Federal Register Vol. 81, No.168,

This interim rule is issued under the Order (7 CFR part 1217). The Order is authorized under the Commodity Promotion, Research and Information Act of 1996 (1996 Act) (7 U.S.C. 7411-7425).

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

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

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

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

This interim rule invites comments on revising the time frame for continuance referenda under the Order. The Order is administered by the Board with oversight by USDA. The Order requires USDA to conduct a continuance referendum five years after the program took effect (2011). This action revises this time frame from five years (2016) to no later than seven years (2018). This will allow time for USDA to complete a separate rulemaking action on the Order's exemption threshold. That rulemaking is being initiated in response to a federal district court decision in Resolute. Once USDA completes that action, a referendum will be conducted. The results of that rulemaking could impact who votes in the referendum and who pays assessments under the program.

The softwood lumber program was promulgated in 2011. Assessment collection began in January 2012. Under the Order, assessments are collected from U.S. manufacturers (domestic) and importers and used for projects designed to increase the demand for softwood lumber within the United States. Softwood lumber is used in products like flooring, siding and framing. Entities that domestically ship or import less than 15 million board feet annually are exempt from paying assessments.

Section 518 of the 1996 Act (7 U.S.C. 7417) authorizes continuance referenda. Paragraph (b) of that section requires USDA to conduct a referendum not later than seven years after assessments first begin under an order. Under § 1217.81(b)(2) of the softwood lumber Order, USDA must conduct a referendum five years after the program took effect to determine whether persons subject to assessment favor continuance of the Order, and then every five years thereafter. A referendum was initially scheduled for August 2016.

USDA is conducting an analysis on the 15 million board foot exemption threshold under the Order, as specified in paragraphs (a) and (b) of section 1217.53. USDA is analyzing this threshold based on recent data and will publish the results of its analysis for public comment in a future rulemaking action. Once this rulemaking is completed, USDA will conduct a referendum. The results of that rulemaking could impact who votes in the referendum and who pays assessments under the program.

USDA will be initiating the future rulemaking action on the Order's exemption threshold in response to a May 2016 federal district court decision in Resolute. All program obligations, including the collection of assessments and filing of reports, remain in effect.

Therefore, USDA has postponed the August 2016 referendum and is revising paragraph (2) in section 1217.81(b) to specify that a referendum must be conducted no later than seven years (2018) after the program took effect. This will allow time for USDA to complete the rulemaking action on the exemption threshold under the program and conduct a referendum. Section 1217.81(b)(2) is revised accordingly. Authority for USDA to amend the Order is provided in section 1217.87 of the Order and in section 514(d) of the 1996 Act (7 U.S.C. 7413).

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

The purpose of the RFA is to fit regulatory actions to the scale of businesses subject to such actions so that small businesses will not be disproportionately burdened. The Small Business Administration defines, in 13 CFR part 121, small agricultural producers as those having annual receipts of no more than $750,000 and small agricultural service firms (domestic manufacturers and importers) as those having annual receipts of no more than $7.5 million.

Based on 2015 Board data, it is estimated that there are about 375 domestic manufacturers of softwood lumber in the United States. Using an average price of $330 per thousand board feet,1 a domestic manufacturer who ships less than about 23 million board feet per year would be considered a small entity. It is estimated that fewer than 240 domestic manufacturers, or 64 percent, ship under 23 million board feet annually.

Likewise, based on 2015 U.S. Customs and Border Protection (Customs) data, it is estimated there are 890 importers of softwood lumber. About 790 importers, or 89 percent, each imported less than $7.5 million worth of softwood lumber annually. Thus, for purposes of the RFA, the majority of domestic manufacturers and importers of softwood lumber would be considered small entities.

Regarding value of the commodity, with domestic consumption estimated at 43.9 billion board feet in 2015,2 and using a price of $330 per thousand board feet, the annual domestic value for softwood lumber is about $14.5 billion. According to 2015 Customs data, the annual value for softwood lumber imports is about $5.0 billion.

This interim rule invites comments on revising the time frame for continuance referenda under the Order. The Order is administered by the Board with oversight by USDA. Section 1217.81(b)(2) of the Order requires USDA to conduct a continuance referendum five years after the program took effect (2011). This action revises this section to change the time frame from five years (2016) to no later than seven years (2018). This will allow time for USDA to complete a separate rulemaking action on the Order's exemption threshold. That rulemaking is being initiated in response to a federal district court decision in Resolute. Once USDA completes that action, a referendum will be conducted. The results of that rulemaking could impact who votes in the referendum and who pays assessments under the program. Authority for this action is provided in section 1217.87 of the Order and in section 514(d) of the 1996 Act (7 U.S.C. 7413).

Regarding the economic impact of this interim rule, this change is administrative in nature. Postponing the 2016 referendum will allow time for USDA to complete a separate rulemaking action on the Order's exemption threshold and conduct a referendum as described above. The results of that rulemaking could impact who votes in the referendum and who pays assessments under the program.

Regarding alternatives, conducting the referendum as initially planned in 2016 would cause confusion in the industry. USDA is currently conducting an analysis on the exemption threshold under the Order and will publish the results in a separate rulemaking action. That action is being initiated in response to Resolute. Once USDA completes that action, a referendum will be conducted. The results of that rulemaking action could impact who votes in the referendum.

In accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. Chapter 35), the information collection and recordkeeping requirements that are imposed by the Order have been approved previously under OMB control number 0581-0093. This interim rule imposes no additional reporting and recordkeeping burden on domestic manufacturer and importers of softwood lumber.

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

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

Regarding outreach efforts, USDA announced at the Board's meeting on May 25, 2016, that the referendum scheduled for August 2016 would be postponed to a future to-be-determined date. USDA also announced at the meeting that it would publish a notice in the Federal Register on the postponement. After the meeting, the Board issued a newsflash to industry members advising them accordingly.

A 60-day comment period is provided to allow interested persons to respond to this interim rule. All written comments received in response to this rule by the date specified will be considered prior to finalizing this action.

After consideration of all relevant material presented, and other information, it is found that this interim rule, as hereinafter set forth, will tend to effectuate the declared purposes of the 1996 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 interim rule extends the time frame for USDA to conduct a referendum under the Order from five years (2016) after the program took effect to no later than seven years (2018); (2) postponing the 2016 referendum will give USDA time to complete a separate rulemaking action on the Order's exemption threshold that is being initiated in response to a May 2016 federal district court decision in Resolute; (3) USDA announced at the Board's meeting on May 25, 2016, that the 2016 referendum would be postponed, and the Board subsequently issued a newsflash to industry members advising them of the postponed referendum; and (4) this rule provides a 60-day comment period and any comments received will be considered prior to finalization of this rule.

For the reasons set forth in the preamble, 7 CFR part 1217 is amended as follows:

Background

Under the Virus-Serum-Toxin Act (the Act, 21 U.S.C. 151-159) and regulations issued under the Act, the Animal and Plant Health Inspection Service (APHIS) grants licenses or permits for biological products which are pure, safe, potent, and efficacious when used according to label instructions. The regulations in 9 CFR part 112, “Packaging and Labeling” (referred to below as the regulations), prescribe requirements for the packaging and labeling of veterinary biological products including requirements applicable to final container labels, carton labels, and enclosures. The main purpose of the regulations in part 112 is to regulate the packaging and labeling of veterinary biologics in a comprehensive manner, which includes ensuring that labeling provides adequate instructions for the proper use of the product, including vaccination schedules, warnings, and cautions. Complete labeling (either on the product or accompanying the product) must be reviewed and approved by APHIS in accordance with the regulations in part 112 prior to their use.

Although the science of immunology and our understanding of how veterinary biologics work have advanced substantially in recent years, communicating such information to consumers and veterinarians by way of updated labeling claims, cautions, and warnings is a top priority of APHIS. Therefore, on January 13, 2011, we published in the Federal Register (76 FR 2268-2277, Docket No. APHIS-2008-0008) a proposal 1 to amend the regulations to make veterinary biologics labeling requirements more consistent with current science and veterinary practice.

We solicited comments concerning our proposal for 60 days ending March 14, 2011. We received six comments from five commenters by that date. The comments were from licensees, permittees, veterinary biologics industry associations, and a veterinary medical association. All of the commenters were generally supportive of the proposed rule, but raised a number of questions and concerns about its provisions. They are discussed below by topic.

Two commenters noted that the proposed rule states that the abbreviated true name must be identical to that shown on the product license. One commenter stated that the use of abbreviations for true names on small labels would be beneficial only if they are standardized. This commenter expressed concern that without standardization, the use of such abbreviations could result in confusion. The other commenter stated that it was unclear whether the proposal means that a standardized abbreviation that corresponds to the true name shown on the license must be used, that the abbreviation will be negotiated on a case-by-case basis and noted on the product license, or that no abbreviations may be used unless they are also reflected on the product license. The commenter further stated that reissuing licenses for every approved biologic product simply to add abbreviations is unreasonable, and that APHIS should issue a memorandum with a list of standardized abbreviations for use by licensees.

APHIS will assign abbreviated true names when issuing new product licenses, when there is a need to reissue a product license (e.g., renewal of Conditional Licenses, or change in ownership) or upon specific request.

One commenter stated that container labels for diagnostic kits should not be required to include both the true name of the kit and the functional and/or chemical name of the reagent. The commenter noted that the proposed rule includes a requirement to add product code numbers and that this will provide consumers with a reference to connect the component with the specific kit. The commenter further stated that adding the true name would not give consumers any additional useful information, but would significantly increase the amount of text required on the label.

APHIS agrees that reagents can be linked to a particular kit through the product code as well as the true name, and we have amended § 112.2(a)(3)(ii) to specify that the product code number may be used in lieu of the true name on small containers for critical components of diagnostic kits. In the case of small reagent containers within a diagnostic kit, those reagents that should not be used with other kits must bear functional/chemical name of the reagent and the applicable kit product code, but not necessarily the true name of the kit. Reagents that are considered interchangeable need not have the kit product code, but must bear the functional/chemical name of the reagent.

One commenter stated that the proposed rule's “Background” section indicates that carton labels and enclosures would be required to contain both the full true name and the associated abbreviation, but that the regulatory text does not include such a provision. Two commenters also stated that if a licensee does not use an abbreviation on the final container label, then an explanation of the abbreviation should not be required on the carton label and enclosure.

APHIS acknowledges that there was an inconsistency between the preamble and regulatory text in the proposed rule; the provisions in the regulatory text are correct. APHIS also agrees with the commenters that an explanation of an abbreviation should not be required on the carton label and enclosure when the abbreviation is not used on the final container label. We note that § 112.2(a)(1)(i) states that the abbreviation may be used on small final containers, provided that the complete true name must appear on the carton label and enclosures, but does not require explanations of abbreviation if abbreviations are not used.

One commenter stated that firms should be allowed to use existing abbreviated names and have input on newly assigned abbreviated names. The commenter noted that abbreviated names are currently used as part of foreign registrations and that any changes would require significant submission and label review (including registration fees) by several authorities. The commenter also noted that these names are often part of corporate branding strategies that are costly to develop and implement. The commenter stated that unless there are specific concerns with an existing or requested abbreviated name (e.g., mislabeling), APHIS should not require changes in existing products nor reject reasonable suggestions by the firms.

APHIS is aware that there are a variety of issues associated with changing established abbreviations and may allow licensees to use established abbreviations on export labels on a case-by-case basis.

Two commenters stated that in the case of small final container labels, the requirement for a consumer contact telephone number in § 112.2(a)(2) should be waived when the telephone number is included on the carton label or enclosure. Another commenter stated that there will likely be instances where it will be difficult to include all contact information on a small final container without rendering the text illegible. This commenter stated that in these instances, there should be an exception allowing this information to be provided on a minimum of one labeling component (e.g., carton label or enclosure).

For small, single-dose containers, APHIS will consider this requirement to be satisfied if all contact information, including the telephone number, is provided on the carton and enclosure labeling materials. We have amended the regulatory text to read “Provided, that in the case of a biological product exported from the United States in labeled final containers, a consumer contact telephone number is not required; however, small single dose containers marketed in the United States must include contact telephone information on carton and enclosures,” to clarify this requirement.

Two commenters opposed requiring a product code number on labeling materials. The commenters stated that instead of facilitating product identification in the field, it would more likely add to confusion by those trying to identify a product in distribution channels and in the field. The commenters stated that historically there has been no difficulty using a licensee's product serial number to trace it back to a specific product code.

APHIS disagrees with the commenters. We believe that adding the product code will provide a valuable piece of information that will allow the consumer to differentiate between products with the same trade name. For example, if a company makes a product which contains a dye, and another which does not, the products would have different products codes but the same true name. If a consumer reports a problem with one of these products, we would not be able to identify which product caused the problem using only the true name.

One commenter asked whether peel-off labels intended for insertion in medical records would be required to contain the veterinary license number or veterinary permit number, the Product Code number, and the serial number. The commenter expressed concern that this may not be possible without rendering text illegible.

APHIS notes that there are currently no regulations that specify the information that must appear on a peel-off portion of a label, nor would this final rule establish any. Instead, it requires certain information appear on container labels, with exceptions given to small final containers and containers of interchangeable reagents included in diagnostic test kits.

One commenter asked how the proposal addresses combination packages, where the product code for the combination package is different from the product code for the lyophilized cake, which is different from the product code for the diluent vaccine. Similarly, one commenter stated that if the requirement for the product code number is kept, then biological product container labels should also be exempt from the requirement unless they are stand-alone presentations. The commenter stated that there are situations in which desiccated and diluent components can be used in multiple licensed combinations.

APHIS agrees with the commenters that having different product codes on components and a combination package carton could be confusing to consumers. We have amended the regulatory text by adding a new paragraph (iii) to § 112.2(a)(3) that allows container labels for components of combination packages to read “see carton for product code.” In addition, we are adding a definition of “combination package” to § 101.3. Because combination packages, which contains two or more licensed biological products, are not a new concept to the regulated industry, and further, the term “combination package” is used in the regulations, specifically in § 101.3(h) and § 112.2(a)(9)(iv), we believe that it would be beneficial to define this term in order to clarify these new packaging and labeling requirements.

One commenter did not object to the revision of the description of “full directions for use” in § 112.2(a)(5)(i) but suggested two changes. The commenter stated first that the phrase “very small” should be deleted in the first line, because this would make the question of applicability needlessly complicated and second that “carton tray covers” should be added to the list of locations that may be too small. Another commenter suggested revising § 112.2(a)(5)(i) to read “In case of limited space on final container labels, cartons, or carton tray covers, a statement shall be used as to where such information is to be found . . .”. This commenter stated that APHIS currently allows the reference to a carton or insert for complete information, and requested the revision to ensure that the practice can be continued.

APHIS does not agree that limited space is a problem with cartons or carton tray covers. We believe that with the exception of small containers, there is ample space for this information. We agree with the second commenter that limited space on final container labels may present a problem and have amended the requirements to allow a statement referring to a carton or insert on final container labels. We have also removed the words “very small” as requested by the first commenter. The provisions now appear in § 112.2(a)(5).

One commenter stated that as written, the proposed requirements in § 112.2(a)(7) would apply to both viable and killed products, but that they should instead apply only to products containing viable organisms because there is no rationale for requiring inactivation of inactivated products.

APHIS agrees with the commenter. We have amended the regulatory text to clarify that the requirement to inactivate applies only to product containing viable organisms.

One commenter stated that § 112.2(a)(7) should give licensees the added flexibility of recognizing situations in which the warning would not be on the container label. The commenter suggested rephrasing the warning to read “Do not mix with other biological products except as specified on this label [or carton, or insert, as applicable].”

APHIS agrees that minor modifications of the text in the regulations may be appropriate. We have amended the introductory text of § 112.2(a)(7) to allow added flexibility for statements of equivalent intent.

Two commenters stated that there should be a shortened version of the warning for small-label situations, such as, “Do not mix with other products.” This would allow for use of a larger, more legible font size for the warning. The same two commenters stated that the warning in § 112.2(a)(7)(ii) should be revised to read “In case of human exposure, contact a physician.” The commenters stated that this language would convey the same information, would be more concise, and would allow the use of a larger, more legible font size for the warning.

APHIS agrees with the commenters that these shorter warning statements are appropriate. We have amended the recommended statements to read “Do not mix with other products, except as specified on this label” and “In case of human exposure, contact a physician.” As we explained above, we have also amended the introductory text of § 112.2(a)(7) to allow equivalent statements.

Two commenters stated that there should be a shortened version of the inactivation notice for small-container labels, such as “Inactivate unused contents.” This would allow for use of a larger, more legible font size for the warning. Another commenter stated that the additional statements will contribute to space and legibility issues on labels. The commenter stated that the additional statements should be allowed to be included on an insert or carton label.

APHIS will consider shortened versions on a case-by-case basis to accommodate space issues.

One commenter stated that the preamble of the proposed rule states that chemical treatment will be required prior to disposal of containers containing viable or dangerous organisms or viruses; however, § 112.2(a)(7)(iii) states “inactivate” which suggests that other forms of inactivation other than chemical will be allowed. The commenter asked if that was the intent.

The commenter is correct that there was a discrepancy between the preamble and proposed regulatory text. Consumers may use any suitable means to inactivate unused contents.

One commenter stated that the proposed changes to § 112.7(g)(4) would require changes in revaccination recommendations for all instances in which there are not sufficient data for specific recommendations. The commenter stated that these changes should be applied only prospectively as the labeling for such products are otherwise modified.

APHIS does not agree that this rule should apply only to new labels that are submitted for approval, and not to labels that are currently approved. We believe that having two standards for information that appears on labels would be confusing to the public and to the industry. We note that we have made nonsubstantive, editorial changes to § 112.7 and this requirement now appears in paragraph (f) rather than paragraph (g)(4).

One commenter supported the proposed changes to § 112.6(a) to allow flexibility in the packaging of diluent with biological products. The commenter stated, however, that proposed § 112.2(f)(1) has not been revised to authorize this flexibility, and recommended that it be changed accordingly.

The commenter is correct. We have amended the paragraph to read “If a carton label or an enclosure is required to complete the labeling for a multiple-dose final container of liquid biological product, only one final container, with a container of diluent if applicable, shall be packaged in each carton: Provided, That if the multiple-dose final container is fully labeled without a carton label or enclosure, two or more final containers, and a corresponding number of diluent containers, may be packaged in a single carton which shall be considered a shipping box. Labels or stickers for shipping boxes shall not contain false or misleading information, but need not be submitted to APHIS for approval.”

One commenter stated that the term “non-antibiotic preservative” is not defined in § 101.3 and asked for additional clarification so that firms could comply with the labeling requirement.

The regulations previously restricted disclosure to antibiotic preservatives, but APHIS believes that non-antibiotic preservatives may need to be disposed of properly (e.g., merthiolate, phenol) or have consumer safety impact (e.g., sodium azide). This information needs to be readily available to consumers. Any preservative, regardless of nature, should be disclosed. We have amended § 112.2(a)(10) to remove the specific references to antibiotic and non-antibiotic preservatives.

One commenter asked whether residual traces of an inactivating agent would be considered a preservative under proposed § 112.2(a)(10).

Under § 112.2(a)(10), inactivants are not considered preservatives.

One commenter also asked whether, if this change is adopted, there would not be any reason to maintain a distinction between antibiotic and non-antibiotic preservatives.

APHIS agrees that there is no need to maintain that distinction. We have amended § 112.2(a)(10) to specify only that a statement naming the preservative used must appear on the final container label, or on cartons and enclosures, if used.

Two commenters noted that there are differing opinions about what is or is not a preservative. Both commenters stated these concerns could be resolved by revising the paragraph to state that the labeling will include the preservatives as listed in section IV.B of the Outline of Production. One commenter stated that if APHIS does not modify the proposed rule to identify only those items in section IV.B of the Outline of Production, label identification should not apply simply because a non-antibiotic preservative is used at any step in the production process. The commenter stated that such materials may be used in stages of the manufacturing process, yet through a dilution effect or processes the residual levels are determined to be nominal. The commenter stated that APHIS should consider the establishment of a threshold for determining the level of non-antibiotic preservatives at which this requirement is triggered.

Any preservatives still remaining at detectable levels in completed products should be declared on labeling. We have amended § 112.2(a)(10) to clarify this requirement. We will develop guidance on this issue and make it available in an update to VS Memorandum 800.54 (Guidelines for the Preparation and Review of Labeling Materials). This memorandum is available on the APHIS Web site at https://www.aphis.usda.gov/aphis/ourfocus/animalhealth/veterinary-biologics/biologics-regulations-and-guidance/ct_vb_vs_memos.

One commenter stated that concerns for potential residues in food and unfavorable reactions in animals are not applicable to diagnostic test kits, regardless of whether the preservatives used are antibiotic or non-antibiotic.

APHIS agrees, but describing the potentially hazardous ingredients in any biological product is also important from a standpoint of proper disposal. For this reason, this rule applies to diagnostic test kits.

One commenter stated that potential environmental harm is not based on whether the preservative is antibiotic or non-antibiotic. The commenter further stated that the distinction is arbitrary in assessing environmental harm and does not support a requirement to include non-antibiotic preservatives but rather to exempt antibiotic preservatives. The commenter also expressed concern that extending the rule to include considerations of environmental harm seems to go beyond the scope of the Virus-Serum-Toxin Act.

Several States and municipalities have legislation regarding the disposal of certain products, such as those containing mercury. Disclosing all preservatives facilitates proper disposal of products in accordance with State laws and local ordinances.

Two commenters stated that the preamble of the proposed rule indicates that the change in § 112.2(d)(3) to require the statement “for use in animals only” instead of “for veterinary use only” is intended to clarify that the product is for use in animals rather than for use in humans. The commenters stated that they did not believe this was an issue of significant confusion. One commenter further stated that because this change is not related to concerns regarding the purity, potency, safety, or efficacy of veterinary biological products, APHIS should allow for the use of alternative similar statements, including the current “for veterinary use only.” The other commenter stated that providing for alternatives would allow the use of a single label, both domestically and internationally, for a product that may be exported to a jurisdiction where minor differences in wording are required. The commenter stated that such a policy would promote the export of veterinary biologics from the United States. The commenter also noted that Canada requires the label statement “Veterinary use only.”

APHIS prefers the warning “for animal use only” as a replacement for “for veterinary use only” on domestic labeling but § 112.2(d)(3) states that “for animal use” may be used, not that it must be used. This does not preclude alternative wording where justified.

Two commenters stated that it is not clear why the proposed regulations direct the licensee to put the warning on “carton labels and enclosures” rather than the more general “labeling as appropriate.” The commenter recommended that the more general language be used.

APHIS agrees with the commenters and has amended § 112.2(d)(3) to use the more general language suggested.

Three commenters noted that proposed § 112.2(e) contains requirements that differ significantly from the provisions of VS Memorandum 800.208 (Special Labels for Product for Export). One commenter stated that this section should not be amended at all and the proposed changes should be rejected. Another commenter stated that the section needs to be rewritten to reflect the more practical policy of the memorandum. One commenter also stated that the proposed rule does not include consideration for foreign-language portions of multi-language kit labeling. The commenter pointed out that a variation in a test protocol might be required in a specific country and asked that APHIS allow the protocol to appear in the specific language with an accompanying statement that it is approved only in the identified country.

APHIS is aware that some foreign regulatory authorities do not provide label approvals per se. We have amended § 112.2(e) to provide flexibility in the type of foreign documentation provided and to be consistent with established guidelines currently in VS Memorandum 800.208.

Two commenters raised concerns about the proposed requirements for carton tray covers. One commenter stated that it is appropriate to address labeling on tray covers, but that the language of proposed § 112.2(f)(2) would require all labeling to be on the outside face of the tray. The commenter stated that in the case of small covers, there should be flexibility to allow a sentence referring the user to another location of full labeling information. The commenter also stated that § 112.2(f)(2) should be amended to be consistent with, or combined with § 112.2(a)(5). The commenter further stated that the regulations should indicate which information should be immediately visible to the consumer and which could be provided elsewhere with reference to that location on the carton. The other commenter stated that § 112.2(f)(2) should be amended to read “In case of limited space on final container labels, carton labels, or carton tray covers, a statement shall be used as to where such information is to be found . . .” This commenter stated that APHIS currently allows the reference to an enclosure for complete information and the proposal should be amended to allow that practice to continue.

As we explained in the proposed rule, carton tray covers have come to be extensively used in the packaging of diagnostic test kits. They are also used in the packaging of multi-packs of single-dose vaccine. The proposed change would ensure that the information shown on carton tray covers is equivalent to other types of cartons and is presented in a manner that is accessible to the consumer without having to open the product. We are making no changes in response to this comment.

The commenter stated that, according to the preamble of the proposed rule, the changes to § 112.6(a) are intended to remove the requirement for a multiple-dose final product to be packaged with only one vial of diluent. The commenter stated, however, that the last sentence as proposed requires “a carton or enclosure in order to provide all information required under the regulations.”

The regulatory provisions are intended to allow multiple containers in one carton if the container labels contain all the information required by regulations. If the containers do not have all the information, and instead rely on a carton or enclosure for additional information, then the containers must continue to be packaged one per carton to ensure complete labeling for each product unit.

One commenter stated that the proposed revisions to § 112.7(f) would require a pregnancy warning on all modified live and inactivated vaccines for use in mammals unless the vaccine has been shown to be safe in pregnant animals. The commenter stated that this requirement should be applied only to new products and to products with antigens recognized as having a risk in pregnant animals. The commenter stated further that these changes should be applied only prospectively as the labeling for such products are otherwise modified.

APHIS believes that it is appropriate for the label to convey information on whether or not the product has been tested in pregnant animals in order to convey meaningful care information regarding the health of the fetus. We have amended the required statement to read “This product has not been tested in pregnant animals” and we will continue to allow equivalent statements acceptable to APHIS. As a result of editorial changes made to § 112.7, these requirements now appear in paragraph (e).

One commenter stated that the preamble of the proposed rule states that the regulations would require labeling to bear the following statement: “A specific revaccination schedule has not been established for this product; consultation with a veterinarian is recommended.” The commenter agreed that this is an appropriate label statement, but noted that the actual language proposed is different, stating “The need for annual booster vaccinations has not been established for this product.” The commenter requested that the language be amended to allow for the use of equivalent statements and to be provided in an enclosure or other location, with an appropriate reference to the location, when space is limited on labels or outer packaging. The commenter stated that this would allow flexibility to tailor statements where necessary to meet differences unique to species and/or antigens. Another commenter stated that the requirement for a revaccination statement should only be applied prospectively as the labeling for such products is otherwise modified.

APHIS has amended the regulatory text to agree with the preamble, as the latter is more inclusive. We disagree that the requirement should be applied prospectively. Having two standards for the information that appears on labels would be confusing to the public and to the industry.

Three commenters asked that the implementation schedule be changed from 3 years to 5 years. One commenter stated that the proposed changes have in most cases been under discussion for more than a decade, which argues against the need for urgency in the implementation of the new requirements. This commenter stated further that APHIS underestimates the magnitude of the tasks required to implement the changes.

APHIS notes that a recent final rule (80 FR 39669-39675, Docket No. APHIS-2011-0049), which amended the regulations to provide for the use of a simpler labeling format, provided for a 4-year phase-in of the labeling and data summary requirements, with additional extensions of up to 2 years allowed under certain conditions. In order to be consistent with that rule and to minimize sequential label changes, we will also adopt a 4-year phase-in of the packaging and labeling requirements in this rule, with additional extensions of up to 2 years allowed under certain conditions. As we explained in that final rule, we intend to implement that rule and this one concurrently, and we will coordinate implementation with industry.

Section 103.3(d) currently requires that a request for authorization to ship an unlicensed biological product for experimental study include, among other things, two copies of labels or label sketches which show the name or identification of the product and bear the statement “Notice! For experimental use only—Not For Sale” or equivalent statement. However, most applicants submit these requests electronically, and those that still arrive on paper are scanned upon receipt. The requirement that two copies be submitted is no longer necessary, and we are amending this paragraph to require only one copy of the labels or label sketches.

We are amending § 112.5(a) to indicate that transmittal forms to be used with submissions of sketches and labels may be found on the APHIS Web page.

We proposed to amend § 112.7(j)(1) and (2) to require that all but very small final container labels for feline panleukopenia vaccines contain recommendations for use. Specifically, we would have required that these recommendations state that for healthy cats vaccinated at less than 12 weeks of age, a second dose of the vaccine should be given at 12 to 16 weeks of age. Since the proposed rule was published, however, research has shown that the booster for the feline panleukopenia vaccine should not be given earlier than 16 weeks. Therefore we are amending the requirements in new paragraphs (i)(1) and (2) to read “. . . a second dose should be given no earlier than 16 weeks of age.”

We are amending § 113.206(d)(2) to update a reference to labeling requirements that now appear in § 112.7(h).

One commenter stated that the current “true name” system fails to uniquely and accurately identify products. The commenter stated that the system should be changed to correct this problem but did not specify how.

We did not propose to make any changes to the true name system in this rulemaking. We are aware of issues associated with the current system and will consider addressing this issue in a future action.

One commenter asked that APHIS remove the restriction upon the use of trade names for conditionally licensed products. Two commenters requested changes to § 112.8(c), which sets out requirements for labels on shipping containers of products for export. These issues are outside the scope of this rulemaking.

Therefore, for the reasons given in the proposed rule and in this document, we are adopting the proposed rule as a final rule, with the changes discussed in this document.

This final rule has been determined to be significant for the purposes of Executive Order 12866 and, therefore, has been reviewed by the Office of Management and Budget.

We have prepared an economic analysis for this rule. The economic analysis provides a cost-benefit analysis, as required by Executive Orders 12866 and 13563, which 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, and equity). Executive Order 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. The economic analysis also provides a final regulatory flexibility analysis that examines the potential economic effects of this rule on small entities, as required by the Regulatory Flexibility Act. The economic analysis is summarized below. Copies of the full analysis are available on the Regulations.gov Web site (see footnote 1 in this document for a link to Regulations.gov) or by contacting the person listed under FOR FURTHER INFORMATION CONTACT.

APHIS is amending the Virus-Serum-Toxin Act regulations regarding the packaging and labeling requirements for veterinary biologics products. Most of the changes are intended to increase the information readily available to consumers (such as veterinarians, livestock and dairy producers, pet stores, and animal health technicians). These changes are necessary to update and clarify labeling requirements for veterinary biologics licensees (manufacturers of veterinary biologics) and permittees (importers of veterinary biologics) to ensure that information provided in labeling is accurate with regard to the expected performance of the product.

This action will affect all veterinary biologics product licensees and permittees. Currently, there are approximately 100 veterinary biological establishments, including permittees, and the majority of them are small entities. These companies produce about 1,900 different products, and there are about 11,700 active approved labels for veterinary biologics. There were about 3,100 labels submitted for approval from June 2012 through May 2013 by about two-thirds of the companies. The average number of labels submitted per company over that time frame was 46 and the medianwas 8.

The veterinary biologics industry has grown substantially in the United States in recent years; the Census Bureau's Annual Survey of Manufacturers (ASM) reports that the annual shipment value of veterinary biological products increased by $2.06 billion (or 88 percent) from $2.34 billion in 2006 to $4.40 billion in 2010 and have been stable at around $4.33 to $4.60 billion from 2010 to 2014. In 2015, the United States exported about $1.2 billion and imported about $0.9 billion of veterinary biologic products, including exports and imports of veterinary medicaments which were packaged for retail sale.

The action will benefit consumers of veterinary biologic products and, ultimately, the animals they treat with those products. This is because the action aims to ensure that consumers have complete and up-to-date instructions for the proper use of those products, including vaccination schedules, warnings, and cautions.

We anticipate that the costs associated with this rule will be one-time costs to the industry that will overlap with the expected one-time costs of the single label claim rule (80 FR 39669-39675, Docket No. APHIS-2011-0049), which became effective on September 8, 2015. APHIS is allowing the manufacturers to delay implementing the single label claim rule until this rule becomes effective, so that the required label revisions by these two rules are being carried out concurrently. As addressed in the economic analysis of the single label claim rule, we expect the industry's one-time implementation costs associated with the labeling changes in these two rules will fall between about $1.1 million and $4.1 million, with a median estimate of about $2.4 million. Labor costs to plan and implement the required changes (about one-third of the total) and material costs for labeling and packaging (about 40 percent of the total) are key cost components. Other costs are: Label designing (about 20 percent of the total) and standardized summaries for efficacy and safety that are necessary for the single label claim rule (about 6 percent of the total, based on the median cost estimate). We expect that the costs for the industry will not cause significant economic impacts for most veterinary biologics licensees and permittees, and the benefits of this rule justify the costs.

This program/activity is listed in the Catalog of Federal Domestic Assistance under No. 10.025 and is subject to Executive Order 12372, which requires intergovernmental consultation with State and local officials. (See 2 CFR chapter IV.)

This final rule has been reviewed under Executive Order 12988, Civil Justice Reform. It is not intended to have retroactive effect. This rule will not preempt any State or local laws, regulations, or policies where they are necessary to address local disease conditions or eradication programs. However, where safety, efficacy, purity, and potency of biological products are concerned, it is the Agency's intent to occupy the field. This includes, but is not limited to, the regulation of labeling. Under the Act, Congress clearly intended that there be national uniformity in the regulation of these products. There are no administrative proceedings which must be exhausted prior to a judicial challenge to the regulations under this rule.

This rule has been reviewed in accordance with the requirements of Executive Order 13175, “Consultation and Coordination with Indian Tribal Governments.” Executive Order 13175 requires Federal agencies to consult and coordinate with tribes on a government-to-government basis on policies that have tribal implications, including regulations, legislative comments or proposed legislation, and other policy statements or actions that have substantial direct effects on one or more Indian tribes, on the relationship between the Federal Government and Indian tribes or on the distribution of power and responsibilities between the Federal Government and Indian tribes.

The Animal and Plant Health Inspection Service has assessed the impact of this rule on Indian tribes and determined that this rule does not, to our knowledge, have tribal implications that require tribal consultation under Executive Order 13175.

There are information collection activities in this rule. Therefore, in accordance with section 3507(d) of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.), we published a notice 2 in the Federal Register (80 FR 59725, Docket No. APHIS-2015-0066), announcing our intention to initiate this information collection to solicit comments. We are asking the Office of Management and Budget (OMB) to approve our use of this information collection for 3 years. When OMB notifies us of its decision, we will publish a document in the Federal Register providing notice of the assigned OMB control number.

The Animal and Plant Health Inspection Service is committed to compliance with the E-Government Act to promote the use of the Internet and other information technologies, to provide increased opportunities for citizen access to Government information and services, and for other purposes. For information pertinent to E-Government Act compliance related to this rule, please contact Ms. Kimberly Hardy, APHIS' Information Collection Coordinator, at (301) 851-2727.

Accordingly, we are amending 9 CFR parts 101, 103, 112, 113, and 114 as follows:

The objective of this final rule is to reflect changes to the FOIA by the FOIA Improvement Act of 2016 (Improvement Act). The Improvement Act addresses a range of procedural issues, including requirements that agencies establish a minimum of 90 days for requesters to file an administrative appeal and that they provide dispute resolution services at various times throughout the FOIA process. The Improvement Act also updates how fees are assessed.

We revise the regulations as follows:

(1) In § 1402.14,

a. By changing the appeals deadline from 30 days to 90 days in paragraph (b);

b. By adding FCSIC's FOIA Public Liaison and the Office of Government Information Services to the list of offices available to offer dispute resolution services in paragraph (b); and

(2) In § 1402.22, by redesignating existing paragraph (h) as paragraph (k) and adding new paragraphs (h), (i), and (j) with updated information about charging fees.

We have determined that the amendments mandated by the Improvement Act involve agency management and technical changes. Therefore, the amendments do not constitute a rulemaking under the Administrative Procedure Act (APA), 5 U.S.C. 551, 553(a)(2). Under the APA, the public may participate in the promulgation of rules that have a substantial impact on the public. The amendments to our regulations relate to agency management and technical changes only and are required by statute, and therefore, do not require public participation.

Even if these amendments were a rulemaking under 5 U.S.C. 551, 553(a)(2) of the APA, we have determined that notice and public comment are unnecessary and contrary to the public interest. Under 5 U.S.C. 553(b)(B) of the APA, an agency may publish regulations in final form when the agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to public interest. The proposed amendments are required by statute, do not involve Corporation discretion, and provide additional protections to the public through the existing regulations. Thus, notice and public procedure are impracticable, unnecessary, and contrary to the public interest.

Pursuant to section 605(b) of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.), the Corporation hereby certifies that the final rule will not have a significant economic impact on a substantial number of small entities.

As stated in the preamble, part 1402 of chapter XIV, title 12 of the Code of Federal Regulations is amended as follows:

Good Cause for Immediate Adoption Without Prior Notice

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq.) authorizes agencies to dispense with notice and comment procedures for rules when the agency for “good cause” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without seeking comment prior to the rulemaking.

Section 553(d)(3) of the Administrative Procedure Act requires that agencies publish a rule not less than 30 days before its effective date, except as otherwise provided by the agency for good cause found and published with the rule.

This document is correcting errors that are in 14 CFR 415.35, 415.37, 415.41, 415.55, 417.15, 417.107, 417.121, 417.231, 417.301, 417.303, 417.305, and Appendix A, Appendix E, and Appendix I to part 417. These corrections will not impose any additional restrictions on the persons affected by these regulations. Furthermore, any additional delay in making the regulations correct would be contrary to the public interest. Accordingly, the FAA finds that (i) public comment on these standards prior to promulgation is unnecessary, and (ii) good cause exists to make this rule effective in less than 30 days.

On August 25, 2006, the FAA published a final rule entitled, “Licensing and Safety Requirements for Launch; Final Rule” (71 FR 50508).

In that final rule, the FAA amended commercial space transportation regulations governing the launch of expendable launch vehicles. That action was necessary to codify launch practices at Federal launch ranges and codify rules for launches from a non-Federal launch site. The intended effect of the action was to ensure that the public continued to be protected from the hazards of a launch from either a Federal launch range or a non-Federal launch site.

The final rule contains a more complete discussion of the rule and the events leading up to it.

The technical amendment makes the following corrections:

(1) In § 415.35(a), the reference to cc is changed to Ec.

(2) In § 415.37(a)(1), the reference to § 417.117(g) is changed to § 417.117(b)(3).

(3) In § 415.41, the reference to § 417.111(g) is changed to § 417.111(h).

(4) In § 415.55, the reference to § 415.79(a) is changed to § 417.17(b)(2).

(5) In § 417.15(b), the reference to § 405.1 is changed to § 401.5.

(6) In § 417.107(e)(2), the reference to § 417.113(b) is changed to § 417.113(c).

(7) In § 417.121(c), the reference to § 417.113(b) is changed to § 417.113(c).

(8) In § 417.231(a), the reference to § 417.113(b) is changed to § 417.113(c).

(9) In § 417.301(d)(1), duplicate sub-paragraph (1) is removed.

(10) In § 417.303(j), the reference to § 417.307(g) is changed to § 417.307(f).

(11) In § 417.305(c)(1), duplicate sub-paragraph (1) is removed.

(12) In Appendix A to part 417, section A417.29(b)(5), the reference to § 417.113(b) is changed to § 417.113(c).

(13) In Appendix E to part 417, section E417.19(e)(2)(vi), the reference to ±dB is changed to ±3 dB.

(14) In Appendix I to part 417, in the introductory paragraph to section I417.1, the reference to § 417.229 is changed to § 417.227.

(15) In Appendix I to part 417, section I417.5(a), the reference to § 417.113(b) is changed to § 417.113(c).

In consideration of the foregoing, the Federal Aviation Administration amends chapter III of title 14, Code of Federal Regulations as follows:

Section 553(b)(3)(B) of the Administrative Procedure Act (APA) (5 U.S.C. 551 et seq.) authorizes agencies to dispense with notice and comment procedures for rules when the agency for “good cause” finds that those procedures are “impracticable, unnecessary, or contrary to the public interest.” Under this section, an agency, upon finding good cause, may issue a final rule without seeking comment prior to the rulemaking.

Section 553(d)(3) of the Administrative Procedure Act requires that agencies publish a rule not less than 30 days before its effective date, except as otherwise provided by the agency for good cause found and published with the rule.

This document corrects errors in 14 CFR 431.79. These corrections will not impose any additional restrictions on the persons affected by these regulations. Furthermore, any additional delay in making the regulations correct would be contrary to the public interest. Accordingly, the FAA finds that (i) public comment on these standards prior to promulgation is unnecessary, and (ii) good cause exists to make this rule effective in less than 30 days.

On September 19, 2000, the FAA published the “Commercial Space Transportation Reusable Launch Vehicle and Reentry Licensing Regulations; Final Rule” (65 FR 56618). The final rule amended commercial space transportation regulations governing the launch and reentry of reusable launch vehicles (RLVs) to establish operational requirements for launches of RLVs and to implement the FAA's reentry licensing authority by prescribing requirements for obtaining a license to launch and reenter an RLV, to reenter a reentry vehicle, and to operate a reentry site. Licensing rules are necessary to respond to advancements in the development of commercial RLV and reentry capability. The action was necessary to fulfill the FAA's safety mandate by limiting risk to the public from RLV and reentry operations.

The final rule contains a more complete discussion of the rule and the events leading up to it.

The technical amendment makes the following correction:

(1) In § 431.79(a)(3), the duplicate text “federal” is removed and the phrase “for at” is changed to “from”.

In consideration of the foregoing, the Federal Aviation Administration amends chapter III of title 14, Code of Federal Regulations as follows:

The Debt Collection Improvement Act (DCIA), 31 U.S.C. 3720B to 3720E, Public Law 104-134, enacted April 26, 1996) and the Federal Claims Collection Standards, 31 U.S.C. 3701 et seq., require the government to collect money it is owed. For purposes of the DCIA, debts include overpayments of pay and allowances made to federal employees. 5 U.S.C. 5514. This regulation provides procedures for the collection of debts owed to MCC. MCC adopts the Government-wide debt collection standards promulgated by the Departments of the Treasury and Justice, known as the Federal Claims Collection Standards (FCCS), 31 CFR parts 900-904 (as revised on November 22, 2000) and supplements the FCCS by prescribing procedures consistent with the FCCS, as necessary and appropriate for MCC operations. Nothing in this regulation precludes the use of otherwise authorized collection remedies not contained in this regulation.

No notice of proposed rulemaking is required under the Administrative Procedure Act (APA) because these rules relate solely to agency procedure and practice (5 U.S.C. 553(b)(3)(A)).

This rule does not impose any new reporting or recordkeeping requirements subject to the Paperwork Reduction Act, 44 U.S.C. chapter 35.

MCC, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that this final rule will not have a significant economic impact on a substantial number of small entities.

This rule is not a major rule as defined by section 251 of the Small Business Regulatory Enforcement Act of 1996 (5 U.S.C. 804). This rule will not result in an annual effect on the economy of $100 million or more; a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets.

These regulations are not classified as “significant rules” under Executive Order 12866 because they will not result in (1) an annual effect on the economy of $100 million or more; (2) a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; or (3) significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based enterprises to compete with foreign-based enterprises in domestic or foreign markets. Accordingly, no regulatory impact assessment is required.

MCC has reviewed this regulation in light of sections 3(a) and 3(b)(2) of Executive Order 12988, Civil Justice Reform, to eliminate ambiguity, minimize litigation, establish clear legal standards, and reduce burden.

In consideration of the foregoing, the Millennium Challenge Corporation amends Chapter XIII of 22 CFR by adding part 1306, to read as follows:

Authority and Background Internal Revenue Code

Chapter 51 of the Internal Revenue Code of 1986 (IRC), 26 U.S.C. chapter 51, contains excise tax and related provisions concerning distilled spirits used for both beverage and nonbeverage purposes. The IRC imposes an excise tax rate of $13.50 per proof gallon on distilled spirits (26 U.S.C. 5001). Under section 5006(a) of the IRC (26 U.S.C. 5006(a)) the excise tax on distilled spirits is generally determined at the time the distilled spirits are withdrawn from the bonded premises of a distilled spirits plant.

However, section 5214(a) of the IRC authorizes, subject to regulations prescribed by the Secretary of the Treasury, the following two types of spirits to be withdrawn free of tax:

• Spirits that have been “denatured” by the addition of materials that make the spirits unfit for beverage consumption; and

• Undenatured spirits for certain governmental, educational, medical, or research purposes.

Section 5214(a)(1) of the IRC permits the withdrawal of denatured spirits free of tax for:

• Exportation;

• Use in the manufacture of a definite chemical substance, where such distilled spirits are changed into some other chemical substance and do not appear in the finished product; or

• Any other use in the arts or industry, or for fuel, light, or power, except that, under 26 U.S.C. 5273(b), denatured spirits may not be used in the manufacture of medicines or flavors for internal human use where any of the spirits remain in the finished product, and, under section 5273(d), denatured spirits may not be withdrawn or sold for beverage purposes.

The IRC authorizes the Secretary of the Treasury to prescribe regulations regarding the production, warehousing, denaturing, distribution, sale, export, and use of industrial alcohol in order to protect the revenue (26 U.S.C. 5201), and to regulate materials that are suitable to denature distilled spirits (26 U.S.C. 5241 and 5242). Section 5242 states that denaturing materials shall be such as to render the spirits with which they are admixed unfit for beverage or internal medicinal use and that the character and quantity of denaturing materials used shall be as prescribed by the Secretary by regulations. Furthermore, section 5273(a) of the IRC requires that any person using specially denatured spirits (which is defined in the following section of this document) to manufacture products:

The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers chapter 51 of the IRC pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01 (dated December 10, 2013, superseding Treasury Order 120-01 (Revised), “Alcohol and Tobacco Tax and Trade Bureau,” dated January 24, 2003), to the TTB Administrator to perform the functions and duties in the administration and enforcement of this law.

Regulations pertaining specifically to denatured spirits are found in 27 CFR part 20 (Distribution and use of denatured alcohol and rum) and part 21 (Formulas for denatured alcohol and rum). Certain provisions in TTB's regulations in 27 CFR part 19 (Distilled spirits plants), part 27 (Importation of distilled spirits, wines, and beer), and part 28 (Exportation of alcohol) also concern denatured spirits. Denatured spirits are spirits to which denaturants—which are materials that make alcoholic mixtures unfit for beverage or internal human medicinal use—have been added in accordance with 27 CFR part 21. TTB approves denaturants if the denaturants: (1) Make the spirits unfit for beverage or internal human medicinal use (26 U.S.C. 5242 and 27 CFR 21.11), (2) are adequate to protect the Federal excise tax revenue (27 CFR 21.91), and (3) are suitable for the intended use of the denatured spirits (26 U.S.C. 5242).2

There are two types of denatured spirits: Completely denatured alcohol (C.D.A.) and specially denatured spirits (referred to as “S.D.S.” for purposes of this preamble). C.D.A. jeopardizes the revenue less than S.D.S. does—first, C.D.A. is more offensive to the taste than S.D.S. and thus C.D.A. is less likely to be used for beverage purposes, and second, it is more difficult to separate potable alcohol from C.D.A. than it is from S.D.S. For these reasons, the withdrawal and use of C.D.A. are subject to less stringent regulatory oversight than are the withdrawal and use of S.D.S.

Title 27 CFR 20.41 provides that permits are required to withdraw, deal in, or use S.D.S. The regulations also require that dealers and users of S.D.S. maintain specified records and retain invoices (see 27 CFR 20.262 through 20.268). Under § 20.264(b), users of S.D.S. are required to submit an annual report to TTB, and, under § 20.262(d), a dealer, as defined in 27 CFR 20.11, when requested by TTB, must submit a required accounting of each formulation of new and recovered S.D.S. In contrast, under 27 CFR 20.141, no permits are required to use or distribute C.D.A. (with the exception of recovery for reuse). A person that receives, packages, stores, disposes of, or uses C.D.A. is required to maintain records only when specifically requested by TTB (see 27 CFR 20.261). The regulations do not provide any reporting requirements for persons that use or deal in C.D.A.

The regulations prescribe formulas for C.D.A. and for S.D.S. C.D.A. generally may be sold and used for any purpose (§ 20.141), with the exception that C.D.A. denatured in accordance with Formula No. 20 is restricted to fuel use (27 CFR 21.24). In contrast, S.D.S., which is generally used as a raw material or ingredient in the manufacture of other products (termed “articles”), may not be used for any purpose not specifically authorized in the regulations. The authorized purposes are categorized within “use codes,” which are published in the regulations in 27 CFR part 21.

Both C.D.A. and S.D.S. may be used to manufacture articles, which are defined in section 5002(a)(14) of the IRC (26 U.S.C. 5002(a)(14)) as “any substance in the manufacture of which denatured distilled spirits are used.” The manufacture of articles with C.D.A. is generally unregulated. By contrast, the manufacture of articles with S.D.S. is strictly regulated under 27 CFR part 20, in accordance with sections 5271 through 5275 of the IRC (26 U.S.C. 5271-5275). A significant aspect of this regulation is the requirement for prior TTB approval of all articles made with S.D.S. Such approval is mandated by law in section 5273(a) of the IRC (26 U.S.C. 5273(a)), which states, “* * * no person shall use specially denatured distilled spirits in the manufacture or production of any article until approval of the article, formula, and process has been obtained from the Secretary.”

TTB approval of articles takes two forms. First, TTB approves specific, proprietary formulas and processes for articles, submitted by manufacturers on TTB Form 5150.19, Formula and/or Process for Article Made with Specially Denatured Spirits. (TTB encourages industry members to submit this form electronically using Formulas Online, which is available at www.ttb.gov.) Second, “general-use formulas,” which TTB generally approves by publishing them in the regulations in 27 CFR part 20, are approved formulas for articles. General-use formulas may be used by any manufacturer that has a TTB permit to use S.D.S. in the manufacture of articles. Each general-use formula authorizes the production of only a specific type of article. Under § 20.111, manufacturers of articles produced pursuant to general-use formulas are not required to obtain specific formula approval from TTB on TTB Form 5150.19. Thus, the regulatory burden is lighter on manufacturers producing articles pursuant to general-use formulas than on manufacturers producing articles pursuant to other formulas that prescribe S.D.S. (In fiscal year 2015, TTB received 1,163 formula applications on TTB Form 5150.19.)

TTB is providing the following definitions to assist in comprehension of this final rule:

• An article is any substance or preparation manufactured using denatured spirits.

• Completely Denatured Alcohol (C.D.A.) is alcohol that has been denatured under a formula specified in subpart C of 27 CFR part 21. Only a registered distilled spirits plant may produce C.D.A. TTB and industry generally refer to formulations of C.D.A. by the formula number. For example, a formulation produced in accordance with C.D.A. Formula No. 20 is simply referred to as “C.D.A. 20.” To reflect the common parlance, this same shorthand is used throughout this document.

• A formula is an instruction for manufacturing a product, and is analogous to a recipe that a cook follows. This document refers to two broad types of formulas: denatured alcohol formulas and article formulas. Denatured alcohol formulas specify the instructions for producing either S.D.S (as specified in 27 CFR part 21 subpart D) or C.D.A. (as specified in 27 CFR part 21 subpart C). Article formulas include both formulas approved individually by TTB on TTB Form 5150.19 and general-use formulas (as specified in 27 CFR 20.112 through 20.119).

• A formulation is a physical product manufactured in accordance with a formula, and is analogous to a cooked meal that has been prepared using a recipe. The word “formulation” can refer to S.D.S., C.D.A., or an article.

• A general-use formula is a formula for making a certain type of article that is prescribed by 27 CFR 20.112 through 20.119, approved by TTB as an alternate method, or published as a TTB ruling. Specific formula approval by TTB on Form 5150.19 is not required for an article made pursuant to a general-use formula.

• Specially Denatured Alcohol (S.D.A) is alcohol that has been denatured following a formula specified in subpart D of 27 CFR part 21. A formulation of S.D.A. may be used only for the uses specified for the corresponding formula in 27 CFR part 21.

• Specially Denatured Rum (S.D.R.) is a rum that has been denatured following the formula specified in subpart D of 27 CFR part 21. S.D.R. may be used only for the uses specified for that formula in 27 CFR part 21.

• Specially Denatured Spirits (S.D.S.) are specially denatured alcohol (S.D.A.) and/or specially denatured rum (S.D.R.). Only a registered distilled spirits plant may produce S.D.S. TTB and industry generally refer to formulations of S.D.S. by the formula number. For example, a formulation produced in accordance with S.D.A. Formula No. 40-B is simply referred to as “S.D.A. 40-B.” To reflect the common parlance, this same shorthand is used throughout this document.

On June 27, 2013, TTB published Notice No. 136 in the Federal Register (78 FR 38628) to propose several changes to the regulations to ease burdens on industry members and on TTB, as well as other improvements and clarifications. While a more detailed description of those proposals can be found in Notice No. 136, TTB provides a general summary below:

In Notice No. 136, TTB proposed to remove, from part 21, 16 S.D.A. formulas that do not appear to be in use—specifically, S.D.A. Formula Nos. 2-C, 3-B, 6-B, 17, 20, 22, 23-F, 27, 27-A, 27-B, 33, 38-C, 39, 39-A, 42, and 46. In addition to proposing to remove those 16 formulas, TTB also proposed to remove references to those formulas from part 21, as well as references to, and any specifications for, denaturants that are prescribed by those 16 formulas and are not mentioned in other formulas.

TTB identified two S.D.A. formulas that TTB could reclassify as C.D.A. formulas, because it would be very difficult to separate the denaturant from the alcohol in the resulting formulation. TTB proposed to reclassify S.D.A. Formula Nos. 12-A and 35 as C.D.A. formulas by removing 27 CFR 21.40 and 21.61 and by adding new 27 CFR 21.21a and 21.25 respectively. TTB also proposed to remove other references to these two S.D.A. formulas from part 21.

TTB also determined that it would be appropriate to issue a new, multi-purpose general-use formula for any appropriate articles made with one or more of 15 S.D.A. formulations that TTB identified as being appropriate for the general-use formula. Such a general-use formula would alleviate paperwork burdens for both industry members and TTB, because the manufacturer of an article produced in accordance with a general-use formula is not required to obtain specific formula approval from TTB on Form 5150.19. Furthermore, because it would be difficult to separate the alcohol from the articles produced using one or more of those 15 S.D.A. formulations, the revenue would not be jeopardized. Accordingly, TTB proposed to specify S.D.A. Formula Nos. 1, 3-A, 13-A, 19, 23-A, 23-H, 30, 32, 35-A, 36, 37, 38-D, 40, 40-A, and 40-B in a multi-purpose general-use formula in new 27 CFR 20.120.

TTB also identified three S.D.A. formulations that may be used as ingredients, subject to certain conditions, in certain general-use formulas. Accordingly, TTB proposed:

• To allow the use of S.D.A. 18 in a vinegar general-use formula in new 27 CFR 20.121 (which would have as a condition that the ethyl alcohol either loses its identity in the vinegar-making process or only residual ethyl alcohol within the limit specified in 27 CFR 20.104 remains);

• To allow the use of S.D.A. 39-C in a new general-use formula in 27 CFR 20.122 (which would have as a condition that each gallon of finished product contain not less than 2 fluid ounces of perfume material); and

• To provide for the use of S.D.A. 40-C in a pressurized container general-use formula in new 27 CFR 20.123 (which would have as a condition that the formula only be used in the manufacture of products that will be packaged in pressurized containers in which the liquid contents are in intimate contact with the propellant and from which the contents are not easily removable in liquid form).

Only the uses that are currently approved for the corresponding S.D.A. formula in part 21 would be allowed under each of these three new general-use formulas.

TTB also proposed to remove 27 CFR 20.103 from the regulations. Section 20.103 requires that articles made with S.D.A. 39-C contain at least two fluid ounces of perfume material in each gallon of finished product. Because this condition will appear in the general-use formula specified in the new § 20.122, and because the new general-use formula covers all articles made with S.D.A. 39-C, the condition is no longer needed in § 20.103.

In addition to the changes discussed above, TTB proposed to:

• Create a general-use formula for duplicating fluids and ink solvents specifying S.D.A. 1, 3-A, and 3-C in new 27 CFR 20.124; and

• Amend the proprietary solvents general-use formula (27 CFR 20.113) to also allow the use of S.D.A. 3-C in making proprietary solvents.

TTB also proposed to remove benzene—which the U.S. Environmental Protection Agency (EPA) has designated in its regulations as a hazardous air pollutant under the Clean Air Act (40 CFR 61.01(a))—as a denaturant prescribed in S.D.A. Formula No. 2-B (27 CFR 21.33), and to exclude benzene from the denaturants prescribed by the new C.D.A. Formula No. 12-A in proposed § 21.21a. While TTB also proposed to remove benzene from the list of authorized denaturants in 27 CFR 21.151, TTB did not propose to remove the specifications for benzene contained in 27 CFR 21.97. TTB will remove § 21.97 in this rule because the benzene specifications are no longer needed.

In addition to the changes to the S.D.S. and C.D.A formulas, denaturant specifications, and general-use formulas, TTB also proposed the following changes to the regulations to provide greater flexibility to industry members:

• To clarify the regulations relating to the destruction of S.D.S. or recovered alcohol, TTB proposed to amend 27 CFR 20.222 to state that destruction of recovered material that is not sufficiently denatured to meet the formula specifications of an article must be done by the original manufacturer, a distilled spirits plant, or a facility that possesses an S.D.S. dealer's permit.

• TTB proposed to amend 27 CFR 20.63 to allow any permittee to adopt, for use at any of its plants, any formula previously approved for use at another of its plants, or any formula previously approved for its parent or wholly-owned subsidiary.

• TTB proposed to amend § 20.102 to except bay rum, alcoholado, and alcoholado-type toilet waters produced under an approved formula and endorsed “For Export Only” from the requirement that they be produced from the materials specified in that section.

• To make the regulations on reagent alcohol less restrictive, TTB proposed to amend 27 CFR 20.117 to allow permittees who have a legitimate use for reagent alcohol in manufacturing to receive it for that purpose, but only from distilled spirits plants and S.D.S. user or dealer permittees. TTB also proposed to amend § 20.117(a) to provide for treatment of reagent alcohol as S.D.A. when distributed for use in manufacturing.

• TTB proposed to amend 27 CFR 20.134 to allow containers of articles to either (1) bear a label or (2) have the required information etched or printed directly on the containers, since the technology now exists to etch or print information directly on containers.

• TTB proposed to amend the regulations by adding a new 27 CFR 20.183 which would allow for the exportation of most S.D.S. formulations by dealers provided that the S.D.S. conforms to a formula specified in part 21 of the TTB regulations, that the exportation is to a country, the laws of which allow the importation of such spirits, and that the dealer notifies TTB of the exportation.

• TTB proposed to add new § 20.193 (27 CFR 20.193) to allow for the export of articles that would not be approved for domestic distribution. Previously, TTB and its predecessor agency, the Bureau of Alcohol, Tobacco, and Firearms (ATF), provided for such exports on individual bases as alternate methods or procedures.

In Notice No. 136, TTB proposed several technical changes, as well as changes to clarify the regulations, and TTB is finalizing those changes in this rulemaking.

TTB received a total of four comment submissions in response to Notice No. 136, from Archer Daniels Midland Company (ADM) (Comment 1), an individual who works in industry (Comment 2), Videojet Technologies, Inc. (“Videojet”) (Comments 3a through 3d), and the Renewable Fuels Association (RFA) (Comment 4). All comments appear on “Regulations.gov,” the Federal Rulemaking portal, at http://www.regulations.gov, in Docket No. TTB-2013-0005.

ADM's comment submission (Comment 1) included nine specific comments. One of those comments expressed support for the clarification regarding the importation of denatured spirits and fuel alcohol in § 27.222. ADM's eight other comments, and TTB's responses, are as follows:

• ADM comment: ADM stated that the current general-use formulas (§§ 20.112 through 20.118) “are prescriptive in that they detail what denaturants and amounts must be added to the applicable S.D.A.,” but the general-use formula proposed in § 20.120 is “less prescriptive in that it only states that an additional denaturant must be added.” ADM noted their concern that the proposed formula could be misinterpreted, which would result in inadvertent noncompliance.

TTB response: General-use formulas do not specify denaturants that must be used in producing an article. Rather, they specify which type of S.D.A. must be used to produce the article. It is the S.D.A. that contains the denaturants, per the S.D.A. formula provided in 27 CFR part 21. Some of the general-use formulas also specify additional ingredients that must be used, but not all of the existing general use-formulas specify exact quantities of additional ingredients. For example, the existing tobacco flavor general-use formula (§ 20.114) only requires the use of S.D.A. Formula No. 4 or S.D.R. Formula No. 4 and “sufficient flavors,” and the existing ink general-use formula in § 20.115 only requires the use of one of several specified S.D.A. formulations and “sufficient pigments, dyes, or dyestuffs.” The permissiveness of the general-use formula proposed in the new § 20.120 is consistent with TTB's longstanding approach. This approach provides manufacturers with a degree of flexibility in producing articles—which minimizes the paperwork burden imposed on both manufacturers and TTB—while still protecting the revenue. Therefore, TTB will finalize the general-use formula in § 20.120 as proposed.

• ADM comment: ADM noted that the names of existing general-use formulas describe the type of article that is produced in accordance with the general-use formula. ADM recommended that TTB assign a similar type of name to the general-use formula proposed in new § 20.120.

TTB response: Many kinds of articles may be produced in accordance with the general-use formula proposed in new § 20.120, making it impractical to assign a name to the general-use formula based on the resulting articles. However, TTB has reconsidered calling the general-use formula the “General-use formula for articles made with S.D.A. 1, 3-A, 13-A, 19, 23-A, 23-H, 30, 32, 35-A, 36, 37, 38-D, 40, 40-A, or 40-B,” and instead has determined that “Multi-purpose general-use formula” is less cumbersome. Accordingly, TTB has changed the name of that general-use formula to “Multi-purpose general-use formula” in this document.

• ADM comment: ADM believes that the lists of “Authorized Uses” for the various S.D.A. formulas 27 CFR part 21—which are listed in § 21.141 and in section (b) of each section of part 21 subpart D—are overly lengthy, overly specific, and in some cases redundant or repetitive. ADM asked that TTB limit the “Authorized Uses” lists to more general usage categories such as “ingredient in personal care product” or “process aid in food production.”

TTB response: Though TTB sees the value in revising the lists of “Authorized Uses,” such a revision is outside the scope of the regulatory changes published in the Notice No. 136. TTB will consider such revisions for a future rulemaking.

• ADM comment: ADM echoed one of the comments made in response to Notice No. 83, a comment that TTB discussed in Notice No. 136. Specifically, the comments relate to TTB's specification of exact amounts of denaturants in C.D.A. and S.D.A. formulas. ADM noted that “it is not practical to expect and impossible to ensure that the exact amounts of denaturants have been added,” and asked TTB to “provide clarification in the regulations regarding acceptable variability in denaturant addition” by using “action levels” in enforcement or applying standard rounding rules.

TTB response: TTB applies a plus or minus five percent tolerance when analyzing samples of S.D.A., C.D.A., and articles to determine compliance with the formula. TTB also employs standard rounding rules when reviewing results of analyses, where a number is rounded up if the first digit after the last significant digit is “5” or more, and a number is rounded down if the first digit after the last significant digit is “4” or less. For example, if TTB were examining an article made pursuant to a formula specifying a mixture of 90 percent by volume S.D.A. 3-C and 10 percent by volume n-propyl acetate, taking into consideration the plus or minus five percent tolerance, the acceptable range of S.D.A. 3-C in the article would be 85.5-94.5 percent by volume. If laboratory analysis of the article showed that the article contains 85.45 percent S.D.A. 3-C, TTB would round that result to 85.5 percent, which would be in compliance with the formula. If laboratory analysis showed that the article contains 85.44 percent S.D.A. 3-C, TTB would round that result to 85.4 percent, which would be out of compliance with the formula.

Accordingly, TTB is adding a new paragraph (d) to both 27 CFR 21.21 and 21.31 to state the analytical tolerance and the use of standard rounding rules. TTB also applies the plus or minus five percent tolerance and standard rounding rules when analyzing samples of articles that were made pursuant to a formula that specified an exact amount of an ingredient, including denatured spirits. Accordingly, TTB is revising 27 CFR 20.132 to state the analytical tolerance and the use of standard rounding rules. TTB believes that the plus or minus five percent tolerance and the application of standard rounding rules provide for a reasonable degree of variation.

• ADM comment: ADM asked TTB to consider modifying labeling requirements as described in 27 CFR 20.134, concerning the labeling of articles, and 20.146, concerning labels on bulk containers of C.D.A., because “it is not general practice to label transport containers with product name, manufacturer name, etc.,” and “in the case of rail and truck tankers, containers are placarded per [Department of Transportation (DOT)] regulations and product information is listed on shipping paperwork. Any identification beyond that stipulated by the DOT for first responders could easily decrease the security of the product in transit.”

TTB response: As ADM stated, TTB did not specifically address this labeling issue in Notice No. 136. Therefore, TTB cannot make substantive changes to those sections in this document, as they are outside the scope of this rulemaking. However, as ADM noted, §§ 20.134 and 20.146 do not specifically address large transport containers such as truck tankers, railcars, or barges. TTB notes that in 27 CFR 19.495, for bulk conveyances of spirits or denatured spirits—which would include containers such as truck tankers, railcars, and barges—TTB allows a label containing the information required by TTB to be securely attached to the route board or another equivalent device. TTB would not object to bulk conveyances of articles or C.D.A. having a label in a manner consistent with § 19.495.

• ADM comment: ADM opposed the addition to the regulations of specifications for five new denaturants (high octane denaturant blend, at § 21.112c; naphtha, at § 21.118b; natural gasoline, at § 21.118c; raffinate, at § 21.124a; and straight run gasoline, at § 21.130a) for use in fuel ethanol. ADM asserted that, because of the specific nature of some of the analytical requirements listed with those denaturants, it is not clear that they are commercially available. ADM stated that denaturants listed in the regulations should be available to all industry members. In addition, ADM requested that if TTB finds it necessary to list denaturant specifications, TTB publish them someplace other than in the regulations, asserting that it is easier to change another type of publication than it is the regulations.

TTB response: Industry members may, under 27 CFR 21.91, request that TTB authorize substitute denaturants. To approve a material as a denaturant for a denatured alcohol formula, TTB must determine that (1) the proposed material, when added to spirits (ethanol), makes the ethanol “unfit for beverage or internal human medicinal use;” (2) the use of the proposed material as a substitute denaturant will be adequate to protect the Federal excise tax revenue; and (3) the proposed material is suitable for the intended use. If the material meets these criteria, TTB will authorize the use of the material as a denaturant in making specified C.D.A. or S.D.S. formulations so that the requestor and any other interested industry members may use the material as a denaturant. In order to provide more flexibility to industry, TTB believes that it is appropriate to authorize use of denaturants that meet the criteria. We do not specify as a criterion that the denaturant must be widely available in the commercial market.

However, if an industry member believes that TTB should deauthorize a particular denaturant, we will consider, based on the criteria stated above, a petition submitted by any interested person stating the reasons it believes authorization is not appropriate. Furthermore, the specification of a denaturant in the regulations does not foreclose any interested person from applying for an alternate method or procedure or any denaturer from requesting authorization to use other denaturants.

Regarding ADM's comment about publishing the requirements someplace other than in the TTB regulations, we recognize that rulemaking can sometimes be a lengthy process. However, TTB's current practice provides the public with a chance for notice and comment on the proposed requirements. After such notice and comment is given, the appropriate vehicle for codification is publication in the Code of Federal Regulations.

• ADM comment: ADM requested that TTB (1) recognize consensus specifications and test methods, such as those maintained by ASTM International (“ASTM”), whenever possible, for the denaturants listed in part 21, and (2) encourage and participate in a stakeholder effort to develop such standards if a consensus standard does not exist for a commercially available denaturant. During the comment period, two commenters, ADM and Videojet, noted that a particular consensus standard appearing in the regulations is obsolete. Thus, they recommended that, if TTB cites a consensus standard, the specific version of the consensus standard not be included in the citation, because standards are issued, updated, and withdrawn on a continual basis. ADM provided as an example the denaturant specifications for unleaded gasoline, as set out in 27 CFR 21.110, which cite ASTM Standard D439-79, but which has been withdrawn by ASTM. ADM asserted that TTB should update this reference.

TTB response: TTB uses consensus standards when appropriate and practicable for the Bureau's purpose. When incorporating in regulations a consensus standard by reference, a Federal agency must specifically identify the incorporated materials and is prohibited from incorporating material dynamically. As specified in 1 CFR 51.1(f), “[i]ncorporation by reference of a publication is limited to the edition of the publication that is approved.”

TTB agrees that § 21.110 should be amended. Moreover, TTB is undertaking a comprehensive review of all the standards incorporated by reference in part 21 to ensure that TTB regulations cite to the current version of the referenced materials. TTB has determined that it is appropriate to make revisions to 27 CFR 21.6, Incorporations by reference, and other sections in part 21 that include incorporations by reference, not only to update the consensus standard references but also to ensure compliance with the Office of the Federal Register's rules in 1 CFR part 5, which were recently revised. See 79 FR 66267, November 7, 2014. Accordingly, TTB will engage in a separate rulemaking to update § 21.6 and the standards incorporated by reference into part 21, including the ASTM standard for unleaded gasoline set forth in 27 CFR 21.110.

• ADM comment: Finally, ADM stated its support for TTB's consideration of harmonization of the regulations governing C.D.A. Formula No. 20 and the regulations governing fuel ethanol.

TTB response: TTB will continue to consider such harmonization for a future rulemaking with some other proposed changes to the regulations governing alcohol fuel plants, which are found in 27 CFR part 19, subpart X.

Loren Lowy, an individual who works in industry, expressed support for TTB's designation of S.D.A. Formula No. 3-A as an S.D.A. formulation that is appropriate for the new general-use formula in new § 20.120, because it will ease the regulatory burden on industry by removing the requirement for article formula approval on TTB Form 5150.19 for articles made with formulations of S.D.A. 3-A. He also expressed support for TTB's revision to § 20.63 to expand the adoption of formulas by parent or subsidiary corporations.

Lowy also noted a conflict between the proposed new general-use formula in new § 20.120 and the treatment of reagent alcohol in the proposed revision to § 20.117. Specifically, Lowy explained that there is a contradiction because, under the proposed § 20.120, an article formula is not required for any article made with formulations of S.D.A. 3-A. However, under the proposed § 20.117, reagent alcohol—which is made with 95 parts (by volume) of S.D.A. 3-A, and 5 parts (by volume) of isopropyl alcohol—is to be treated as S.D.A. unless distributed and used in accordance with that section.

Lowy also posed the following questions regarding the treatment as S.D.A. of reagent alcohol that is not distributed and used in accordance with the proposed revised § 20.117:

• Whether reagent alcohol in manufacturing would be included in the annual S.D.A. usage report;

• If so, whether it would be a separate entry from the S.D.A.;

• Whether the report form would change to reflect any necessary separate entries; and

• Whether the total volume of reagent alcohol should be reported or just the S.D.A. 3-A portion of the reagent alcohol.

TTB response: The new multi-purpose general-use formula specified in § 20.120 requires that any article made pursuant to that general-use formula contain sufficient additional ingredients to definitely change the composition and character of the S.D.A. used to make the article in question, and to ensure that the finished article is unfit for beverage or other internal human use and cannot be reclaimed or diverted to beverage use. Reagent alcohol does not contain such sufficient additional ingredients, and so the multi-purpose general-use formula is not applicable. Therefore, TTB is adding paragraph (d) to § 20.120 to provide that the multi-purpose general-use formula may not be used for the production of any articles that conform to another general-use formula in part 20, subpart F. This clarification will prevent any other article that is subject to restrictions in another general-use formula from being manufactured or distributed under the multi-purpose general-use formula without being subject to the restrictions of the other general-use formula.

In response to the commenter's additional questions, TTB notes that reagent alcohol used in manufacturing should be included in the annual S.D.A. usage report. Because reagent alcohol used in manufacturing is to be treated as S.D.A., it would not be a separate entry from S.D.A. Thus, the report will not be changed. Again, because reagent alcohol used in manufacturing is to be treated as S.D.A., the total volume of reagent alcohol should be reported in the annual S.D.A. usage report.

Videojet disagreed with the new definition of “Fit for beverage use, or fit for beverage purposes” in § 20.11, in that it states that the determination of fitness or unfitness for beverage use would be “based solely on the composition of the product and without regard to extraneous factors such as price, labeling, or advertising.” Accordingly, Videojet requested that TTB remove that portion of the definition. Videojet asserted that labeling is definitive because it communicates the intended use of each formulation, that consumer use is prohibited, and, in some cases, it indicates whether a product is poisonous or hazardous to health.

TTB response: With limited exceptions, spirits that are fit for beverage use are subject to Federal excise tax. Reliance on product labeling, rather than product composition, in determining unfitness for beverage use could create a significant jeopardy to the revenue. It would be possible to evade payment of excise taxes due on distilled spirits by labeling the spirits as not intended for beverage use, and then diverting them to beverage use. Accordingly, to protect the revenue, TTB will finalize the definition of “Fit for beverage use, or fit for beverage purposes” as proposed in Notice No. 136, which states that the determination of fitness or unfitness will be “based solely on the composition of the product and without regard to extraneous factors such as price, labeling, or advertising.”

Videojet's next comment related to TTB's clarification of § 20.95, concerning developmental samples of articles. Videojet first noted an inconsistency in the proposed text, where it limits the number of samples to one per customer, but requires that a record of the number of samples sent to each customer be kept. Videojet explained that a product test may require more than one container of an article (like a printer cartridge filled with ink), which would exceed the limitation in § 20.95 that only one sample of each formulation may be sent to each customer. Videojet also explained that customers often prefer a two-stage approval process for testing a product, which would exceed the limitation in § 20.95 that samples be sent on a one-time basis.

TTB response: TTB will retain the limitation of one sample per customer and authorize that samples may only be sent on a one-time basis, to ensure protection of the revenue. Allowing manufacturers to send an unlimited number of samples to customers multiple times would effectively allow manufacturers to distribute articles for which there is no formula approval. Since many articles will be able to be produced under a general-use formula and would not require formula approval on TTB Form 5150.19, this limitation will not affect many articles. In addition, where articles cannot be produced in accordance with a general-use formula, manufacturers may send unlimited numbers of samples if they first obtain formula approval on TTB Form 5150.19. However, TTB is removing from § 20.95 the requirement that a record of the number of samples sent to each customer be kept, since that number will not exceed one.

Videojet had several detailed comments about TTB's proposed revisions to § 20.115 and proposed new §§ 20.124 and 20.120, as follows:

• Videojet comment: Videojet noted an apparent typographical error in the proposed revision to § 20.115, which in Notice No. 136 was proposed to say that the “ink general-use formula authorizes the production of any finished article made with alcohol denatured in accordance with S.D.A. Formula No. 1, 3-A, 3-C, 13-A, 23-A, 30, or 32, or which . . . [c]ontains pigments, dyes, or dyestuffs sufficient to ensure that the article is unfit for beverage use . . . .”

TTB response: The second use of the word “or” in the proposed regulation was a typographical error, which TTB is correcting in this final rule.

• Videojet comment: Videojet asked that the TTB expand the list of S.D.A. formulations that are specified in the ink general-use formula in section 20.115, to include S.D.A. Formula Nos. 35-A, 40-B, and 45. Videojet also asked that TTB add the use code for inks (use code 052) to §§ 21.62(b)(1), 21.76(b)(1), and 21.80(b)(1), and add references to S.D.A. Formula Nos. 35-A, 40-B, and 45 to the table in § 21.141.

TTB response: TTB has determined that formulations of S.D.A. Formula Nos. 35-A and 40-B would be appropriate in the ink general-use formula in § 20.115, and would not create a threat to the revenue as part of the general-use formula. Because industry members are using formulations of S.D.A. Formula Nos. 35-A and 40-B to manufacture inks, TTB will add references to those formulas to the list of S.D.A. formulations specified in the ink general-use formula in § 20.115. However, TTB has determined that it will not add S.D.A. Formula No. 45 to the general-use formula because that formula—which specifies the addition of 300 pounds of refined whole or orange shellac to every 100 gallons of alcohol—is not, to TTB's knowledge, typically used in manufacturing inks, and is currently only authorized for use in manufacturing candy glazes. S.D.A. users may continue to seek approval from TTB to manufacture ink using formulations of S.D.A. Formula No. 45 by filing TTB Form 5150.19.

• Videojet comment: As proposed in Notice No. 136, inks manufactured in accordance with the general-use formula specified in § 20.115 would be required to contain “pigments, dyes, or dyestuffs sufficient to ensure that the article is unfit for beverage use.” Videojet noted that although one or more of those ingredients are present in ink, there are other ingredients that may be present that may serve to further render the ink unfit for beverage use. Accordingly, Videojet asked TTB to require that inks manufactured in accordance with the general-use formula contain “pigments, dyes, or dyestuffs, solvents, or other ingredients sufficient to ensure that the article is unfit for beverage use.”

TTB response: TTB agrees that other ingredients used in manufacturing ink may render the ink unfit for beverage use. However, Videojet's proposed modification to § 20.115 would allow for an ink to contain no pigments, dyes, or dyestuffs. Accordingly, TTB will modify § 20.115 to require that inks manufactured in accordance with the general-use formula contain “pigments, dyes, or dyestuffs, which, alone or in combination with solvents or other ingredients, are sufficient to ensure that the article is unfit for beverage use.”

• Videojet comment: Videojet supported the addition of the duplicating fluid and ink solvent general-use formula in § 20.124, but asked TTB to harmonize the ink general-use formula with the duplicating fluid and ink solvent general-use formula because in some cases ink and ink solvent must be combined in a printer. Specifically, Videojet asked TTB to add S.D.A. 13-A, 23-A, 30, 32, 35-A, 40-B, and 45 to the list of S.D.A. formulations authorized by the duplicating fluid and ink solvent general-use formula.

TTB response: To reduce the compliance burden on S.D.A. users that manufacture duplicating fluids and ink solvents, TTB will add S.D.A. 13-A, 23-A, 30, 32, 35-A, and 40-B to the list of S.D.A. formulations authorized by the duplicating fluid and ink solvent general-use formula. TTB will also add use code 485 (miscellaneous solutions) to §§ 21.41, 21.59, 21.62, and 21.76 to authorize formulations of S.D.A. Formula Nos. 13-A, 32, 35-A, and 40-B in the manufacture of miscellaneous solutions, and will add S.D.A.13-A, 32, 35-A, and 40-B to the entry for use code 485 in the chart in § 21.141. S.D.A. Formula Nos. 23-A and 30 are already authorized for use in miscellaneous solutions (use code 485). However, TTB has determined not to add S.D.A. Formula No. 45 to the general-use formula because that formula is not, to TTB's knowledge, typically used in manufacturing duplicating fluids or ink solvents, and is currently only authorized for use in manufacturing candy glazes. S.D.A. users may continue to seek approval from TTB to manufacture ink using formulations of S.D.A. Formula No. 45 by filing TTB Form 5150.19.

• Videojet comment: Videojet stated that, while the proposed duplicating fluid and ink solvent general-use formula stipulates specific further denaturants (n-propyl acetate, isopropyl alcohol, or methyl alcohol), “it is generally not feasible to add [those] specific solvents to the ink solvent formulation due to the intrinsic connection between the ink formula and the ink solvent formula.” Accordingly, Videojet asked that TTB instead allow for the use of “pigments, dyes, dyestuffs, solvents or other ingredients sufficient to ensure that the article is unfit for beverage use” as an alternative to n-propyl acetate, isopropyl alcohol, or methyl alcohol.

TTB response: TTB often receives requests for formula approval that specify the use of n-propyl acetate, isopropyl alcohol, or methyl alcohol in duplicating fluids or ink solvents. Therefore, it is feasible for at least some industry members to use those ingredients in duplicating fluids and ink solvents. The duplicating fluid and ink solvent general-use formula also allows the resulting article to contain additional ingredients not specified in the general-use formula, so a manufacturer is not precluded from adding dyes to the solvent. TTB believes that it is appropriate to maintain the requirement that duplicating fluids and ink solvents produced in accordance with the general-use formula contain n-propyl acetate alone or in combination with isopropyl alcohol or methyl alcohol. S.D.A. users may still submit requests for formula approval on TTB Form 5150.19 for articles that do not conform to this general-use formula.

• Videojet comment: Videojet also asked TTB to add S.D.A. Formula No. 3-C to the general-use formula in § 20.120 because doing so would reduce the regulatory burden on industry and on TTB without threatening the revenue.

TTB response: TTB believes that it would be inappropriate to include S.D.A. Formula No. 3-C in the general purpose general-use formula in § 20.120. The current and proposed general-use formulas that specify S.D.A. 3-C (special industrial solvents, duplicating fluids and ink solvents, ink, and toilet preparations) also specify certain other ingredients to ensure that the resulting article is unfit for beverage use. To ensure adequate protection of the revenue, the Bureau believes it is appropriate to continue reviewing formulas for other articles made with S.D.A. 3-C.

• Videojet comment: Videojet next asked TTB to authorize the use of formulations of S.D.A. Formula Nos. 13-A, 19, 32, and 35-A in cleaning solutions.

TTB response: TTB has received no data to support authorizing the use of formulations of S.D.A. Formula Nos. 13-A, 19, 32, and 35-A in cleaning solutions. Since 1991, when TTB began its practice of electronic recordkeeping, no requests have been received for the use of formulations of S.D.A. Formula Nos. 13-A, 19, 32, and 35-A in cleaning solutions, which suggests that industry members are not interested in those formulations for that purpose. However, TTB will consider authorizing those S.D.A. formulations for use in cleaning solutions in the future if TTB receives sufficient information to support doing so.

• Videojet comment: Videojet also asked that, in § 20.120, TTB remove the requirement that only additional ingredients other than the denaturants prescribed for the applicable S.D.A. formulas be added to the article to definitely change the composition and character of the S.D.A. used to make the article and to ensure that the finished article is unfit for beverage use.

TTB response: An article that is made by taking an S.D.A. formulation and adding more of the denaturant that was used to make the S.D.A. has the same character and very similar composition of the S.D.A. Additional ingredients used to manufacture an article in accordance with the multi-purpose general-use formula in § 20.120 must substantially change the nature of the S.D.A. Accordingly, TTB will maintain the requirement that an article produced in accordance with the multi-purpose general-use formula contain additional ingredients beyond the denaturant used in the S.D.A.

• Videojet comment: Finally, Videojet noted that if an article is manufactured under the general-use formula specified in § 20.120 by combining two S.D.A. formulations and an additional ingredient, the article must conform to a use code that is authorized for both S.D.A. formulations. In contrast, an article that is manufactured by combining one S.D.A. formulation with an intermediate ingredient that is itself comprised of the second S.D.A. formulation and the additional ingredient, the article would only have to conform to a use code that is authorized for the S.D.A. formulation that is not used in the intermediate ingredient.

TTB response: By law (26 U.S.C. 5242), denaturing materials must be suitable for the intended use. To help ensure this, TTB will continue to require that an article made under the multi-purpose general-use formula with multiple S.D.A. formulations conforms to a use code that is authorized for all of the S.D.A. formulations used. Manufacturers using multiple S.D.A. formulations to produce an article may seek formula approval from TTB on TTB Form 5150.19 if the intended use of the article is not covered by a use code that is authorized for all of the S.D.A. formulations being used. In the case of intermediate articles being used in the manufacture of another article, the intermediate article must be suitable for that intermediate use.

Videojet also raised some concerns related to other national and international standards, as follows:

• Videojet comment: Videojet noted that other Federal agencies, like the Occupational Safety and Health Administration (OSHA), also maintain rules concerning the communication of hazards.

TTB response: TTB is aware that other Federal agencies maintain rules concerning the labeling and handling of certain chemicals, or products that contain certain chemicals. Section 20.136 currently notes that such rules are implemented by the Consumer Product Safety Commission (CPSC), Federal Trade Commission (FTC), and Food and Drug Administration (FDA). The labeling requirements specified in TTB's regulations for articles that would contain methanol if produced in accordance with certain general-use formulas (specifically, the special industrial solvents general-use formula, proprietary solvents general-use formula, reagent alcohol general use formula in §§ 20.112, 20.113, and 20.117, and the proposed duplicating fluid and ink solvent general-use formula in § 20.124) were derived from CPSC requirements found in 16 CFR 1500.14(b)(4). TTB believes that industry will be aided in complying with all applicable labeling regulations if TTB refers in its regulations to the applicable labeling regulations of other Federal agencies. TTB believes that the best approach is to refer to those other applicable Federal labeling requirements in part 20. Accordingly, TTB is revising § 20.136 to reference the labeling regulations of other Federal agencies, and is removing the labeling requirements from §§ 20.112, 20.113, 20.117, and 20.124.

• Videojet comment: Videojet also noted that the United Nations (UN) Globally Harmonized System of Classification and Labelling of Chemicals (GHS) uses the acronym “SDS” to refer to “safety data sheet.” Videojet asked TTB to consider whether TTB's “S.D.S.” acronym for “specially denatured spirits” would be confusing given the prevalence of the acronym “SDS” in the UN GHS.

TTB response: Many widely used acronyms abbreviate a term despite being identical to an acronym that abbreviates a different term. Readers can usually determine which term an acronym is abbreviating based on the context in which it is being used. Accordingly, TTB will continue using the abbreviation “S.D.S.” for “specially denatured spirits” in its regulations.

RFA made several points in its comment submission. The comments, and TTB's responses, are as follows:

• RFA comment: RFA expressed support for TTB's effort toward a future rulemaking that would harmonize the denaturant specifications for C.D.A. Formula No. 20 and fuel alcohol.

TTB response: As stated above in response to ADM's similar comment, TTB will continue to consider such harmonization for a future rulemaking.

• RFA comment: RFA, noting the outdated denaturant specifications for unleaded gasoline, recommended that TTB base denaturant specifications on consensus standards, like those developed by ASTM, instead of providing specifications. As mentioned above, RFA also recommended that TTB maintain its list of denaturants and the specifications for those denaturants in a place other than the regulations and update the list as needed, because updating regulations is a lengthy process.

TTB response: As explained above in response to ADM's similar comments, under Federal regulations, a Federal agency must identify the specific version of the consensus standard incorporated by reference into its particular regulations. TTB will engage in a separate rulemaking to update references to outdated consensus standards appearing in part 21.

RFA comment: RFA stated that it is important that denaturant specifications in the TTB regulations represent a commercially available material, and that the authorized denaturants “conform to very stringent requirements of both state and Federal regulations for motor fuels and fuel additives.”

TTB response: Regarding commercial availability, as noted above in response to one of ADM's comments, TTB may authorize denaturants that conform to certain specifications upon receipt of a petition. If an industry member believes that TTB should change or deauthorize a particular denaturant or its specifications, the industry member should submit to TTB a petition for the change that provides information about why TTB should make the change. Regarding conformity with State and Federal regulations for motor fuels and fuel additives, TTB tries to be consistent with other Federal regulations. As this document explains, TTB's statutory authority in regulating denatured alcohol pertains to protecting the Federal excise tax revenue. Accordingly, TTB's determinations will primarily be based on revenue protection considerations. Ultimately, industry members remain responsible for ensuring compliance with State and other Federal regulations.

• RFA comment: RFA recommended that TTB remain open to approving denaturants of non-hydrocarbon origin.

TTB response: TTB will consider authorizing denaturants of non-hydrocarbon origin. Under the authority of 27 CFR 21.91, the appropriate TTB officer may, pursuant to written application filed by the denaturer, authorize the use of substitute denaturants if such substitution will not jeopardize the revenue. An industry member who would like TTB to authorize a substitute denaturant should submit a request to TTB for authorization of the denaturant pursuant to § 21.91.

• RFA comment: RFA supported the clarification of jurisdiction over imported denatured spirits and fuel alcohol. RFA noted that TTB should provide clarity for the regulatory requirements in support of unfettered transportation and use of fuel alcohol.

TTB response: TTB is adding new § 27.222 to the regulations to help clarify the regulations regarding the importation of denatured spirits. TTB welcomes petitions for additional regulatory changes that industry members feel are needed.

After careful review of the comments discussed above, TTB is finalizing the proposed amendments, with the adjustments explained above. In addition, TTB is altering some of the section numbers proposed in Notice No. 136 to conform to Office of Federal Register policies. Specifically, proposed §§ 21.21a, 21.94a, 21.105a, 21.105b, 21.106a, 21.108a, 21.112a, 21.112b, 21.112c, 21.115a, 21.115b, 21.118a, 21.118b, 21.118c, 21.121a, 21.124a, and 21.130a are being finalized as 27 CFR 21.26, 21.94-T, 21.105-T1, 21.105-T2, 21.106-T, 21.108-T, 21.112-T1, 21.112-T2, 21.112-T3, 21.115-T1, 21.115-T2, 21.118-T1, 21.118-T2, 21.118-T3, 21.122, 21.124-T, and 21.130-T. Finally, TTB is making a number of technical corrections to existing regulations, beyond those that were proposed in Notice No. 136. These technical corrections merely update or clarify the application of those provisions and do not change the Bureau's interpretation of any regulation or the requirements of any recordkeeping provision.

• One technical correction concerns the use of S.D.S. in foreign-trade zones. Section 484F of the Customs and Trade Act of 1990, Public Law 101-382, 104 Stat. 706, 710, enacted on August 20, 1990, amended 19 U.S.C. 81c(c) by eliminating the requirement that specially denatured spirits used in a foreign-trade zone come from domestic sources. Accordingly, TTB is amending 27 CFR 19.427 to conform with this statutory change.

• TTB is updating additional OMB control numbers in 27 CFR 20.22, 20.56, 20.57, 20.60, 20.61, 20.62, 20.68, 20.142, 20.149, 20.163, 20.170, 20.171, 20.172, 20.180, 20.192, 20.202, 20.203, 20.212, 20.216, 20.231, 20.232, 20.234, 20.235, 20.251, 20.252, 20.261, 20.262, 20.263, and 20.265 to reflect the change from ATF to TTB.

• TTB is amending 27 CFR 20.11 and 20.20 to clarify that references to “TTB Order 1135.20” are to the most recent version of that order, which is not necessarily the original version.

• Typographical errors are corrected in 27 CFR 20.59, 20.93, 20.100, 20.118, 20.131, 20.163, 21.11, 21.49, 21.64, 21.65, and 21.125.

• In 27 CFR 20.92, the reference to the TTB Bulletin is replaced with a reference to TTB's Web site.

• In 27 CFR 20.112 and 20.113, TTB is replacing the erroneous cross-reference to 27 CFR 21.106 with the correct cross-reference 27 CFR 21.107 for the location of a definition of 85 percent ester content.

• In 27 CFR 20.118, the reference to “Bitrex (THS 839),” which is a registered trade name, has been replaced by the generic term “denatonium benzoate.”

• In 27 CFR 20.191, the last sentence is removed, since TTB Publication 5150.5 is no longer available.

• TTB is amending 27 CFR 21.7 and 21.11 to clarify that references to “TTB Order 1135.21” are to the most recent version of that order, which is not necessarily the original version.

• Finally, TTB is updating the abbreviation for “milliliters” in 20.11 and throughout part 21 from “ml” to “mL” to reflect current usage.

Certain TTB regulations issued under the IRC, including this one, are exempt from the requirements of Executive Order 12866, as supplemented and reaffirmed by Executive Order 13563. Therefore, a regulatory impact assessment is not required.

Pursuant to the requirements of the Regulatory Flexibility Act (5 U.S.C. chapter 6) TTB certifies that this final rule will not have a significant economic impact on a substantial number of small entities. The rule updates the regulations to align them with current industry practice, clarifies other regulatory provisions, and reduces the regulatory burden on the alcohol industry as well as TTB, resulting in an estimated 80 percent reduction in the number of article formulas submitted to TTB. Thus, the regulatory changes do not create any additional requirements or burdens on small businesses, and are expected to decrease the regulatory burden on industry members, including small entities. Accordingly, a regulatory flexibility analysis is not required.

Pursuant to section 7805(f) of the Internal Revenue Code, TTB submitted the notice of proposed rulemaking (Notice No. 136, 78 FR 38628, June 27, 2013) to the Chief Counsel for Advocacy of the Small Business Administration (SBA) for comment on the impact of these regulations. The SBA had no comment on the proposed rule.

Finally, as previously mentioned, TTB is making a number of technical corrections to existing regulations in this rulemaking that were not proposed in Notice No. 136. TTB has determined, in accordance with 5 U.S.C. 553(b)(3)(B) that it is unnecessary and contrary to public interest to follow prior public notice and comment procedures with respect to the technical corrections, and 5 U.S.C 553(b) does not apply.

The collections of information in the regulations contained in this final rule have been previously reviewed and approved by the Office of Management and Budget (OMB) in accordance with the Paperwork Reduction Act of 1995 (44 U.S.C. 3504(h)) and assigned control numbers 1513-0011, 1513-0028, 1513-0037, 1513-0061, and 1513-0062. Specific regulatory sections in this final rule that contain collections of information are 27 CFR 19.607, 20.63, 20.95, 20.111, 20.117, 20.133, 20.134, 20.183, 20.193, 20.222, 20.262, 20.263, and 20.264. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a valid control number assigned by OMB.

Several amendments made in this document reduce information collection burdens. Specifically, certain amendments alter circumstances under which article manufacturers must obtain formula approval using TTB Form 5150.19, Formula and/or Process for Article Made with Specially Denatured Spirits. Information collections associated with Form 5150.19 are currently approved under OMB control number 1513-0011. These amendments reduce required submissions of Form 5150.19, and thus reduce the total burden hours currently estimated for control number 1513-0011 by an estimated 955 burden hours, and an 80 percent reduction in the number of these forms submitted to TTB.

Four categories of amendments will reduce required submissions of Form 5150.19:

• Addition to part 20 of new sections 27 CFR 20.120 through 20.124, setting forth five new general-use formulas covering articles made with 19 different S.D.A. formulations;

• Amended regulations in part 21 that reclassify S.D.A. Formula Nos. 12-A and 35 as C.D.A. formulas;

• Amended 27 CFR 20.113(a) and 20.115, which permit the use of additional S.D.A. formulations in the proprietary solvents general-use formula and ink general-use formula; and

• Amended 27 CFR 20.63, which allows a permittee to adopt, for use at a plant where such use is not specifically approved, one of the permittee's own article formulas previously approved for use at another of the permittee's plants, or to adopt a formula previously approved for a parent or wholly-owned subsidiary.

TTB estimates that, as a result of the amendments, the new annual burden hours will be as follows:

• Estimated total annual reporting and/or record keeping burden: 239 hours.

• Estimated average annual burden hours per respondent: 0.84 hours.

• Estimated number of respondents: 285.

• Estimated annual frequency of responses: 1 (one).

One amendment involves an alteration to the information collection currently approved under, OMB control number 1513-0061. The amendment to 27 CFR 20.63 allows a permittee to adopt, for use at a plant where such use is not specifically approved, one of the permittee's own article formulas previously approved for use at another of the permittee's plants, or to adopt a formula previously approved for a parent or wholly-owned subsidiary. Previous to this rulemaking, permittees could adopt formulas under more limited circumstances by submitting a certificate of adoption to TTB, which is an information collection currently approved under control number 1513-0061. Although TTB estimates that the amendment will increase the number of certificates of adoption submitted to TTB under § 20.63, it also proportionally decreases the number of submissions of Form 5150.19 that would have been required absent the amendment. Since the estimated average annual burden per respondent relating to certificates of adoption approved under control number 1513-0061 is smaller than the average annual burden for Form 5150.19 under control number 1513-0011, the amendment reduces the overall burden on permittees. TTB estimates that, as a result of this amendment, the new annual burden under control number 1513-0061 will be as follows:

• Estimated total annual reporting and/or record keeping burden: 1,897 hours.

• Estimated average annual burden hours per respondent: 0.5 hours.

• Estimated number of respondents: 3,794.

• Estimated annual frequency of responses: 1 (one).

Other amendments to regulatory sections that involve collections of information do not impact the burden hours associated with those collections. Proposed amendments to 27 CFR 19.607, 20.95, 20.111, 20.117, 20.133, 20.134, 20.193, 20.222, 20.262, 20.263, and 20.264 neither increase nor decrease information collections because the amendments clarify preexisting regulatory requirements and do not otherwise impose new requirements increasing information collection burdens. New 27 CFR 20.183 allows S.D.S. dealers to export S.D.S. and requires such dealers to complete TTB Form 5100.11. TTB estimated that the amendment would not increase submissions of Form 5100.11 because, although the amendment allows an additional category of persons to export, the amendment is not expected to increase demand for exported S.D.S. Thus, the exporters may be different, but the number of exportations is not expected to change. Since TTB is only including an additional category of persons entitled to export S.D.S., and is not increasing information collection burdens associated with exporting S.D.S., the proposed amendment will not impact currently estimated information collection burdens. Information collections associated with the amendments described in this paragraph are currently approved under OMB control numbers 1513-0028, 1513-0037, and 1513-0062. TTB estimates the annual burden hours under these control numbers are as follows:

OMB Control Number 1513-0028:

• Estimated total annual reporting and/or record keeping burden: 419 hours.

• Estimated average annual burden hours per respondent: 0.76 hour.

• Estimated number of respondents: 550.

• Estimated annual frequency of responses: 1 (one).

OMB Control Number 1513-0037:

• Estimated total annual reporting and/or record keeping burden: 6,000 hours.

• Estimated average annual burden hours per respondent: 20 hours.

• Estimated number of respondents: 300.

• Estimated annual frequency of responses: 20.

OMB Control Number 1513-0062:

• Estimated total annual reporting and/or record keeping burden: 1 hour.

• Estimated number of respondents: 3,430.

• Estimated annual frequency of responses: 1 (one).

TTB received no comments about the information collections approved under OMB control numbers 1513-0011, 1513-0028, 1513-0037, 1513-0061, and 1513-0062 in response to Notice No. 136.

Karen E. Welch of the Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, drafted this document.

For the reasons discussed in the preamble, TTB amends 27 CFR parts 19, 20, 21, 27, and 28 as follows:

Approximately 39 million employees in the United States do not have access to a retirement savings plan through their employers.1 Even though such employees could set up and contribute to their own individual retirement accounts or annuities (IRAs), the great majority do not save for retirement. In fact, less than 10 percent of all workers contribute to a plan outside of work.2

For older Americans, inadequate retirement savings can mean sacrificing or skimping on food, housing, health care, transportation, and other necessities. In addition, inadequate retirement savings places greater stress on state and federal social welfare programs as guaranteed sources of income and economic security for older Americans. Accordingly, states have a substantial governmental interest to encourage retirement savings in order to protect the economic security of their residents.3 Concern over the low rate of saving among American workers and the lack of access to workplace plans for many of those workers has led some state governments to expand access to savings programs for their residents and other individuals employed in their jurisdictions by creating their own programs and requiring employer participation.4

One approach some states have taken is to establish state payroll deduction savings programs. Through automatic enrollment such programs encourage employees to establish tax-favored IRAs funded by payroll deductions.5 California, Connecticut, Illinois, Maryland, and Oregon, for example, have adopted laws along these lines.6 These initiatives generally require certain employers that do not offer workplace savings arrangements to automatically deduct a specified amount of wages from their employees' paychecks unless the employee affirmatively chooses not to participate in the program.7 The employers are also required to remit the payroll deductions to state-administered IRAs established for the employees. These programs also allow employees to stop the payroll deductions at any time. The programs, as currently designed, do not require, provide for or permit employers to make matching or other contributions of their own into the employees' accounts. In addition, the state initiatives typically require that employers provide employees with information prepared or assembled by the program, including information on employees' rights and various program features.

Section 3(2) of ERISA defines the terms “employee pension benefit plan” and “pension plan” broadly to mean, in relevant part “[A]ny plan, fund, or program which was heretofore or is hereafter established or maintained by an employer or by an employee organization, or by both, to the extent that by its express terms or as a result of surrounding circumstances such plan, fund, or program provides retirement income to employees. . . .” 8 The Department and the courts have broadly interpreted “established or maintained” to require only minimal involvement by an employer or employee organization.9 An employer could, for example, establish an employee benefit plan simply by purchasing insurance products for individual employees. These expansive definitions are essential to ERISA's purpose of protecting plan participants by ensuring the security of promised benefits.

Due to the broad scope of ERISA coverage, some stakeholders have expressed concern that state payroll deduction savings programs, such as those enacted in California, Connecticut, Illinois, Maryland, and Oregon may cause covered employers to inadvertently establish ERISA-covered plans, despite the express intent of the states to avoid such a result. This uncertainty, together with ERISA's broad preemption of state laws that “relate to” private-sector employee pension benefit plans has created a serious impediment to wider adoption of state payroll deduction savings programs.10

Although IRAs generally are not set up by employers or employee organizations, ERISA coverage may be triggered if an employer (or employee organization) does, in fact, “establish or maintain” an IRA arrangement for its employees. 29 U.S.C. 1002(2)(A).11 In contexts not involving state payroll deduction savings programs, the Department has previously issued guidance to help employers determine whether their involvement in certain voluntary payroll deduction savings arrangements involving IRAs would result in the employers having established or maintained ERISA-covered plans. That guidance included a 1975 “safe harbor” regulation under 29 CFR 2510.3-2(d) setting forth circumstances under which IRAs funded by payroll deductions would not be treated as ERISA plans, and a 1999 Interpretive Bulletin clarifying that certain ministerial activities will not cause an employer to have established an ERISA plan simply by facilitating such payroll deduction savings arrangements.12

The 1975 regulation provides that certain IRA payroll deduction arrangements are not subject to ERISA if four conditions are met: (1) The employer makes no contributions; (2) employee participation is “completely voluntary”; (3) the employer does not endorse the program and acts as a mere facilitator of a relationship between the IRA vendor and employees; and (4) the employer receives no consideration except for its own expenses.13 In essence, if the employer merely allows a vendor to provide employees with information about an IRA product and then facilitates payroll deduction for employees who voluntarily initiate action to sign up for the vendor's IRA, the employer will not have established, and the arrangement will not be, an ERISA pension plan.

With regard to the 1975 IRA Payroll Deduction Safe Harbor's condition requiring that an employee's participation be “completely voluntary,” the Department intended this term to mean that the employee's enrollment in the program must be self-initiated. In other words, under the safe harbor, the decision to enroll in the program must be made by the employee, not the employer. If the employer automatically enrolls employees in a benefit program, the employees' participation would not be “completely voluntary” and the employer's actions would constitute the “establishment” of a pension plan, within the meaning of ERISA section 3(2). This is true even if the employee can affirmatively opt out of the program.14 Thus, arrangements that allow employers to automatically enroll employees—as do all existing state payroll deduction savings programs—do not satisfy the condition in the safe harbor that the employees' participation be “completely voluntary,” even if the employees are permitted to “opt out” of the program. Consequently, such programs would fall outside the 1975 safe harbor and could be subject to ERISA.

On December 27, 2015, the Bucksport Marina notified the Coast Guard that it will sponsor a series of drag boat races from 1 p.m. to 7 p.m. on September 10, 2016 and September 11, 2016. In response, on July 10, 2016, the Coast Guard published a notice of proposed rulemaking (NPRM) titled Bucksport/Lake Murray Drag Boat Fall Nationals, Atlantic Intracoastal Waterway; Bucksport, SC, 81 FR 44815. There we stated why we issued the NPRM, and invited comments on our proposed regulatory action related to this special local regulation. During the comment period that ended August 10, 2016, we received no comments.

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 impracticable due to the date of the event. The Coast Guard did not receive any adverse comments during the period outlined in the NPRM with regard to this rule.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1233. The purpose of the rule is to ensure safety of life on navigable waters of the United States during the Bucksport/Lake Murray Drag Boat Fall Nationals, a series of high speed boat races.

As noted above, we received no comments on our NPRM published July 10, 2016. There are no changes in the regulatory text of this rule from the proposed rule in the NPRM. This rule establishes a special local regulation on the Atlantic Intracoastal Waterway in Busksport, South Carolina during the Bucksport/Lake Murray Drag Boat Fall Nationals on September 10 and September 11, 2016. The special local regulation will be enforced daily from 1 p.m. until 7 p.m. on September 10 and September 11, 2016. Approximately 50 powerboats are expected to participate in the races and approximately 35 spectator vessels are expected to attend the event.

Except for those persons and vessels participating in the drag boat races, persons and vessels are prohibited from entering, transiting through, anchoring in, or remaining within any of the race areas unless specifically authorized by the Captain of the Port Charleston or a designated representative. Persons and vessels desiring to enter, transit through, anchor in, or remain within any of the race areas may contact the Captain of the Port Charleston by telephone at (843) 740-7050, or a designated representative via VHF radio on channel 16, to request authorization. If authorization to enter, transit through, anchor in, or remain within the race areas is granted by the Captain of the Port Charleston or a designated representative, all persons and vessels receiving such authorization must comply with the instructions of the Captain of the Port Charleston or a designated representative. The Coast Guard will provide notice of the regulated areas by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.

We developed this rule after considering numerous statutes and Executive Orders 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 rule is not a significant regulatory action under section 3(f) of Executive Order 12866, Regulatory Planning and Review, as supplemented by Executive Order 13563, Improving Regulation and Regulatory Review, and does not require an assessment of potential costs and benefits under section 6(a)(3) of Executive Order 12866 or under section 1 of Executive Order 13563. The Office of Management and Budget has not reviewed it under those Orders.

The economic impact of this rule is not significant for the following reasons: (1) The special local regulation would be enforced for only six hours a day over a two-day period; (2) although persons and vessels would not be able to enter, transit through, anchor in, or remain within the regulated area without authorization from the Captain of the Port Charleston or a designated representative, they would be able to operate in the surrounding area during the enforcement periods; (3) persons and vessels would still be able to enter, transit through, anchor in, or remain within the regulated area if authorized by the Captain of the Port Charleston or a designated representative; and (4) the Coast Guard will provide advance notification of the regulated area to the local maritime community by Local Notice to Mariners, Broadcast Notice to Mariners, and on-scene designated representatives.

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 received no comments from the Small Business Administration on this rulemaking. 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.

This rule may affect the following entities, some of which may be small entities: the owner or operators of vessels intending to enter, transit through, anchor in, or remain within the regulated area during the enforcement period. For the reasons discussed in Regulatory Planning and Review section above, this rule will not have a significant economic impact on a substantial number of small entities.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 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.

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 a special local regulation issued in conjunction with a regatta or marine parade. This rule 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:

From 8 p.m. to 10 p.m. on September 16, 2016, with a rain date of September 18, 2016, the Coast Guard will enforce regulations in 33 CFR 165.506 for the safety zone in the Delaware River in Philadelphia, PA listed in row (a)(16) in the table in that section. This action is being taken to provide for the safety of life on navigable waterways during the fireworks display.

Our regulations for recurring firework events in Captain of the Port Delaware Bay Zone, appear in § 165.506, Safety Zones; Fireworks Displays in the Fifth Coast Guard District, which specifies the location of the regulated area for this safety zone as all waters of Delaware River, adjacent to Penns Landing, Philadelphia, PA, bounded from shoreline to shoreline, bounded on the south by a line running east to west from points along the shoreline at latitude 39°56′31.2″ N., longitude 075°08′28.1″ W.; thence to latitude 39°56′29″.1 N., longitude 075°07′56.5″ W., and bounded on the north by the Benjamin Franklin Bridge.

As specified in §  165.506, during the enforcement period no vessel may transit this safety zone without approval from the Captain of the Port Delaware Bay (COTP). If permission is granted, all persons and vessels shall comply with the instructions of the COTP or designated representative.

This notice of enforcement is issued under authority of 33 CFR 165.506 and 5 U.S.C. 552(a). In addition to this notice of enforcement in the Federal Register, the Coast Guard will provide the maritime community with advanced notification of this enforcement period via Broadcast Notice to Mariners (BNM). If the COTP Delaware Bay determines that the regulated area need not be enforced for the full duration, a BNM to grant general permission to enter the safety zone may be used.

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 information about the military exercises beginning on September 7, 2016, was not received by the Coast Guard with sufficient time making it impracticable to publish a final rule less than 30 days after the publication in the Federal Register while also allowing for an opportunity to comment on a proposed rule. The Coast Guard will provide advance notifications to users of the affected waterway via marine information broadcasts and local notice to mariners.

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. The restriction on vessel traffic is necessary to protect life, property and the environment, for the duration of the military exercise due to the high speeds of the vessels involved. Therefore, due to the need to have a rule effective by September 7, 2016, a 30-day, delayed-effective-date is impracticable. Delaying the effective date would be contrary to the safety zone's intended objectives, immediate action is needed to protect persons and vessels, and enhance public and maritime safety.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port Hampton Roads (COTP) has determined that potential hazards associated with the military exercises starting on September 7, 2016, will be a safety concern for anyone within described coordinates of the U.S. Navy exercises. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone from hazards to mariners associated with the exercises include high speed maneuvering vessels.

This rule establishes a safety zone from 7 a.m. Wednesday, September 7, 2016, through 6 p.m. Friday, October 7, 2016. The safety zone will encompass all navigable waters within an area enclosed by a line connecting the following points latitude 37°07′06″ N., longitude 076°13′12″ W., thence east to 37°05′18″ N., longitude 076°06′54″ W., thence southeast to 37°04′30″ N., longitude 076°06′30″ W., thence south to 36°59′24″.4 N., longitude 076°08′30″ W., thence west to 37°01′18″ N., longitude 076°15′36″ W., thence to the point or origin on the Chesapeake Bay located just northeast of Ft. Monroe in Hampton, VA. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters during military exercises. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.

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 safety zone. Vessel traffic will be able to safely transit around this safety zone which will impact the designated area of the Chesapeake Bay in Hampton, VA for 31 days. Moreover, the Coast Guard will issue Broadcast Notice to Mariners via VHF-FM marine channel 16 about the zone and the rule allows vessels to seek permission to enter the zone.

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 safety zone 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 (Pub. L. 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 a safety zone lasting 31 days that will prohibit entry within five nautical miles of vessels involved in the military exercises located just northeast of Ft. Monroe in Hampton, VA. It is categorically excluded from further review under paragraph 34(g) 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 165 as follows:

Efforts to dredge the Shark River have been underway for well over a decade. After Superstorm Sandy the need to dredge the river increased significantly due to sediment deposited by the storm, which impeded navigation within those channels. Funding issues and concerns over dewatering locations (locations to dry the dredged materials) have historically stalled the progress of this project.

Mobile Dredging and Pumping Co. has been awarded the contract to restore the state channels to allow safe passage for recreational and commercial traffic. The project requires dredging approximately 102,000 cubic yards of sediment comprised of sand and silt. The sediment will be hydraulically dredged and piped via a secure welded pipeline to the selected dewatering locations.

The purpose of this rule is to promote maritime safety and protect vessels from the hazards of dredge piping and dredge operations. The rule will temporarily restrict vessel traffic from transiting a portion of the Shark River while dredging operations are being conducted in the main navigational channel.

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 the final details for this event were not received by the Coast Guard until August 17, 2016, and the dredging operation will begin September 1, 2016. The safety zone is needed by September 1, 2016, to ensure safe navigation of the vessels transiting the Shark River, and it is impracticable to publish an NPRM and consider comments before that date. The dredge and dredge piping must be positioned in the main navigational channel in order for the dredging company to complete the proper dredging of the main navigational channel. Allowing this event to go forward without a safety zone in place would expose mariners and the public to unnecessary dangers associated with dredge piping and dredge operations. Therefore, it is imperative that there is a safety zone restricting traffic in this portion of the Shark River, in Neptune City, NJ.

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 for the reasons we stated for not publishing an NPRM. The Coast Guard expects that there will be an impact to vessel traffic during times when the navigational channel is restricted. However, there will be times throughout the project where vessel traffic is not restricted and traffic will be able to freely flow through the main navigational channel. Furthermore, notification of the waterway restrictions will be made by the contractor, Mobile Dredging and Pumping Co. Additionally the New Jersey Department of Transportation, Office of Marine Resources, will be conducting outreach to the local community. Notification of the safety zone and waterway restrictions will be made by the COTP via marine safety broadcast using VHF-FM channel 16 and through the Local Notice to Mariners.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port, Delaware Bay has determined that potential hazards are associated with dredge piping and dredge operations from September 1, 2016, through September 30, 2016. The rule is necessary to promote maritime safety and protect vessels from the hazards of dredge piping and dredge operations.

The rule will have an impact to vessels transiting through the Shark River main navigational channel, from latitude 40°10′53.2579″ N., longitude 074°01′52.6231″ W. channel, north, to latitude 40°11′21.0139″ N., longitude 074°01′53.1749″ W. as vessels will be unable to transit the main navigational channel during times when dredging operations are being conducted. This restriction is necessary to ensure the safety of life and protect vessel from dredge piping and dredge operations.

On September 1, 2016, dredging will begin on a portion of the Shark River in Neptune City, NJ. The Captain of the Port, Delaware Bay, has determined that the hazards associated with dredge piping and dredge operations in the main navigational channel create the need for a safety zone to ensure safety of vessels transiting this portion and for workers engaged in dredge piping and dredging operations of the Shark River.

The safety zone will close the main navigational channel on all the navigable waters on the Shark River from latitude 40°10′53.2579″ N., longitude 074°01′52.6231″ W., bounded by the eastern side of the channel and the western side of the channel, north, to latitude 40°11′21.0139″ N., longitude 074°01′53.1749″ W.; during times of dredging. Dredging for the main navigational channel is scheduled from September 1, 2016, through September 30, 2016, only from 9 a.m. on Mondays through 9 p.m. on Thursdays, with the exception of Labor Day weekend, 6 a.m. Friday September 2, 2016 through 12 p.m. Tuesday September 6, 2016. Entry into, transiting, or anchoring within this portion of Shark River during these times is prohibited. These coordinates are based on the World Geodetic System 1984 (WGS 84) horizontal datum reference.

The channel will be open from September 1, 2016, through September 30, 2016, from 9 p.m. on Thursdays to 9 a.m. on Mondays, as well as Labor Day weekend, 6 a.m. Friday September 2, 2016 through 12 p.m. Tuesday September 6, 2016. Vessels may transit freely during these times, and vessels are requested to contact the dredge via VHF-FM channel 13 or 16 to make satisfactory passing arrangement and maintain a safe speed when transiting the main navigational channel.

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 finding is based on the limited size of the zone and duration of the safety zone. Although the main navigational channel of this portion of the Shark River will be closed for periods of time throughout the dredging operation, there are designated times where the channel will be open for vessel traffic and traffic will be able to flow freely. Vessels will only be affected 84-hours weekly, from 9 a.m. on Mondays through 9 p.m. on Thursdays, during the month of September in 2016. The safety zone and channel closure will be well publicized to allow mariners to make alternative plans for transiting the affected area.

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.

It is expected that there will be some disruption to the maritime community. Before the effective period, the Coast Guard, Mobile Dredging and Pumping Co., and New Jersey Department of Transportation's Office of Marine Resources will issue maritime advisories, widely available to users of the Shark River, describing times and dates of waterway closures and openings.

Under section 213(a) of the Small Business Regulatory Enforcement Fairness Act of 1996 (Pub. L. 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 a safety zone encompassing all the waters from latitude 40°10′53.2579″ N., longitude 074°01′52.6231″ W., bounded by the eastern side of the channel and the western side of the channel, north, to latitude 40°11′21.0139″ N., longitude 074°01′53.1749″ W., in the Shark River, in Neptune City, NJ. It is categorically excluded from further review under paragraph 34(g) 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 165 as follows:

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 of the immediate actions needed to respond to the emergency and potential safety hazards associated with the fire on board the Caribbean Fantasy. It is impracticable to publish an NPRM because we must establish this safety zone immediately, on August 17, 2016.

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 because immediate action is needed to respond to the emergency and potential safety hazards associated with the fire on board the Caribbean Fantasy.

The Coast Guard is issuing this rule under authority in 33 U.S.C. 1231. The Captain of the Port San Juan (COTP) has determined that potential hazards associated with fire will be a safety concern for anyone within a 1000-yard radius the Caribbean Fantasy. This rule is needed to protect personnel, vessels, and the marine environment in the navigable waters within the safety zone.

This rule establishes a safety zone from 3 p.m. on August 17, 2016 until 11:59 p.m. on August 31, 2016. The safety zone will cover all navigable waters within 1000 yards of the vessel Caribbean Fantasy. The duration of the zone is intended to protect personnel, vessels, and the marine environment in these navigable waters while the passenger gets rescued and the fire gets suppressed. No vessel or person will be permitted to enter the safety zone without obtaining permission from the COTP or a designated representative.

We developed this rule after considering numerous statutes and Executive orders 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.

The safety zone listed in this rule will restrict vessel traffic from entering, transiting in or operating on the waters within this zone. The effect of this regulation will not be significant for several reasons: (1) this rule will only affect vessel traffic for a short duration; (2) vessels may request permission from the COTP to transit through the safety zone; and (3) the impacts on routine navigation are expected to be minimal. Notifications to the marine community will be made through Broadcast Notice to Mariners via VHF-FM marine channel 16 and on-scene representatives. These notifications will allow the public to plan operations around the affected areas.

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 safety zone 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 (Pub. L. 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 a safety zone that will prohibit entry within 1000 yards of the Caribbean Fantasy due to an imminent fire on board. It is categorically excluded from further review under paragraph 34(g) 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 165 as follows:

I. Background

On May 20, 2016 (81 FR 31887), EPA published a notice of proposed rulemaking (NPR) for the State of Maryland. In the NPR, EPA proposed to grant conditional approval of revisions to regulations in Maryland's SIP which control emissions from various processes and fuel-burning equipment at Kraft pulp mills. The formal SIP revision (14-04) was submitted by MDE on October 15, 2014.

MDE's SIP revision adds and amends regulations in order to control emissions from various processes and fuel-burning equipment at Kraft pulp mills. The SIP revision adds a definition for “NOX Ozone Season Allowance” and establishes applicability, compliance requirements, monitoring and reporting requirements, allowances, and NOX emission standards and limits for Kraft pulp mills. The SIP revision also removes subsection (C)(h) of the Code of Maryland Regulations (COMAR) 26.11.09.08 from the Maryland SIP because the NOX requirements for pulp mills have been relocated to COMAR 26.11.14.07. The SIP revision clarifies the VOC control system and requirements for several process installations at Kraft pulp mills.

Other specific requirements of the SIP revision and the rationale for EPA's action to grant conditional approval are explained in the NPR and will not be restated here. No public comments were received on the NPR.

EPA is granting conditional approval of Maryland's October 15, 2014 SIP revision concerning the regulations and requirements to control NOX and VOC emissions from various processes and fuel-burning equipment at Kraft pulp mills as it strengthens the SIP with provisions related to controlling emissions of NOX and VOC. The conditional approval is contingent upon MDE's September 29, 2015 commitment to remove references to the now defunct CAIR CAA allowance trading program within the definition of “NOX Ozone Season Allowance,” at COMAR 26.11.01.01 and replace with another allowance mechanism. Once EPA has determined that MDE has satisfied this condition and EPA approves the revised definition, EPA shall remove the conditional nature of its approval and this SIP revision will at that time receive full approval status.

In this rule, with our conditional approval, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing, with our conditional approval, the incorporation by reference of revisions to COMAR 26.11.01.01, COMAR 26.11.14.07, COMAR 26.11.09.08, and COMAR 26.11.14.06. Therefore, these materials have been conditionally approved by EPA for inclusion in the SIP, have been incorporated by reference by EPA into that plan, are fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.1 EPA has made, and will continue to make, these materials generally available through http://www.regulations.gov and/or at the EPA Region III Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information).

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

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

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

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

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

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

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

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

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

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

In addition, this rule does not have tribal implications as specified by Executive Order 13175 (65 FR 67249, November 9, 2000), because the SIP is not approved to apply in Indian country located in the state, and EPA notes that it will not impose substantial direct costs on tribal governments or preempt tribal law.

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 31, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action.

This action pertaining to the regulations and requirements for the control of emissions from various processes and fuel-burning equipment from Kraft pulp mills, may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

40 CFR part 52 is amended as follows:

Ozone is created when chemical reactions between volatile organic compounds (VOC) and nitrogen oxides (NOX) occur in the presence of sunlight. Ozone is reduced by reducing VOC and NOX emissions. The Louisville Metro Air Pollution Control District (LMAPCD) adopted regulation 6.42 Reasonably Available Control Technology Requirements for Major Volatile Organic Compound and Nitrogen Oxides Emitting Facilities on February 2, 1994. LMAPCD's regulation 6.42 was submitted to EPA, through the Commonwealth of Kentucky, on May 21, 1999. On October 23, 2001, EPA approved LMAPCD's regulation 6.42, section 4.4 of which requires LMAPCD to submit each source-specific reasonably available control technology (RACT) determination to EPA for approval into the Kentucky SIP. See 66 FR 53658. On the same date, EPA approved the NOX RACT plan for LG & E's Cane Run Facility into the SIP. See 66 FR 53684.

On June 13, 2011, LG & E submitted to the Air Pollution Control Board of Jefferson County (Board) an application for a permit to construct a new NGCC generating unit U15 and auxiliary boiler U16 and retire coal-fired units U4, U5 and U6 at LG & E's Cane Run Facility to comply with other federal requirements, including the Mercury & Air Toxics Standards and the Cross-State Air Pollution Rule.1 In response, on July 18, 2012, the Board adopted Amendment 2 establishing NOX emission rates for the new units. On February 13, 2013, KY DAQ, on behalf of LMAPCD, submitted a SIP revision for EPA to approve the LG & E Cane Run Generating Station NOX RACT Plan Amendment 2 into the Kentucky SIP. The LG & E Cane Run Generating Station NOX RACT Plan Amendment 2 includes two parts: Part 1, the existing NOX RACT Plan for the coal-fired units, which will remain in effect until those units are retired; and Part 2, the plan that will become effective upon the start of operation of the NGCC facility and the shut-down of the coal-fired units.

In a notice of proposed rulemaking (NPRM) published on June 15, 2016 (81 FR 39002), EPA proposed to approve Kentucky's February 13, 2013, submission, for the purpose of establishing emission requirements for the changeover from coal-fired units U4, U5 and U6 to a new NGCC generating unit U15 and auxiliary boiler U16 at the LG & E Cane Run Facility. No comments were received on the June 15, 2016, proposed rulemaking. The details of Kentucky's submittal and the rationale for EPA's actions are further explained in the NPRM. See 81 FR 39002 (June 15, 2016).

In this rule, EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, EPA is finalizing the incorporation by reference of KY DAQ source-specific provision entitled “Air Pollution Control Board of Jefferson County Board Order—Amendment 2,” approved by LMAPCD on July 18, 2012. Therefore, this material has been approved by EPA for inclusion in the SIP, has been incorporated by reference by EPA into that plan, is fully federally enforceable under sections 110 and 113 of the CAA as of the effective date of the final rulemaking of EPA's approval, and will be incorporated by reference by the Director of the Federal Register in the next update to the SIP compilation.2 EPA has made, and will continue to make, these materials generally available through www.regulations.gov and/or at the EPA Region 4 Office (please contact the person identified in the FOR FURTHER INFORMATION CONTACT section of this preamble for more information)

EPA is taking final action to approve the February 13, 2013, Kentucky SIP revision which adds LG & E Cane Run Generating Station NOX RACT Plan Amendment 2 to the federally-approved Kentucky SIP. This SIP revision includes emission requirements for the changeover from coal-fired units to natural gas-fired combined cycle EGUs and associated equipment.

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

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by October 31, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. See section 307(b)(2).

40 CFR part 52 is amended as follows:

Throughout this document, “we,” “us,” and “our” refer to the EPA.

Under the CAA Amendments of 1990, the Truckee Meadows area (hereinafter referred to as Truckee Meadows, the Truckee Meadows area or the area), which includes the Reno-Sparks metropolitan area in Washoe County, Nevada, was designated and classified as a moderate CO nonattainment area.1

The primary CO NAAQS are attained when ambient concentration design values do not exceed either the 1-hour 35 parts per million (ppm) (or 10 milligrams per cubic meter) standard or the 8-hour 9 ppm (or 40 milligrams per cubic meter) standard more than once per year. See 40 CFR 50.8(a). According to monitoring data going back to 1980 in the EPA's 2 Air Quality System (AQS), Truckee Meadows has not had a violation of the 1-hour CO standard.3 Regarding the 8-hour standard, the area has not had a violation since 1991.4 The EPA determined in 2005 that the area had attained the CO NAAQS by the area's December 31, 1995 attainment deadline. See 70 FR 22803 (May 3, 2005). This determination did not affect the designation of the area as nonattainment or its classification as a moderate area.

On November 4, 2005, the State of Nevada (“State” or “Nevada”) submitted a request to the EPA to redesignate Truckee Meadows from nonattainment to attainment for the CO NAAQS. Along with this request, the State submitted a CAA section 175A(a) maintenance plan, which demonstrated that the area would maintain the CO NAAQS for the first 10 years following our approval of the redesignation request (“2005 Maintenance Plan”). We approved the State's redesignation request and 10-year maintenance plan on April 2, 2008. See 73 FR 38124 (July 3, 2008). For a detailed history of the CO planning efforts in the area up to 2005, please see the EPA's proposal to approve the 2005 Maintenance Plan. See 73 FR 1175 at 1177 (January 7, 2008).

Eight years after an area is redesignated to attainment, CAA section 175A(b) requires the State to submit a subsequent maintenance plan to the EPA, covering a second 10-year period.5 The second maintenance plan must demonstrate continued compliance with the NAAQS during this second 10-year period. To fulfill this requirement of the CAA, Nevada submitted the second 10-year update of the Truckee Meadows area CO maintenance plan to the EPA on November 7, 2014. The plan was developed by the Washoe County Health District's (District) Air Quality Management Division (AQMD) and is titled “Second 10-Year Maintenance Plan for the Truckee Meadows 8-Hour Carbon Monoxide Attainment Area, August 28, 2014” (hereinafter, “2014 Maintenance Plan” or “Plan”). The 2014 Maintenance Plan was adopted by the District's Board of Health on August 28, 2014. See Washoe County Board of Health Certificate of Adoption, August 28, 2014. Air quality planning and monitoring in Truckee Meadows is the responsibility of the District, which administers air quality programs in Washoe County through the AQMD. The State Environmental Commission and the Nevada Department of Motor Vehicles are responsible for the motor vehicle inspection and maintenance program in Truckee Meadows.

Section 176(c) of the Act defines conformity as meeting the SIP's purpose of eliminating or reducing the severity and number of violations of the NAAQS and achieving expeditious attainment of such standards. The Act further defines transportation conformity to mean that no Federal transportation activity will: (1) Cause or contribute to any new violation of any standard in any area; (2) increase the frequency or severity of any existing violation of any standard in any area; or (3) delay timely attainment of any standard or any required interim emission reductions or other milestones in any area. The federal transportation conformity rule, 40 CFR part 93 subpart A, sets forth the criteria and procedures for demonstrating and assuring conformity of transportation plans, programs and projects which are developed, funded or approved by the U.S. Department of Transportation, and by metropolitan planning organizations or other recipients of Federal funds under Title 23 U.S.C. or the Federal Transit Laws.

The transportation conformity rule applies within all nonattainment and maintenance areas. As prescribed by the transportation conformity rule, once an area has an applicable SIP with MVEBs, the expected emissions from planned transportation activities must be consistent with such established budgets for that area.

The 2014 Maintenance Plan contains the following major sections: (1) An introductory section containing a general discussion of plan approvals and the area's redesignation to attainment; and (2) a maintenance plan section including subsections on the attainment emissions inventory, a maintenance demonstration, MVEBs, the area's monitoring network, verification of continued attainment, and a contingency plan. See 2014 Maintenance Plan, Chapters 1 and 2.

Following is the EPA's evaluation of the 2014 Maintenance Plan under the CAA, the EPA's implementing regulations and relevant guidance.

As noted above, the primary NAAQS for CO are: 9 ppm (or 10 milligrams per cubic meter) for an 8-hour average concentration not to be exceeded more than once per year and 35 ppm (or 40 milligrams per cubic meter) for a 1-hour average concentration not to be exceeded more than once per year. See 40 CFR 50.8(a).

The 2014 Maintenance Plan includes a summary of 8-hour CO design values for the years 2008 to 2013. See 2014 Maintenance Plan, Table 1-1, page 2. In addition, the EPA examined monitoring data for Truckee Meadows for the last ten years, including a large portion of the period covered by the first maintenance plan. Table 1 shows the complete, quality assured and certified ambient air monitoring design values for CO in the area for the years 2006 to 2015 and preliminary data for 2016. The first maintenance plan covers the years 2008-2018. The year 2015 is the last year for which we have complete, quality assured and certified ambient air monitoring design values for CO in the area. The monitoring data show that CO design values in the Truckee Meadows area have been well below the level of the NAAQS throughout the last decade.

Due to the area's status at the time as moderate nonattainment for the CO standards, the District developed a 1990 baseline emissions inventory and has continued to update the inventory pursuant to CAA requirements every three years. The most recent inventory at the time the state submitted the 2014 Maintenance Plan was for the year 2011. The District is using the 2011 emissions inventory, adjusted down due to unusually high wildfire emissions that occurred that year, as the attainment inventory. The District refers to this attainment inventory as the Truckee Meadows maintenance emissions limit. With the level of emissions that occurred in 2011, the area still attained the CO standards. Levels at or below the downward-adjusted 2011 emissions (that is, the Truckee Meadows maintenance emissions limit) are therefore expected to maintain the standards. The unadjusted emissions levels are presented in Table 2. The District then adjusts the nonpoint source category to reflect more representative wildfire emissions, and then uses the adjusted total emissions for the area as the maintenance emissions limit, as explained in section III.C below.

The EPA finds that the 2011 inventory information presented by the District is acceptable and consistent with the source category amounts and totals for the 2011 National Emissions Inventory for Washoe County, with one exception. The District's information does not account for railroad (locomotive) emissions. Locomotive emissions would add 3.6 tons per year of CO emissions to the area, or 19.7 pounds per day (lbs/day). Compared to a total inventory of 372,522 lbs/day, however, the omission of railroad emissions amounts to less than 0.01% of the total CO emissions for the area, and the EPA therefore does not believe the omission to be significant.

In general, a state may demonstrate that an area will maintain the NAAQS by showing that future emissions will not exceed the level of the attainment inventory.8 Attainment must be demonstrated for the 10-year period following the first ten years covered by the initial maintenance plan. For the Truckee Meadows area, the first maintenance period ranges from 2008, when the EPA approved the area's redesignation request and maintenance plan, through the year 2018. In the 2014 Maintenance Plan, the District must also demonstrate attainment for the 10-year period following the first ten years. The 2014 Maintenance Plan covers a portion of the first 10-year period (through 2018), as well as the second ten years, 2018 through 2028. In addition, a state may go beyond the minimum requirements of the CAA. The District has elected to make the horizon year for this Plan 2030 for the convenience of transportation planning.

Although the 2005 Maintenance Plan addresses maintenance through the year 2018, the emissions projections of the 2014 Maintenance Plan replace those from the previous plan. The District's rationale is that there are now better planning assumptions and improved emissions calculation methodologies that were not available in developing the previous plan. Updated methodologies include the change from using MOBILE6 mobile source modeling software, used for the 2005 Maintenance Plan, to the MOVES model used for the 2014 Maintenance Plan.

As noted above, the District used its 2011 periodic emissions inventory 9 to develop the baseline 2011 “maintenance emissions limit” for the Truckee Meadows area, which is then used to compare future emissions inventories for the purpose of verifying continued attainment of the CO NAAQS as long as those future emissions are lower than the maintenance emissions limit.

As shown in Table 3, for most emissions categories, the District simply used emission levels from the 2011 periodic emissions inventory to develop its 2011 maintenance emissions limit. However, for wildfires, the District noted that 2011 was an unusually active year for wildfires, with corresponding CO emissions of 105,092 lbs/day. To approximate more typical wildfire emissions for purposes of producing the 2011 Truckee Meadows maintenance emissions limit, the District used the average of wildfire emissions for the four previous inventory years (1999, 2002, 2005, and 2008). That average is 217 lbs/day, which the District used to adjust the nonpoint source category. Due to this adjustment, total nonpoint emissions for the nonpoint source category are 50,081 lbs/day for the maintenance emissions limit, as compared with 154,956 lbs/day in the 2011 emissions inventory, as shown in Table 3. See 2014 Maintenance Plan, Table 2-3.

The District supports its use of 267,648 lbs/day maintenance emissions limit as the attainment inventory because it uses the most accurate emissions inventory methodologies, is a current and comprehensive emissions inventory, identifies the level of emissions in the Truckee Meadows area sufficient to maintain the CO standards, and will be the emissions inventory most consistent with the 2030 projected inventory required for demonstrating maintenance of the CO standards. See 2014 CO Maintenance Plan, page 6.

The District used the following methodologies or models, as described in EPA guidance,11 to project the 2011 maintenance emissions limit (i.e. the 2011 periodic emissions inventory adjusted to exclude unusually high wildfire emissions) out to future milestone years 2015, 2020, 2025 and 2030 for each of the emissions source categories, in order to demonstrate continued maintenance with the CO NAAQS.

1. Baseline Emissions Projections. Washoe County's 2030 population, employment and vehicle miles travelled (VMT) forecasts (2014 Maintenance Plan, Appendix A) were used as surrogates to project the 2030 emissions, and were consistent with those used by the local metropolitan planning organization.

2. EPA Models. Non-road and on-road motor vehicle categories accounted for approximately 59% of the 2011 emissions inventory. To ensure consistency throughout the maintenance demonstration period, the same non-road and on-road models were used to estimate the 2030 projected emissions inventory.

3. Emissions Category Surveys. The District uses surveys to estimate emissions from residential wood combustion (RWC). The District applied an adjustment factor based on heating degree days to the most recent survey (conducted in 2012-2013) to project RWC emissions from 2015 through 2030. See 2014 Maintenance Plan, Appendix A.1

Table 4 lists the 2011 Truckee Meadows maintenance emissions limit and projected emissions for 2015, 2020, 2025 and 2030 for the four major CO emissions source categories in the area. See 2014 Maintenance Plan, Table 2-4. The District provides a more detailed inventory for 2011 and projected future years in the 2014 Maintenance Plan, Appendix B.

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

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

• Crop production (NAICS code 111).

• Animal production (NAICS code 112).

• Food manufacturing (NAICS code 311).

• Pesticide manufacturing (NAICS code 32532).

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

Under FFDCA section 408(g), 21 U.S.C. 346a, any person may file an objection to any aspect of this regulation and may also request a hearing on those objections. You must file your objection or request a hearing on this regulation in accordance with the instructions provided in 40 CFR part 178. To ensure proper receipt by EPA, you must identify docket ID number EPA-HQ-OPP-2016-0034 in the subject line on the first page of your submission. All objections and requests for a hearing must be in writing, and must be received by the Hearing Clerk on or before October 31, 2016. Addresses for mail and hand delivery of objections and hearing requests are provided in 40 CFR 178.25(b).

In addition to filing an objection or hearing request with the Hearing Clerk as described in 40 CFR part 178, please submit a copy of the filing (excluding any Confidential Business Information (CBI)) for inclusion in the public docket. Information not marked confidential pursuant to 40 CFR part 2 may be disclosed publicly by EPA without prior notice. Submit the non-CBI copy of your objection or hearing request, identified by docket ID number EPA-HQ-OPP-2016-0034, by one of the following methods:

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

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

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

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

In the Federal Register of March 29, 2016 (81 FR 17422) (FRL-9943-67), EPA issued a document pursuant to FFDCA section 408(d)(3), 21 U.S.C. 346a(d)(3), announcing the filing of a pesticide tolerance petition (PP 5F8418) by Southern Gardens Citrus, 1820 County Road 833, Clewiston, FL 33440. The petition requested that 40 CFR part 180 be amended by establishing a temporary exemption from the requirement of a tolerance for residues of Citrus tristeza virus expressing spinach defensin proteins 2, 7, and 8 alone or in various combinations. That document referenced a summary of the petition prepared by the petitioner Southern Gardens Citrus, which is available in the docket, http://www.regulations.gov. There were no comments received in response to the notice of filing; however, several comments were received in response to the notice of issuance for the associated Experimental Use Permit No. 88232-EUP-2 that related to food safety and are found in Docket ID No. EPA-HQ-OPP-2016-0035. EPA's response to these comments is contained in Unit VII.B.

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

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

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

The pesticide chemical is Citrus tristeza virus that has been genetically altered to express spinach defensin proteins 2 (SoD2), 7 (SoD7), and 8 (SoD8) to combat Citrus Greening disease. Although EPA did not receive data on the altered virus itself, EPA has sufficient data to evaluate each component of the pesticide individually—i.e., the Citrus tristeza virus and the spinach defensin proteins 2, 7, and 8. Assessing overall risk based on the virus and spinach defensin proteins' individual risks is reasonable because the antimicrobial spinach defensin proteins are unlikely to change the host range of the plant virus and the plant virus is unlikely to affect the toxicity or allergenicity profile of the antimicrobial spinach defensin proteins.

The U.S. human population has been exposed to the Citrus tristeza (C. tristeza) virus in citrus products for at least two decades since its discovery as being widespread in the Florida citrus industry in the mid-1990s. No adverse effects from this exposure in people have been reported. This lack of adverse effects is consistent with the fact that C. tristeza is a plant virus, which do not cause disease in humans; human intestines commonly harbor plant viruses without any adverse effect. (Ref 1).

Spinach defensin proteins are naturally found in every spinach plant, and oral exposure to the spinach plant provides exposure to these proteins. There is a long history of mammalian consumption of the entire spinach plant (both raw and cooked)—including necessarily—these defensin proteins, as food, without causing any known deleterious human health effects or any evidence of toxicity. Spinach plant leaves have long been part of the human diet, and there have been no findings that indicate toxicity or allergenicity of spinach proteins.

Bioinformatic sequence comparisons to assess the toxicity potential of spinach defensin proteins 2 (SoD2), 7 (SoD7), and 8 (SoD8) yielded no potential significant toxicity matches. Furthermore, literature searches did not produce any papers that showed any mammalian toxicity associated with spinach or spinach defensins. Available data demonstrate that SoD2, SoD7, and SoD8 proteins have very low oral toxicity. In an acute oral toxicity study conducted with a single dose of 5,000 milligram/kilogram (mg/kg) of microbial-produced SoD2 protein, no evidence of toxic or adverse effects was observed. Since SoD proteins are consumed in spinach without adverse effect and SoD2, SoD7, and SoD8 are similar both functionally in spinach and in regards to their amino acid sequence, the results of the acute oral toxicity study are applicable to all three proteins.

Because SoD2, SoD7, and SoD8 are proteins, EPA also evaluated their potential for allergenicity. A literature search was performed to identify any published studies that might implicate these spinach proteins as allergens. No scientific references were found to suggest possible allergenicity associated with spinach or these spinach proteins. Finding no indication that these proteins are derived from a known allergenic source, EPA also considered the proteins' bioinformatics and resistance to digestibility.

Searching both the AllergenOnline.org database and the National Center for Biotechnology Information (NCBI) Protein database for sequence similarities to known allergens, no significant sequence matches to SoD2, SoD7, and SoD8 were found using a sliding window of 80 amino acids.

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

An evaluation of the similarities of SoD8 compared to SoD2 and SoD7 proteins to estimate SoD8 protein digestibility indicates that SoD8 should be digested very similarly to SoD2 and SoD7. The sequences are homologous, but SoD8 is longer on both the beginning and the end of the sequence. The proteins were found to be nearly identical in major overlapping sequences, while SoD8 has one more pepsin cleavage site compared to SoD2 and SoD7 which indicates that it will be even more susceptible to digestion.

Based on the source, bioinformatics, and digestibility of these proteins, EPA concludes that these spinach defensin proteins will not pose any allergenicity concerns. In sum, EPA concludes that due to the lack of toxicity and pathogenicity concerns for C. tristeza and any toxicity or allergenicity concerns for the spinach defensin proteins 2, 7, and 8, the altered C. tristeza virus expressing those spinach defensin proteins does not pose any toxicity, pathogenicity, or allergenicity concerns. Therefore, EPA did not identify any points of departure for regulating exposure, and a qualitative assessment was conducted. For further information about EPA's assessment of the Citrus tristeza virus that has been genetically altered to express spinach defensin proteins 2 (SoD2), 7 (SoD7), and 8 (SoD8), see the C. tristeza SoD2, SoD7, and SoD8 Human Health Review March 2016 found in Docket ID No. EPA-HQ-OPP-2016-0035.

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

The Agency has considered available information on the aggregate exposure levels of consumers (and major identifiable subgroups of consumers) to the pesticide chemical residue and to other related substances. These considerations include dietary exposure under the tolerance exemption and all other tolerances or exemptions in effect for residue from genetically engineered C. tristeza expressing spinach defensins SoD2, SoD7, and SoD8, and exposure from non-occupational sources.

The Agency anticipates that there may be dietary exposure to Citrus tristeza virus expressing spinach defensin proteins 2, 7, and 8 (either alone or in combinations with each other) from the consumption of citrus products treated with this pesticide. Significant dietary exposure to spinach defensin proteins 2, 7, and 8 (either alone or in combinations with each other) from use of this pesticide is not expected due to the very low expression of the defensin proteins from the C. tristeza vector. Dietary exposure to spinach defensins from consumption of treated citrus products containing them will be far below the amount consumed from raw and cooked spinach. Recent U.S. consumption statistics indicate that, on average, 2 lbs. of spinach are consumed per person per year in the United States. “Spinach Profile,” Agricultural Marketing Resource Center (June 2013). (http://www.agmrc.org/commodities_products/vegetables/spinach-profile/). EPA has also approved another experimental use permit (88232-EUP-1) involving use of defensin proteins SoD2 and SoD7, to which people may be exposed. 75 kg of SoD proteins were authorized for treatment of 720 acres in Florida and Texas. May 6, 2015 (80 FR 25943) (FRL-9926-99) and August 28, 2015 (80 FR 52270) (FRL-9931-26). In terms of non-pesticidal dietary exposure, the U.S. population will continue to be exposed to C. tristeza virus through infected citrus plants and will continue to be exposed to these spinach defensin proteins through consumption of spinach plants.

Residues in drinking water from use of this pesticide will be extremely low or non-existent since the pesticide will be present only in the vascular tissue of citrus trees and is applied under the bark, and it is highly unlikely that any environmental exposure will occur.

The Agency does not expect there to be any non-occupational exposure to this pesticide chemical residue. Exposure via the skin or inhalation is not likely since the viral vector will be phloem limited in citrus trees, and very little phloem is present in citrus fruit, which essentially eliminates these exposure routes or reduces these exposure routes to negligible.

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

Citrus tristeza virus expressing spinach defensin proteins 2, 7, and 8 (either alone or in combinations with each other) is not toxic and does not have a common mechanism of toxicity with other substances. Consequently, section 408(b)(2)(D)(v) does not apply.

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

In applying this provision, EPA either retains the default value of 10X or uses a different additional safety factor when reliable data available to EPA support the choice of a different factor. Based on the information discussed in Unit III., EPA concludes that there are no threshold effects of concern to infants, children, or adults from exposure to the spinach defensin proteins 2, 7, and 8. As a result, EPA concludes that no additional margin of exposure (safety) is necessary to protect infants and children and that not adding any additional margin of exposure (safety) will be safe for infants and children.

EPA concludes that there is a reasonable certainty that no harm will result to the U.S. population, including infants and children, from aggregate exposure to the residues of C. tristeza virus expressing spinach defensin proteins 2, 7, and 8. Such exposure includes all anticipated dietary exposures and all other exposures for which there is reliable information. The Agency has arrived at this conclusion based on a lack of toxicity and allergenicity of the C. tristeza virus expressing spinach defensin proteins 2, 7, and 8.

An analytical method is not required for enforcement purposes since the Agency is establishing an exemption from the requirement of a tolerance without any numerical limitation based on the lack of any toxicity or allergenicity of the C. tristeza virus expressing spinach defensin proteins 2, 7, and 8.

Five non-governmental organizations opposed the issuance of the temporary exemption from the requirement for a tolerance in order to prevent the issuance of the related experimental use permit (EUP). Their objections on the EUP focused on concerns about the potential for environmental impacts as a result of the pesticide spreading beyond the field trial boundaries of the EUP. They did not raise any concern about the human health or safety of the pesticide itself. Without more, the commenters have not provided a basis on which the Agency should reconsider issuing this temporary tolerance exemption. The FFDCA requires EPA to make a safety finding about the pesticide; the statutory scope of that review is focused on human health, not environmental, impacts.

Therefore, a temporary exemption is established for residues of Citrus tristeza virus expressing spinach defensin proteins 2, 7, and 8 alone or in various combinations on commodities in the fruit, citrus, group 10-10, when used in accordance with the Experimental Use Permit No. 88232-EUP-2. Because Experimental Use Permit No. 88232-EUP-2 will expire on August 31, 2019, EPA is similarly limiting the term of this exemption; this temporary exemption from the requirement of a tolerance will expire on August 31, 2020.

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

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

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

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

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

Therefore, 40 CFR chapter I is amended as follows:

States that have received final authorization from EPA under RCRA section 3006(b), 42 U.S.C. 6926(b), must maintain a hazardous waste program that is equivalent to, consistent with, and no less stringent than the Federal program. As the Federal program is revised to become more stringent or broader in scope, States must revise their programs and apply to EPA to authorize the revisions. Authorization of revisions to State programs may be necessary when Federal or State statutory or regulatory authority is modified or when certain other revisions occur. Most commonly, States must revise their programs because of revisions to EPA's regulations in 40 Code of Federal Regulations (CFR) parts 124, 260 through 266, 268, 270, 273 and 279.

On July 31, 2015, Maryland submitted a final program revision application (with subsequent corrections) seeking authorization of revisions to its hazardous waste program that correspond to certain Federal rules promulgated between January 14, 1985 and August 5, 2005. EPA concludes that Maryland's application to revise its authorized program meets all of the statutory and regulatory requirements established by RCRA, as set forth in RCRA section 3006(b), 42 U.S.C 6926(b), and 40 CFR part 271. Therefore, EPA grants Maryland final authorization to operate its hazardous waste program with the revisions described in its authorization application, and as outlined below in Section G of this document.

Maryland has responsibility for permitting treatment, storage, and disposal facilities (TSDFs) within its borders and for carrying out the aspects of the RCRA program described in its application, subject to the limitations of the Hazardous and Solid Waste Amendments of 1984 (HSWA). New Federal requirements and prohibitions imposed by Federal regulations that EPA promulgates under the authority of HSWA take effect in authorized States before they are authorized for the requirements. Thus, EPA will implement those HSWA requirements and prohibitions for which Maryland has not been authorized, including issuing HSWA permits, until the State is granted authorization to do so.

This action serves to authorize revisions to Maryland's authorized hazardous waste program. This action does not impose additional requirements on the regulated community because the regulations for which Maryland is being authorized by today's action are already effective and are not changed by today's action. Maryland has enforcement responsibilities under its state hazardous waste program for violations of its program, but EPA retains its authority under RCRA sections 3007, 3008, 3013, and 7003, which include, among others, authority to:

• Perform inspections, and require monitoring, tests, analyses or reports;

• Enforce RCRA requirements and suspend or revoke permits; and

• Take enforcement actions regardless of whether Maryland has taken its own actions.

Along with this direct final rule, EPA is publishing a separate document in the “Proposed Rules” section of today's Federal Register that serves as the proposal to authorize these State program revisions. EPA did not publish a proposal before today's rule because EPA views this action as a routine program change and does not expect comments that oppose its approval. EPA is providing an opportunity for public comment now, as described in Section E of this document.

If EPA receives comments that oppose this authorization, EPA will withdraw today's direct final rule by publishing a document in the Federal Register before the rule becomes effective. EPA will base any further decision on the authorization of Maryland's program revisions on the proposal mentioned in the previous section, after considering all comments received during the comment period. EPA will then address all such comments in a later final rule. You may not have another opportunity to comment. If you want to comment on this authorization, you must do so at this time.

If EPA receives comments that oppose only the authorization of a particular revision to the State's hazardous waste program, EPA will withdraw that part of this rule, but the authorization of the program revisions that the comments do not oppose will become effective on the date specified above. The Federal Register withdrawal document will specify which part of the authorization will become effective, and which part is being withdrawn.

Maryland initially received final authorization effective February 11, 1985 (50 FR 3511; January 25, 1985) to implement its base hazardous waste management program. EPA granted authorization for revisions to Maryland's regulatory program on June 1, 2001, effective July 31, 2001 (66 FR 29712), and on July 26, 2004, effective September 24, 2004 (69 FR 44463).

On July 31 2015, Maryland submitted a final program revision application (with subsequent corrections), seeking authorization of additional revisions to its program in accordance with 40 CFR 271.21. Maryland's revision application includes various regulations that are equivalent to, and no less stringent than, selected Federal final hazardous waste rules, as published in the Federal Register between January 14, 1985 and August 5, 2005.

EPA now makes a direct final regisule, subject to receipt of written comments that oppose this action, that Maryland's hazardous waste program revision application satisfies all of the requirements necessary to qualify for final authorization. Therefore, EPA grants Maryland final authorization for the following program revisions:

Maryland seeks authority to administer the Federal requirements that are listed in Table 1 below. This table lists the Maryland analogs that are being recognized as no less stringent than the analogous Federal requirements. Note that the Federal rules listed in Table 1 may include revisions related to the land disposal restriction (LDR) regulations. Maryland has not adopted, and is not seeking authorization for, the LDR regulations.

Maryland's regulatory references are to Title 26, Subtitle 13 of the Code of Maryland Regulations (COMAR), Chapters 01 through 10, as amended effective November 12, 2010. The State's statutory authority for its hazardous waste program is based on the Environment Article of the Annotated Code of Maryland (2013 Replacement Volume and 2014 Supplement), and the State Government Article of the Annotated Code of Maryland (2014 Replacement Volume). Maryland's application also includes a revised Program Description, which provides a description of the hazardous waste regulatory program in Maryland.

Maryland's program revision application includes State-initiated changes that are not directly related to any of the Revision Checklists in Table 1. Each State-initiated change is related to one of the following: (1) The adoption of a provision that makes internal clarification and conforming changes to the State's regulations, (2) adoption of a provision that makes the State's regulations, which had been more stringent, now equivalent to the Federal hazardous waste regulations, or (3) correction of typographical errors. EPA has evaluated the changes and has determined that the State's regulations remain consistent with, and are no less stringent than, the corresponding Federal regulations. EPA grants Maryland final authorization for the State provisions listed in Table 2. These requirements are analogous to the indicated Federal RCRA regulations found at relevant or applicable 40 CFR sections as of July 1, 2005.

DoD is amending DFARS 225.872-6 to specify the qualifying countries that have audit agreements with the United States (i.e., France, Germany, the Netherlands, and the United Kingdom).

The statute that applies to the publication of the Federal Acquisition Regulation (FAR) is 41 U.S.C. 1707 entitled “Publication of Proposed Regulations.” Paragraph (a)(1) of the statute requires that a procurement policy, regulation, procedure, or form (including an amendment or modification thereof) must be published for public comment if it relates to the expenditure of appropriated funds, and has either a significant effect beyond the internal operating procedures of the agency issuing the policy, regulation, procedure, or form, or a significant cost or administrative impact on contractors or offerors. This final rule is not required to be published for public comment, because it only specifies the qualifying countries that have audit agreements with the United States, rather than requiring each contracting officer to contact the Deputy Director of Defense Procurement and Acquisition Policy (Contract Policy and International Contracting), to determine whether a qualifying country has such an audit agreement. These regulations affect only the internal operating procedures of the Government.

This case does not add any new provisions or clauses or impact any existing provisions or clauses.

Executive Orders (E.O.s) 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and, if regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, distributive impacts, and equity). E.O. 13563 emphasizes the importance of quantifying both costs and benefits, of reducing costs, of harmonizing rules, and of promoting flexibility. This is not a significant regulatory action and, therefore, was not subject to review under section 6(b) of E.O. 12866, Regulatory Planning and Review, dated September 30, 1993. This rule is not a major rule under 5 U.S.C. 804.

The Regulatory Flexibility Act does not apply to this rule because this final rule does not constitute a significant DFARS revision within the meaning of FAR 1.501-1, and 41 U.S.C. 1707 does not require publication for public comment.

The rule does not contain any information collection requirements that require the approval of the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

Therefore, 48 CFR part 225 is amended as follows:

DoD published a proposed rule in the Federal Register at 81 FR 17055 on March 25, 2016, to implement section 885(a) of the National Defense Authorization Act (NDAA) for Fiscal Year (FY) 2016 (Pub. L. 114-92). Section 818(c)(2)(B) of the NDAA for FY 2012, as amended by section 885(a), provides that the costs of counterfeit electronic parts or suspect counterfeit electronic parts and the cost of rework or corrective action that may be required to remedy the use or inclusion of such parts are not allowable unless—

• The covered contractor has an operational system to detect and avoid counterfeit electronic parts and suspect counterfeit electronic parts that had been reviewed and approved by DoD;

• The counterfeit electronic parts or suspect counterfeit electronic parts were provided to the covered contractor as Government property in accordance with the Federal Acquisition Regulation (FAR) part 45, or were obtained by the contractor in accordance with the regulations described in paragraph (c)(3) of section 818 of the NDAA for FY 2012, as amended;

• The contractor discovers the counterfeit electronic parts or suspect counterfeit electronic parts and provides timely (i.e., within 60 days after the contractor becomes aware) notice to the Government, pursuant to section 818(c)(4).

Section 885 is the third in a series of amendments to section 818(c) of the NDAA for FY 2012, summarized as follows:

Section 803 of the NDAA for FY 2014, entitled Identification and Replacement of Obsolete Electronic Parts, did not modify section 818 of the NDAA for FY 2012 and is not directly related to the detection and avoidance of counterfeit electronic parts.

DoD has processed several DFARS cases to implement section 818 and its subsequent amendments as follows:

In addition, there are two related FAR cases:

• FAR Case 2012-032, Higher-Level Contract Quality Requirements, does not specifically implement section 818 of the NDAA for FY 2012, but the performance of higher-level quality assurance for critical items does assist in the detection and avoidance of counterfeit electronic parts (final rule published November 25, 2014, effective December 26, 2014).

• FAR Case 2013-002, Expanded Reporting of Nonconforming Items, expands beyond the requirements of section 818(c)(4), applying Governmentwide (not just DoD) to certain parts with a major or critical nonconformance (not just counterfeit electronic parts) (proposed rule published June 10, 2014).

Two respondents submitted public comments in response to the proposed rule.

DoD reviewed the public comments in the development of the final rule. A discussion of the comments and the changes made to the rule as a result of those comments is provided, as follows:

The final rule includes the following changes from the proposed rule at DFARS 231.205-71(b):

1. (b)(1)—Replaced “counterfeit parts” with “counterfeit electronic parts” (see section II.B.5. of this preamble).

2. (b)(3)(i)—Replaced “Discovers” with “Becomes aware of” and added clarifying language (see section II.B.3.c. of this preamble).

3. (b)(3)(ii)—Added the requirement to provide notice of counterfeit parts to Government Industry Exchange Program (GIDEP), with some exceptions (see section II.B.3.d. of this preamble).

Comment: One respondent stated that industry wholeheartedly supports the change to the statute to expand the conditional safe harbor from strict liability for costs to remedy damage resulting from the discovery of counterfeit electronic parts and suspect counterfeit electronic parts in end products delivered to DoD.

Response: Noted.

Both respondents commented on the number and timing of cases in process to implement section 818 of the NDAA for FY 2012, as amended.

Comment: One respondent applauded the deliberate and thoughtful approach by DoD to proceed with great care over a period of years to ensure the requirements are implemented with minimal disruption to the DoD supply chain.

Response: Noted.

Comment: One respondent recommended comprehensive, rather than “piecemeal” regulations. The respondent was concerned that this case should be considered and resolved together with DFARS cases 2014-D005 and 2016-D013 in a proposed rule with opportunity for notice and comment on the entire rule. The other respondent requested that DoD align the open cases to create a safe harbor that is efficient and complementary to the goal of building a risk-based framework to reduce the risk of counterfeit electronic parts from entering the DoD supply chain.

Response: Sometimes the best way to achieve a goal is to divide the task into segments that can be accomplished sequentially. Furthermore, the legislation to be implemented was enacted in four separate statutes over a period of 4 years, necessitating additional cases to implement the statutory amendments. DFARS Case 2014-D005 had already been published as a proposed rule on September 21, 2015, prior to enactment of the NDAA for FY 2016 on November 25, 2016. DoD carefully considered whether the new amendments should be incorporated into the existing rule, or whether DFARS Case 2014-D005 should be finalized and followed by the two cases to implement section 885(a) and (b) of the NDAA for FY 2016.

• Because both DFARS cases 2016-D010 and 2016-D013 required publication for public comment, they could not be incorporated in a final rule under 2014-D005.

• At the time of public comment on this rule, the respondents were able to view the proposed rule under DFARS Case 2014-D005. If the two new cases were published as proposed rules, separately or in combination with DFARS Case 2014-D005, the respondents would still not know what the final rule under 2014-D005 would be, at the time of commenting on the new aspects of the case. Furthermore, implementation of DFARS Case 2014-D005 would be delayed by at least a year if it were not finalized prior to implementation of the new requirements of section 885 of the NDAA for FY 2016.

• DoD considered it important to reduce supply chain risk as soon as possible by proceeding to finalize DFARS Case 2014-D005. DFARS Case 2014-D005 further implements section 818(c)(3)(A), (B), and (D) to provide detailed regulations to all DoD contractors and subcontractors that provide electronic parts to the Government, either as end items or components (not just cost accounting standards (CAS)-covered contractors and their subcontractors). If each phase of implementation of the rule were delayed until every new amendment was ready to be incorporated, DoD would still have nothing in place to protect against the hazards of counterfeit electronic parts in the DoD supply chain.

• DFARS Case 2016-D013 could not be published as a proposed rule until DFARS case 2014-D005 was finalized (81 FR 50635 on August 2, 2016), in order to provide the baseline for the required change.

• There was interest in expediting this DFARS Case 2016-D010, because it impacts cost allowability, and the text of this case is not overlapping with the text of DFARS Case 2014-D005. Therefore, this case was published as a proposed rule prior to publication of the final rule under DFARS Case 2014-D005.

• Although the respondents did not have the opportunity to see the final rule under DFARS Case 2014-D005 prior to providing comments on this case, DoD considered all other related cases when finalizing DFARS Case 2014-D005, proposing DFARS Case 2016-D013, and now finalizing this case.

Comment: One respondent stated that DFARS Case 2014-D005 addresses precisely what would be considered an operational system, who provides the needed approval, and how approval will be obtained.

Response: DFARS Case 2012-D055 (finalized May 6, 2014) added the regulations on—

• The contractors' purchasing system reviews (DFARS 244.305), which also cover review of the adequacy of the contractor's counterfeit electronic part detection and avoidance system; and

• The contractors' counterfeit electronic part detection and avoidance system (DFARS 246.870 and the clause at 252.246-7007). DFARS Case 2014-D005 (finalized August 2, 2016) did not make any changes to the coverage at DFARS 244.305, so did not impact who approves the operational system and how the approval is obtained. DFARS Case 2014-D005 did implement section 818(c)(3)(D) at DFARS 246.870-2(a), authorizing contractors and subcontractors to identify and use additional trusted suppliers (contractor-approved suppliers) in some circumstances. Therefore, DFARS Case 2014-D005 amended one of the 12 system criteria at DFARS 246.870 (i.e., the criterion relating to use of suppliers) by providing a cross reference to the more detailed coverage on sources of electronic parts now provided at DFARS 246.870-2(a). In addition, the clause at DFARS 252.246-7007 included some additional definitions of terms relating to sources of electronic parts, and cross-referenced to the new clause at DFARS 252.246-7008 for consistency in the requirements relating to traceability and sources of electronic parts between CAS-covered contractors with operational systems and all other DoD contractors and subcontractor supplying electronic parts or items containing electronic parts.

Comment: One respondent noted that, while the rules on the elements of the Detection and Avoidance System and the Contractor Purchasing System have been finalized, both systems are dependent on the forthcoming rules on use of trusted suppliers (DFARS Case 2014-D005) and timely reporting (FAR Case 2013-002). The respondent was concerned that, when finalized, those rules may shape those policies and systems in ways not contemplated in this rulemaking. The respondent recommended that, where finalization of pending rules cause contractor or subcontractor systems to go out of alignment with any of the elements related to cost allowability herein, or their previously approved systems, DoD should adopt a “time-out” from compliance enforcement and allow contractors and subcontractors time to adjust those systems to any new or modified requirements impacting the safe harbor.

Response: DFARS Case 2014-D005, although not yet finalized at the time the comments were submitted, has now been in effect since August 2, 2016. The system criterion in paragraph (c)(6) of the clause at DFARS 252.246-7007 already requires reporting of counterfeit electronic parts and suspect counterfeit electronic parts to GIDEP. Paragraph (c)(11) also requires a process for screening GIDEP reports to avoid the purchase or use of counterfeit electronic parts. Although the FAR case may provide some additional details, the primary purpose of the FAR Case 2013-002 is to expand the requirement for GIDEP reporting to agencies other than DoD and to encompass parts other than electronic parts.

Comment: One respondent commented on the sourcing of electronic parts as a condition of cost allowability. Using the terminology of the proposed rule published under DFARS Case 2014-D005, the respondent noted three categories of suppliers each with its own unique set of qualities and conditions needed to meet the conditions for safe harbor.

The respondent was concerned about the meaning of the statement that the contractor is responsible for the authenticity of the parts, when buying from what is now termed a “contractor-approved” supplier. The respondent requested clarification and confirmation that the safe harbor condition based on acquiring parts in accordance with the DFARS 252.246-7008 clause will be broadly construed and available where contractors acquire from any of the categories of suppliers defined in the proposed version of the 252.246-7008 clause. The respondent was concerned that use of the terms “trustworthy” or “non-trusted” may be perceived to imply a standard inferior to that of “trusted supplier” and imply that use of such sources could prevent contractors from availing themselves of the safe harbor.

Response: It is correct that the statute and the final rule under DFARS Case 2014-D005 provided for a tiered approach for sources of electronic parts, although the final rule no longer uses the terms “trusted supplier,” “trustworthy,” or “non-trusted supplier.”

• Category 1: Electronic parts that are in production or currently available in stock. The contractor shall obtain the parts from the original manufacturer, their authorized suppliers, or from suppliers that obtain such parts exclusively from the original manufacturers of the parts or their authorized dealers.

• Category 2: Electronic parts that are not in production and not currently available in stock. The contractor shall obtain parts from suppliers identified by the contractor as contractor-approved suppliers, subject to certain conditions.

• Category 3: Electronic parts that are not in production and not available from any of the above sources; electronic parts from a subcontractor (other than the original manufacturer) that refuses to accept flowdown of 252.246-7008; or electronic parts that the contractor or subcontractor cannot confirm are new or that the electronic parts have not been comingled in supplier new production or stock with used, refurbished, reclaimed, or returned parts: The contractor may buy such electronic parts subject to certain conditions.

Section 818(c)(3)(C) imposes, as one of the conditions for contractor identification and use of contractor-approved suppliers (category 2), the requirement that the contractor or subcontractor “assume responsibility for the authenticity of parts provided by such suppliers as provided in paragraph (2)” (i.e., section 818(c)(2), entitled “Contractor Responsibilities,” which states that covered contractors that supply electronic parts or products that include electronic parts are responsible for detecting and avoiding the use or inclusion of counterfeit electronic parts or suspect counterfeit electronic parts in such products and for any rework or corrective action that may be required to remedy the use or inclusion of such parts). The contractor assumes responsibility for the inspection, testing, and authentication in accordance with existing applicable standards, consistent with the requirements at DFARS 252.246-7008(c)(2) if the contractor cannot establish traceability from the original manufacturer for a specific electronic part.

The safe harbor provision of the statute at section 818(c)(2)(B), as amended, does not exclude applicability to electronic parts acquired from any of the categories of sources, as long as the contractor complies with all of the conditions associated with that category. The allowability of the costs of any counterfeit electronic parts and any rework or corrective action that may be required to remedy the use or inclusion of such parts must be based upon an analysis of the facts of the case, in accordance with section 818(c)(2)(B), as amended, DFARS 231.205-71, 246.870-2, and the associated clauses at DFARS 252.246-7007 and 252.246-7008.

Comment: One respondent recommended that “pending approval” be added to the definition of “trusted suppliers” and that contractor-designated trusted suppliers be assumed to be approved by the DoD officials until DoD notifies the designating contractor that the supplier is not approved. According to the respondent, this change to the regulations is necessary in order to prevent contractors and their suppliers from having costs relating to detection and remediation deemed unallowable because DoD officials have not conducted and completed the approval process for a contractor-approved supplier.

Response: DoD approval of contractor-approved suppliers is the subject of DFARS Case 2016-D013, Amendments Related to Sources of Electronic Part, which was published in the Federal Register as a proposed rule on August 2, 2016. Although that rule is not yet finalized, the proposed rule stated explicitly that the contractor may proceed with the acquisition of electronic parts from a contractor-approved supplier unless notified otherwise by DoD.