Federal Register Vol. 81, No.159,

This rule is issued under Marketing Order No. 981, as amended (7 CFR part 981), regulating the handling of almonds grown in California, hereinafter referred to as the “order.” The order is effective under the Agricultural Marketing Agreement Act of 1937, as amended (7 U.S.C. 601-674), hereinafter referred to as the “Act.”

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

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

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

This rule implements a recommendation from the Almond Board of California (Board) to change the quality control requirements currently prescribed under the order. This rule relaxes incoming quality requirements by increasing the inedible kernel tolerance from 0.50 percent to 2 percent. This relaxation would decrease California almond handler's disposition obligation. This will allow handlers more flexibility in their operations while continuing to maintain quality control. In addition, this change will ensure that the reporting and outgoing quality requirements of the order are met. The Board unanimously recommended this change at its April 12, 2016, meeting.

Section 981.42 of the almond marketing order provides authority for quality control regulations. Paragraph (a) of that section requires that almonds must be inspected prior to processing to determine the percentage of inedible kernels in each lot. Inedible kernels are defined in § 981.408. The Board, with the approval of the Secretary, may change the approved percentage of inedible kernels for any crop year. Inedible kernels in excess of the approved percentage of the kernel weight constitute the handlers' inedible disposition weight obligation. Handlers must satisfy their obligation by disposing of inedible kernels in Board-accepted, non-human outlets such as animal feed or oil.

Section 981.442(a)(4)(i) of the order's rules and regulations currently specifies that the weight of inedible kernels in excess of 0.50 percent of kernel weight shall constitute the handler's disposition obligation. Pursuant to § 981.442(a)(5), handlers must meet their disposition obligation by delivering inedible kernels to crushers, feed manufacturers, feeders, or dealers in nut wastes on record with the Board as accepted users.

In the past several years, the total inedible kernel percentages have been trending lower. This is partially due to good agricultural practices used by growers and better technologies in handler facilities. At the same time, the market value of almonds has increased significantly. As a result, some Board-accepted outlets have started to clean and repurpose the disposition obligation delivered by handlers. After the inedible disposition is delivered to Board-accepted outlets, these accepted outlets provide to the Board a record of disposition receipt, which indicates what was received by the accepted outlet from handlers and how the accepted outlet disposed of the inedible disposition. However, such record of disposition receipt does not indicate whether the almonds have been pasteurized or treated for human consumption. Thus the action of repurposing has led to concern that the order's outgoing quality requirements are not being met.

By increasing the inedible kernel tolerance, handlers' disposition obligation will decrease or become zero, therefore reducing the quantity of product delivered to those specified outlets. This action will also provide handlers with more control over low quality product allowing one handler the flexibility to transfer the larger portion of low quality product to another handler for further cleaning. This action will require completion of an interhandler transfer form and help with traceability of low quality product. It also will help ensure that any product destined for human consumption was in compliance with the pertinent regulations under the order.

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

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

There are approximately 6,800 almond growers in the production area and approximately 100 handlers 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 whose annual receipts are less than $7,500,000 (13 CFR 121.201).

The National Agricultural Statistics Service (NASS) reported in its 2012 Agricultural Census that there were 6,841 almond farms in the production area (California), of which 6,204 had bearing acres. The following computation provides an estimate of the proportion of producers (farms) and agricultural service firms (handlers) that would be considered small under the SBA definitions.

The NASS Census data indicates that out of the 6,204 California farms with bearing acres of almonds, 4,471 (72 percent) have fewer than 100 bearing acres.

For the almond industry's most recently reported crop year (2014), NASS reported an average yield of 2,150 pounds per acre, and a season average grower price of $3.19 per pound. A 100-acre farm with an average yield of 2,150 pounds per acre would produce about 215,000 pounds of almonds. At $3.19 per pound, that farm's production would be valued at $685,850. Since Census of Agriculture indicates that the majority of California's almond farms are smaller than 100 acres, it could be concluded that the majority of growers had annual receipts from the sale of almonds in 2014-15 of less than $685,850, which is below the SBA threshold of $750,000. Thus, over 70 percent of California's almond growers would be considered small growers according to SBA's definition.

According to information supplied by the Board, approximately 30 percent of California's almond handlers shipped almonds valued under $7,500,000 during the 2014-15 crop year, and would, therefore, be considered small handlers according to the SBA definition.

This rule revises § 981.442(a)(4)(i) of the order's administrative rules and regulations regarding inedible kernel tolerance. Specifically, this action increases the inedible kernel tolerance from 0.50 percent to 2 percent, effectively decreasing handler's disposition obligation. Authority for this action is provided in § 981.42(a) of the order.

Regarding the impact of this action on affected entities, increasing the inedible kernel tolerance reduces disposition obligation on handlers and provides handlers with more flexibility and control over the poor quality product. This rule is not expected to change handler inspection costs, as handlers currently are required to have all lots inspected to determine the percentage of inedible kernels.

The Board considered alternatives to this action. It formed a taskforce to examine the current inedible program and investigate alternatives. The taskforce reviewed the program and recent data, surveyed handlers, and reported their findings to the Almond Quality and Food Safety Committee (Committee). Recent data showed that the overall inedible kernel percentages have been trending lower, regardless of crop size. Surveyed handlers who did not agree with the change raised the concern that increasing the tolerance could result in more poor quality almonds entering the market. The Committee discussed the concerns raised and concluded that changing the tolerance would give handlers more flexibility in maintaining quality. After discussing the taskforce's findings, the Committee unanimously recommended this increase in inedible tolerance to the Board.

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

This rule will not impose any additional reporting or recordkeeping requirements on either small or large almond handlers. As with all Federal marketing order programs, reports and forms are periodically reviewed to reduce information requirements and duplication by industry and public sector agencies.

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

In addition, USDA has not identified any relevant Federal rules that duplicate, overlap or conflict with this rule.

Further, the Board's meeting was widely publicized throughout the almond industry and all interested persons were invited to attend the meeting and participate in Board deliberations. Like all Board meetings, the April 12, 2016, meeting was a public meeting and all entities, both large and small, were able to express their views on this issue.

Also, the Board has a number of appointed committees to review certain issues and make recommendations to the Board. The Board's Almond Quality and Food Safety Committee met on April 5, 2016, and discussed this issue in detail. That meeting was also a public meeting, and both large and small entities were able to participate and express their views. Finally, interested persons are invited to submit comments on this interim rule, including the regulatory and informational impacts of this action on small businesses.

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

This rule invites comments on a change to the quality control requirements currently prescribed under the order. Any comments timely received will be considered prior to finalization of this rule.

After consideration of all relevant material presented, including the Board's recommendation, and other information, it is found that this interim rule, as hereinafter set forth, will tend to effectuate the declared policy of the Act.

Pursuant to 5 U.S.C. 553, it is also found and determined upon good cause that it is impracticable, unnecessary, and contrary to the public interest to give preliminary notice prior to putting this rule into effect and that good cause exists for not postponing the effective date of this rule until 30 days after publication in the Federal Register because: (1) This rule relaxes the current rules and regulations; (2) this rule should be in place in time for the beginning of the crop year on August 1; (3) the Board unanimously recommended these changes at a public meeting and interested parties had an opportunity to provide input; and (4) this rule provides a 60-day comment period and any comments timely received will be considered prior to finalization of this rule.

For the reasons set forth in the preamble, 7 CFR part 981 is amended as follows:

The U.S. Department of Energy (DOE) published a final rule in the Federal Register on July 25, 2016 (“the July 2016 final rule”) amending test procedures for ceiling fans. 81 FR 48619. This correction addresses an amendatory term error in that final rule. Specifically, the instructions amending appendix U to subpart B of part 430—Uniform Test Method for Measuring the Energy Consumption of Ceiling Fans, stated that appendix U is “added”. Since 10 CFR part 430 already includes appendix U, the instruction amending appendix U should use the amendatory term “revised.” This document corrects appendix U instructions to use the correct amendatory term “revised.”

This final rule is published in conjunction with the publication elsewhere in this issue of the Federal Register of a Department of State, Directorate of Defense Trade Controls final rule revising § 123.9(b)(1) of the ITAR. Both final rules are part of the President's Export Control Reform Initiative. This final rule is also part of Commerce's retrospective regulatory review plan under Executive Order (E.O.) 13563 (see below for availability of the plan).

Prior to the effective date of this final rule, the EAR required exporters to include a destination control statement (“DCS”), specified in § 758.6 (Destination control statement and other information furnished to consignees) of the EAR, on certain export control documents that accompanied a shipment for most exports. The purpose of the DCS was to alert parties outside the United States that receive the item that the item was subject to the EAR, the item was exported in accordance with the EAR, and that diversion contrary to U.S. law was prohibited.

Prior to the effective date of the State final rule, the ITAR, under § 123.9(b)(1), included the same type of DCS requirement, but with slightly different text than that which was required by the EAR. The purpose of the DCS requirements was the same under both sets of export control regulations. As a general principle of the Export Control Reform (ECR) effort, wherever the ITAR and EAR have provisions that are intended to achieve the same purpose, the U.S. Government will harmonize the corresponding provisions.

As was stated in the Commerce and State proposed rules, the DCS under the ITAR and the EAR were an example of requirements that could and should be harmonized to reduce the burden on exporters, improve compliance, and ensure that the regulations are achieving their intended purpose for use under the U.S. export control system, specifically under the transactions “subject to the ITAR” and “subject to the EAR.” This final rule is revising § 758.6 of the EAR to harmonize the DCS requirement text with § 123.9(b)(1) of the ITAR.

Under the existing provisions, both regulations have a mandatory DCS that must be on the export control documents for shipments that include items subject to those regulations. This had caused confusion to exporters as to which statement to include on such mixed shipments, or whether to include both. The harmonization of these statements in this final rule will ease the regulatory burden on exporters, which, based on the public comments described below and the additional changes made in the Commerce and State final rules in response to those comments, will further the objectives of the DCS requirements.

The change is also being made in this final rule to harmonize the two sets of regulations, the EAR and the ITAR, per the President's instructions. While the creation of a single export control list and licensing agency would require legislation, the President has directed BIS and the Directorate of Defense Trade Controls at the Department of State to undertake all available actions to prepare for consolidation as a single agency with a single set of regulations. Harmonization, to the extent possible, of the existing export control regulations is one important step for preparing both regulators and the regulated public for the work that will be needed to create such regulations.

The public comment period on the May 22, 2015, proposed rule (80 FR 29551) closed on July 6, 2015. BIS received 17 public comments on the EAR proposed rule. Most of the commenters sent the same comments to Commerce and State expressing their support or concerns regarding the DCS related provisions included in the Commerce and State proposed rules. There were slightly different points of emphasis that were specific to the Commerce and State proposed rules, but substantively the comments were not different in any meaningful way in what the commenters thought needed to be changed in order to achieve the stated objectives in the Commerce and State proposed rules. The following describes the public comments and BIS's responses. After making changes to what was proposed to address the public comments and better achieve the stated objectives, Commerce and State are concurrently publishing final rules to harmonize the DCS provisions under the EAR and ITAR. Commerce and State agree with the public commenters that, as proposed, the harmonization did not go far enough and in order to have true harmonization and achieve the stated objectives that additional harmonization was needed. In addition, certain clarifications and refinements of what was originally proposed were needed in order to clarify and alleviate perceived concerns, in particular for exporters of non-600 series and non-9x515 items under the EAR. Where BIS has made regulatory changes to address the public comments, a description of those changes is included beneath the respective public comments and BIS responses. BIS has made these regulatory changes to § 758.6 to address the public comments and to better achieve the stated objectives of the rule. The public comment process was helpful in identifying areas where changes needed to be made to fully achieve the intended objectives for the DCS for use under the EAR and the ITAR. The following are the BIS responses to the comments:

Comment 1: Several commenters were supportive of the plan to harmonize the DCS and noted the proposed changes: (1) Will minimize confusion as to which DCS must be used depending on the jurisdiction of item, (2) will exclude EAR and ITAR-specific text—meaning it can be used under both sets of regulations; and (3) will help to achieve the stated intent of the ECR initiative principles, which includes elimination of unnecessary export compliance burdens.

BIS response: BIS agrees. These commenters support that the key objectives of the rule have been met.

Comment 2: Expresses significant concern and requests clarification, but also wishes to note that in general supports BIS's efforts to harmonize the DCS and thereby reduce the burden on exporters, promote consistency, improve compliance, and ensure the regulations are achieving the intended purpose for use under the U.S. export control system.

BIS response: BIS was encouraged that even for the commenters that raised significant concerns about certain aspects of the proposed rule that most of these same commenters still supported the general objective of harmonization of the DCS under the EAR and ITAR. Once BIS made changes to address their concerns on certain aspects of the proposed rule, these commenters would likely fully support the final rule because they viewed harmonization of the DCS as a positive step and their support was only qualified because of certain aspects of the proposed rule, which BIS has addressed in this final rule, as described further below.

Comment 3: Proposed DCS language focuses too much on harmonizing the EAR's language with the ITAR's DCS. While this is a potentially positive outcome for companies involved in defense trade, this approach does not take into account non-military exporters and the nature of commercial transactions.

BIS response: BIS is addressing these concerns by defining some of the key terms used in the DCS as they are interpreted in the EAR context, including providing some specific application examples in this final rule. These changes will address the various concerns in this area that were raised by various commenters as it related to NLR shipments or multi-step transactions that consist of discrete controlled events (e.g., “exported” to a distributor as one discrete controlled event, and then a subsequent “reexport” as another discrete controlled event under the EAR). The proposed rule did not change any of the obligations of the parties to the transaction in these situations under the EAR, but the text of the DCS made some people worry how the DCS text would be applied in the EAR context, which BIS is addressing with some clarifying examples and defining how some of these key terms used in the DCS text is interpreted in the EAR context in this final rule. This final rule makes the following regulatory changes to address this public comment:

In § 758.6, addition of Note 1 to paragraph (a). This final rule adds Note 1 to paragraph (a) to clarify the term “authorized” includes exports, reexports and transfers (in-country) designated under No License Required (NLR), which was explained in the preamble of the proposed rule, but one commenter requested this be added to the regulatory text. In addition, several other commenters did not understand that in the context of paragraph (a) the term “authorized” also includes NLR. BIS agrees that specifying this for purposes of this section is helpful and therefore this final rule is adding the new Note to paragraph (a). Because NLR is specific to the EAR, no changes are being made to the ITAR's DCS to address this comment. Similarly, the Note 2 to paragraph (a) described in the next paragraph is specific to the application under the EAR, so no changes are being made in the ITAR rule to add similar clarifying notes.

In § 758.6, addition of Note 2 to paragraph (a). This final rule adds Note 2 to paragraph (a) to specify the phrase `country of ultimate destination' means the country specified on the commercial invoice where the ultimate consignee or end user will receive the items as an “export.” The term “export” is a long established and well understood term under the EAR, so the use of this term in Note 2 will assist exporters' understanding of the use of the phrase `country of ultimate destination” in the DCS requirements in the context of the EAR. This final rule provides two examples here for using Note 2 to paragraph (a) to determine the `country of ultimate destination.' Example 1: If the exporter is “exporting” directly to an end user, such as generally permitted pursuant to § 750.7(c)(1)(ix) under a BIS license, the commercial invoice must be provided to the end user, which in this scenario is in the `country of ultimate destination.' Example 2: If the exporter is exporting to an ultimate consignee, such as a distributor, the `country of ultimate destination' in these exports is the destination of the ultimate consignee. This was a major concern that several commenters raised on the proposed rule, in particular for exporters of non-600 series and non-9x515 items. The addition of Note 2 addresses those comments and will improve understanding of the DCS in the EAR.

Comment 4: We applaud the U.S. government's attempt to simplify and improve the export clearance process (export clearance process refers to the regulatory requirements that need to be followed under the EAR and ITAR at the time of export to clear the final steps in exporting an item, e.g., filing Electronic Export Information (EEI)); however, you are proposing changes that will require every organization that exports products from the U.S. to revise their systems, when the need is appropriate only for ITAR or EAR license-required 9x515 and 600-series shipments. The proposed changes will impose a regulatory burden on all U.S. exporters without any apparent enhancement to compliance; and increase the uncertainty among foreign recipients.

BIS response: BIS does not agree. There are benefits that this harmonization will bring for exporters of “600 series” (what the commenters refers to as defense exporters) and 9x515 items. However, all exporters will benefit from a reduction in the number of documents that the DCS needs to be placed on under the EAR and the ITAR. In addition, as was noted in the support for not requiring the DCS on transportation documents (such as the air waybill), the existing DCS provisions imposed a requirement on many transportation related documents that in many cases were not reaching the consignees for which the statement was intended. The EAR were imposing a requirement to place the DCS on transportation documents that, although important to a transaction, do not in most cases reach the ultimate consignee or end-user(s). Requirements that do not achieve their objectives should be revised or removed. The objectives of the DCS are to ensure that the statement reaches the ultimate destination and ultimate consignee and/or end-user(s) of the item. The DCS helps such parties understand that the items were exported under the U.S. export control system, so they will understand their responsibilities under the U.S. export control system. Ensuring that the DCS is placed on the document that has the greatest likelihood of reaching the parties that will ultimately receive and use the item is the best way to protect the interest of all parties that participate in exports that are subject to the EAR and ITAR. This includes exporters of non-600 series and non-9x515 items under the EAR. An effective DCS is important for protecting U.S. national security and foreign policy interests. Parties outside the United States that will receive and use an item that is “subject to the EAR” or “subject to the ITAR” must be aware that the item was exported to them under the U.S. export control system in order to be able to comply with the EAR or the ITAR.

Comment 5: Several commenters indicated the objectives of the proposed rule were achieved because of the following reasons: (1) Will eliminate confusion regarding which statement to use for shipments that include both items subject to the ITAR and items subject to the EAR, (2) incorporating the DCS into the commercial invoice will be much more likely to achieve the intended purpose of the DCS; and (3) having common text for the DCS will significantly simplify the export process.

BIS response: BIS agrees.

Comment 6: Better to create a second DCS for use with ITAR and “600 series” and mixed shipments.

BIS response: BIS disagrees. This suggestion would create unneeded complexity. The concerns raised by exporters of non-600 series and non-9x515 items can be addressed without creating separate forms for different types of items.

Comment 7: Harmonized text right step. But DCS requirements need to be identical to achieve the intended objective.

BIS response: BIS agrees. The intent was to have the DCS text be identical, so any slight differences are being harmonized. This final rule makes the following regulatory changes to address this public comment:

In § 758.6, introductory text of paragraph (a), this final rule makes a conforming edit for text used to ensure the text is the same under the EAR and ITAR DCS. In the first sentence of paragraph (a) introductory text, this final rule is removing the term “shall” and adding in its place the term “must.” This change is being made to harmonize the EAR text with the text used in the ITAR DCS rule. Commerce and State intended for these words to be the same, but the Commerce and State proposed rules differed, so BIS is making this change in the Commerce final rule. This inconsistency was identified in one of the comments, including the suggestion of adopting State's text because it was clearer regarding it being a requirement. BIS agrees.

Comment 8: There should be some way to ensure that this DCS information is communicated to all parties involved and not just to the first party the items will be exported to in the transaction. Often the export occurs to a sales agent/reseller in the foreign country who will first receive the shipment, but they may not be the actual end-user and may be in a country that is not the ultimate destination.

BIS response: BIS agrees. BIS has added text as described below to address such scenarios, along with also providing guidance on how the DCS provisions interact with other EAR provisions, which was noted by several other comments as a concern with potential overreach.

Comment 9: This appears to be a case of harmonization for the sake of harmonization, and would appear to have the potential to create substantial confusion among recipients, impose significant burdens without a correspondingly significant benefit to the government.

BIS response: BIS disagrees. Several other commenters noted the concern in particular over mixed shipments and that the objectives of the rule would be met. BIS disagrees that there would not be benefits to the United States Government. An effective U.S. export control system requires effective reexport controls, which at its most basic level means reexporters understand that an item is subject to U.S. reexport controls. Ensuring that the DCS actually goes out of the U.S. and reaches the parties that will receive the items is key to the United States Government's ability to achieve its objectives in this area with the DCS.

Comment 10: Statement that commercial invoice and contractual documentation would be most likely to travel with shipment not necessarily correct.

BIS response: BIS disagrees. For the commercial invoice, several other commenters disagreed with this commenter's assertion. Requiring the DCS on contractual documentation was not adopted in this final rule, so that part of the comment is no longer applicable.

Comment 11: Single DCS statement will make it easier to automate because the same DCS will be used for EAR and ITAR shipments.

BIS response: BIS agrees.

Comment 12: Changes to the DCS can be costly because it requires recoding the logic for each enterprise resource planning (ERP) system printing the DCS in the export control documentation. Some companies may have several different ERPs, which further increases the burden.

BIS response: The delayed effective date is intended to ease this initial burden of transitioning to the new DCS, which BIS expects will subside quickly and that over the mid to long term the DCS text will ease the burden. BIS acknowledges that there will be a minimal one-time burden on exporters as they need to update the DCS text on an existing document that already requires the DCS, but BIS expects this to be a one-time cost, not a recurring one. The delayed effective date of 90 days will also ease the cost on exporters who have already pre-printed the DCS on their commercial invoice documents by allowing such exporters to use that remaining stock of commercial invoices during the transition period prior to the effective date. In addition, several commenters noted that their systems are set up to prepopulate the commercial invoice, so limiting the requirement to the commercial invoice should ease the burden significantly. Current EAR DCS requirements already extend to the invoice (which has the same meaning as commercial invoice), so exporters' ERP systems should already be set up for this requirement and the extent of the change is limited to updating the text of the statement. Not adopting the proposed requirement to include the DCS on the contractual documentation will significantly reduce the amount of changes needed to ERP systems. This commenter also wanted the ability to continue to include the DCS on the shipping documents. Nothing in the final rule would prohibit continuing that practice, which will also reduce the number of changes needed to ERP systems, except for updating the text used.

Comment 13: Extending to intangible exports would create a significant burden.

BIS Response: BIS agrees. BIS has added changes in this final rule to clarify the EAR DCS is only required on the items exported in tangible form. This final rule makes the following regulatory changes to address this public comment:

In § 758.6, introductory text of paragraph (a), this final rule clarifies that paragraph (a) applies only to items shipped, i.e., exported in tangible form. As discussed above in response to the public comments, several commenters were concerned that the use of the defined term “export” would be a significant expansion of the DCS requirement by requiring the DCS for tangible as well as intangible exports. BIS had intended this broader scope when using the term “export,” instead of the undefined term shipment, in the proposed rule. However, in reviewing the public comments and in discussing the practice under the ITAR, BIS accepts the public comments on the Commerce rule to clarify that the scope of the DCS requirement only applies to items on the Commerce Control List that are shipped (exported in tangible form). Therefore, this final rule adopts in paragraph (a)(1) the term “shipped (i.e., exported in tangible form)” rather than the term “export.”

In § 758.6, paragraph (a)(2), this final rule removes the term “exported” and adds in its place the phrase “shipped (i.e., exported in tangible form).” This clarification is made for the same reasons why, as described above, the similar changes were made to paragraph (a)(1) in response to public comments.

Comment 14: Large and small exporters will incur costs that are dependent on size, but significant in any case. Large exporters will have to retool their ERP systems to collect information they are not presently collecting (e.g., end-user) and insert it into documents they do not currently generate with a DCS.

BIS response: The commenter is concerned about having to account for changes in the ERP system, but this concern is not warranted because the proposed rule did not change any of the obligations of the parties to the transaction in these situations under the EAR. BIS is clarifying that these obligations of the parties to the transactions will not change, which also addresses the ERP changes concern. These concerns about the extent of changes required to the ERP systems were based on an incorrect understanding that the obligations of the parties to the transactions were also proposed to change in addition to the DCS proposed changes. As discussed elsewhere in this final rule, BIS is clarifying that this is not the case.

Comment 15: There is no justification for requiring the inclusion of the new DCS on documentation associated with NLR exports, as such exports require no authorization from the U.S. Government. Such a requirement would be unnecessarily burdensome and should be eliminated.

BIS response: BIS disagrees. The requirement to include the DCS for most NLR shipments is an existing EAR DCS requirement. An item that can be exported NLR to one country or one end user or end use may require an EAR license for subsequent transfers (in-country) or reexports. For example, NS1, RS1, or MT1 controlled items could go NLR to Canada, but would be subject to a worldwide license requirement for any subsequent reexport. Further, there are certain persons in Canada on the Entity List who are subject to a license requirement for all items subject to the EAR, including a license requirement for transfers (in-country). Merely because the initial export can be made under the NLR designation does not preclude that subsequent reexporters or transfers (in-country) will require a license. Accordingly, no new burden is being imposed because the existing DCS requirements require it for NLR designated shipments and the policy rationale for why a DCS is needed for NLR shipments has not changed.

Comment 16: Proposed rulemaking requires a DCS to be included whenever any item on the CCL is exported. Because exports are defined to include both tangible and intangible transfers, this requirement can be construed to require the DCS to be included on both physical shipments as well as intangible transfers (e.g., when software is downloaded). They propose that the requirements should be limited to physical (tangible) exports only.

BIS response: BIS agrees. BIS has made changes in this final rule to clarify the DCS only applies to shipments (exports in tangible form). This final rule makes the following regulatory changes to address this public comment:

In § 758.6, paragraph (a)(1), this final rule removes an unneeded phrase. Specifically, this final rule removes at the beginning of paragraph (a)(1) the phrase “For any item on the Commerce Control List being exported” because the text is not needed. The text is not needed because the same text is already stated in the introductory text of paragraph (a). This will shorten and simplify the text of paragraph (a)(1) without changing the requirements of this paragraph, or the requirements specified in paragraph (a)(2).

Comment 17: Clarifying that the DCS provisions are limited to shipments (tangible exports).

BIS response: After reviewing the public comments, this final rule limits the requirement to shipments, i.e., tangible exports, but notes that when a commercial invoice does exist for intangible exports that BIS recommends as a good compliance practice to include a DCS or other export control related information that may be relevant.

Comment 18: Retain the phrase “excluding EAR99 items” in the text of § 758.6 for maximum clarity.

BIS response: BIS agrees. This final rule makes the following regulatory changes to address this public comment:

In § 758.6, introductory text of paragraph (a), this final rule clarifies that items designated as EAR99 do not require a DCS. The proposed rule in the preamble explained that items designated as EAR99 did not require the DCS, and several of the public commenters agreed. However, some of the commenters suggested that this clarification also needed to be added to the regulatory text in paragraph (a)(1). BIS believes the reference in the text of paragraph (a) to “items on the Commerce Control List” already clarifies that the requirement would not extend to items designated as EAR99. However, BIS does agree with the commenters that for people not familiar with the EAR, such as certain foreign purchasers or consignees that would be receiving commercial invoices with this DCS, that this nuance of the Commerce Control List may not be well understood and could lead to misunderstanding. BIS agrees that although the text may be slightly redundant that it will be helpful in particular for those not as familiar to the EAR, so the final rule is adding the phrase “or the item is designated as EAR99” to the introductory text of paragraph (a) to clarify items designated as EAR99 do not require a DCS.

Comment 19: Clarify whether the use of the term “end-user” in the proposed language implies the creation of a new regulatory requirement to identify all potential end-users on all documents for which a DCS is required.

BIS response: The term “end user” does not create a new regulatory requirement. This final rule makes the following regulatory changes to address this public comment:

In § 758.6, paragraph (a)(1), this final rule removes the term “specified” before the phrase “country of ultimate destination.” The use of the term “specified,” raised concerns for several of the commenters regarding whether the inclusion of this term would change other obligations of the parties to the transaction in these situations under the EAR for how exports are treated, in particular for subsequent reexports or transfers (in-country). BIS did not intend to change the obligations of the parties to the transaction in these situations under the EAR. In order to address these concerns, BIS has removed the term “specified.” BIS, to address the public comments in this area, in particular misunderstandings for how the text of paragraph (a)(1) would be applied in the EAR context, is including Note 2 to paragraph (a)(1) to clarify the application of the phrase “country of ultimate destination,” along with adding two other notes for paragraph (a)(1) to address misunderstandings for how paragraph (a)(1) would be applied in the EAR context.

In § 758.6, paragraph (a)(1), this final rule is also adding the term “ultimate consignee” before the term “end-user,” along with making the term “end-user” plural by adding an “s” to clarify that the requirement applies to the “ultimate consignee” or “end-user(s).” This final rule did not adopt the term “or consignee” that followed the term “end-user” in the proposed rule. Certain commenters requested clarification regarding to which consignees the requirement specified in paragraph (a)(1) was intended to apply, which the more specific text of “ultimate consignee or end-user(s)” addresses. To achieve the objectives of the DCS, the commercial invoice must be provided to those two types of consignees: ultimate consignee and end-user(s), as applicable.

Comment 20: Commercial invoice and shipping documents currently in most cases do not include end users.

BIS response: BIS is aware of this, but the commercial invoice is still deemed to be the most appropriate document to achieve the objectives of the DCS. BIS will be adding FAQs to the BIS Web site to provide additional application guidance on applying the DCS in different scenarios.

Comment 21: Insert the phrase “ultimate consignee or” before the term end user.

BIS response: BIS accepts this suggestion which may mitigate the concerns people have with needing to include the end user on every document that requires the DCS.

Comment 22: Delete the term “ultimate” before the term “destination” and delete the term “ultimate end user.”

BIS response: BIS will delete the term ultimate before those two terms.

Comment 23: Clarify the application of the DCS text in the EAR context as it relates to other EAR provisions, such as shipments to distributors and NLR and multi-step shipments.

BIS response: Many of the commenters that raised concerns regarding the burden or other major concerns were focused on how the DCS text seemed more appropriate for the ITAR regulatory construct than the EAR regulatory construct. These commenters thought that this rule proposed broader changes than intended, and therefore several of them raised significant concerns. For example, they raised concerns about how shipments to distributors would be handled in light of the proposed DCS text. In order to address these concerns, BIS is defining some of the key terms used in the DCS text as they are interpreted in the EAR context, including providing some specific application examples, along with adding notes to clarify the applicability of the DCS requirements in the context of the EAR. These changes will address the various concerns in this area that commenters raised related to NLR shipments or multi-step transactions that consist of discrete controlled events (e.g., “exported” to a distributor as one discrete controlled event, and then a subsequent “reexport” as another discrete controlled event under the EAR). The proposed rule did not change any of these other provisions under the EAR, but the proposed text of the DCS made some people worry how the text would be applied in the EAR context.

Comment 24: The proposed inclusion of the phrase “or as otherwise authorized by U.S. law and regulations” is more likely to cause confusion than the current DCS with respect to items that can be reexported NLR or under a license exception, and lead recipients erroneously to believe that all U.S.-origin items require a specific reexport license. Some exporters have tried to use phrases in export control contractual clauses that limit reexports “unless otherwise approved in writing by the U.S. government or authorized by U.S. law or regulation.” Such phrases are understood by sophisticated reexporters, but they inevitably lead to questions about why a reexport license is required, when no export license was required in the first place.

BIS Response: To address this commenter's concern, this final rule includes several clarifications to key terms used, including a new note to define what is meant by “or as otherwise authorized by U.S. law and regulations.” This final rule makes the following regulatory changes to address this public comment:

In § 758.6, addition of Note 3 to paragraph (a). This final rule adds Note 3 to paragraph (a) to clarify what is meant in the EAR context by the phrase “or as otherwise authorized by U.S. law and regulations.” The note as of the effective date of this final rule will now acknowledge that the phrase includes not just license exceptions, but also shipments made under `no license required' as well as reexports of foreign made items containing less than de minimis U.S. origin controlled content. Some of the commenters acknowledged that the use of this phrase was also explained in the preamble of the proposed rule. However, other commenters did not understand this nuance of this proposed regulatory text. Most of those commenters also requested that BIS make this nuance of the EAR more explicit in regulatory text, in particular to avoid people outside the United States incorrectly believing that the new Commerce DCS provisions were intended to change or limit the applicability of the EAR de minimis provisions, or the EAR direct product rule provisions. The Commerce DCS proposed rule did not intend to change any EAR related provisions related to de minimis or the direct product rule, which is also the case with the Commerce final rule published today. BIS agrees with the commenters that making the intended meaning of the phrase “or as otherwise authorized by U.S. law and regulations” clearer will help understanding of the DCS provisions in the EAR. Therefore, this final rule is adding Note 3 to paragraph (a)(1) to address these comments.

Comment 25: Commerce and State should require the DCS on the same document(s).

BIS response: Commerce and State agree that, in addition to harmonizing the text of the DCS, the requirements regarding the documents on which it needs to be placed should be harmonized as well. Commenters supported the Commerce proposal of including it on the commercial invoice. After reviewing the public comments, Commerce and State agree that using the same document for the requirement is the best approach.

Comment 26: Export clearance phase of corporate export controls compliance programs relies heavily on information technology (IT) as standardization conserves resources and improves compliance. By having different DCS implementation requirements for the ITAR and EAR, the proposed regulation will force companies to have two different IT systems—one for the ITAR and one for the EAR. Companies will have to re-train their compliance staff to be able to determine which commercial document to insert the required DCS statement. This proposal will increase compliance costs. Different documents for DCS will increase likelihood of violations.

BIS Response: BIS agrees. BIS will require the DCS on the same document, the commercial invoice, as required by State.

Comment 27: Supports this proposed requirement and recognizes this change as a key element to reinforcing the intent of the regulation which is to provide the foreign consignee with needed information to ensure compliance with the EAR. The foreign consignee is far more likely to receive the commercial invoice and contractual documents between the shipper/USPPI and consignee/buyer than any transportation documentation produced by the carrier/forwarder for any such contract of carriage.

BIS response: BIS agrees. However, as noted elsewhere in this final rule, BIS is limiting the documentation requirement to the commercial invoice.

Comment 28: Exporters generate commercial invoices, but freight forwarders and/or carriers generate bills of lading and air waybills. Imposing requirements on exporters that they must then flow to other parties to a shipping transaction adds complexity and compliance risk.

BIS response: BIS agrees. The Commerce proposed rule already took these factors into account in proposing that the DCS be placed on the commercial invoice and contractual documentation (documents created by exporter). As described elsewhere in this final rule, the requirement is limited to the commercial invoice (document created by exporter).

Comment 29: Supports the approach taken by BIS for using commercial invoice and contractual documentation, and in particular for recognizing that this lengthy statement does not offer value on the transport document (bill of lading, air waybill) and that the DCS should be required only on the commercial and contractual documents that relate to the transactions between the vendors, purchasers and other parties that may be involved in the commercial relationship for exports.

BIS response: BIS agrees, but as noted elsewhere in the final rule the requirement will be limited to the commercial invoice.

Comment 30: Invoices are usually filed by the finance function that is responsible for payment and they may not take any action on this information (e.g., restriction on further re-sale/transfer to the end-user); explicitly stating export restriction on the contractual documents would be a more effective way to communicate the importance of compliance with the U.S. exports regulation and use of the items.

BIS response: Other commenters did not support using contractual documentation. BIS notes that although the personnel involved in financial management of a company (e.g., those in accounts payable) may receive the commercial invoice either at the time the items shipped (exported in tangible form) are received or before, at some point in the process typically the commercial invoice is matched up with what was received. If the DCS reaches the ultimate consignee or end-user(s) before the item is subsequently reexported or transferred (in-country) to another party, it helps to achieve the objective of putting the reexporter or transferor on notice that the items are subject to U.S. export controls.

Comment 31: BIS uses the term “commercial invoice” but DDTC uses the term “invoice.” For some exporters, the term “invoice” refers to the final billing document that moves electronically, whereas the commercial invoice moves with the freight.

BIS response: BIS agrees that the terms should be harmonized. Based on other comments received, the term commercial invoice is well understood by industry, as well as by BIS's Office of Export Enforcement, so this final rule adopts the term commercial invoice.

Comment 32: Commercial invoices do not accompany items during shipment. In today's business processes, invoices are sent either electronically (the preferred method) or in hard copy directly to the buyer's accounts payable department. The invoice is not sent to those who might divert the items. In compliance with the EAR, the DCS is currently printed on the invoice, but doing so arguably does not serve the purpose BIS intends.

BIS response: Several other commenters supported BIS's position that the commercial invoice is the document most likely to travel to the end of the export. However, BIS acknowledges and understands that in certain cases a commercial invoice may be sent prior to the items being shipped (exported in tangible form), so this final rule does not specify the timing of when the commercial invoice must be sent, but simply specifies the requirement that the commercial invoice must include the DCS. BIS intends to add FAQs to the BIS Web site once this final rule is published to provide additional application guidance to exporters.

Comment 33: Changing requirement from “accompanies the shipment” to when “such documentation exists” is a significant expansion of the DCS requirement for little benefit to U.S. national security.

BIS response: BIS disagrees. As was noted by several commenters the DCS requirements under the EAR and ITAR we need to take into account how business is conducted in order for exporters to effectively comply and to achieve the export control objectives of protecting U.S. national security and foreign policy interests. Because the phrase “accompanies the shipment” is limiting and does not take into full account how documents are transmitted related to exports in certain cases, BIS does not accept the suggestion, which conflicts with the larger objectives of what the DCS provisions are trying to achieve.

Comment 34: The contractual documents and commercial invoice are intended to detail the entirety of the transaction between the parties that are engaging in the transfer of the items. Incorporating the DCS into those documents is much more likely to achieve the intended purpose of the DCS than is including that information on the air waybill.

BIS response: BIS agrees. However, as noted elsewhere in this final rule, BIS is limiting the documentation requirement to the commercial invoice.

Comment 35: The proposed requirement to include the DCS on contractual documentation raised significant concerns among the majority of commenters, even those that strongly supported the proposed rule. These commenters included a number of well supported reasons for why the use of contractual documentation would be needlessly burdensome and not achieve the stated objectives in the proposed rule. These reasons included the following: (1) The term “contractual documentation” was not defined and could be overinclusive of documents, including contractual documentation that are not related directly to items that would be exported, but would still create a significant administrative burden in keeping track of certain contractual documentation that would require the DCS from those that would not; (2) grandfathering of existing contractual documentation, where some commenters noted that amending existing contracts to include the DCS would require amending thousands of contractual documents; (3) would require a U.S. company to have prior knowledge during negotiations for what the item that is subject to the contract that will actually be exported, which often is unknown at the time a contract is signed; (3) handling changes in classification that may impact previous contracts would require contractual documents to be revised; (4) including the DCS in contractual documentation may exacerbate foreign parties' concerns over acknowledging U.S. extraterritoriality; and (5) if the ultimate goal of the proposed rule is to avoid diversion, most commenters noted that requiring the DCS to be included on the commercial invoice will suffice—meaning the objectives of the DCS could be achieved more efficiently by only requiring it on the commercial invoice without creating the significant burdens that would be required to include it on contractual documentation.

BIS response: Commerce and State agree with the public commenters that removing the requirement to include the DCS on the contractual documentation is warranted. The public comments were persuasive that including a requirement to include the DCS on the contractual documentation would create a significant amount of unneeded complexity and in most cases would not achieve the stated objectives in the Commerce and State proposed rules. Based on the public comments received and additional review by Commerce and State, limiting the requirement to include the DCS on the commercial invoice is sufficient to meet the stated objectives in the Commerce and State proposed rules, and therefore this final rule does not adopt the proposed requirement to include the DCS on contractual documentation. This final rule makes the following regulatory changes to address this public comment:

In § 758.6, introductory text of paragraph (a), this final rule removes the undefined term “contractual documentation.” As discussed above, there was considerable concern raised regarding the inclusion of the undefined term “contractual documentation.” BIS is not including the undefined term “contractual documentation” and instead, as explained above, is limiting the requirement under the EAR to the commercial invoice. The Department of State will only require the DCS to be placed on the commercial invoice under the ITAR.

Comment 36: Provide the DCS and other export control information (e.g., as “600 series” or a 9x515 ECCN classification) on a completely separate document that can serve multiple purposes and can be sent with the items being shipped or separately in order to convey to the consignees that the items are U.S. export regulated and are intended only for the designated end user and the destination identified. This should be similar to a certificate of compliance or documents of similar nature (usually from a quality perspective) that are usually sent to customers.

BIS response: BIS appreciates the effort this commenter put into the idea, including the templates they created, but ultimately BIS believes that it would be unduly burdensome to create a requirement to generate a wholly new document. Therefore, although we acknowledge there would be some benefits to what the commenter had in mind, BIS believes that it is still preferable to require the DCS on an existing document (the commercial invoice) that is created in the normal course of business. Other public comments support this conclusion.

Comment 37: The regulations should not prescribe the specific document that must include the DCS, but instead require that it appear on one document that accompanies the item to the ultimate destination. Which document will contain the DCS should be determined by the exporter in light of its shipping practices.

BIS response: BIS disagrees. This would create a burden on exporters and other parties to the transaction, as well as the United Stated Government in conducting checks to confirm that exporters are in compliance. Allowing for exporters to pick and choose the document would create more burden than benefits that would come from allowing that level of flexibility because exporters and other parties to the transaction would need to adopt processes to identify on a transaction by transaction basis, which document contained the required DCS. Variability would provide flexibility, but also impose implementation costs. Requiring and identifying a single document, the commercial invoice, creates predictability, will facilitate the adoption of standardized processes and will reduce implementation costs. In addition, exporters are free to place the DCS on additional documents, but at a minimum the final rules published today by Commerce and State require the DCS to be placed on the commercial invoice.

Comment 38: In the Supplementary Information, BIS states that, “. . . in the context of this EAR paragraph “authorized” would also include exports that were designated under No License Required (NLR).” This would be useful information to include in § 758.6.

BIS response: BIS agrees. BIS has added a note to specify this concept as described earlier in the BIS response above to Comment 6.

Comment 39: A requirement should be added that all the parties (consignees involved in the transaction between the U.S. exporter and the ultimate end user) should somehow be communicated to about the U.S. regulations restricting further export/transfer to anyone or to any country other than the end user and ultimate destination should be considered in the final export process.

BIS response: Based on other comments received there would likely be significant concern about the burden created and the complexity of compliance programs caused by implementing such a requirement. The parties helping to facilitate the movement of the item to the end of the export are simply moving the item to the ultimate consignee or end user(s). The focus of the DCS on the commercial invoice is to ensure that it reaches the ultimate consignee and/or end user(s) that will be in a position to make a subsequent reexport or transfer (in-country), so they are aware the item in question is subject to U.S. reexport controls. As discussed in other parts of this rule, BIS is defining some of the terms used in the DCS text and adding some clarifying notes to provide additional context for how the DCS is applied in the EAR context.

Comment 40: Requests that BIS strongly consider setting the implementation date 180-240 days after publication of the final rule to allow sufficient time for all affected parties to make the required changes to system programming, document revision and related procedural tasks. Other commenters had requested a 180 day delayed effective date, along with a delayed compliance date.

BIS response: Commerce and State agree that a delayed effective date is warranted and will delay the effective date of this final rule for 90 days after publication. This delay of effective date will allow exporters, as well as other parties to which these revised DCS requirements will apply, to make any needed changes to their export compliance systems and business processes.

Comment 41: Request for public meetings for public to comment and requests for Commerce and State outreach for the new changes to be implemented.

BIS response: BIS values public participation in the rulemaking process. Through the public comment process, BIS has provided adequate opportunity for comment and has addressed the concerns that were raised. Therefore, BIS does not accept the request to conduct public meetings prior to publishing a final rule. In regard to the request for conducting outreach, BIS agrees that this is a good idea and intends to add updated DCS information to our already robust ECR related outreach activities, including to instruction at seminars and to the Frequently Asked Questions on the BIS Web site.

Comment 42: A public comment period with relevant meetings will provide the necessary fora to engage with the government and discuss mutually‐beneficial alternatives to accomplish the government's objectives without putting any sector of the trade at an inappropriate disadvantage.

BIS response: Commerce and State already provided an opportunity for public review and comment on the proposed rules. Commerce and State have considered those public comments, which were generally supportive of the rule, and for those commenters that raised concerns, Commerce and State were able to refine what was proposed to address those comments and better achieve the stated objectives. Therefore, there is no need for an additional proposed rule or engaging in public meetings before moving forward with final rules, which would delay the reductions in burdens included in the Commerce and State final rules, as well as delaying the benefits for better protecting U.S. national security and foreign policy interests by adopting these more effective DCS requirements under the EAR and the ITAR. No party will be placed at an inappropriate disadvantage as a result of this rule being published in final form because all interested parties had an opportunity to review the proposed rule and make comments for improving the proposed DCS requirements. BIS by addressing those comments in this final rule has led to an improved rule that better achieves the stated objectives. As noted above, Commerce and State have a robust outreach program for ECR related changes and intend to conduct robust outreach regarding the new DCS requirements included in the final rules published today, in particular during the 90 day transition period prior to the effective date.

Comment 43: Require the items level classification for 9x515 and “600 series” items. In consideration that sub-categories of a same ECCN may not be subject to the same controls (for instance 9A610.x and 9A610.y.1), we suggest that the text be amended to request not only the ECCN, but also the corresponding subcategory.

BIS response: This comment is outside the scope of the proposed DCS rule.

Comment 44: While the requirement to place the DCS found in § 758.6(a)(1) on the commercial invoice is reasonable, the requirement to place the DCS and the ECCN for “600 series” or 9x515 item, when required, on contractual documentation, when such contractual documentation exits, may require a level of specificity that is not available at the time of contracting. The suggested change would clarify that the contract itself need not contain each “600 series” or 9x515 ECCN if subsequent contract implementing documentation will be the vehicle by which actual commitments for shipment of such items are made.

BIS response: As noted elsewhere in this final rule (see BIS response above to Comment 35 under the heading Concerns for using contractual documentation), BIS is not including contractual documents in the final rule, so this comment is no longer applicable.

Comment 45: There is no requirement to include a DCS for end items that include ECCN 9x515/600 series de minimis content. This creates a risk related to restrictions on the use of de minimis for Country Group D:5 countries. For example, a non-U.S. prime may receive a system or sub-assembly from an Asian or European supplier for integration into an end-item. That system or sub-assembly may contain ECCN 9x515/600 series de minimis content from another supplier. The non-U.S. prime may never know about the ECCN 9x515/600 series content since there is no requirement for the re-exporter to disclose this information, which may raise a compliance issue when considering further retransfer to Country Group D:5 countries.

BIS response: This comment is outside the scope of the DCS proposed rule, but it is something that BIS will evaluate further. However, as a best practice, BIS does encourage companies to work together to assist each other in complying with the EAR requirements, whether that is in the United States or outside the United States when items that may be subject to the EAR are involved.

Comment 46: Recommend a statement in a final rule to clarify that for existing, valid licenses previously issued by BIS, any license condition to place a DCS on any shipping documentation (e.g., on all bills of lading or air waybills) not specifically required in the revised EAR is rescinded. A common current license condition is as follows: “Place a Destination Control Statement on all bills of lading, air waybills, and commercial invoices.” This clarification will relieve exporters with numerous licenses, wherein the license condition to apply DCS to shipping documentation appears, from the need to petition the Commerce Department for relief from the condition.

BIS response: BIS confirms that a condition on a license issued prior to August 17, 2016 to place a destination control statement on documents other than the commercial invoice would no longer be applicable as of November 15, 2016.

The heading of § 758.6 of the EAR remains the same. However, the provisions that were under paragraph (b) prior to the effective date of this final rule are being moved to a new paragraph (a)(2). Further, new paragraph (a)(2) specifies that the ECCN for each 9x515 or “600 series” item being shipped (exported in tangible form) must be included. This is the same requirement that was in paragraph (b) prior to the effective date of this final rule, although it is slightly shortened because the introductory text of paragraph (a) is specifying some of the requirements that previously were included in paragraph (b), specifically the documents for which the 9x515 and “600 series” classification must be included under this section. The commercial invoice is the same document that the DCS is included on, so this change is shortening and simplifying this section by moving the text of paragraph (b) to paragraph (a)(2). This change will reduce the number of documents upon which this classification needs to be included on to conform with the DCS changes described below.

The introductory text paragraph (a) in this final rule specifies that the exporter shall incorporate the information specified under paragraphs (a)(1) (destination control statement) and (a)(2) (ECCN for 9x515 or “600 series” item being shipped (exported in tangible form)) as an integral part of the commercial invoice. The changes in this final rule mean this section of the EAR no longer includes, as of the effective date of this final rule, a requirement to include the DCS on the air waybill, bill of lading or other export control documents, and instead is limiting the requirement to the commercial invoice.

Consistent with the DCS provisions prior to the effective date of this final rule, this final rule is not requiring an EAR DCS for exports of EAR99 items or items exported under License Exception BAG or GFT. Any other shipment (tangible export) from the United States of any item on the CCL would require the DCS as specified in paragraph (a)(1) and any shipment (tangible export) of a 9x515 or “600 series” ECCN would also need to be specified on the commercial invoice as specified in paragraph (a)(2).

The text of the harmonized DCS in this final rule is being specified under revised paragraph (a)(1) of § 758.6 of the EAR. The new DCS this final rule adds does not include EAR-specific language, but rather adopts text that is equally applicable under the ITAR as well as the EAR. However, this final rule adds several clarifying notes to clarify how the DCS provisions are applied in the EAR context. The first sentence of the statement added by this final rule specifies that “these items are controlled by the U.S. Government and authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s) herein identified.” For clarification this final rule moved the position of the phrase “by the United States Government” to the first sentence. This is a clarification to ensure that exporters understand that “only” modifies “authorized” and not “controlled.” This first sentence is intended to alert the person outside the United States receiving the item that the item is subject to U.S. export laws and regulations and was authorized by the U.S. Government for export. In addition, the first sentence in this final rule specifies that the items are authorized for export only to the country of ultimate destination for use by the ultimate consignee or end-user(s). The new DCS included in this final rule uses the term authorized, but in the context of this EAR paragraph “authorized” would also include exports that were designated under No License Required (NLR). This final rule adds a new Note 1 to paragraph (a) to specify this in the regulatory text in regards to the applicability of NLR. This final rule adds Note 2 to paragraph (a) to specify the phrase “country of ultimate destination” means the country specified on the commercial invoice where the ultimate consignee or end user will receive the items as an “export.” This note will assist the exporter's understanding of the use of this phrase in the context of the EAR.

The second sentence of the new harmonized DCS being added in this final rule focuses on alerting the persons receiving the items that they may not be resold, transferred, or otherwise be disposed of, to any other country or to any person other than the authorized ultimate consignee or end-user(s), either in their original form or after being incorporated into other items, without first obtaining approval from the U.S. government or as otherwise authorized by U.S. law and regulations. Similar to the first sentence, this second sentence is adopting common text that can be used under the ITAR and the EAR. The application of this second sentence is different under the ITAR and the EAR due to the different types of authorizations and other approvals in the respective regulations, as well as other differences, such as the de minimis requirements in the EAR, which is not provided for in the ITAR. The final rule adds a new Note 3 to paragraph (a) to make this clearer in regards to how this is applied in the EAR context.

The advantage of the text included in this final rule is that it adopts a new harmonized DCS, while at the same time is still flexible enough to not impact other ITAR or EAR provisions that do warrant differentiation, such as the availability of de minimis provisions, which are available under the EAR.

Adopting a new harmonized DCS in the final rule will simplify export clearance requirements for exporters because they will not have to decide which DCS to include, especially for mixed shipments containing both ITAR and EAR items.

As of the effective date of the Commerce and State final rules, an exporter will still need to go through all of the steps to determine jurisdiction, classification, and license requirements, and to obtain and use the proper authorization under the respective regulations, prior to moving on to the respective export clearance requirements under the ITAR or EAR. It is important to remember when reviewing the changes included in the Commerce and State final rules that the regulations still need to be reviewed and evaluated in the context in which they are intended to be applied, including the steps for determining the applicable export control requirements under the ITAR and the EAR. For those parties outside the United States that will be receiving items under this new DCS once this final rule becomes effective on November 15, 2016, although the new DCS is not ITAR or EAR specific, in the case of the ITAR the classification of USML items will be required on the commercial invoice. This classification will alert the parties that the items are subject to the ITAR. For military items under the EAR, because of the requirement this final rule is including in paragraph (a)(2) (which was required under paragraph (b) prior to the effective date of this final rule) of § 758.6 of the EAR, anyone receiving a “600 series” military item or an ECCN 9x515 item will know that item is subject to the EAR because the classification information will also need to be included on the commercial invoice. For other EAR items, there is not a requirement to include the classification information, although BIS does encourage the inclusion of that information as an export compliance best practice.

BIS in this final rule removes the text that was in paragraph (c) of § 758.6 prior to the effective date of this final rule. BIS did not receive any comments on this proposed change and therefore is implementing this change in this final rule. Paragraph (c) was added recently (January 23, 2015, 80 FR 3463) and required prior to the effective date of this final rule a special DCS for items controlled under ECCNs for crime control columns 1 and 3 reasons or regional stability column 2 reasons when those items are destined to India. BIS proposed removing this requirement because the benefit of this requirement in paragraph (c) is outweighed by the added complexity to the EAR of including this country specific requirement. Therefore, consistent with the purpose of the retrospective regulatory review, BIS removes paragraph (c).

This final rule is the same as the May 22, 2015 proposed rule except for the refinements explained above. These changes address the public comments and will achieve the objectives of adopting a harmonized DCS requirement under the EAR and ITAR. These changes will help to further achieve the objectives of ECR to harmonize provisions between the EAR and the ITAR where warranted.

The changes in this final rule will ease the regulatory burden and complexity for exporters, in particular those with mixed shipments, which as noted above is now a much more common occurrence because of ECR. These changes and the corresponding reduction of documents that will require the DCS (now limited to the commercial invoices) will benefit all exporters under the EAR, not just exporters of “600 series” and 9x515 items. The DCS provisions in this final rule will better achieve their stated objectives—meaning all exporters will benefit because the appropriate parties (consignees in a position to make a subsequent reexport or transfer (in-country)) further down the line in export transactions will be receiving the DCS and other export control information required under this section as applicable.

These changes to the DCS provisions under the EAR and the ITAR move beyond harmonization for the sake of harmonization, which as discussed above was a concern of several of the commenters in response to the proposed rule. The changes in this final rule achieve true harmonization in this area of the U.S. export control system under the EAR and the ITAR, while at the same time improving the effectiveness of these provisions under the EAR and the ITAR, which ultimately will lead to better informed parties to transactions that are subject to U.S. export controls and better protecting U.S. national security and foreign policy interests. For the reasons described above, Commerce and State are publishing these final rules today.

As required by Executive Order (E.O.) 13563, BIS intends to review this rule's impact on the licensing burden on exporters. Commerce's full retrospective regulatory review plan is available at: http://open.commerce.gov/news/2011/08/23/plan-analysis-existing-rules. Data are routinely collected on an ongoing basis, including through the comments to be submitted and through new information and results from Automated Export System data. These results and data have formed, and will continue to form, the basis for ongoing reviews of the rule and assessments of various aspects of the rule. As part of its plan for retrospective analysis under E.O. 13563, BIS intends to conduct periodic reviews of this rule and to modify, or repeal, aspects of this rule, as appropriate, and after public notice and comment. With regard to a number of aspects of this rule, assessments and refinements may be made on an ongoing basis. This is particularly the case with regard to possible modifications that will be considered based on public comments described above.

Although the Export Administration Act expired on August 20, 2001, the President, through Executive Order 13222 of August 17, 2001, 3 CFR, 2001 Comp., p. 783 (2002), as amended by Executive Order 13637 of March 8, 2013, 78 FR 16129 (March 13, 2013) and as extended by the Notice of August 4, 2016, 81 FR 52587 (August 8, 2016), has continued the Export Administration Regulations in effect under the International Emergency Economic Powers Act. BIS continues to carry out the provisions of the Export Administration Act, as appropriate and to the extent permitted by law, pursuant to Executive Order 13222, as amended by Executive Order 13637.

1. Executive Orders 13563 and 12866 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distribute impacts, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This final rule has been determined to be significant for purposes of Executive Order 12866.

2. Notwithstanding any other provision of law, no person is required to respond to, nor is subject to a penalty for failure to comply with, a collection of information, subject to the requirements of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.) (PRA), unless that collection of information displays a currently valid OMB control number. This regulation involves collections previously approved by the OMB under control number 0694-0122, “Licensing Responsibilities and Enforcement.” This rule does not alter any information collection requirements; therefore, total burden hours associated with the PRA and OMB control number 0694-0122 are not expected to increase as a result of this rule. BIS acknowledges that there will be a minimal one-time burden on exporters as they need to update the DCS text on an existing document that already requires the DCS, but BIS expects this to be a one-time cost, not a recurring one. The scope of the text change, which is very similar in length to the current DCS, should be easy to implement based on the public comments received that strongly favored using the commercial invoice for the DCS requirement. You may send comments regarding the collection of information associated with this rule, including suggestions for reducing the burden, to Jasmeet K. Seehra, Office of Management and Budget (OMB), by email to [email protected], or by fax to (202) 395-7285.

3. This rule does not contain policies with Federalism implications as that term is defined under E.O. 13132.

4. The Regulatory Flexibility Act (RFA), as amended by the Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA), 5 U.S.C. 601 et seq., generally requires an agency to prepare a regulatory flexibility analysis of any rule subject to the notice and comment rulemaking requirements under the Administrative Procedure Act (5 U.S.C. 553) or any other statute, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. Under section 605(b) of the RFA, however, if the head of an agency certifies that a rule will not have a significant impact on a substantial number of small entities, the statute does not require the agency to prepare a regulatory flexibility analysis. Pursuant to section 605(b), the Chief Counsel for Regulation, Department of Commerce, certified to the Chief Counsel for Advocacy, Small Business Administration that the May 22 proposed rule, if promulgated, will not have a significant impact on a substantial number of small entities. A summary of the factual basis for the certification was provided in the May 22 proposed rule that is being finalized in this rule and is not repeated here. No comments were received regarding the economic impact of this final rule. Consequently, BIS has not prepared a regulatory flexibility analysis for this final rule.

Accordingly, part 758 of the Export Administration Regulations (15 CFR parts 730-774) is amended as follows:

The Department published a proposed rule on May 22, 2015 (80 FR 29565) and received 17 public comments on the proposed changes to the ITAR. The Department makes the following revisions in this final rule:

This final rule adds clarifying language to various provisions of the ITAR pertaining to the use of exemptions to the license requirements and the export of items subject to the EAR, when the EAR items are shipped with items subject to the ITAR. These revisions include guidance on the use of license exemptions for the export of such items, as well as clarification that items subject to the EAR are not defense articles, even when exported under a license or other approval, such as an exemption, issued by the Department of State. The Department received the following comments on the proposed changes, which are summarized here, along with the Department's responses:

One commenter raised a concern that the proposed revised language restricts industry's exemption options for items subject to the EAR to situations only when related USG authorization exists for the end item. The Department accepts the comment and has revised § 120.5(b) to state that items subject to the EAR may be exported pursuant to an ITAR exemption if exported with defense articles. ITAR exemptions may not be used for the independent export of items subject to the EAR, i.e., a single physical shipment of EAR item(s) that does not include any USML item with which the EAR item may be used. If the items subject to the EAR will be transferred separately from a defense article, license exceptions available under the EAR may be used to authorize the transfer.

One commenter noted that, the proposed § 120.5(b) inadvertently excluded the exemptions at Part 123 of the ITAR from the parenthetical list of applicable ITAR parts. The Department concurs with this comment and adds a reference to part 123 into the parenthetical phrase.

One commenter noted that the Department should provide clarification and guidance on the proper classification to be entered into the Automated Export System (AES) for items subject to the EAR shipped under an ITAR exemption. The commenter noted that proposed edits to § 123.9(b)(2) did not address AES filings. The Department notes that the Department of Commerce (U.S. Census Bureau and Bureau of Industry and Security) has already clarified this. The EAR classification needs to be provided in the export control information on the Electronic Export Information (EEI) filing in AES for all items subject to the EAR, including EAR99 designated items that are authorized for export under a State Department authorization.

One commenter noted that the changes in this rule require that if a shipment includes both ITAR and EAR controlled items then the Export Control Classification Number (ECCN) of items in the shipments must be listed, including any EAR99 designation (if the authorization for the export was through an approved State Department license), and requires the country of ultimate destination, end-user, licensee information to be provided on the export documents. The flexibility of exporting items subject to the EAR under a State Department authorization does warrant this additional level of identification for all of the items subject to the EAR that the Department authorizes for export. Therefore, although the Department understands the comment, given the hybrid nature of the ITAR authorization under the § 120.5(b) process, the Department has determined the requirements are warranted.

One commenter noted that the text under § 120.5(b) does not specify that “items subject to the EAR” exported under an exemption must be exported with the specific defense article. They recommend clarifying that this is the intent of the modification or if not, to change the text, so it comports with the requirements for “items subject to the EAR” exported under a license or other approval. The Department concurs with this comment. This final rule adds clarifying text to § 120.5(b) to specify that in order to use a Department of State license exemption the item subject to the EAR must be exported with a defense article.

This final rule does not revise the licensing exemption language in § 126.4. This section will be addressed in a separate rulemaking and comments submitted in response to the proposed rule on that topic will be addressed in that rulemaking.

This final rule revises the Destination Control Statement (DCS) in ITAR § 123.9 to harmonize the text with the text of the DCS in EAR § 758.6, which is the subject of a companion rule to be published by the Department of Commerce. The DCS revision is also reflected in § 124.9 and 124.14. This change is being made to facilitate the President's Export Control Reform initiative, which has transferred thousands of formerly ITAR-controlled defense article parts and components, along with other items, to the Commerce Control List in the EAR, which is under the jurisdiction of the Department of Commerce. This change in jurisdiction for many parts and components of military systems has increased the incidence of exporters shipping articles subject to both the ITAR and the EAR in the same shipment. Both regulations have a mandatory Destination Control Statement that must be on the export control documents for shipments that include items subject to both sets of regulations. This had previously caused confusion to exporters as to which statement to include on mixed shipments, or whether to include both. Harmonizing these statements will ease the regulatory burden on exporters.

Most of the public comments fell into one of four areas: (1) Harmonization of DCS language between the ITAR and the EAR; (2) harmonization of documentation between the ITAR and EAR; (3) providing exporters a sufficient implementation period to adjust to the new DCS requirements; and (4) consideration of the different documents required for shipping, with the commercial invoice being the clear favorite and most appropriate for the DCS to be included on.

This final rule includes an effective date 90 days after publication in the Federal Register for the DCS provisions. It also specifies that the exporter is responsible for including the DCS on the commercial invoice. Additionally, the DCS text adopted in this final rule is identical to the DCS text adopted in a companion rule by Commerce.

The Department received a small number of comments on the proposed rule which were specific to the Commerce proposed rule, and Commerce is addressing these comments in its final rule.

Several commenters noted that harmonization represents a step in the right direction and will minimize confusion as to which DCS must be used depending on the jurisdiction of the item. The Department concurs with this comment.

Several commenters objected that the Department's requirements for placement of the DCS were out of step with Commerce and not harmonized in the proposed rule. The Department agrees, and the requirement for placement of the DCS is being harmonized by the Departments of State and Commerce.

Several commenters stated that the government should not specify the documents that require the DCS, but rather should impose a high level requirement and leave it to parties to choose which document(s) to include. The Department disagrees. Specifying which documents the DCS will be placed on will create greater transparency, as well as make it easier for various United States government agencies, as well as exporters and other consignees, to identify whether the DCS has been properly included.

One commenter noted that this appears to be a case of harmonization for the sake of harmonization, and would appear to have the potential to create substantial confusion among recipients, and impose significant burdens without a correspondingly significant benefit to the government. The Department disagrees. Ensuring the DCS reaches the parties that will receive items exported and/or reexported is key to the United States achieving its policy objectives.

One commenter stated that it was confusing that Commerce uses the term “commercial invoice” whereas the Department uses “invoice.” For some exporters, the term “invoice” refers to the final billing document that moves electronically, whereas the commercial invoice moves with the freight. The Department agrees that the terms should be harmonized. Based on other comments received, the term “commercial invoice” is well understood by industry, so this final rule adopts the term “commercial invoice” to reference the document that moves with the freight.

One commenter objected to the DCS, as it imposed additional burdens and costs on the public and trade. Further, the commenter noted that to add this information separately to the bill of lading, air waybill and other transportation documentation could have the unintended effect of signaling the package contents to third parties. The Department disagrees with the commenter's characterization as these statements are already required and the harmonization of the DCS will lower the administrative burden on exporters and re-exporters. In addition, and as noted elsewhere in this final rule, the Department is removing the requirement to include the DCS on transportation documents.

One commenter stated that the air waybill imposed a severe space limitation with regard to including the DCS. According to the commenter, including information regarding a country of ultimate destination, end-user, and license or other approval number or exemption citation information could be unduly burdensome. The Department concurs, as noted elsewhere in this final rule, and the requirement to include the DCS on transportation documents has been removed.

One commenter noted that the State Department should consider a shorter DCS, such as: “This shipment contains goods under the jurisdiction of the ITAR.” This statement could more easily be converted to an electronic format than the complete DCS. The Department disagrees, as an ITAR specific DCS would defeat the purpose of harmonization between the Departments of State and Commerce and would not address mixed shipments.

One commenter suggested that the DCS and other export control related information (e.g., USML category) be placed on a separate document that serves multiple purposes, and can be sent with the items being shipped or separately in order to convey to the consignees that the items are U.S. export regulated and are intended only for the designated end user and the destination identified. The Department acknowledges there would be some benefits to such an approach, but it is preferable to require the DCS on an existing document (the commercial invoice) that is created in the normal course of business. Other public comments support this conclusion.

Numerous commenters requested a delay in the implementation date of between 180-240 days after publication of the final rule to allow sufficient time for affected parties to make the required changes to system programming, document revision and related procedural tasks. Other commenters requested a 180 day delayed effective date, along with a delayed compliance date. The Department agrees that industry will need time to update their systems and has included a delayed effective date of 90 days after publication of this final rule.

One commenter requested public meetings in order to comment on the proposed changes, and that State and Commerce also conduct outreach prior to new changes being implemented. The Department values public participation in the rulemaking process and has provided an opportunity for public review and comment on the proposed rules. For those commenters that raised concerns, the Department was generally able to refine what was proposed to address those comments and better achieve the stated objectives. Therefore, the Department does not see a need to conduct public meetings prior to publishing this final rule. In regards to outreach, the Department agrees that this is a good idea and intends to add updated DCS information to our already robust ECR related outreach activities.

The Department of State has revised the proposed changes to § 123.9 to address the public comments and to better achieve its stated objectives in this final rule. The public comment process was helpful in identifying areas where changes needed to be made to fully achieve the intended objectives for the DCS for use under the ITAR and the EAR.

Placement of Destination Control Statement. This final rule removes the requirement to place the Destination Control State on the bill of lading, air waybill, or other shipping documents and retains the requirement for the invoice, which will now be more clearly described as the commercial invoice. As stated elsewhere in this final rule, the commercial invoice is the document that is most likely to achieve the purpose of this section and therefore the Department is limiting the requirement to this one document, which also will reduce the burden on exporters.

Clarifying the scope of paragraph 123.9(a) applies to items shipped (exported in tangible form), retransferred (in tangible form), or reexported (in tangible form). This final rule clarifies that the requirement applies to tangible defense articles when exported, reexported, or retransferred.

Addition of Note to paragraph 123.9(b)(1)(iv). This final rule also adds a Note to proposed paragraph (b)(1)(iv) to clarify what is meant in the DCS by the phrase “or as otherwise authorized by U.S. law and regulations.” The note clarifies that the phrase “or as otherwise authorized by U.S. law and regulations” is included to advise that U.S. regulations contain specific license exemptions, provisions that allow shipments to be made “no license required,” as well as reexports of foreign made items containing less than de minimis U.S. origin controlled content (see 15 CFR 734). This note reflects that an individual license is not required in all cases.

This final rule adds a new paragraph (d) to § 123.9 to clarify the requirements for retransferring items subject to the EAR pursuant to a request for written approval from DDTC.

Other changes in this rule. The Department makes a number of minor edits to the ITAR that address reporting requirements. This final rule removes the requirement to provide seven paper copies for various requests in §§ 124.7, 124.12, 124.14, 125.2, 125.7 and 126.9. The Department did not receive any comments on the proposed changes, except for one commenter that expressed support for the removal of unnecessary submission requirements (e.g., seven paper copies). Therefore, this final rule revises §§ 124.7, 124.12, 124.14, 125.2, 125.7 and 126.9 as proposed.

This final rule imposes the Code of Federal Regulations paragraph structure on § 124.8. The Department received no comments on § 124.8, and the provision is adopted as proposed.

This final rule replaces the previous Destination Control Statement in § 124.9(a)(6) with the new language found at § 123.9(b)(1)(iv). The Department received only one comment on this issue, which did not propose substantive changes, but advised that § 124.9(a)(6) needed to reflect the new Destination Control Statement language. The Department notes that the proposed rule did not revise the Destination Control Statement language of § 124.14(c)(7). Therefore, this final rule revises §§ 124.9 and 124.14 accordingly.

This final rule also changes the identification of the agency responsible for permanent import authorizations in § 123.4 from the Department of the Treasury to Department of Justice. The Department did not receive any comments on the proposed changes. Therefore, this final rule revises § 123.4 as proposed.

This final rule removes the pilot filing requirement found in § 123.13, given that, as noted in the proposed rule, it did not take into account the practices of modern airport operations and is no longer necessary. The Department did not receive any comments on the proposed change. Therefore, this final rule revises § 123.13 as proposed.

This final rule revises § 124.12(b) to correct the citations contained in the parenthetical from §§ 124.9 and 124.10 to §§ 124.8 and 124.9. This revision was not included in the proposed rule.

Additionally, the Department amends § 126.9, Advisory Opinions and Related Authorizations, to add a new paragraph (c) for requests to interpret ITAR requirements. This revision was not included in the proposed rule but is added to clarify the Department's practice. The Department is undertaking a review of the advisory opinion process which will be addressed in a future rule.

Finally, the Department notes that this final rule does not revise the NATO special retransfer authorizations language in § 124.16, which was contained in the proposed rule. By separate Federal Register notice (81 FR 35611, June 3, 2016) effective September 1, 2016, the provisions of § 124.16 will be incorporated into § 126.18 and the section will be removed and reserved.

The Department of State is of the opinion that controlling the import and export of defense articles and services is a foreign affairs function of the United States government and that rules implementing this function are exempt from §§ 553 (rulemaking) and 554 (adjudications) of the Administrative Procedure Act (APA). Although the Department is of the opinion that this rule is exempt from the rulemaking provisions of the APA, the Department published this rule with a 45-day provision for public comment and without prejudice to its determination that controlling the import and export of defense services is a foreign affairs function. The Department has made additional refinements to what was proposed based on the public comments received, which helps to further the objectives described in the proposed rule that is published as a final rule today. The Department is also adopting a delayed effective date of 90 days.

Since this final rule is exempt from the provisions of 5 U.S.C. 553, there is no requirement for an analysis under the Regulatory Flexibility Act.

This rulemaking does not involve a mandate that will 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 year and it will not significantly or uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

The Department does not believe this rulemaking is a major rule as defined in 5 U.S.C. 804.

This rulemaking 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, in accordance with Executive Order 13132, it is determined that this rulemaking does not have sufficient federalism implications to require consultations or warrant the preparation of a federalism summary impact statement. The regulations implementing Executive Order 12372 regarding intergovernmental consultation on Federal programs and activities do not apply to this proposed rulemaking.

Executive Orders 12866 and 13563 direct agencies to assess costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributed impacts, and equity). These executive orders stress the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has been designated a “significant regulatory action” under Executive Order 12866. Accordingly, this final rule has been reviewed by the Office of Management and Budget (OMB).

The Department of State has reviewed this rulemaking in light of Executive Order 12988 to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

The Department of State has determined that this rulemaking will not have tribal implications, will not impose substantial direct compliance costs on Indian tribal governments, and will not preempt tribal law. Accordingly, the provisions of Executive Order 13175 do not apply to this rulemaking.

This rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. Chapter 35. This rule removes provisions that previously required the applicant to provide seven additional copies for various export license requests. As noted in the proposed rule, the Department believes that there would be little or no practical burden reduction since the use of electronic methods of filing has made the requirement for “seven copies” obsolete. The Department requested public comment on its estimate that there will be little or no change in the burdens associated with effected information collections as a result of this rulemaking. The Department received no public comments with respect to the information collections.

Accordingly, for the reasons set forth above, title 22, chapter I, subchapter M, is amended as follows:

Pursuant to the authority granted in 33 U.S.C. 1605, the DoN amends 32 CFR part 706.

This amendment provides notice that the DAJAG (Admiralty and Maritime Law), under authority delegated by the Secretary of the Navy, has certified that USS GABRIELLE GIFFORDS (LCS 10) is a vessel of the Navy which, due to its special construction and purpose, cannot fully comply with the following specific provisions of 72 COLREGS without interfering with its special function as a naval ship: Annex I paragraph 2(a)(i), pertaining to the height of the forward masthead light above the hull; Annex I, paragraph 2(f)(i), pertaining to the placement of the masthead light or lights above and clear of all other lights and obstructions; Annex I, paragraph 3(a), pertaining to the location of the forward masthead light in the forward quarter of the ship, and the horizontal distance between the forward and after masthead light; Annex I, paragraph 3(c), pertaining to the task light's horizontal distance from the fore and aft centerline of the vessel in the athwartship direction. The DAJAG (Admiralty and Maritime Law) has also certified that the lights involved are located in closest possible compliance with the applicable 72 COLREGS requirements.

Moreover, it has been determined, in accordance with 32 CFR parts 296 and 701, that publication of this amendment for public comment prior to adoption is impracticable, unnecessary, and contrary to public interest since it is based on technical findings that the placement of lights on this vessel in a manner differently from that prescribed herein will adversely affect the vessel's ability to perform its military functions.

For the reasons set forth in the preamble, the DoN amends part 706 of title 32 of the Code of Federal Regulations as follows:

I. Table of Abbreviations CFR Code of Federal Regulations DHS Department of Homeland Security FR Federal Register NPRM Notice of proposed rulemaking § Section U.S.C. United States Code II. Background Information and Regulatory History

The Coast Guard is issuing this temporary rule without prior notice and opportunity to comment pursuant to authority under section 4(a) of the Administrative Procedure Act (APA) (5 U.S.C. 553(b)). This provision authorizes an agency to issue a rule without prior notice and opportunity to comment when the agency for good cause finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under 5 U.S.C. 553(b)(B), the Coast Guard finds that good cause exists for not publishing a notice of proposed rulemaking (NPRM) with respect to this rule because doing so would be impracticable. Amplifying information regarding event schedule, plan, and vessel participants was not provided by the event sponsor with sufficient time to accommodate the comment period prior to the August 18, 2016 event. Thus, delaying the effective date of this rule to wait for the comment period to run would be both impracticable because it would be impossible to have the rule implemented before the date of the event.

We are issuing this rule, and under 5 U.S.C. 553(d)(3), the Coast Guard finds that good cause exists for making it effective less than 30 days after publication in the Federal Register. Delaying the effective date of this rule would be contrary to public interest as it would inhibit the Coast Guard's ability to protect spectator and vessels from the hazards associated with the event.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1233. These temporary special local regulations will provide for the safety of life and protection of property on the navigable waters of Lake Superior and Duluth Harbor, Minnesota, by providing for the organized viewing of Tall Ships and preventing the large number of spectator vessels from interfering with the organized and controlled Parade of Sail.

Duluth, Minnesota will host the Tall Ships Duluth 2016 from August 18-21, 2016. This visit of sailing vessels is part of a recurring series of sail training races, rallies, cruises, and port festivals organized by Tall Ships America in conjunction with host ports in the United States and Canada. The Tall Ships Duluth 2016, including a Parade of Sail, is akin to similar events held several times in the past in Duluth, Minnesota, the most recent being in 2013.

The Tall Ships visit to Duluth, which will occur from August 18-21, 2016, will include a Parade of Sail on August 18, 2016. About 9 vessels are expected to participate in the Parade of Sail. These temporary special local regulations will provide for the safety of life and protection of property on the navigable waters of Lake Superior and Duluth Harbor, Minnesota, by providing for the organized viewing of Tall Ships and by preventing the large number of spectator vessels from interfering with the organized and controlled Parade of Sail. There may be vessels participating in the event from several foreign countries and the high visibility of this event warrants that temporary special local regulations be established to ensure the safety of vessels and spectators from hazards associated with Tall Ships Duluth 2016.

The participating vessels will berth at assigned facilities in Duluth, Minnesota, from August 18-21, 2016. On August 19, 2016, visitors will be permitted to board the berthed vessels from shore. On the morning of August 22, 2016, the Tall Ships will depart the Duluth Harbor.

The Coast Guard believes that vessel congestion due to the large number of participating and spectator vessels may pose a significant hazard to navigation. To reduce the risk associated with congested waterways the Coast Guard is proposing to establish regulated areas to restrict vessel movement around the location of the participating Tall Ships while participating in the Parade of Sail in Duluth Harbor. These temporary special local regulations would be in effect from 9:00 a.m. through 5:00 p.m. August 18, 2016.

Area “Duluth Harbor”: This Area includes all waters of Lake Superior and Duluth Harbor bounded by Rice's Point to the west and Duluth to the north, within the following boundaries: Beginning at position 46°49′11″ N., 92°02′20″ W., then due south to position 46°45′12″ N., 92°02′20″ W., and then west to position 46°45′12″ N., 92°05′40″ W. (Duluth Marine Terminal South Light (LLNR 15935)). This area is needed to protect the maritime public and participating vessels from hazards to navigation associated with numerous spectator craft during the Parade of Sail on August 18, 2016.

Area “Parade of Sail”: This Area includes all waters of Lake Superior and Duluth Harbor bounded by Duluth to the north, within the following boundaries: Beginning at position 46°46′51.54″ N., 92°05′17.03″ W. (North Pier Light (LLNR 15855)), then northeast to position 46°47′18.96″ N., 92°4′0.84″ W., then south to position 46°47′11.04″ N., 92°03′55.08″ W., then southwest to position 46°46′48.46″ N., 92°05′15.02″ W. (South Breakwater Outer Light (LLNR 15845)), then to position 46°46′40.66″ N., 92°05′36.59″ W. near the Duluth Lift Bridge, then to position 46°46′34.04″ N., 92°05′39.64″ W. (Basin Buoy 1 (LLNR 15865)), and then west to position 46°46′36.42″ N., 92°06′07.86″ W. This area is needed to enhance navigation safety by facilitating the organized and controlled transit of participating vessels through the parade route and minimizing the impact on the maritime community.

We developed this rule after considering numerous statutes and Executive order related to rulemaking. Below we summarize our analyses based on a number of these statutes and Executive orders, and we discuss First Amendment rights of protestors.

Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits. Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This rule has not been designated a “significant regulatory action,” under Executive Order 12866. Accordingly, it has not been reviewed by the Office of Management and Budget.

This regulatory action determination is based on the size, location, duration, and time-of-year of the special local regulations. These proposed regulations involve only the Duluth portion of Duluth/Superior Harbor and would close the Duluth Entry Channel to commercial traffic only for several hours during the actual Parade of Sail on August 18, 2016. The Superior Entry would remain open to vessel traffic at all times. The impact of these proposed regulations will not be significant because these regulations would be in effect for only a portion of one day centered on the Parade of Sail, and most vessel traffic can pass safely around affected areas of Duluth Harbor by transiting through the Superior Entry.

Notice of these special local regulations will be provided prior to the event through Local Notice to Mariners and Broadcast Notice to Mariners. In addition, the sponsoring organization, Draw Events, LLC., is planning to publish information of the event in local newspapers, pamphlets, and Internet sites.

The Regulatory Flexibility Act of 1980, 5 U.S.C. 601-612, as amended, requires Federal agencies to consider the potential impact of regulations on small entities during rulemaking. The term “small entities” comprises small businesses, not-for-profit organizations that are independently owned and operated and are not dominant in their fields, and governmental jurisdictions with populations of less than 50,000. The Coast Guard certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities.

While some owners or operators of vessels intending to transit the regulated areas may be small entities, for the reasons stated in section V.A above, this rule will not have a significant economic impact on any vessel owner or operator.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Public Law 104-121), we want to assist small entities in understanding this rule. If the rule would affect your small business, organization, or governmental jurisdiction and you have questions concerning its provisions or options for compliance, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section.

Small businesses may send comments on the actions of Federal employees who enforce, or otherwise determine compliance with, Federal regulations to the Small Business and Agriculture Regulatory Enforcement Ombudsman and the Regional Small Business Regulatory Fairness Boards. The Ombudsman evaluates these actions annually and rates each agency's responsiveness to small business. If you wish to comment on actions by employees of the Coast Guard, call 1-888-REG-FAIR (1-888-734-3247). The Coast Guard will not retaliate against small entities that question or complain about this rule or any policy or action of the Coast Guard.

This rule will not call for a new collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520).

A rule has implications for federalism under Executive Order 13132, Federalism, if it has a substantial direct effect on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. We have analyzed this rule under that Order and have determined that it is consistent with the fundamental federalism principles and preemption requirements described in Executive Order 13132.

Also, this rule does not have tribal implications under Executive Order 13175, Consultation and Coordination with Indian Tribal Governments, because it does not have a substantial direct effect on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes, or on the distribution of power and responsibilities between the Federal Government and Indian tribes. If you believe this rule has implications for federalism or Indian tribes, please contact the person listed in the FOR FURTHER INFORMATION CONTACT section above.

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

We have analyzed this rule under Department of Homeland Security Management Directive 023-01 and Commandant Instruction M16475.lD, which guide the Coast Guard in complying with the National Environmental Policy Act of 1969 (42 U.S.C. 4321-4370f), and have determined that this action is one of a category of actions that do not individually or cumulatively have a significant effect on the human environment. This rule involves special local regulations lasting no more than 12 hours. It is categorically excluded from further review under paragraph 34(h) of Figure 2-1 of the Commandant Instruction. An environmental analysis checklist supporting this determination and a Categorical Exclusion Determination are available in the docket where indicated under ADDRESSES. We seek any comments or information that may lead to the discovery of a significant environmental impact from this rule.

The Coast Guard respects the First Amendment rights of protesters. Protesters are asked to contact the person listed in the FOR FURTHER INFORMATION CONTACT section to coordinate protest activities so that your message can be received without jeopardizing the safety or security of people, places or vessels.

For the reasons discussed in the preamble, the Coast Guard amends 33 CFR part 100 as follows:

The Marine Parkway Bridge, mile 3.0, across the Rockaway Inlet, has a vertical clearance in the closed position of 55 feet at mean high water and 59 feet at mean low water. The existing bridge operating regulations are found at 33 CFR 117.795(a).

The waterway is transited by commercial barge traffic of various sizes.

The bridge owner, MTA Bridges and Tunnels, requested a temporary deviation from the normal operating schedule to replace mechanical and electrical components for the lift span operation.

Under this temporary deviation, the Marine Parkway Bridge shall remain in the closed position from 7 a.m. on November 15, 2016 to 5 p.m. May 13, 2017.

Vessels able to pass under the bridge in the closed position may do so at any time. The bridge will not be able to open for emergencies and there is no immediate alternate route for vessels to pass.

The Coast Guard will inform the users of the waterways through our Local Notice and Broadcast to Mariners of the change in operating schedule for the bridge so that vessel operations can arrange their transits to minimize any impact caused by the temporary deviation. The Coast Guard notified various companies of the commercial oil and barge vessels and they have no objections to the temporary deviation.

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

Section 172(c)(1) of the CAA provides that SIPs for nonattainment areas must include reasonably available control measures (RACM), including RACT, for sources of emissions. Section 182(b)(2)(A) provides that for certain nonattainment areas, states must revise their SIPs to include RACT for sources of volatile organic compound (VOC) emissions covered by a CTG document issued after November 15, 1990 and prior to the area's date of attainment. Furthermore, pursuant to section 184(b)(1)(B) of the CAA, all areas in the Ozone Transport Region (OTR), such as Pennsylvania, must submit SIP revisions that include implementation of RACT with respect to all sources of VOCs in the states covered by a CTG. EPA defines RACT as “the lowest emission limitation that a particular source is capable of meeting by the application of control technology that is reasonably available considering technological and economic feasibility.” 44 FR 53761 (September 17, 1979).

CTGs are intended to provide state and local air pollution control authorities information that should assist them in determining RACT for VOCs from various sources. The CTG for fiberglass boat manufacturing materials (Publication No. EPA 453/R-08-004; September 2008) provides control recommendations for reducing VOC emissions from the use of gel coats, resins, and materials used to clean application equipment in fiberglass boat manufacturing operations. This CTG applies to facilities that manufacture hulls or decks of boats from fiberglass, or build molds to make fiberglass boat hulls or decks. EPA's 2008 CTG recommends that the following operations should be covered: Open molding resin and gel coat operations (these include pigmented gel coat, clear gel coat, production resin, tooling gel coat, and tooling resin); resin and gel coat mixing operations; and resin and gel coat application equipment cleaning operations.

EPA's 2008 CTG recommends the following VOC reduction measures: VOC emission limits for molding resins and gel coats; work practices for resin and gel coat mixing containers; and VOC content and vapor pressure limits for cleaning materials. Recommended VOC emission limits for open molding resin and gel coat operations are shown in Table 1. A more detailed explanation for determining the VOC emission limits for molding resin and gel coats can be found in the Technical Support Document (TSD) for this rulemaking under Docket ID Number EPA-R03-OAR-2016-0189 and available online at http://www.regulations.gov.

Background Approved Measures

On June 6, 2016, we proposed in the Federal Register (81 FR 36251) management modifications to implement Framework Adjustment 3 to the Northeast Skate Complex Fishery Management (FMP), which includes catch specifications for fishing years 2016-2017. After reviewing public comments in response to the proposed rule, we are approving Framework 3 and the 2016-2017 specifications as detailed in our proposed rule.

Specifications including the acceptable biological catch (ABC), annual catch limit (ACL), annual catch target (ACT), and total allowable landings (TALs) for the skate wing and bait fisheries, as well as possession limits, may be specified for up to 2 years. The 2016-2017 skate complex ABC and ACL is 31,081 metric tons (mt). After removing management uncertainty from the ABC, the ACT that remains is 23,311 mt. After removing discards and state landings from the ACT, the TAL that remains is 12,872 mt. Tables 1 and 2 (below) detail TALs and possession limits for the skate wing and skate bait fisheries—there are no possession limit changes from last year. These specifications and possession limits remain in effect until they are replaced.

Framework 3 modifies the skate wing TAL so that 57 percent of the skate wing TAL is allocated in Season 1 (May 1-August 31) with the remainder allocated in Season 2 (September 1-April 30). This modification was made because skate fishing effort is higher earlier in the fishing year and a seasonal apportionment with in-season change authority should ensure year-round fishing opportunities. Any portion of the Season 1 TAL that is unused is rolled over into Season 2. From May 1 through August 17, the Regional Administrator is required to reduce the directed skate wing possession limit for vessels fishing under a day-at-sea (DAS) from 2,600 lb (1,179 kg) to an incidental catch level of 500 lb (227 kg) when the fishery is projected to land 85 percent of its Season 1 quota. However, if harvest levels are projected to reach 85 percent sometime between August 18 and August 31 (the last two weeks of Season 1), the Regional Administrator maintains discretion on whether or not to reduce the directed possession limit. This option is included because it is difficult and sometimes impracticable for the agency to rapidly close a fishery immediately prior to the end of a season.

The DAS possession limit increases to 4,100 lb (1,860 kg) at the start of Season 2 (September 1) with the remainder of the annual skate wing TAL available in Season 2. In Season 2, the Regional Administrator may reduce the possession limit to 500 lb (227 kg) when 85 percent of the annual skate wing TAL is projected to have been landed, consistent with previous regulations. These in-season possession limit reductions are designed to mitigate the potential for prolonged closures for the directed skate fishery while still allowing some incidental catches to be landed.

We received four public comments on the proposed rule, including submissions on behalf of the Cape Cod Commercial Fishermen's Alliance and Shark Advocates International.

Comment 1: The Cape Cod Commercial Fishermen's Alliance and Shark Advocates International support the proposed seasonal specifications and possession limits.

Response 1: We are approving Framework 3 and the accompanying specifications and possession limits because these measures promote optimum yield, fishery conservation, and are based upon the best available science.

Comment 2: One commenter argued for a dramatic increase in quota while one commenter contended a dramatic decrease in quota is needed.

Response 2: The ABC, ACL, and TAL are based on the best available science with advice from the Council's Scientific and Statistical Committee. Therefore, we are approving this action because it is based on the best available science consistent with National Standard 2 of the Magnuson-Stevens Fishery Conservation and Management Act (Magnuson-Stevens Act) and with the Council recommendation. The proposed rule (81 FR 36251, June 6, 2016) details the justifications for modifying the specifications. These specifications are expected to result in optimum yield while ensuring that the stocks are not overfished or subject to overfishing (except for thorny skate, which is a prohibited species), consistent with National Standard 1 of the Magnuson-Stevens Act.

Comment 3: Shark Advocates International urged us to elevate the priority of examining and addressing the severe depletion of thorny skates.

Response 3: Although this comment does not directly apply to Framework 3, we are concerned with the stock status of thorny skates. In May 2015, we received a petition to list thorny skates as threatened or endangered. We found that the petition to list thorny skate presented substantial scientific or commercial information indicating that the petitioned action may be warranted and solicited information from the public that could be included in a candidate species status review (80 FR 65175, October 26, 2015). A thorny skate status review occurred on May 19, 2016, in Gloucester, MA. A report from the review is currently being developed and will undergo peer-review prior to being shared with the public.

Comment 4: The Cape Cod Commercial Fishermen's Alliance offered support for the Council's decision to further pursue limited access for the skate fishery.

Response 4: The Council has prioritized consideration of limiting access to the skate fishery. We will continue working with the Council so that it can research, review, and address its management priorities.

After further review of the regulatory text deemed by the Council and included in the proposed rule, we are revising the regulatory language previously proposed at § 648.322(b)(2) to be consistent with the Regional Administrator's discretion to reduce the Season 2 skate-wing possession limit as provided in Framework Adjustment 1 to the FMP (76 FR 28328; May 17, 2011). These regulatory language changes do not alter the management measures specified in the proposed rule and are consistent with the intent of Framework 3.

The Administrator, Greater Atlantic Region, NMFS, determined that Framework 3 to the FMP is necessary for the conservation and management of the northeast skate complex and that it is consistent with the Magnuson-Stevens Fishery Conservation and Management Act and other applicable laws.

There is good cause under 5 U.S.C. 553(d)(3) to waive the 30-day delay in effective date. This final rule reduces TALs which are administered through different fishing seasons. Season 1 for the skate wing fishery began on May 1 and ends on August 31. It is possible that the fishery could approach a seasonal landing limit which would require possession limits to be reduced to avoid overharvesting. Waiving the 30-day implementation delay is necessary to ensure timely implementation of the reduced catch limits. Retaining a 30-day delay in implementation would be contrary to the public interest because it could result in a catch limit being exceeded. Immediate implementation of the new TALs, including the new seasonal measures, will benefit fishermen by helping to prevent overages and potentially providing fishing opportunities more evenly throughout the fishing year. For these reasons, NMFS finds it both contrary to the public interest and unnecessary to provide a 30-day delay in implementation.

This final rule has been determined to be not significant for the purpose of E.O. 12866.

A final regulatory flexibility analysis (FRFA) was prepared. The FRFA incorporates the initial regulatory flexibility analysis (IRFA), a summary of the significant issues raised by the public comments in response to the IRFA, and NMFS responses to those comments. A copy of this analysis is available from the Council [or NMFS] (see ADDRESSES).

A description of the action, why it is being considered, and the legal basis were contained in the preamble of the proposed rule (81 FR 36251, June 6, 2016) and are not repeated here. The public did not provide any comments on the IRFA; therefore, there are no changes made in this final rule with regards to the economic analyses and impacts.

This final rule would impact fishing vessels, including commercial fishing entities. In 2014, there were 2,012 vessels that held an open access skate permit. However, only 431 of those permit holders were active participants in the commercial skate fishery (i.e., landed any amount of skates). Because there are several ownership affiliate groups (as explained in greater detail in the proposed rule) there are actually 364 active vessels in the skate fishery, only 3 of which qualified as large businesses.

On December 29, 2015, 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) previous 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, respectively, of the U.S. commercial fishing industry.

An IRFA was developed for this regulatory action prior to July 1, 2016, using SBA's previous size standards. Under the SBA's size standards, 3 of 364 skate fishing entities were determined to be large. NMFS has qualitatively reviewed the analyses prepared for this action using the new size standard. The new standard could result in a few more commercial shellfish businesses being considered small (due to the increase in small business size standards). In addition, the new standard could result in fewer commercial finfish businesses being considered small (due to the decrease in size standards). Skates are only responsible for a small fraction of total landings and revenue for any of these vessels so it is unlikely that these size-standard changes would have any impact on the previously conducted analyses.

This final rule does not introduce any new reporting, recordkeeping, or other compliance requirements.

The ACL alternative described in the preambles of the proposed rule and this rule represents an ACL reduction in comparison to previous years' ACLs (maintaining the status quo measures). However, we do not anticipate any significant economic impacts on small entities to result from this action. While there is an overall reduction in the TAL, Framework 3 analyses indicate that actual skate landings in recent years have been close to the TAL we are approving for fishing years 2016-2017. This suggests that it is unlikely that potential revenue losses would be directly commensurate with the TAL reduction. By contrast, maintaining the status quo ACL is inconsistent with the stated objectives because it does not represent the best available science or the goals and objectives of the FMP. The seasonal allocation for the skate-wing fishery effected by this rule was developed to coincide with fishing effort so that more quota is allocated during the months when there is greater fishing effort. This is expected to reduce the risk of the fishery approaching a seasonal quota and having its possession limits reduced. The Council considered reducing the skate-wing possession limits due to the reduced TAL but elected to keep the status quo possession limits to further mitigate economic impacts from the ACL reductions. For these reasons, we do not expect revenues to be significantly impacted.

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 letter to permit holders that also serves as small entity compliance guide was prepared. Copies of this final rule are available from the Greater Atlantic Regional Fisheries Office (GARFO), and the compliance guide, i.e., permit holder letter, will be sent to all holders of permits for the skate fishery. The guide and this final rule will be posted or publically available on the GARFO Web site.

For the reasons set out in the preamble, NMFS amends 50 CFR part 648 as follows: