late Successional Reserves (LSRs), which provides large areas expected to eventually develop into contiguous, unfragmented forest. In addition to LSRs, the NWFP designated a system of Adaptive Management Areas, where efforts focus on answering management questions, and matrix areas, where most forest production occurs. Administratively withdrawn lands, as described in the individual National Forest or BLM land use plans, are also part of the NWFP.

    In the 1996 final rule, we acknowledged the value of implementation of the NWFP as an integral role in marbled murrelet conservation. As a result, designated critical habitat on lands within the NWFP area administered by the National Forests and BLM was congruent with LSRs. These areas, as managed under the NWFP, should develop into large blocks of suitable murrelet nesting habitat given sufficient time. However, LSRs are plan-level designations with less assurance of long-term persistence than areas designated by Congress. Designation of LSRs as critical habitat complements and supports the NWFP and helps to ensure persistence of this management directive over time. These lands managed under the NWFP require special management considerations or protection to allow the full development of the essential physical or biological features as represented by large blocks of forest with the old-growth characteristics that will provide suitable nesting habitat for marbled murrelets.

    In some areas, the large blocks of Federal land under the NWFP are presently capable of providing the necessary contribution for recovery of the species. However, the marbled murrelet's range includes areas that are south of the range of the northern spotted owl (the focus of the NWFP), where Federal lands are subject to timber harvest. Therefore, the critical habitat designated on Federal lands outside of the NWFP also require special management considerations or protection to enhance or restore the old-growth characteristics required for nesting by marbled murrelets, and to attain the large blocks of contiguous habitat necessary to reduce edge effects and predation.

    In the 1996 critical habitat rule (May 24, 1996; 61 FR 26256), the Service designated selected non-Federal lands that met the requirements identified in the Criteria for Identifying Critical Habitat section, in those areas where Federal lands alone were insufficient to provide suitable nesting habitat for the recovery of the species. For example, State lands were considered to be particularly important in southwestern Washington, northwestern Oregon, and in California south of Cape Mendocino. Small segments of county lands were also included in northwestern Oregon and central California. Some private lands were designated as critical habitat because they provided essential elements and occurred where Federal lands were, and continue to be, very limited, although suitable habitat on private land is typically much more limited than on public lands. In California, south of Cape Mendocino, State, county, city, and private lands contain the last remnants of nesting habitat for the southernmost population of murrelets, which is the smallest, most isolated, and most susceptible to extirpation. All of the non-Federal lands have been and continue to be subject to some amount of timber harvest and habitat fragmentation and lower habitat effectiveness due to human activity. Therefore, all non-Federal lands within the designation require special management considerations or protection to preserve suitable nesting habitat where it is already present, and to provide for the development of suitable nesting habitat in areas currently in early successional stages.

    In summary, areas that provide the essential physical or biological features and PCEs for the marbled murrelet may require special management considerations or protection. Because succession has been set back or fragmentation has occurred due to either natural or anthropogenic disturbance, those essential features may require special management considerations or protections to promote the development of the large, contiguous blocks of unfragmented, undisturbed coniferous forest with old-growth characteristics (i.e., nest platforms) required by marbled murrelets. Areas with these characteristics provide the marbled murrelet with suitable nesting habitat, and reduce edge effects, such as increased predation, resulting in greater nest success for the species. Areas that currently provide suitable nesting habitat for the marbled murrelet may require protection to preserve those essential characteristics, as the development of old-growth characteristics may take hundreds of years and thus cannot be easily replaced once lost.

    V. Definition of Geographical Area Occupied at the Time of Listing

    Critical habitat is defined as “the specific areas within the geographical area occupied by the species, at the time it is listed” under section (3)(5)(A)(i) of the Act, on which are found those physical or biological features essential to the conservation of the species and which may require special management considerations or protection. For the purposes of critical habitat, the Service must first determine what constitutes the geographical area occupied by the species at the time of listing. We consider this to be a relatively broad-scale determination, as the wording of the Act clearly indicates that the specific areas that constitute critical habitat will be found within some larger geographical area. We consider the “geographical area occupied by the species” at the time of listing, for the purposes of section 3(5)(A)(i), to be the area that may be broadly delineated around the occurrences of a species, or generally equivalent to what is commonly understood as the “range” of the species. We consider a species occurrence to be a particular location in which individuals of the species are found throughout all or part of their life cycle, even if not used on a regular basis (e.g., migratory corridors, seasonal habitats, and habitats used periodically, but not solely by vagrant individuals). Because the “geographical area occupied by the species” can, depending on the species at issue and the relevant data available, be defined on a relatively broad, coarse scale, individuals of the species may or may not be present within each area at a smaller scale within the geographical area occupied by the species. For the purposes of critical habitat, then, we consider an area to be “occupied” (within the geographical area occupied by the species) if it falls within the broader area delineated by the species' occurrences, i.e., its range.

    Within the listed DPS, at-sea observations indicate marbled murrelets use the marine environment along the Pacific Coast from the British Columbia, Canada/Washington border south to the Mexico/California border. Because they must fly back and forth to the nest from their marine foraging areas, marbled murrelets use inland areas for nesting that are nearby to those areas used by the species offshore. The inland extent of terrestrial habitat use varies from north to south and depends upon the presence of nesting structures in relation to marine foraging areas. Marbled murrelets have been detected as far inland as 70 miles (mi) (113 kilometers (km)) in Washington, but the inland extent narrows going south, where marbled murrelets generally occur within 25 mi (40 km) of the coast in California. At a broad scale, the geographical area occupied by the listed DPS of the marbled murrelet at the time of listing includes the west coast from the British Columbia, Canada/Washington border south to the Mexico/California border, ranging inland from approximately 70 mi (113 km) in Washington to roughly 25 mi (40 km) of the coast in California. However, the inland nesting habitat extends southward in California only to just south of Monterey Bay. Occurrence data that supports this geographic range includes at-sea surveys, radar detections, radio-telemetry studies, and audiovisual surveys.

    At the time the marbled murrelet was listed (October 1, 1992; 57 FR 45328), occurrence data were very limited. However, the geographic range was generally known at that time, with the exception of the exact inland extent.

    We now describe what is known about marbled murrelet use of the critical habitat subunits that were designated in 1996, as revised in 2011. In 1996, only terrestrial areas were designated as critical habitat. Terrestrial habitat is used by the marbled murrelet only for the purpose of nesting; therefore, we focus on those specific areas used for nesting by the species. Because we did not designate critical habitat in the marine environment, that aspect of the species' life history or available data will not be discussed further, unless it is pertinent to the terrestrial habitat.

    At the landscape scale, marbled murrelets show fidelity to marine foraging areas and may return to specific watersheds for nesting (Nelson 1997, pp. 13, 16-17, 20; Cam et al. 2003, p. 1123). For example, marbled murrelets have been observed to return to the same specific nest branches or sites (Hebert and Golightly 2006, p. 270; Bloxton and Raphael 2009, p. 11). Repeated surveys in nesting stands have revealed site tenacity similar to that of other birds in the alcid family (Huff et al. 2006, p. 12) in that marbled murrelets have been observed in the same suitable habitat areas for more than 20 years in California and Washington. Based on the high site tenacity exhibited by marbled murrelets, it is highly likely that areas found to be used by marbled murrelets since listing in 1992 were also being used at the time of listing. Therefore, in order to determine whether any particular area was being used at the time the marbled murrelet was listed, we used all years of survey data available to us (for example, through 2013 in Washington, and some data through 2014 for California).

    Not all survey data are indicative of nesting. The specific types of data that we relied upon include audiovisual surveys and specific nest locations, which may have been located through radio-telemetry studies, tree climbing, chicks on the ground, or eggshell fragments. Audiovisual surveys result in a variety of detections, only some of which are specific indicators of nesting behavior tied to the area being surveyed. The types of behaviors that are indicative of nesting include: sub-canopy behaviors, circling above the canopy, and stationary calling. Other types of detections, such as radar and fly-overs observed during audiovisual surveys, provide information regarding the general use of an area, but generally do not tie the observed individual(s) to a specific forested area (Evans Mack et al. 2003, pp. 20-23).

    There continue to be gaps in our knowledge of marbled murrelet use in the terrestrial environment. Surveys are site/project specific and generally have been conducted for the purposes of allowing timber harvest. Surveys not conducted in adherence to the strict protocol may have missed nesting behaviors due to the cryptic nature of marbled murrelets and their nests. For example, a single visit to a location where marbled murrelets are present has only a 55 percent chance of detecting marbled murrelets (Evans Mack et al. 2003, p. 39). In addition, on some lands, such as Federal LSRs, our history of consultation under section 7 of the Act demonstrates that, in general, land managers choose not to conduct surveys to determine site “presence”; rather they consider the suitable habitat to be used by nesting murrelets and adjust their projects accordingly. Therefore, we recognize that our information regarding marbled murrelet use of the terrestrial landscape is incomplete; however, we have determined that the information used in this document is the best scientific data available.

    We consider the geographical area occupied by the species at the time of listing for the purposes of critical habitat to be equivalent to the nesting range of the marbled murrelet, for the reasons described above. However, it is important to note that, at the time of listing, we may not have had data that definitively demonstrated the presence of nesting murrelets within each specific area designated as critical habitat. Some of these areas still lack adequate survey information. Yet because these areas fall within the broader nesting range of the species, we consider them to have been occupied at the time of listing. For the purposes of clarity, we further evaluated the specific areas within that broader geographic range to determine whether we have documented detections of behaviors indicative of nesting by the marbled murrelet at the scale of each subunit. The following types of data are indicative of the marbled murrelet's use of forested areas for nesting and will be relied upon to make the determination of whether we have documentation of nesting behavior by critical habitat subunit:

    (a) Data indicative of nesting behavior. A subunit with any of the following data will be considered to have a documented detection of nesting behavior. We consider one detection in a subunit sufficient to support a positive nesting behavior determination for the entire subunit.

    (1) Audiovisual surveys conducted according to the Pacific Seabird Group (PSG) survey protocol (Evans Mack et al. 2003 or earlier versions). Detection types that are indicative of nesting include: sub-canopy behaviors (such as flying through the canopy or landing), circling above the canopy, and stationary calling.

    (2) Nest locations obtained through radio-telemetry tracking, tree climbing, eggshell fragments, and chicks on the ground.

    (b) Contiguity of forested areas within which nesting behaviors have been observed. According to the PSG protocol (Evans Mack et al. 2003), a contiguously forested area with detections indicative of nesting behavior is deemed to be used by nesting marbled murrelets throughout its entirety. Therefore, any subunits where there were no detections of behaviors indicative of nesting or possibly no surveys, but the forested areas in the subunit are contiguous with forested areas extending outside of the subunit within which there are documented nesting behaviors, will be deemed to be positive in terms of a nesting behavior detection.

    Radar-based marbled murrelet detections and presence-only detections (such as flying over or heard only) resulting from audiovisual surveys were not used to classify a subunit as positive in terms of nesting behavior detections. Even though these detections indicate use of an area by marbled murrelets, these types of detections do not link murrelet nesting to specific areas of forested habitat.

    In Washington and California, occurrence data, including nest locations and audiovisual survey data, are maintained in State wildlife agency databases. The Washington Department of Fish and Wildlife marbled murrelet data was obtained by the Service on June 19, 2014, and includes data collected through 2013. The California Department of Fish and Wildlife's marbled murrelet occurrence database, as currently maintained by the Arcata Fish and Wildlife Office, was accessed on February 5, 2015. The database includes information on some surveys conducted through 2006, with one observation from 2014, but is incomplete for the State. Audiovisual surveys in Oregon are not maintained in a centralized database. The Service, through a cooperative agreement, provided funds to the Oregon State University to obtain and collate Oregon survey data. The data provided to the Service included surveys through 2003, mainly on Federal lands. Additionally, the BLM and Oregon Department of Forestry provided a summary of current survey data, as of March 2015, within critical habitat in Oregon. Survey data for private lands in Oregon were not available.

    VI. Specific Areas Occupied at the Time of Listing

    We have determined that all 101 subunits designated as critical habitat in 1996, as revised in 2011, are within the geographical range occupied by the species at the time of listing, and all 101 subunits contain the physical or biological features and PCEs essential to the conservation of the species. Evidence of the presence of PCEs is based on nests located within a subunit, nesting behavior detections, audiovisual survey station placements (generally surveys are conducted only if there are nesting platforms present in the forested area), and specific forest inventory data. All of these forms of evidence point to the presence of PCE 1, nesting platforms, within the subunit, as well as the presence of PCE 2. In addition, within all 101 subunits, the essential physical or biological features and PCEs may require special management considerations or protection, as described above, because these subunits have received or continue to receive some level of timber harvest, fragmentation of the forested landscape, and reduced habitat effectiveness from human activity. Therefore, all 101 subunits meet the definition of critical habitat under section 3(5)(A)(i) of the Act.

    Of the 101 subunits, 78 (all critical habitat subunits except for those identified in Table 1, below) have either specific nesting behavior detection data within the subunit or forested areas within the subunit that are contiguous with forested areas within which nesting behaviors have been observed. In total, the 78 subunits with nesting behavior detections account for 3,335,400 ac (1,349,800 ha), or 90 percent of the total designation. These 78 subunits all contain the physical or biological features and PCEs essential to the conservation of the species, which may require special management considerations or protection, as described above, because these subunits have received or continue to receive some level of timber harvest, fragmentation of the forested landscape, and reduced habitat effectiveness from human activity. Therefore, we conclude that these 78 subunits meet the definition of critical habitat under section 3(5)(A)(i) of the Act.

    Table 1—Marbled Murrelet Critical Habitat Subunits Without Detections Indicative of Nesting Behavior Subunit WA-04a WA-11d OR-01d OR-06a OR-06c OR-07f OR-07g CA-01d CA-01e CA-04b CA-05a CA-05b CA-06a CA-06b CA-07b CA-07c CA-08a CA-08b CA-09a CA-09b CA-11b CA-13 CA-14c

    There are 23 subunits that did not have data indicating marbled murrelet nesting behaviors at the time of listing (Table 1). All of these subunits, however, are within the range of the species at the time of listing, and, hence, we consider them to be occupied. Of these 23 subunits, 2 are in Washington, 5 are in Oregon, and 16 are in California, totaling up to 362,600 ac (145,800 ha) or 10 percent of the designation. We have determined that all 23 subunits contain the essential physical or biological features and PCEs based on specific forest inventory data and audiovisual survey station placements. Only 7 of these 23 subunits have received partial or complete surveys to determine use by marbled murrelets. Very limited inland distribution information was available when the species was listed (1992) and in 1996 when critical habitat was designated (May 24, 1996; 61 FR 26256, pp. 26269-26270). However, continued survey efforts have filled in gaps in the distribution that were not known at the time of listing. For example, as of June 2014, the Washington Department of Fish and Wildlife murrelet detection database contained 5,225 nesting behavior detections. Of these 5,225 detections, only 254 were from surveys before 1992, and only 2,149 were prior to 1996. Therefore, our opinion is that, had surveys been conducted in many of these 23 subunits, nesting behaviors would likely have been detected.

    Even if these 23 subunits were considered unoccupied at the time of listing because we do not have specific documentation of nesting behaviors, the Act permits designation of such areas as critical habitat if they are essential for the conservation of the species. We evaluated whether each of these 23 subunits are essential for the conservation of the species. In this evaluation we considered: (1) The importance of the areas to the future recovery of the species; (2) whether the areas have or are capable of providing the essential physical or biological features; and (3) whether the areas provide connectivity between marine and terrestrial habitats. As stated above, we determined that all 23 subunits contain the physical or biological features and PCEs for the marbled murrelet; therefore, all 23 subunits provide essential nesting habitat that is currently limited on the landscape. In particular, 13 subunits in California that are south of Cape Mendocino contain the last remnants of nesting habitat in that part of California. All 101 designated subunits work together to create a distribution of essential nesting habitat from north to south and inland from marine foraging areas. All of the designated critical habitat units occur within areas identified in the draft and final recovery plans for the marbled murrelet (USFWS 1995 and 1997, entire) as essential for the conservation of the species. Maintaining and increasing suitable nesting habitat for the marbled murrelet is a key objective for the conservation and recovery of the species, by providing for increases in nest success and productivity needed to attain long-term population viability. Based upon this information, we have determined that all of the 23 subunits where nesting behaviors have not been documented are, nonetheless, essential for the conservation of the species. Therefore, even if these 23 subunits were considered unoccupied, we conclude that they meet the definition of critical habitat under section 3(5)(A)(ii) of the Act.

    VII. All Critical Habitat Is Essential to the Conservation of the Marbled Murrelet

    As described above, all areas designated as critical habitat for the marbled murrelet (101 subunits) contain the physical or biological features and PCEs essential to the conservation of the species, which may require special management considerations or protection. We recognize that the physical or biological features and PCEs may not be uniformly distributed throughout these 101 subunits because historical harvest patterns and natural disturbances have created a mosaic of multiple-aged forests. Replacement of essential physical or biological features and PCEs for the marbled murrelet can take centuries to grow.

    We have additionally evaluated all currently designated critical habitat for the marbled murrelet applying the standard under section 3(5)(A)(ii) of the Act, and have determined that all 101 subunits included in this designation are essential for the conservation of the species. As detailed above, we have determined that all areas of critical habitat, whether known to be occupied at the time of listing or not, contain the physical or biological features and PCEs for the marbled murrelet. All 101 designated subunits work together to create a distribution of essential nesting habitat from north to south and inland from marine foraging areas, and occur within areas identified in the draft and final recovery plans for the marbled murrelet (USFWS 1995 and 1997, entire) as essential for the conservation of the species. All areas designated as critical habitat are essential for the conservation and recovery of the marbled murrelet by maintaining and increasing suitable nesting habitat and limiting forest fragmentation, thereby providing for increases in nest success and productivity to attain long-term population viability of the species. Therefore, we have determined that all areas currently identified as critical habitat for the marbled murrelet, whether confirmed to be occupied at the time of listing or not, are essential for the conservation of the species and meet the definition of critical habitat under section 3(5)(A)(ii) of the Act. Recent population and suitable habitat research confirms that these areas continue to be essential because the marbled murrelet population has declined since listing (Miller et al. 2012, entire) and continues to decline in Washington (Lance and Pearson 2015, pp. 4-5), hence suitable nesting areas are of increased importance to provide recovery potential for the marbled murrelet. In addition, while habitat loss has slowed since adoption of the NWFP, suitable nesting habitat continues to be lost to timber harvest (Raphael et al. 2015 in prep, pp. 94-95).

    VIII. Restated Correction

    The preamble to the 1996 final critical habitat rule (May 24, 1996; 61 FR 26265) stated that, within the boundaries of designated critical habitat, only those areas that contain one or more PCEs are, by definition, critical habitat, and areas without any PCEs are excluded by definition. This statement was in error; we clarified this language in the revised critical habitat rule published in 2011 (October 5, 2011; 76 FR 61599, p. 61604), and we reemphasize this correction here. By introducing some ambiguity in our delineation of critical habitat, this language was inconsistent with the requirement that each critical habitat unit be delineated by specific limits using reference points and lines (50 CFR 424.12(c)). The Service does its best not to include areas that obviously cannot attain PCEs, such as alpine areas, water bodies, serpentine meadows, lava flows, airports, buildings, parking lots, etc. (May 24, 1996; 61 FR 26256, p. 26269). However, the scale at which mapping is done for publication in the Code of Federal Regulations does not allow precise identification of these features, and, therefore, some may fall within the critical habitat boundaries. Hence, all lands within the mapped critical habitat boundaries for the marbled murrelet are critical habitat.

    IX. Effects of Critical Habitat Designation

    Section 7(a)(2) of the Act requires Federal agencies, including the Service, to ensure that any action they fund, authorize, or carry out is not likely to jeopardize the continued existence of any endangered species or threatened species or result in the destruction or adverse modification of designated critical habitat of such species.

    We published a final regulation with a new definition of destruction or adverse modification on February 11, 2016 (81 FR 7214), which became effective on March 14, 2016. Destruction or adverse modification means a direct or indirect alteration that appreciably diminishes the value of critical habitat for the conservation of a listed species. Such alterations may include, but are not limited to, those that alter the physical or biological features essential to the conservation of a species or that preclude or significantly delay development of such features.

    If a Federal action may affect a listed species or its critical habitat, the responsible Federal agency (action agency) must enter into consultation with us. Examples of actions that are subject to the section 7 consultation process are actions on State, tribal, local, or private lands that require a Federal permit (such as a permit from the U.S. Army Corps of Engineers under section 404 of the Clean Water Act (33 U.S.C. 1251 et seq.) or a permit from the Service under section 10 of the Act) or that involve some other Federal action (such as funding from the Federal Highway Administration, Federal Aviation Administration, or the Federal Emergency Management Agency). Federal actions not affecting listed species or critical habitat, and actions on State, tribal, local, or private lands that are not federally funded or authorized, do not require section 7 consultation.

    As a result of section 7 consultation, we document compliance with the requirements of section 7(a)(2) through our issuance of:

    (1) A concurrence letter for Federal actions that may affect, but are not likely to adversely affect, listed species or critical habitat; or

    (2) A biological opinion for Federal actions that may affect and are likely to adversely affect, listed species or critical habitat.

    When we issue a biological opinion concluding that a project is likely to jeopardize the continued existence of a listed species and/or destroy or adversely modify critical habitat, we provide reasonable and prudent alternatives to the project, if any are identifiable, that would avoid the likelihood of jeopardy and/or destruction or adverse modification of critical habitat. We define “reasonable and prudent alternatives” (at 50 CFR 402.02) as alternative actions identified during consultation that:

    (1) Can be implemented in a manner consistent with the intended purpose of the action,

    (2) Can be implemented consistent with the scope of the Federal agency's legal authority and jurisdiction,

    (3) Are economically and technologically feasible, and

    (4) Would, in the Director's opinion, avoid the likelihood of jeopardizing the continued existence of the listed species and/or avoid the likelihood of destroying or adversely modifying critical habitat.

    Reasonable and prudent alternatives can vary from slight project modifications to extensive redesign or relocation of the project. Costs associated with implementing a reasonable and prudent alternative are similarly variable.

    Regulations at 50 CFR 402.16 require Federal agencies to reinitiate consultation on previously reviewed actions in instances where we have listed a new species or subsequently designated critical habitat that may be affected and the Federal agency has retained discretionary involvement or control over the action (or the agency's discretionary involvement or control is authorized by law). Consequently, Federal agencies sometimes may need to request reinitiation of consultation with us on actions for which formal consultation has been completed, if those actions with discretionary involvement or control may affect subsequently listed species or designated critical habitat.

    We recognize that critical habitat designated at a particular point in time may not include all of the habitat areas that we may later determine are necessary for the recovery of the species. For these reasons, a critical habitat designation does not signal that habitat outside the designated area is unimportant or may not be needed for recovery of the species. Areas that are important to the conservation of the species, both inside and outside the critical habitat designation, will continue to be subject to: (1) Conservation actions implemented under section 7(a)(1) of the Act, (2) regulatory protections afforded by the requirement in section 7(a)(2) of the Act for Federal agencies to ensure their actions are not likely to jeopardize the continued existence of any endangered or threatened species, and (3) section 9 of the Act's prohibitions on taking any individual of the species, including taking caused by actions that affect habitat. Federally funded or permitted projects affecting listed species outside their designated critical habitat areas may still result in jeopardy findings in some cases. These protections and conservation tools will continue to contribute to recovery of this species. Similarly, critical habitat designations made on the basis of the best available information at the time of designation will not control the direction and substance of future recovery plans, habitat conservation plans (HCPs), or other species conservation planning efforts if new information available at the time of these planning efforts calls for a different outcome.

    The key factor related to the adverse modification determination is whether, with implementation of the proposed Federal action, the affected critical habitat would continue to serve its intended conservation role for the species. Activities that may destroy or adversely modify critical habitat are those that result in a direct or indirect alteration that appreciably diminishes the value of critical habitat for the conservation of the marbled murrelet. Such alterations may include, but are not limited to, those that alter the physical or biological features essential to the conservation of the species or that preclude or significantly delay development of such features. As discussed above, the role of critical habitat is to support physical or biological features essential to the conservation of a listed species and provide for the conservation of the species.

    Section 4(b)(8) of the Act requires us to briefly evaluate and describe, in any proposed or final regulation that designates critical habitat, activities involving a Federal action that may destroy or adversely modify such habitat, or that may be affected by such designation.

    Activities that may affect critical habitat, when carried out, funded, or authorized by a Federal agency, should result in consultation for the marbled murrelet. A detailed explanation of the regulatory effects of critical habitat in terms of consultation under section 7 of the Act and application of the adverse modification standard is provided in the October 5, 2011, final rule revising critical habitat for the marbled murrelet (76 FR 61599).

    X. Economic Considerations

    As required by section 4(b)(2) of the Act and its implementing regulations, we fully considered the economic impact that may result from specifying any particular area as critical habitat. If critical habitat has not been previously designated, the probable economic impact of a proposed critical habitat designation is analyzed by comparing scenarios both “with critical habitat” and “without critical habitat.” The “without critical habitat” scenario represents the baseline for the analysis, and includes the existing regulatory and socio-economic burden imposed on landowners, managers, or other resource users potentially affected by the designation of critical habitat (e.g., under the Federal listing as well as other Federal, State, and local regulations). In this case the baseline represents the costs of all efforts attributable to the listing of the species under the Act (i.e., conservation of the species and its habitat incurred regardless of whether critical habitat is designated). The “with critical habitat” scenario describes the incremental impacts associated specifically with the designation of critical habitat for the species. These are the conservation efforts and associated impacts that would not be expected but for the designation of critical habitat for the species. In other words, the incremental costs are those attributable solely to the designation of critical habitat, above and beyond the baseline costs. These incremental costs represent the potential economic impacts we consider in association with a designation or revision of critical habitat, as required by the Act.

    Baseline protections as a result of the listed status of the marbled murrelet include sections 7, 9, and 10 of the Act, and any economic impacts resulting from these protections to the extent they are expected to occur absent the designation of critical habitat:

    • Section 7 of the Act, even absent critical habitat designation, requires Federal agencies to consult with the Service to ensure that any action authorized, funded, or carried out will not likely jeopardize the continued existence of any endangered or threatened species. Consultations under the jeopardy standard result in administrative costs, as well as impacts of conservation efforts resulting from consideration of this standard.

    • Section 9 defines the actions that are prohibited by the Act. In particular, it prohibits the “take” of endangered wildlife, where “take” means to harass, harm, pursue, hunt, shoot, wound, kill, trap, capture, or collect, or to attempt to engage in any such conduct. The economic impacts associated with this section manifest themselves in sections 7 and 10.

    • Under section 10(a)(1)(B) of the Act, an entity (e.g., a landowner or local government) may develop an HCP for a listed animal species in order to meet the conditions for issuance of an incidental take permit in connection with a land or water use activity or project. The requirements posed by the HCP may have economic impacts associated with the goal of ensuring that the effects of incidental take are adequately avoided or minimized. The development and implementation of HCPs is considered a baseline protection for the species and habitat unless the HCP is determined to be precipitated by the designation of critical habitat, or the designation influences stipulated conservation efforts under HCPs.

    In the present rulemaking, we are not starting from a “without critical habitat” baseline. In this particular case, critical habitat has been in place for the marbled murrelet since May 24, 1996 (61 FR 26256), and was most recently revised on October 5, 2011 (76 FR 61599). Because the 2011 revision resulted only in the removal of some areas of critical habitat, all areas remaining in the current designation have been critical habitat for the marbled murrelet since 1996. This current critical habitat designation formed the baseline for our consideration of the potential economic impacts of the proposed rule.

    In the proposed rule, we described our evaluation and conclusion that all of the currently designated areas meet the statutory definition of critical habitat for the marbled murrelet. Specifically, we clarified that all areas are within the range of the marbled murrelet and, therefore, occupied by the species at the time of listing, and contain the physical or biological features essential to the conservation of the species, which may require special management consideration or protection. Furthermore, although all areas are considered to have been occupied at the time of listing, all areas do not necessarily have specific data indicating known detections of nesting murrelets at the time of listing. Upon further evaluation, we determined that all critical habitat, regardless of whether we have information indicating definitive use by nesting murrelets at the time of listing, is essential for the conservation of the species. As a result of our evaluation, we did not propose any modification to the boundaries of critical habitat for the marbled murrelet, nor did we propose any changes to the definition of the PCEs (May 24, 1996; 61 FR 26256). We fully considered all substantive comments and relevant information received on our proposed determination of critical habitat for the marbled murrelet; our consideration of this information did not lead to any changes from our proposed rule in this final rule.

    We considered the probable incremental economic impacts of the proposed rule with regard to critical habitat for the marbled murrelet. As described in our proposed rule, critical habitat has already been in place for the marbled murrelet for 20 years; as we are not changing any of the critical habitat boundaries or PCEs, and as Federal action agencies consult on the effects to the PCEs rather than the species itself with regard to actions in critical habitat, we do not anticipate any additional costs as a result of the clarification of areas occupied at the time of listing. Our evaluation of the probable economic impacts of our proposed determination of critical habitat for the marbled murrelet was available for public review during the comment period on our proposed rule from August 25, 2015, through October 26, 2015 (August 25, 2015; 80 FR 51506). Following the close of the comment period, we reviewed and evaluated all information submitted that may pertain to our consideration of the probable incremental economic impacts of this critical habitat rule. We fully considered public comment on our evaluation, as well as information supplied by the action agencies with whom we regularly consult with regard to marbled murrelet critical habitat (details below). Those action agencies confirmed our conclusion that our clarification of how the areas currently designated as critical habitat meet the statutory definition under the Act is unlikely to result in any additional costs, regardless of occupancy status.

    Our conclusion that this critical habitat rule will not result in incremental economic impacts is based upon the following evaluation. Critical habitat designation will not affect activities that do not have any Federal involvement; designation of critical habitat affects only activities conducted, funded, permitted, or authorized by Federal agencies. In areas where the marbled murrelet is present, Federal agencies already are required to consult with the Service under section 7 of the Act on activities they fund, permit, or implement that may affect the species. In this particular case, because all areas that we have considered are already designated as critical habitat for the marbled murrelet, where a Federal nexus occurs, consultations to avoid the destruction or adverse modification of critical habitat have been incorporated into the existing consultation process. Federal agencies have been consulting under section 7 of the Act on critical habitat for the marbled murrelet for approximately 20 years. As our proposed rule did not include the addition of any new areas as critical habitat, any probable economic impacts resulting from the proposed rule would result solely from our clarification of how all of the areas currently designated meet the statutory definition of critical habitat. The incremental economic impacts of our rulemaking would, therefore, be equal to any additional costs incurred as the result of a difference between the outcome of consultations as they are currently conducted and consultations as they would be conducted if the proposed rule were to become final.

    Based upon our evaluation and as described in our proposed rule, we do not anticipate changes to the consultation process or effect determinations made for critical habitat as a result of our evaluation and conclusion that all areas meet the definition of critical habitat under the Act. In addition, we do not anticipate requiring additional or different project modifications than are currently requested when an action “may affect” critical habitat. Therefore, it is the Service's expectation that this final rule clarifying the 1996 critical habitat designation, as revised in 2011, which explains how all areas within the boundaries of the current designation meet the definition of critical habitat under the Act, will result in no additional (incremental) economic impacts.

    In order to confirm the accuracy of our assessment of the potential economic impacts of the proposed rule, we asked those Federal action agencies that manage lands that are critical habitat or with whom we have consulted over the past 20 years on marbled murrelet critical habitat to review our evaluation and characterization of the changes, if any, to consultation under section 7 that may be anticipated as a consequence of the proposed rule. We specifically asked each agency whether our proposed rule would be likely to result in any additional economic impacts on their agency (incremental impacts), above and beyond those already incurred as a result of the current critical habitat designation for the marbled murrelet (baseline impacts). Based on our consultation history with Federal agencies, it is our understanding that action agencies currently consult on effects to marbled murrelet critical habitat through an analysis of the effects to the PCEs. We asked the action agencies to confirm or correct this understanding, and to verify our characterization of how these consultations take place under the current designation, which we described as follows:

    • If an action will take place within designated critical habitat, the action agency considers the action area to be critical habitat, irrelevant of the presence of PCEs. The action agency then determines whether there are PCEs within the action area. If the action agency determines there are no PCEs within the action area, the agency makes a “no effect” determination and the Service is not consulted.

    • If the action agency determines there are PCEs within the action area, they analyze the action's potential effects on the PCEs, which may result in a “no effect” or “may effect” determination. If the action agency determines the action “may affect” the PCEs, they undergo section 7 consultation with the Service.

    Whether the critical habitat subunit or action area is considered to be “occupied” by the species is irrelevant to the effect determination made for critical habitat. Rather, the determination of “occupancy” is relevant to the effect determination for the species and any minimization measures that may be implemented (such as project timing).

    In the proposed rule we clarified that we consider all areas to have been occupied by the species at the time of listing, and that all of these areas have the PCEs. Because occupancy of the critical habitat subunit or action area is considered irrelevant to the effect determination made for critical habitat, the Service does not anticipate changes to the consultation process or effect determinations made for critical habitat as a result of this determination. In addition, the Service does not anticipate requiring additional or different project modifications than are currently requested when an action “may affect” critical habitat. Therefore, we conclude that this final rule clarifying the 1996 critical habitat designation, as revised in 2011, which is limited to explaining how all areas within the boundaries of the current designation meet the definition of critical habitat under the Act, will not result in additional (incremental) costs to the Federal agencies.

    As noted above, we solicited review and comment on our draft summary of the anticipated economic impacts of the proposed rule from seven Federal agencies with whom we regularly consult on marbled murrelet critical habitat (the U.S. Forest Service (USFS), U.S. Bureau of Land Management (BLM), National Park Service (NPS), Bureau of Indian Affairs (BIA), U.S. Army Corps of Engineers, Federal Highway Administration, and Federal Energy Regulatory Commission). We received responses from four of these agencies: The USFS representing multiple national forests, the BLM representing multiple districts, the NPS representing Redwood National Park and State Parks partnership, and the BIA. All responses agreed with our evaluation of the potential incremental effects of the proposed rule, and confirmed that they did not anticipate any additional costs as a result of the clarification of areas occupied at the time of listing. Our initial letter of inquiry and all responses received from the action agencies are available for review in the Supplemental Materials folder at http://www.regulations.gov, Docket No. FWS-R1-ES-2015-0070.

    We additionally considered any potential economic impacts on non-Federal entities as a result of the proposed rule. In our experience, any economic impacts to non-Federal parties are generally associated with the development of HCPs under section 10(a)(1)(B) of the Act. However, as described above, in most cases the incentive for the development of an HCP is the potential issuance of an incidental take permit in connection with an activity or project in an area where a listed animal species occurs. HCPs are seldom undertaken in response to a critical habitat designation, but in such a case the costs associated with the development of an HCP prompted by the designation of critical habitat would be considered an incremental impact of that designation. In this particular situation, because we did not propose any changes to the boundaries of critical habitat, we did not anticipate the initiation of any new HCPs in response to the proposed rule; therefore, we did not anticipate any costs to non-Federal parties associated with HCP development. We did not receive any information during the public comment period that suggested this conclusion was in error.

    Other potential costs to non-Federal entities as a result of critical habitat designation might include costs to third-party private applicants in association with Federal activities. In most cases, consultations under section 7 of the Act involve only the Service and other Federal agencies, such as the U.S. Army Corps of Engineers. Sometimes, however, consultations may include a third party involved in projects that involve a permitted entity, such as the recipient of a Clean Water Act section 404 permit. In such cases, these private parties may incur some costs, such as the cost of applying for the permit in question, or the time spent gathering and providing information for a permit. These costs and administrative effort on the part of third-party applicants, if attributable solely to critical habitat, would be incremental impacts of the designation. In this particular case, however, because we did not propose any boundary changes to the current critical habitat designation, we did not anticipate any change from the current baseline conditions in terms of potential costs to third parties; therefore, we expected any incremental impacts to non-Federal parties associated with the proposed rule to be minimal. Again, we did not receive any information during the public comment period that would suggest this conclusion is in error.

    Based on our evaluation, the information provided to us by the Federal action agencies within the critical habitat area under consideration, and the information received during the public comment period on our proposed rule, we conclude that this final rule will result in little if any additional economic impact above baseline costs.

    XI. Determination

    We have examined all areas designated as critical habitat for the marbled murrelet in 1996 (May 24, 1996; 61 FR 26256), as revised in 2011 (October 5, 2011; 76 FR 61599), and evaluated whether all areas meet the definition of critical habitat under section 3(5)(A) of the Act. Based upon our evaluation, we have determined that all 101 subunits designated as critical habitat are within the geographical area occupied by the species at the time of listing, and each of these subunits provides the physical or biological features and PCEs essential to the conservation of the species, which may require special management considerations or protections. Therefore, we conclude that all areas designated as critical habitat for the marbled murrelet meet the definition of critical habitat under section 3(5)(A)(i) of the Act. Of the 101 subunits, 78 of those subunits had documented detections of nesting behavior at the time of listing. We have determined that we do not have sufficient data to definitively document nesting behavior within the other 23 subunits at the time of listing. However, even if these 23 subunits were considered unoccupied, the Secretary has determined that they are essential for the conservation of the species, as they contribute to the maintenance or increase of suitable nesting habitat required to achieve the conservation and recovery of the marbled murrelet; therefore, we conclude that they meet the definition of critical habitat under section 3(5)(A)(ii) of the Act.

    In addition, recognizing that the detection of nesting behaviors or the presence of essential physical or biological features or PCEs within a subunit may be evaluated on multiple scales, such that at some finer scales some subset of the subunit may be considered unoccupied or lacking in PCEs, we evaluated the designation in its entirety as if it were unoccupied under section 3(5)(A)(ii) of the Act, and found that all areas of critical habitat are essential for the conservation of the species. We have here clarified that we have evaluated all critical habitat for the marbled murrelet, and have concluded that in all cases the areas designated as critical habitat for the marbled murrelet meet the definition of critical habitat under section 3(5)(A) of the Act. In addition, as required by section 4(b)(2) of the Act, we have considered the potential economic impact of this clarification, and we have concluded that any potential economic effects resulting from this rulemaking are negligible.

    Therefore, we conclude that, under the Act, critical habitat as currently designated for the marbled murrelet in the Code of Federal Regulations remains valid.

    XII. Summary of Comments and Responses

    We requested written comments from the public on the proposed determination of critical habitat for the marbled murrelet in a proposed rule published on August 25, 2015 (80 FR 51506). As described in that proposed rule, our purpose was to reconsider the final rule designating critical habitat for the marbled murrelet (May 24, 1996; 61 FR 26256, as revised on October 5, 2011; 76 FR 61599) for the purpose of evaluating whether all areas currently designated meet the definition of critical habitat under the Act. To that end, we specifically sought comments concerning: (1) What areas within the currently designated critical habitat for the marbled murrelet were occupied at the time of listing and contain features essential to the conservation of the species; (2) special management considerations or protection that may be needed in critical habitat areas, including managing for the potential effects of climate change; (3) what areas within the currently designated critical habitat are essential for the conservation of the species and why; and (4) information on the extent to which the description of economic impacts is a reasonable estimate of the likely economic impacts of the proposed determination. During the comment period, which closed on October 26, 2015, we received 16 comment letters from organizations or individuals directly addressing the proposed critical habitat designation.

    Eleven of these letters provided substantive comments (beyond a succinct expression of agreement or opposition) on the proposed rule. Five of the comment letters expressed support of our 1996 designation, one opposed the 1996 designation, and five did not express a particular opinion regarding the 1996 designation and whether it meets the statutory definition, but offered other suggestions or information regarding critical habitat for the marbled murrelet.

    Several comments we received were outside the scope of the proposed rule, which was limited to the specific purpose for which the court remanded this rule, which was to assess whether all of the designated areas meet the statutory definition of critical habitat. Examples of comments outside of the scope of the proposed rule included:

    (a) Requests that we designate additional critical habitat;

    (b) A request that we apply the Service's proposed policy for excluding lands included in Habitat Conservation Plans (See 79 FR 27052 (May 12, 2014) at 27055);

    (c) Requests that we designate marine areas as critical habitat;

    (d) A request that surrounding encumbered lands be freed up as a more available revenue source; and

    (e) A request to complete a 5-year review.

    These comments are beyond the scope of the proposed rule, and some would require separate rulemaking to be considered. Accordingly, we have not specifically responded to these comments in this final rule.

    All substantive information provided during the comment period has either been incorporated directly into this final determination or addressed below. Comments received were grouped into general issues specifically relating to the proposed critical habitat determination, and are addressed in the following summary and incorporated into the final rule as appropriate.

    Comments From States

    Section 4(i) of the Act states, “the Secretary shall submit to the State agency a written justification for his failure to adopt regulations consistent with the agency's comments or petition.” Comments received from the State regarding the determination of critical habitat for the marbled murrelet are addressed below.

    (1) Comment: The Oregon Department of Forestry stated they have not experienced impacts, positive or negative, associated with the designation of critical habitat. Critical habitat has not been an obstacle to the effective implementation of their forest management plans.

    Our response: Thank you for the information.

    (2) Comment: The Oregon Department of Forestry and one private organization expressed the opinion that we relied heavily on technical information associated with the 1996 designation and largely or completely ignored newer scientific literature. In particular they pointed out that all the referenced nest site data is decades old.

    Our response: The sole purpose of our proposed rule was to evaluate whether all areas currently designated as critical habitat for the marbled murrelet meet the statutory definition of critical habitat; we did not propose to revise critical habitat as a whole. In doing so, we did not ignore or discount any available relevant literature, including publications made available after the 1996 designation of critical habitat. In fact, many of the publications the commenters indicate we ignored, such as McShane et al. 2004, are cited in the proposed rule (see, for example, citations on pp. 51509-51512 of 80 FR 51506; August 25, 2015). If our review of the best available scientific data as reflected in the more recently published literature had indicated a change in our understanding of the essential habitat features for the marbled murrelet, we might have proposed further revision. However, we reviewed all available scientific data relevant to this question and found that it did not indicate that such a change was appropriate. Rather, the more recently published literature continues to support the physical or biological factors and primary constituent elements (PCEs) as described in the 1996 critical habitat final rule and is, therefore, consistent with both our proposed and final rules.

    The commenters also indicate that the nest and occupancy data we relied upon were outdated. We disagree. On page 51516 of the proposed rule (80 FR 51506; August 25, 2015), we denote the years of survey data that we relied upon, which included all available nests, occupied behaviors, and presence behaviors within the analysis area. In Washington, the information included data collected through 2013. In Oregon, some survey data was as recent as 2014. In California, most of the available data was collected through 2006, with one data point from 2014. These data present the most recent and best data available for us to use in our reconsideration.

    (3) Comment: The Oregon Department of Forestry commented that the boundaries of critical habitat follow ownerships rather than habitat.

    Our response: Our implementing regulations at 50 CFR 424.12(c), in effect at the time of our designation, specify that “Each critical habitat will be defined by specific limits using reference points and lines as found on standard topographic maps of the area. . . . Ephemeral reference points (e.g., trees, sand bars) shall not be used in defining critical habitat.” Although by definition the foundation of our critical habitat designation is based on habitat characteristics (the presence of essential physical or biological features, or areas otherwise determined to be essential for the conservation of the species), to be useful those specific areas that fall within the designation must be identifiable “on the ground.” Characteristics such as the location of forest edges, for example, which might serve as a habitat-based boundary for marbled murrelets, are expected to vary over space and time and thus are not useful in this regard. For this reason, we utilized ownership and administrative boundaries, which are relatively more stable, to define the boundaries of our critical habitat units, after reliance on the habitat characteristics to define critical habitat for the marbled murrelet located within those administrative boundaries.

    (4) Comment: The Oregon Department of Forestry recommended that critical habitat should be focused on older, high-quality habitat rather than younger stands.

    Our response: We agree with the basic principle of this recommendation, and in fact the critical habitat does focus on older, high-quality habitat, which is likely to equate to forested areas that contain trees with suitable nesting structures (PCE 1). However, limiting the critical habitat designation to areas that only contain PCE 1 would not be sufficient to achieve the conservation of the species because marbled murrelets need large contiguous blocks of forested areas (Recovery Plan for the Marbled Murrelet, USFWS 1997). It is not necessary that the entirety of these large, contiguous blocks of forest is represented by trees with characteristics associated with late-successional old growth; a large block of forested area may be constituted of trees with suitable nesting structures surrounded by areas of younger forest. Marbled murrelet critical habitat, therefore, comprises two PCEs, which serve separate, but intertwined, purposes. Forested areas within 0.5 mile (0.8 kilometer) of individual trees with potential nesting platforms with a canopy height of at least one-half the site-potential tree height (PCE 2) provide the larger forested areas that are necessary to minimize edge effects and reduce the impacts of nest predators to increase the probability of nest success, in addition to providing forest cohesion around suitable nesting trees (PCE 1), which has been associated with murrelet use and to provide for the development of suitable nesting trees. Because these younger stands may provide this essential feature, critical habitat for the marbled murrelet is not strictly limited to only older stands of forest.

    (5) Comment: The Washington Department of Natural Resources (WDNR) requested that the critical habitat unit descriptions, tables, and maps be updated to remove the lands excluded because of inclusion in the Department's Habitat Conservation Plan (HCP).

    Our response: The 1996 critical habitat designation for the marbled murrelet stipulates by text that “Critical habitat units do not include non-federal lands covered by a legally operative incidental take permit for marbled murrelets issued under section 10(a) of the Act.” However, the WDNR HCP for the marbled murrelet was not completed until 1997, after critical habitat designation; therefore, all WDNR lands were mapped in the final critical habitat. Once the WDNR obtained a legally operative incidental take permit for marbled murrelets issued under section 10(a) of the Act in 1997, the HCP lands designated as critical habitat were excluded by the text referenced above. As long as WDNR has a legally operative incidental take permit for marbled murrelets, their lands remain excluded by text from critical habitat. However, should their permit be revoked, terminated, or expire, WDNR lands would revert back to critical habitat. WDNR lands, therefore, continue to remain mapped and accounted for in the total designation acreage.

    Further, as noted above, the purpose of this proposed action was to consider whether our 1996 designation meets the statutory definition of critical habitat; we did not propose revision of critical habitat as a whole. Therefore, we did not propose to reconsider or reevaluate any of the exclusions contained in the 1996 final designation for consistency with our current exclusion policies.

    Public Comments

    (6) Comment: One private organization stated that our proposed rule did not contain a finding that areas not occupied at the time of the listing are essential for the conservation of the species. At the same time, this organization also contends that our determination that all 101 subunits would qualify for designation under 16 U.S.C. 1532 (5)(A)(ii) as “essential to the conservation of the species” has no legal bearing on a designation under 16 U.S.C. 1532 (5)(A)(i) for the geographical area occupied at the time of listing. The comment letter suggests that the subsection (ii) standard applies only to areas that are outside the geographical area occupied at the time of listing, and that the “Service has determined that all designated critical habitat is within the geographical area occupied at the time of listing. For such areas, they suggest critical habitat can only be designated under subsection (i), and only if the physical or biological features (PCEs) “are found” on those areas.”

    Our response: We refer the commenter to section VII on pages 51517-51518 of the proposed rule (80 FR 51506; August 25, 2015), which provides our finding that all currently designated critical habitat is essential to the conservation of the marbled murrelet. As stated there, we first determined that all areas designated as critical habitat are within the geographical area occupied by the species at the time of listing and contain the physical or biological features and PCEs essential to the conservation of the species, which may require special management considerations or protection. However, we acknowledged that the physical or biological features and PCEs may not be uniformly distributed throughout the subunits, and, therefore, we additionally conducted an evaluation of all subunits under the standards of section 3(5)(A)(ii) of the Act. While this evaluation was not technically necessary, we determined it to be a conscientious application of all methods of designating critical habitat, regardless of occupancy, differing interpretations of occupancy, or differing scales of analysis. We expressly stated in our determination that all areas currently identified as critical habitat for the marbled murrelet, whether confirmed to be occupied at the time of listing or not, are essential for the conservation of the species and meet the definition of critical habitat under section 3(5)(A)(ii) of the Act (see section XI, Determination, on page 51520 of the proposed rule, 80 FR 51506; August 25, 2015). This approach is consistent with the ruling in Home Builders Ass'n of Northern California v. U.S. Fish and Wildlife Service, 616 F.3d 983 (9th Cir.), cert. denied 131 S.Ct. 1475 (2011), in which the court upheld a critical habitat rule in which the Service had determined that the areas designated, whether occupied or not, met the more demanding standard of being essential for conservation. See also our response to Comment (7).

    (7) Comment: The same private organization stated that the Service cannot designate areas within the geographical area occupied at the time of listing that lack any of the physical or biological features simply by combining those areas in a large “subunit” consisting of thousands of acres including some other areas that do contain the features. If the presence of physical and biological features anywhere within a large critical habitat unit was sufficient to find the presence of physical and biological features everywhere within the unit, nothing would prevent the administrative creation of a single multimillion-acre critical habitat “unit” and finding every acre to contain physical and biological features because a single small area contains such features. This interpretation would render the statutory terms meaningless. In particular, the commenting organization noted that the designation included lands delineated as Late Successional Reserves under the Northwest Forest Plan, which they contend does not meet the statutory standard because the physical or biological features and PCEs may not be uniformly distributed throughout a subunit.

    Our response: We agree with the commenter that an interpretation of the statute that would lead to the creation of a single multimillion-acre critical habitat unit and declaring every acre within that unit to contain physical and biological features on the basis of a small subset of the unit containing such features would not be reasonable. However, we disagree that such an interpretation reflects our designation of critical habitat for the marbled murrelet. Marbled murrelets require forested habitats for nesting, particularly trees with nesting platforms (which are typically found in forests with late seral characteristics) embedded within larger areas of contiguous forest that may serve as a “buffer” area to insulate nesting murrelets from edge effects, such as invasion by corvid predators (crows or ravens) or negative microclimatic conditions (also noting that the beneficial effects of these surrounding areas may be provided by younger forest stands). In addition, as noted in our proposed rule, trees with suitable nesting platforms may also be found in areas of younger forest containing remnant large trees.

    Forests are dynamic systems, and cannot be expected to remain static on the landscape; the progression of forest habitats through a series of seral stages is a fundamental principle of forest ecology. As a result of both natural disturbance and anthropogenic activities, forests occur in a mosaic of age-structured conditions. It is, therefore, to be expected that the designation of critical habitat for a wide-ranging forest species requiring nest trees with mature or old-growth characteristics will additionally include surrounding forests in a mosaic of both old and younger forests; this simply reflects how forest patches of varying ages and structural condition are distributed across the landscape.

    Our implementing regulations at 50 CFR 424.12(b)(5)(d) state: “When several habitats, each satisfying the requirements for designation as critical habitat, are located in proximity to one another, an inclusive area may be designated as critical habitat.” In this case, our designation of critical habitat for the marbled murrelet is focused primarily on areas of forest with late-successional characteristics that provide suitable nesting habitat (PCE 1), surrounded by areas of potentially younger forest (PCE 2). Because marbled murrelets require large blocks of contiguous forest habitat for successful nesting, we have noted that special management considerations may be required to provide for the development of suitable nesting habitat for those areas currently in early successional stages.

    Taking all of these factors into consideration, we considered the best available scientific information and concluded that the 101 subunits of critical habitat designated here for the marbled murrelet contain the essential physical or biological features and PCEs at a scale appropriate for the conservation of the species and representative of the natural distribution of these features on the landscape. It is not biologically reasonable to expect the PCEs to be found on every acre of each subunit of a critical habitat designation for a wide-ranging species that requires large blocks of contiguous forest habitat for successful nesting. Furthermore, because of the fundamental dynamic nature of successional forests, we do not expect such features to be distributed uniformly across critical habitat. We dispute the commenter's argument that areas within the critical habitat designation do not meet the statutory standard because the physical or biological features and PCEs are not uniformly distributed throughout the subunits. There is no statutory or regulatory requirement that the physical or biological features or PCEs be “uniformly distributed” throughout critical habitat. Section 3(5)(A)(i) of the Act requires in plain language only that the physical or biological features essential to the conservation of the species “are found” on those specific areas identified as critical habitat within the geographical area occupied by the species at the time it is listed. Our designation of critical habitat for the marbled murrelet clearly meets the statutory standard. We note that the U.S. Court of Appeals for the Ninth Circuit recently affirmed a similar interpretation of the Act in Alaska Oil and Gas Association v. Jewell, 2016 U.S. App. LEXIS 3624 (9th Cir., Feb. 29, 2016), in which the court upheld the Service's designation of critical habitat for the polar bear. The court held that, in its designation of denning habitat, the Service was not required to identify specifically where all elements of the denning habitat PCE were located within each 5-mile increment of the designated area, and the Service adequately explained why it adopted a method designed to capture a “robust” estimation of inland den use.

    Finally, we recognize that there may be different approaches to defining the “geographical area occupied by the species at the time it is listed,” depending largely on the scale at which the area occupied is considered. Here we have defined that area on a relatively large scale, essentially equivalent to the range of the species, such that all critical habitat is considered occupied by the species. We have further determined, as described in this document, that the physical or biological features essential to the conservation of the species, and which may require special management considerations or protection, are found in each of the 101 subunits within the geographical area occupied by the species at the time it was listed, as identified in this designation of critical habitat. All critical habitat for the marbled murrelet therefore meets the definition of critical habitat under section (3)(5)(A)(i) of the Act.

    This commenter asserted that the proposal includes “millions of acres that were not occupied at the time of listing.” In the proposed rule, we explained why this assertion is incorrect, in light of our interpretation of “occupied” as being equivalent to the range of the species. But, even if some areas of the critical habitat designation were considered unoccupied at the time of listing, we have determined that all critical habitat for the marbled murrelet, as currently designated, is essential for the conservation of the species (see section VII of the proposed rule). Hence, the designated areas meet the definition of critical habitat set forth in section 3(5)(A)(ii) of the Act. That alternative definition does not require that PCEs be present.

    In this case, regardless of the scale at which the geographical area occupied by the species at the time it was listed is considered, we have determined that all areas currently designated as critical habitat for the marbled murrelet meet the definition of critical habitat whether evaluated under the standards of subsection (i) or (ii) of section 3(5)(A) of the Act. This approach is consistent with the ruling in Home Builders Ass'n of Northern California v. U.S. Fish and Wildlife Service, 616 F.3d 983, 990 (9th Cir.), cert. denied 131 S.Ct. 1475 (2011), in which the court held that, where the Service had determined in a critical habitat rule that all areas met the more demanding standard under section 3(5)(A)(ii) for unoccupied areas, there was no need to classify particular areas as occupied or unoccupied, and any possible overlap with occupied areas “poses no problem.” The court observed that “Courts routinely apply similar reasoning in cases where a standard is unclear yet the result is the same under even the highest standard.” Id. The court also held that its prior ruling in Gifford Pinchot Task Force v. U.S. Fish and Wildlife Service, 378 F.3d 1059 (9th Cir. 2004), “requires FWS to be more generous in defining area as part of a critical habitat designation.” Id. at 989 (emphasis in original).

    (8) Comment: The same private organization stated that an area can only be designated as critical habitat under section 3(5)(A)(i) of the Act if it meets two separate requirements with two different temporal bounds: (1) The area must be within the geographic area occupied by the species at the time it is listed, and (2) the area must currently contain (“on which are found”) physical or biological features that are “essential to the conservation of the species” [emphasis added by commenter].

    Our response: In our designation of critical habitat in 1996, as revised in 2011, we determined that the physical or biological features essential to the conservation of the marbled murrelet were found on all areas occupied by the species at the time of listing. In the analysis presented in this document, we have reevaluated all designated critical habitat for the marbled murrelet, and have additionally determined that the physical or biological features essential to the conservation of the species are currently found in all critical habitat subunits as well, whether considered occupied at the time of listing or not. Therefore, whether considered at the time of listing, at designation, or at present, we conclude that all critical habitat for the marbled murrelet meets the definition of critical habitat under section 3(5)(A)(i) of the Act. Furthermore, we note that, since we have additionally evaluated all critical habitat as if it were unoccupied at the time of listing and determined that all designated areas meet the “essential for conservation” standard of section 3(5)(A)(ii), the presence of the essential physical or biological features or PCEs is not determinative.

    (9) Comment: The same private organization stated that designation of non-habitat younger forest stands as critical habitat has a substantial economic impact, because, absent such designation, consultation under the jeopardy standard would not be required for actions limited to non-habitat younger forest stands, since those actions would be “no effect” on the marbled murrelet. By requiring consultation on actions limited to non-habitat younger forest stands that would not otherwise occur, there is a substantial risk that some of those actions would run afoul of the adverse modification standard, and impose a substantial administrative cost on the consulting agencies.

    Our response: Section 4(b)(2) of the Act requires that we consider the potential economic impacts of a critical habitat designation. We consider the economic impacts of critical habitat to be those impacts that would not occur but for the designation of critical habitat; that is, those costs that are attributable solely to the proposed critical habitat, above and beyond the “baseline” costs already incurred for the species. As fully described in our proposed rule (pp. 51518-51519, 80 FR 51506; August 24, 2015), in this case the baseline for our analysis is the critical habitat that has been in place for the marbled murrelet since 1996, as revised in 2011. Our proposed rule focused solely on evaluating this existing critical habitat for the purpose of determining whether all areas meet the statutory definition under the Act; we did not propose any changes to the critical habitat designation already in place beyond the clarification of areas considered occupied or unoccupied at the time of listing, and a detailed description of how those areas meet the statutory definition of critical habitat. In considering the potential economic impacts of our proposed rule, we, therefore, contemplated a possible change in occupancy status of some areas of critical habitat as a result of our assessment. That is, we evaluated whether there would be any additional costs incurred as a result of our proposed rule, should we determine that some areas of critical habitat currently considered to be occupied by the marbled murrelet would change to “unoccupied” or vice versa.

    Whether a subunit or action area is considered “occupied” by the species is irrelevant to the effect determination for critical habitat analysis, because the analysis is based on impacts to the PCEs, not impacts to the species. For this reason we did not anticipate any incremental economic impacts from our proposed rule. Federal agencies have been consulting under section 7 of the Act on impacts to PCE 1 and PCE 2 for marbled murrelet critical habitat since 1996. As described in detail in our proposed rule (p. 51520, 80 FR 51506; August 25, 2015), we contacted all Federal agencies with whom we have consulted on marbled murrelet critical habitat over the past 20 years to confirm our understanding that they consult on effects to critical habitat through an analysis of the effects to PCEs. Furthermore, we specifically inquired whether our proposed rule would be likely to result in any additional economic impacts on their agencies, should any areas change in occupancy status. All of the agencies that responded confirmed that they did not anticipate any additional costs as a result of the clarification of critical habitat subunits occupied at the time of listing.

    (10) Comment: The same private organization stated that the Service incorrectly determined that critical habitat designation will not affect activities that do not have Federal agency involvement because, in Washington and California, the designation triggers legal obligations under State laws. Therefore, the Service should account for additional costs sustained by private landowners and revise the determination that designating critical habitat will result in no additional (incremental) economic impacts.

    Our response: As required by section 4(b)(2) of the Act, we considered the potential economic impacts that could result as a consequence of our proposed rule. As described on pages 51518-51520 of the proposed rule (80 FR 51506; August 25, 2015), the baseline for this analysis is the critical habitat designation in place today. The proposed rulemaking was focused solely on evaluating the current critical habitat designation—those areas designated in 1996, as revised in 2011—for the purposes of determining whether all of those areas meet the statutory definition of critical habitat.

    We are not proposing any changes to the critical habitat designation that is already in place beyond this clarification of areas considered occupied or unoccupied at the time of listing, and a detailed description of how those areas meet the statutory definition of critical habitat. We evaluated whether there would be any incremental costs incurred if there was a change in status of a critical habitat subunit from unoccupied to occupied (see our response to Comment 9, above). Incremental costs are those costs that are solely attributable to the proposed critical habitat rulemaking, over and above costs incurred for the conservation of the species absent the proposed critical habitat action. In this case, because there is no change in the geographic areas designated as critical habitat, the current designation would not trigger any additional obligations under State laws that had not already been triggered by the initial 1996 designation; therefore, there would be no indirect incremental impacts of this rulemaking in relation to State laws as suggested by the commenter. In addition, for the most part, private lands in Washington and California that were included in the final 1996 designation were known to be used by marbled murrelets; therefore, any legal obligations of the landowners would be primarily associated with the presence of the listed species, and would not be attributable solely to the designation of critical habitat (in other words, those obligations would have been realized regardless of critical habitat designation).

    Under the Regulatory Flexibility Act, Federal agencies (including the Service) are required to evaluate the potential incremental impacts of a rulemaking only on directly regulated entities. The regulatory mechanism through which critical habitat protections are realized is section 7 of the Act, which requires Federal agencies, in consultation with the Service, to ensure that any action authorized, funded, or carried out by the Agency is not likely to adversely modify critical habitat. Therefore, only Federal action agencies are directly subject to the specific regulatory requirement imposed by critical habitat designation (avoiding destruction or adverse modification of critical habitat). Under these circumstances, it is the Service's position that only Federal action agencies will be directly regulated by this designation.

    Required Determinations Regulatory Planning and Review (Executive Orders 12866 and 13563)

    Executive Order 12866 provides that the Office of Information and Regulatory Affairs (OIRA) will review all significant rules. The Office of Information and Regulatory Affairs has determined that this rule is not significant.

    Executive Order 13563 reaffirms the principles of E.O. 12866 while calling for improvements in the nation's regulatory system to promote predictability, to reduce uncertainty, and to use the best, most innovative, and least burdensome tools for achieving regulatory ends. The executive order directs agencies to consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public where these approaches are relevant, feasible, and consistent with regulatory objectives. E.O. 13563 emphasizes further that regulations must be based on the best available science and that the rulemaking process must allow for public participation and an open exchange of ideas. We have developed this rule in a manner consistent with these requirements.

    Regulatory Flexibility Act (5 U.S.C. 601 et seq.)

    Under the Regulatory Flexibility Act (RFA; 5 U.S.C. 601 et seq.), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA; 5 U.S.C. 801 et seq.), whenever an agency is required to publish a notice of rulemaking for any proposed or final rule, it must prepare and make available for public comment a regulatory flexibility analysis that describes the effects of the rule on small entities (i.e., small businesses, small organizations, and small government jurisdictions). However, no regulatory flexibility analysis is required if the head of the agency certifies the rule will not have a significant economic impact on a substantial number of small entities. The SBREFA amended the RFA to require Federal agencies to provide a certification statement of the factual basis for certifying that the rule will not have a significant economic impact on a substantial number of small entities.

    According to the Small Business Administration, small entities include small organizations such as independent nonprofit organizations; small governmental jurisdictions, including school boards and city and town governments that serve fewer than 50,000 residents; and small businesses (13 CFR 121.201). Small businesses include manufacturing and mining concerns with fewer than 500 employees, wholesale trade entities with fewer than 100 employees, retail and service businesses with less than $5 million in annual sales, general and heavy construction businesses with less than $27.5 million in annual business, special trade contractors doing less than $11.5 million in annual business, and agricultural businesses with annual sales less than $750,000. To determine if potential economic impacts to these small entities are significant, we considered the types of activities that might trigger regulatory impacts under this designation as well as types of project modifications that may result. In general, the term “significant economic impact” is meant to apply to a typical small business firm's business operations.

    The Service's current understanding of the requirements under the RFA, as amended, and following recent court decisions, is that Federal agencies are required to evaluate the potential incremental impacts of rulemaking only on those entities directly regulated by the rulemaking itself and are not required to evaluate the potential impacts to indirectly regulated entities. The regulatory mechanism through which critical habitat protections are realized is section 7 of the Act, which requires Federal agencies, in consultation with the Service, to ensure that any action authorized, funded, or carried by the Agency is not likely to destroy or adversely modify critical habitat. Therefore, under section 7 only Federal action agencies are directly subject to the specific regulatory requirement (avoiding destruction and adverse modification) imposed by critical habitat designation. Consequently, it is our position that only Federal action agencies will be directly regulated by this designation. There is no requirement under RFA to evaluate the potential impacts to entities not directly regulated. Moreover, Federal agencies are not small entities. Consequently, because no small entities are directly regulated by this rulemaking, the Service certifies that, if promulgated, the final critical habitat designation will not have a significant economic impact on a substantial number of small entities.

    During the development of this final rule we reviewed and evaluated all information submitted during the comment period that may pertain to our consideration of the probable incremental economic impacts of this critical habitat designation. Based on this information, we affirm our certification that this final critical habitat designation will not have a significant economic impact on a substantial number of small entities, and a regulatory flexibility analysis is not required.

    Energy Supply, Distribution, or Use—Executive Order 13211

    Executive Order 13211 (Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use) requires agencies to prepare Statements of Energy Effects when undertaking certain actions. OMB has provided guidance for implementing this Executive Order that outlines nine outcomes that may constitute “a significant adverse effect” when compared to not taking the regulatory action under consideration. Our consideration of potential economic impacts finds that none of these criteria are relevant to this analysis, thus, energy-related impacts associated with marbled murrelet conservation activities within critical habitat are not expected. This final rule only clarifies how the designated critical habitat meets the definition of critical habitat under the Act. As such, the designation of critical habitat is not expected to significantly affect energy supplies, distribution, or use. Therefore, this action is not a significant energy action, and no Statement of Energy Effects is required.

    Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.)

    In accordance with the Unfunded Mandates Reform Act (2 U.S.C. 1501 et seq.), we make the following findings:

    (1) This rule will not produce a Federal mandate. In general, a Federal mandate is a provision in legislation, statute, or regulation that would impose an enforceable duty upon State, local, or tribal governments, or the private sector, and includes both “Federal intergovernmental mandates” and “Federal private sector mandates.” These terms are defined in 2 U.S.C. 658(5)-(7). “Federal intergovernmental mandate” includes a regulation that “would impose an enforceable duty upon State, local, or tribal governments” with two exceptions. It excludes “a condition of Federal assistance.” It also excludes “a duty arising from participation in a voluntary Federal program,” unless the regulation “relates to a then-existing Federal program under which $500,000,000 or more is provided annually to State, local, and tribal governments under entitlement authority,” if the provision would “increase the stringency of conditions of assistance” or “place caps upon, or otherwise decrease, the Federal Government's responsibility to provide funding,” and the State, local, or tribal governments “lack authority” to adjust accordingly. At the time of enactment, these entitlement programs were: Medicaid; Aid to Families with Dependent Children work programs; Child Nutrition; Food Stamps; Social Services Block Grants; Vocational Rehabilitation State Grants; Foster Care, Adoption Assistance, and Independent Living; Family Support Welfare Services; and Child Support Enforcement. “Federal private sector mandate” includes a regulation that “would impose an enforceable duty upon the private sector, except (i) a condition of Federal assistance or (ii) a duty arising from participation in a voluntary Federal program.”

    The designation of critical habitat does not impose a legally binding duty on non-Federal Government entities or private parties. Under the Act, the only regulatory effect is that Federal agencies must ensure that their actions do not destroy or adversely modify critical habitat under section 7. While non-Federal entities that receive Federal funding, assistance, or permits, or that otherwise require approval or authorization from a Federal agency for an action, may be indirectly impacted by the designation of critical habitat, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency. Furthermore, to the extent that non-Federal entities are indirectly impacted because they receive Federal assistance or participate in a voluntary Federal aid program, the Unfunded Mandates Reform Act would not apply, nor would critical habitat shift the costs of the large entitlement programs listed above onto State governments.

    (2) We do not believe that this rule will significantly or uniquely affect small governments because this final rule only clarifies how the designated critical habitat meets the definition of critical habitat under the Act. The rule does not change the boundaries of the current critical habitat; therefore, landownership within critical habitat does not change, and a Small Government Agency Plan is not required.

    Takings—Executive Order 12630

    In accordance with Executive Order 12630 (“Government Actions and Interference with Constitutionally Protected Private Property Rights”), we analyzed the potential takings implications of the proposed determination of critical habitat for the marbled murrelet. This final rule clarifies whether and how the designated critical habitat meets the definition of critical habitat under the Act; there are no changes to the boundaries of the current critical habitat, so landownership within critical habitat does not change. Thus, we conclude that this final rule does not pose additional takings implications for lands within or affected by the original 1996 designation. Critical habitat designation does not affect landowner actions that do not require Federal funding or permits, nor does it preclude development of habitat conservation programs or issuance of incidental take permits to permit actions that do require Federal funding or permits to go forward. Therefore, based on the best available information, as described above, we confirm the conclusions we reached in 1996 that the final determination of critical habitat for the marbled murrelet does not pose significant takings implications.

    Federalism—Executive Order 13132

    In accordance with E.O. 13132 (Federalism), this rule does not have significant Federalism effects. A Federalism assessment is not required. From a Federalism perspective, the designation of critical habitat directly affects only the responsibilities of Federal agencies. The Act imposes no other duties with respect to critical habitat, either for States and local governments, or for anyone else. As a result, the rule does not have substantial direct effects either on the States, or on the relationship between the national government and the States, or on the distribution of powers and responsibilities among the various levels of government. The designation may have some benefit to these governments because the areas that contain the features essential to the conservation of the species are more clearly defined, and the physical and biological features of the habitat necessary to the conservation of the species are specifically identified. This information does not alter where and what federally sponsored activities may occur. However, it may assist these local governments in long-range planning (because these local governments no longer have to wait for case-by-case section 7 consultations to occur).

    Where State and local governments require approval or authorization from a Federal agency for actions that may affect critical habitat, consultation under section 7(a)(2) would be required. While non-Federal entities that receive Federal funding, assistance, or permits, or that otherwise require approval or authorization from a Federal agency for an action, may be indirectly impacted by the designation of critical habitat, the legally binding duty to avoid destruction or adverse modification of critical habitat rests squarely on the Federal agency.

    Civil Justice Reform—Executive Order 12988

    In accordance with Executive Order 12988 (Civil Justice Reform), the Office of the Solicitor has determined that the rule does not unduly burden the judicial system and that it meets the requirements of sections 3(a) and 3(b)(2) of the Order. We have reconsidered designated critical habitat for the marbled murrelet for the purpose of assessing whether all of the areas meet the statutory definition of critical habitat in accordance with the provisions of the Act. To assist the public in understanding the habitat needs of the species, the final rule identifies the elements of physical or biological features essential to the conservation of the marbled murrelet.

    Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.)

    This rule does not contain any new collections of information that require approval by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). This rule will not impose recordkeeping or reporting requirements on State or local governments, individuals, businesses, or organizations. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

    National Environmental Policy Act (42 U.S.C. 4321 et seq.)

    It is our position that, outside the jurisdiction of the U.S. Court of Appeals for the Tenth Circuit, we do not need to prepare environmental analyses pursuant to the National Environmental Policy Act (NEPA; 42 U.S.C. 4321 et seq.) in connection with designating critical habitat under the Act. We published a notice outlining our reasons for this determination in the Federal Register on October 25, 1983 (48 FR 49244). This position was upheld by the U.S. Court of Appeals for the Ninth Circuit (Douglas County v. Babbitt, 48 F.3d 1495 (9th Cir. 1995), cert. denied 516 U.S. 1042 (1996)).

    Government-to-Government Relationship With Tribes

    In accordance with the President's memorandum of April 29, 1994 (Government-to-Government Relations with Native American Tribal Governments; 59 FR 22951), Executive Order 13175 (Consultation and Coordination With Indian Tribal Governments), and the Department of the Interior's manual at 512 DM 2, we readily acknowledge our responsibility to communicate meaningfully with recognized Federal Tribes on a government-to-government basis. In accordance with Secretarial Order 3206 of June 5, 1997 (American Indian Tribal Rights, Federal-Tribal Trust Responsibilities, and the Endangered Species Act), we readily acknowledge our responsibilities to work directly with tribes in developing programs for healthy ecosystems, to acknowledge that tribal lands are not subject to the same controls as Federal public lands, to remain sensitive to Indian culture, and to make information available to tribes.

    There are no tribal lands designated as critical habitat for the marbled murrelet.

    References Cited

    A complete list of all references cited in this rule is available on the Internet at http://www.regulations.gov, at Docket No. FWS-R1-ES-2015-0070. In addition, a complete list of all references cited herein, as well as others, is available upon request from the Washington Fish and Wildlife Office (see ADDRESSES).

    Authors

    The primary authors of this document are the staff members of the Washington Fish and Wildlife Office, U.S. Fish and Wildlife Service (see ADDRESSES).

    Authority

    The authority for this action is the Endangered Species Act of 1973, as amended (16 U.S.C. 1531 et seq.).

    Dated: July 5, 2016. Karen Hyun, Principal Deputy Assistant Secretary for Fish and Wildlife and Parks.
    [FR Doc. 2016-18376 Filed 8-3-16; 8:45 am] BILLING CODE 4333-15-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket No. 151130999-6594-02] RIN 0648-XE336 Fisheries of the Northeastern United States; Atlantic Bluefish Fishery; 2016-2018 Atlantic Bluefish Specifications AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Final rule.

    SUMMARY:

    NMFS is implementing final specifications for the 2016-2018 bluefish fishery, including catch restrictions for commercial and recreational fisheries. This action is necessary to comply with the implementing regulations for the Bluefish Fishery Management Plan that require us to publish specifications. The intent of this action is to implement specifications necessary to constrain harvest of this species within scientifically sound recommendations to prevent overfishing.

    DATES:

    The final specifications for the 2016-2018 bluefish fishery are effective August 1, 2016, through December 31, 2018.

    ADDRESSES:

    Copies of the specifications document, including the Environmental Assessment and Initial Regulatory Flexibility Analysis (EA/IRFA) and other supporting documents for the specifications, are available from Dr. Christopher M. Moore, Executive Director, Mid-Atlantic Fishery Management Council, Suite 201, 800 N. State Street, Dover, DE 19901. These documents are also accessible via the Internet at www.mafmc.org and www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Elizabeth Scheimer, Fishery Management Specialist, (978) 281-9236.

    SUPPLEMENTARY INFORMATION: Background

    The Atlantic Bluefish fishery is jointly managed by the Mid-Atlantic Fishery Management Council and the Atlantic States Marine Fisheries Commission. The management unit for bluefish specified in the Atlantic Bluefish Fishery Management Plan is U.S. waters of the western Atlantic Ocean. Regulations implementing the FMP appear at 50 CFR part 648, subparts A and J. The regulations requiring annual specifications are found at § 648.162, and are described in the proposed rule. The proposed rule for this action published in the Federal Register on March 31, 2016 (81 FR 18559), and comments were accepted through April 15, 2016.

    Final Specifications

    A description of the process used to estimate bluefish stock status and fishing mortality, as well as the process for deriving the annual catch limit (ACL) and associated quotas and harvest limits, is provided in the proposed rule and in the bluefish regulations at § 648.160 through 162, and are not repeated here. The stock is not overfished or experiencing overfishing, and the specifications described below reflect the best available scientific information for bluefish. The final 2016-2018 bluefish specifications are shown in Table 1.

    Table 1—Final 2016-2018 Bluefish Specifications 2016 lb mt 2017 lb mt 2018 lb mt OFL 25,763,220 11,686 26,444,448 11,995 27,972,252 12,688 ABC 19,455,796 8,825 20,641,883 9,363 21,814,742 9,895 ACL 19,455,796 8,825 20,641,883 9,363 21,814,742 9,895 Management Uncertainty 0 0 0 0 0 0 Commercial ACT 3,307,485 1,500 3,509,120 1,592 3,708,506 1,682 Recreational ACT 16,148,311 7,325 17,132,763 7,770 18,106,236 8,213 Commercial Discards 0 0 0 0 0 0 Recreational Discards 2,989,468 1,356 2,989,468 1,356 2,989,468 1,356 Commercial TAL 3,307,485 1,500 3,509,120 1,592 3,708,506 1,682 Recreational TAL 13,158,843 5,969 14,143,295 6,414 15,116,768 6,857 Combined TAL 16,466,328 7,469 17,652,415 8,006 18,825,274 8,539 Expected Recreational Landings 11,581,548 5,253 11,581,548 5,253 11,581,548 5,253 Transfer 1,577,295 715 2,561,747 1,161 3,535,220 1,604 Commercial Quota 4,884,780 2,215 6,070,867 2,753 7,243,726 3,286 Recreational Harvest Limit 13,158,843 1,500 14,143,295 6,414 15,116,768 6,857

    A transfer of quota from the recreational fishery to the commercial sector is permitted under the FMP up to a commercial fishery quota of 10.50 million lb (4,763 mt), provided the combined expected recreational landings and the commercial quota does not exceed the total TAL. The proposed rule for this action contained a sector quota transfer based on preliminary 2015 recreational landings data. In the interim between the proposed rule and now, the final 2015 Marine Recreational Information Program (MRIP) estimates were released in June and subsequently revised in July. The final bluefish catch estimate is higher than the preliminary value used to calculate the proposed measures, but notably lower than the MRIP information provided in June. Using these updated recreational landings to project 2016 catch allows a transfer of quota from the recreational sector to the commercial fishery (1.57 million lb (715 mt)) and results in a final commercial quota of 4,884,780 lb (2,215 mt).

    Consistent with Council recommendations, these final specifications do not allocate research set-aside quota for 2016 through 2018; therefore, no additional adjustments to commercial or recreational allocations are needed.

    Given historical landings, the reduced commercial quota could be constraining to the fishery. Even though the commercial quota is reduced, the bluefish quota management system has been timely and effective at constraining catch in the past, and NMFS does not expect any state to exceed their quota.

    Final Recreational Possession Limit

    Consistent with the recommendation of the Council, this final rule maintains the status quo daily recreational possession limit of up to 15 fish per person for 2016.

    Final State Commercial Allocations

    The final rule implementing Amendment 1 to the Bluefish Fishery Management Plan, which was published in the Federal Register on July 26, 2000 (65 FR 45844), provided a mechanism for bluefish quota to be transferred from one state to another. Two or more states, under mutual agreement and with the concurrence of the Administrator, Greater Atlantic Region, NMFS (Regional Administrator), can transfer or combine bluefish commercial quota under § 648.162(e). The Regional Administrator is required to consider the criteria in § 648.162(e)(1) in the evaluation of requests for quota transfers or combinations.

    During the processing of this final rule, the Commonwealth of Virginia agreed to transfer 50,000 lb (22,680 kg) of bluefish quota to the State of Rhode Island and 30,000 lb (13,607 kg) to the State of New York, and the State of Florida agreed to transfer 50,000 lb (22,680 kg) to the State of Rhode Island. The state commercial transfers will not preclude the overall annual quota from being fully harvested, and will address contingencies in the fishery. In addition, the transfers are consistent with the objectives of the FMP and the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act). These transfers have been approved and are incorporated within this final rule and the individual state quota allocations have been adjusted to reflect the transfer. The final state commercial allocations for 2016-2018 are shown in Table 2. The initial quotas are based on percentages specified in the FMP. No states exceeded their quota in 2015, therefore, no accountability measures are being implemented for the 2016 fishing year.

    BILLING CODE 3510-22-P ER04AU16.000 Changes From the Proposed Rule

    The 2015 recreational catch for bluefish for was previously projected to be 10,980,469 lb (4.980 mt), which would have allowed for a transfer of 2,178,374 lb (984 mt) from the recreational sector to the commercial fishery. As previously noted, the 2015 MRIP estimate changed on two occasions when information was finalized. The final recreational catch for 2015 is now known to be 11,581,548 lb (5,253 mt), which results in a smaller commercial quota of 4,884,780 lb (2,215 mt) than was outlined in the proposed rule.

    Comments and Responses

    The public comment period for the proposed rule ended on April 15, 2016. There were four comments received from the public, including recreational and commercial fishermen.

    Comment 1: One commenter criticized the data used to estimate recreational catch, stating that the catch estimate was arbitrary and capricious, and requested to know where the numbers come from. The commenter did not suggest other data or approaches that might be better suited for establishing specifications.

    Response: NMFS disagrees that the recreational catch estimate is arbitrary and capricious. Recreational catch was estimated using data from MRIP, and a newly peer-reviewed and approved methodology that improved the incorporation of small sample sizes was used to generate the final estimates. A publically searchable database and information about the program are available at http://www.st.nmfs.noaa.gov/recreational-fisheries. The most up-to-date stock assessment and recreational and commercial catch data were used. Consistent with National Standard 2 of the Magnuson-Stevens Act, NMFS used the best scientific information available and is approving specifications for the bluefish fishery. The final specifications in this rule are consistent with the FMP and recommendations of the Council.

    Comment 2: Two commenters were unclear why we proposed to reduce harvest by 10 percent if there was no overfishing, and were unclear how the 10-percent reduction would be achieved. One of the commenters gave anecdotal evidence that bluefish stock was declining and suggested that the reason could be overfishing or a decline in the forage fish that bluefish eat.

    Response: The 10-percent reduction is the cumulative result of new stock assessment information that indicates the spawning stock biomass for bluefish is lower than previously believed, changes in overall stock productivity as reflected by updated biological reference points, and application of the Council's risk policy. The commenter is correct that Atlantic bluefish stock biomass was higher in the 1980's and overfishing occurred in the 1990's, but this trend has not continued. The species was declared overfished in 1999 and managed under a rebuilding plan until 2009, when it was declared rebuilt. Using data from the new 2015 benchmark stock assessment, bluefish were not overfished and overfishing was not occurring in 2014. The assessment also changed the biological reference points for Atlantic bluefish to better model sources of uncertainty. The peer-reviewed model captures the dynamics of the bluefish stock well and accurately reflects trends in spawning stock biomass and fishing mortality. We are approving a 10-percent reduction in catch limits because, while the spawning stock biomass estimate is greater than the overfished threshold, it is less than the biomass target, and shows a decrease from the estimate in 2013, the last year a full assessment was conducted. Further, these specifications were developed using the Council's Risk Policy.

    Comment 3: One commenter suggested that NMFS was showing preference to the commercial fishery by increasing commercial quota at the expense of the stock and suggested reducing commercial quota 5-percent.

    Response: NMFS disagrees. NMFS is implementing final specifications, including the commercial quota, using the best available scientific information and following the formula outlined in the FMP, as recommended by the Council. Reducing commercial quota by 5-percent would be insufficient to achieve the necessary reduction in total landings. Through this process there is no explicit preference by NMFS for the commercial or recreational fishery and specifications are derived as outlined by the FMP. The Council could, at its discretion, revise the FMP through an amendment; however, at this time there are no pending bluefish actions that would change the commercial and recreational allocations or the specification process.

    Classification

    Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Act, the NMFS Assistant Administrator has determined that this final rule is consistent with the Atlantic Bluefish FMP, other provisions of the Magnuson-Stevens Act, and other applicable law.

    This final rule is exempt from review under Executive Order 12866.

    This final rule does not duplicate, conflict, or overlap with any existing Federal rules.

    The Assistant Administrator for Fisheries finds there is a need to implement these measures as soon as possible in order to help achieve conservation objectives for the bluefish fishery. The bluefish fishing year began on January 1, 2016, and has been operating without an established bluefish quota. Currently landings data show that some states may soon approach their quotas. Development of this final rule was undertaken as quickly as possible; however, analyzing and incorporating the most up-to-date MRIP data necessarily created a delay. Until this final rule becomes effective, there will be no bluefish quota for 2016 and therefore no authority to close a fishery that is approaching a quota limit. A 30-day delay in implementing this final rule would delay the setting of a quota, which is necessary to properly manage and monitor bluefish stocks at the state and federal level. The need to implement these measures as soon as possible constitutes good cause, under authority contained in 5 U.S.C. 553(d)(3), to waive the 30-day delay in effectiveness and to make the 2016-2018 Atlantic bluefish specifications effective immediately upon filing with the Office of the Federal Register.

    Final Regulatory Flexibility Analysis

    The FRFA included in this final rule was prepared pursuant to 5 U.S.C. 604(a), and incorporates the IRFA and a summary of analyses completed to support the action. A public copy of the EA/IRFA is available from the Council (see ADDRESSES).

    The preamble to the proposed rule included a detailed summary of the analyses contained in the IRFA, and that discussion is not repeated here.

    A Summary of the Significant Issues Raised by the Public in Response to the IRFA, a Summary of the Agency's Assessment of Such Issues, and a Statement of Any Changes Made in the Final Rule as a Result of Such Comments

    The comments NMFS received did not raise specific issues regarding the economic analyses summarized in the IRFA. Refer to the “Comments and Responses” section of this preamble for more detail. No changes to the proposed rule were required to be made as a result of public comment.

    Description and Estimate of Number of Small Entities to Which the Rule Would Apply

    On December 29, 2015, the National Marine Fisheries Service (NMFS) issued a final rule establishing a small business size standard of $11 million in annual gross receipts for all businesses primarily engaged in the commercial fishing industry (NAICS 11411) for Regulatory Flexibility Act (RFA) compliance purposes only (80 FR 81194, December 29, 2015). The $11 million standard became effective on July 1, 2016, and is to be used in place of the U.S. Small Business Administration's (SBA) current standards of $20.5 million, $5.5 million, and $7.5 million for the finfish (NAICS 114111), shellfish (NAICS 114112), and other marine fishing (NAICS 114119) sectors of the U.S. commercial fishing industry in all NMFS rules subject to the Regulatory Flexibility Act after July 1, 2016.

    Pursuant to the Regulatory Flexibility Act, and prior to July 1, 2016, an initial regulatory flexibility analysis was developed for this regulatory action using SBA's former size standards. NMFS has reviewed the analyses prepared for this regulatory action in light of the new size standard. All of the entities directly regulated by this regulatory action are commercial finfish fishing businesses. The new standard could result in 13 fewer commercial finfish businesses being considered small.

    Taking this change into consideration, NMFS has identified no additional significant alternatives that accomplish statutory objectives and minimize any significant economic impacts of the proposed rule on small entities. Other options considered by the Council, including those that could have less of an impact on small entities, fail to meet one or more of these statutory objectives and therefore cannot be implemented. Further, the new size standard does not affect the decision to prepare a FRFA as opposed to a certification for this regulatory action

    Description of Projected Reporting, Recordkeeping, and Other Compliance Requirements

    No additional reporting, recordkeeping, or other compliance requirements are included in this final rule.

    Description of the Steps the Agency Has Taken To Minimize the Significant Economic Impact on Small Entities Consistent With the Stated Objectives of Applicable Statutes

    Specification of commercial quota, recreational harvest levels, and possession limits is constrained by the conservation objectives and derivation formula set forth in the FMP and implemented at 50 CFR part 648 under the authority of the Magnuson-Stevens Act. Furthermore, specifications must be based on the best available scientific information, consistent with National Standard 2 of the Magnuson-Stevens Act. With the specification options considered, the measures in this final rule are the only measures that both satisfy these overarching regulatory and statutory requirements while minimizing, to the extent possible, impacts on small entities. This rule implements the specifications outlined in Table 1. The impacts of the specifications, as implemented by this final rule, are not expected to disproportionately impact large or small entities.

    Small Entity Compliance Guide

    Section 212 of the Small Business Regulatory Enforcement Fairness Act of 1996 states that, for each rule or group of related rules for which an agency is required to prepare a FRFA, the agency shall publish one or more guides to assist small entities in complying with the rule, and shall designate such publications as “small entity compliance guides.” The agency shall explain the actions a small entity is required to take to comply with a rule or group of rules. As part of this rulemaking process, a small entity compliance guide will be sent to all holders of Federal permits issued for the Atlantic bluefish fishery.

    In addition, copies of this final rule and guide (i.e., permit holder letter) are available from NMFS (see ADDRESSES) and at the following Web site: www.greateratlantic.fisheries.noaa.gov.

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: July 29, 2016. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.
    [FR Doc. 2016-18424 Filed 8-1-16; 8:45 am] BILLING CODE 3510-22-C
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket No. 160301167-6658-02] RIN 0648-BF89 Fisheries of the Northeastern United States; Recreational Management Measures for the Summer Flounder, Scup, and Black Sea Bass Fisheries; Fishing Year 2016 AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Final rule.

    SUMMARY:

    NMFS is implementing management measures for the 2016 summer flounder, scup, and black sea bass recreational fisheries, changes to the commercial scup incidental possession limit, and two minor corrections to the summer flounder commercial fishery minimum mesh size regulations. The implementing regulations for these fisheries require NMFS to publish recreational measures for the fishing year. The intent of these measures is to constrain recreational catch to established limits and prevent overfishing of the summer flounder, scup, and black sea bass resources, to reduce unnecessary commercial discards by allowing more incidentally caught scup to be retained by vessels, and to correct inaccuracies within the summer flounder mesh regulations.

    DATES:

    Effective August 4, 2016.

    ADDRESSES:

    Copies of the Supplemental Information Report (SIR) and other supporting documents for the recreational harvest measures are available from Dr. Christopher M. Moore, Executive Director, Mid-Atlantic Fishery Management Council, Suite 201, 800 N. State Street, Dover, DE 19901. The recreational harvest measures document is also accessible via the Internet at: http://www.greateratlantic.fisheries.noaa.gov.

    FOR FURTHER INFORMATION CONTACT:

    Elizabeth Scheimer, Fisheries Management Specialist, (978) 281-9236.

    SUPPLEMENTARY INFORMATION:

    General Background

    The summer flounder, scup, and black sea bass fisheries are managed cooperatively under the provisions of the Summer Flounder, Scup, and Black Sea Bass Fishery Management Plan (FMP) developed by the Mid-Atlantic Fishery Management Council and the Atlantic States Marine Fisheries Commission, in consultation with the New England and South Atlantic Fishery Management Councils. States manage these three species within 3 nautical miles (4.83 km) of their coasts, under the Commission's plan for summer flounder, scup, and black sea bass. The applicable species-specific Federal regulations govern vessels and individual fishermen fishing in Federal waters of the exclusive economic zone (EEZ), as well as vessels possessing a Federal summer flounder, scup, or black sea bass charter/party vessel permit, regardless of where they fish.

    A proposed rule to implement the 2016 Federal recreational management measures (minimum fish size, season, and possession limit) for the summer flounder, scup, and black sea bass fisheries, scup commercial possession limit change, and summer flounder mesh requirement clarifications was published in the Federal Register on May 23, 2016 (81 FR 32269), with a 15-day comment period that ended on June 7, 2016. Comments received on the proposed rule are summarized and responded to in the Comments and Responses section found later in this rule. Additional background and information on the process to develop the measures described is provided in the preamble to the proposed rule and is not repeated here.

    2016 Recreational Management Measures

    NMFS is implementing the following measures that would apply in the Federal waters of the EEZ:

    Table 1—Summary of 2016 Summer Flounder, Scup, and Black Sea Bass Federal Recreational Management Measures Minimum size Per-angler
  • possession
  • limit
  • Season
    Summer Flounder, through December 31, 2016 Conservation equivalency—specific management measures determined by state of landing (see Table 2) Summer Flounder, beginning January 1, 2017 18 inches (45.7 cm) 4 fish May 1-September 30. Scup 9 inches (22.9 cm) 50 fish January 1-December 31. Black Sea Bass 12.5 inches (31.8 cm) 15 fish May 15-September 21, October 22-December 31.

    These measures apply to all federally permitted party/charter vessels with applicable summer flounder, scup, or black sea bass permits, regardless of where they fish, unless the state in which they land implements measures that are more restrictive. These measures are intended to achieve, but not exceed, the previously-established recreational harvest limits for these fisheries. See 80 FR 80689, published December 28, 2015, for background information on 2016 harvest limits. Additional detail on the measures for each species is provided below.

    Summer Flounder Recreational Management Measures

    NMFS is implementing conservation equivalency to manage the 2016 summer flounder recreational fishery, as recommended by the Council and Commission. The 2016 recreational harvest limit for summer flounder is 5.42 million lb (2,214 mt) and final landings for 2015, as estimated by the Marine Recreational Information Program (MRIP), were 4.88 million lb (2,096 mt). Maintaining the 2015 management measures is expected to effectively constrain 2016 summer flounder recreational landings and prevent the recreational harvest limit from being exceeded.

    Conservation equivalency, as established by Framework Adjustment 2 (July 29, 2001; 66 FR 36208), allows each state to establish its own recreational management measures (per-angler possession limits, minimum fish size, and fishing seasons) to achieve its state harvest limit partitioned by the Commission from the coastwide recreational harvest limit, as long as the combined effect of all of the states' management measures achieves the same level of conservation as would Federal coastwide measures. Framework Adjustment 6 (July 26, 2006; 71 FR 42315) allowed states to form regions for conservation equivalency in order to minimize regulation differences for anglers fishing in adjacent waters.

    The Commission implemented Addendum XXVII to its Summer Flounder FMP to continue regional conservation equivalency for fishing year 2016. The Commission has adopted the following mix of stand-alone state and regions for summer flounder measures: (1) Massachusetts; (2) Rhode Island; (3) Connecticut and New York; (4) New Jersey; (4) Delaware, Maryland, and Virginia; and (5) North Carolina. In order to provide the maximum amount of flexibility and to continue to adequately address the state-by-state differences in fish availability, each state in a region is required by the Council and Commission to establish fishing seasons of the same length, with identical minimum fish sizes and possession limits. The Commission certified, by letter dated June 7, 2016, that the Addendum XXVII measures implemented by individual states and regions, when combined, are the conservation equivalent of coastwide measures that would be expected to result in the recreational harvest limit being achieved, but not exceeded. More information on this addendum is available from the Commission (www.asmfc.org).

    Based on the recommendation of the Commission, we find that the recreational summer flounder fishing measures implemented for 2016 in state waters are, collectively, the conservation equivalent of the season, minimum size, and possession limit prescribed in §§ 648.104(b), 648.105, and 648.106(a). According to § 648.107(a)(1), vessels subject to the recreational fishing measures are not subject to Federal measures, and instead are subject to the recreational fishing measures implemented by the state in which they land. Section 648.107(a) is amended through this rule to recognize state-implemented measures as conservation equivalent of the coastwide recreational management measures for 2016. The 2016 summer flounder management measures adopted by the individual states vary according to the state of landing, as specified in Table 2.

    Table 2—2016 Commission-Approved Conservation Equivalent Recreational Management Measures for Summer Flounder State Minimum size (inches) Possession limit Open season Massachusetts 16 5 fish May 22-September 23. Rhode Island 18 8 fish May 1-December 31. Connecticut 18 5 fish May 17-September 21. CT shore program (46 designed shore sites) 16 New York 18 5 fish May 17-September 21. New Jersey: Coastal waters, east of Cape May COLREGS 18 5 fish May 21-September 25. 1 shore program site 16 2 fish May 21-September 25. Delaware Bay, west of Cape May COLREGS 17 4 fish May 21-September 25. Delaware 16 4 fish January 1-December 31. Maryland 16 4 fish January 1-December 31. PRFC 16 4 fish January 1-December 31. Virginia 16 4 fish January 1-December 31. North Carolina 15 6 fish January 1-December 31.

    In addition, this action maintains the current default coastwide measures (an 18-inch (45.7-cm) minimum size, 4-fish possession limit, and May 1-September 30 open fishing season), that become effective January 1, 2017, when the 2016 conservation equivalency program expires. These measures will remain effective until replaced by the 2017 recreational management measures in the spring of next year.

    Scup Recreational Management Measures

    This rule maintains status quo scup measures for the 2016 fishery: A 9-inch (22.9-cm) minimum fish size, 50-fish per person possession limit, and year-round season. The 2016 scup recreational harvest limit is 6.09 million lb (2,763 mt) and 2015 recreational landings were 5.11 million lb (2,318 mt). Based on this, no changes in measures are needed to ensure the 2016 recreational harvest limit is not exceeded, and further liberalization of the management measures was not requested by the Council or Commission.

    Black Sea Bass Recreational Management Measures

    This rule implements a 12.5-inch (31.8-cm) minimum size, 15-fish possession limit, and open seasons of May 15-September 21 and October 22-December 31 in Federal waters. The states of Maryland, Delaware, Virginia and North Carolina have also adopted these measures for state waters. New Jersey, New York, Connecticut, Rhode Island, and Massachusetts have adopted different, more restrictive measures for their state waters, as required by the Commission's Addendum XXVII to the FMP. The Commission certified, by letter dated June 7, 2016, that the northern states (Massachusetts to New Jersey) have implemented measures consistent with Addendum XXVII.

    The Council and the Commission made use of the preliminary MRIP estimates when developing 2016 management measures. It was, at the time of the development process, the best available information. In some years, the final MRIP estimates that are typically available in April have been slightly different than the preliminary year-end estimates available in February. The final 2015 MRIP estimates, delayed until June 13, 2016, are substantially different than the preliminary information used by the Council and Commission. The 2015 landings estimate increased from 3.62 (1,642 mt) to 3.97 million lb (1,801 mt)—a 350,000-lb (159-mt) increase. This would necessitate a 30.2-percent reduction from 2015 landings to constrain 2016 catch to the 2.82 million lb (1,279 mt) recreational harvest limit. The preliminary information used by the Council and Commission indicated a 22.1-percent reduction in landings was necessary.

    The majority of black sea bass are caught inside state waters from New Jersey north. The Council and Commission recommend maintaining the 2015 management measures (12.5-inch (31.8-cm) minimum fish size, 15-fish possession limit with an open season of May 15-September 21 and October 22-December 31) in Federal waters and for state waters in Delaware, Maryland, Virginia, and North Carolina. Because catch from Federal waters and state waters from Delaware to North Carolina is generally less than 8 percent of the total catch, recreational measures must necessarily focus on state waters from New Jersey north. The Council and Commission's recommendations were contingent on the northern states (New Jersey north) implementing at least a 23-percent reduction to their state waters measures through a Commission Addendum. This approach also used the accountability measure methods developed for 2015. The accountability measure has been triggered again for 2016; however, because the previously developed and implemented approach (i.e., maintaining Federal measures and applying them in states from Delaware south while states from New Jersey north reduce landings to constrain catch) is being maintained, no additional measures are required for 2016.

    The Council recommended a backup coastwide measure of a 14-inch (35.56-cm) minimum fish size and a 3-fish possession limit with an open season of July 15-September 15 to be implemented in Federal waters and for southern states only if the northern states did not comply with the landings-reduction requirements of the Commission's Addendum. NMFS received a letter from the Commission on June 7, 2016, before the final MRIP estimates were available, stating that the northern states had developed and implemented black sea bass measures designed to achieve the required 23-percent reduction in 2016 recreational landings.

    In response to the unexpected change in the final MRIP estimates for black sea bass, the Commission's Black Sea Bass Management Board held an emergency teleconference on July 6, 2016, to discuss the new MRIP estimates and to consider additional management action. In the discussion, Board members spoke about challenges in making any additional changes. They cited administrative burdens and timing complications of both receiving new information so late in the fishing year and difficulties implementing regulatory changes quickly mid-season. Many reiterated that the backup coastwide measures were intended to ensure states complied with the addendum requirements and were never envisioned for implementation under any other scenario. That is, backup measures were only designed as an incentive to ensure state compliance and would only be used in the event that states failed to implement the addendum-required measures. Some cited the potential for additional angler and public disillusionment if additional reductions were implemented mid-year. Others stated that it is possible, given the upcoming stock assessment, that catches may be increased next or, at a minimum, any regulatory changes could be developed next year in response to 2016 catch and whatever information results from the assessment. Ultimately, the Board elected not to take any action at this time. The existing measures adopted under Addendum XXVII, when evaluated with the final 2015 MRIP estimates indicates that landings reductions may be in the 24- to 25-percent range as the new data changed the effective reductions on a state-by-state basis. Some state measures are now more restrictive than previously believed, others are now more liberal.

    NMFS is implementing the Council recommended original suite of measures, for the following reasons:

    1. The Council and Commission developed appropriate measures on what was considered the best available information at the time of their decisionmaking processes. The backup coastwide provisions (i.e., a 14-inch (35.56-cm) minimum fish size and a 3-fish possession limit with an open season of July 15-September 15) developed by the Council as a backstop provision was designed for use only if northern states did not develop measures to achieve the required 23-percent reduction in landings based on the preliminary MRIP information. Acting in good faith, the northern states did comply with the provisions of Addendum XXVII to the Commission's FMP. Using the coastwide provisions would disproportionally affect the southern states that adopt Federal measures for their state waters while doing little, if anything, to constrain overall catch. The actual reduction in landings from using the backstop would not achieve a 30-percent reduction in 2016 landings.

    2. The final MRIP data were released substantially later than is normal and were considerably different than the preliminary estimates. It could not be foreseen that final information would increase 2015 landing estimates by nearly 10 percent, nor could it be anticipated that final estimates would be available much later than normal. Final MRIP estimates for black sea bass, usually released in mid-April, generally vary 1-2 percent from the preliminary estimates and in many years have been lower than preliminary estimates, not higher.

    3. The 2016 recreational black sea bass fishery is well underway. Even acting quickly, several states indicated during the July 6 Board teleconference that they would be unable to implement regulatory changes before the end of summer. For many states, the fishery is effectively over by mid-September. Similarly, it is unlikely that an emergency action by NMFS could be implemented much more quickly. Federal measures alone would be insufficient to effectively reduce landings because the majority of catch occurs in northern state's waters.

    4. A comprehensive stock assessment is scheduled for December 2016. Work has already begun on this assessment. NMFS is prepared to work quickly with the Council and Commission to react to new stock information as soon as it becomes available in early 2017.

    5. Further delay to implement management measures would affect not only black sea bass management, but also scup and summer flounder. The latter species, summer flounder, currently lacks the conservation equivalency determination for Federal waters until a final rule is published in the Federal Register. This would create inconsistent measures in Federal and state waters, confusion for the public, and could lead to enforcement problems.

    Commercial Scup Incidental Possession Limit Change

    This rule increases the incidental winter season (November 1-April 30) scup commercial possession limit for vessels using mesh smaller than 5.0 inches (12.7 cm) from 500 lb (227 kg) to 1,000 lb (454 kg). This change is expected to allow vessels using small mesh that take scup incidental to other target species to convert some scup that would otherwise be discarded to landings. Vessels using mesh larger than 5 inches (12.7 cm) may continue to land up to the targeted commercial fishery possession limit according to the applicable Federal and state rules.

    Additional Regulatory Changes

    This rule also corrects two errors in the commercial summer flounder regulations. The summer flounder minimum mesh size regulations at § 648.108(a)(1) require that any vessel landing or possessing more than 100 lb (45 kg) of summer flounder from May 1 through October 31, or 200 lb (91 kg) of summer flounder from November 1 through April 30, use at least 5.5-inch (14-cm) diamond or 6.0-inch (15-cm) square mesh “throughout the body, extension(s), and codend portion of the net.” However, the turtle excluding device (TED) regulations require summer flounder trawls fishing in the sea turtle protection area to have a TED extension with webbing no larger than 3.5 inches (9 cm). This rule eliminates the conflict between these two regulations by specifying that the minimum mesh size restrictions do not apply to extensions needed to comply with the TED regulations.

    This rule also corrects an erroneous reference to the Regional Administrator's authority to terminate the fly net exemption after review. This authority has been incorrectly listed at § 648.108(b)(3) and is corrected in this rule to reference § 648.108(b)(2)(iv).

    Comments and Responses

    Three comments were received on measures outlined in the May 23, 2016 (81 FR 32269), proposed rule. Two comments received supported the scup incidental trip limit increase contained in this rule. Both noted this change will assist fishermen in reducing regulatory discards in small-mesh fisheries during the November to April timeframe. NMFS agrees and is implementing this change as proposed.

    The other comment received raised no issues with any of the proposed measures. Rather, the individual wanted more information in the final rule about what outreach and/or inclusion of commercial and recreational fishermen's input occurred during the development of the measures in this rule.

    As outlined in the SIR prepared by the Council, the public had the opportunity to provide comments during the development of the 2016 catch limits, the 2016 recreational management measures, and the scup incidental trawl possession limits. Opportunities for public participation, including recreational and commercial fishermen, occurred as part the following meetings:

    • Summer Flounder, Scup, and Black Sea Bass Monitoring Committee Meetings; September 23, 2015, and November 7-10, 2015;

    • Summer Flounder, Scup, and Black Sea Bass Advisory Panel Meetings; October 22, 2015, and November 17, 2015;

    • Council meeting; December 8-10, 2015.

    Furthermore, the measures of this rule have been subject to public comment through proposed rulemaking, as required under the Administrative Procedure Act.

    Classification

    The Administrator, Greater Atlantic Region, NMFS, determined that the 2016 recreational management measures and other specification measures of this rule for the Summer Flounder, Scup, and Black Sea Bass FMP are necessary for the conservation and management of the summer flounder, scup, and black sea bass fisheries and that the measures are consistent with the Magnuson-Stevens Fishery Conservation and Management Act and other applicable laws.

    The Assistant Administrator for Fisheries, NOAA, finds good cause to waive the requirement for a 30-day delay in effectiveness under the provisions of section 553(d) of the Administrative Procedure Act because a delay in its effectiveness would not serve any legitimate purpose, while unfairly prejudicing federally permitted charter/party vessels. Recreational fisheries are already underway for summer flounder, scup, and black sea bass. Rulemaking has been delayed while final information from the MRIP program, provided many weeks later than is typical, has been evaluated. The Commission's Black Sea Bass Management Board met on July 6, 2016, to discuss the updated MRIP estimates. NMFS could not issue a final rule for black sea bass measures until the outcome of this meeting was known.

    Because summer flounder fisheries are already open prior to the publication of this rule, additional delay will disadvantage federally permitted charter/party vessels that would be restricted to the existing summer flounder coastwide regulations (18-inch (45.7-cm) minimum size and a 4-fish per person possession limit) until the Federal regulations implementing conservation equivalency are effective. This would unnecessarily disadvantage federally permitted vessels, which would be subject to the more restrictive measures while state-licensed vessels could be engaged in fishing activities under this year's management measures. If this final rule were delayed for 30 days, the fishery would likely forego some amount of landings and revenues during the delay period. While these restrictions would be alleviated after this rule becomes effective, fishermen may be not able to recoup the lost economic opportunity of foregone trips that would result from delaying the effectiveness of this action.

    Finally, requiring a 30-day delay before the final rule becomes effective would not provide any benefit to the regulated parties. Unlike actions that require an adjustment period to comply with new rules, charter/party operators will not have to purchase new equipment or otherwise expend time or money to comply with these management measures. Rather, complying with this final rule simply means adhering to the published management measures for each relevant species of fish while the charter/party operators are engaged in fishing activities.

    For these reasons, the Assistant Administrator finds good cause to waive the 30-day delay and to implement this rule upon publication in the Federal Register.

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

    On December 29, 2015, the National Marine Fisheries Service (NMFS) issued a final rule establishing a small business size standard of $11 million in annual gross receipts for all businesses primarily engaged in the commercial fishing industry (NAICS 11411) for Regulatory Flexibility Act (RFA) compliance purposes only (80 FR 81194, December 29, 2015). The $11 million standard became effective on July 1, 2016, and is to be used in place of the U.S. Small Business Administration's (SBA) current standards of $20.5 million, $5.5 million, and $7.5 million for the finfish (NAICS 114111), shellfish (NAICS 114112), and other marine fishing (NAICS 114119) sectors of the U.S. commercial fishing industry in all NMFS rules subject to the RFA after July 1, 2016.

    Pursuant to the Regulatory Flexibility Act, and prior to July 1, 2016, a certification was developed for this regulatory action using SBA's former size standards. NMFS has reviewed the analyses prepared for this regulatory action in light of the new size standard. All of the entities directly regulated by this regulatory action are commercial finfish fishing businesses. The new standard could result in fewer commercial finfish businesses being considered small. However, NMFS has determined that the new size standard does not affect its decision to certify this regulatory action. The action results in essentially status quo measures for all three fisheries and would have a minimal, potentially slightly positive, impact on all regulated entities regardless of size.

    List of Subjects in 50 CFR Part 648

    Fisheries, Fishing, Reporting and recordkeeping requirements.

    Dated: July 29, 2016. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.

    For the reasons set out in the preamble, 50 CFR part 648 is amended as follows:

    PART 648—FISHERIES OF THE NORTHEASTERN UNITED STATES 1. The authority citation for part 648 continues to read as follows: Authority:

    16 U.S.C. 1801 et seq.

    2. In § 648.107, paragraph (a) introductory text is revised to read as follows:
    § 648.107 Conservation equivalent measures for the summer flounder fishery.

    (a) The Regional Administrator has determined that the recreational fishing measures proposed to be implemented by the states of Maine through North Carolina for 2016 are the conservation equivalent of the season, minimum size, and possession limit prescribed in §§ 648.102, 648.103, and 648.105(a), respectively. This determination is based on a recommendation from the Summer Flounder Board of the Atlantic States Marine Fisheries Commission.

    3. In § 648.108, paragraph (a)(1) is revised and paragraph (b)(3) is redesignated as paragraph (b)(2)(iv).

    The revision reads as follows:

    § 648.108 Summer flounder gear restrictions.

    (a) General. (1) Otter trawlers whose owners are issued a summer flounder permit and that land or possess 100 lb (45.4 kg) or more of summer flounder from May 1 through October 31, or 200 lb (90.7 kg) or more of summer flounder from November 1 through April 30, per trip, must fish with nets that have a minimum mesh size of 5.5-inch (14.0-cm) diamond or 6.0-inch (15.2-cm) square mesh applied throughout the body, extension(s), and codend portion of the net, except as required in a TED extension, in accordance with § 223.206(d)(2)(iii) of this title.

    4. In § 648.125, paragraph (a)(1) is revised to read as follows:
    § 648.125 Scup gear restrictions.

    (a) Trawl vessel gear restrictions—(1) Minimum mesh size. No owner or operator of an otter trawl vessel that is issued a scup moratorium permit may possess more than 1,000 lb (454 kg) of scup from November 1 through April 30, or more than 200 lb (91 kg) of scup from May 1 through October 31, unless fishing with nets that have a minimum mesh size of 5.0-inch (12.7-cm) diamond mesh, applied throughout the codend for at least 75 continuous meshes forward of the terminus of the net, and all other nets are stowed and not available for immediate use as defined in § 648.2.

    [FR Doc. 2016-18485 Filed 8-1-16; 4:15 pm] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 150818742-6210-02] RIN 0648-XE708 Fisheries of the Exclusive Economic Zone Off Alaska; Dusky Rockfish in the Western Regulatory Area of the Gulf of Alaska AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Temporary rule; closure.

    SUMMARY:

    NMFS is prohibiting directed fishing for dusky rockfish in the Western Regulatory Area of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2016 total allowable catch of dusky rockfish in the Western Regulatory Area of the GOA.

    DATES:

    Effective 1200 hours, Alaska local time (A.l.t.), August 1, 2016, through 2400 hours, A.l.t., December 31, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Josh Keaton, 907-586-7228.

    SUPPLEMENTARY INFORMATION:

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

    The 2016 total allowable catch (TAC) of dusky rockfish in the Western Regulatory Area of the GOA is 173 metric tons (mt) as established by the final 2016 and 2017 harvest specifications for groundfish of the Gulf of Alaska (81 FR 14740, March 18, 2016).

    In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2016 TAC of dusky rockfish in the Western Regulatory Area of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 100 mt, and is setting aside the remaining 73 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for dusky rockfish in the Western Regulatory Area of the GOA.

    After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

    Classification

    This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for dusky rockfish in the Western Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 29, 2016.

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

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

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: August 1, 2016. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2016-18524 Filed 8-1-16; 4:15 pm] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 150818742-6210-02] RIN 0648-XE706 Fisheries of the Exclusive Economic Zone Off Alaska; Pacific Ocean Perch in the Western Regulatory Area of the Gulf of Alaska AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Temporary rule; closure.

    SUMMARY:

    NMFS is prohibiting directed fishing for Pacific ocean perch in the Western Regulatory Area of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2016 total allowable catch of Pacific ocean perch in the Western Regulatory Area of the GOA.

    DATES:

    Effective 1200 hours, Alaska local time (A.l.t.), August 1, 2016, through 2400 hours, A.l.t., December 31, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Josh Keaton, 907-586-7228.

    SUPPLEMENTARY INFORMATION:

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

    The 2016 total allowable catch (TAC) of Pacific ocean perch in the Western Regulatory Area of the GOA is 2,737 metric tons (mt) as established by the final 2016 and 2017 harvest specifications for groundfish of the Gulf of Alaska (81 FR 14740, March 18, 2016).

    In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2016 TAC of Pacific ocean perch in the Western Regulatory Area of the GOA will soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 2,637 mt, and is setting aside 100 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for Pacific ocean perch in the Western Regulatory Area of the GOA.

    After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

    Classification

    This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for Pacific ocean perch in the Western Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 29, 2016.

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

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

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: August 1, 2016. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2016-18522 Filed 8-1-16; 4:15 pm] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 150818742-6210-02] RIN 0648-XE707 Fisheries of the Exclusive Economic Zone Off Alaska; Northern Rockfish in the Western Regulatory Area of the Gulf of Alaska AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Temporary rule; closure.

    SUMMARY:

    NMFS is prohibiting directed fishing for northern rockfish in the Western Regulatory Area of the Gulf of Alaska (GOA). This action is necessary to prevent exceeding the 2016 total allowable catch of northern rockfish in the Western Regulatory Area of the GOA.

    DATES:

    Effective 1200 hours, Alaska local time (A.l.t.), August 1, 2016, through 2400 hours, A.l.t., December 31, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Josh Keaton, 907-586-7228.

    SUPPLEMENTARY INFORMATION:

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

    The 2016 total allowable catch (TAC) of northern rockfish in the Western Regulatory Area of the GOA is 457 metric tons (mt) as established by the final 2016 and 2017 harvest specifications for groundfish of the Gulf of Alaska (81 FR 14740, March 18, 2016).

    In accordance with § 679.20(d)(1)(i), the Administrator, Alaska Region, NMFS (Regional Administrator), has determined that the 2016 TAC of northern rockfish in the Western Regulatory Area of the GOA will be soon be reached. Therefore, the Regional Administrator is establishing a directed fishing allowance of 50 mt, and is setting aside 407 mt as bycatch to support other anticipated groundfish fisheries. In accordance with § 679.20(d)(1)(iii), the Regional Administrator finds that this directed fishing allowance has been reached. Consequently, NMFS is prohibiting directed fishing for northern rockfish in the Western Regulatory Area of the GOA.

    After the effective date of this closure the maximum retainable amounts at § 679.20(e) and (f) apply at any time during a trip.

    Classification

    This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay the closure of directed fishing for northern rockfish in the Western Regulatory Area of the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of July 29, 2016.

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

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

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: August 1, 2016. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2016-18523 Filed 8-1-16; 4:15 pm] BILLING CODE 3510-22-P
    81 150 Thursday, August 4, 2016 Proposed Rules DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 7 CFR Part 319 [Docket No. APHIS-2016-0026] RIN 0579-AE25 Importation of Fresh Mango Fruit From Vietnam Into the Continental United States AGENCY:

    Animal and Plant Health Inspection Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    We are proposing to amend the regulations to allow the importation of fresh mango fruit from Vietnam into the continental United States. As a condition of entry, fresh mango fruit from Vietnam would be subject to a systems approach that would include orchard requirements, irradiation treatment, and port of entry inspection. The fruit would also be required to be imported in commercial consignments and accompanied by a phytosanitary certificate issued by the national plant protection organization of Vietnam with an additional declaration stating that the consignment was inspected and found free of Macrophoma mangiferae and Xanthomonas campestris pv. mangiferaeindicae. This action would allow for the importation of fresh mango fruit from Vietnam while continuing to provide protection against the introduction of plant pests into the continental United States.

    DATES:

    We will consider all comments that we receive on or before October 3, 2016.

    ADDRESSES:

    You may submit comments by either of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov/#!docketDetail;D=APHIS-2016-0026.

    Postal Mail/Commercial Delivery: Send your comment to Docket No. APHIS-2016-0026, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road, Unit 118, Riverdale, MD 20737-1238.

    Supporting documents and any comments we receive on this docket may be viewed at http://www.regulations.gov/#!docketDetail;D=APHIS-2016-0026 or in our reading room, which is located in Room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 799-7039 before coming.

    FOR FURTHER INFORMATION CONTACT:

    Mr. Tony Román, Senior Regulatory Policy Specialist, Regulatory Coordination and Compliance, PPQ, APHIS, 4700 River Road, Unit 133, Riverdale, MD 20737-1231; (301) 851-2242.

    SUPPLEMENTARY INFORMATION:

    Background

    Under the regulations in “Subpart—Fruits and Vegetables” (7 CFR 319.56-1 through 319.56-75, referred to below as the regulations or the fruits and vegetables regulations), the Animal and Plant Health Inspection Service (APHIS) of the United States Department of Agriculture prohibits or restricts the importation of fruits and vegetables into the United States from certain parts of the world to prevent plant pests from being introduced into and spread within the United States.

    APHIS received a request from the national plant protection organization (NPPO) of Vietnam to amend the regulations to allow the importation of commercially produced fresh mango (Mangifera indica L.) fruit from Vietnam into the continental United States. In evaluating Vietnam's request, we prepared a pest risk assessment (PRA) and a risk management document (RMD). Copies of the PRA and the RMD may be obtained from the person listed under FOR FURTHER INFORMATION CONTACT or viewed on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov).

    The PRA, titled “Importation of Fresh Mango Fruit, Mangifera indica L., from Vietnam into the Continental United States” (September 2012), analyzes the potential pest risk associated with the importation of fresh mango fruit into the continental United States from Vietnam.

    The PRA identifies 18 quarantine pests that could be introduced into the United States in consignments of fresh mango fruit from Vietnam. A quarantine pest is defined in § 319.56-2 as “a pest of potential economic importance to the area endangered thereby and not yet present there, or present but not widely distributed and being officially controlled.” The pests listed in the PRA are:

    • Carambola fruit fly, Bactrocera carambolae Drew & Hancock

    • Guava fruit fly, Bactrocera correcta (Bezzi)

    • Melon fly, Bactrocera cucurbitae Coquillett

    • Oriental fruit fly, Bactrocera dorsalis Hendel

    • Pumpkin fruit fly, Bactrocera tau Walker

    • Peach fruit fly, Bactrocera zonata (Saunders)

    • Yellow peach moth, Conogethes punctiferalis

    • Mango seed borer, Deanolis albizonalis

    • Old World bollworm, Helicoverpa armigera

    • Pink hibiscus mealybug, Maconellicoccus hirsutus

    • The fungus Macrophoma mangiferae

    • Spherical mealybug, Nipaecoccus viridis

    • Coffee mealybug, Planococcus lilacinus

    • Citriculus mealybug, Pseudococcus cryptus

    • Fruit tree mealybug, Rastrococcus invadens

    • Chili thrips, Scirtothrips dorsalis

    • Mango pulp weevil, Sternochetus frigidus

    • Mango black spot, Xanthomonas campestris pv. mangiferaeindicae

    Based on the findings of the PRA, APHIS has determined that measures beyond standard port-of-entry inspection are needed to mitigate the risks posed by these pests. These measures are identified in the RMD and are used as the basis for the requirements included in this proposed rule. We are therefore proposing to allow the importation of fresh mango fruit from Vietnam into the continental United States if it is produced under a systems approach, which is described below. Requirements of the systems approach would be added to the regulations as a new § 319.56-76.

    Commercial Consignments

    Only commercial consignments of fresh mango fruit from Vietnam would be allowed to be imported into the continental United States. Produce grown commercially is less likely to be infested with plant pests than noncommercial consignments. Noncommercial consignments are more prone to infestations because the commodity is often ripe to overripe, could be of a variety with unknown susceptibility to pests, and is often grown with little or no pest control. Commercial consignments, as defined in § 319.56-2, are consignments that an inspector identifies as having been imported for sale and distribution. Such identification is based on a variety of indicators, including, but not limited to: Quantity of produce, type of packing, identification of grower or packinghouse on the packaging, and documents consigning the fruits or vegetables to a wholesaler or retailer.

    Treatments

    Under this proposed rule, fresh mango fruit from Vietnam would be required to be treated with a minimum absorbed irradiation dose of 400 gray in accordance with § 305.9 of the phytosanitary treatment regulations in 7 CFR part 305. This is the established generic dose for all insect pests except pupae and adults of the order Lepidoptera. While it is true that three of the pests associated with fresh mango fruit from Vietnam are Lepidopteran (yellow peach moth, mango seed borer, and Old World bollworm), irradiation is unique among quarantine treatments insofar as sublethal doses are effective in providing phytosanitary protection against Lepidopteran pests in the following ways:

    • While the treatment is not lethal to pupae and adults of the order Lepidoptera it is lethal to larvae. Larvae are of greatest phytosanitary concern given that they are internal feeders and may therefore be overlooked upon inspection;

    • Irradiation prevents normal adult emergence from the pupal stage;

    • Irradiation also causes sterility in pupae and emerged adults, preventing further larval reproduction.

    Shipments of fresh mango fruit from Vietnam would also have to meet all other relevant requirements in 7 CFR part 305, including monitoring of treatment by APHIS inspectors.

    In order to mitigate the risks posed by Macrophoma mangiferae, we are proposing three options: (1) The mangoes be treated with a broad-spectrum post-harvest fungicidal dip, (2) the orchard of origin be inspected at a time prior to the beginning of harvest and be found free of Macrophoma mangiferae, or (3) fruit must originate from an orchard that was treated with a broad-spectrum fungicide during the growing season.

    Symptoms of this plant pathogen can be easily seen and detected in the field on mango leaves and fruit during pre-harvest inspection. Post-harvest diseases do not occur without the presence of symptoms on leaves in the field. Orchard application of broad spectrum fungicide sprays protects fruit from infection by aerial spores produced on leaves or stems.

    Phytosanitary Certificate

    Each consignment of fruit would have to be accompanied by a phytosanitary certificate issued by the NPPO of Vietnam that contains an additional declaration stating that the fruit in the consignment was inspected and found free of Macrophoma mangiferae and Xanthomonas campestris pv. mangiferaeindicae.

    Inspection would mitigate the risks posed by Xanthomonas campestris pv. mangiferaeindicae since symptoms of Xanthomonas campestris pv. mangiferaeindicae are easily discernible to the naked eye. The bacterium is not generally considered a post-harvest disease. Infection occurs most often through wounds which would cause the fruit to be culled during harvest or processing.

    Requiring a phytosanitary certificate would ensure that the NPPO of Vietnam has inspected the fruit and certified that the fruit meets our requirements for export to the continental United States.

    Port of Entry Inspection

    Shipments of fresh mango fruit from Vietnam would be subject to inspection at the port of entry. This will provide an additional layer of phytosanitary protection in order to prevent the dissemination of plant pests into the continental United States.

    Executive Order 12866 and Regulatory Flexibility Act

    This proposed rule has been has been determined to be not significant for the purposes of Executive Order 12866 and, therefore, has not been reviewed by the Office of Management and Budget.

    In accordance with the Regulatory Flexibility Act, we have analyzed the potential economic effects of this action on small entities.

    This proposed rule is in response to a request from Vietnam to be allowed to export fresh mango fruit to the continental United States. The annual quantity that Vietnam expects to export to the United States, 3,000 metric tons, represents less than 1 percent of U.S. fresh mango fruit imports, which averaged 396,070 metric tons per year, 2012 to 2015, primarily from Mexico, Peru, Ecuador, Brazil, and Guatemala. While mangoes are grown in Florida and Hawaii, and in smaller quantities in California and Texas, U.S. annual production totals only about 3,000 metric tons.

    Most if not all U.S. mango farms and wholesalers are small entities. However, given the small quantity expected to be imported from Vietnam relative to current imports, the proposed rule would not have a significant impact on U.S. mango producers. While Vietnam's mango season runs from February to September, encompassing that of the United States (Florida's season is May to September), U.S. importers may benefit marginally in having Vietnam as another source of fresh mango fruit that would help meet demand.

    Under these circumstances, the Administrator of the Animal and Plant Health Inspection Service has determined that this action would not have a significant economic impact on a substantial number of small entities.

    Executive Order 12988

    This proposed rule would allow fresh mango fruit to be imported into the continental United States from Vietnam under a systems approach. If this proposed rule is adopted, State and local laws and regulations regarding fresh mango fruit imported under this rule would be preempted while the fruit is in foreign commerce. Fresh fruits are generally imported for immediate distribution and sale to the consuming public and would remain in foreign commerce until sold to the ultimate consumer. The question of when foreign commerce ceases in other cases must be addressed on a case-by-case basis. If this proposed rule is adopted, no retroactive effect will be given to this rule, and this rule will not require administrative proceedings before parties may file suit in court challenging this rule.

    Paperwork Reduction Act

    In accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), the information collection or recordkeeping requirements included in this proposed rule have been submitted for approval to the Office of Management and Budget (OMB). Please send written comments to the Office of Information and Regulatory Affairs, OMB, Attention: Desk Officer for APHIS, Washington, DC 20503. Please state that your comments refer to Docket No. APHIS-2016-0026. Please send a copy of your comments to: (1) APHIS, using one of the methods described under ADDRESSES at the beginning of this document, and (2) Clearance Officer, OCIO, USDA, Room 404-W, 14th Street and Independence Avenue SW., Washington, DC 20250.

    This action would allow for the importation of fresh mango fruit from Vietnam while continuing to provide protection against the introduction of plant pests into the continental United States.

    Implementing this rule will require irradiation facility requirements, orchard inspections, phytosanitary treatments, port of entry inspections, and phytosanitary certificates.

    We are soliciting comments from the public (as well as affected agencies) concerning our proposed information collection and recordkeeping requirements. These comments will help us:

    (1) Evaluate whether the proposed information collection is necessary for the proper performance of our agency's functions, including whether the information will have practical utility;

    (2) Evaluate the accuracy of our estimate of the burden of the proposed information collection, including the validity of the methodology and assumptions used;

    (3) Enhance the quality, utility, and clarity of the information to be collected; and

    (4) Minimize the burden of the information collection on those who are to respond (such as through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology; e.g., permitting electronic submission of responses).

    Estimate of burden: Public reporting burden for this collection of information is estimated to average 0.02183 hours per response.

    Respondents: Foreign businesses and the NPPO of Vietnam.

    Estimated annual number of respondents: 2.

    Estimated annual number of responses per respondent: 6,617.

    Estimated annual number of responses: 13,233.

    Estimated total annual burden on respondents: 289 hours. (Due to averaging, the total annual burden hours may not equal the product of the annual number of responses multiplied by the reporting burden per response.)

    Copies of this information collection can be obtained from Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

    E-Government Act Compliance

    The Animal and Plant Health Inspection Service is committed to compliance 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 information pertinent to E-Government Act compliance related to this proposed rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

    List of Subjects in 7 CFR Part 319

    Coffee, Cotton, Fruits, Imports, Logs, Nursery stock, Plant diseases and pests, Quarantine, Reporting and recordkeeping requirements, Rice, Vegetables.

    Accordingly, we propose to amend 7 CFR part 319 as follows:

    PART 319—FOREIGN QUARANTINE NOTICES 1. The authority citation for part 319 continues to read as follows: Authority:

    7 U.S.C. 450, 7701-7772, and 7781-7786; 21 U.S.C. 136 and 136a; 7 CFR 2.22, 2.80, and 371.3.

    2. Add § 319.56-76 to read as follows:
    § 319.56-76 Fresh Mango from Vietnam.

    Fresh mango (Mangifera indica L.) fruit may be imported into the continental United States under the following conditions:

    (a) The fresh mango fruit may be imported in commercial consignments only.

    (b) The fresh mango fruit must be treated for plant pests of the class Insecta, except pupae and adults of the order Lepidoptera, with irradiation in accordance with part 305 of this chapter.

    (c) The risks presented by Macrophoma mangiferae must be addressed in one of the following ways:

    (1) The mangoes are treated with a broad-spectrum post-harvest fungicidal dip; or

    (2) The orchard of origin is inspected prior to the beginning of harvest and found free of Macrophoma mangiferae; or

    (3) Fruit must originate from an orchard that was treated with a broad-spectrum fungicide during the growing season.

    (d) Each consignment of fresh mango fruit must be accompanied by a phytosanitary certificate issued by the NPPO of Vietnam that contains an additional declaration stating that the fruit in the consignment was inspected and found free of Macrophoma mangiferae and Xanthomonas campestris pv. mangiferaeindicae and has been produced in accordance with the requirements of the systems approach in 7 CFR 319.56-76.

    (e) The fruit is subject to inspection at the port of entry for all quarantine pests of concern.

    Done in Washington, DC, this 29th day of July 2016. Kevin Shea, Administrator, Animal and Plant Health Inspection Service.
    [FR Doc. 2016-18439 Filed 8-3-16; 8:45 am] BILLING CODE 3410-34-P
    DEPARTMENT OF AGRICULTURE Agricultural Marketing Service 7 CFR Part 929 [Doc. No. AMS-SC-16-0041; SC16-929-1 PR] Cranberries Grown in the States of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York; Proposed Amendment to Marketing Order AGENCY:

    Agricultural Marketing Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    This proposed rule invites comments on a proposed amendment to Marketing Orders, which regulates the handling of cranberries grown in the states of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York. The Cranberry Marketing Committee (Committee), which is responsible for the local administration of the order and is comprised of growers of cranberries operating within the production area, recommended adding authority to accept donations from domestic contributors. Contributed funds would be used solely for research and development activities authorized under the regulation of the order and would be free from any encumbrances as to their usage by the donor.

    DATES:

    Comments must be received by October 3, 2016.

    ADDRESSES:

    Written comments should be submitted to the Docket Clerk, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., STOP 0237, Washington, DC 20250-0237; Fax: (202) 720-8938; or Internet: http://www.regulations.gov. All comments should reference the document number and the date and page number of this issue of the Federal Register. All comments submitted in response to this proposed rule will be included in the record and will be made available for public inspection in the Office of the Docket Clerk during regular business hours, or can be viewed at: http://www.regulations.gov. Please be advised that the identity of the individuals or entities submitting the comments will be made public on the Internet at the address provided above.

    FOR FURTHER INFORMATION CONTACT:

    Abdullah Orozco, Marketing Specialist, or Michelle P. Sharrow, Rulemaking Branch Chief, Marketing Order and Agreement Division, Specialty Crops Program, AMS, USDA, 1400 Independence Avenue SW., Stop 0237, Washington, DC 20250-0237; Telephone: (202) 720-2491, Fax: (202) 720-8938, or Email: [email protected] or [email protected].

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

    SUPPLEMENTARY INFORMATION:

    This proposal is issued under Marketing Order and Agreement No. 929, as amended (7 CFR part 929), regulating the handling of cranberries grown in the states of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.” Section 608c(17) of the Act and the applicable rules of practice and procedure governing the formulation of marketing agreements and orders (7 CFR part 900) authorizes amendment of the order through this informal rulemaking action. AMS will consider comments received in response to this rule, and based on all the information available, will determine if order amendment is warranted. If AMS determines amendment of the order is warranted, a subsequent proposed rule and referendum order would be issued, and producers of cranberries regulated within the production area would be allowed to vote for or against the proposed amendment. AMS would then issue a final rule effectuating the amendment if it is approved by producers in the referendum.

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

    This proposal has been reviewed under Executive Order 12988, Civil Justice Reform. This rule is not intended to have retroactive effect. This rule shall not be deemed to preclude, preempt, or supersede any State program covering cranberries in the production area.

    The Act provides that administrative proceedings must be exhausted before parties may file suit in court. Under section 608c(15)(A) of the Act, any handler subject to an order may file with USDA a petition stating that the order, any provision of the order, or any obligation imposed in connection with the order is not in accordance with law and request a modification of the order or to be exempted therefrom. A handler is afforded the opportunity for a hearing on the petition. After the hearing, USDA would rule on the petition. The Act provides that the district court of the United States in any district in which the handler is an inhabitant, or has his or her principal place of business, has jurisdiction to review USDA's ruling on the petition, provided an action is filed no later than 20 days after the date of entry of the ruling.

    Section 1504 of the Food, Conservation, and Energy Act of 2008 (2008 Farm Bill) (Pub. L. 110-246) amended section 18c(17) of the Act, which in turn required the addition of supplemental rules of practice to 7 CFR part 900 (73 FR 49307; August 21, 2008). The amendment of section 18c(17) of the Act and additional supplemental rules of practice authorize the use of informal rulemaking (5 U.S.C. 553) to amend Federal fruit, vegetable, and nut marketing agreements and orders. USDA may use informal rulemaking to amend marketing orders based on the nature and complexity of the proposed amendments, the potential regulatory and economic impacts on affected entities, and any other relevant matters.

    AMS has considered these factors and has determined that this proposed amendment is not unduly complex and its nature is appropriate for utilizing the informal rulemaking process to amend the order. A discussion of the potential regulatory and economic impacts on affected entities is discussed later in the “Initial Regulatory Flexibility Analysis” section of this rule.

    The proposed amendment was unanimously recommended by the Committee following deliberations at a public meeting held August 17-18, 2015. The proposed amendment would give the Committee authority to receive and expend voluntary contributions from domestic sources to fund production research, marketing research, and market development projects, including paid advertising, designed to assist, improve, or promote the marketing, distribution, consumption or efficient production of cranberries, as authorized under § 929.45, Research and development.

    Currently, program operations are solely financed through assessments collected from handlers regulated under the order. Sources not subject to the order have expressed an interest in supporting many of the research and development projects currently funded by the order. However, without the ability to accept financial contributions, the Committee has had to decline these offers. This proposal would provide authority to accept financial contributions. With the potential for additional funding, more research and development projects could be undertaken.

    This proposal would add a new section, § 929.43, Contributions, to the order. If implemented, this section would authorize the Committee to accept voluntary financial contributions. Such contributions could only be accepted from domestic sources and would be free from any encumbrances or restrictions on their use by the donor. When received, the Committee would retain complete control of their use. The use of contributed funds would be limited to funding program activities authorized under § 929.45, Research and development.

    Initial Regulatory Flexibility Analysis

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

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

    There are approximately 1,200 cranberry growers in the regulated area and approximately 45 cranberry handlers who are subject to regulation under the marketing order. Small agricultural producers are defined by the Small Business Administration (SBA) as those having annual receipts of less than $750,000, and small agricultural service firms are defined as those having annual receipts of less than $7,500,000 (13 CFR 121.201).

    According to the National Agricultural Statistics Service (NASS), grower prices were $30.90 per barrel for cranberries during the 2014-15 marketing year. NASS also reported total bearing acres at 40,600 and average yield per acre at 10.3 tons for the 2014-15 marketing year.

    Based on the total bearing acres provided by NASS and the approximate number of cranberry growers (1,200 growers), the average acreage per grower is 33.8 acres. Multiplying the average acreage per grower (33.8 acres) by the average yield per acre (10.3 tons) results in an average production of 348.5 tons. To convert the average production from tons to barrels, 348.5 tons is multiplied by 2,000 pounds (one ton equals 2,000 pounds) to equal 696,966.7 pounds and is then divided by 100 (100 pounds equals 1 barrel), resulting in an average production per growers of 6,969.7 barrels.

    Multiplying the average production (6,967.7 barrels) by the grower price ($30.90 per barrel), provided by NASS, equals an average grower revenue of $215,301.90. Based on this calculation, the average annual grower revenue for the 2014-15 marketing year was below $750,000.

    Using Committee information and shipment data, the majority of cranberry handlers could also be considered small businesses under SBA's definition. Therefore, the majority of cranberry growers and handlers may be classified as small entities under SBA definitions.

    The amendment proposed by the Committee would add a new section, § 929.43, Contributions, to the order. If implemented, this section would authorize the Committee to accept voluntary financial contributions. Such contributions could only be accepted from domestic sources and would be free from any encumbrances or restrictions on their use by the donor. When received, the Committee would retain complete control of their use. The use of contributed funds would be limited to funding program activities authorized under § 929.45, Research and development.

    The Committee's proposed amendment was unanimously recommended at a public meeting on August 17-18, 2015. If the proposal is approved in referendum, there would be no direct financial effect on growers or handlers. This proposal would provide authority to accept additional funding. With the potential for additional funding, more research and promotional projects could be undertaken. Therefore, it is anticipated that both small and large producer and handler businesses would benefit from its implementation.

    Paperwork Reduction Act

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

    This proposed rule would impose no additional reporting or recordkeeping requirements on either small or large cranberry handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

    The Committee's meeting was widely publicized throughout the cranberry production area. All interested persons were invited to attend the meeting and encouraged to participate in Committee deliberations on all issues. Like all Committee meetings, the August 17-18, 2015, meeting was public, and all entities, both large and small, were encouraged to express their views on these proposals. Finally, interested persons are invited to submit comments on the proposed amendments to the order, including comments on the regulatory and informational impacts of this action on small businesses.

    Following analysis of any comments received on the amendments proposed in this rule, AMS will evaluate all available information and determine whether to proceed. If appropriate, a proposed rule and referendum order would be issued, and producers would be provided the opportunity to vote for or against the proposed amendment. Information about the referendum, including dates and voter eligibility requirements, would be published in a future issue of the Federal Register. A final rule would then be issued to effectuate the amendment, if favored by producers participating in the referendum.

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

    USDA has not identified any relevant Federal rules that duplicate, overlap, or conflict with this action. A small business guide on complying with fruit, vegetable, and specialty crop marketing agreements and orders may be viewed at: https://www.ams.usda.gov/rules-regulations/moa/small-businesses. Any questions about the compliance guide should be sent to Antoinette Carter at the previously mentioned address in the FOR FURTHER INFORMATION CONTACT section.

    General Findings

    The findings hereinafter set forth are supplementary to the findings and determinations which were previously made in connection with the issuance of the marketing order; and all said previous findings and determinations are hereby ratified and affirmed, except insofar as such findings and determinations may be in conflict with the findings and determinations set forth herein.

    1. The marketing order as hereby proposed to be amended and all of the terms and conditions thereof, would tend to effectuate the declared policy of the Act;

    2. The marketing order as hereby proposed to be amended regulates the handling of cranberries grown in the states of Massachusetts, Rhode Island, Connecticut, New Jersey, Wisconsin, Michigan, Minnesota, Oregon, Washington, and Long Island in the State of New York in the same manner as, and is applicable only to, persons in the respective classes of commercial and industrial activity specified in the marketing order;

    3. The marketing order as hereby proposed to be amended is limited in application to the smallest regional production area which is practicable, consistent with carrying out the declared policy of the Act, and the issuance of several orders applicable to subdivisions of the production area would not effectively carry out the declared policy of the Act;

    4. The marketing order as hereby proposed to be amended prescribes, insofar as practicable, such different terms applicable to different parts of the production area as are necessary to give due recognition to the differences in the production and marketing of cranberries produced or handled in the production area; and

    5. All handling of cranberries produced in the production area as defined in the order is in the current of interstate or foreign commerce or directly burdens, obstructs, or affects such commerce.

    A 60-day comment period is provided to allow interested persons to respond to these proposals. Any comments received on the amendments proposed in this rule will be analyzed, and if AMS determines to proceed based on all the information presented, a producer referendum would be conducted to determine producer support for the proposed amendments. If appropriate, a final rule would then be issued to effectuate the amendment favored by producers participating in the referendum.

    List of Subjects in 7 CFR Part 929

    Cranberries, Marketing agreements, Reporting and recordkeeping requirements.

    For the reasons set forth in the preamble, 7 CFR part 929 is proposed to be amended as follows:

    PART 929—CRANBERRIES GROWN IN THE STATES OF MASSACHUSETTS, RHODE ISLAND, CONNECTICUT, NEW JERSEY, WISCONSIN, MICHIGAN, MINNESOTA, OREGON, WASHINGTON, AND LONG ISLAND IN THE STATE OF NEW YORK 1. The authority citation for 7 CFR part 929 continues to read as follows: Authority:

    7 U.S.C. 601-674.

    2. Add a new § 929.43 to read as follows:
    § 929.43 Contributions.

    The Committee may accept voluntary contributions to pay expenses incurred pursuant to § 929.45, Research and development. Such contributions may only be accepted if they are sourced from domestic contributors and are free from any encumbrances or restrictions on their use by the donor. The Cranberry Marketing Committee shall retain complete control of their use.

    Dated: July 27, 2016. Elanor Starmer, Administrator, Agricultural Marketing Service.
    [FR Doc. 2016-18115 Filed 8-3-16; 8:45 am] BILLING CODE 3410-02-P
    DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 9 CFR Parts 1, 2, and 3 [Docket No. APHIS-2014-0059] RIN 0579-AD99 Thresholds for De Minimis Activity and Exemptions From Licensing Under the Animal Welfare Act AGENCY:

    Animal and Plant Health Inspection Service, USDA.

    ACTION:

    Proposed rule.

    SUMMARY:

    We are proposing to amend the Animal Welfare Act (AWA) regulations in response to a 2014 Farm Bill amendment to the Act that provides the Secretary of Agriculture with the authority to determine that animal dealers and exhibitors are not required to obtain a license under the Act and regulations if the size of the business conducting AWA-related activities is determined to be de minimis by the Secretary. The Animal and Plant Health Inspection Service has reviewed past compliance with the Animal Welfare Act of currently-regulated facilities and has determined that de minimis businesses, as defined in the rule are capable of providing adequate care and treatment of the animals involved in regulated business activities. We also propose amending the regulations in response to a 2013 amendment to the Act that excludes from the definition of “exhibitor” some owners of household pets that are exhibited occasionally, generate less than a substantial portion of income, and reside exclusively with the owner. Dealers and exhibitors operating at or below the thresholds determined for their particular AWA-related business activity would be exempted from Federal licensing requirements established under the Act and regulations. Our proposed actions would amend the regulations to be consistent with the Act while continuing to ensure the humane care and treatment of animals covered under the AWA.

    DATES:

    We will consider all comments that we receive on or before November 2, 2016.

    ADDRESSES:

    You may submit comments by any of the following methods:

    Federal eRulemaking Portal: Go to http://www.regulations.gov/#!docketDetail;D=APHIS-2014-0059.

    Postal Mail/Commercial Delivery: Send your comment to Docket No. APHIS-2014-0059, Regulatory Analysis and Development, PPD, APHIS, Station 3A-03.8, 4700 River Road, Unit 118, Riverdale, MD 20737-1238.

    Supporting documents and any comments we receive on this docket may be viewed at http://www.regulations.gov/#!docketDetail;D=APHIS-2014-0059 or in our reading room, which is located in room 1141 of the USDA South Building, 14th Street and Independence Avenue SW., Washington, DC. Normal reading room hours are 8 a.m. to 4:30 p.m., Monday through Friday, except holidays. To be sure someone is there to help you, please call (202) 799-7039 before coming.

    FOR FURTHER INFORMATION CONTACT:

    Dr. Kay Carter-Corker, DVM, Director, National Policy Staff, USDA-APHIS-Animal Care, 4700 River Road, Unit 84, Riverdale, MD 20737; (301) 851-3748.

    SUPPLEMENTARY INFORMATION:

    Background

    Under the Animal Welfare Act (AWA or the Act, 7 U.S.C. 2131 et seq.), the Secretary of Agriculture is authorized to promulgate standards and other requirements governing the humane handling, care, treatment, and transportation of certain animals by dealers, research facilities, exhibitors, operators of auction sales, and carriers and intermediate handlers. The Secretary has delegated responsibility for administering the AWA to the Administrator of U.S. Department of Agriculture's Animal and Plant Health Inspection Service (APHIS). Within APHIS, the responsibility for administering the AWA has been delegated to the Deputy Administrator for Animal Care. Regulations and standards established under the AWA are contained in the Code of Federal Regulations (CFR) in 9 CFR parts 1, 2, and 3 (referred to below as the regulations). Part 1 contains definitions for terms used in parts 2 and 3; part 2 provides administrative requirements and sets forth institutional responsibilities for regulated parties; and part 3 contains specifications for the humane handling, care, treatment, and transportation of animals covered by the AWA.

    The AWA seeks to ensure the humane handling, care, treatment, and transportation of animals intended for use by dealers, research facilities, and exhibitors, operators of auction sales, and carriers and intermediate handlers. Dealers (including breeders meeting the definition of “dealer”) and exhibitors of such animals must obtain licenses and comply with AWA regulations and standards, and their facilities are inspected by APHIS for compliance.

    Exclusions and Exemptions in the Act

    The Act defines “animal” in § 2132(g) specifically as any live or dead dog, cat, monkey (nonhuman primate mammal), guinea pig, hamster, rabbit, or such other warm-blooded animal, as the Secretary may determine is being used, or is intended for use, for research, testing, experimentation, or exhibition purposes, or as pets; but such term excludes birds, rats of the genus Rattus, and mice of the genus Mus, bred for use in research; horses not used for research purposes; and other farm animals, such as, but not limited to livestock or poultry, used or intended for use as food or fiber; for improving animal nutrition, breeding, management, or production efficiency; or for improving the quality of food or fiber. With respect to a dog, the term means all dogs including those used for hunting, security, or breeding purposes. Animals that do not fall under the definition of “animal” in the Act are excluded from regulation and licensing.

    In addition to the exclusions provided to persons under the definition of “animal,” the Act contains exclusions for certain persons who buy, sell, transport, or exhibit animals that are covered under the Act. Under the definition of “dealer” in § 2132, the Act excludes retail pet stores that do not sell any animals to a research facility, an exhibitor, or a dealer. Prior to its amendment by the 2014 Farm Bill,1 the Act also excluded from the definition of “dealer” any person who does not sell or negotiate the purchase of any wild animal, dog, or cat and who derives no more than $500 gross income from the sale of other animals during any calendar year.

    1 The Agricultural Act of 2014: http://www.thefederalregister.org/fdsys/pkg/BILLS-113hr2642enr/pdf/BILLS-113hr2642enr.pdf.

    The definition of “exhibitor” under § 2132(h) of the Act excludes retail pet stores, an owner of a common, domesticated household pet who derives less than a substantial portion of income from a nonprimary source (as determined by the Secretary) for exhibiting an animal that exclusively resides at the residence of the pet owner, organizations sponsoring and all persons participating in State and county fairs, livestock shows, rodeos, purebred dog and cat shows, and any other fairs or exhibitions intended to advance agricultural arts and sciences, as may be determined by the Secretary.

    Section 2133 of the Act establishes a requirement for licensing of dealers and exhibitors but excludes retail pet stores from the licensing requirement. Prior to its amendment by the 2014 Farm Bill, the Act also specifically excluded from licensing any person “who derives less than a substantial portion of income (as determined by the Secretary) from the breeding and raising of dogs or cats on his own premises and sells any such dog or cat to a dealer or research facility.”

    Business Size-Based Exemptions in the AWA Regulations

    The current regulations include, among others, licensing exemptions based on the size of the business with respect to the number of breeding female animals maintained or gross income from the sale of animals. These exemptions are explained below.

    Retail Exemptions

    Reflecting what is stated in § 2132 of the Act, § 2.1(a)(3)(i) of the AWA regulations affirms that retail pet stores are exempt from the licensing requirements. However, the Act itself provides no specific definition for the term “retail pet store.” In a 2013 final rule,2 we defined a retail pet store to mean “a place of business or residence at which the seller, buyer, and the animal available for sale are physically present so that every buyer may personally observe the animal prior to purchasing and/or taking custody of that animal after purchase, and where only the following animals are sold or offered for sale, at retail, for use as pets: Dogs, cats, rabbits, guinea pigs, hamsters, gerbils, rats, mice, gophers, chinchillas, domestic ferrets, domestic farm animals, birds, and coldblooded species.” Prior to this change, the regulations referred to “retail pet store” as simply an “outlet” where the animals listed above were sold at retail, with no specific requirement that customers personally observe the animal prior to purchasing or taking custody of it. As a consequence, many large Internet-based retailers claiming the exemption were able to sell and ship pets to buyers sight unseen without the benefit of public or APHIS oversight to ensure humane treatment of their animals. The business model practiced by such Internet-based retailers selling pets bore no resemblance to a retail pet store in existence at the time the provision was originally promulgated in the Act.

    2 September 18, 2013; 78 FR 57227-57250 (Docket No. APHIS-2011-0003).

    Our intent in amending the definition of “retail pet store” was to narrow the scope of the exemption to apply only to retailers who sell exclusively in face-to-face transactions so that pets sold by exempted retailers continue to be monitored for their humane care and treatment by the buying public. We made these changes to ensure that the definition of “retail pet store” was consistent with the original intent of the Act and to bring more pet animals sold at retail under its protection.

    In the rulemaking to define “retail pet store,” we also preserved an exemption in § 2.1(a)(3)(vii) for purebred dog and cat fanciers with four or fewer breeding female dogs, cats, and/or small exotic or wild mammals who sell only the offspring of these animals and who, because of the size of their businesses, are capable of providing adequate care and treatment for the animals involved in regulated business activities without Federal licensing and inspection requirements to ensure animal welfare.

    Wholesale Exemption

    Section 2.1(a)(3)(iii) exempts from licensing any person maintaining four or fewer breeding female dogs, cats, and/or small exotic or wild mammals, and who sells, at wholesale,3 only the offspring of those animals born and raised on his or her premises, for use as pets or exhibition. As was the case with retailers, we determined that wholesalers with four or fewer breeding females who sell only the offspring are capable of providing adequate care and treatment for the animals involved in regulated business activities without Federal licensing and inspection requirements to ensure animal welfare.

    3 “Wholesale” means the sale of animals to other persons for resale.

    Income-Based Exemption

    The current AWA regulations also include the income-based exemption from licensing that was in § 2132(f)(ii) of the Act prior to its amendment by Congress in the 2014 Farm Bill. The $500 gross income limit for persons who sell animals other than wild or exotic animals, dogs, or cats excludes such persons from the definition of “dealer” in § 1.1 of the regulations and therefore exempts them from the licensing requirement in § 2.1(a)(3)(ii). The rationale for establishing this exemption was to conform the regulations to the 1970 statutory amendment to the Act.

    2014 Farm Bill Amendments to the Act

    In the 2014 Farm Bill, Congress amended § 2133 of the Act by giving the Secretary the authority to set thresholds for regulated activities involving animals under which businesses could be exempted from licensure as a dealer or exhibitor “if the size of business is determined by the Secretary to be de minimis.” The amendment provides APHIS with greater authority to exempt small businesses conducting AWA-related activities from licensing and inspection, allowing us to direct our oversight and enforcement efforts on larger businesses conducting regulated activities.

    Congress noted in its Conference Report 4 that this legislation codifies the exemption we made to the regulations 5 in § 2.1(a)(3)(vii) for purebred dog and cat fanciers, and/or breeders of small exotic or wild mammals, who maintain four or fewer breeding females and sell the offspring at retail for pets or exhibition. Dealers qualifying for this licensing exemption are capable of providing adequate care and treatment for the animals involved in regulated business activities without Federal licensing and inspection requirements to ensure animal welfare. We made this same determination for wholesalers with four or fewer breeding females, who are exempted under § 2.1(a)(3)(iii). We therefore intend to retain these exemptions, with four or fewer breeding female dogs, cats, and small exotic or wild mammals sold at wholesale.

    4 See pg. 562: http://www.thefederalregister.org/fdsys/pkg/CRPT-113hrpt333/pdf/CRPT-113hrpt333.pdf.

    5 See footnote 2.

    We emphasize that the thresholds in the current exemptions for dealers are based on the total number of breeding females of all species combined on a premises, not four breeding female animals per each species. For example, if a breeder selling AWA-covered species at retail or wholesale has a total of three breeding female dogs and two breeding female guinea pigs, that breeder could not claim an exemption, as the total number of AWA-covered breeding females the person maintains is five breeding females and exceeds the threshold of four breeding females. We would apply the same provision to any person seeking a de minimis exemption for breeding females under our proposed changes. We expect, however, that most wholesale and retail dealers eligible for a de minimis exemption under this proposal are already eligible for the current licensing exemptions in § 2.1(a)(3) of the regulations.

    In addition to dealers, in section 12308 of the 2014 Farm Bill, Congress amended the Act (7 U.S.C. 2132) to provide the Secretary with the authority to establish a de minimis exemption from licensing for exhibitors. In determining de minimis thresholds for such businesses, we would consider the risk to the humane care and treatment of animals, the total number of AWA-regulated animals maintained, the type of activity for which the animals are being used, and/or the number of days per year the animals are exhibited.

    Contingency Plans Rule

    On December 31, 2012, we published a final rule 6 establishing regulations under which research facilities, dealers, exhibitors, intermediate handlers, and carriers must meet certain requirements for contingency planning and training of personnel. However, on July 31, 2013, we issued a stay 7 of those regulations so that we could further consider the impact of plan requirements on regulated entities, taking into account different needs according to the type and size of their AWA-regulated business activities.

    6 Docket No. APHIS-2006-0159 (77 FR 76815-76824).

    7 78 FR 46255.

    One issue that warranted further review was the impact of contingency planning and other licensing requirements on exhibitors whose businesses involve small numbers of animals. While these exhibitors do not typically pose risks to animal welfare, there was no legal mechanism for exempting them from licensing and contingency planning requirements as de minimis businesses. The amendment to the Act makes it possible to lift the stay on the Agency's contingency plan rule by allowing APHIS to determine certain exhibitors to be de minimis based on the size of their AWA-regulated business activities. We will review the impact of the AWA amendment on the contingency plan rulemaking and consider lifting the stay pending the final outcome of this rulemaking.

    Proposed Changes to the Regulations Definitions

    In response to the amendments made to the Act, we propose to amend the definitions of dealer and exhibitor in § 1.1, “Definitions.”

    Dealer

    In § 1.1 of the regulations, dealer is defined as any person who, in commerce, for compensation or profit, delivers for transportation, or transports, except as a carrier, buys, or sells, or negotiates the purchase or sale of: Any dog or other animal whether alive or dead (including unborn animals, organs, limbs, blood, serum, or other parts) for research, teaching, testing, experimentation, exhibition, or for use as a pet; or any dog at the wholesale level for hunting, security, or breeding purpose. The term excludes retail pet stores, as defined in the regulations, any retail outlet where dogs are sold for hunting, breeding, or security purposes; or any person who does not sell or negotiate the purchase or sale of any wild or exotic animal, dog, or cat and who derives no more than $500 gross income from the sale of animals other than wild or exotic animals, dogs, or cats during any calendar year.

    The 2014 Farm Bill amended the definition of “dealer” in § 2132(f) of the Act by striking language from the definition that excluded “any person who does not sell, or negotiate the purchase or sale of any wild animal, dog, or cat, and who derives no more than $500 gross income from the sale of other animals during any calendar year.”

    We propose to make the definition of dealer in § 1.1 of the regulations consistent with the Act. We would do so by striking the statement that excludes as a dealer “any person who does not sell or negotiate the purchase or sale of any wild or exotic animal, dog, or cat and who derives no more than $500 gross income from the sale of animals other than wild or exotic animals, dogs, or cats during any calendar year.”

    Exhibitor

    In 2013, Congress amended 8 the Act to exclude from the definition of “exhibitor” “an owner of a common, domesticated household pet who derives less than a substantial portion of income from a nonprimary source (as determined by the Secretary) for exhibiting an animal that exclusively resides at the residence of the pet owner.” We propose to amend the definition of exhibitor in § 1.1 of the regulations by adding this exclusion to it, thereby making it consistent with the definition in the Act. While we have not defined “substantial portion of income” in the proposed regulation, we interpret this to mean that the income generated from exhibition is the main source of the person's income. We interpret less-than-substantial income to mean the exhibition generates a minimal amount of money and does not constitute a main source of the person's income. We seek comment on this interpretation and whether we should add it to the regulatory text.

    8 S. 3666; Public Law: 112-261.

    De Minimis Exemptions to Licensing

    We propose to make changes and additions to the licensing exemptions in § 2.1(a)(3) so that the AWA regulations are consistent with the Act, as amended. These changes include adding de minimis exemption requirements in new paragraphs § 2.1(a)(3)(ix) through § 2.1(a)(3)(xii) and including a table summarizing the de minimis exemption thresholds in a new paragraph § 2.1(a)(3)(xiii).

    The de minimis exemptions would apply only to the activities of those dealers and exhibitors that fall under the scope of the Act and are not already excluded or exempted from APHIS licensing and inspection. We note that the Act excludes from regulation farm animals that are used or intended for use as food or fiber, or for improving animal nutrition, breeding, management, or production efficiency. Accordingly, the AWA regulations exclude farm animals used under certain circumstances from the definition of “animal” in § 1.1 and exempt other animals used for food and fiber in § 2.1(a)(3)(vi). None of these regulations would be changed by this proposal. However, farm animals used or exhibited for regulated purposes, such as petting zoos, would continue to fall under the scope of the Act unless they otherwise qualify for a de minimis exemption from licensing.

    As noted previously, we propose no changes to the current retail licensing exemptions in § 2.1(a)(3)(i) and (a)(3)(iii) or the exemption in § 2.1(a)(3)(vii), and persons exempted under these provisions would not be affected by this proposal. Retailers exempted under the retail pet store licensing exemption who sell the offspring of their breeding females solely in face-to-face customer transactions would not be affected by the proposed de minimis requirements, regardless of the number of breeding females they maintain. However, to make the regulations consistent with the amended Act, we are proposing to remove in its entirety the $500 gross income exemption from licensing currently in § 2.1(a)(3)(ii). This exemption parallels the exclusion we are proposing to remove from the definition of dealer in § 1.1. In its place, we would add language that exempts from licensing any person whose business is determined by APHIS to be de minimis in accordance with the proposed regulations in § 2.1(a)(3).

    We propose in a new § 2.1(a)(3)(ix) to establish a de minimis exemption for any person who maintains a total of four or fewer breeding female dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, and who sells, at retail or wholesale, only the offspring of these animals, which were born and raised on his or her premises, and is not otherwise required to obtain a license. As is the case with the current licensing exemptions, this de minimis exemption from licensing as a dealer would not extend to any person residing in a household that collectively maintains a total of more than four such breeding female animals, regardless of ownership, nor to any person maintaining such breeding female animals on premises on which more than four such breeding female animals are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than four such breeding female animals, regardless of ownership. The animals listed as eligible for the proposed de minimis exemption were chosen because they are common domesticated animals with a well-established history of known welfare standards. Again, businesses already exempted under current licensing exemptions would not be affected by this proposed exemption, nor would sales of farm animals be affected if they are sold for the purpose of improving animal nutrition, breeding, management, or production efficiency, or for food or fiber.

    Exhibitor Exemptions

    As indicated above, we also propose to establish de minimis thresholds for some businesses engaged in AWA-covered exhibition activities. This action would exempt exhibitors considered to be de minimis from licensing if they meet the proposed thresholds and relieve them of the requirement to perform the reporting and recordkeeping activities associated with licensing.

    The de minimis thresholds we propose to include for exhibitors would be based on the size of their AWA-related business activity as measured by the total number of animals maintained, the type of exhibitor activity, and/or the duration of exhibition (as measured in days). However, there are situations that preclude de minimis consideration for certain exhibitors. In the Conference Report accompanying the 2014 Farm Bill amendments to the Act, Congress indicated that “an exhibitor's business must not be considered de minimis merely because the facility operates as a non-profit corporation, nor is the exhibition of a small number of dangerous animals (including, but not limited to, big cats, bears, wolves, nonhuman primates, or elephants) de minimis.

    In a new § 2.1(a)(3)(x), we would establish a de minimis licensing exemption for people in a household who in total maintain four or fewer dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, for exhibition and who houses the animals at a site for year-round exhibition, and is not otherwise required to obtain a license. This exemption for a license as an exhibitor would not extend to any person residing in a household that collectively maintains a total of more than four such animals, regardless of ownership, nor to any person maintaining such animals on premises on which more than four such animals are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than four such animals, regardless of ownership.

    Based on our extensive knowledge and experience of animals used for year-round exhibition purposes, we determined the threshold for this exemption to be four, as exhibitors with a small number of common, domesticated, non-dangerous animals are capable of providing adequate care and treatment for the animals involved in regulated business activities, based on compliance data on currently licensed exhibitors.

    In a new § 2.1(a)(3)(xi), we would also include de minimis licensing exemptions for certain persons using animals in seasonal exhibitions. The exemption would apply to any person who maintains a total of eight or fewer dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, for seasonal exhibition only, and who exhibits any or all of the animals for no more than 30 days per calendar year, and is not otherwise required to obtain a license. This exemption would not extend to any person residing in a household that collectively maintains a total of more than eight such animals, regardless of ownership, nor to any person maintaining eight such animals on premises on which more than eight such animals are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than eight such animals, regardless of ownership.

    We determined the de minimis threshold for seasonal exhibition to be eight common, domesticated, non-dangerous animals based on the fact that, unlike animals exhibited year-round, animals exhibited seasonally are displayed to the public for a minimal period of time (30 days or less each year) during holiday seasons such as Easter, Halloween, Thanksgiving, and Christmas.9

    9 Thirty days or less is consistent with the average number of days when many exhibitors are displaying animals intermittently or infrequently for limited duration (as measured in days). Examples of such exhibitions include, but are not limited to, seasonal petting zoos (e.g. exhibits open for Halloween or from Thanksgiving to Christmas), college game mascots, magic shows, rabbits used for photo shoots during Easter season (half hour sessions over a 2-3 week period; petting zoos with farm animals during pumpkin harvest season (lasting less than 30 days), and nativity scenes during the Christmas season (usually 21-30 days).

    We based our determination of 30 or fewer days for this exemption on our experience with inspecting seasonal exhibitors holding a small number of common, domesticated, non-dangerous animals, which indicates that exhibitors with animals displayed to the public for 30 days or less annually are capable of providing adequate care and treatment for the animals involved in the exhibition.

    Persons exhibiting regulated animals not included in the proposed thresholds table would not be eligible for a de minimis exemption, regardless of the duration (as measured in days) for which the animals are exhibited. For example, camels, bison, and reindeer are sometimes included in seasonal holiday exhibits, but their behavior and size set them apart from common, non-dangerous domestic livestock displayed in such exhibits, and under the regulations they are considered to be wild or exotic species.

    In 2013, Congress amended 10 the definition of “exhibitor” in the Act to exclude certain persons as exhibitors, namely “any owner of a common, domesticated household pet who derives less than a substantial portion of income from a nonprimary source (as determined by the Secretary) for exhibiting an animal that exclusively resides at the residence of the pet owner.” In order to make the regulations consistent with the Act, we propose to add this amendment to the list of exclusions under the definition of “exhibitor” in § 1.1 of the regulations.

    10 See footnote 8.

    The exclusion from the definition of “exhibitor” under the Act is only applicable to persons meeting all the criteria listed in the amendment. Similarly, under our proposed revision of “exhibitor” in the regulations, a person exhibiting other than a “common, domesticated household pet” would not be eligible for the exclusion. Also, persons who derive their primary source of income from exhibiting the animals, or who generate a substantial amount of money from such exhibition as determined by APHIS, would not be eligible for the exclusion. We interpret “less than a substantial portion of income” in the Act to mean a minimal amount of money that the owner makes from exhibiting animals. We interpret “a nonprimary source” to mean the activity is not a full-time job or primary source of income.

    Many persons eligible for this exclusion employ one or more common, domesticated household pets in intermittent or infrequent exhibition, such as brief film and television appearances. Based on the industry pay rates for pet animal film work 11 and on our experience from working with small exhibitors, we determined that persons with four or fewer common domesticated household pet animals that are exhibited infrequently or intermittently generate a less than substantial portion of income and therefore meet the requirements for the exclusion. By being excluded from the definition of “exhibitor”, they are not required to be licensed.

    11 According to the Screen Actors Guild-American Federation of Television and Radio Artists 2013 pay rate scale for background actors, the average pay per background appearance in a film or television production ranges from $39 to $224.

    Therefore, we propose to include a regulatory licensing exemption in a new § 2.1(a)(3)(xii) for any person who maintains a total of four or fewer common, domesticated household pet animals, who uses them for intermittent or infrequent exhibition for no more than 30 days per calendar year, who derives less than a substantial portion of income from a nonprimary source for exhibiting such animals, whose animals reside exclusively at the residence of the owner, and who is not otherwise required to obtain a license. This exemption would not extend to any person residing in a household that collectively maintains a total of more than four pet animals, regardless of ownership, nor to any person maintaining pet animals on premises on which more than four pet animals are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than four pet animals, regardless of ownership.

    We determined the total number of animals for this exemption to be four because our experience indicates that exhibitors who maintain and exhibit four or fewer animals and those who exhibit resident pet animals infrequently or intermittently (i.e., no more than 30 days per year) for minimal amounts of money are capable of providing adequate care and treatment for the animals involved in the regulated business activities without Federal licensing and inspection requirements to ensure animal welfare. Additionally, exhibitors with four or fewer animals are less likely to generate a substantial income as a primary source from exhibiting such animals compared to persons exhibiting with larger numbers of animals as the primary source of income.

    For easier reference, we also propose adding to the regulations a new § 2.1(a)(3)(xiii) that includes a summary table of the de minimis threshold requirements included in paragraphs (a)(3)(ix) through (a)(3)(xii).

    The proposed thresholds are ultimately based on our experience that businesses conducting AWA-regulated activities with the animals indicated for each threshold present a minimal risk to animal welfare and therefore do not require APHIS licensing and inspection. However, the list of animals eligible for de minimis consideration is not intended to be exhaustive. We encourage public comment on the proposed exemption thresholds as they pertain to animal welfare and effects on businesses engaged in the breeding, dealing, or exhibition of animals. We also invite comments on the types of exhibition proposed in the table, particularly with regard to types of animals and exhibition business models that may not be represented here.

    Miscellaneous

    We are also proposing to amend the regulations to remove a redundant provision. We would remove from § 2.1(c)(2) the phrase “and, in the case of a license renewal, the annual license fee has been received by the appropriate Animal Care regional office on or before the expiration date of the license.” This phrase is unnecessary because the same provision is repeated in paragraph (d)(1) of that section. In addition, we are proposing to remove §§ 3.28(b), 3.53(b), and 3.80(b)(1). These sections contain obsolete sheltering and minimum space requirements for dogs, cats, guinea pigs, hamsters, rabbits, and nonhuman primates that have been since replaced by updated sheltering and minimum space requirements. Removal of the obsolete requirements will minimize confusion with the current regulatory requirements and will have no impact on facilities and animal welfare. Similarly, we are revising § 3.6(a)(2)(xii) to remove phase-in dates which are no longer needed regarding primary enclosures for dogs and cats.

    Executive Orders 12866 and 13563 and Regulatory Flexibility Act

    This proposed rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.

    We have prepared an economic analysis for this rule. The economic analysis provides a cost-benefit analysis, as required by Executive Orders 12866 and 13563, and an initial regulatory flexibility analysis that examines the potential economic effects of this proposed rule on small entities, as required by the Regulatory Flexibility Act. The economic analysis is summarized below. Copies of the full analysis are available by contacting the person listed under FOR FURTHER INFORMATION CONTACT or on the Regulations.gov Web site (see ADDRESSES above for instructions for accessing Regulations.gov).

    A 2014 Farm Bill amendment to the Animal Welfare Act provides the Secretary of Agriculture with the authority to determine when animal dealers and exhibitors are not required to obtain a license under the Act if the size of the business conducting AWA-related activities is determined by the Secretary to be de minimis. Businesses considered to be de minimis are capable of providing adequate care and treatment to the animals involved in the regulated business activities without Federal licensing and inspection requirements to ensure animal welfare. This proposal would establish de minimis thresholds for businesses engaged in breeding, selling, or exhibiting certain regulated animals and include the thresholds in the regulations. We would measure business size using various criteria, including number of breeding female animals maintained, number of animals exhibited, and the duration of exhibition (as measured in days). We are also amending the AWA regulations in response to a 2013 amendment to the Act excluding from the statutory definition of “exhibitor” owners of household pets that are exhibited infrequently or intermittently, generate less than a substantial portion of income, and reside exclusively with the owner. Dealers and exhibitors operating at or below the thresholds determined for their particular business activity would be exempted from Federal licensing requirements established under the Animal Welfare Act. These proposed actions would amend the regulations to be consistent with the Act while continuing to ensure the humane care and treatment of animals.

    APHIS' experience indicates that exhibitors who maintain or infrequently exhibit a small number of certain common non-dangerous animals are capable of providing adequate care and treatment to the animals involved in regulated business activities without Federal licensing and inspection requirements to ensure animal welfare. Because of the size of the business and their ability to provide adequate care and treatment, we consider such businesses to be engaged in a de minimis level of regulated activities. Establishing de minimis thresholds for exclusion or exemption from the AWA licensing requirements outlined in this proposal would allow APHIS to direct inspection and enforcement efforts on larger businesses conducting such activities.

    By the very nature of this proposal, all entities that would be affected are considered small. The entities most likely to be affected by this proposal are businesses engaged in AWA-related exhibition activities that have small numbers of regulated animals. This proposed rule would relieve regulatory responsibilities for some currently licensed entities and reduce the cost of business for those entities. Those currently licensed exhibitors and dealers (including breeders meeting the definition of “dealer”) who are under the proposed de minimis thresholds would no longer be subject to licensing, animal identification, and recordkeeping requirements.

    The cost of a license for the smallest entities is between $40 and $85 annually. Identification tags for dogs and cats cost from $1.12 to $2.50 each. Other covered animals can be identified by a label attached to the primary enclosure containing a description of the animals in the enclosure at negligible cost. We estimate that the average currently licensed entity potentially affected by this proposal spends about 10 hours annually to comply with the licensing paperwork and recordkeeping requirements. All of the currently licensed entities that would be considered de minimis under this proposal would benefit from reduced costs for licensing, identification, and recordkeeping. We estimate that approximately 212 currently licensed exhibitors, breeders, and dealers would no longer require licensing following implementation of this proposal (See the economic analysis for more detail on how we estimated this). We estimate that the cost savings for all these entities could total about $41,400 annually.

    Based on our review of available information, APHIS does not expect the proposed rule to have a significant economic impact on small entities. We have prepared the initial regulatory flexibility analysis because we need public input to help establish the total number of entities that will be affected. While we have yet to determine the total number of entities that would fall below the thresholds we propose, those entities that do fall below the thresholds would benefit from the rule. Those currently licensed entities that do not fall below the thresholds would see no additional economic impact as a result of this rule. In the absence of apparent significant economic impacts, we have not identified alternatives that would minimize such impacts.

    Executive Order 12372

    This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.)

    Executive Order 12988

    This proposed rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. The Act does not provide administrative procedures which must be exhausted prior to a judicial challenge to the provisions of this rule.

    Executive Order 13175

    This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

    The Animal and Plant Health Inspection Service has assessed the impact of this rule on Indian tribes and determined that this rule does not, to our knowledge, have tribal implications that require tribal consultation under Executive Order 13175. If a Tribe requests consultation, APHIS will work with the Office of Tribal Relations to ensure meaningful consultation is provided where changes, additions and modifications identified herein are not expressly mandated by Congress.

    Paperwork Reduction Act

    This proposed rule contains no new information collection or recordkeeping requirements under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.).

    List of Subjects in 9 CFR Parts 1, 2, and 3

    Animal welfare, Marine mammals, Pets, Reporting and recordkeeping requirements, Research, Transportation.

    Accordingly, we propose to amend 9 CFR parts 1, 2, and 3 as follows:

    PART 1—DEFINITION OF TERMS 1. The authority citation for part 1 continues to read as follows: Authority:

    7 U.S.C. 2131-2159; 7 CFR 2.22, 2.80, and 371.7.

    2. Section 1.1 is amended as follows: a. By revising the definition of dealer. b. By revising the definition of exhibitor.

    The revisions read as follows:

    § 1.1 Definitions.

    Dealer means any person who, in commerce, for compensation or profit, delivers for transportation, or transports, except as a carrier, buys, or sells, or negotiates the purchase or sale of: Any dog or other animal whether alive or dead (including unborn animals, organs, limbs, blood, serum, or other parts) for research, teaching, testing, experimentation, exhibition, or for use as a pet; or any dog at the wholesale level for hunting, security, or breeding purposes. This term does not include: A retail pet store, as defined in this section; or any retail outlet where dogs are sold for hunting, breeding, or security purposes.

    Exhibitor means any person (public or private) exhibiting any animals, which were purchased in commerce or the intended distribution of which affects commerce, or will affect commerce, to the public for compensation, as determined by the Secretary, and such term includes carnivals, circuses, and zoos exhibiting such animals whether operated for profit or not; but such term excludes retail pet stores, an owner of a common, domesticated household pet who derives less than a substantial portion of income from a nonprimary source (as determined by the Secretary) for exhibiting an animal that exclusively resides at the residence of the pet owner, organizations sponsoring and all persons participating in State and country fairs, livestock shows, rodeos, purebred dog and cat shows, and any other fairs or exhibitions intended to advance agricultural arts and sciences, as may be determined by the Secretary.

    PART 2—REGULATIONS 3. The authority citation for part 2 continues to read as follows: Authority:

    7 U.S.C. 2131-2159; 7 CFR 2.22, 2.80, and 371.7.

    4. Section 2.1 is amended as follows: a. By revising paragraph (a)(3)(ii). b. By adding paragraphs (a)(3)(ix) through (a)(3)(xiii). c. By revising paragraph (c)(2).

    The revisions and additions read as follows:

    § 2.1 Requirements and application.

    (a) * * *

    (3) * * *

    (ii) Any person whose AWA-related business activity is determined by APHIS to be de minimis in accordance with the regulations in this section;

    (ix) Any person who maintains a total of four or fewer breeding female dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, and who sells, at retail or wholesale, only the offspring of these dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, which were born and raised on his or her premises, and is not otherwise required to obtain a license. This exemption does not extend to any person residing in a household that collectively maintains a total of more than four breeding female dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, regardless of ownership, nor to any person maintaining breeding female dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep on premises on which more than four breeding female dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than four breeding female dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, regardless of ownership.

    (x) Any person who maintains a total of four or fewer dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, for exhibition and houses the animals permanently at the site where they are exhibited year-round, and is not otherwise required to obtain a license. This exemption does not extend to any person residing in a household that collectively maintains a total of more than four dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, regardless of ownership, nor to any person maintaining dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep on premises on which more than four dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than four dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, regardless of ownership.

    (xi) Any person who maintains a total of eight or fewer dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, for seasonal exhibition and exhibits any or all of the animals for no more than 30 days per calendar year, and is not otherwise required to obtain a license. This exemption does not extend to any person residing in a household that collectively maintains a total of more than eight dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, regardless of ownership, nor to any person maintaining eight dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep on premises on which more than eight dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than eight dogs, cats, rabbits, hamsters, guinea pigs, chinchillas, cows, goats, pigs, and sheep, regardless of ownership.

    (xii) Any person who maintains a total of four or fewer common, domesticated, non-dangerous household pet animals for infrequent or intermittent exhibition for no more than 30 days per calendar year, who derives less than a substantial portion of income from a nonprimary source for exhibiting such animals, whose animals reside exclusively at the residence of the owner, and who is not otherwise be required to obtain a license. This exemption would not extend to any person residing in a household that collectively maintains a total of more than four pet animals, regardless of ownership, nor to any person maintaining pet animals on premises on which more than four pet animals are maintained, nor to any person acting in concert with others where they collectively maintain a total of more than four pet animals, regardless of ownership.

    (xiii) Following is a summary of the de minimis exemption requirements for paragraphs (ix) to (xii) of this section:

    Table 1—De Minimis Thresholds for Exemption From Licensing Animals Activity De minimis thresholds
  • (exempt from licensing if at or
  • below all indicated thresholds)
  • Number of
  • breeding
  • females
  • Number of
  • total animals
  • Maximum number of days exhibited per year
  • (any or all
  • animals
  • exhibited)
  • Dogs, Cats, Rabbits, Hamsters, Guinea pigs, Chinchillas, Cows, Goats, Pigs, Sheep Breeding/selling retail (unless covered by another exemption 1)
  • Breeding/selling wholesale (unless covered by another exemption 2)
  • 4
  • 4
  • NA.
  • NA.
  • Exhibition of all types (unless listed below) 4 No maximum. Seasonal exhibition (for example nativity scenes and petting zoos operating part of the year) 8 30 days. Common, domesticated pet animals living in owner's residence Infrequent or intermittent exhibitions (for example, film and television appearances, team mascots, canine disc competitions, magic shows) from which less than a substantial portion of income from a nonprimary source is derived 4 30 days. Farm animals bred, sold, exhibited, or otherwise used solely for agricultural purposes and animals used solely for food or fiber are exempt from the licensing requirements of this section. 1 Includes retail businesses exempted under paragraphs (a)(3)(i) and (a)(3)(vii) of this section. 2 Includes wholesale businesses exempted under paragraph (a)(3)(iii) of this section.

    (c) * * *

    (2) The applicant has paid the application fee of $10 and the annual license fee indicated in § 2.6 to the appropriate Animal Care regional office for an initial license.

    PART 3—STANDARDS 5. The authority citation for part 3 continues to read as follows: Authority:

    7 U.S.C. 2131-2159; 7 CFR 2.22, 2.80, and 371.7.

    6. Section 3.6 is amended as follows: a. By revising paragraph (a)(2)(xii). b. By removing paragraph (b)(1)(i). c. By removing paragraph (b)(1)(ii) introductory text. d. By redesignating paragraphs (b)(1)(iii) and (b)(1)(iv) as paragraphs (b)(1)(iv) and b)(1)(v) respectively. e. By redesignating paragraphs (b)(1)(ii)(A), (b)(1)(ii)(B), and (b)(1)(ii)(C) as paragraphs (b)(1)(i), (b)(1)(ii), and (b)(1)(iii) respectively.

    The revision reads as follows:

    § 3.6 Primary enclosures.

    (a) * * *

    (2) * * *

    (xii) If the suspended floor of a primary enclosure is constructed of metal strands, the strands must either be greater than 1/8 of an inch in diameter (9 gauge) or coated with a material such as plastic or fiberglass. The suspended floor of any primary enclosure must be strong enough so that the floor does not sag or bend between the structural supports.

    § 3.28 [Amended]
    7. Section 3.28 is amended as follows: a. By removing paragraph (b). b. By redesignating paragraph (c) as paragraph (b). c. In the heading of newly redesignated paragraph (b), by removing the words “acquired on or after August 15, 1990”. d. In newly redesignated paragraph (b)(2)(iii), by removing the words “paragraph (c)(2)(iv)” and adding the words “paragraph (b)(2)(iv)” in their place. e. In newly redesignated paragraph (b)(3), by removing the words “paragraph (c)(1) or (c)(2)” and adding the words “paragraph (b)(1) or (b)(2)” in their place.
    § 3.53 [Amended]
    8. Section 3.53 is amended as follows: a. By removing paragraph (b). b. By redesignating paragraph (c) as paragraph (b). c. In the heading of newly redesignated paragraph (b), by removing the words “acquired on or after August 15, 1990”. d. In newly redesignated paragraph (b)(3), by removing the words “paragraph (c)(2)” and adding the words “paragraph (b)(2)” in their place. 9. Section 3.80 is amended as follows: a. By removing paragraph (b)(1). b. By removing the paragraph (b)(2) introductory text. c. By redesignating paragraphs (b)(2)(i), (b)(2)(ii), (b)(2)(iii), and (b)(2)(iv), as paragraphs (b)(1), (b)(2), (b)(3), and (b)(4) respectively. d. In newly redesignated paragraph (b)(1), footnote 4, by removing the words “paragraph (b)(2)(ii)” and adding the words “paragraph (b)(2)” in their place. e. In newly redesignated paragraph (b)(2), by removing the words “paragraph (b)(2)(i)” and adding the words “paragraph (b)(1)” in their place. f. In newly redesignated paragraph (b)(4), by removing the words “paragraph (b)(2)(i)” and adding the words “paragraph (b)(1)” in their place. g. By revising paragraph (c).

    The revision reads as follows:

    § 3.80 Primary enclosures.

    (c) Innovative primary enclosures not precisely meeting the floor area and height requirements provided in paragraph (b) of this section, but that do provide nonhuman primates with a sufficient volume of space and the opportunity to express species-typical behavior, may be used at research facilities when approved by the Committee, and by dealers and exhibitors when approved by the Administrator.

    Done in Washington, DC, this 29th day of July 2016. Edward Avalos, Under Secretary for Marketing and Regulatory Programs.
    [FR Doc. 2016-18452 Filed 8-3-16; 8:45 am] BILLING CODE 3410-34-P
    DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 34 [Docket No. OCC-2015-0021] RIN 1557-AD99 FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Docket No. R-1443] RIN 7100-AD 90 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB-2016-0035] RIN 3170-AA11 Appraisals for Higher-Priced Mortgage Loans Exemption Threshold AGENCY:

    Board of Governors of the Federal Reserve System (Board); Bureau of Consumer Financial Protection (Bureau); and Office of the Comptroller of the Currency, Treasury (OCC).

    ACTION:

    Proposed rule; request for public comment.

    SUMMARY:

    The OCC, the Board and the Bureau are publishing proposed rules amending the official interpretations for their regulations that implement section 129H of the Truth in Lending Act (TILA). Section 129H of TILA establishes special appraisal requirements for “higher-risk mortgages,” termed “higher-priced mortgage loans” or “HPMLs” in the agencies' regulations. The OCC, the Board, the Bureau, the Federal Deposit Insurance Corporation (FDIC), the National Credit Union Administration (NCUA) and the Federal Housing Finance Agency (FHFA) (collectively, the Agencies) issued joint final rules implementing these requirements, effective January 18, 2014. The Agencies' rules exempted, among other loan types, transactions of $25,000 or less, and required that this loan amount be adjusted annually based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the OCC, the Board and the Bureau will not adjust this exemption threshold from the prior year. The proposal would memorialize this as well as the agencies' calculation method for determining the adjustment in years following a year in which there is no annual percentage increase in the CPI-W.

    DATES:

    Comments must be received on or before September 6, 2016.

    ADDRESSES:

    Interested parties are encouraged to submit written comments jointly to the OCC, the Board, and the Bureau. Commenters are encouraged to use the title “Appraisals for Higher-Priced Mortgage Loans” to facilitate the organization and distribution of comments among the agencies. Interested parties are invited to submit written comments to:

    OCC: Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments by the Federal eRulemaking Portal or email, if possible. Please use the title “Appraisals for Higher-Priced Mortgage Loans” to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods:

    Federal eRulemaking Portal—“regulations.gov”: Go to http://www.regulations.gov. Enter “Docket ID OCC-2015-0021” in the Search box and click “Search.” Results can be filtered using the filtering tools on the left side of the screen. Click on “Comment Now” to submit public comments.

    • Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments.

    Email: [email protected]

    Mail: Legislative and Regulatory Activities Division, 400 7th Street SW., suite 3E-218, mail stop 9W-11, Washington, DC 20219.

    Hand Delivery/Courier: 400 7th Street SW., suite 3E-218, mail stop 9W-11, Washington, DC 20219.

    Fax: (571) 465-4326.

    Instructions: You must include “OCC” as the agency name and “Docket ID OCC-2015-0021” in your comment. In general, OCC will enter all comments received into the docket and publish them on the Regulations.gov Web site without change, including any business or personal information that you provide such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

    You may review comments and other related materials that pertain to this notice of proposed rulemaking by any of the following methods:

    Viewing Comments Electronically: Go to http://www.regulations.gov. Enter “Docket ID OCC-2015-0021” in the Search box and click “Search.” Comments can be filtered by Agency using the filtering tools on the left side of the screen.

    • Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for viewing public comments, viewing other supporting and related materials, and viewing the docket after the close of the comment period.

    Viewing Comments Personally: You may personally inspect and photocopy comments at the OCC, 400 7th Street SW., Washington, DC. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649-6700 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597. Upon arrival, visitors will be required to present valid government-issued photo identification and submit to security screening in order to inspect and photocopy comments.

    Docket: You may also view or request available background documents and project summaries using the methods described above.

    Board: You may submit comments, identified by Docket No. R-1443 or RIN 7100 AD-90, by any of the following methods:

    Agency Web site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Email: [email protected] Include the docket number in the subject line of the message.

    Fax: (202) 452-3819 or (202) 452-3102.

    Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.

    All public comments will be made available on the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets NW.) between 9:00 a.m. and 5:00 p.m. on weekdays.

    Bureau: You may submit comments, identified by Docket No. CFPB-2016-0035 or RIN 3170-AA11, by any of the following methods:

    Email: [email protected] Include Docket No. CFPB-2016-0035 or RIN 3170-AA11 in the subject line of the email.

    Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552.

    Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1275 First Street NE., Washington, DC 20002.

    Instructions: All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1275 First Street NE., Washington, DC 20002, on official business days between the hours of 10 a.m. and 5 p.m. eastern time. You can make an appointment to inspect the documents by telephoning (202) 435-7275.

    All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or Social Security numbers, should not be included. Comments will not be edited to remove any identifying or contact information.

    FOR FURTHER INFORMATION CONTACT:

    OCC: MaryAnn Nash, Counsel, Legislative and Regulatory Affairs Division, (202) 649-6287; for persons who are deaf and hard of hearing TTY, (202) 649-5597. Board: Lorna M. Neill, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263-4869.

    Bureau: Shaakira Gold-Ramirez, Paralegal Specialist, Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, at (202) 435-7700.

    SUPPLEMENTARY INFORMATION:

    I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) amended the Truth in Lending Act (TILA) to add special appraisal requirements for “higher-risk mortgages.” 1 In January 2013, the Agencies issued a joint final rule implementing these requirements and adopted the term “higher-priced mortgage loan” (HPML) instead of “higher-risk mortgage” (the January 2013 Final Rule).2 In July 2013, the Agencies proposed additional exemptions from the January 2013 Final Rule (the 2013 Supplemental Proposed Rule).3 In December 2013, the Agencies issued a supplemental final rule with additional exemptions from the January 2013 Final Rule (the December 2013 Supplemental Final Rule).4 Among other exemptions, the Agencies adopted an exemption from the new HPML appraisal rules for transactions of $25,000 or less, to be adjusted annually for inflation.

    1 Public Law 111-203 section 1471, 124 Stat. 1376 (2010), codified at TILA section 129H, 15 U.S.C. 1639h.

    2 78 FR 10368 (Feb. 13, 2013).

    3 78 FR 48548 (Aug. 8, 2013).

    4 78 FR 78520 (Dec. 26, 2013).

    The Bureau's, the OCC's, and the Board's versions of the January 2013 Final Rule and December 2013 Supplemental Final Rule and corresponding official interpretations are substantively identical. The FDIC, NCUA, and FHFA adopted the Bureau's version of the regulations under the January 2013 Final Rule and December 2013 Supplemental Final Rule.5

    5See NCUA: 12 CFR 722.3; FHFA: 12 CFR part 1222. Although the FDIC adopted the Bureau's version of the regulation, the FDIC did not issue its own regulation containing a cross-reference to the Bureau's version. See 78 FR 10368, 10370 (Feb. 13, 2013).

    Section 34.203(b)(2) of subpart G of part 34 of the OCC's regulations, § 226.43(b)(2) of the Board's Regulation Z, and § 1026.35(c)(2)(ii) of the Bureau's Regulation Z, and their accompanying interpretations,6 provide that the exemption threshold for smaller loans will be adjusted effective January 1 of each year based on any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. If there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust the threshold amounts from the prior year.7

    6See 12 CFR part 34, Appendix C to Subpart G, comment 203(b)(2)-1 (OCC); 12 CFR part 226, Supplement I, comment 43(b)(2)-1 (Board); and 12 CFR part 1026, Supplement I, comment 35(c)(2)(ii)-1 (Bureau).

    7See 78 FR 48548, 48565 (Aug. 8, 2013) (“Thus, under the proposal, if the CPI-W decreases in an annual period, the percentage increase would be zero, and the dollar amount threshold for the exemption would not change.”).

    II. Commentary Revision

    The OCC, the Board and the Bureau are proposing new commentary to memorialize the calculation method used by the agencies each year to adjust the exemption threshold. The new commentary is substantively identical for § 34.203(b)(2) of subpart G of part 34 of the OCC's regulations, § 226.43(b)(2) of the Board's Regulation Z, and § 1026.35(c)(2)(ii) of the Bureau's Regulation Z. For ease of reference, the “Commentary Revision” refers only to the section numbers of the commentary that will published in the Bureau's Regulation Z at 12 CFR part 1026, Supplement I.

    Comment 35(c)(2)(ii)-1 to the Bureau's Regulation Z currently provides the threshold amount in effect during a particular period and details the rules the agencies use for rounding the threshold calculation to the nearest $100 or $1,000 increment, as discussed above in part I, “Background.” The OCC, the Board and the Bureau are proposing to revise comment 35(c)(2)(ii)-1 by moving the text regarding the threshold amount that is in effect during a particular period to a new proposed comment 35(c)(2)(ii)-3. The discussion of how the agencies round the threshold calculation would remain in comment 35(c)(2)(ii)-1. Current comments 35(c)(2)(ii)-2 and 35(c)(2)(ii)-3 would be renumbered as proposed comments 35(c)(2)(ii)-5 and 35(c)(2)(ii)-6, respectively.

    As the Agencies have stated previously,8 if there is no annual percentage increase in the CPI-W, the OCC, the Board, and the Bureau will not adjust the exemption threshold from the prior year. This position is consistent with the Board's and the Bureau's approach in adjusting the coverage thresholds for the Consumer Leasing Act (CLA) and TILA, based on Section 1100E(b) of the Dodd-Frank Act, which states that the threshold must be adjusted by the “annual percentage increase” in the CPI-W (emphasis added). The Board and the Bureau are publishing similar amendments to the commentaries to each of their respective regulations implementing the CLA (Regulation M) and TILA (Regulation Z) elsewhere in the Federal Register.9

    8See 78 FR 48548, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944 (Nov. 27, 2015).

    9 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (“[A]n annual period of deflation or no inflation would not require a change in the threshold amount.”).

    For the HPML appraisal rule exemption for smaller loans, the OCC, the Board, and the Bureau are proposing to memorialize this concept in proposed comment 35(c)(2)(ii)-2, which would provide that if the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. For example, if the threshold in effect from January 1, 2019, through December 31, 2019, is $27,500 and the CPI-W in effect on June 1 of 2019, indicates a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, the threshold in effect for January 1, 2020, through December 31, 2020, will remain $27,500.

    Proposed comment 35(c)(2)(ii)-2 would further set forth the calculation method the agencies would use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year. Specifically, as set forth under proposed comment 35(c)(2)(ii)-2, for the years after a year in which the threshold did not change because the CPI-W in effect on June 1 decreased from the CPI-W in effect on June 1 of the previous year, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted if the decreases and any subsequent increases in the CPI-W had been taken into account. Proposed comment 35(c)(2)(ii)-2.i further states that, if the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    For example, assume that the threshold in effect from January 1, 2019, through December 31, 2019, is $27,500 and that, due to a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W in effect on June 1, 2019, the threshold in effect from January 1, 2020, through December 31, 2020, remains at $27,500. If, however, the threshold had been adjusted downward to reflect the decrease in the CPI-W over that time period, the threshold in effect from January 1, 2020, through December 31, 2020, would have been $27,200. Further assume that the CPI-W in effect on June 1, 2020, increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 1.6 percent increase in the CPI-W on $27,200, rather than $27,500, resulting in a 2021 threshold of $27,600.

    Furthermore, comment 35(c)(2)(ii)-2.ii states that, if the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted. To illustrate, assume in the example above that the CPI-W in effect on June 1, 2020, increased by only 0.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 0.6 percent increase in the CPI-W on $27,200. The resulting amount is $27,400, which is lower than $27,500, the threshold in effect from January 1, 2020, through December 31, 2020. Therefore, the threshold in effect from January 1, 2021, through December 31, 2021, will remain $27,500. However, the calculation for the threshold that will be in effect from January 1, 2022, through December 31, 2022, will apply the percentage change in the CPI-W to $27,400, the amount that would have resulted based on the 0.6 percent change from the CPI-W in effect on June 1, 2019, to the CPI-W in effect on June 1, 2020.

    The agencies request comment on all aspects of the proposed rule.

    III. Regulatory Analysis Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis

    In developing this proposal, the Bureau has considered potential benefits, costs, and impacts.10 In addition, the Bureau has consulted, or offered to consult with, the prudential regulators, the Securities and Exchange Commission, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, and the Department of the Treasury, including regarding consistency with any prudential, market, or systemic objectives administered by such agencies.

    10 Specifically, section 1022(b)(2)(A) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Act; and the impact on consumers in rural areas.

    The Bureau has chosen to evaluate the benefits, costs and impacts of the proposed commentary against the current state of the world, which takes into account the current regulatory regime. The Bureau is not aware of any significant benefits or costs to consumers or covered persons associated with the proposal relative to the baseline. The OCC, the Board, and the Bureau previously stated that if there is no annual percentage increase in the CPI-W, then the agencies will not adjust the exemption threshold from the prior year.11 The proposal memorializes this in official commentary. The proposal also clarifies how the threshold would be calculated for years after a year in which the threshold did not change. The Bureau believes that this clarification memorializes the method that the Bureau would be expected to use: This method holds the threshold fixed until a notional threshold calculated using the Bureau's methodology, but taking into account both decreases and increases in the CPI-W, exceeds the actual threshold. The Bureau requests comment on this point. Thus, the Bureau believes that the proposed rule does not change the regulatory regime relative to the baseline and creates no significant benefits, costs, or impacts.

    11 78 FR 48547, 48565 (Aug. 8, 2013) and 80 FR 73943, 73944 (Nov. 27, 2015).

    The proposed rule will have no unique impact on depository institutions or credit unions with $10 billion or less in assets as described in section 1026(a) of the Dodd-Frank Act or on rural consumers. The Bureau does not expect this final rule to affect consumers' access to credit.

    Regulatory Flexibility Act

    OCC: The Regulatory Flexibility Act, 5 U.S.C. 601 et seq. (RFA) requires an agency, in connection with a proposed rule, to prepare an Initial Regulatory Flexibility Analysis describing the impact of the proposed rule on small entities (defined by the Small Business Administration for purposes of the RFA to include banking entities with total assets of $550 million or less) or to certify that the proposed rule would not have a significant economic impact on a substantial number of small entities.

    As explained in the Commentary Revision section of the preamble, this proposed rule memorializes the calculation method used by the OCC, the Board, and the Bureau each year to adjust the threshold for exemption from the special appraisal requirements for HPMLs and clarifies the agencies' calculation method for determining the adjustment in the years following a year in which there is no annual percentage increase in the CPI-W. The economic impact of this proposed rule on national banks and Federal savings associations, regardless of size, is not expected to be significant. Accordingly, the OCC certifies that the proposed rule would not have a significant economic impact on a substantial number of OCC-supervised small entities.

    Board: The Regulatory Flexibility Act (RFA) requires an agency to publish an initial regulatory flexibility analysis with a proposed rule or certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.12 Based on its analysis, and for the reasons stated below, the Board believes that the rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing an initial regulatory flexibility analysis and requests public comment on all aspects of its analysis. The Board will, if necessary, conduct a final regulatory flexibility analysis after considering the comments received during the public comment period.

    12See 5 U.S.C. 601 et seq.

    1. Statement of the need for, and objectives of, the proposed rule. The proposed rule would memorialize the calculation method used by the Board each year to adjust the exemption threshold in accordance with Regulation Z, 12 CFR 226.43(b)(2).

    2. Small entities affected by the proposed rule. The Board invites comment on the effect of the proposed rule on small entities. For purposes of the RFA, the Small Business Administration defines small entities to include banking entities with total assets of $550 million or less. Of Board supervised institutions with an asset size of $550 million or less as of March 2016, 223 reported making 5,135 higher-priced mortgage loans in 2015.13

    13 Board supervised institutions include State Member Banks, uninsured state branches and agencies of foreign banks. The number of institutions making higher-priced mortgage loans and the number of higher-priced mortgage loans is based on data reported pursuant to the Home Mortgage Disclosure Act (HMDA), 12 U.S.C. 2801 et seq.

    3. Recordkeeping, reporting, and compliance requirements. The proposed rule would not impose any recordkeeping, reporting, or compliance requirements.

    4. Other Federal rules. The Board has not identified any likely duplication, overlap and/or potential conflict between the proposed rule and any Federal rule.

    5. Significant alternatives to the proposed revisions. The Board solicits comment on any significant alternatives that would reduce the regulatory burden on small entities associated with this proposed rule.

    Bureau: The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements.14 These analyses must “describe the impact of the proposed rule on small entities”.15 An IRFA or FRFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.16 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required.17

    14 5 U.S.C. 601 et seq.

    15Id. at 603(a). For purposes of assessing the impacts of the proposed rule on small entities, “small entities” is defined in the RFA to include small businesses, small not-for-profit organizations, and small government jurisdictions. Id. at 601(6). A “small business” is determined by application of Small Business Administration regulations and reference to the North American Industry Classification System (NAICS) classifications and size standards. Id. at 601(3). A “small organization” is any “not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Id. at 601(4). A “small governmental jurisdiction” is the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000. Id. at 601(5).

    16Id. at 605(b).

    17Id. at 609.

    An IRFA is not required for this proposal because if adopted it would not have a significant economic impact on a substantial number of small entities. As discussed in the Bureau's Section 1022(b)(2) Analysis above, this proposal does not introduce costs or benefits to covered persons because the proposal seeks only to clarify the method of threshold adjustment which has already been established in previous Agency rules. Therefore this proposed rule would not have a significant impact on small entities.

    Certification

    Accordingly, the Bureau Director, by signing below, certifies that this proposal, if adopted, would not have a significant economic impact on a substantial number of small entities.

    Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,18 the agencies reviewed this proposed rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the proposed rule.

    18 44 U.S.C. 3506; 5 CFR 1320.

    Unfunded Mandates Reform Act

    The OCC has analyzed the notice of proposed rulemaking under the factors set forth in the Unfunded Mandates Reform Act of 1995 (UMRA) (2 U.S.C. 1532). Under this analysis, the OCC considered whether the proposed rule includes a Federal mandate that may result in the expenditure by State, local, and Tribal governments, in the aggregate, or by the private sector, of $100 million or more in any one year (adjusted annually for inflation).

    The proposed rule memorializes the calculation method used by the OCC, the Board, and the Bureau each year to adjust the threshold for exemption from the special appraisal requirements for HPMLs and clarifies the agencies' calculation method for determining the adjustment in the years following a year in which there is no annual percentage increase in the CPI-W. Because the proposed rule is designed to clarify existing rules, and does not introduce any new requirements, the OCC has determined that it would not result in expenditures by State, local, and Tribal governments or by the private sector, of $100 million or more. Accordingly, the OCC has not prepared a written statement to accompany its proposed rule.

    List of Subjects 12 CFR Part 34

    Appraisal, Appraiser, Banks, Banking, Consumer protection, Credit, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in lending.

    12 CFR Part 226

    Advertising, Appraisal, Appraiser, Consumer protection, Credit, Federal Reserve System, Mortgages, Reporting and recordkeeping requirements, Truth in lending.

    12 CFR Part 1026

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

    Department of the Treasury Office of the Comptroller of the Currency Authority and Issuance

    For the reasons set forth in the preamble, the OCC proposes to amend 12 CFR part 34 as set forth below:

    PART 34—REAL ESTATE LENDING AND APPRAISALS 1. The authority citation for part 34 is revised to read as follows: Authority:

    12 U.S.C. 1 et seq., 25b, 29, 93a, 371, 1463, 1464, 1465, 1701j-3, 1828(o), 3331 et seq., 5101 et seq., 5412(b)(2)(B) and 15 U.S.C. 1639h.

    Subpart G—Appraisals for Higher-Priced Mortgage Loans 2. In Appendix C to Subpart G, under Section 34.203—Appraisals for Higher-Priced Mortgage Loans, under paragraph (b)(2): i. Paragraph 1 is revised; ii. Paragraphs 2 and 3 are re-designated as paragraphs 4 and 5, respectively; and iii. Paragraphs 2 and 3 are added.

    The additions and revisions read as follows:

    Appendix C to Subpart G—OCC Interpretations Section 34.203—Appraisals for Higher-Priced Mortgage Loans 34.203(b) Exemptions Paragraph 34.203(b)(2)

    1. Threshold amount. For purposes of § 34.203(b)(2), the threshold amount in effect during a particular period is the amount stated in comment 203(b)(2)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 203(b)(2)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.

    2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted.

    3. Threshold. For purposes of § 34.203(b)(2), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000.

    ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500.

    iii. From January 1, 2016 through December 31, 2016, the threshold amount is $25,500.

    4. Qualifying for exemption—in general. A transaction is exempt under § 34.203(b)(2) if the creditor makes an extension of credit at consummation that is equal to or below the threshold amount in effect at the time of consummation.

    5. Qualifying for exemption—subsequent changes. A transaction does not meet the condition for an exemption under § 34.203(b)(2) merely because it is used to satisfy and replace an existing exempt loan, unless the amount of the new extension of credit is equal to or less than the applicable threshold amount. For example, assume a closed-end loan that qualified for a § 34.203(b)(2) exemption at consummation in year one is refinanced in year ten and that the new loan amount is greater than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of § 34.203 with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, unless another exemption from the requirements of § 34.203 applies. See § 34.203(b) and (d)(7).

    Board of Governors of the Federal Reserve System Authority and Issuance

    For the reasons set forth in the preamble, the Board proposes to amend Regulation Z, 12 CFR part 226, as set forth below:

    PART 226—TRUTH IN LENDING (REGULATION Z) 3. The authority citation for part 226 continues to read as follows: Authority:

    12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), 1639(l), and 1639h; Pub. L. 111-24, section 2, 123 Stat. 1734; Pub. L. 111-203, 124 Stat. 1376.

    4. In Supplement I to part 226, under Section 226.43—Appraisals for Higher-Risk Mortgage Loans, under paragraph 43(b)(2), paragraph 1 is revised, paragraphs 2 and 3 are re-numbered paragraphs 4 and 5, respectively, and new paragraphs 2 and 3 are added, to read as follows: Supplement I to Part 226—Official Staff Interpretations Subpart E—Special Rules for Certain Home Mortgage Transactions Section 226.43—Appraisals for Higher-Risk Mortgage Loans 43(b) Exemptions Paragraph 43(b)(2)

    1. Threshold amount. For purposes of § 226.43(b)(2), the threshold amount in effect during a particular period is the amount stated in comment 43(b)(2)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 43(b)(2)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.

    2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted.

    3. Threshold. For purposes of § 226.43(b)(2), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000.

    ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500.

    iii. From January 1, 2016 through December 31, 2016, the threshold amount is $25,500.

    4. Qualifying for exemption—in general. A transaction is exempt under § 226.43(b)(2) if the creditor makes an extension of credit at consummation that is equal to or below the threshold amount in effect at the time of consummation.

    5. Qualifying for exemption—subsequent changes. A transaction does not meet the condition for an exemption under § 226.43(b)(2) merely because it is used to satisfy and replace an existing exempt loan, unless the amount of the new extension of credit is equal to or less than the applicable threshold amount. For example, assume a closed-end loan that qualified for a § 226.43(b)(2) exemption at consummation in year one is refinanced in year ten and that the new loan amount is greater than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of § 226.43 with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, unless another exemption from the requirements of § 226.43 applies. See § 226.43(b) and (d)(7).

    Bureau of Consumer Financial Protection Authority and Issuance

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

    PART 1026—TRUTH IN LENDING (REGULATION Z) 5. The authority citation for part 1026 continues to read as follows: Authority:

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

    6. In Supplement I to part 1026, under Section 1026.35—Requirements for Higher-Priced Mortgage Loans, under paragraph 35(c)(2)(ii), paragraphs 1 through 3 are revised, and paragraphs 4 and 5 are added, to read as follows: Supplement I to Part 1026—Official Interpretations Subpart E—Special Rules for Certain Home Mortgage Transactions Section 1026.35—Requirements for Higher-Priced Mortgage Loans

    35(c) Appraisals

    35(c)(2) Exemptions

    Paragraph 35(c)(2)(ii)

    1. Threshold amount. For purposes of § 1026.35(c)(2)(ii), the threshold amount in effect during a particular period is the amount stated in comment 35(c)(2)(ii)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 35(c)(2)(ii)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.

    2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted.

    3. Threshold. For purposes of § 1026.35(c)(2)(ii), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. From January 18, 2014, through December 31, 2014, the threshold amount is $25,000.

    ii. From January 1, 2015, through December 31, 2015, the threshold amount is $25,500.

    iii. From January 1, 2016 through December 31, 2016, the threshold amount is $25,500.

    4. Qualifying for exemption—in general. A transaction is exempt under § 1026.35(c)(2)(ii) if the creditor makes an extension of credit at consummation that is equal to or below the threshold amount in effect at the time of consummation.

    5. Qualifying for exemption—subsequent changes. A transaction does not meet the condition for an exemption under § 1026.35(c)(2)(ii) merely because it is used to satisfy and replace an existing exempt loan, unless the amount of the new extension of credit is equal to or less than the applicable threshold amount. For example, assume a closed-end loan that qualified for a § 1026.35(c)(2)(ii) exemption at consummation in year one is refinanced in year ten and that the new loan amount is greater than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of § 1026.35(c) with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, unless another exemption from the requirements of § 1026.35(c) applies. See § 1026.35(c)(2) and (c)(4)(vii).

    Thomas J. Curry, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, July 19, 2016. Robert deV. Frierson, Secretary of the Board. Dated: July 13, 2016. Richard Cordray, Director, Bureau of Consumer Financial Protection.
    [FR Doc. 2016-18058 Filed 8-3-16; 8:45 am] BILLING CODE 4810-33-P; 6210-01-P; 4810-AM-P
    FEDERAL RESERVE SYSTEM 12 CFR Part 213 [Docket No. R-1545] RIN 7100 AE-56 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1013 [Docket No. CFPB-2016-0036] Consumer Leasing (Regulation M) AGENCY:

    Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau).

    ACTION:

    Proposed rule; official interpretations.

    SUMMARY:

    The Board and the Bureau are proposing to amend the official interpretations and commentary for the agencies' regulations that implement the Consumer Leasing Act (CLA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended the CLA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust this exemption threshold from the prior year. The proposal would memorialize this as well as the agencies' calculation method for determining the adjustment in years following a year in which there is no annual percentage increase in the CPI-W.

    Because the Dodd-Frank Act also requires similar adjustments in the Truth in Lending Act's threshold for exempt consumer credit transactions, the Board and the Bureau are proposing similar amendments to the commentaries to each of their respective regulations implementing the Truth in Lending Act elsewhere in the Federal Register.

    DATES:

    Comments must be received on or before September 6, 2016.

    ADDRESSES:

    Interested parties are encouraged to submit written comments jointly to the Board and the Bureau. Commenters are encouraged to use the title “Consumer Leasing (Regulation M)” to facilitate the organization and distribution of comments among the agencies. Interested parties are invited to submit written comments to:

    Board: You may submit comments, identified by Docket No. R-1545 or RIN 7100 AE-56, by any of the following methods:

    Agency Web site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Email: [email protected] Include the docket number in the subject line of the message.

    Fax: (202) 452-3819 or (202) 452-3102.

    Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.

    All public comments will be made available on the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets NW.,) between 9:00 a.m. and 5:00 p.m. on weekdays.

    Bureau: You may submit comments, identified by Docket No. CFPB-2016-0036 by any of the following methods:

    Email: [email protected] Include Docket No. CFPB-2016-0036 in the subject line of the email.

    Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552.

    Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1275 First Street NE., Washington, DC 20002.

    Instructions: All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1275 First Street NE., Washington, DC 20002, on official business days between the hours of 10 a.m. and 5 p.m. eastern time. You can make an appointment to inspect the documents by telephoning (202) 435-7275.

    All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or Social Security numbers, should not be included. Comments will not be edited to remove any identifying or contact information.

    FOR FURTHER INFORMATION CONTACT:

    Board: Vivian W. Wong, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263-4869.

    Bureau: Shaakira Gold-Ramirez, Paralegal Specialist, Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, at (202) 435-7700.

    SUPPLEMENTARY INFORMATION: I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increased the threshold in the Consumer Leasing Act (CLA) for exempt consumer leases from $25,000 to $50,000, effective July 21, 2011.1 In addition, the Dodd-Frank Act requires that, on and after December 31, 2011, this threshold be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics. In April 2011, the Board issued a final rule amending Regulation M (which implements the CLA) consistent with these provisions of the Dodd-Frank Act along with a similar final rule amending Regulation Z (which implements the Truth in Lending Act) (collectively, the Board Final Threshold Rules).2

    1 Public Law 111-203, section 1100E, 124 Stat. 1376 (2010).

    2 76 FR 18349 (Apr. 4, 2011); 76 FR 18354 (Apr. 4, 2011).

    Title X of the Dodd-Frank Act transferred rulemaking authority for a number of consumer financial protection laws from the Board to the Bureau, effective July 21, 2011. In connection with this transfer of rulemaking authority, the Bureau issued its own Regulation M implementing the CLA in an interim final rule, 12 CFR part 1013 (Bureau Interim Final Rule).3 The Bureau Interim Final Rule substantially duplicated the Board's Regulation M, including the revisions to the threshold for exempt transactions made by the Board in April 2011. In April 2016, the Bureau adopted the Bureau Interim Final Rule as final, subject to intervening final rules published by the Bureau.4 Although the Bureau has the authority to issue rules to implement the CLA for most entities, the Board retains authority to issue rules under the CLA for certain motor vehicle dealers covered by section 1029(a) of the Dodd-Frank Act, and the Board's Regulation M continues to apply to those entities.5

    3 76 FR 78500 (Dec. 19, 2011).

    4 81 FR 25323 (April 28, 2016).

    5 Section 1029(a) of the Dodd-Frank Act states: “Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement, or any other authority * * * over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.” 12 U.S.C. 5519(a). Section 1029(b) of the Dodd-Frank Act states: “Subsection (a) shall not apply to any person, to the extent that such person (1) provides consumers with any services related to residential or commercial mortgages or self-financing transactions involving real property; (2) operates a line of business (A) that involves the extension of retail credit or retail leases involving motor vehicles; and (B) in which (i) the extension of retail credit or retail leases are provided directly to consumers; and (ii) the contract governing such extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party finance or leasing source; or (3) offers or provides a consumer financial product or service not involving or related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or any related or ancillary product or service.” 12 U.S.C. 5519(b).

    Section 213.2(e)(1) of the Board's Regulation M and § 1013.2(e)(1) of the Bureau's Regulation M, and their accompanying commentaries, provide that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI-W that was in effect on the preceding June 1. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.6 If there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust the exemption threshold from the prior year.

    6See comments 2(e)-9 in Supplements I of 12 CFR part 213 and 12 CFR part 1013.

    Since 2011, the Board and the Bureau have adjusted the Regulation M exemption threshold annually, consistent with these rules. The Board and the Bureau last published final rules implementing the exemption threshold in effect for January 1, 2016, through December 31, 2016, in November 2015.7

    7 80 FR 73945 (Nov. 27, 2015).

    II. Commentary Revision

    The Board and the Bureau are proposing new commentary to memorialize the calculation method used by the agencies each year to adjust the exemption threshold. Comment 2(e)-9 to the Board's and Bureau's Regulation M currently provides the threshold amount in effect during a particular period and details the rules the agencies use for rounding the threshold calculation to the nearest $100 or $1,000 increment, as discussed above in part I, “Background.”

    The Board and the Bureau are proposing to revise comment 2(e)-9 by moving the text regarding the threshold amount that is in effect during a particular period to a new proposed comment 2(e)-11. The discussion of how the agencies round the threshold calculation would remain in comment 2(e)-9.

    As stated in the Board Final Threshold Rules, if there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust the exemption threshold from the prior year.8 This position is consistent with Section 1100E(b) of the Dodd-Frank Act, which states that the threshold must be adjusted by the “annual percentage increase” in the CPI-W (emphasis added). The Board and the Bureau are proposing to memorialize this concept in proposed comment 2(e)-10, which would provide that if the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. For example, if the threshold in effect from January 1, 2019, through December 31, 2019, is $55,500 and the CPI-W in effect on June 1 of 2019, indicates a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, the threshold in effect for January 1, 2020, through December 31, 2020, will remain $55,500.

    8 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (“[A]n annual period of deflation or no inflation would not require a change in the threshold amount.”).

    Proposed comment 2(e)-10 would further set forth the calculation method the agencies would use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year. The proposed calculation method would ensure that the values for the exemption threshold keep pace with the CPI-W as contemplated by Section 1100E(b) of the Dodd-Frank Act.

    Specifically, as set forth under proposed comment 2(e)-10, for the years after a year in which the threshold did not change because the CPI-W in effect on June 1 decreased from the CPI-W in effect on June 1 of the previous year, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted if the decreases and any subsequent increases in the CPI-W had been taken into account. Proposed comment 2(e)-10.i further states that, if the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    For example, assume that the threshold in effect from January 1, 2019, through December 31, 2019, is $55,500 and that, due to a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W in effect on June 1, 2019, the threshold in effect from January 1, 2020, through December 31, 2020, remains at $55,500. If, however, the threshold had been adjusted downward to reflect the decrease in the CPI-W over that time period, the threshold in effect from January 1, 2020, through December 31, 2020, would have been $54,900. Further assume that the CPI-W in effect on June 1, 2020, increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 1.6 percent increase in the CPI-W on $54,900, rather than $55,500, resulting in a 2021 threshold of $55,800.

    Furthermore, comment 2(e)-10.ii states that, if the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted. To illustrate, assume in the example above that the CPI-W in effect on June 1, 2020, increased by only 0.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 0.6 percent increase in the CPI-W on $54,900. The resulting amount is $55,200, which is lower than $55,500, the threshold in effect from January 1, 2020, through December 31, 2020. Therefore, the threshold in effect from January 1, 2021, through December 31, 2021, will remain $55,500. However, the calculation for the threshold that will be in effect from January 1, 2022, through December 31, 2022, will apply the percentage change in the CPI-W to $55,200, the amount that would have resulted based on the 0.6 percent change from the CPI-W in effect on June 1, 2019, to the CPI-W in effect on June 1, 2020.

    The agencies request comment on all aspects of the proposed rule.

    III. Regulatory Analysis Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis

    In developing this proposal, the Bureau has considered potential benefits, costs, and impacts.9 In addition, the Bureau has consulted, or offered to consult with, the prudential regulators, the Securities and Exchange Commission, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, and the Department of the Treasury, including regarding consistency with any prudential, market, or systemic objectives administered by such agencies.

    9 Specifically, section 1022(b)(2)(A) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Act; and the impact on consumers in rural areas.

    The Bureau has chosen to evaluate the benefits, costs and impacts of the proposed commentary against the current state of the world, which takes into account the current regulatory regime. The Bureau is not aware of any significant benefits or costs to consumers or covered persons associated with the proposal relative to the baseline. The Board previously stated that if there is no annual percentage increase in the CPI-W, then the Board (and now the Bureau) will not adjust the exemption threshold from the prior year.10 The proposal memorializes this in official commentary. The proposal also clarifies how the threshold would be calculated for years after a year in which the threshold did not change. The Bureau believes that this clarification memorializes the method that the Bureau would be expected to use: This method holds the threshold fixed until a notional threshold calculated using the Bureau's methodology, but taking into account both decreases and increases in the CPI-W, exceeds the actual threshold. The Bureau requests comment on this point. Thus, the Bureau believes that the proposed rule does not change the regulatory regime relative to the baseline and creates no significant benefits, costs, or impacts.

    10 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (“[A]n annual period of deflation or no inflation would not require a change in the threshold amount.”).

    The proposed rule will have no unique impact on depository institutions or credit unions with $10 billion or less in assets as described in section 1026(a) of the Dodd-Frank Act or on rural consumers. The Bureau does not expect this final rule to affect consumers' access to credit.

    Regulatory Flexibility Act

    Board: The Regulatory Flexibility Act (RFA) requires an agency to publish an initial regulatory flexibility analysis with a proposed rule or certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.11 Based on its analysis, and for the reasons stated below, the Board believes that the rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing an initial regulatory flexibility analysis and requests public comment on all aspects of its analysis. The Board will, if necessary, conduct a final regulatory flexibility analysis after considering the comments received during the public comment period.

    11See 5 U.S.C. 601 et seq.

    1. Statement of the need for, and objectives of, the proposed rule. The proposed rule would memorialize the calculation method used by the Board each year to adjust the exemption threshold in accordance with Section 1100E of the Dodd-Frank Act.

    2. Small entities affected by the proposed rule. Motor vehicle dealers that are subject to the Board's Regulation M and offer consumer leases that may be exempt from Regulation M under 12 CFR 213.2(e) would be affected. While the total number of small entities likely to be affected by the proposed rule is unknown, the Board does not believe the proposed rule will have a significant economic impact on the entities that it affects. The Board invites comment on the effect of the proposed rule on small entities.

    3. Recordkeeping, reporting, and compliance requirements. The proposed rule would not impose any recordkeeping, reporting, or compliance requirements.

    4. Other Federal rules. The Board has not identified any likely duplication, overlap and/or potential conflict between the proposed rule and any Federal rule.

    5. Significant alternatives to the proposed revisions. The Board solicits comment on any significant alternatives that would reduce the regulatory burden associated on small entities with this proposed rule.

    Bureau: The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements.12 These analyses must “describe the impact of the proposed rule on small entities”.13 An IRFA or FRFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.14 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required.15

    12 5 U.S.C. 601 et seq.

    13Id. at 603(a). For purposes of assessing the impacts of the proposed rule on small entities, “small entities” is defined in the RFA to include small businesses, small not-for-profit organizations, and small government jurisdictions. Id. at 601(6). A “small business” is determined by application of Small Business Administration regulations and reference to the North American Industry Classification System (NAICS) classifications and size standards. Id. at 601(3). A “small organization” is any “not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Id. at 601(4). A “small governmental jurisdiction” is the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000. Id. at 601(5).

    14Id. at 605(b).

    15Id. at 609.

    An IRFA is not required for this proposal because if adopted it would not have a significant economic impact on a substantial number of small entities. As discussed in the Bureau's Section 1022(b)(2) Analysis above, this proposal does not introduce costs or benefits to covered persons because the proposal seeks only to clarify the method of threshold adjustment which has already been established in previous Agency rules. Therefore this proposed rule would not have a significant impact on small entities.

    Certification

    Accordingly, the Bureau Director, by signing below, certifies that this proposal, if adopted, would not have a significant economic impact on a substantial number of small entities.

    Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,16 the agencies reviewed this proposed rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the proposed rule.

    16 44 U.S.C. 3506; 5 CFR 1320.

    List of Subjects 12 CFR Part 213

    Advertising, Consumer leasing, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements.

    12 CFR Part 1013

    Advertising, Consumer leasing, Reporting and recordkeeping requirements, Truth in Lending.

    Board of Governors of the Federal Reserve System Text of Proposed Revisions

    For the reasons set forth in the preamble, the Board proposes to amend Regulation M, 12 CFR part 213, as set forth below:

    PART 213—CONSUMER LEASING (REGULATION M) 1. The authority citation for part 213 continues to read as follows: Authority:

    15 U.S.C. 1604 and 1667f; Pub. L. 111-203 § 1100E, 124 Stat. 1376.

    2. In Supplement I to Part 213, under Section 213.2—Definitions, under 2(e) Consumer Lease, paragraph 9. is revised, and paragraphs 10. and 11. are added, to read as follows: Supplement I to Part 213—Official Staff Interpretations
    § 213.2 Definitions. 2(e) Consumer Lease

    9. Threshold amount. A consumer lease is exempt from the requirements of this Part if the total contractual obligation exceeds the threshold amount in effect at the time of consummation. The threshold amount in effect during a particular time period is the amount stated in comment 2(e)-11 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 2(e)-11 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. If a consumer lease is exempt from the requirements of this Part because the total contractual obligation exceeds the threshold amount in effect at the time of consummation, the lease remains exempt regardless of a subsequent increase in the threshold amount.

    10. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted.

    11. Threshold. For purposes of § 213.2(e)(1), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. Prior to July 21, 2011, the threshold amount is $25,000.

    ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.

    iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.

    iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.

    v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.

    vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.

    vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.

    Bureau of Consumer Financial Protection Authority and Issuance

    For the reasons set forth in the preamble, the Bureau proposes to amend Regulation M, 12 CFR part 1013, as set forth below:

    PART 1013—CONSUMER LEASING (REGULATION M) 3. The authority citation for part 1013 continues to read as follows: Authority:

    15 U.S.C. 1604 and 1667f; Pub. L. 111-203 § 1100E, 124 Stat. 1376.

    4. In Supplement I to part 1013, under Section 1013.2—Definitions, under 2(e)—Consumer Lease, paragraph 9 is revised, and paragraphs 10 and 11 are added, to read as follows: Supplement I to Part 1013—Official Interpretations
    § 1013.2 Definitions. 2(e) Consumer Lease

    9. Threshold amount. A consumer lease is exempt from the requirements of this part if the total contractual obligation exceeds the threshold amount in effect at the time of consummation. The threshold amount in effect during a particular time period is the amount stated in comment 2(e)-11 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 2(e)-11 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900. If a consumer lease is exempt from the requirements of this part because the total contractual obligation exceeds the threshold amount in effect at the time of consummation, the lease remains exempt regardless of a subsequent increase in the threshold amount.

    10. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted.

    11. Threshold. For purposes of § 1013.2(e)(1), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. Prior to July 21, 2011, the threshold amount is $25,000.

    ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.

    iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.

    iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.

    v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.

    vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.

    vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.

    By order of the Board of Governors of the Federal Reserve System, July 19, 2016.

    Robert deV. Frierson, Secretary of the Board. Dated: July 13, 2016. Richard Cordray, Director, Bureau of Consumer Financial Protection.
    [FR Doc. 2016-18059 Filed 8-3-16; 8:45 am] BILLING CODE 6210-01-4810-AM-P
    FEDERAL RESERVE SYSTEM 12 CFR Part 226 [Docket No. R-1546] RIN 7100 AE-57 BUREAU OF CONSUMER FINANCIAL PROTECTION 12 CFR Part 1026 [Docket No. CFPB-2016-0037] Truth in Lending (Regulation Z) AGENCY:

    Board of Governors of the Federal Reserve System (Board); and Bureau of Consumer Financial Protection (Bureau).

    ACTION:

    Proposed rule; official interpretations.

    SUMMARY:

    The Board and the Bureau are proposing to amend the official interpretations and commentary for the agencies' regulations that implement the Truth in Lending Act (TILA). The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) amended TILA by requiring that the dollar threshold for exempt consumer credit transactions be adjusted annually by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W). If there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust this exemption threshold from the prior year. The proposal would memorialize this as well as the agencies' calculation method for determining the adjustment in years following a year in which there is no annual percentage increase in the CPI-W.

    Because the Dodd-Frank Act also requires similar adjustments in the Consumer Leasing Act's threshold for exempt consumer leases, the Board and the Bureau are proposing similar amendments to the commentaries to each of their respective regulations implementing the Consumer Leasing Act elsewhere in the Federal Register.

    DATES:

    Comments must be received on or before September 6, 2016.

    ADDRESSES:

    Interested parties are encouraged to submit written comments jointly to the Board and the Bureau. Commenters are encouraged to use the title “Truth in Lending (Regulation Z)” to facilitate the organization and distribution of comments among the agencies. Interested parties are invited to submit written comments to:

    Board: You may submit comments, identified by Docket No. R-7100 or RIN 7100 AE-57, by any of the following methods:

    Agency Web site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments.

    Email: [email protected] Include the docket number in the subject line of the message.

    Fax: (202) 452-3819 or (202) 452-3102.

    Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.

    All public comments will be made available on the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper in Room MP-500 of the Board's Martin Building (20th and C Streets NW.) between 9:00 a.m. and 5:00 p.m. on weekdays.

    Bureau: You may submit comments, identified by Docket No. CFPB-2016-0037 by any of the following methods:

    Email: [email protected] Include Docket No. CFPB-2016-0037 in the subject line of the email.

    Electronic: http://www.regulations.gov. Follow the instructions for submitting comments.

    Mail: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1700 G Street NW., Washington, DC 20552.

    Hand Delivery/Courier: Monica Jackson, Office of the Executive Secretary, Consumer Financial Protection Bureau, 1275 First Street NE., Washington, DC 20002.

    Instructions: All submissions should include the agency name and docket number or Regulatory Information Number (RIN) for this rulemaking. Because paper mail in the Washington, DC area and at the Bureau is subject to delay, commenters are encouraged to submit comments electronically. In general, all comments received will be posted without change to http://www.regulations.gov. In addition, comments will be available for public inspection and copying at 1275 First Street NE., Washington, DC 20002, on official business days between the hours of 10 a.m. and 5 p.m. eastern time. You can make an appointment to inspect the documents by telephoning (202) 435-7275.

    All comments, including attachments and other supporting materials, will become part of the public record and subject to public disclosure. Sensitive personal information, such as account numbers or Social Security numbers, should not be included. Comments will not be edited to remove any identifying or contact information.

    FOR FURTHER INFORMATION CONTACT:

    Board: Vivian W. Wong, Senior Counsel, Division of Consumer and Community Affairs, Board of Governors of the Federal Reserve System, at (202) 452-3667; for users of Telecommunications Device for the Deaf (TDD) only, contact (202) 263-4869.

    Bureau: Shaakira Gold-Ramirez, Paralegal Specialist, Jaclyn Maier, Counsel, Office of Regulations, Consumer Financial Protection Bureau, at (202) 435-7700.

    SUPPLEMENTARY INFORMATION:

    I. Background

    The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank Act) increased the threshold in the Truth in Lending Act (TILA) for exempt consumer credit transactions 1 from $25,000 to $50,000, effective July 21, 2011.2 In addition, the Dodd-Frank Act requires that, on and after December 31, 2011, this threshold be adjusted annually for inflation by the annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W), as published by the Bureau of Labor Statistics. In April 2011, the Board issued a final rule amending Regulation Z (which implements TILA) consistent with these provisions of the Dodd-Frank Act along with a similar final rule amending Regulation M (which implements the Consumer Leasing Act) (collectively, the Board Final Threshold Rules).3

    1 Although consumer credit transactions above the threshold are generally exempt, loans secured by real property or by personal property used or expected to be used as the principal dwelling of a consumer and private education loans are covered by TILA regardless of the loan amount. See 12 CFR 226.3(b)(1)(i) (Board) and 12 CFR 1026.3(b)(1)(i) (Bureau).

    2 Public Law 111-203, section 1100E, 124 Stat. 1376 (2010).

    3 76 FR 18354 (Apr. 4, 2011); 76 FR 18349 (Apr. 4, 2011).

    Title X of the Dodd-Frank Act transferred rulemaking authority for a number of consumer financial protection laws from the Board to the Bureau, effective July 21, 2011. In connection with this transfer of rulemaking authority, the Bureau issued its own Regulation Z implementing TILA in an interim final rule, 12 CFR part 1026 (Bureau Interim Final Rule).4 The Bureau Interim Final Rule substantially duplicated the Board's Regulation Z, including the revisions to the threshold for exempt transactions made by the Board in April 2011. In April 2016, the Bureau adopted the Bureau Interim Final Rule as final, subject to intervening final rules published by the Bureau.5 Although the Bureau has the authority to issue rules to implement TILA for most entities, the Board retains authority to issue rules under TILA for certain motor vehicle dealers covered by section 1029(a) of the Dodd-Frank Act, and the Board's Regulation Z continues to apply to those entities.6

    4 76 FR 79768 (Dec. 22, 2011).

    5 81 FR 25323 (April 28, 2016).

    6 Section 1029(a) of the Dodd-Frank Act states: “Except as permitted in subsection (b), the Bureau may not exercise any rulemaking, supervisory, enforcement, or any other authority . . . over a motor vehicle dealer that is predominantly engaged in the sale and servicing of motor vehicles, the leasing and servicing of motor vehicles, or both.” 12 U.S.C. 5519(a). Section 1029(b) of the Dodd-Frank Act states: “Subsection (a) shall not apply to any person, to the extent that such person (1) provides consumers with any services related to residential or commercial mortgages or self-financing transactions involving real property; (2) operates a line of business (A) that involves the extension of retail credit or retail leases involving motor vehicles; and (B) in which (i) the extension of retail credit or retail leases are provided directly to consumers; and (ii) the contract governing such extension of retail credit or retail leases is not routinely assigned to an unaffiliated third party finance or leasing source; or (3) offers or provides a consumer financial product or service not involving or related to the sale, financing, leasing, rental, repair, refurbishment, maintenance, or other servicing of motor vehicles, motor vehicle parts, or any related or ancillary product or service.” 12 U.S.C. 5519(b).

    Section 226.3(b)(1)(ii) of the Board's Regulation Z and § 1026.3(b)(1)(ii) of the Bureau's Regulation Z, and their accompanying commentaries, provide that the exemption threshold will be adjusted annually effective January 1 of each year based on any annual percentage increase in the CPI-W that was in effect on the preceding June 1. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.7 If there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust the exemption threshold from the prior year.

    7See comments 3(b)-1 in Supplements I of 12 CFR part 226 and 12 CFR part 1026.

    Since 2011, the Board and the Bureau have adjusted the Regulation Z exemption threshold annually, consistent with these rules. The Board and the Bureau last published final rules implementing the exemption threshold in effect for January 1, 2016, through December 31, 2016, in November 2015.8

    8 80 FR 73947 (Nov. 27, 2015).

    II. Commentary Revision

    The Board and the Bureau are proposing new commentary to memorialize the calculation method used by the agencies each year to adjust the exemption threshold. Comment 3(b)-1 to the Board's and Bureau's Regulation Z currently provides the threshold amount in effect during a particular period and details the rules the agencies use for rounding the threshold calculation to the nearest $100 or $1,000 increment, as discussed above in part I, “Background.”

    The Board and the Bureau are proposing to revise comment 3(b)-1 by moving the text regarding the threshold amount that is in effect during a particular period to a new proposed comment 3(b)-3. The discussion of how the agencies round the threshold calculation would remain in comment 3(b)-1. Current comments 3(b)-2, 3(b)-3, 3(b)-4, 3(b)-5, and 3(b)-6 would be renumbered as proposed comments 3(b)-4, 3(b)-5, 3(b)-6, 3(b)-7, and 3(b)-8, respectively. Cross-references to these comments would also be renumbered accordingly.

    As stated in the Board Final Threshold Rules, if there is no annual percentage increase in the CPI-W, the Board and Bureau will not adjust the exemption threshold from the prior year.9 This position is consistent with Section 1100E(b) of the Dodd-Frank Act, which states that the threshold must be adjusted by the “annual percentage increase” in the CPI-W (emphasis added). The Board and the Bureau are proposing to memorialize this concept in proposed comment 3(b)-2, which would provide that if the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. For example, if the threshold in effect from January 1, 2019, through December 31, 2019, is $55,500 and the CPI-W in effect on June 1 of 2019, indicates a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, the threshold in effect for January 1, 2020, through December 31, 2020, will remain $55,500.

    9 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (“[A]n annual period of deflation or no inflation would not require a change in the threshold amount.”).

    Proposed comment 3(b)-2 would further set forth the calculation method the agencies would use in years following a year in which the exemption threshold was not adjusted because there was no increase in the CPI-W from the previous year. The proposed calculation method would ensure that the values for the exemption threshold keep pace with the CPI-W as contemplated by Section 1100E(b) of the Dodd-Frank Act.

    Specifically, as set forth under proposed comment 3(b)-2, for the years after a year in which the threshold did not change because the CPI-W in effect on June 1 decreased from the CPI-W in effect on June 1 of the previous year, the threshold is calculated by applying the annual percentage change in the CPI-W to the dollar amount that would have resulted if the decreases and any subsequent increases in the CPI-W had been taken into account. Proposed comment 3(b)-2.i further states that, if the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    For example, assume that the threshold in effect from January 1, 2019, through December 31, 2019, is $55,500 and that, due to a 1.1 percent decrease from the CPI-W in effect on June 1, 2018, to the CPI-W in effect on June 1, 2019, the threshold in effect from January 1, 2020, through December 31, 2020, remains at $55,500. If, however, the threshold had been adjusted downward to reflect the decrease in the CPI-W over that time period, the threshold in effect from January 1, 2020, through December 31, 2020, would have been $54,900. Further assume that the CPI-W in effect on June 1, 2020, increased by 1.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 1.6 percent increase in the CPI-W on $54,900, rather than $55,500, resulting in a 2021 threshold of $55,800.

    Furthermore, comment 3(b)-2.ii states that, if the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted. To illustrate, assume in the example above that the CPI-W in effect on June 1, 2020, increased by only 0.6 percent from the CPI-W in effect on June 1, 2019. The calculation for the threshold that will be in effect from January 1, 2021, through December 31, 2021, is based on the impact of a 0.6 percent increase in the CPI-W on $54,900. The resulting amount is $55,200, which is lower than $55,500, the threshold in effect from January 1, 2020, through December 31, 2020. Therefore, the threshold in effect from January 1, 2021, through December 31, 2021, will remain $55,500. However, the calculation for the threshold that will be in effect from January 1, 2022, through December 31, 2022, will apply the percentage change in the CPI-W to $55,200, the amount that would have resulted based on the 0.6 percent change from the CPI-W in effect on June 1, 2019, to the CPI-W in effect on June 1, 2020.

    The agencies request comment on all aspects of the proposed rule.

    III. Regulatory Analysis Bureau's Dodd-Frank Act Section 1022(b)(2) Analysis

    In developing this proposal, the Bureau has considered potential benefits, costs, and impacts.10 In addition, the Bureau has consulted, or offered to consult with, the prudential regulators, the Securities and Exchange Commission, the Department of Housing and Urban Development, the Federal Housing Finance Agency, the Federal Trade Commission, and the Department of the Treasury, including regarding consistency with any prudential, market, or systemic objectives administered by such agencies.

    10 Specifically, section 1022(b)(2)(A) calls for the Bureau to consider the potential benefits and costs of a regulation to consumers and covered persons, including the potential reduction of access by consumers to consumer financial products or services; the impact on depository institutions and credit unions with $10 billion or less in total assets as described in section 1026 of the Act; and the impact on consumers in rural areas.

    The Bureau has chosen to evaluate the benefits, costs and impacts of the proposed commentary against the current state of the world, which takes into account the current regulatory regime. The Bureau is not aware of any significant benefits or costs to consumers or covered persons associated with the proposal relative to the baseline. The Board previously stated that if there is no annual percentage increase in the CPI-W, then the Board (and now the Bureau) will not adjust the exemption threshold from the prior year.11 The proposal memorializes this in official commentary. The proposal also clarifies how the threshold would be calculated for years after a year in which the threshold did not change. The Bureau believes that this clarification memorializes the method that the Bureau would be expected to use: This method holds the threshold fixed until a notional threshold calculated using the Bureau's methodology, but taking into account both decreases and increases in the CPI-W, exceeds the actual threshold. The Bureau requests comment on this point. Thus, the Bureau believes that the proposed rule does not change the regulatory regime relative to the baseline and creates no significant benefits, costs, or impacts.

    11 76 FR 18354, 18355 n.1 (Apr. 4, 2011) (“[A]n annual period of deflation or no inflation would not require a change in the threshold amount.”).

    The proposed rule will have no unique impact on depository institutions or credit unions with $10 billion or less in assets as described in section 1026(a) of the Dodd-Frank Act or on rural consumers. The Bureau does not expect this final rule to affect consumers' access to credit.

    Regulatory Flexibility Act

    Board: The Regulatory Flexibility Act (RFA) requires an agency to publish an initial regulatory flexibility analysis with a proposed rule or certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.12 Based on its analysis, and for the reasons stated below, the Board believes that the rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the Board is publishing an initial regulatory flexibility analysis and requests public comment on all aspects of its analysis. The Board will, if necessary, conduct a final regulatory flexibility analysis after considering the comments received during the public comment period.

    12See 5 U.S.C. 601 et seq.

    1. Statement of the need for, and objectives of, the proposed rule. The proposed rule would memorialize the calculation method used by the Board each year to adjust the exemption threshold in accordance with Section 1100E of the Dodd-Frank Act.

    2. Small entities affected by the proposed rule. Motor vehicle dealers that are subject to the Board's Regulation Z and offer closed-end or open-end credit that may be exempt from Regulation Z under 12 CFR 226.3(b) would be affected. While the total number of small entities likely to be affected by the proposed rule is unknown, the Board does not believe the proposed rule will have a significant economic impact on the entities that it affects. The Board invites comment on the effect of the proposed rule on small entities.

    3. Recordkeeping, reporting, and compliance requirements. The proposed rule would not impose any recordkeeping, reporting, or compliance requirements.

    4. Other Federal rules. The Board has not identified any likely duplication, overlap and/or potential conflict between the proposed rule and any Federal rule.

    5. Significant alternatives to the proposed revisions. The Board solicits comment on any significant alternatives that would reduce the regulatory burden on small entities associated with this proposed rule.

    Bureau: The RFA generally requires an agency to conduct an initial regulatory flexibility analysis (IRFA) and a final regulatory flexibility analysis (FRFA) of any rule subject to notice-and-comment rulemaking requirements.13 These analyses must “describe the impact of the proposed rule on small entities”.14 An IRFA or FRFA is not required if the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities.15 The Bureau also is subject to certain additional procedures under the RFA involving the convening of a panel to consult with small business representatives prior to proposing a rule for which an IRFA is required.16

    13 5 U.S.C. 601 et seq.

    14Id. at 603(a). For purposes of assessing the impacts of the proposed rule on small entities, “small entities” is defined in the RFA to include small businesses, small not-for-profit organizations, and small government jurisdictions. Id. at 601(6). A “small business” is determined by application of Small Business Administration regulations and reference to the North American Industry Classification System (NAICS) classifications and size standards. Id. at 601(3). A “small organization” is any “not-for-profit enterprise which is independently owned and operated and is not dominant in its field.” Id. at 601(4). A “small governmental jurisdiction” is the government of a city, county, town, township, village, school district, or special district with a population of less than 50,000. Id. at 601(5).

    15Id. at 605(b).

    16Id. at 609.

    An IRFA is not required for this proposal because if adopted it would not have a significant economic impact on a substantial number of small entities. As discussed in the Bureau's Section 1022(b)(2) Analysis above, this proposal does not introduce costs or benefits to covered persons because the proposal seeks only to clarify the method of threshold adjustment which has already been established in previous Agency rules. Therefore this proposed rule would not have a significant impact on small entities.

    Certification

    Accordingly, the Bureau Director, by signing below, certifies that this proposal, if adopted, would not have a significant economic impact on a substantial number of small entities.

    Paperwork Reduction Act

    In accordance with the Paperwork Reduction Act of 1995,17 the agencies reviewed this proposed rule. No collections of information pursuant to the Paperwork Reduction Act are contained in the proposed rule.

    17 44 U.S.C. 3506; 5 CFR 1320.

    List of Subjects 12 CFR Part 226

    Advertising, Consumer protection, Federal Reserve System, Reporting and recordkeeping requirements, Truth in lending.

    12 CFR Part 1026

    Advertising, Appraisal, Appraiser, Banking, Banks, Consumer protection, Credit, Credit unions, Mortgages, National banks, Reporting and recordkeeping requirements, Savings associations, Truth in Lending.

    BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM Text of Proposed Revisions

    For the reasons set forth in the preamble, the Board proposes to amend Regulation Z, 12 CFR part 226, as set forth below:

    PART 226—TRUTH IN LENDING (REGULATION Z) 1. The authority citation for part 226 continues to read as follows: Authority:

    12 U.S.C. 3806; 15 U.S.C. 1604, 1637(c)(5), and 1639(l); Pub. L. 111-24 § 2, 123 Stat. 1734; Pub. L. 111-203, 124 Stat. 1376.

    Subpart A—General 2. In Supplement I to part 226, under Section 226.3—Exempt Transactions, under 3(b) Credit over applicable threshold amount, paragraphs 1 through 6 are revised, and paragraphs 7 and 8 are added, to read as follows: Supplement I to Part 226—Official Staff Interpretations Subpart A—General Section 226.3—Exempt Transactions 3(b) Credit Over Applicable Threshold Amount

    1. Threshold amount. For purposes of section 226.3(b), the threshold amount in effect during a particular period is the amount stated in comment 3(b)-3 for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 3(b)-3 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100 increment. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.

    2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting amount calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the amount that would have resulted.

    3. Threshold. For purposes of § 226.3(b), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. Prior to July 21, 2011, the threshold amount is $25,000.

    ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.

    iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.

    iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.

    v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.

    vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.

    vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.

    4. Open-end credit.

    i. Qualifying for exemption. An open-end account is exempt under § 226.3(b) (unless secured by any real property, or by personal property used or expected to be used as the consumer's principal dwelling) if either of the following conditions is met:

    A. The creditor makes an initial extension of credit at or after account opening that exceeds the threshold amount in effect at the time the initial extension is made. If a creditor makes an initial extension of credit after account opening that does not exceed the threshold amount in effect at the time the extension is made, the creditor must have satisfied all of the applicable requirements of this Part from the date the account was opened (or earlier, if applicable), including but not limited to the requirements of § 226.6 (account-opening disclosures), § 226.7 (periodic statements), § 226.52 (limitations on fees), and § 226.55 (limitations on increasing annual percentage rates, fees, and charges). For example:

    (1) Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $60,000. In this circumstance, no requirements of this Part apply to the account.

    (2) Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $50,000 or less. In this circumstance, the account is not exempt and the creditor must have satisfied all of the applicable requirements of this Part from the date the account was opened (or earlier, if applicable).

    B. The creditor makes a firm written commitment at account opening to extend a total amount of credit in excess of the threshold amount in effect at the time the account is opened with no requirement of additional credit information for any advances on the account (except as permitted from time to time with respect to open-end accounts pursuant to § 226.2(a)(20)).

    ii. Subsequent changes generally. Subsequent changes to an open-end account or the threshold amount may result in the account no longer qualifying for the exemption in § 226.3(b). In these circumstances, the creditor must begin to comply with all of the applicable requirements of this Part within a reasonable period of time after the account ceases to be exempt. Once an account ceases to be exempt, the requirements of this Part apply to any balances on the account. The creditor, however, is not required to comply with the requirements of this Part with respect to the period of time during which the account was exempt. For example, if an open-end credit account ceases to be exempt, the creditor must within a reasonable period of time provide the disclosures required by § 226.6 reflecting the current terms of the account and begin to provide periodic statements consistent with § 226.7. However, the creditor is not required to disclose fees or charges imposed while the account was exempt. Furthermore, if the creditor provided disclosures consistent with the requirements of this Part while the account was exempt, it is not required to provide disclosures required by § 226.6 reflecting the current terms of the account. See also comment 3(b)-6.

    iii. Subsequent changes when exemption is based on initial extension of credit. If a creditor makes an initial extension of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under § 226.3(b) regardless of a subsequent increase in the threshold amount, including an increase pursuant to § 226.3(b)(1)(ii) as a result of an increase in the CPI-W. Furthermore, in these circumstances, the account remains exempt even if there are no further extensions of credit, subsequent extensions of credit do not exceed the threshold amount, the account balance is subsequently reduced below the threshold amount (such as through repayment of the extension), or the credit limit for the account is subsequently reduced below the threshold amount. However, if the initial extension of credit on an account does not exceed the threshold amount in effect at the time of the extension, the account is not exempt under § 226.3(b) even if a subsequent extension exceeds the threshold amount or if the account balance later exceeds the threshold amount (for example, due to the subsequent accrual of interest).

    iv. Subsequent changes when exemption is based on firm commitment.

    A. General. If a creditor makes a firm written commitment at account opening to extend a total amount of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under § 226.3(b) regardless of a subsequent increase in the threshold amount pursuant to § 226.3(b)(1)(ii) as a result of an increase in the CPI-W. However, see comment 3(b)-8 with respect to the increase in the threshold amount from $25,000 to $50,000. If an open-end account is exempt under § 226.3(b) based on a firm commitment to extend credit, the account remains exempt even if the amount of credit actually extended does not exceed the threshold amount. In contrast, if the firm commitment does not exceed the threshold amount at account opening, the account is not exempt under § 226.3(b) even if the account balance later exceeds the threshold amount. In addition, if a creditor reduces a firm commitment, the account ceases to be exempt unless the reduced firm commitment exceeds the threshold amount in effect at the time of the reduction. For example:

    (1) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If during year one the creditor reduces its firm commitment to $53,000, the account remains exempt under § 226.3(b). However, if during year one the creditor reduces its firm commitment to $40,000, the account is no longer exempt under § 226.3(b).

    (2) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If the threshold amount is $56,000 on January 1 of year six as a result of increases in the CPI-W, the account remains exempt. However, if the creditor reduces its firm commitment to $54,000 on July 1 of year six, the account ceases to be exempt under § 226.3(b).

    B. Initial extension of credit. If an open-end account qualifies for a § 226.3(b) exemption at account opening based on a firm commitment, that account may also subsequently qualify for a § 226.3(b) exemption based on an initial extension of credit. However, that initial extension must be a single advance in excess of the threshold amount in effect at the time the extension is made. In addition, the account must continue to qualify for an exemption based on the firm commitment until the initial extension of credit is made. For example:

    (1) Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $55,000 in credit. The account is not used for an extension of credit during year one. On January 1 of year two, the threshold amount is increased to $51,000 pursuant to § 226.3(b)(1)(ii) as a result of an increase in the CPI-W. On July 1 of year two, the consumer uses the account for an initial extension of $52,000. As a result of this extension of credit, the account remains exempt under § 226.3(b) even if, after July 1 of year two, the creditor reduces the firm commitment to $51,000 or less.

    (2) Same facts as in paragraph iv.B(1) above except that the consumer uses the account for an initial extension of $30,000 on July 1 of year two and for an extension of $22,000 on July 15 of year two. In these circumstances, the account is not exempt under § 226.3(b) based on the $30,000 initial extension of credit because that extension did not exceed the applicable threshold amount ($51,000), although the account remains exempt based on the firm commitment to extend $55,000 in credit.

    (3) Same facts as in paragraph iv.B(1) above except that, on April 1 of year two, the creditor reduces the firm commitment to $50,000, which is below the $51,000 threshold then in effect. Because the account ceases to qualify for a § 226.3(b) exemption on April 1 of year two, the account does not qualify for a § 226.3(b) exemption based on a $52,000 initial extension of credit on July 1 of year two.

    5. Closed-end credit.

    i. Qualifying for exemption. A closed-end loan is exempt under § 226.3(b) (unless the extension of credit is secured by any real property, or by personal property used or expected to be used as the consumer's principal dwelling; or is a private education loan as defined in § 226.46(b)(5)), if either of the following conditions is met

    A. The creditor makes an extension of credit at consummation that exceeds the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 226.3(b) even if the amount owed is subsequently reduced below the threshold amount (such as through repayment of the loan).

    B. The creditor makes a commitment at consummation to extend a total amount of credit in excess of the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 226.3(b) even if the total amount of credit extended does not exceed the threshold amount.

    ii. Subsequent changes. If a creditor makes a closed-end extension of credit or commitment to extend closed-end credit that exceeds the threshold amount in effect at the time of consummation, the closed-end loan remains exempt under § 226.3(b) regardless of a subsequent increase in the threshold amount. However, a closed-end loan is not exempt under § 226.3(b) merely because it is used to satisfy and replace an existing exempt loan, unless the new extension of credit is itself exempt under the applicable threshold amount. For example, assume a closed-end loan that qualified for a § 226.3(b) exemption at consummation in year one is refinanced in year ten and that the new loan amount is less than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of this Part with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, which is not exempt under § 226.3(b). See also comment 3(b)-6.

    6. Addition of a security interest in real property or a dwelling after account opening or consummation.

    i. Open-end credit. For open-end accounts, if, after account opening, a security interest is taken in real property, or in personal property used or expected to be used as the consumer's principal dwelling, a previously exempt account ceases to be exempt under § 226.3(b) and the creditor must begin to comply with all of the applicable requirements of this Part within a reasonable period of time. See comment 3(b)-4.ii. If a security interest is taken in the consumer's principal dwelling, the creditor must also give the consumer the right to rescind the security interest consistent with § 226.15.

    ii. Closed-end credit. For closed-end loans, if, after consummation, a security interest is taken in any real property, or in personal property used or expected to be used as the consumer's principal dwelling, an exempt loan remains exempt under § 226.3(b). However, the addition of a security interest in the consumer's principal dwelling is a transaction for purposes of § 226.23, and the creditor must give the consumer the right to rescind the security interest consistent with that section. See § 226.23(a)(1) and the accompanying commentary. In contrast, if a closed-end loan that is exempt under § 226.3(b) is satisfied and replaced by a loan that is secured by any real property, or by personal property used or expected to be used as the consumer's principal dwelling, the new loan is not exempt under § 226.3(b) and the creditor must comply with all of the applicable requirements of this Part. See comment 3(b)-5.

    7. Application to extensions secured by mobile homes. Because a mobile home can be a dwelling under § 226.2(a)(19), the exemption in § 226.3(b) does not apply to a credit extension secured by a mobile home that is used or expected to be used as the principal dwelling of the consumer. See comment 3(b)-6.

    8. Transition rule for open-end accounts exempt prior to July 21, 2011. Section 226.3(b)(2) applies only to open-end accounts opened prior to July 21, 2011. Section 226.3(b)(2) does not apply if a security interest is taken by the creditor in any real property, or in personal property used or expected to be used as the consumer's principal dwelling. If, on July 20, 2011, an open-end account is exempt under § 226.3(b) based on a firm commitment to extend credit in excess of $25,000, the account remains exempt under § 226.3(b)(2) until December 31, 2011 (unless the firm commitment is reduced to $25,000 or less). If the firm commitment is increased on or before December 31, 2011 to an amount in excess of $50,000, the account remains exempt under § 226.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W. If the firm commitment is not increased on or before December 31, 2011 to an amount in excess of $50,000, the account ceases to be exempt under § 226.3(b) based on a firm commitment to extend credit. For example:

    i. Assume that, on July 20, 2011, the account is exempt under § 226.3(b) based on the creditor's firm commitment to extend $30,000 in credit. On November 1, 2011, the creditor increases the firm commitment on the account to $55,000. In these circumstances, the account remains exempt under § 226.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W.

    ii. Same facts as paragraph i. above except, on November 1, 2011, the creditor increases the firm commitment on the account to $40,000. In these circumstances, the account ceases to be exempt under § 226.3(b)(2) after December 31, 2011, and the creditor must begin to comply with the applicable requirements of this Part.

    BUREAU OF CONSUMER FINANCIAL PROTECTION Authority and Issuance

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

    PART 1026—TRUTH IN LENDING (REGULATION Z) 3. The authority citation for part 1026 continues to read as follows: Authority:

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

    4. In Supplement I to part 1026, under Section 1026.3—Exempt Transactions, under 3(b)—Credit Over Applicable Threshold Amount, paragraphs 1 through 6 are revised, and paragraphs 7 and 8 are added, to read as follows: Supplement I to Part 1026—Official Interpretations Subpart A—General Section 1026.3—Exempt Transactions 3(b) Credit Over Applicable Threshold Amount

    1. Threshold amount. For purposes of § 1026.3(b), the threshold amount in effect during a particular period is the amount stated in comment 3(b)-4 below for that period. The threshold amount is adjusted effective January 1 of each year by any annual percentage increase in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) that was in effect on the preceding June 1. Comment 3(b)-4 will be amended to provide the threshold amount for the upcoming year after the annual percentage change in the CPI-W that was in effect on June 1 becomes available. Any increase in the threshold amount will be rounded to the nearest $100. For example, if the annual percentage increase in the CPI-W would result in a $950 increase in the threshold amount, the threshold amount will be increased by $1,000. However, if the annual percentage increase in the CPI-W would result in a $949 increase in the threshold amount, the threshold amount will be increased by $900.

    2. No increase in the CPI-W. If the CPI-W in effect on June 1 does not increase from the CPI-W in effect on June 1 of the previous year, the threshold amount effective the following January 1 through December 31 will not change from the previous year. When this occurs, for the years that follow, the threshold is calculated based on the annual percentage change in the CPI-W applied to the dollar amount that would have resulted if decreases and any subsequent increases in the CPI-W had been taken into account.

    i. Net increases. If the resulting amount is greater than the current threshold, then the threshold effective January 1 the following year will increase accordingly.

    ii. Net decreases. If the resulting threshold calculated is equal to or less than the current threshold, then the threshold effective January 1 the following year will not change, but future increases will be calculated based on the threshold that would have resulted.

    3. Threshold. For purposes of § 1026.3(b), the threshold amount in effect during a particular period is the amount stated below for that period.

    i. Prior to July 21, 2011, the threshold amount is $25,000.

    ii. From July 21, 2011 through December 31, 2011, the threshold amount is $50,000.

    iii. From January 1, 2012 through December 31, 2012, the threshold amount is $51,800.

    iv. From January 1, 2013 through December 31, 2013, the threshold amount is $53,000.

    v. From January 1, 2014 through December 31, 2014, the threshold amount is $53,500.

    vi. From January 1, 2015 through December 31, 2015, the threshold amount is $54,600.

    vii. From January 1, 2016 through December 31, 2016, the threshold amount is $54,600.

    4. Open-end credit. i. Qualifying for exemption. An open-end account is exempt under § 1026.3(b) (unless secured by real property, or by personal property used or expected to be used as the consumer's principal dwelling) if either of the following conditions is met:

    A. The creditor makes an initial extension of credit at or after account opening that exceeds the threshold amount in effect at the time the initial extension is made. If a creditor makes an initial extension of credit after account opening that does not exceed the threshold amount in effect at the time the extension is made, the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable), including but not limited to the requirements of § 1026.6 (account-opening disclosures), § 1026.7 (periodic statements), § 1026.52 (limitations on fees), and § 1026.55 (limitations on increasing annual percentages rates, fees, and charges). For example:

    1. Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $60,000. In this circumstance, no requirements of this part apply to the account.

    2. Assume that the threshold amount in effect on January 1 is $50,000. On February 1, an account is opened but the creditor does not make an initial extension of credit at that time. On July 1, the creditor makes an initial extension of credit of $50,000 or less. In this circumstance, the account is not exempt and the creditor must have satisfied all of the applicable requirements of this part from the date the account was opened (or earlier, if applicable).

    B. The creditor makes a firm written commitment at account opening to extend a total amount of credit in excess of the threshold amount in effect at the time the account is opened with no requirement of additional credit information for any advances on the account (except as permitted from time to time with respect to open-end accounts pursuant to § 1026.2(a)(20)).

    ii. Subsequent changes generally. Subsequent changes to an open-end account or the threshold amount may result in the account no longer qualifying for the exemption in § 1026.3(b). In these circumstances, the creditor must begin to comply with all of the applicable requirements of this part within a reasonable period of time after the account ceases to be exempt. Once an account ceases to be exempt, the requirements of this part apply to any balances on the account. The creditor, however, is not required to comply with the requirements of this part with respect to the period of time during which the account was exempt. For example, if an open-end credit account ceases to be exempt, the creditor must within a reasonable period of time provide the disclosures required by § 1026.6 reflecting the current terms of the account and begin to provide periodic statements consistent with § 1026.7. However, the creditor is not required to disclose fees or charges imposed while the account was exempt. Furthermore, if the creditor provided disclosures consistent with the requirements of this part while the account was exempt, it is not required to provide disclosures required by § 1026.6 reflecting the current terms of the account. See also comment 3(b)-6.

    iii. Subsequent changes when exemption is based on initial extension of credit. If a creditor makes an initial extension of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under § 1026.3(b) regardless of a subsequent increase in the threshold amount, including an increase pursuant to § 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. Furthermore, in these circumstances, the account remains exempt even if there are no further extensions of credit, subsequent extensions of credit do not exceed the threshold amount, the account balance is subsequently reduced below the threshold amount (such as through repayment of the extension), or the credit limit for the account is subsequently reduced below the threshold amount. However, if the initial extension of credit on an account does not exceed the threshold amount in effect at the time of the extension, the account is not exempt under § 1026.3(b) even if a subsequent extension exceeds the threshold amount or if the account balance later exceeds the threshold amount (for example, due to the subsequent accrual of interest).

    iv. Subsequent changes when exemption is based on firm commitment. A. General. If a creditor makes a firm written commitment at account opening to extend a total amount of credit that exceeds the threshold amount in effect at that time, the open-end account remains exempt under § 1026.3(b) regardless of a subsequent increase in the threshold amount pursuant to § 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. However, see comment 3(b)-9 with respect to the increase in the threshold amount from $25,000 to $50,000. If an open-end account is exempt under § 1026.3(b) based on a firm commitment to extend credit, the account remains exempt even if the amount of credit actually extended does not exceed the threshold amount. In contrast, if the firm commitment does not exceed the threshold amount at account opening, the account is not exempt under § 1026.3(b) even if the account balance later exceeds the threshold amount. In addition, if a creditor reduces a firm commitment, the account ceases to be exempt unless the reduced firm commitment exceeds the threshold amount in effect at the time of the reduction. For example:

    1. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If during year one the creditor reduces its firm commitment to $53,000, the account remains exempt under § 1026.3(b). However, if during year one the creditor reduces its firm commitment to $40,000, the account is no longer exempt under § 1026.3(b).

    2. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. If the threshold amount is $56,000 on January 1 of year six as a result of increases in the CPI-W, the account remains exempt. However, if the creditor reduces its firm commitment to $54,000 on July 1 of year six, the account ceases to be exempt under § 1026.3(b).

    B. Initial extension of credit. If an open-end account qualifies for a § 1026.3(b) exemption at account opening based on a firm commitment, that account may also subsequently qualify for a § 1026.3(b) exemption based on an initial extension of credit. However, that initial extension must be a single advance in excess of the threshold amount in effect at the time the extension is made. In addition, the account must continue to qualify for an exemption based on the firm commitment until the initial extension of credit is made. For example:

    1. Assume that, at account opening in year one, the threshold amount in effect is $50,000 and the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $55,000 in credit. The account is not used for an extension of credit during year one. On January 1 of year two, the threshold amount is increased to $51,000 pursuant to § 1026.3(b)(1)(ii) as a result of an increase in the CPI-W. On July 1 of year two, the consumer uses the account for an initial extension of $52,000. As a result of this extension of credit, the account remains exempt under § 1026.3(b) even if, after July 1 of year two, the creditor reduces the firm commitment to $51,000 or less.

    2. Same facts as in paragraph iv.B.1 above except that the consumer uses the account for an initial extension of $30,000 on July 1 of year two and for an extension of $22,000 on July 15 of year two. In these circumstances, the account is not exempt under § 1026.3(b) based on the $30,000 initial extension of credit because that extension did not exceed the applicable threshold amount ($51,000), although the account remains exempt based on the firm commitment to extend $55,000 in credit.

    3. Same facts as in paragraph iv.B.1 above except that, on April 1 of year two, the creditor reduces the firm commitment to $50,000, which is below the $51,000 threshold then in effect. Because the account ceases to qualify for a § 1026.3(b) exemption on April 1 of year two, the account does not qualify for a § 1026.3(b) exemption based on a $52,000 initial extension of credit on July 1 of year two.

    5. Closed-end credit. i. Qualifying for exemption. A closed-end loan is exempt under § 1026.3(b) (unless the extension of credit is secured by real property, or by personal property used or expected to be used as the consumer's principal dwelling; or is a private education loan as defined in § 1026.46(b)(5)), if either of the following conditions is met:

    A. The creditor makes an extension of credit at consummation that exceeds the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 1026.3(b) even if the amount owed is subsequently reduced below the threshold amount (such as through repayment of the loan).

    B. The creditor makes a commitment at consummation to extend a total amount of credit in excess of the threshold amount in effect at the time of consummation. In these circumstances, the loan remains exempt under § 1026.3(b) even if the total amount of credit extended does not exceed the threshold amount.

    ii. Subsequent changes. If a creditor makes a closed-end extension of credit or commitment to extend closed-end credit that exceeds the threshold amount in effect at the time of consummation, the closed-end loan remains exempt under § 1026.3(b) regardless of a subsequent increase in the threshold amount. However, a closed-end loan is not exempt under § 1026.3(b) merely because it is used to satisfy and replace an existing exempt loan, unless the new extension of credit is itself exempt under the applicable threshold amount. For example, assume a closed-end loan that qualified for a § 1026.3(b) exemption at consummation in year one is refinanced in year ten and that the new loan amount is less than the threshold amount in effect in year ten. In these circumstances, the creditor must comply with all of the applicable requirements of this part with respect to the year ten transaction if the original loan is satisfied and replaced by the new loan, which is not exempt under § 1026.3(b). See also comment 3(b)-6.

    6. Addition of a security interest in real property or a dwelling after account opening or consummation. i. Open-end credit. For open-end accounts, if after account opening a security interest is taken in real property, or in personal property used or expected to be used as the consumer's principal dwelling, a previously exempt account ceases to be exempt under § 1026.3(b) and the creditor must begin to comply with all of the applicable requirements of this part within a reasonable period of time. See comment 3(b)-4.ii. If a security interest is taken in the consumer's principal dwelling, the creditor must also give the consumer the right to rescind the security interest consistent with § 1026.15.

    ii. Closed-end credit. For closed-end loans, if after consummation a security interest is taken in real property, or in personal property used or expected to be used as the consumer's principal dwelling, an exempt loan remains exempt under § 1026.3(b). However, the addition of a security interest in the consumer's principal dwelling is a transaction for purposes of § 1026.23, and the creditor must give the consumer the right to rescind the security interest consistent with that section. See § 1026.23(a)(1) and its commentary. In contrast, if a closed-end loan that is exempt under § 1026.3(b) is satisfied and replaced by a loan that is secured by real property, or by personal property used or expected to be used as the consumer's principal dwelling, the new loan is not exempt under § 1026.3(b), and the creditor must comply with all of the applicable requirements of this part. See comment 3(b)-5.

    7. Application to extensions secured by mobile homes. Because a mobile home can be a dwelling under § 1026.2(a)(19), the exemption in § 1026.3(b) does not apply to a credit extension secured by a mobile home that is used or expected to be used as the principal dwelling of the consumer. See comment 3(b)-6.

    8. Transition rule for open-end accounts exempt prior to July 21, 2011. Section 1026.3(b)(2) applies only to open-end accounts opened prior to July 21, 2011. Section 1026.3(b)(2) does not apply if a security interest is taken by the creditor in real property, or in personal property used or expected to be used as the consumer's principal dwelling. If, on July 20, 2011, an open-end account is exempt under § 1026.3(b) based on a firm commitment to extend credit in excess of $25,000, the account remains exempt under § 1026.3(b)(2) until December 31, 2011 (unless the firm commitment is reduced to $25,000 or less). If the firm commitment is increased on or before December 31, 2011 to an amount in excess of $50,000, the account remains exempt under § 1026.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W. If the firm commitment is not increased on or before December 31, 2011 to an amount in excess of $50,000, the account ceases to be exempt under § 1026.3(b) based on a firm commitment to extend credit. For example:

    i. Assume that, on July 20, 2011, the account is exempt under § 1026.3(b) based on the creditor's firm commitment to extend $30,000 in credit. On November 1, 2011, the creditor increases the firm commitment on the account to $55,000. In these circumstances, the account remains exempt under § 1026.3(b)(1) regardless of subsequent increases in the threshold amount as a result of increases in the CPI-W.

    ii. Same facts as paragraph i above except, on November 1, 2011, the creditor increases the firm commitment on the account to $40,000. In these circumstances, the account ceases to be exempt under § 1026.3(b)(2) after December 31, 2011, and the creditor must begin to comply with the applicable requirements of this part.

    By order of the Board of Governors of the Federal Reserve System, July 19, 2016. Robert deV. Frierson, Secretary of the Board. Dated: July 13, 2016. Richard Cordray, Director, Bureau of Consumer Financial Protection.
    [FR Doc. 2016-18062 Filed 8-3-16; 8:45 am] BILLING CODE 6210-01-P; 4810-AM-P
    SOCIAL SECURITY ADMINISTRATION 20 CFR Part 404 [Docket No. SSA-2014-0052] RIN 0960-AH71 Ensuring Program Uniformity at the Hearing and Appeals Council Levels of the Administrative Review Process AGENCY:

    Social Security Administration.

    ACTION:

    Notice of proposed rulemaking (NPRM); reopening of the comment period.

    SUMMARY:

    On July 12, 2016, we published in the Federal Register a notice of proposed rulemaking (NPRM) for Ensuring Program Uniformity at the Hearing and Appeals Council Levels of the Administrative Review Process. We provided a 30-day comment period ending on August 11, 2016. We are extending the comment period for 15 days.

    DATES:

    The comment period for the NPRM published on July 12, 2016 (81 FR 45079), is extended by 15 days and thus will end on August 26, 2016.

    ADDRESSES:

    You may submit comments by any one of three methods—Internet, fax, or mail. Do not submit the same comments multiple times or by more than one method. Regardless of which method you choose, please state that your comments refer to Docket No. SSA-2014-0052 so that we may associate your comments with the correct rule.

    Caution: You should be careful to include in your comments only information that you wish to make publicly available. We strongly urge you not to include in your comments any personal information, such as Social Security numbers or medical information.

    1. Internet: We strongly recommend that you submit your comments via the Internet. Please visit the Federal eRulemaking portal at http://www.regulations.gov. Use the “Search” function to find docket number SSA-2014-0052. The system will issue a tracking number to confirm your submission. You will not be able to view your comment immediately because we must post each comment manually. It may take up to a week for your comment to be viewable.

    2. Fax: Fax comments to (410) 966-2830.

    3. Mail: Mail your comments to the Office of Regulations and Reports Clearance, Social Security Administration, 3100 West High Rise Building, 6401 Security Boulevard, Baltimore, Maryland 21235-6401.

    Comments are available for public viewing on the Federal eRulemaking portal at http://www.regulations.gov or in person, during regular business hours, by arranging with the contact person identified below.

    FOR FURTHER INFORMATION CONTACT:

    Maren Weight, Office of Appellate Operations, Social Security Administration, 5107 Leesburg Pike, Falls Church, VA 22041, (703) 605-7100. For information on eligibility or filing for benefits, call our national toll-free number, 1-800-772-1213 or TTY 1-800-325-0778, or visit our Internet site, Social Security Online, at http://www.socialsecurity.gov.

    SUPPLEMENTARY INFORMATION:

    This document extends to August 26, 2016, the comment period for the NPRM that we published on July 12, 2016. We are extending the comment period in response to comments we received requesting additional time to review and comment on the proposed rules. If you have already provided comments on the proposed rules, we will consider your comments and you do not need to resubmit them.

    Carolyn W. Colvin, Acting Commissioner of Social Security.
    [FR Doc. 2016-18367 Filed 8-3-16; 8:45 am] BILLING CODE 4191-02-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 1 [REG-123854-12] RIN 1545-BL25 Application of Section 409A to Nonqualified Deferred Compensation Plans; Correction AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Correction to a partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking.

    SUMMARY:

    This document contains corrections to a partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking (REG-123854-12) that was published in the Federal Register on Wednesday, June 22, 2016 (81 FR 40569). The proposed regulations are to clarify or modify certain specific provisions of the final regulations under section 409A (TD 9321, 72 FR 19234).

    DATES:

    Written or electronic comments and requests for a public hearing for the notice of proposed rulemaking published at 81 FR 40569, June 22, 2016 are still being accepted and must be received by September 20, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Concerning the proposed regulations under sections 409A, Gregory Burns at (202) 927-9639, concerning submissions or comments and/or requests for a public hearing, Regina Johnson 202-317-6901 (not toll-free numbers).

    SUPPLEMENTARY INFORMATION: Background

    The partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking (REG-123854-12) that is the subject of this correction is under 409A of the Internal Revenue Code.

    Need for Correction

    As published, the partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking (REG-123854-12) contains errors that may prove to be misleading and are in need of clarification.

    Correction of Publication

    Accordingly, the partial withdrawal of notice of proposed rulemaking; notice of proposed rulemaking (REG-123854-12) that was the subject of FR Doc. 2016-14331 is corrected as follows:

    § 1.409A-3 [Corrected]
    1. On page 40582, first column, seventeenth line of paragraph (i)(5)(iv), the language “described in § 1.409A-(1)(b)(ii) held” is corrected to read “described in § 1.409A-1(b)(5)(ii) held”. 2. On page 40582, second column, in paragraph (i)(5)(iv) twenty-first line from the top of the page, the language “§ 1.409A-(1)(b)(5)(i)(A) or (B) or a statutory stock” is corrected to read “§ 1.409A-1(b)(5)(i)(A) or (B) or a statutory stock”. 3. On page 40582, second column, in paragraph (i)(5)(iv) twenty-third line from the top of the page, the language “§ 1.409A-(1)(b)(5)(ii) also will not cause the stock” is corrected to read “§ 1.409A-1(b)(5)(ii) also will not cause the stock”.
    § 1.409A-4 [Corrected]
    4. On page 40584, first column, in the third and fourth line of paragraph (a)(1)(ii)(B), the language “substantial risk of forfeiture—(1) Risk of forfeiture disregarded.” is corrected to read “substantial risk of forfeiture.”. 5. On page 40584, first and second column of paragraphs “(a)(1)(ii)(B)(i), (ii), and (iii)” are renumbered as “(a)(1)(ii)(B)(1), (2), and (3)” respectively. Martin V. Franks, Chief, Publications and Regulations Branch, Legal Processing Division, Associate Chief Counsel, (Procedure and Administration).
    [FR Doc. 2016-18355 Filed 8-3-16; 8:45 am] BILLING CODE 4830-01-P
    DEPARTMENT OF THE TREASURY Internal Revenue Service 26 CFR Part 25 [REG-163113-02] RIN 1545-BB71 Estate, Gift, and Generation-Skipping Transfer Taxes; Restrictions on Liquidation of an Interest AGENCY:

    Internal Revenue Service (IRS), Treasury.

    ACTION:

    Notice of proposed rulemaking and notice of public hearing.

    SUMMARY:

    This document contains proposed regulations concerning the valuation of interests in corporations and partnerships for estate, gift, and generation-skipping transfer (GST) tax purposes. Specifically, these proposed regulations concern the treatment of certain lapsing rights and restrictions on liquidation in determining the value of the transferred interests. These proposed regulations affect certain transferors of interests in corporations and partnerships and are necessary to prevent the undervaluation of such transferred interests.

    DATES:

    Written and electronic comments must be received by November 2, 2016. Outlines of topics to be discussed at the public hearing scheduled for December 1, 2016, must be received by November 2, 2016.

    ADDRESSES:

    Send submissions to: CC:PA:LPD:PR (REG-163113-02), Room 5203, Internal Revenue Service, POB 7604, Ben Franklin Station, Washington, DC 20044. Submissions also may be hand delivered Monday through Friday between the hours of 8 a.m. and 5 p.m. to: CC:PA:LPD:PR (REG-163113-02), Courier's Desk, Internal Revenue Service, 1111 Constitution Avenue NW., Washington, DC 20224, or sent electronically via the Federal eRulemaking portal at www.regulations.gov (IRS REG-163113-02). The public hearing will be held in the Auditorium, Internal Revenue Service Building, 1111 Constitution Avenue NW., Washington, DC 20224.

    FOR FURTHER INFORMATION CONTACT:

    Concerning the proposed regulations, John D. MacEachen, (202) 317-6859; concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Regina L. Johnson at (202) 317-6901 (not toll-free numbers).

    SUPPLEMENTARY INFORMATION:

    Background

    Section 2704 of the Internal Revenue Code provides special valuation rules for purposes of subtitle B (relating to estate, gift, and GST taxes) for valuing intra-family transfers of interests in corporations and partnerships subject to lapsing voting or liquidation rights and restrictions on liquidation. Lapses of voting or liquidation rights are treated as a transfer of the excess of the fair market value of all interests held by the transferor, determined as if the voting or liquidation rights were nonlapsing, over the fair market value of such interests after the lapse. Certain restrictions on liquidation are disregarded in determining the fair market value of the transferred interest. The legislative history of section 2704 states that the provision is intended, in part, to prevent results similar to that in Estate of Harrison v. Commissioner, T.C. Memo. 1987-8. Informal S. Rep. on S. 3209, 136 Cong. Rec. S15629-4 (October 18, 1990); H.R. Conf. Rep. No. 101-964, 2374, 2842 (October 27, 1990).

    In Harrison, the decedent and two of his children each held a general partner interest in a partnership immediately before the decedent's death. The decedent also held all of the limited partner interests in the partnership. Because any general partner could liquidate the partnership during life, each general partner could cause all partners to obtain the full value of such partner's partnership interests. A general partner's right to liquidate the partnership lapsed on the death of that partner. In determining the estate tax value of the decedent's limited partner interest, the court concluded that the right of the decedent to liquidate the partnership (and thus readily obtain the full value of the limited partner interest) could not be taken into account because that right lapsed at death. As a result, the Court determined the value for transfer tax purposes of the limited partner interest to be less than its value either in the hands of the decedent immediately before death or in the hands of his family (the other general partners) immediately after death.

    Section 2704(a)(1) provides generally that, if there is a lapse of any voting or liquidation right in a corporation or a partnership and the individual holding such right immediately before the lapse and members of such individual's family hold, both before and after the lapse, control of the entity, such lapse shall be treated as a transfer by such individual by gift, or a transfer which is includible in the gross estate, whichever is applicable. The amount of the transfer is the fair market value of all interests held by the individual immediately before the lapse (determined as if the voting and liquidation rights were nonlapsing) over the fair market value of such interests after the lapse.

    Section 25.2704-1(a)(2)(v) of the current Gift Tax Regulations defines a liquidation right as the right or ability, including by reason of aggregate voting power, to compel the entity to acquire all or a portion of the holder's equity interest in the entity, whether or not its exercise would result in the complete liquidation of the entity.

    Section 25.2704-1(c)(1) provides a rule that a lapse of a liquidation right occurs at the time a presently exercisable liquidation right is restricted or eliminated. However, under § 25.2704-1(c)(1), a transfer of an interest that results in the lapse of a liquidation right generally is not subject to this rule if the rights with respect to the transferred interest are not restricted or eliminated. The effect of this exception is that the inter vivos transfer of a minority interest by the holder of an interest with the aggregate voting power to compel the entity to acquire the holder's interest is not treated as a lapse even though the transfer results in the loss of the transferor's presently exercisable liquidation right.

    The Treasury Department and the IRS, however, believe that this exception should not apply when the inter vivos transfer that results in the loss of the power to liquidate occurs on the decedent's deathbed. Cf. Estate of Murphy v. Commissioner, T.C. Memo. 1990-472 (rejecting “attempts to avoid taxation of the control value of stock holdings through bifurcation of the blocks”). Such transfers generally have minimal economic effects, but result in a transfer tax value that is less than the value of the interest either in the hands of the decedent prior to death or in the hands of the decedent's family immediately after death. See Harrison, supra. The enactment of section 2704 was intended to prevent this result. See Informal S. Rep. on S. 3209, supra; H.R. Conf. Rep. No. 101-964, supra. See also section 2704(a)(3) (conferring on the Secretary broad regulatory authority to apply section 2704(a) to the lapse of rights similar to voting and liquidation rights). The Treasury Department and the IRS have concluded that the regulatory exception created in § 25.2704-1(c)(1) should apply only to transfers occurring more than three years before death, where the loss of control over liquidation is likely to have a more substantive effect. A bright-line test will avoid the fact-intensive inquiry underlying a determination of a donor's subjective motive which is administratively burdensome for both taxpayers and the IRS. Cf. section 2035(a) (replacing the contemplation of death presumption of prior law with a bright-line, three-year test). Accordingly, the proposed regulations treat transfers occurring within three years of death that result in the lapse of a liquidation right as transfers occurring at death for purposes of section 2704(a).

    Section 2704(b)(1) provides generally that, if a transferor transfers an interest in a corporation or partnership to (or for the benefit of) a member of the transferor's family, and the transferor and members of the transferor's family hold, immediately before the transfer, control of the entity, any “applicable restriction” is disregarded in valuing the transferred interest. Under section 2704(b)(2), an applicable restriction is defined as a restriction that effectively limits the ability of the entity to liquidate, but which, after the transfer, either in whole or in part, will lapse or may be removed by the transferor or the transferor's family, either alone or collectively. Section 2704(b)(3)(B) excepts from the definition of an applicable restriction any restriction “imposed, or required to be imposed, by any Federal or State law.”

    Section 2704(b)(4) provides that the Secretary may by regulations provide that other restrictions shall be disregarded in determining the value of any interest in a corporation or a partnership transferred to a member of the transferor's family if the restriction has the effect of reducing the value of the transferred interest for transfer tax purposes but does not ultimately reduce the value of the interest to the transferee.

    Section 25.2704-2(b) provides, in part, that an applicable restriction “is a limitation on the ability to liquidate the entity (in whole or in part) that is more restrictive than the limitations that would apply under the State law generally applicable to the entity in the absence of the restriction.”

    The Treasury Department and the IRS have determined that the current regulations have been rendered substantially ineffective in implementing the purpose and intent of the statute by changes in state laws and by other subsequent developments. First, courts have concluded that, under the current regulations, section 2704(b) applies only to restrictions on the ability to liquidate an entire entity, and not to restrictions on the ability to liquidate a transferred interest in that entity. Kerr v. Commissioner, 113 T.C. 449, 473 (1999), aff'd, 292 F.3rd 490 (5th Cir. 2002). Thus, a restriction on the ability to liquidate an individual interest is not an applicable restriction under the current regulations.

    Second, as noted above, the current regulations except from the definition of an applicable restriction a restriction on liquidation that is no more restrictive than that of the state law that would apply in the absence of the restriction. The Tax Court viewed this as a regulatory expansion of the statutory exception to the application of section 2704(b) contained in section 2704(b)(3)(B) that excepts “any restriction imposed, or required to be imposed, by any Federal or State law.” Kerr, 113 T.C. at 472. Since the promulgation of the current regulations, many state statutes governing limited partnerships have been revised to allow liquidation of the entity only on the unanimous vote of all owners (unless provided otherwise in the partnership agreement), and to eliminate the statutory default provision that had allowed a limited partner to liquidate his or her limited partner interest. Instead, statutes in these jurisdictions typically now provide that a limited partner may not withdraw from the partnership unless the partnership agreement provides otherwise. See, e.g., Tex. Bus. Orgs. Ann. § 153.110 (West 2016) (limited partner may withdraw as specified in the partnership agreement); Uniform Limited Partnership Act (2001) § 601(a), 6A U.L.A. 348, 448 (Supp. 2015) (limited partner has no right to withdraw before completion of the winding up of the partnership). Further, other state statutes have been revised to create elective restrictions on liquidation. See, e.g., Nev. Rev. Stat. § 87A.427 (2016) (limited partnership electing to be restricted limited partnership may not make any distributions for a 10-year period). Each of these statutes is designed to be at least as restrictive as the maximum restriction on liquidation that could be imposed in a partnership agreement. The result is that the provisions of a partnership agreement restricting liquidation generally fall within the regulatory exception for restrictions that are no more restrictive than those under state law, and thus do not constitute applicable restrictions under the current regulations.

    Third, taxpayers have attempted to avoid the application of section 2704(b) through the transfer of a partnership interest to an assignee rather than to a partner. Again relying on the regulatory exception for restrictions that are no more restrictive than those under state law, and the fact that an assignee is allocated partnership income, gain, loss, etc., but does not have (and thus may not exercise) the rights or powers of a partner, taxpayers argue that an assignee's inability to cause the partnership to liquidate his or her partnership interest is no greater a restriction than that imposed upon assignees under state law. Kerr, 113 T.C. at 463-64; Estate of Jones v. Commissioner, 116 T.C. 121, 129-30 (2001). Taxpayers thus argue that the assignee status of the transferred interest is not an applicable restriction.

    Finally, taxpayers have avoided the application of section 2704(b) through the transfer of a nominal partnership interest to a nonfamily member, such as a charity or an employee, to ensure that the family alone does not have the power to remove a restriction. Kerr, 292 F.3rd at 494.

    As the Tax Court noted in Kerr, Congress granted the Secretary broad discretion in section 2704(b)(4) to promulgate regulations identifying restrictions not covered by section 2704(b) that nevertheless should be disregarded for transfer tax valuation purposes. 113 T.C. at 474. The Treasury Department and the IRS have concluded that, as was recognized by Congress when enacting section 2704(b), there are additional restrictions that may affect adversely the transfer tax value of an interest but that do not reduce the value of the interest to the family-member transferee, and thus should be disregarded for transfer tax valuation purposes. H.R. Conf. Rep. No. 101-964, supra, at 1138. The Treasury Department and the IRS have determined that such restrictions include: (a) A restriction on the ability to liquidate the transferred interest; and (b) any restrictions attendant upon the nature or extent of the property to be received in exchange for the liquidated interest, or the timing of the payment of that property.

    Further, the Treasury Department and the IRS have concluded that the grant of an insubstantial interest in the entity to a nonfamily member should not preclude the application of section 2704(b) because, in reality, such nonfamily member interest generally does not constrain the family's ability to remove a restriction on the liquidation of an individual interest. Cf. Kerr, 292 F.3rd at 494 (noting that a charity receiving a partnership interest would “convert its interests into cash as soon as possible, so long as it believed the transaction to be in its best interest and that it would receive fair market value for its interest”). The interest of such nonfamily members does not affect the family's control of the entity, but rather, when combined with a requirement that all holders approve liquidation, is designed to reduce the transfer tax value of the family-held interests while not ultimately reducing the value of those interests to the family member transferees. The enactment of section 2704 was intended to prevent this result. See section 2704(b)(4) (conferring on the Secretary broad regulatory authority to apply section 2704(b) to other restrictions if the restriction has the effect of reducing the value of the transferred interest for transfer tax purposes but does not ultimately reduce the value of the interest to the transferee). The Treasury Department and the IRS have concluded that the presence of a nonfamily-member interest should be recognized only where the interest is an economically substantial and longstanding one that is likely to have a more substantive effect. A bright-line test will avoid the fact-intensive inquiry underlying a determination of whether the interest of the nonfamily member effectively constrains the family's ability to liquidate the entity. Accordingly, the proposed regulations disregard the interest held by a nonfamily member that has been held less than three years before the date of the transfer, that constitutes less than 10 percent of the value of all of the equity interests, that when combined with the interests of other nonfamily members constitutes less than 20 percent of the value of all of the equity interests, or that lacks a right to put the interest to the entity and receive a minimum value.

    Finally, since the promulgation of §§ 301.7701-1 through 301.7701-3 of the Procedure and Administration Regulations (the check-the-box regulations), an entity's classification for federal tax purposes may differ substantially from the entity's structure or form under local law. In addition, many taxpayers now utilize a limited liability company (LLC) as the preferred entity to hold family assets or business interests. The Treasury Department and the IRS have concluded that the regulations under section 2704 should be updated to reflect these significant developments.

    Explanation of Provisions

    The proposed regulations would amend § 25.2701-2 to address what constitutes control of an LLC or other entity or arrangement that is not a corporation, partnership, or limited partnership. The proposed regulations would amend § 25.2704-1 to address deathbed transfers that result in the lapse of a liquidation right and to clarify the treatment of a transfer that results in the creation of an assignee interest. The proposed regulations would amend § 25.2704-2 to refine the definition of the term “applicable restriction” by eliminating the comparison to the liquidation limitations of state law. Further, the proposed regulations would add a new section, § 25.2704-3, to address restrictions on the liquidation of an individual interest in an entity and the effect of insubstantial interests held by persons who are not members of the family.

    Covered Entities

    The proposed regulations would clarify, in §§ 25.2704-1 through 25.2704-3, that section 2704 applies to corporations, partnerships, LLC's, and other entities and arrangements that are business entities within the meaning of § 301.7701-2(a), regardless of whether the entity or arrangement is domestic or foreign, regardless of how the entity or arrangement is classified for other federal tax purposes, and regardless of whether the entity or arrangement is disregarded as an entity separate from its owner for other federal tax purposes.

    Classification of the Entity

    Section 2704 speaks in terms of corporations and partnerships. Under the proposed regulations, a corporation is any business entity described in § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8), an S corporation within the meaning of section 1361(a)(1), and a qualified subchapter S subsidiary within the meaning of section 1361(b)(3)(B). For this purpose, a qualified subchapter S subsidiary is treated as a corporation that is separate from its parent owner. For most purposes under the proposed regulations, a partnership would be any other business entity within the meaning of § 301.7701-1(a), regardless of how the entity is classified for federal tax purposes.

    However, these proposed regulations address two situations in which it is necessary to go beyond this division of entities into only the two categories of corporation and partnership. These situations (specifically, the test to determine control of an entity, and the test to determine whether a restriction is imposed under state law) require consideration of the differences among various types of business entities under the local law under which those entities are created and governed. As a result, for purposes of the test to determine control of an entity and to determine whether a restriction is imposed under state law, the proposed regulations would provide that in the case of any business entity or arrangement that is not a corporation, the form of the entity or arrangement would be determined under local law, regardless of how it is classified for other federal tax purposes, and regardless of whether it is disregarded as an entity separate from its owner for other federal tax purposes. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, under which the entity or arrangement is created or organized. Thus, in applying these two tests, there would be three types of entities: Corporations, partnerships (including limited partnerships), and other business entities (which would include LLCs that are not S corporations) as determined under local law.

    Control of the Entity

    Section 2704(c)(1) incorporates the definition of control found in section 2701(b)(2). Control of a corporation, partnership, or limited partnership is defined in sections 2701(b)(2)(A) and (B). The proposed regulations would clarify, in § 25.2701-2, that control of an LLC or of any other entity or arrangement that is not a corporation, partnership, or limited partnership would constitute the holding of at least 50 percent of either the capital or profits interests of the entity or arrangement, or the holding of any equity interest with the ability to cause the full or partial liquidation of the entity or arrangement. Cf. section 2701(b)(2)(B)(ii) (defining control of a limited partnership as including the holding of any interest as a general partner). Further, for purposes of determining control, under the attribution rules of existing § 25.2701-6, an individual, the individual's estate, and members of the individual's family are treated as holding interests held indirectly through a corporation, partnership, trust, or other entity.

    Lapses Under Section 2704(a)

    The proposed regulations would amend § 25.2704-1(a) to confirm that a transfer that results in the restriction or elimination of any of the rights or powers associated with the transferred interest (an assignee interest) is treated as a lapse within the meaning of section 2704(a). This is the case regardless of whether the right or power is exercisable by the transferor after the transfer because the statute is concerned with the lapse of rights associated with the transferred interest. Whether the lapse is of a voting or liquidation right is determined under the general rules of section 25.2704-1.

    The proposed regulations also would amend § 25.2704-1(c)(1) to narrow the exception in the definition of a lapse of a liquidation right to transfers occurring three years or more before the transferor's death that do not restrict or eliminate the rights associated with the ownership of the transferred interest. In addition, the proposed regulations would amend § 25.2704-1(c)(2)(i)(B) to conform the existing provision for testing the family's ability to liquidate an interest with the proposed elimination of the comparison with local law, to clarify that the manner in which liquidation may be achieved is irrelevant, and to conform with the proposed provision for disregarding certain nonfamily-member interests in testing the family's ability to remove a restriction in proposed § 25.2704-3 regarding disregarded restrictions.

    Applicable Restrictions Under Section 2704(b)

    The proposed regulations would remove the exception in § 25.2704-2(b) that limits the definition of applicable restriction to limitations that are more restrictive than the limitations that would apply in the absence of the restriction under the local law generally applicable to the entity. As noted above, this exception is not consistent with section 2704(b) to the extent that the transferor and family members have the power to avoid any statutory rule. The proposed regulations also would revise § 25.2704-2(b) to provide that an applicable restriction does include a restriction that is imposed under the terms of the governing documents, as well as a restriction that is imposed under a local law regardless of whether that restriction may be superseded by or pursuant to the governing documents or otherwise. In applying this particular exception to the definition of an applicable restriction, this proposed rule is intended to ensure that a restriction that is not imposed or required to be imposed by federal or state law is disregarded without regard to its source.

    Further, with regard to the exception for restrictions “imposed, or required to be imposed, by any Federal or State law,” in section 2704(b)(3)(B), the proposed regulations would clarify that the terms “federal” and “state” refer only to the United States or any state (including the District of Columbia (see section 7701(a)(10)), but do not include any other jurisdiction.

    A restriction is imposed or required to be imposed by law if the restriction cannot be removed or overridden and it is mandated by the applicable law, is required to be included in the governing documents, or otherwise is made mandatory. In addition, a restriction imposed by a state law, even if that restriction may not be removed or overridden directly or indirectly, nevertheless would constitute an applicable restriction in two situations. In each situation, although the statute itself is mandatory and cannot be overridden, another statute is available to be used for the entity's governing law that does not require the mandatory restriction, thus in effect making the purportedly mandatory provision elective. The first situation is that in which the state law is limited in its application to certain narrow classes of entities, particularly those types of entities most likely to be subject to transfers described in section 2704, that is, family-controlled entities. The second situation is that in which, although the state law under which the entity was created imposed a mandatory restriction that could not be removed or overridden, either at the time the entity was organized or at some subsequent time, that state's law also provided an optional provision or an alternative statute for the creation and governance of that same type of entity that did not mandate the restriction. Thus, an optional provision is one for the same category of entity that did not include the restriction or that allowed it to be removed or overridden, or that made the restriction optional, or permitted the restriction to be superseded, whether by the entity's governing documents or otherwise. For purposes of determining whether a restriction is imposed on an entity under state law, there would be only three types of entities, specifically, the three categories of entities described in § 25.2701-2(b)(5) of the proposed regulations: Corporations; partnerships (including limited partnerships); and other business entities. A similar proposed rule applies to the additional restrictions discussed later in this preamble.

    If an applicable restriction is disregarded, the fair market value of the transferred interest is determined under generally applicable valuation principles as if the restriction does not exist (that is, as if the governing documents and the local law are silent on the question), and thus, there is deemed to be no such restriction on liquidation of the entity.

    Disregarded Restrictions

    A new class of restrictions is described in the proposed regulations that would be disregarded, described as “disregarded restrictions.” This class of restrictions is identified pursuant to the authority contained in section 2704(b)(4). Note that, although it may appear that sections 2703 and 2704(b) overlap, they do not. While section 2703 and the corresponding regulations currently address restrictions on the sale or use of individual interests in family-controlled entities, the proposed regulations would address restrictions on the liquidation or redemption of such interests.

    Under § 25.2704-3 of the proposed regulations, in the case of a family-controlled entity, any restriction described below on a shareholder's, partner's, member's, or other owner's right to liquidate his or her interest in the entity will be disregarded if the restriction will lapse at any time after the transfer, or if the transferor, or the transferor and family members, without regard to certain interests held by nonfamily members, may remove or override the restriction. Under the proposed regulations, such a disregarded restriction includes one that: (a) Limits the ability of the holder of the interest to liquidate the interest; (b) limits the liquidation proceeds to an amount that is less than a minimum value; (c) defers the payment of the liquidation proceeds for more than six months; or (d) permits the payment of the liquidation proceeds in any manner other than in cash or other property, other than certain notes.

    “Minimum value” is the interest's share of the net value of the entity on the date of liquidation or redemption. The net value of the entity is the fair market value, as determined under section 2031 or 2512 and the applicable regulations, of the property held by the entity, reduced by the outstanding obligations of the entity. Solely for purposes of determining minimum value, the only outstanding obligations of the entity that may be taken into account are those that would be allowable (if paid) as deductions under section 2053 if those obligations instead were claims against an estate. For example, and subject to the foregoing limitation on outstanding obligations, if the entity holds an operating business, the rules of § 20.2031-2(f)(2) or 20.2031-3 apply in the case of a testamentary transfer and the rules of § 25.2512-2(f)(2) or 25.2512-3 apply in the case of an inter vivos transfer. The minimum value of the interest is the net value of the entity multiplied by the interest's share of the entity. For this purpose, the interest's share is determined by taking into account any capital, profits, and other rights inherent in the interest in the entity.

    A disregarded restriction includes limitations on the time and manner of payment of the liquidation proceeds. Such limitations include provisions permitting deferral of full payment beyond six months or permitting payment in any manner other than in cash or property. For this purpose, the term “property” does not include a note or other obligation issued directly or indirectly by the entity, other holders of an interest in the entity, or persons related to either. An exception is made for the note of an entity engaged in an active trade or business to the extent that (a) the liquidation proceeds are not attributable to passive assets within the meaning of section 6166(b)(9)(B), and (b) the note is adequately secured, requires periodic payments on a non-deferred basis, is issued at market interest rates, and has a fair market value (when discounted to present value) equal to the liquidation proceeds. A fair market value determination assumes a cash sale. See Section 2 of Rev. Rul. 59-60, 1959-1 C.B. 237 (defining fair market value and stating that “[c]ourt decisions frequently state in addition that the hypothetical buyer and seller are assumed to be able, as well as willing to trade . . .”). Thus, in the absence of immediate payment of the liquidation proceeds, the fair market value of any note falling within this exception must equal the fair market value of the liquidation proceeds on the date of liquidation or redemption.

    Exceptions that apply to applicable restrictions under the current and these proposed regulations also apply to this new class of disregarded restrictions. One of the exceptions applicable to the definition of a disregarded restriction applies if (a) each holder of an interest in the entity has an enforceable “put” right to receive, on liquidation or redemption of the holder's interest, cash and/or other property with a value that is at least equal to the minimum value previously described, (b) the full amount of such cash and other property must be paid within six months after the holder gives notice to the entity of the holder's intent to liquidate any part or all of the holder's interest and/or withdraw from the entity, and (c) such other property does not include a note or other obligation issued directly or indirectly by the entity, by one or more holders of interests in the entity, or by a person related either to the entity or to any holder of an interest in the entity. However, in the case of an entity engaged in an active trade or business, at least 60 percent of whose value consists of the non-passive assets of that trade or business, and to the extent that the liquidation proceeds are not attributable to passive assets within the meaning of section 6166(b)(9)(B), such proceeds may include a note or other obligation if such note is adequately secured, requires periodic payments on a non-deferred basis, is issued at market interest rates, and has a fair market value on the date of the liquidation or redemption equal to the liquidation proceeds. A similar exception is made to the definition of an applicable restriction in proposed § 25.2704-2(b)(4).

    In determining whether the transferor and/or the transferor's family has the ability to remove a restriction included in this new class of disregarded restrictions, any interest in the entity held by a person who is not a member of the transferor's family is disregarded if, at the time of the transfer, the interest: (a) Has been held by such person for less than three years; (b) constitutes less than 10 percent of the value of all of the equity interests in a corporation, or constitutes less than 10 percent of the capital and profits interests in a business entity described in § 301.7701-2(a) other than a corporation (for example, less than a 10-percent interest in the capital and profits of a partnership); (c) when combined with the interests of all other persons who are not members of the transferor's family, constitutes less than 20 percent of the value of all of the equity interests in a corporation, or constitutes less than 20 percent of the capital and profits interests in a business entity other than a corporation (for example, less than a 20-percent interest in the capital and profits of a partnership); or (d) any such person, as the owner of an interest, does not have an enforceable right to receive in exchange for such interest, on no more than six months' prior notice, the minimum value referred to in the definition of a disregarded restriction. If an interest is disregarded, the determination of whether the family has the ability to remove the restriction will be made assuming that the remaining interests are the sole interests in the entity.

    Finally, if a restriction is disregarded under proposed § 25.2704-3, the fair market value of the interest in the entity is determined assuming that the disregarded restriction did not exist, either in the governing documents or applicable law. Fair market value is determined under generally accepted valuation principles, including any appropriate discounts or premiums, subject to the assumptions described in this paragraph.

    Coordination With Marital and Charitable Deductions

    Section 2704(b) applies to intra-family transfers for all purposes of subtitle B relating to estate, gift and GST taxes. Therefore, to the extent that an interest qualifies for the gift or estate tax marital deduction and must be valued by taking into account the special valuation assumptions of section 2704(b), the same value generally will apply in computing the marital deduction attributable to that interest. The value of the estate tax marital deduction may be further affected, however, by other factors justifying a different value, such as the application of a control premium. See, e.g., Estate of Chenoweth v. Commissioner, 88 T.C. 1577 (1987).

    Section 2704(b) does not apply to transfers to nonfamily members and thus has no application in valuing an interest passing to charity or to a person other than a family member. If part of an entity interest includible in the gross estate passes to family members and part of that interest passes to nonfamily members, and if (taking into account the proposed rules regarding the treatment of certain interests held by nonfamily members) the part passing to the decedent's family members is valued under section 2704(b), then the proposed regulations provide that the part passing to the family members is treated as a property interest separate from the part passing to nonfamily members. The fair market value of the part passing to the family members is determined taking into account the special valuation assumptions of section 2704(b), as well as any other relevant factors, such as those supporting a control premium. The fair market value of the part passing to the nonfamily member(s) is determined in a similar manner, but without the special valuation assumptions of section 2704(b). Thus, if the sole nonfamily member receiving an interest is a charity, the interest generally will have the same value for both estate tax inclusion and deduction purposes. If the interest passing to nonfamily members, however, is divided between charities and other nonfamily members, additional considerations (not prescribed by section 2704) may apply, resulting in a different value for charitable deduction purposes. See, e.g., Ahmanson Foundation v. United States, 674 F.2d 761 (9th Cir. 1981).

    Effective Dates

    The amendments to § 25.2701-2 are proposed to be effective on and after the date of publication of a Treasury decision adopting these rules as final regulations in the Federal Register. The amendments to § 25.2704-1 are proposed to apply to lapses of rights created after October 8, 1990, occurring on or after the date these regulations are published as final regulations in the Federal Register. The amendments to § 25.2704-2 are proposed to apply to transfers of property subject to restrictions created after October 8, 1990, occurring on or after the date these regulations are published as final regulations in the Federal Register. Section 25.2704-3 is proposed to apply to transfers of property subject to restrictions created after October 8, 1990, occurring 30 or more days after the date these regulations are published as final regulations in the Federal Register.

    Special Analyses

    Certain IRS regulations, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required. Pursuant to the Regulatory Flexibility Act (5 U.S.C. chapter 6), it is hereby certified that this regulation will not have a significant economic impact on a substantial number of small entities. The proposed regulations affect the transfer tax liability of individuals who transfer an interest in certain closely held entities and not the entities themselves. The proposed regulations do not affect the structure of such entities, but only the assumptions under which they are valued for federal transfer tax purposes. In addition, any economic impact on entities affected by section 2704, large or small, is derived from the operation of the statute, or its intended application, and not from the proposed regulations in this notice of proposed rulemaking. Accordingly, a regulatory flexibility analysis is not required. Pursuant to section 7805(f) of the Internal Revenue Code, this regulation has been submitted to the Chief Counsel for Advocacy of the Small Business Administration for comment on its impact on small business.

    Comments and Public Hearing

    Before these proposed regulations are adopted as final regulations, consideration will be given to any written (a signed original and eight (8) copies) or electronic comments that are submitted timely (in the manner described in ADDRESSES) to the IRS. The Treasury Department and the IRS request comments on all aspects of the proposed regulations. All comments will be available at www.regulations.gov, or upon request.

    A public hearing on these proposed regulations has been scheduled for December 1, 2016, beginning at 10 a.m. in the Auditorium, Internal Revenue Building, 1111 Constitution Avenue NW., Washington, DC 20224. Due to building security procedures, visitors must enter at the Constitution Avenue entrance. In addition, all visitors must present photo identification to enter the building. Because of access restrictions, visitors will not be admitted beyond the immediate entrance area more than 30 minutes before the hearing starts. For information about having your name placed on the building access list to attend the hearing, see the FOR FURTHER INFORMATION CONTACT section of this preamble.

    The rules of 26 CFR 601.601(a)(3) apply to the hearing. Persons who wish to present oral comments at the hearing must submit comments by November 2, 2016, and submit an outline of the topics to be discussed and the time to be devoted to each topic (signed original and eight (8) copies) by November 2, 2016.

    A period of 10 minutes will be allotted to each person for making comments. Copies of the agenda will be available free of charge at the hearing.

    Drafting Information

    The principal author of these proposed regulations is John D. MacEachen, Office of the Associate Chief Counsel (Passthroughs and Special Industries). Other personnel from the Treasury Department and the IRS participated in their development.

    List of Subjects in 26 CFR Part 25

    Gift taxes, Reporting and recordkeeping requirements.

    Proposed Amendments to the Regulations

    Accordingly, 26 CFR part 25 is proposed to be amended as follows:

    PART 25—GIFT TAX; GIFTS MADE AFTER DECEMBER 31, 1954 Paragraph 1. The authority citation for part 25 is amended by adding entries in numerical order to read in part as follows: Authority:

    26 U.S.C. 7805. * * *

    Section 25.2701-2 also issued under 26 U.S.C. 2701(e).

    Section 25.2704-1 also issued under 26 U.S.C. 2704(a).

    Sections 25.2704-2 and 25.2704-3 also issued under 26 U.S.C. 2704(b).

    Par. 2. Section 25.2701-2 is amended as follows: 1. In paragraph (b)(5)(i), the first sentence is revised and five sentences are added before the last sentence. 2. Paragraph (b)(5)(iv) is added.

    The revision and additions read as follows:

    § 25.2701-2 Special valuation rules for applicable retained interests.

    (b) * * *

    (5) * * *

    (i) * * * For purposes of section 2701, a controlled entity is a corporation, partnership, or any other entity or arrangement that is a business entity within the meaning of § 301.7701-2(a) of this chapter controlled, immediately before a transfer, by the transferor, applicable family members, and/or any lineal descendants of the parents of the transferor or the transferor's spouse. The form of the entity determines the applicable test for control. For purposes of determining the form of the entity, any business entity described in § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) of this chapter, an S corporation within the meaning of section 1361(a)(1), and a qualified subchapter S subsidiary within the meaning of section 1361(b)(3)(B) is a corporation. For this purpose, a qualified subchapter S subsidiary is treated as a corporation separate from its parent corporation. In the case of any business entity that is not a corporation under these provisions, the form of the entity is determined under local law, regardless of how the entity is classified for federal tax purposes or whether it is disregarded as an entity separate from its owner for federal tax purposes. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, under whose laws the entity is created or organized. * * *

    (iv) Other business entities. In the case of any entity or arrangement that is not a corporation, partnership, or limited partnership, control means the holding of at least 50 percent of either the capital interests or the profits interests in the entity or arrangement. In addition, control means the holding of any equity interest with the ability to cause the liquidation of the entity or arrangement in whole or in part.

    Par. 3. Section 25.2701-8 is amended as follows: 1. The existing text is designated as paragraph (a). 2. The first sentence of newly designated paragraph (a) is revised and paragraph (b) is added.

    The revision and addition reads as follows:

    § 25.2701-8 Effective dates.

    (a) Except as provided in paragraph (b) of this section, §§ 25.2701-1 through 25.2701-4 and §§ 25.2701-6 and 25.2701-7 are effective as of January 28, 1992. * * *

    (b) The first six sentences of § 25.2701-2(b)(5)(i) and (iv) are effective on the date these regulations are published as final regulations in the Federal Register.

    Par. 4. Section 25.2704-1 is amended as follows: 1. In paragraph (a)(1), the first two sentences are revised and four sentences are added before the third sentence. 2. In paragraph (a)(2)(i), a sentence is added at the end. 3. Paragraph (a)(2)(iii) is removed. 4. Paragraphs (a)(2)(iv) through (vi) are redesignated as paragraphs (a)(2)(iii) through (v), respectively. 5. In newly designated paragraph (a)(2)(iii), a sentence is added before the third sentence. 6. Paragraph (a)(4) is revised. 7. Paragraph (a)(5) is added. 8. In paragraph (c)(1), the second sentence is revised and a sentence is added at the end. 9. Paragraph (c)(2)(i)(B) is revised. 10. In paragraph (f) Example 4, the third and fourth sentences are revised and a sentence is added at the end. 11. In paragraph (f) Example 6, the third sentence is removed. 12. In paragraph (f) Example 7, the third and fourth sentences are revised and a sentence is added at the end.

    The revisions and additions read as follows:

    § 25.2704-1 Lapse of certain rights.

    (a) * * *

    (1) * * * For purposes of subtitle B (relating to estate, gift, and generation-skipping transfer taxes), the lapse of a voting or a liquidation right in a corporation or a partnership (an entity), whether domestic or foreign, is a transfer by the individual directly or indirectly holding the right immediately prior to its lapse (the holder) to the extent provided in paragraphs (b) and (c) of this section. This section applies only if the entity is controlled by the holder and/or members of the holder's family immediately before and after the lapse. For purposes of this section, a corporation is any business entity described in § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) of this chapter, an S corporation within the meaning of section 1361(a)(1), and a qualified subchapter S subsidiary within the meaning of section 1361(b)(3)(B). For this purpose, a qualified subchapter S subsidiary is treated as a corporation separate from its parent corporation. A partnership is any other business entity within the meaning of § 301.7701-2(a) of this chapter regardless of how that entity is classified for federal tax purposes. Thus, for example, the term partnership includes a limited liability company that is not an S corporation, whether or not it is disregarded as an entity separate from its owner for federal tax purposes. * * *

    (2) * * *

    (i) * * * For purposes of determining whether the group consisting of the holder, the holder's estate and members of the holder's family control the entity, a member of the group is also treated as holding any interest held indirectly by such member through a corporation, partnership, trust, or other entity under the rules contained in § 25.2701-6.

    (iii) * * * In the case of a limited liability company, the right of a member to participate in company management is a voting right. * * *

    (4) Source of right or lapse. A voting right or a liquidation right may be conferred by or lapse by reason of local law, the governing documents, an agreement, or otherwise. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, that governs voting or liquidation rights.

    (5) Assignee interests. A transfer that results in the restriction or elimination of the transferee's ability to exercise the voting or liquidation rights that were associated with the interest while held by the transferor is a lapse of those rights. For example, the transfer of a partnership interest to an assignee that neither has nor may exercise the voting or liquidation rights of a partner is a lapse of the voting and liquidation rights associated with the transferred interest.

    (c) * * *

    (1) * * * Except as otherwise provided, a transfer of an interest occurring more than three years before the transferor's death that results in the lapse of a voting or liquidation right is not subject to this section if the rights with respect to the transferred interest are not restricted or eliminated. * * * The lapse of a voting or liquidation right as a result of the transfer of an interest within three years of the transferor's death is treated as a lapse occurring on the transferor's date of death, includible in the gross estate pursuant to section 2704(a).

    (2) * * *

    (i) * * *

    (B) Ability to liquidate. Whether an interest can be liquidated immediately after the lapse is determined under the local law generally applicable to the entity, as modified by the governing documents of the entity, but without regard to any restriction (in the governing documents, applicable local law, or otherwise) described in section 2704(b) and the regulations thereunder. The manner in which the interest may be liquidated is irrelevant for this purpose, whether by voting, taking other action authorized by the governing documents or applicable local law, revising the governing documents, merging the entity with an entity whose governing documents permit liquidation of the interest, terminating the entity, or otherwise. For purposes of making this determination, an interest held by a person other than a member of the holder's family (a nonfamily-member interest) may be disregarded. Whether a nonfamily-member interest is disregarded is determined under § 25.2704-3(b)(4), applying that section as if, by its terms, it also applies to the question of whether the holder (or the holder's estate) and members of the holder's family may liquidate an interest immediately after the lapse.

    (f) * * *

    Example 4.

    * * * More than three years before D's death, D transfers one-half of D's stock in equal shares to D's three children (14 percent each). Section 2704(a) does not apply to the loss of D's ability to liquidate Y because the voting rights with respect to the transferred shares are not restricted or eliminated by reason of the transfer, and the transfer occurs more than three years before D's death. However, had the transfers occurred within three years of D's death, the transfers would have been treated as the lapse of D's liquidation right occurring at D's death.

    Example 7.

    * * * More than three years before D's death, D transfers 30 shares of common stock to D's child. The transfer is not a lapse of a liquidation right with respect to the common stock because the voting rights that enabled D to liquidate prior to the transfer are not restricted or eliminated, and the transfer occurs more than three years before D's death. * * * However, had the transfer occurred within three years of D's death, the transfer would have been treated as the lapse of D's liquidation right with respect to the common stock occurring at D's death.

    Par. 5. Section 25.2704-2 is amended as follows: 1. Paragraphs (a) and (b) are revised. 2. Paragraphs (c) and (d) are designated as paragraphs (e) and (g), respectively. 3. New paragraphs (c), (d), and (f) are added. 4. The first sentence of newly designated paragraph (e) is revised. 5. The third sentences of newly designated paragraph (g) Example 1. and Example 3. are removed. 6. The third sentence of newly designated paragraph (g) Example 5. is revised.

    The revisions and additions read as follows:

    § 25.2704-2 Transfers subject to applicable restrictions.

    (a) In general. For purposes of subtitle B (relating to estate, gift, and generation-skipping transfer taxes), if an interest in a corporation or a partnership (an entity), whether domestic or foreign, is transferred to or for the benefit of a member of the transferor's family, and the transferor and/or members of the transferor's family control the entity immediately before the transfer, any applicable restriction is disregarded in valuing the transferred interest. For purposes of this section, a corporation is any business entity described in § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) of this chapter, an S corporation within the meaning of section 1361(a)(1), and a qualified subchapter S subsidiary within the meaning of section 1361(b)(3)(B). For this purpose, a qualified subchapter S subsidiary is treated as a corporation separate from its parent corporation. A partnership is any other business entity within the meaning of § 301.7701-2(a) of this chapter, regardless of how that entity is classified for federal tax purposes. Thus, for example, the term partnership includes a limited liability company that is not an S corporation, whether or not it is disregarded as an entity separate from its owner for federal tax purposes.

    (b) Applicable restriction defined—(1) In general. The term applicable restriction means a limitation on the ability to liquidate the entity, in whole or in part (as opposed to a particular holder's interest in the entity), if, after the transfer, that limitation either lapses or may be removed by the transferor, the transferor's estate, and/or any member of the transferor's family, either alone or collectively. See § 25.2704-3 for restrictions on the ability to liquidate a particular holder's interest in the entity.

    (2) Source of limitation. An applicable restriction includes a restriction that is imposed under the terms of the governing documents (for example, the corporation's by-laws, the partnership agreement, or other governing documents), a buy-sell agreement, a redemption agreement, or an assignment or deed of gift, or any other document, agreement, or arrangement; and a restriction imposed under local law regardless of whether that restriction may be superseded by or pursuant to the governing documents or otherwise. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, that governs the applicability of the restriction. For an exception for restrictions imposed or required to be imposed by federal or state law, see paragraph (b)(4)(ii) of this section.

    (3) Lapse or removal of limitation. A restriction is an applicable restriction only to the extent that either the restriction by its terms will lapse at any time after the transfer, or the restriction may be removed after the transfer by any one or more members, either alone or collectively, of the group consisting of the transferor, the transferor's estate, and members of the transferor's family. For purposes of determining whether the ability to remove the restriction is held by any member(s) of this group, members are treated as holding the interests attributed to them under the rules contained in § 25.2701-6, in addition to interests held directly. The manner in which the restriction may be removed is irrelevant for this purpose, whether by voting, taking other action authorized by the governing documents or applicable local law, removing the restriction from the governing documents, revising the governing documents to override the restriction prescribed under local law in the absence of a contrary provision in the governing documents, merging the entity with an entity whose governing documents do not contain the restriction, terminating the entity, or otherwise.

    (4) Exceptions. A restriction described in this paragraph (b)(4) is not an applicable restriction.

    (i) Commercially reasonable restriction. An applicable restriction does not include a commercially reasonable restriction on liquidation imposed by an unrelated person providing capital to the entity for the entity's trade or business operations, whether in the form of debt or equity. An unrelated person is any person whose relationship to the transferor, the transferee, or any member of the family of either is not described in section 267(b), provided that for purposes of this section the term fiduciary of a trust as used in section 267(b) does not include a bank as defined in section 581 that is publicly held.

    (ii) Imposed by federal or state law. An applicable restriction does not include a restriction imposed or required to be imposed by federal or state law. For this purpose, federal or state law means the laws of the United States, of any state thereof, or of the District of Columbia, but does not include the laws of any other jurisdiction. A provision of law that applies only in the absence of a contrary provision in the governing documents or that may be superseded with regard to a particular entity (whether by the shareholders, partners, members and/or managers of the entity or otherwise) is not a restriction that is imposed or required to be imposed by federal or state law. A law that is limited in its application to certain narrow classes of entities, particularly those types of entities (such as family-controlled entities) most likely to be subject to transfers described in section 2704, is not a restriction that is imposed or required to be imposed by federal or state law. For example, a law requiring a restriction that may not be removed or superseded and that applies only to family-controlled entities that otherwise would be subject to the rules of section 2704 is an applicable restriction. In addition, a restriction is not imposed or required to be imposed by federal or state law if that law also provides (either at the time the entity was organized or at some subsequent time) an optional provision that does not include the restriction or that allows it to be removed or overridden, or that provides a different statute for the creation and governance of that same type of entity that does not mandate the restriction, makes the restriction optional, or permits the restriction to be superseded, whether by the entity's governing documents or otherwise. For purposes of determining the type of entity, there are only three types of entities, specifically, the three categories of entities described in § 25.2701-2(b)(5): Corporations; partnerships (including limited partnerships); and other business entities.

    (iii) Certain rights under section 2703. An option, right to use property, or agreement that is subject to section 2703 is not an applicable restriction.

    (iv) Put right of each holder. Any restriction that otherwise would constitute an applicable restriction under this section will not be considered an applicable restriction if each holder of an interest in the entity has a put right as described in § 25.2704-3(b)(6).

    (c) Other definitions. For the definition of the term controlled entity, see § 25.2701-2(b)(5). For the definition of the term member of the family, see § 25.2702-2(a)(1).

    (d) Attribution. An individual, the individual's estate, and members of the individual's family are treated as also holding any interest held indirectly by such person through a corporation, partnership, trust, or other entity under the rules contained in § 25.2701-6.

    (e) * * * If an applicable restriction is disregarded under this section, the fair market value of the transferred interest is determined under generally applicable valuation principles as if the restriction (whether in the governing documents, applicable law, or both) does not exist. * * *

    (f) Certain transfers at death to multiple persons. Solely for purposes of section 2704(b), if part of a decedent's interest in an entity includible in the gross estate passes by reason of death to one or more members of the decedent's family and part of that includible interest passes to one or more persons who are not members of the decedent's family, and if the part passing to the members of the decedent's family is to be valued pursuant to paragraph (e) of this section, then that part is treated as a single, separate property interest. In that case, the part passing to one or more persons who are not members of the decedent's family is also treated as a single, separate property interest. See paragraph (g) Ex. 4 of § 25.2704-3.

    (g) * * *

    Example 5.

    * * * The preferred stock carries a right to liquidate X that cannot be exercised until 1999. * * *

    § 25.2704-3 [Redesignated as § 25.2704-4]
    Par. 6. Section 25.2704-3 is redesignated as § 25.2704-4. Par. 7. New § 25.2704-3 is added to read as follows.
    § 25.2704-3 Transfers subject to disregarded restrictions.

    (a) In general. For purposes of subtitle B (relating to estate, gift and generation-skipping transfer taxes), and notwithstanding any provision of § 25.2704-2, if an interest in a corporation or a partnership (an entity), whether domestic or foreign, is transferred to or for the benefit of a member of the transferor's family, and the transferor and/or members of the transferor's family control the entity immediately before the transfer, any restriction described in paragraph (b) of this section is disregarded, and the transferred interest is valued as provided in paragraph (f) of this section. For purposes of this section, a corporation is any business entity described in § 301.7701-2(b)(1), (3), (4), (5), (6), (7), or (8) of this chapter, an S corporation within the meaning of section 1361(a)(1), and a qualified subchapter S subsidiary within the meaning of section 1361(b)(3)(B). For this purpose, a qualified subchapter S subsidiary is treated as a corporation separate from its parent corporation. A partnership is any other business entity within the meaning of § 301.7701-2(a) of this chapter, regardless of how that entity is classified for federal tax purposes. Thus, for example, the term partnership includes a limited liability company that is not an S corporation, whether or not it is disregarded as an entity separate from its owner for federal tax purposes.

    (b) Disregarded restrictions defined—(1) In general. The term disregarded restriction means a restriction that is a limitation on the ability to redeem or liquidate an interest in an entity that is described in any one or more of paragraphs (b)(1)(i) through (iv) of this section, if the restriction, in whole or in part, either lapses after the transfer or can be removed by the transferor or any member of the transferor's family (subject to paragraph (b)(4) of this section), either alone or collectively.

    (i) The provision limits or permits the limitation of the ability of the holder of the interest to compel liquidation or redemption of the interest.

    (ii) The provision limits or permits the limitation of the amount that may be received by the holder of the interest on liquidation or redemption of the interest to an amount that is less than a minimum value. The term minimum value means the interest's share of the net value of the entity determined on the date of liquidation or redemption. The net value of the entity is the fair market value, as determined under section 2031 or 2512 and the applicable regulations, of the property held by the entity, reduced by the outstanding obligations of the entity. Solely for purposes of determining minimum value, the only outstanding obligations of the entity that may be taken into account are those that would be allowable (if paid) as deductions under section 2053 if those obligations instead were claims against an estate. For example, and subject to the foregoing limitation on outstanding obligations, if the entity holds an operating business, the rules of § 20.2031-2(f)(2) or § 20.2031-3 of this chapter apply in the case of a testamentary transfer and the rules of § 25.2512-2(f)(2) or § 25.2512-3 apply in the case of an inter vivos transfer. The minimum value of the interest is the net value of the entity multiplied by the interest's share of the entity. For this purpose, the interest's share is determined by taking into account any capital, profits, and other rights inherent in the interest in the entity. If the property held by the entity directly or indirectly includes an interest in another entity, and if a transfer of an interest in that other entity by the same transferor (had that transferor owned the interest directly) would be subject to section 2704(b), then the entity will be treated as owning a share of the property held by the other entity, determined and valued in accordance with the provisions of section 2704(b) and the regulations thereunder.

    (iii) The provision defers or permits the deferral of the payment of the full amount of the liquidation or redemption proceeds for more than six months after the date the holder gives notice to the entity of the holder's intent to have the holder's interest liquidated or redeemed.

    (iv) The provision authorizes or permits the payment of any portion of the full amount of the liquidation or redemption proceeds in any manner other than in cash or property. Solely for this purpose, except as provided in the following sentence, a note or other obligation issued directly or indirectly by the entity, by one or more holders of interests in the entity, or by a person related to either the entity or any holder of an interest in the entity, is deemed not to be property. In the case of an entity engaged in an active trade or business, at least 60 percent of whose value consists of the non-passive assets of that trade or business, and to the extent that the liquidation proceeds are not attributable to passive assets within the meaning of section 6166(b)(9)(B), such proceeds may include such a note or other obligation if such note or other obligation is adequately secured, requires periodic payments on a non-deferred basis, is issued at market interest rates, and has a fair market value on the date of liquidation or redemption equal to the liquidation proceeds. See § 25.2512-8. For purposes of this paragraph (b)(1)(iv), a related person is any person whose relationship to the entity or to any holder of an interest in the entity is described in section 267(b), provided that for this purpose the term fiduciary of a trust as used in section 267(b) does not include a bank as defined in section 581 that is publicly held.

    (2) Source of limitation. A disregarded restriction includes a restriction that is imposed under the terms of the governing documents (for example, the corporation's by-laws, the partnership agreement, or other governing documents), a buy-sell agreement, a redemption agreement, or an assignment or deed of gift, or any other document, agreement, or arrangement; and a restriction imposed under local law regardless of whether that restriction may be superseded by or pursuant to the governing documents or otherwise. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, which governs the applicability of the restriction. For an exception for restrictions imposed or required to be imposed by federal or state law, see paragraph (b)(5)(iii) of this section.

    (3) Lapse or removal of limitation. A restriction is a disregarded restriction only to the extent that the restriction either will lapse by its terms at any time after the transfer or may be removed after the transfer by any one or more members, either alone or collectively, of the group consisting of the transferor, the transferor's estate, and members of the transferor's family. For purposes of determining whether the ability to remove the restriction is held by any one or more members of this group, members are treated as holding interests attributed to them under the rules contained in § 25.2701-6, in addition to interests held directly. See also paragraph (b)(4) of this section. The manner in which the restriction may be removed is irrelevant for this purpose, whether by voting, taking other action authorized by the governing documents or applicable local law, removing the restriction from the governing documents, revising the governing documents to override the restriction prescribed under local law in the absence of a contrary provision in the governing documents, merging the entity with an entity whose governing documents do not contain the restriction, terminating the entity, or otherwise.

    (4) Certain interests held by nonfamily members disregarded—(i) In general. In the case of a transfer to or for the benefit of a member of the transferor's family, for purposes of determining whether the transferor (or the transferor's estate) or any member of the transferor's family, either alone or collectively, may remove a restriction within the meaning of this paragraph (b), an interest held by a person other than a member of the transferor's family (a nonfamily-member interest) is disregarded unless all of the following are satisfied:

    (A) The interest has been held by the nonfamily member for at least three years immediately before the transfer;

    (B) On the date of the transfer, in the case of a corporation, the interest constitutes at least 10 percent of the value of all of the equity interests in the corporation, and, in the case of a business entity within the meaning of § 301.7701-2(a) of this chapter other than a corporation, the interest constitutes at least a 10-percent interest in the business entity, for example, a 10-percent interest in the capital and profits of a partnership;

    (C) On the date of the transfer, in the case of a corporation, the total of the equity interests in the corporation held by shareholders who are not members of the transferor's family constitutes at least 20 percent of the value of all of the equity interests in the corporation, and, in the case of a business entity within the meaning of § 301.7701-2(a) of this chapter other than a corporation, the total interests in the entity held by owners who are not members of the transferor's family is at least 20 percent of all the interests in the entity, for example, a 20-percent interest in the capital and profits of a partnership; and

    (D) Each nonfamily member, as owner, has a put right as described in paragraph (b)(6) of this section.

    (ii) Effect of disregarding a nonfamily-member interest. If a nonfamily-member interest is disregarded under this section, the rules of this section are applied as if all interests other than disregarded nonfamily-member interests constitute all of the interests in the entity.

    (iii) Attribution. In applying the 10-percent and 20-percent tests when the property held by the corporation or other business entity is, in whole or in part, an interest in another entity, the attribution rules of paragraph (d) of this section apply both in determining the interest held by a nonfamily member, and in measuring the interests owned through other entities.

    (5) Exceptions. A restriction described in this paragraph (b)(5) is not a disregarded restriction.

    (i) Applicable restriction. A disregarded restriction does not include an applicable restriction on the liquidation of the entity as defined in and governed by § 25.2704-2.

    (ii) Commercially reasonable restriction. A disregarded restriction does not include a commercially reasonable restriction on liquidation imposed by an unrelated person providing capital to the entity for the entity's trade or business operations whether in the form of debt or equity. An unrelated person is any person whose relationship to the transferor, the transferee, or any member of the family of either is not described in section 267(b), provided that for purposes of this section the term fiduciary of a trust as used in section 267(b) does not include a bank as defined in section 581 that is publicly held.

    (iii) Requirement of federal or state law. A disregarded restriction does not include a restriction imposed or required to be imposed by federal or state law. For this purpose, federal or state law means the laws of the United States, of any state thereof, or of the District of Columbia, but does not include the laws of any other jurisdiction. A provision of law that applies only in the absence of a contrary provision in the governing documents or that may be superseded with regard to a particular entity (whether by the shareholders, partners, members and/or managers of the entity or otherwise) is not a restriction that is imposed or required to be imposed by federal or state law. A law that is limited in its application to certain narrow classes of entities, particularly those types of entities (such as family-controlled entities) most likely to be subject to transfers described in section 2704, is not a restriction that is imposed or required to be imposed by federal or state law. For example, a law requiring a restriction that may not be removed or superseded and that applies only to family-controlled entities that otherwise would be subject to the rules of section 2704 is a disregarded restriction. In addition, a restriction is not imposed or required to be imposed by federal or state law if that law also provides (either at the time the entity was organized or at some subsequent time) an optional provision that does not include the restriction or that allows it to be removed or overridden, or that provides a different statute for the creation and governance of that same type of entity that does not mandate the restriction, makes the restriction optional, or permits the restriction to be superseded, whether by the entity's governing documents or otherwise. For purposes of determining the type of entity, there are only three types of entities, specifically, the three categories of entities described in § 25.2701-2(b)(5): Corporations; partnerships (including limited partnerships); and other business entities.

    (iv) Certain rights described in section 2703. An option, right to use property, or agreement that is subject to section 2703 is not a restriction for purposes of this paragraph (b).

    (v) Right to put interest to entity. Any restriction that otherwise would constitute a disregarded restriction under this section will not be considered a disregarded restriction if each holder of an interest in the entity has a put right as described in paragraph (b)(6) of this section.

    (6) Put right. The term put right means a right, enforceable under applicable local law, to receive from the entity or from one or more other holders, on liquidation or redemption of the holder's interest, within six months after the date the holder gives notice of the holder's intent to withdraw, cash and/or other property with a value that is at least equal to the minimum value of the interest determined as of the date of the liquidation or redemption. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, that governs liquidation or redemption rights with regard to interests in the entity. For purposes of this paragraph (b)(6), the term other property does not include a note or other obligation issued directly or indirectly by the entity, by one or more holders of interests in the entity, or by one or more persons related either to the entity or to any holder of an interest in the entity. However, in the case of an entity engaged in an active trade or business, at least 60 percent of whose value consists of the non-passive assets of that trade or business, and to the extent that the liquidation proceeds are not attributable to passive assets within the meaning of section 6166(b)(9)(B), the term other property does include a note or other obligation if such note or other obligation is adequately secured, requires periodic payments on a non-deferred basis, is issued at market interest rates, and has a fair market value on the date of liquidation or redemption equal to the liquidation proceeds. See § 25.2512-8. The minimum value of the interest is the interest's share of the net value of the entity, as defined in paragraph (b)(1)(ii) of this section.

    (c) Other definitions. For the definition of the term controlled entity, see § 25.2701-2(b)(5). For the definition of the term member of the family, see § 25.2702-2(a)(1).

    (d) Attribution. An individual, the individual's estate, and members of the individual's family, as well as any other person, also are treated as holding any interest held indirectly by such person through a corporation, partnership, trust, or other entity under the rules contained in § 25.2701-6.

    (e) Certain transfers at death to multiple persons. Solely for purposes of section 2704(b), if part of a decedent's interest in an entity includible in the gross estate passes by reason of death to one or more members of the decedent's family and part of that includible interest passes to one or more persons who are nonfamily members of the decedent, and if the part passing to the members of the decedent's family is to be valued pursuant to paragraph (f) of this section, then that part is treated as a single, separate property interest. In that case, the part passing to one or more persons who are not members of the decedent's family is also treated as a single, separate property interest. See paragraph (g) Example 4 of this section.

    (f) Effect of disregarding a restriction. If a restriction is disregarded under this section, the fair market value of the transferred interest is determined under generally applicable valuation principles as if the disregarded restriction does not exist in the governing documents, local law, or otherwise. For this purpose, local law is the law of the jurisdiction, whether domestic or foreign, under which the entity is created or organized.

    (g) Examples. The following examples illustrate the provisions of this section.

    Example 1.

    (i) D and D's children, A and B, are partners in Limited Partnership X that was created on July 1, 2016. D owns a 98 percent limited partner interest, and A and B each own a 1 percent general partner interest. The partnership agreement provides that the partnership will dissolve and liquidate on June 30, 2066, or by the earlier agreement of all the partners, but otherwise prohibits the withdrawal of a limited partner. Under applicable local law, a limited partner may withdraw from a limited partnership at the time, or on the occurrence of events, specified in the partnership agreement. Under the partnership agreement, the approval of all partners is required to amend the agreement. None of these provisions is mandated by local law. D transfers a 33 percent limited partner interest to A and a 33 percent limited partner interest to B.

    (ii) By prohibiting the withdrawal of a limited partner, the partnership agreement imposes a restriction on the ability of a partner to liquidate the partner's interest in the partnership that is not required to be imposed by law and that may be removed by the transferor and members of the transferor's family, acting collectively, by agreeing to amend the partnership agreement. Therefore, under section 2704(b) and paragraph (a) of this section, the restriction on a limited partner's ability to liquidate that partner's interest is disregarded in determining the value of each transferred interest. Accordingly, the amount of each transfer is the fair market value of the 33 percent limited partner interest determined under generally applicable valuation principles taking into account all relevant factors affecting value including the rights determined under the governing documents and local law and assuming that the disregarded restriction does not exist in the governing documents, local law, or otherwise. See paragraphs (b)(1)(i) and (f) of this section.

    Example 2.

    The facts are the same as in Example 1, except that, both before and after the transfer, A's partnership interests are held in an irrevocable trust of which A is the sole income beneficiary. The trustee is a publicly-held bank. A is treated as holding the interests held by the trust under the rules contained in § 25.2701-6. The result is the same as in Example 1.

    Example 3.

    The facts are the same as in Example 1, except that, on D's subsequent death, D's remaining 32 percent limited partner interest passes outright to D's surviving spouse, S, who is a U.S. citizen. In valuing the 32 percent interest for purposes of determining both the amount includible in the gross estate and the amount allowable as a marital deduction, the analysis and result are as described in Example 1.

    Example 4.

    (i) The facts are the same as in Example 1, except that D made no gifts and, on D's subsequent death pursuant to D's will, a 53 percent limited partner interest passes to D's surviving spouse who is a U.S. citizen, a 25 percent limited partner interest passes to C, an unrelated individual, and a 20 percent limited partner interest passes to E, a charity. The restriction on a limited partner's ability to liquidate that partner's interest is a disregarded restriction. In determining whether D's estate and/or D's family may remove the disregarded restriction after the transfer occurring on D's death, the interests of C and E are disregarded because these interests were not held by C and E for at least three years prior to D's death, nor do C and E have the right to withdraw on six months' notice and receive their respective interest's share of the minimum value of X. Thus, the 53 percent interest passing to D's surviving spouse is subject to section 2704(b). D's gross estate will be deemed to include two separate assets: A 53 percent limited partner interest subject to section 2704(b), and a 45 percent limited pa