Federal Register Vol. 81, No.207,

Federal Register Volume 81, Issue 207 (October 26, 2016)

Page Range74279-74656
FR Document

81_FR_207
Current View
Page and SubjectPDF
81 FR 74655 - United Nations Day, 2016PDF
81 FR 74653 - National Historically Black Colleges and Universities Week, 2016PDF
81 FR 74432 - Sunshine Act; Notice of ETAC Member MeetingPDF
81 FR 74395 - Lemon Juice From Argentina: Continuation of Suspension of Antidumping InvestigationPDF
81 FR 74408 - Agency Information Collection Activities Under OMB ReviewPDF
81 FR 74458 - Short-Term Alternative Animal Models or In Vitro Tests Used To Identify Substances With the Potential To Cause Excessive Inflammation or Exaggerated Immune Responses; Request for InformationPDF
81 FR 74460 - Office of the Director, Office of Science Policy, Office of Biotechnology Activities; Amended Notice of MeetingPDF
81 FR 74459 - National Institute of Environmental Health Sciences; Notice of Closed MeetingsPDF
81 FR 74459 - Eunice Kennedy Shriver National Institute of Child Health and Human Development; Notice of Closed MeetingPDF
81 FR 74482 - Advisory Committee for Environmental Research and Education; Notice of MeetingPDF
81 FR 74456 - Renewal of Charters for Certain Federal Advisory CommitteesPDF
81 FR 74480 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-Advanced Media Workflow Association, Inc.PDF
81 FR 74481 - Notice Pursuant to the National Cooperative Research and Production Act of 1993-UHD Alliance, Inc.PDF
81 FR 74392 - Notice of Petitions by Firms for Determination of Eligibility To Apply for Trade Adjustment AssistancePDF
81 FR 74403 - Fisheries of the South Atlantic; South Atlantic Fishery Management Council; Public MeetingPDF
81 FR 74412 - Submission for OMB Review; Comment RequestPDF
81 FR 74308 - Fisheries of the Northeastern United States; Atlantic Bluefish Fishery; Quota TransfersPDF
81 FR 74470 - Extension of the Designation of Nepal for Temporary Protected StatusPDF
81 FR 74401 - Stainless Steel Bar From Spain: Initiation and Preliminary Results of Changed Circumstances ReviewPDF
81 FR 74484 - Independent Assessment of Nuclear Material Control and Accounting SystemsPDF
81 FR 74431 - Notice of Agreements FiledPDF
81 FR 74313 - Fisheries of the Economic Exclusive Zone Off Alaska; Groundfish Fishery by Vessels Using Trawl Gear in the Gulf of AlaskaPDF
81 FR 74393 - Multilayered Wood Flooring From the People's Republic of China: Rescission of Antidumping Duty New Shipper Reviews; 2014-2015PDF
81 FR 74475 - 30-Day Notice of Proposed Information Collection: Section 8 Management Assessment ProgramPDF
81 FR 74487 - Release of Waybill DataPDF
81 FR 74463 - Agency Information Collection Activities: Proposed Collection; Comment Request; Hazard Mitigation Grant Program (HMGP) Application and ReportingPDF
81 FR 74486 - Meetings of the United States-Peru Environmental Affairs Council, Environmental Cooperation Commission, and Sub-Committee on Forest Sector GovernancePDF
81 FR 74490 - Local Empowerment for Accelerating Projects (LEAP) Pilot ProgramPDF
81 FR 74496 - Proposed Agency Information Collection Activities; Comment RequestPDF
81 FR 74432 - Change in Bank Control Notices; Acquisitions of Shares of a Bank or Bank Holding CompanyPDF
81 FR 74431 - Formations of, Acquisitions by, and Mergers of Bank Holding CompaniesPDF
81 FR 74487 - U.S. Department of State Advisory Committee on Private International Law (ACPIL): Public Meeting on Insolvency-Related Judgments and Enterprise Group Insolvency IssuesPDF
81 FR 74404 - Pacific Fishery Management Council; Public MeetingsPDF
81 FR 74406 - Fisheries of the South Atlantic; South Atlantic Fishery Management Council; Public MeetingPDF
81 FR 74406 - Fisheries of the South Atlantic; Southeast Data, Assessment, and Review (SEDAR); Public MeetingPDF
81 FR 74407 - Mid-Atlantic Fishery Management Council (MAFMC); Public MeetingPDF
81 FR 74487 - North American Free Trade Agreement; Invitation for Applications for Inclusion on the Chapter 19 RosterPDF
81 FR 74426 - Records Governing Off-the-Record CommunicationsPDF
81 FR 74427 - Broadview Energy JN, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
81 FR 74423 - Broadview Energy KW, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
81 FR 74427 - ESS Snook Project, LLC; Supplemental Notice That Initial Market-Based Rate Filing Includes Request for Blanket Section 204 AuthorizationPDF
81 FR 74416 - Combined Notice of Filings #1PDF
81 FR 74456 - Advisory Commission on Childhood VaccinesPDF
81 FR 74489 - Twenty Sixth RTCA SC-225 Rechargeable Lithium Batteries and Battery Systems PlenaryPDF
81 FR 74428 - Information Collection Request Submitted to OMB for Review and Approval; Comment Request; Procedures for Implementing the National Environmental Policy Act and Assessing the Environmental Effects Abroad of EPA Actions (Renewal)PDF
81 FR 74468 - Identification of Foreign Countries Whose Nationals Are Eligible To Participate in the H-2A and H-2B Nonimmigrant Worker ProgramsPDF
81 FR 74315 - Enhanced Cyber Risk Management StandardsPDF
81 FR 74481 - Meeting of the Coordinating Council on Juvenile Justice and Delinquency PreventionPDF
81 FR 74302 - Alabama Regulatory ProgramPDF
81 FR 74413 - DOE/NSF High Energy Physics Advisory PanelPDF
81 FR 74414 - Environmental Management Site-Specific Advisory Board, Northern New MexicoPDF
81 FR 74414 - Biomass Research and Development Technical Advisory CommitteePDF
81 FR 74483 - Notice of Permit Applications Received Under the Antarctic Conservation Act of 1978PDF
81 FR 74279 - Exportation of Live Animals, Hatching Eggs, and Animal Germplasm From the United StatesPDF
81 FR 74494 - Qualification of Drivers; Exemption Applications; VisionPDF
81 FR 74392 - In the Matter of: Junaid Peerani, 1331 NW. 115th Ave., Plantation, FL 33323PDF
81 FR 74455 - Renewal of Charter for the Advisory Commission on Childhood VaccinesPDF
81 FR 74410 - Compliance Bulletin and Policy Guidance; 2016-02, Service ProvidersPDF
81 FR 74455 - Advisory Committee on Organ TransplantationPDF
81 FR 74452 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Format and Content Requirements for Over-the-Counter Drug Product LabelingPDF
81 FR 74453 - The Sentinel Post-Licensure Rapid Immunization Safety Monitoring Program; Public Workshop; CorrectionPDF
81 FR 74368 - Use of Ozone-Depleting SubstancesPDF
81 FR 74298 - Use of Ozone-Depleting SubstancesPDF
81 FR 74364 - Use of Ozone-Depleting SubstancesPDF
81 FR 74402 - Mid-Atlantic Fishery Management Council (MAFMC); MeetingPDF
81 FR 74413 - Agency Information Collection Activities; Comment Request; Lender's Request for Payment of Interest and Special Allowance-LaRSPDF
81 FR 74478 - Information Collection Request Sent to the Office of Management and Budget (OMB) for Approval; Certification of Identity and Consent FormPDF
81 FR 74429 - Information Collections Being Submitted for Review and Approval to the Office of Management and BudgetPDF
81 FR 74477 - Proposed Information Collection; National Park Service Background Clearance Initiation RequestPDF
81 FR 74407 - Proposed Information Collection; Comment Request; American Lobster-Annual Trap Transfer ProgramPDF
81 FR 74391 - Meetings; Architectural and Transportation Barriers Compliance BoardPDF
81 FR 74419 - Commission Information Collection Activities (FERC-725I); Comment RequestPDF
81 FR 74425 - Skandana, LLC; Notice of Preliminary Permit Application Accepted for Filing and Soliciting Comments, Motions To Intervene, and Competing ApplicationsPDF
81 FR 74425 - Pyramid Lake Paiute Tribe; Notice of Intent To File License Application, Filing of Pre-Application Document, Approving Use of the Traditional Licensing ProcessPDF
81 FR 74415 - Pyramid Lake Paiute Tribe; Notice of Intent To File License Application, Filing of Pre-Application Document, Approving Use of the Traditional Licensing ProcessPDF
81 FR 74421 - Brookfield White Pine Hydro LLC; Notice of Application Accepted for Filing, Soliciting Motions To Intervene and Protests, Ready for Environmental Analysis, and Soliciting Comments, Recommendations, Preliminary Terms and Conditions, and Preliminary Fishway PrescriptionsPDF
81 FR 74420 - FirstLight Hydro Generating Company; Notice of Application Accepted for Filing, Soliciting Comments, Motions To Intervene, and ProtestsPDF
81 FR 74423 - Notice of Petition for Enforcement; Allco Renewable Energy Limited Allco Finance Limited, Ecos Energy, LLCPDF
81 FR 74420 - Transcontinental Gas Pipe Line Company, LLC; Notice of Revised Schedule for Environmental Review of the Atlantic Sunrise ProjectPDF
81 FR 74418 - Equitrans, LP; Notice of Request Under Blanket AuthorizationPDF
81 FR 74482 - Notice of Appointments of Individuals To Serve as Members of Performance Review BoardsPDF
81 FR 74479 - Certain Activity Tracking Devices, Systems, and Components Thereof; Commission Determination Not To Review a Final Initial Determination Finding No Violation of Section 337; Termination of the InvestigationPDF
81 FR 74489 - Petition for Exemption; Summary of Petition ReceivedPDF
81 FR 74490 - Petition for Exemption; Summary of Petition Received; B/E Aerospace, Inc.-FSIPDF
81 FR 74485 - Competitive Price AdjustmentPDF
81 FR 74461 - National Institute of Mental Health; Notice of Closed MeetingPDF
81 FR 74459 - National Institute of Mental Health; Amended Notice of MeetingPDF
81 FR 74460 - National Institute of Mental Health; Notice of Closed MeetingsPDF
81 FR 74461 - National Institute of Diabetes and Digestive and Kidney Diseases; Notice of Closed MeetingsPDF
81 FR 74462 - Eunice Kennedy Shriver National Institute of Child Health & Human Development; Notice of Closed MeetingPDF
81 FR 74458 - National Institute of Allergy and Infectious Diseases; Notice of Closed MeetingsPDF
81 FR 74462 - Center for Scientific Review; Notice of Closed MeetingsPDF
81 FR 74460 - Center for Scientific Review; Notice of Closed MeetingsPDF
81 FR 74461 - Center for Scientific Review; Notice of Closed MeetingsPDF
81 FR 74431 - Petition for Reconsideration of a Policy StatementPDF
81 FR 74432 - Medicaid Program; Final FY 2014 and Preliminary FY 2016 Disproportionate Share Hospital Allotments, and Final FY 2014 and Preliminary FY 2016 Institutions for Mental Diseases Disproportionate Share Hospital LimitsPDF
81 FR 74427 - Combined Notice of FilingsPDF
81 FR 74415 - Combined Notice of Filings #1PDF
81 FR 74350 - Special Conditions: Aerocon Engineering Company, Boeing Model 777-200 Airplane; Access Hatch Installed Between the Cabin and the Class C Cargo Compartment To Allow In-Flight Access to the Cargo CompartmentPDF
81 FR 74348 - Special Conditions: Bombardier Inc. Model BD-700-2A12 and BD-700-2A13 Airplanes; Fuselage In-Flight Fire Safety and Flammability Resistance of Aluminum-Lithium MaterialPDF
81 FR 74347 - Special Conditions: Bombardier Inc. Models BD-700-2A12 and BD-700-2A13 Airplanes; Fuselage Post-Crash Fire SurvivabilityPDF
81 FR 74388 - Medicare Program; Listening Session Regarding the Implementation of Certain Medicare Part D Provisions in the Comprehensive Addiction and Recovery Act of 2016 (CARA)PDF
81 FR 74307 - Inspection Service AuthorityPDF
81 FR 74500 - Volkswagen Group of America, Inc., Receipt of Petition for Decision of Inconsequential NoncompliancePDF
81 FR 74464 - Assistance to Firefighters Grant ProgramPDF
81 FR 74462 - Agency Information Collection Activities: Proposed Collection; Comment Request; Environmental and Historic Preservation Screening FormPDF
81 FR 74358 - Airworthiness Directives; Pratt & Whitney Division Turbofan EnginesPDF
81 FR 74482 - NASA Advisory Council; Technology, Innovation and Engineering Committee; MeetingPDF
81 FR 74391 - Meeting of Bureau of Economic Analysis Advisory CommitteePDF
81 FR 74448 - Guidelines Stating Principles for Working With Federally Recognized Indian TribesPDF
81 FR 74453 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; Threshold of Regulation for Substances Used in Food-Contact ArticlesPDF
81 FR 74417 - Dominion Carolina Gas Transmission, LLC; Notice of Availability of the Environmental Assessment for the Proposed Transco to Charleston ProjectPDF
81 FR 74424 - Commission Information Collection Activities (FERC-577); Comment RequestPDF
81 FR 74423 - FLS Energy, Inc.; Notice of Petition for EnforcementPDF
81 FR 74429 - Agency Information Collection Activities: Comment RequestPDF
81 FR 74451 - Low Sexual Interest, Desire, and/or Arousal in Women: Developing Drugs for Treatment; Draft Guidance for Industry; AvailabilityPDF
81 FR 74447 - Submission for OMB Review; Comment RequestPDF
81 FR 74282 - Special Conditions: Airbus Helicopters Model EC120B Helicopters, Installation of HeliSAS Autopilot and Stabilization Augmentation System (AP/SAS)PDF
81 FR 74296 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 74289 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 74291 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 74292 - Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous AmendmentsPDF
81 FR 74362 - Airworthiness Directives; Airbus Helicopters (Previously Eurocopter France)PDF
81 FR 74287 - Airworthiness Directives; Bombardier, Inc. AirplanesPDF
81 FR 74285 - Airworthiness Directives; Bell Helicopter TextronPDF
81 FR 74382 - Loan Guaranty Vendee Loan FeesPDF
81 FR 74305 - Domestic Competitive Products Pricing and Mailing Standards ChangesPDF
81 FR 74304 - International Product and Price ChangesPDF
81 FR 74360 - Airworthiness Directives; Bombardier, Inc. AirplanesPDF
81 FR 74352 - Airworthiness Directives; The Boeing Company AirplanesPDF
81 FR 74354 - Airworthiness Directives; Airbus AirplanesPDF
81 FR 74326 - Restrictions on Qualified Financial Contracts of Certain FDIC-Supervised Institutions; Revisions to the Definition of Qualifying Master Netting Agreement and Related DefinitionsPDF
81 FR 74372 - Tenant-Based Assistance: Enhanced VouchersPDF
81 FR 74476 - Grays Harbor National Wildlife Refuge and Black River Unit of Billy Frank Jr. Nisqually National Wildlife Refuge, Grays Harbor and Thurston Counties, WA; Draft Comprehensive Conservation Plan and Environmental AssessmentPDF
81 FR 74309 - Fisheries Off West Coast States; Coastal Pelagic Species Fisheries; Multi-Year Specifications for Monitored and Prohibited Harvest Species Stock CategoriesPDF
81 FR 74280 - Inhumane Handling of Livestock in Connection With Slaughter by Persons Not Employed by the Official EstablishmentPDF
81 FR 74504 - Cross-State Air Pollution Rule Update for the 2008 Ozone NAAQSPDF

Issue

81 207 Wednesday, October 26, 2016 Contents Agriculture Agriculture Department See

Animal and Plant Health Inspection Service

See

Food Safety and Inspection Service

Animal Animal and Plant Health Inspection Service RULES Exports: Live Animals, Hatching Eggs, and Animal Germplasm from the United States, 74279-74280 2016-25860 Antitrust Division Antitrust Division NOTICES Changes under the National Cooperative Research and Production Act: Advanced Media Workflow Association, Inc., 74480-74481 2016-25915 UHD Alliance, Inc., 74481 2016-25914 Architectural Architectural and Transportation Barriers Compliance Board NOTICES Meetings: Committee and Board Meetings, 74391 2016-25843 Consumer Financial Protection Bureau of Consumer Financial Protection NOTICES Compliance Bulletin: Service Providers, 74410-74412 2016-25856 Centers Medicare Centers for Medicare & Medicaid Services PROPOSED RULES Medicare Program: Listening Session Regarding the Implementation of Certain Medicare Part D Provisions in the Comprehensive Addiction and Recovery Act, 74388-74390 2016-25806 NOTICES Medicaid Program: Final FY 2014 and Preliminary FY 2016 Disproportionate Share Hospital Allotments, and Final FY 2014 and Preliminary FY 2016 Institutions for Mental Diseases Disproportionate Share Hospital Limits, 74432-74447 2016-25813 Children Children and Families Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74447-74448 2016-25787 Guidelines Stating Principles for Working with Federally Recognized Indian Tribes, 74448-74451 2016-25794 Commerce Commerce Department See

Economic Analysis Bureau

See

Economic Development Administration

See

Industry and Security Bureau

See

International Trade Administration

See

National Oceanic and Atmospheric Administration

Commodity Futures Commodity Futures Trading Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74408-74410 2016-25925 Comptroller Comptroller of the Currency PROPOSED RULES Enhanced Cyber Risk Management Standards, 74315-74326 2016-25871 Defense Department Defense Department See

Navy Department

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74412 2016-25897
Economic Analysis Bureau Economic Analysis Bureau NOTICES Meetings: Bureau of Economic Analysis Advisory Committee, 74391-74392 2016-25795 Economic Development Economic Development Administration NOTICES Trade Adjustment Assistance Eligibility; Petitions, 74392 2016-25911 Education Department Education Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Lender's Request for Payment of Interest and Special Allowance, 74413 2016-25848 Energy Department Energy Department See

Federal Energy Regulatory Commission

NOTICES Meetings: Biomass Research and Development Technical Advisory Committee, 74414 2016-25865 DOE/NSF High Energy Physics Advisory Panel, 74413-74414 2016-25867 Environmental Management Site-Specific Advisory Board, Northern New Mexico, 74414-74415 2016-25866
Environmental Protection Environmental Protection Agency RULES Cross-State Air Pollution Rule Update for the 2008 Ozone National Ambient Air Quality Standards, 74504-74650 2016-22240 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Procedures for Implementing the National Environmental Policy Act and Assessing the Environmental Effects Abroad of EPA Actions, 74428-74429 2016-25873 Export Import Export-Import Bank NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74429 2016-25789 Federal Aviation Federal Aviation Administration RULES Airworthiness Directives: Bell Helicopter Textron, 74285-74287 2016-25742 Bombardier, Inc. Airplanes, 74287-74289 2016-25747 Special Conditions: Airbus Helicopters Model EC120B Helicopters, Installation of HeliSAS Autopilot and Stabilization Augmentation System, 74282-74285 2016-25786 Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments, 74289-74298 2016-25782 2016-25783 2016-25784 2016-25785 PROPOSED RULES Airworthiness Directives: Airbus Airplanes, 74354-74358 2016-25662 Airbus Helicopters (Previously Eurocopter France), 74362-74364 2016-25748 Boeing Company Airplanes, 74352-74354 2016-25663 Bombardier, Inc. Airplanes, 74360-74362 2016-25664 Pratt and Whitney Division Turbofan Engines, 74358-74360 2016-25799 Special Conditions: Aerocon Engineering Company, Boeing Model 777-200 Airplane; Access Hatch Installed Between the Cabin and the Class C Cargo Compartment to Allow In-Flight Access to the Cargo Compartment, 74350-74352 2016-25810 Bombardier Inc. Model BD-700-2A12 and BD-700-2A13 Airplanes; Fuselage In-Flight Fire Safety and Flammability Resistance of Aluminum-Lithium Material, 74348-74350 2016-25809 Bombardier Inc. Models BD-700-2A12 and BD-700-2A13 Airplanes; Fuselage Post-Crash Fire Survivability, 74347-74348 2016-25808 NOTICES Meetings: Twenty Sixth Radio Technical Commission for Aeronautics SC-225 Rechargeable Lithium Batteries and Battery Systems Plenary, 74489-74490 2016-25874 Petitions for Exemption; Summaries, 74489 2016-25826 Petitions for Exemption; Summaries: B/E Aerospace, Inc.—FSI, 74490 2016-25825 Federal Communications Federal Communications Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74429-74431 2016-25846 Petitions: Reconsideration of a Policy Statement, 74431 2016-25814 Federal Deposit Federal Deposit Insurance Corporation PROPOSED RULES Enhanced Cyber Risk Management Standards, 74315-74326 2016-25871 Restrictions on Qualified Financial Contracts of Certain FDIC-Supervised Institutions: Revisions to the Definition of Qualifying Master Netting Agreement and Related Definitions, 74326-74347 2016-25605 Federal Emergency Federal Emergency Management Agency NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Environmental and Historic Preservation Screening Form, 74462-74463 2016-25800 Hazard Mitigation Grant Program Application and Reporting, 74463-74464 2016-25896 Assistance to Firefighters Grant Program, 74464-74468 2016-25801 Federal Energy Federal Energy Regulatory Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74419-74420, 74424-74425 2016-25791 2016-25841 Applications: Brookfield White Pine Hydro LLC, 74421-74423 2016-25837 FirstLight Hydro Generating Co., 74420-74421 2016-25836 Combined Filings, 74415-74417, 74427 2016-25811 2016-25812 2016-25876 Environmental Assessments; Availability, etc.: Dominion Carolina Gas Transmission, LLC, Transco to Charleston Project, 74417-74418 2016-25792 Environmental Reviews: Transcontinental Gas Pipe Line Co., LLC, Atlantic Sunrise Project, 74420 2016-25834 Initial Market-Based Rate Filings Including Requests for Blanket Section 204 Authorizations: Broadview Energy JN, LLC, 74427 2016-25879 Broadview Energy KW, LLC, 74423 2016-25878 Equitrans, LP, 74418-74419 2016-25833 ESS Snook Project, LLC, 74427-74428 2016-25877 License Applications: Pyramid Lake Paiute Tribe, 74415, 74425-74426 2016-25838 2016-25839 Permit Applications: Skandana, LLC, 74425 2016-25840 Petitions for Enforcement: Allco Renewable Energy Limited, Allco Finance Limited, Ecos Energy, LLC, 74423 2016-25835 FLS Energy, Inc., 74423-74424 2016-25790 Records Governing Off-the-Record Communications, 74426-74427 2016-25880 Federal Highway Federal Highway Administration NOTICES Local Empowerment for Accelerating Projects Pilot Program, 74490-74494 2016-25894 Federal Maritime Federal Maritime Commission NOTICES Agreements Filed, 74431 2016-25903 Federal Motor Federal Motor Carrier Safety Administration NOTICES Qualification of Drivers; Exemption Applications: Vision, 74494-74496 2016-25859 Federal Railroad Federal Railroad Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74496-74500 2016-25893 Federal Reserve Federal Reserve System PROPOSED RULES Enhanced Cyber Risk Management Standards, 74315-74326 2016-25871 NOTICES Change in Bank Control Notices: Acquisitions of Shares of a Bank or Bank Holding Company, 74432 2016-25892 Formations of, Acquisitions by, and Mergers of Bank Holding Companies, 74431-74432 2016-25891 Federal Retirement Federal Retirement Thrift Investment Board NOTICES Meetings; Sunshine Act, 74432 2016-25979 Fish Fish and Wildlife Service NOTICES Environmental Impact Statements; Availability, etc.: Draft Comprehensive Conservation Plan, etc., Grays Harbor National Wildlife Refuge and Black River Unit of Billy Frank Jr. Nisqually National Wildlife Refuge, Grays Harbor and Thurston Counties, WA, 74476-74477 2016-25367 Food and Drug Food and Drug Administration RULES Use of Ozone-Depleting Substances, 74298-74302 2016-25851 PROPOSED RULES Use of Ozone-Depleting Substances, 74364-74372 2016-25850 2016-25852 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Format and Content Requirements for Over-the-Counter Drug Product Labeling, 74452-74453 2016-25854 Threshold of Regulation for Substances Used in Food-Contact Articles, 74453-74454 2016-25793 Guidance: Low Sexual Interest, Desire, and/or Arousal in Women—Developing Drugs for Treatment, 74451-74452 2016-25788 Meetings: Sentinel Post-Licensure Rapid Immunization Safety Monitoring Program, 74453 2016-25853 Food Safety Food Safety and Inspection Service RULES Inhumane Handling of Livestock in Connection with Slaughter by Persons Not Employed by the Official Establishment, 74280-74282 2016-24754 Health and Human Health and Human Services Department See

Centers for Medicare & Medicaid Services

See

Children and Families Administration

See

Food and Drug Administration

See

Health Resources and Services Administration

See

National Institutes of Health

NOTICES Charter Renewals: Certain Federal Advisory Committees, 74456-74458 2016-25916
Health Resources Health Resources and Services Administration NOTICES Charter Renewals: Advisory Commission on Childhood Vaccines, 74455-74456 2016-25857 Meetings: Advisory Commission on Childhood Vaccines, 74456 2016-25875 Advisory Committee on Organ Transplantation, 74455 2016-25855 Homeland Homeland Security Department See

Federal Emergency Management Agency

See

U.S. Citizenship and Immigration Services

NOTICES Identification of Foreign Countries Whose Nationals Are Eligible to Participate in the H-2A and H-2B Nonimmigrant Worker Programs, 74468-74470 2016-25872
Housing Housing and Urban Development Department PROPOSED RULES Tenant-Based Assistance: Enhanced Vouchers, 74372-74382 2016-25520 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Section 8 Management Assessment Program, 74475-74476 2016-25899 Industry Industry and Security Bureau NOTICES Denials of Export Privileges: Junaid Peerani, 74392-74393 2016-25858 Interior Interior Department See

Fish and Wildlife Service

See

National Park Service

See

Surface Mining Reclamation and Enforcement Office

International Trade Adm International Trade Administration NOTICES Antidumping or Countervailing Duty Investigations, Orders, or Reviews: Lemon Juice from Argentina, 74395-74401 2016-25947 Multilayered Wood Flooring from the People's Republic of China, 74393-74395 2016-25901 Stainless Steel Bar from Spain, 74401-74402 2016-25906 International Trade Com International Trade Commission NOTICES Investigations; Determinations, Modifications, and Rulings, etc.: Certain Activity Tracking Devices, Systems, and Components; Termination of the Investigation, 74479-74480 2016-25829 Justice Department Justice Department See

Antitrust Division

See

Justice Programs Office

Justice Programs Justice Programs Office NOTICES Meetings: Coordinating Council on Juvenile Justice and Delinquency Prevention, 74481 2016-25870 NASA National Aeronautics and Space Administration NOTICES Meetings: NASA Advisory Council; Technology, Innovation and Engineering Committee, 74482 2016-25798 National Highway National Highway Traffic Safety Administration NOTICES Receipts of Petitions: Volkswagen Group of America, Inc.; Decision of Inconsequential Noncompliance, 74500-74501 2016-25802 National Institute National Institutes of Health NOTICES Meetings: Center for Scientific Review, 74460-74462 2016-25817 2016-25815 2016-25816 Eunice Kennedy Shriver National Institute of Child Health and Human Development, 74459-74460, 74462 2016-25819 2016-25919 National Institute of Allergy and Infectious Diseases, 74458-74459 2016-25818 National Institute of Diabetes and Digestive and Kidney Diseases, 74461 2016-25820 National Institute of Environmental Health Sciences, 74459 2016-25920 National Institute of Mental Health, 74460-74461 2016-25821 2016-25823 National Institute of Mental Health; Amended, 74459 2016-25822 Office of the Director, Office of Science Policy, Office of Biotechnology Activities, 74460-74461 2016-25921 Requests for Information: Short-Term Alternative Animal Models or In Vitro Tests Used to Identify Substances with the Potential to Cause Excessive Inflammation or Exaggerated Immune Responses, 74458 2016-25924 National Labor National Labor Relations Board NOTICES Appointments of Individuals to Serve as Members of Performance Review Boards, 74482 2016-25830 National Oceanic National Oceanic and Atmospheric Administration RULES Fisheries of the Exclusive Economic Zone Off Alaska: Groundfish Fishery by Vessels Using Trawl Gear in the Gulf of Alaska, 74313-74314 2016-25902 Fisheries of the Northeastern United States: Atlantic Bluefish Fishery; Quota Transfers, 74308 2016-25908 Fisheries Off West Coast States: Coastal Pelagic Species Fisheries; Multi-Year Specifications for Monitored and Prohibited Harvest Species Stock Categories, 74309-74313 2016-24989 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: American Lobster—Annual Trap Transfer Program, 74407-74408 2016-25844 Meetings: Fisheries of the South Atlantic; South Atlantic Fishery Management Council, 74406 2016-25885 2016-25886 Fisheries of the South Atlantic; Southeast Data, Assessment, and Review, 74406-74407 2016-25884 Mid-Atlantic Fishery Management Council, 74402-74403, 74407 2016-25849 2016-25883 Pacific Fishery Management Council, 74404-74406 2016-25887 South Atlantic Fishery Management Council, 74403-74404 2016-25910 National Park National Park Service NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Background Clearance Initiation Request, 74477-74478 2016-25845 Certification of Identity and Consent Form, 74478-74479 2016-25847 National Science National Science Foundation NOTICES Antarctic Conservation Act Permit Applications, 74483-74484 2016-25861 Meetings: Advisory Committee for Environmental Research and Education, 74482-74483 2016-25917 Permit Applications: Antarctic Conservation Act of 1978, 74483 2016-25862 Navy Navy Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 74412-74413 2016-25909 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Guidance: Independent Assessment of Nuclear Material Control and Accounting Systems, 74484-74485 2016-25904 Postal Regulatory Postal Regulatory Commission NOTICES Competitive Price Adjustment, 74485-74486 2016-25824 Postal Service Postal Service RULES Domestic Competitive Products Pricing and Mailing Standards Changes, 74305-74307 2016-25712 Inspection Service Authority, 74307-74308 2016-25805 International Product and Price Changes, 74304-74305 2016-25711 Presidential Documents Presidential Documents PROCLAMATIONS Special Observances: Historically Black Colleges and Universities Week (Proc. 9527), 74651-74654 2016-26070 United Nations Day (Proc. 9528), 74655-74656 2016-26071 State Department State Department NOTICES Meetings: Advisory Committee on Private International Law, 74487 2016-25890 United States-Peru Environmental Affairs Council, Environmental Cooperation Commission, and Sub-Committee on Forest Sector Governance, 74486 2016-25895 Surface Mining Surface Mining Reclamation and Enforcement Office RULES Alabama Regulatory Program, 74302-74304 2016-25869 Surface Transportation Surface Transportation Board NOTICES Release of Waybill Data, 74487 2016-25898 Trade Representative Trade Representative, Office of United States NOTICES Requests for Applications: North American Free Trade Agreement; Chapter 19 Roster, 74487-74489 2016-25882 Transportation Department Transportation Department See

Federal Aviation Administration

See

Federal Highway Administration

See

Federal Motor Carrier Safety Administration

See

Federal Railroad Administration

See

National Highway Traffic Safety Administration

Treasury Treasury Department See

Comptroller of the Currency

U.S. Citizenship U.S. Citizenship and Immigration Services NOTICES Temporary Protected Status: Nepal, 74470-74475 2016-25907 Veteran Affairs Veterans Affairs Department PROPOSED RULES Loan Guaranty Vendee Loan Fees, 74382-74388 2016-25738 Separate Parts In This Issue Part II Environmental Protection Agency, 74504-74650 2016-22240 Part III Presidential Documents, 74651-74656 2016-26070 2016-26071 Reader Aids

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

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81 207 Wednesday, October 26, 2016 Rules and Regulations DEPARTMENT OF AGRICULTURE Animal and Plant Health Inspection Service 9 CFR Part 91 [Docket No. APHIS-2012-0049] RIN 0579-AE00 Exportation of Live Animals, Hatching Eggs, and Animal Germplasm From the United States AGENCY:

Animal and Plant Health Inspection Service, USDA.

ACTION:

Final rule; technical amendment.

SUMMARY:

In a final rule published in the Federal Register on January 20, 2016, and effective on February 19, 2016, we revised our regulations regarding the exportation of livestock from the United States. Among other revisions, we expanded the scope of the regulations so that, if the Animal and Plant Health Inspection Service (APHIS) knows that an importing country requires an export health certificate endorsed by the competent veterinary authority of the United States for any animal other than livestock or for any animal semen, animal embryos, hatching eggs, other embryonated eggs, or gametes intended for export to that country, the animal or other commodity must have an endorsed export health certificate in order to be eligible for export from the United States. While, in the preamble for that rule, we indicated that APHIS is the competent veterinary authority of the United States, and must endorse the export health certificate in such instances, this was not reflected in the regulations themselves. This document corrects that error.

DATES:

Effective October 26, 2016.

FOR FURTHER INFORMATION CONTACT:

Dr. Jack Taniewski, Director for Animal Export, National Import Export Services, VS, APHIS, 4700 River Road Unit 39, Riverdale, MD 20737-1231; (301) 851-3300.

SUPPLEMENTARY INFORMATION:

In a final rule 1 that was published in the Federal Register on January 20, 2016 (81 FR 2967, Docket No. APHIS-2012-0049), and effective on February 19, 2016, we amended the regulations concerning the exportation of livestock from the United States, which are found in 9 CFR part 91 (referred to below as “the regulations”). Among other revisions, we expanded the scope of the regulations so that, if the Animal and Plant Health Inspection Service (APHIS) knows that an importing country requires an export health certificate endorsed by the competent veterinary authority of the United States for any animal other than livestock or for any animal semen, animal embryos, hatching eggs, other embryonated eggs, or gametes intended for export to that country, the animal or other commodity must have an endorsed export health certificate in order to be eligible for export from the United States.

1 To view the rule, supporting documents, and comments we received, go to http://www.regulations.gov/#!docketDetail;D=APHIS-2012-0049.

In the preamble of that rule, we stated that this requirement was necessary because several foreign countries consider any animal, germplasm, or hatching egg offered for importation to their country without an export health certificate issued by the competent veterinary authority of the exporting country to present a risk of disseminating pests or diseases of livestock within their country, and accordingly prohibit such importation. We also stated that, if we are aware that the importing country has such requirements, we consider it necessary to require export health certificates for the animals, germplasm, or hatching eggs in order to provide assurances to the importing country that, in our, that is, APHIS', determination as the competent veterinary authority of the United States, we do not consider the animals, germplasm, or hatching eggs to present a risk of disseminating pests or diseases of livestock. Thus, we implied that, in such instances, the export health certificate must be issued and endorsed by APHIS.

In the regulatory text of that final rule, however, we did not specify that such export health certificates must be endorsed by APHIS, but rather that they must be endorsed by the competent veterinary authority of the United States.

This has led to confusion regarding whether we intended to allow agencies other than APHIS to endorse the certificates. We did not.

Accordingly, we are amending the regulations to specify that, if APHIS knows that an importing country requires an export health certificate endorsed by the competent veterinary authority of the United States for any animal other than livestock or for any animal semen, animal embryos, hatching eggs, other embryonated eggs, or gametes intended for export to that country, the animal or other commodity must have an export health certificate endorsed by APHIS in order to be eligible for export from the United States.

List of Subjects in 9 CFR Part 91

Animal diseases, Animal welfare, Exports, Livestock, Reporting and recordkeeping requirements, Transportation.

Accordingly, we are amending 9 CFR part 91 as follows:

PART 91—EXPORTATION OF LIVE ANIMALS, HATCHING EGGS OR OTHER EMBRYONATED EGGS, ANIMAL SEMEN, ANIMAL EMBRYOS, AND GAMETES FROM THE UNITED STATES 1. The authority citation for part 91 continues to read as follows: Authority:

7 U.S.C. 8301-8317; 19 U.S.C. 1644a(c); 21 U.S.C. 136, 136a, and 618; 46 U.S.C. 3901 and 3902; 7 CFR 2.22, 2.80, and 371.4.

2. In § 91.3, paragraph (a)(2) is revised to read as follows:
§ 91.3 General requirements.

(a) * * *

(2) If APHIS knows that an importing country requires an export health certificate endorsed by the competent veterinary authority of the United States for any animal other than livestock or for any animal semen, animal embryos, hatching eggs, other embryonated eggs, or gametes intended for export to that country, the animal or other commodity must have an export health certificate endorsed by APHIS in order to be eligible for export from the United States.

Done in Washington, DC, this 21st day of October 2016. Kevin Shea, Administrator, Animal and Plant Health Inspection Service.
[FR Doc. 2016-25860 Filed 10-25-16; 8:45 am] BILLING CODE 3410-34-P
DEPARTMENT OF AGRICULTURE Food Safety and Inspection Service 9 CFR Parts 313, 320, and 500 [Docket No. FSIS-2016-0004] Inhumane Handling of Livestock in Connection With Slaughter by Persons Not Employed by the Official Establishment AGENCY:

Food Safety and Inspection Service, USDA.

ACTION:

Final determination and opportunity for comments.

SUMMARY:

The Food Safety and Inspection Service (FSIS), is announcing its intent to hold livestock owners, transporters, haulers and other persons not employed by an official establishment responsible if they commit acts involving inhumane handling of livestock in connection with slaughter when on the premises of an official establishment. The Agency intends to initiate civil or criminal action, in appropriate circumstances, against individuals not employed by an official establishment, if these individuals handle livestock inhumanely in connection with slaughter when on the official premises. FSIS believes these actions will further improve the welfare of livestock handled in connection with slaughter by ensuring that all persons that inhumanely handle livestock in connection with slaughter are held accountable.

DATES:

Comments must be received by November 25, 2016. FSIS will implement the actions discussed in this document on January 24, 2017, unless FSIS receives comments that demonstrate a need to revise this date. FSIS will publish a Federal Register document affirming the implementation date.

ADDRESSES:

FSIS invites interested persons to submit comments on this notice. Comments may be submitted by either of the following methods:

Federal eRulemaking Portal: This Web site provides the ability to type short comments directly into the comment field on this Web page or attach a file for lengthier comments. Go to http://www.regulations.gov/. Follow the on-line instructions at that site for submitting comments.

Mail, including CD-ROMs, etc.: Send to Docket Room Manager, U.S. Department of Agriculture, Food Safety and Inspection Service, Patriots Plaza 3, 14000 Independence Avenue SW., Mailstop 3782, Room 8-163B, Washington, DC 20250-3700.

Hand- or courier-delivered submittals: Deliver to Patriots Plaza 3, 355 E. Street SW., Room 8-163B. Washington, DC 20250-3700.

Instructions: All items submitted by mail or electronic mail must include the Agency name and docket number FSIS-2016-0004. Comments received in response to this docket will be made available for public inspection and posted without change, including any personal information, to http://www.regulations.gov.

Docket: For access to background documents or to comments received, go to the FSIS Docket Room at Patriots Plaza 3, 355 E. Street SW., Room 8-164, Washington, DC 20250-3700 between 8 a.m. and 4:30 p.m., Monday through Friday.

FOR FURTHER INFORMATION CONTACT:

Daniel L. Engeljohn, Ph.D., Assistant Administrator, Office of Policy and Program Development, FSIS, USDA; Telephone: (202) 205-0495.

SUPPLEMENTARY INFORMATION: Background

FSIS administers the Federal Meat Inspection Act (FMIA) (21 U.S.C. 601 et seq.), which establishes requirements for the premises, facilities, and operations of official establishments that slaughter livestock and prepare meat and meat products for human food to ensure both the safety of meat and the humane slaughter and handling of livestock. The FMIA provides that, for the purposes of preventing inhumane slaughter of livestock, the Secretary of Agriculture will assign inspectors to examine and inspect the methods by which livestock are slaughtered and handled in connection with slaughter in slaughtering establishments subject to inspection under the FMIA (21 U.S.C. 603(b)). The Humane Methods of Slaughter Act (HMSA) (7 U.S.C. 1901 et seq.) requires that the slaughter of livestock and the handling of livestock in connection with slaughter be carried out only by humane methods (7 U.S.C. 1901). Therefore, FSIS requires official establishments to humanely handle livestock that are on the official premises, on vehicles that are on the official premises, and on vehicles in queue for slaughter establishments. Once a vehicle carrying livestock enters, or is in line to enter, an official establishment's premises, the vehicle is considered to be part of that official establishment's premises (see FSIS Directive 6900.2).

With respect to enforcement action at the establishment, the FMIA and implementing regulations provide that FSIS may suspend inspection services from an official establishment for inhumane slaughter or inhumane handling in connection with slaughter (21 U.S.C. 603(b); 9 CFR part 500). The FMIA (21 U.S.C. 610) provides that no person, establishment, or corporation shall slaughter or handle in connection with slaughter any livestock in any manner not in accordance with the HMSA (21 U.S.C. 610(b)). The FMIA also provides for the issuance of warning letters and for initiation of criminal and civil action for violations (21 U.S.C. 674 and 676).

Livestock transporters or haulers transport animals to slaughter establishments. Many of these individuals are not employed by the establishment and thus are not required to follow instructions from the establishment on the handling of livestock in connection with slaughter.

Unlike owners of Federal establishments, non-employees, such as livestock transporters, generally do not hold a grant of Federal inspection and therefore are not subject to FSIS administrative enforcement actions. When non-employee transporters inhumanely handle livestock on the premises of an official establishment, FSIS takes action against the establishment (see FSIS Directive 6900.2). For purposes of this document, livestock transporters, haulers, or other persons not employed by an official establishment that handle livestock in connection with slaughter are collectively referred to as “non-employee transporters”, or simply “non-employees.”

On January 21, 2015, FSIS received a petition from an attorney on behalf of an official swine slaughter establishment requesting that FSIS review its humane handling enforcement policy (available on the FSIS Web page at http://www.fsis.usda.gov/wps/wcm/connect/4d9160de-a7a1-4fd9-88ff-e3b24bf8d1e9/15-03-Non-Employee-Humane-Handling.pdf?MOD=AJPERES). The petition stated that official establishments should not be held accountable when non-employees inhumanely handle livestock on the official establishment premises. FSIS has decided to grant the petition and is publishing this document to describe the actions that the Agency will take when non-employee transporters inhumanely handle livestock on the premises of an official establishment.

Non-Employee Violations

FSIS intends to hold non-employees accountable for their actions if they inhumanely handle livestock in connection with slaughter when on the premises of an official establishment.

When FSIS's Office of Field Operations (OFO) inspection program personnel (IPP) observe a non-employee inhumanely handling livestock in connection with slaughter, FSIS will instruct them to produce a written record of the event and forward the record to their District Office. The District Office will refer the record, when appropriate, to FSIS's Office of Investigation, Enforcement and Audit (OIEA) to conduct follow-up investigations and enforcement action. As discussed below, FSIS intends to update its livestock handling instructions to OFO and OIEA personnel to reflect the actions described in this document. These instructions will include a description of the type of information that IPP are to include in their written records of the event. In accordance with FSIS Directive 8010.5 Case Referral and Disposition, OIEA personnel will evaluate the case for determination of action, including warning letters for minor violations, civil action for repetitive violations, and criminal prosecution for egregious violations (21 U.S.C. 674 and 676).

The actions that FSIS is announcing in this document are intended to enhance the Agency's ability to ensure the humane handling of livestock in connection with slaughter and do not replace existing enforcement policies. FSIS will continue to use its administrative authority to take action against the establishment when establishment employees are found responsible for inhumane handling of livestock. FSIS will consider the involvement of non-employees in incidents of inhumane handling while on establishment premises to assess the appropriate administrative enforcement actions, if any, that the Agency will take against the establishment. The following examples illustrate how FSIS intends to implement this policy.

If FSIS determines that a non-employee is solely responsible for a humane handling violation, FSIS will use its authority to initiate action solely against the non-employee and will not take administrative enforcement action against the establishment. For example, if OFO personnel observe a non-employee driving animals too fast and causing a few to slip and fall, and establishment employees are not involved in the event, FSIS will initiate action against the non-employee and will not take an administrative enforcement action against the establishment.

If FSIS determines that a non-employee and an establishment employee both are engaged in a humane handling violation, FSIS will use its authority to initiate action against the non-employee and to take a regulatory control action or administrative enforcement action, as appropriate, against the establishment. For example, if OFO personnel observe a non-employee transporter and an establishment employee driving animals too fast, FSIS will initiate an action against the non-employee and take a separate regulatory or administrative enforcement action against the establishment.

OFO personnel will take a regulatory control action when it is necessary for FSIS to stop the inhumane treatment of livestock because the violation continues to injure, cause distress, or otherwise adversely affects livestock, or to immediately stop inhumane handling that is egregious, regardless of whether a non-employee or an establishment employee is responsible for the inhumane handling (9 CFR 500.2(a)(4), 9 CFR 313.50). After taking a regulatory control action, OFO personnel will meet with establishment management and assess the event to determine whether a non-employee, an establishment employee, or both committed the humane handling violation. For example, if OFO personnel observe the excessive beating of livestock during unloading, FSIS personnel may apply a tag to the unloading chute to prevent further inhumane handling. FSIS personnel would meet with establishment management and make a determination as to whether the persons responsible for the inhumane handling were non-employees or were employed by the establishment. If a non-employee is found to be solely responsible for the inhumane handling violation, OFO personnel would not take regulatory or administrative enforcement actions against the establishment. OFO personnel would remove the tag after the establishment proffers preventive measures that ensure compliance with the appropriate provisions of 9 CFR part 313.

If OFO personnel determine that a non-employee inhumanely handled livestock on the premises of an official slaughter establishment, FSIS expects that establishment management will provide, upon request, certain records that are required to be maintained under 9 CFR part 320. These records include, among others, the name and address of the seller of the livestock, the method of shipment, the date of shipment, and the name and address of the carrier (9 CFR 320.1(b)(1)). If establishment management does not provide the information upon request, FSIS may obtain a subpoena to gain access to the non-employee information required under 9 CFR 320.1.

Implementation and Request for Comments

FSIS requests comments on its decision to initiate enforcement actions against non-employees that inhumanely handle livestock in connection with slaughter while on the premises of an official establishment. FSIS will make changes to its implementation plans as necessary in response to the comments received. The Agency also will update its livestock handling instructions to OFO and OIEA personnel and its humane handling guidance materials to reflect the actions described in this document. FSIS will begin implementing the policy discussed in this action 90 days after its publication in the Federal Register, unless FSIS receives comments that demonstrate a need to revise this plan. The Agency will announce the availability of its updated humane handling guidance materials in a separate Federal Register notice. Additionally, FSIS will perform outreach to industry to educate slaughter establishments as well as animal transporters, haulers, and allied industries.

USDA Non-Discrimination Statement

No agency, officer, or employee of the USDA shall, on the grounds of race, color, national origin, religion, sex, gender identity, sexual orientation, disability, age, marital status, family/parental status, income derived from a public assistance program, or political beliefs, exclude from participation in, deny the benefits of, or subject to discrimination any person in the United States under any program or activity conducted by the USDA.

How To File a Complaint of Discrimination

To file a complaint of discrimination, complete the USDA Program Discrimination Complaint Form, which may be accessed online at http://www.ocio.usda.gov/sites/default/files/docs/2012/Complain_combined_6_8_12.pdf, or write a letter signed by you or your authorized representative.

Send your completed complaint form or letter to USDA by mail, fax, or email:

Mail: U.S. Department of Agriculture, Director, Office of Adjudication, 400 Independence Avenue SW., Washington, DC 20250-9410, Fax: (202) 690-7442, Email: [email protected]

Persons with disabilities who require alternative means for communication (Braille, large print, audiotape, etc.), should contact USDA's TARGET Center at (202) 720-2600 (voice and TDD).

Additional Public Notification

Public awareness of all segments of rulemaking and policy development is important. Consequently, FSIS will announce this Federal Register publication on-line through the FSIS Web page located at: http://www.fsis.usda.gov/federal-register.

FSIS will also make copies of this Federal Register publication available through the FSIS Constituent Update, which is used to provide information regarding FSIS policies, procedures, regulations, Federal Register notices, FSIS public meetings, and other types of information that could affect or would be of interest to constituents and stakeholders.

The Update is communicated via Listserv, a free electronic mail subscription service for industry, trade groups, consumer interest groups, health professionals, and other individuals who have asked to be included. The Update is also available on the FSIS Web page. In addition, FSIS offers an electronic mail subscription service which provides automatic and customized access to selected food safety news and information. This service is available at: http://www.fsis.usda.gov/subscribe. Options range from recalls to export information to regulations, directives, and notices. Customers can add or delete subscriptions themselves, and have the option to password protect their accounts.

Dated: October 6, 2016. Alfred V. Almanza, Acting Administrator.
[FR Doc. 2016-24754 Filed 10-25-16; 8:45 am] BILLING CODE P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 27 [Docket No. FAA-2016-9308; Special Conditions No. 27-040-SC] Special Conditions: Airbus Helicopters Model EC120B Helicopters, Installation of HeliSAS Autopilot and Stabilization Augmentation System (AP/SAS) AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final special conditions; request for comments.

SUMMARY:

These special conditions are issued for the modification of the Airbus Helicopters Model EC120B helicopter. This model helicopter will have a novel or unusual design feature after installation of the S-TEC Corporation (S-TEC) HeliSAS helicopter autopilot/stabilization augmentation system (AP/SAS) that has potential failure conditions with more severe adverse consequences than those envisioned by the existing applicable airworthiness regulations. These special conditions contain the added safety standards the Administrator considers necessary to ensure the failures and their effects are sufficiently analyzed and contained.

DATES:

The effective date of these special conditions is October 26, 2016. We must receive your comments on or before December 12, 2016.

ADDRESSES:

Send comments identified by docket number [FAA-2016-9308] using any of the following methods:

Federal eRegulations Portal: Go to http://www.regulations.gov and follow the online instructions for sending your comments electronically.

Mail: Send comments to Docket Operations, M-30, U.S. Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room W12-140, West Building Ground Floor, Washington, DC 20590-0001.

Hand Delivery of Courier: Deliver comments to the Docket Operations, in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC between 9 a.m., and 5 p.m., Monday through Friday, except federal holidays.

Fax: Fax comments to Docket Operations at 202-493-2251.

Privacy: The FAA will post all comments it receives, without change, to http://regulations.gov, including any personal information the commenter provides. Using the search function of the docket Web site, anyone can find and read the electronic form of all comments received into any FAA docket, including the name of the individual sending the comment (or signing the comment for an association, business, labor union, etc.). DOT's complete Privacy Act Statement can be found in the Federal Register published on April 11, 2000 (65 FR 19477-19478), as well as at http://DocketsInfo.dot.gov.

Docket: Background documents or comments received may be read at http://www.regulations.gov. Follow the online instructions for accessing the docket or go to the Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m., and 5 p.m., Monday through Friday, except Federal holidays.

FOR FURTHER INFORMATION CONTACT:

Gary Roach, Aviation Safety Engineer, FAA, Rotorcraft Directorate, Regulations and Policy Group (ASW-111), 10101 Hillwood Parkway, Fort Worth, Texas 76177; telephone (817) 222-4859; facsimile (817) 222-5961; or email to [email protected]

SUPPLEMENTARY INFORMATION: Reason for No Prior Notice and Comment Before Adoption

The FAA has determined that notice and opportunity for public comment are unnecessary because the substance of these special conditions has been subjected to the notice and comment period previously and has been derived without substantive change from those previously issued. As it is unlikely that we will receive new comments, the FAA finds that good cause exists for making these special conditions effective upon issuance.

Comments Invited

While we did not precede this with a notice of proposed special conditions, we invite interested people to take part in this action by sending written comments, data, or views. The most helpful comments reference a specific portion of the special conditions, explain the reason for any recommended change, and include supporting data.

We will consider all comments we receive by the closing date for comments. We will consider comments filed late if it is possible to do so without incurring expense or delay. We may change these special conditions based on the comments we receive.

If you want us to let you know we received your mailed comments on these special conditions, send us a pre-addressed, stamped postcard on which the docket number appears. We will stamp the date on the postcard and mail it back to you.

Background

On January 25, 2016, S-TEC applied for a supplemental type certificate No. SR11230SC to install a HeliSAS AP/SAS on the Airbus Helicopters Model EC120B helicopter. The Airbus Helicopters Model EC120B helicopter is a 14 CFR part 27 normal category rotorcraft, single turbine engine, conventional helicopter designed for civil operations. This helicopter model is capable of carrying up to four passengers with one pilot, and has a maximum gross weight of up to 3,700 pounds, depending on the model configuration. The major design features include a 3-blade, fully articulated main rotor, an anti-torque tail rotor system, a skid landing gear, and a visual flight rule basic avionics configuration.

S-TEC proposes to modify these model helicopters by installing a two-axis HeliSAS AP/SAS. The S-TEC HeliSAS SAS/AP is intended only for operations under Visual Flight Rules. The system is designed to reduce pilot workload by stabilizing the pitch and roll attitudes of the helicopter in all flight conditions.

Type Certification Basis

Under 14 CFR 21.115, S-TEC must show that the Airbus Helicopters Model EC120B helicopter, as modified by the installed HeliSAS AP/SAS, continues to meet the requirements specified in 14 CFR 21.101. The baseline of the certification basis for the unmodified Airbus Helicopters model EC120B helicopter is listed in Type Certificate No. R0001RD. Additionally, compliance must be shown to any applicable equivalent level of safety findings, exemptions, and special conditions prescribed by the Administrator as part of the certification basis.

The Administrator has determined the applicable airworthiness regulations (that is, 14 CFR part 27), as they pertain to this STC, do not contain adequate or appropriate safety standards for the Airbus Helicopters Model EC120B helicopter because of a novel or unusual design feature. Therefore, special conditions are prescribed under § 21.16.

In addition to the applicable airworthiness regulations and special conditions, S-TEC must show compliance of the HeliSAS AP/SAS STC altered Airbus Helicopters Model EC120B helicopter with the noise certification requirements of 14 CFR part 36.

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

Novel or Unusual Design Features

The HeliSAS AP/SAS incorporates novel or unusual design features for installation in an Airbus Helicopters Model EC120B helicopter. This HeliSAS AP/SAS performs non-critical control functions, since this model helicopter has been certificated to meet the applicable requirements independent of this system. However, the possible failure conditions for this system, and their effect on the continued safe flight and landing of the helicopters, are more severe than those envisioned by the present rules. Therefore, a high level of integrity for failure protection is required.

Discussion

The effect on safety is not adequately covered under § 27.1309 for the application of new technology and new application of standard technology. Specifically, the present provisions of § 27.1309(c) do not adequately address the safety requirements for systems whose failures could result in catastrophic or hazardous/severe-major failure conditions, or for complex systems whose failures could result in major failure conditions. The current regulations are inadequate because when § 27.1309(c) was promulgated, it was not envisioned that this type of rotorcraft would use systems that are complex or whose failure could result in “catastrophic” or “hazardous/severe-major” effects on the rotorcraft. This is particularly true with the application of new technology, new application of standard technology, or other applications not envisioned by the rule that affect safety.

To comply with the provisions of the special conditions, we require that S-TEC provide the FAA with a systems safety assessment (SSA) for the final HeliSAS AP/SAS installation configuration that will adequately address the safety objectives established by a functional hazard assessment (FHA) and a preliminary system safety assessment (PSSA), including the fault tree analysis (FTA). This will ensure that all failure conditions and their resulting effects are adequately addressed for the installed HeliSAS AP/SAS. The SSA process, FHA, PSSA, and FTA are all parts of the overall safety assessment process discussed in FAA Advisory Circular 27-1B (Certification of Normal Category Rotorcraft) and Society of Automotive Engineers document Aerospace Recommended Practice 4761 (Guidelines and Methods for Conducting the Safety Assessment Process on Civil Airborne Systems and Equipment).

These special conditions require that the HeliSAS AP/SAS installed on an Airbus Helicopters Model EC120B helicopter meet the requirements to adequately address the failure effects identified by the FHA, and subsequently verified by the SSA, within the defined design integrity requirements.

Failure Condition Categories. Failure conditions are classified, according to the severity of their effects on the rotorcraft, into one of the following categories:

1. No Effect—Failure conditions that would have no effect on safety. For example, failure conditions that would not affect the operational capability of the rotorcraft or increase crew workload; however, could result in an inconvenience to the occupants, excluding the flight crew.

2. Minor—Failure conditions which would not significantly reduce rotorcraft safety, and which would involve crew actions that are well within their capabilities. Minor failure conditions would include, for example, a slight reduction in safety margins or functional capabilities, a slight increase in crew workload such as routine flight plan changes or result in some physical discomfort to occupants.

3. Major—Failure conditions which would reduce the capability of the rotorcraft or the ability of the crew to cope with adverse operating conditions to the extent that there would be, for example, a significant reduction in safety margins or functional capabilities, a significant increase in crew workload or result in impairing crew efficiency, physical distress to occupants, including injuries, or physical discomfort to the flight crew.

4. Hazardous/Severe-Major.

a. Failure conditions which would reduce the capability of the rotorcraft or the ability of the crew to cope with adverse operating conditions to the extent that there would be:

(1) A large reduction in safety margins or functional capabilities;

(2) physical distress or excessive workload that would impair the flight crew's ability to the extent that they could not be relied on to perform their tasks accurately or completely; or

(3) possible serious or fatal injury to a passenger or a cabin crewmember, excluding the flight crew.

b. “Hazardous/severe-major” failure conditions can include events that are manageable by the crew by the use of proper procedures, which, if not implemented correctly or in a timely manner, may result in a catastrophic event.

5. Catastrophic—Failure conditions which would result in multiple fatalities to occupants, fatalities or incapacitation to the flight crew, or result in loss of the rotorcraft.

Radio Technical Commission for Aeronautics, Inc. (RTCA) Document DO-178C (Software Considerations in Airborne Systems And Equipment Certification) provides software design assurance levels most commonly used for the major, hazardous/severe-major, and catastrophic failure condition categories. The HeliSAS AP/SAS system equipment must be qualified for the expected installation environment. The test procedures prescribed in RTCA Document DO-160G (Environmental Conditions and Test Procedures for Airborne Equipment) are recognized by the FAA as acceptable methodologies for finding compliance with the environmental requirements. Equivalent environment test standards may also be acceptable. This is to show that the HeliSAS AP/SAS system performs its intended function under any foreseeable operating condition, which includes the expected environment in which the HeliSAS AP/SAS is intended to operate. Some of the main considerations for environmental concerns are installation locations and the resulting exposure to environmental conditions for the HeliSAS AP/SAS system equipment, including considerations for other equipment that may be affected environmentally by the HeliSAS AP/SAS equipment installation. The level of environmental qualification must be related to the severity of the considered failure conditions and effects on the rotorcraft.

Applicability

These special conditions are applicable to the HeliSAS AP/SAS installed as an STC approval in Airbus Helicopters Model EC120B helicopters, Type Certificate No. R0001RD.

Conclusion

This action affects only certain novel or unusual design features for a HeliSAS AP/SAS STC installed on the specified model helicopter. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features.

List of Subjects in 14 CFR Part 27

Aircraft, Aviation safety.

The authority citation for these special conditions is as follows: Authority:

42 U.S.C. 7572, 49 U.S.C. 106(g), 40105, 40113, 44701-44702, 44704, 44709, 44711, 44713, 44715, 45303.

The Special Conditions Accordingly, pursuant to the authority delegated to me by the Administrator, the following special conditions are issued as part of the S-TEC Corporation (S-TEC) supplemental type certificate basis for the installation of a HeliSAS helicopter autopilot/stabilization augmentation system (AP/SAS) on the Airbus Helicopters Model EC120B helicopter.

In addition to the requirement of § 27.1309(c), HeliSAS AP/SAS installations on Airbus Helicopters Model EC120B helicopters must be designed and installed so that the failure conditions identified in the functional hazard assessment (FHA) and verified by the system safety assessment (SSA), after design completion, are adequately addressed in accordance with the following requirements.

Requirements

S-TEC must comply with the existing requirements of § 27.1309 for all applicable design and operational aspects of the HeliSAS AP/SAS with the failure condition categories of “no effect,” and “minor,” and for non-complex systems whose failure condition category is classified as “major.” S-TEC must comply with the requirements of these special conditions for all applicable design and operational aspects of the HeliSAS AP/SAS with the failure condition categories of “catastrophic” and “hazardous severe/major,” and for complex systems whose failure condition category is classified as “major.” A complex system is a system whose operations, failure conditions, or failure effects are difficult to comprehend without the aid of analytical methods (for example, FTA, Failure Modes and Effect Analysis, FHA).

System Design Integrity Requirements

Each of the failure condition categories defined in these special conditions relate to the corresponding aircraft system integrity requirements. The system design integrity requirements, for the HeliSAS AP/SAS, as they relate to the allowed probability of occurrence for each failure condition category and the proposed software design assurance level, are as follows:

1. “Major”—For systems with “major” failure conditions, failures resulting in these major effects must be shown to be remote, a probability of occurrence on the order of between 1 × 10−5 to 1 × 10−7 failures/hour, and associated software must be developed, at a minimum, to the Level C software design assurance level.

2. “Hazardous/Severe-Major”—For systems with “hazardous/severe-major” failure conditions, failures resulting in these hazardous/severe-major effects must be shown to be extremely remote, a probability of occurrence on the order of between 1 × 10−7 to 1 × 10 failures/hour, and associated software must be developed, at a minimum, to the Level B software design assurance level.

3. “Catastrophic”—For systems with “catastrophic” failure conditions, failures resulting in these catastrophic effects must be shown to be extremely improbable, a probability of occurrence on the order of 1 × 10−9 failures/hour or less, and associated software must be developed, at a minimum, to the Level A design assurance level.

System Design Environmental Requirements

The HeliSAS AP/SAS system equipment must be qualified to the appropriate environmental level for all relevant aspects to show that it performs its intended function under any foreseeable operating condition, including the expected environment in which the HeliSAS AP/SAS is intended to operate. Some of the main considerations for environmental concerns are installation locations and the resulting exposure to environmental conditions for the HeliSAS AP/SAS system equipment, including considerations for other equipment that may be affected environmentally by the HeliSAS AP/SAS equipment installation. The level of environmental qualification must be related to the severity of the considered failure conditions and effects on the rotorcraft.

Test and Analysis Requirements

Compliance with the requirements of these special conditions may be shown by a variety of methods, which typically consist of analysis, flight tests, ground tests, and simulation, as a minimum. Compliance methodology is related to the associated failure condition category. If the HeliSAS AP/SAS is a complex system, compliance with the requirements for failure conditions classified as “major” may be shown by analysis, in combination with appropriate testing to validate the analysis. Compliance with the requirements for failure conditions classified as “hazardous/severe-major” may be shown by flight-testing in combination with analysis and simulation, and the appropriate testing to validate the analysis. Flight tests may be limited for “hazardous/severe-major” failure conditions and effects due to safety considerations. Compliance with the requirements for failure conditions classified as “catastrophic” may be shown by analysis, and appropriate testing in combination with simulation to validate the analysis. Very limited flight tests in combination with simulation are used as a part of a showing of compliance for “catastrophic” failure conditions. Flight tests are performed only in circumstances that use operational variations, or extrapolations from other flight performance aspects to address flight safety.

These special conditions require that the HeliSAS AP/SAS system installed on an Airbus Helicopters Model EC120B helicopter meet these requirements to adequately address the failure effects identified by the FHA, and subsequently verified by the SSA, within the defined design system integrity requirements.

Issued in Fort Worth, Texas, on October 17, 2016. Scott A. Horn, Assistant Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2016-25786 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-3821; Directorate Identifier 2014-SW-025-AD; Amendment 39-18696; AD 2016-22-07] RIN 2120-AA64 Airworthiness Directives; Bell Helicopter Textron AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

We are superseding Airworthiness Directive (AD) 75-26-05 for Bell Helicopter Textron (Bell) Model 204B, 205A-1 and 212 helicopters. AD 75-26-05 required removing and visually inspecting each main rotor(M/R) blade and, depending on the inspection's outcome, repairing or replacing the M/R blades. This new AD requires more frequent inspections of certain M/R blades and applies to Model 205A helicopters. This AD does not require that helicopter blades be removed to conduct the initial visual inspections. We are issuing this AD to detect a crack and prevent failure of an M/R blade and subsequent loss of helicopter control.

DATES:

This AD is effective November 30, 2016.

ADDRESSES:

For service information identified in this final rule, contact Bell Helicopter Textron, Inc., P.O. Box 482, Fort Worth, TX 76101; telephone (817) 280-3391; fax (817) 280-6466; or at http://www.bellcustomer.com/files/. You may view this referenced service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy, Room 6N-321, Fort Worth, TX 76177.

Examining the AD Docket

You may examine the AD docket on the Internet at http://www.regulations.gov in Docket No. FAA-2015-3821; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the economic evaluation, any comments received, and other information. The address for the Docket Office (phone: 800-647-5527) is Document Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Charles Harrison, Project Manager, Fort Worth Aircraft Certification Office, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5140; email [email protected]

SUPPLEMENTARY INFORMATION:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to remove AD 75-26-05, Amendment 39-2457 (40 FR 57783, December 12, 1975) and add a new AD. AD 75-26-05 applied to Bell Model 204B, 205A-1, and 212 helicopters. AD 75-26-05 required removing and visually inspecting each M/R blade and, depending on the inspection's outcome, repairing or replacing the M/R blade.

The NPRM published in the Federal Register on May 5, 2016 (81 FR 27055). The NPRM was prompted by a report of an M/R blade with multiple fatigue cracks around the retention bolt hole. The NPRM proposed to require more frequent inspections of certain M/R blades and proposed to remove the requirement that helicopter blades be removed to conduct the initial visual inspections. The NPRM also proposed to include the Model 205A in the applicability but remove the Model 212 because similar inspections are required by AD 2011-23-02 (76 FR 68301, November 4, 2011). Finally, the NPRM included specific part-numbered blades in the applicability so that the proposed AD would no longer be required if a new blade is designed that is not subject to the unsafe condition.

Comments

We gave the public the opportunity to participate in developing this AD, but we received no comments on the NPRM (81 FR 27055, May 5, 2016).

FAA's Determination

We have reviewed the relevant information and determined that an unsafe condition exists and is likely to exist or develop on other helicopters of these same type designs and that air safety and the public interest require adopting the AD requirements as proposed.

Related Service Information

Bell issued Alert Service Bulletin (ASB) No. UH-1H-13-09, dated January 14, 2013, for the Model UH-1H helicopter (ASB UH-1H-13-09). ASB UH-1H-13-09 specifies a one-time visual inspection, within 10 hours time-in-service (TIS), of the lower grip pad and upper and lower grip plates for cracks, edge voids, and loose or damaged adhesive squeeze-out. ASB UH-1H-13-09 also specifies a repetitive visual inspection, daily and at every 150 hours TIS of the lower grip pad, upper and lower grip plates, and all upper and the lower doublers for cracks, corrosion, edge voids, and loose or damaged adhesive squeeze-out. Similar inspections are contained in Bell ASB No. 204-75-1 (ASB 204-75-1) and No. 205-75-5 (ASB 205-75-5), both Revision C and both dated April 25, 1979, for Bell Model 204B and 205A-1 helicopters, respectively. ASB 204-75-1 and ASB 205-75-5 call for daily inspections and for inspections, rework, and refinishing every 1,000 hours TIS or 12 months, whichever occurs first.

Differences Between This AD and the Service Information

This AD requires all inspections every 25 hours TIS or 2 weeks, whichever occurs first. ASB UH-1H-13-09 specifies a one-time inspection within 10 hours TIS, and then a second repetitive inspection daily and at every 150 hours TIS, while ASB 204-75-1 and ASB 205-75-5 call for daily visual inspections, and inspections, rework, and refinishing every 1,000 hours TIS or 12 months, whichever occurs first. This AD contains more detailed inspection requirements and a more specific inspection area than the instructions in ASB UH-1H-13-09. The service information applies to M/R blade, part number (P/N) 204-011-250, and was issued for Model 204B and 205A-1 helicopters. This AD also applies toP/N 204-011-200 because this blade is of the same type and susceptible to the unsafe condition. This AD also applies to certain M/R blades installed on the Model 205A helicopters. While none of these models are registered in the U.S., they were included because of bladeP/N eligibility.

Costs of Compliance

We estimate that this AD affects 52 helicopters of U.S. Registry and that labor costs average $85 a work-hour. Based on these estimates, we expect the following costs:

Cleaning and performing all inspections of a set of M/R blades (2 per helicopter) requires a half work-hour. No parts are needed. At an estimated 24 inspections a year, the cost is $1,032 per helicopter and $53,664 for the U.S. fleet.

Replacing an M/R blade requires 12 work hours and parts cost $90,656 for a total cost of $91,676 per blade.

Authority for This Rulemaking

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

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

Regulatory Findings

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

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

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

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

(3) Will not affect intrastate aviation in Alaska to the extent that a regulatory distinction is required and

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

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

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

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

§ 39.13 [Amended]
2. The FAA amends § 39.13 by removing Airworthiness Directive (AD) 75-26-05, Amendment 39-2457 (40 FR 57783, December 12, 1975), and adding the following new AD: 2016-22-07 Bell Helicopter Textron: Amendment 39-18696; Docket No. FAA-2015-3821; Directorate Identifier 2014-SW-025-AD. (a) Applicability

This AD applies to Model 204B, 205A, and 205A-1 helicopters with a main rotor (M/R) blade, part number (P/N) 204-011-200-001 or P/N 204-011-250-(all dash numbers), installed, certificated in any category.

(b) Unsafe Condition

This AD defines the unsafe condition as a crack in an M/R blade, which could result in failure of an M/R blade and subsequent loss of helicopter control.

(c) Affected ADs

This AD supersedes AD 75-26-05, Amendment 39-2457 (40 FR 57783, December 12, 1975).

(d) Effective Date

This AD becomes effective November 30, 2016.

(e) Compliance

You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

(f) Required Actions

(1) Within 25 hours time-in-service (TIS) or 2 weeks, whichever occurs first, and thereafter at intervals not to exceed 25 hours TIS or 2 weeks, whichever occurs first, clean the upper and lower exposed surfaces of each M/R blade from an area starting at the butt end of the blade to three inches outboard of the doublers. Using a 3X or higher power magnifying glass and a light, inspect as follows:

(i) Visually inspect the exposed areas of the lower grip pad and upper and lower grip plates of each M/R blade for a crack and any corrosion.

(ii) On the upper and lower exposed surfaces of each M/R blade from blade stations 24.5 to 35 for the chord width, visually inspect each layered doubler and blade skin for a crack and any corrosion. Pay particular attention for any cracking in a doubler or skin near or at the same blade station as the blade retention bolt hole (blade station 28).

(iii) Visually inspect the exposed areas of each bond line at the edges of the lower grip pad, upper and lower grip plates, and each layered doubler (bond lines) on the upper and lower surfaces of each M/R blade for the entire length and chord width for an edge void, any corrosion, loose or damaged adhesive squeeze-out, and an edge delamination. Pay particular attention to any crack in the paint finish that follows the outline of a grip pad, grip plate, or doubler, and to any loose or damaged adhesive squeeze-out, as these may be the indication of an edge void.

(2) If there is a crack, any corrosion, an edge void, loose or damaged adhesive squeeze-out, or an edge delamination during any inspection in paragraph (f)(1) of this AD, before further flight, do the following:

(i) If there is a crack in a grip pad or any grip plate or doubler, replace the M/R blade with an airworthy M/R blade.

(ii) If there is a crack in the M/R blade skin that is within maximum repair damage limits, repair the M/R blade. If the crack exceeds maximum repair damage limits, replace the M/R blade with an airworthyM/R blade.

(iii) If there is any corrosion within maximum repair damage limits, repair theM/R blade. If the corrosion exceeds maximum repair damage limits, replace the M/R blade with an airworthy M/R blade.

(iv) If there is an edge void in the grip pad or in a grip plate or doubler, determine the length and depth using a feeler gauge. Repair the M/R blade if the edge void is within maximum repair damage limits, or replace the M/R blade with an airworthy M/R blade.

(v) If there is an edge void in a grip plate or doubler near the outboard tip, tap inspect the affected area to determine the size and shape of the void. Repair the M/R blade if the edge void is within maximum repair damage limits, or replace the M/R blade with an airworthy M/R blade.

(vi) If there is any loose or damaged adhesive squeeze-out along any of the bond lines, trim or scrape away the adhesive without damaging the adjacent surfaces or parent material of the M/R blade. Determine if there is an edge void or any corrosion by lightly sanding the trimmed area smooth using 280 or finer grit paper. If there is no edge void or corrosion, refinish the sanded area.

(vii) If there is an edge delamination along any of the bond lines or a crack in the paint finish, determine if there is an edge void or a crack in the grip pad, grip plate, doubler, or skin by removing paint from the affected area by lightly sanding in a span-wise direction using 180-220 grit paper. If there are no edge voids and no cracks, refinish the sanded area.

(viii) If any parent material is removed during any sanding or trimming in paragraphs (f)(2)(vi) or (f)(2)(vii) of this AD, repair the M/R blade if the damage is within maximum repair damage limits, or replace the M/R blade with an airworthy M/R blade.

(g) Special Flight Permits

Special flight permits are prohibited.

(h) Alternative Methods of Compliance (AMOCs)

(1) The Manager, Fort Worth Aircraft Certification Office, FAA, may approve AMOCs for this AD. Send your proposal to: Charles Harrison, Project Manager, Fort Worth Aircraft Certification Office, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5140; email [email protected].

(2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office, before operating any aircraft complying with this AD through an AMOC.

(i) Additional Information

Bell Helicopter Alert Service Bulletin (ASB) No. UH-1H-13-09, dated January 14, 2013, and ASB No. 204-75-1 and ASB No. 205-75-5, both Revision C and both dated April 25, 1979, which are not incorporated by reference, contain additional information about the subject of this AD. For service information identified in this AD, contact Bell Helicopter Textron, Inc., P.O. Box 482, Fort Worth, TX 76101; telephone (817) 280-3391; fax (817) 280-6466; or at http://www.bellcustomer.com/files/. You may review the service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort Worth, TX 76177.

(j) Subject

Joint Aircraft Service Component (JASC) Code: 6210, Main Rotor Blades.

Issued in Fort Worth, Texas, on October 18, 2016. James A. Grigg, Acting Manager, Rotorcraft Directorate, Aircraft Certification Service.
[FR Doc. 2016-25742 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2015-8464; Directorate Identifier 2015-NM-050-AD; Amendment 39-18692; AD 2016-22-03] RIN 2120-AA64 Airworthiness Directives; Bombardier, Inc. Airplanes AGENCY:

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

ACTION:

Final rule.

SUMMARY:

We are adopting a new airworthiness directive (AD) for all Bombardier, Inc. Model DHC-8-400 series airplanes. This AD was prompted by a revision by the manufacturer to the Certification Maintenance Requirements (CMR) of the Airworthiness Limitation Items (ALI), in the Maintenance Requirement Manual (MRM), that introduces a new CMR task that requires repetitive operational checks of the propeller overspeed governor. This AD requires revising the airplane maintenance or inspection program, as applicable, to incorporate a new CMR task. We are issuing this AD to prevent dormant failure of the propeller overspeed governor, which may lead to a loss of propeller overspeed protection and result in high propeller drag in flight.

DATES:

This AD is effective November 30, 2016.

Examining the AD Docket

You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8464; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (telephone: 800-647-5527) is Docket Management Facility, U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590.

FOR FURTHER INFORMATION CONTACT:

Morton Lee, Aerospace Engineer, Propulsion and Services Branch, ANE-173, FAA, New York Aircraft Certification Office (ACO), 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone: 516-228-7355; fax: 516-794-5531.

SUPPLEMENTARY INFORMATION:

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to all Bombardier, Inc. Model DHC-8-400 series airplanes. The NPRM published in the Federal Register on January 19, 2016 (81 FR 2785) (“the NPRM”). The NPRM was prompted by a revision by the manufacturer to the CMR of the ALI, in the MRM, that introduces a new CMR task that requires repetitive operational checks of the propeller overspeed governor. The NPRM proposed to require revising the airplane maintenance or inspection program, as applicable, to incorporate a new CMR task. We are issuing this AD to prevent dormant failure of the propeller overspeed governor, which may lead to a loss of propeller overspeed protection and result in high propeller drag in flight.

Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian AD CF-2014-43, dated December 18, 2014 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Bombardier, Inc. Model DHC-8-400 series airplanes. The MCAI states:

Bombardier Inc. has revised the Maintenance Requirement Manual PSM-1-84-7, Airworthiness Limitation Items (ALI), Part 2, Section 1, Certification Maintenance Requirements (CMR). This revision introduces a new CMR task, task number 612000-109, for the Operational Check of the Propeller Overspeed Governor to be performed every 200 flight hours.

This new task was introduced to minimize the probability of dormant failure of the propeller overspeed governor, which may lead to a loss of propeller overspeed protection and result in high propeller drag in-flight.

This [Canadian] AD is issued to mandate the incorporation of a new CMR task for the Propeller Overspeed Governor.

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8464.

Comments

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

Request To Specify Temporary Revision (TR) as Method of Compliance

Horizon Air requested that we revise paragraph (g) of the proposed AD, which would require revising the maintenance or inspection program, as applicable, to incorporate an operational check of the propeller overspeed governor using a method approved by the Manager, New York ACO, ANE-170, FAA. Horizon Air requested that we instead allow an operational check of the propeller overspeed governor using Bombardier “Temporary Revision (TR) ALI-129 of the DHC-8 Series 400 Maintenance Requirements Manual, PSM-1-84-7.” Horizon stated that the revised AD would then be similar to previous ADs that have mandated incorporation of maintenance program tasks. Horizon Air also requested that we add a note that allows the incorporation of the TR by the general revisions of the maintenance requirements manual (MRM).

We do not agree with the commenter's request. Because of certain formatting anomalies in the document, we cannot incorporate it by reference in this AD, so this AD requires revising the maintenance or inspection program to incorporate an operational check, using a method approved by the Manager, New York ACO, ANE-170, FAA. We referred to CMR task number 612000-109 of the MRM in note 1 to paragraph (g) of this AD to inform operators that the TR to the MRM is an additional source of guidance for the operational check of the propeller overspeed governor. We have not changed this AD in this regard.

Conclusion

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

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

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

Costs of Compliance

We estimate that this AD affects 82 airplanes of U.S. registry.

We also estimate that it would take about 1 work-hour per product to comply with the basic requirements of this AD. The average labor rate is $85 per work-hour. Based on these figures, we estimate the cost of this AD on U.S. operators to be $6,970, or $85 per product.

Authority for This Rulemaking

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

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

Regulatory Findings

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

List of Subjects in 14 CFR Part 39

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

Adoption of the Amendment

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

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

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

§ 39.13 [Amended]
2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): 2016-22-03 Bombardier, Inc.: Amendment 39-18692; Docket No. FAA-2015-8464; Directorate Identifier 2015-NM-050-AD. (a) Effective Date

This AD is effective November 30, 2016.

(b) Affected ADs

None.

(c) Applicability

This AD applies to all Bombardier, Inc. Model DHC-8-400, -401, and -402 airplanes, certificated in any category.

(d) Subject

Air Transport Association (ATA) of America Code 61, Propellers/propulsors.

(e) Reason

This AD was prompted by a revision by the manufacturer to the Certification Maintenance Requirements (CMR) of the Airworthiness Limitation Items (ALI), in the Maintenance Requirement Manual (MRM), that introduces a new CMR task that requires repetitive operational checks of the propeller overspeed governor. We are issuing this AD to prevent dormant failure of the propeller overspeed governor, which may lead to a loss of propeller overspeed protection and result in high propeller drag in flight.

(f) Compliance

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

(g) Maintenance Program or Inspection Program Revision

Within 30 days after the effective date of this AD, revise the maintenance program or inspection program, as applicable, to incorporate an operational check of the propeller overspeed governor, CMR task number 612000-109, to be performed every 200 flight hours, using a method approved by the Manager, New York Aircraft Certification Office (ACO), ANE-170, FAA.

Note 1 to paragraph (g) of this AD:

CMR task number 612000-109, Operational Check of the Propeller Overspeed Governor, in Bombardier Q400 Dash 8 Temporary Revision (TR) ALI-129, dated September 3, 2013, is an additional source of guidance for the operational check of the propeller overspeed governor specified in paragraph (g) of this AD.

(h) Other FAA AD Provisions

The following provisions also apply to this AD:

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

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

(i) Related Information

(1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian AD CF-2014-43, dated December 18, 2014, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2015-8464.

(2) Service information identified in this AD that is not incorporated by reference is available at Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416-375-4000; fax 416-375-4539; email [email protected]; Internet http://www.bombardier.com.

(j) Material Incorporated by Reference

None.

Issued in Renton, Washington, on October 13, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
[FR Doc. 2016-25747 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31098; Amdt. No. 3715] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

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

DATES:

This rule is effective October 26, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 26, 2016.

ADDRESSES:

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

For Examination

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

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

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

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

Availability

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

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

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

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

Availability and Summary of Material Incorporated by Reference

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

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

The Rule

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

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

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

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

List of Subjects in 14 CFR Part 97

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

Issued in Washington, DC, on September 23, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

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

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

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

2. Part 97 is amended to read as follows: Effective 10 November 2016 Barter Island, AK, Barter Island, Takeoff Minimums and Obstacle DP, Orig Barter Island, AK, Barter Island, Takeoff Minimums and Obstacle DP, Orig, CANCELED Bettles, AK, Bettles, VOR RWY 1, Amdt 1B Kodiak, AK, Kodiak, ILS Y OR LOC Y RWY 26, Amdt 3A Platinum, AK, Platinum, Takeoff Minimums and Obstacle DP, Amdt 1A Scammon Bay, AK, Scammon Bay, Takeoff Minimums and Obstacle DP, Amdt 2 El Dorado, AR, South Arkansas Rgnl At Goodwin Field, ILS OR LOC RWY 22, Amdt 2D El Dorado, AR, South Arkansas Rgnl At Goodwin Field, RNAV (GPS) RWY 4, Orig-B El Dorado, AR, South Arkansas Rgnl At Goodwin Field, RNAV (GPS) RWY 22, Orig-B El Dorado, AR, South Arkansas Rgnl At Goodwin Field, VOR/DME RWY 4, Amdt 10B Jackson, CA, Westover Field Amador County, Takeoff Minimums and Obstacle DP, Amdt 1 Long Beach, CA, Long Beach/Daugherty Field/, ILS OR LOC RWY 30, Amdt 33 Long Beach, CA, Long Beach/Daugherty Field/, RNAV (GPS) Z RWY 30, Amdt 3 Long Beach, CA, Long Beach/Daugherty Field/, RNAV (RNP) RWY 12, Amdt 2 Long Beach, CA, Long Beach/Daugherty Field/, RNAV (RNP) RWY 25R, Amdt 1 Long Beach, CA, Long Beach/Daugherty Field/, RNAV (RNP) Y RWY 30, Amdt 2 Palm Springs, CA, Palm Springs Intl, RNAV (RNP) Y RWY 13R, Amdt 1B, CANCELED Palm Springs, CA, Palm Springs Intl, RNAV (RNP) Z RWY 13R, Amdt 1 San Andreas, CA, Calaveras Co-Maury Rasmussen Field, Takeoff Minimums and Obstacle DP, Amdt 1 San Diego, CA, San Diego Intl, Takeoff Minimums and Obstacle DP, Amdt 9 Santa Ana, CA, John Wayne Airport-Orange County, LOC BC RWY 2L, Amdt 13 Santa Ana, CA, John Wayne Airport-Orange County, RNAV (GPS) Y RWY 2L, Amdt 2 Santa Ana, CA, John Wayne Airport-Orange County, RNAV (RNP) Z RWY 2L, Orig Santa Ana, CA, John Wayne Airport-Orange County, RNAV (RNP) Z RWY 20R, Amdt 2 Santa Barbara, CA, Santa Barbara Muni, Takeoff Minimums and Obstacle DP, Amdt 8 Georgetown, DE, Delaware Coastal, Takeoff Minimums and Obstacle DP, Amdt 4B Hilo, HI, Hilo Intl, RNAV (GPS) RWY 21, Orig-B Hilo, HI, Hilo Intl, RNAV (GPS) RWY 26, Orig-D Hilo, HI, Hilo Intl, VOR-B, Orig-C Hilo, HI, Hilo Intl, VOR/DME OR TACAN RWY 26, Amdt 5D Hilo, HI, Hilo Intl, VOR/DME OR TACAN-A, Amdt 7C Forest City, IA, Forest City Muni, NDB RWY 33, Amdt 2B Forest City, IA, Forest City Muni, RNAV (GPS) RWY 33, Orig-A Forest City, IA, Forest City Muni, VOR/DME-A, Amdt 3A Hampton, IA, Hampton Muni, VOR/DME RWY 35, Amdt 1E Keokuk, IA, Keokuk Muni, NDB RWY 14, Amdt 12B Keokuk, IA, Keokuk Muni, NDB RWY 26, Amdt 1B Mount Pleasant, IA, Mount Pleasant Muni, NDB RWY 33, Amdt 6B Driggs, ID, Driggs-Reed Memorial, LAMON TWO GRAPHIC DP Grangeville, ID, Idaho County, MELLR ONE GRAPHIC DP Grangeville, ID, Idaho County, MELLR TWO GRAPHIC DP, CANCELED Grangeville, ID, Idaho County, RNAV (GPS) RWY 7, Amdt 1A, CANCELED Grangeville, ID, Idaho County, RNAV (GPS) RWY 8, Orig Grangeville, ID, Idaho County, RNAV (GPS) RWY 25, Amdt 1A, CANCELED Grangeville, ID, Idaho County, RNAV (GPS) RWY 26, Orig Grangeville, ID, Idaho County, Takeoff Minimums and Obstacle DP, Orig Grangeville, ID, Idaho County, Takeoff Minimums and Obstacle DP, Amdt 1, CANCELED Canton, IL, Ingersoll, RNAV (GPS) RWY 36, Amdt 1B Macomb, IL, Macomb Muni, LOC RWY 27, Amdt 3B Macomb, IL, Macomb Muni, RNAV (GPS) RWY 9, Amdt 1B Greensburg, IN, Greensburg Municipal, VOR-A, Amdt 2D Indianapolis, IN, Greenwood Muni, VOR-A, Amdt 5A Winchester, IN, Randolph County, RNAV (GPS) RWY 8, Amdt 1A St Francis, KS, Cheyenne County Muni, NDB-A, Orig St Francis, KS, Cheyenne County Muni, NDB OR GPS RWY 32, Amdt 1A, CANCELED St Francis, KS, Cheyenne County Muni, RNAV (GPS) RWY 32, Orig St Francis, KS, Cheyenne County Muni, Takeoff Minimums and Obstacle DP, Orig Albert Lea, MN, Albert Lea Muni, VOR/DME RWY 35, Amdt 1B Austin, MN, Austin Muni, RNAV (GPS) RWY 17, Amdt 1B Austin, MN, Austin Muni, RNAV (GPS) RWY 35, Amdt 1B Monroe, NC, Charlotte-Monroe Executive, ILS OR LOC RWY 5, Amdt 2 Monroe, NC, Charlotte-Monroe Executive, RNAV (GPS) RWY 5, Amdt 2 Monroe, NC, Charlotte-Monroe Executive, RNAV (GPS) RWY 23, Amdt 1 Eugene, OR, Mahlon Sweet Field, ILS OR LOC RWY 16L, Amdt 1A Eugene, OR, Mahlon Sweet Field, ILS OR LOC RWY 16R, ILS RWY 16R (SA CAT I), ILS RWY 16R (CAT II), ILS RWY 16R (CAT III), Amdt 37 Eugene, OR, Mahlon Sweet Field, VOR-A, Amdt 7A Eugene, OR, Mahlon Sweet Field, VOR OR TACAN RWY 16R, Amdt 5B Eugene, OR, Mahlon Sweet Field, VOR OR TACAN RWY 34L, Amdt 5A Greenwood, SC, Greenwood County, NDB RWY 27, Amdt 2 Greenwood, SC, Greenwood County, RNAV (GPS) RWY 9, Orig Greenwood, SC, Greenwood County, RNAV (GPS) RWY 27, Orig Greenwood, SC, Greenwood County, Takeoff Minimums and Obstacle DP, Amdt 1 Greenwood, SC, Greenwood County, VOR RWY 9, Amdt 14 College Station, TX, Easterwood Field, VOR/DME RWY 28, Amdt 13A Houston, TX, David Wayne Hooks Memorial, LOC RWY 17R, Amdt 3C Midland, TX, Midland Intl Air & Space Port, RADAR-1, Amdt 7 Ellensburg, WA, Bowers Field, Takeoff Minimums and Obstacle DP, Amdt 2B Wenatchee, WA, Pangborn Memorial, ILS X RWY 12, Orig-A, CANCELED Wenatchee, WA, Pangborn Memorial, ILS Y RWY 12, Amdt 1 Wenatchee, WA, Pangborn Memorial, ILS Z RWY 12, Orig Wenatchee, WA, Pangborn Memorial, RNAV (RNP) RWY 12, Amdt 1 Wenatchee, WA, Pangborn Memorial, RNAV (RNP) Z RWY 30, Amdt 1 Wenatchee, WA, Pangborn Memorial, VOR-A, Amdt 9 Wenatchee, WA, Pangborn Memorial, VOR-B, Orig Wenatchee, WA, Pangborn Memorial, VOR/DME-C, Amdt 4A, CANCELED
[FR Doc. 2016-25784 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31101; Amdt. No. 3718] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

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

DATES:

This rule is effective October 26, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 26, 2016.

ADDRESSES:

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

For Examination

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

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

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

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

Availability

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

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

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

This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

Availability and Summary of Material Incorporated by Reference

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

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

The Rule

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

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

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

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

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

List of Subjects in 14 CFR Part 97

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

Issued in Washington, DC, on October 7, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

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

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

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

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

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

* * * Effective Upon Publication AIRAC date State City Airport FDC No. FDC Date Subject 10-Nov-16 WI Necedah Necedah 6/1373 9/22/16 RNAV (GPS) RWY 36, Orig-B.
[FR Doc. 2016-25783 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31100; Amdt. No. 3717] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

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

DATES:

This rule is effective October 26, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 26, 2016.

ADDRESSES:

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

For Examination

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

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

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

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

Availability

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

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

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

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

Availability and Summary of Material Incorporated by Reference

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

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

The Rule

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

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

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

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

List of Subjects in 14 CFR Part 97

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

Issued in Washington, DC, on October 7, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

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

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

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

2. Part 97 is amended to read as follows: Effective 10 November 2016 Barter Island, AK, Barter Island, RNAV (GPS) RWY 7, Orig Barter Island, AK, Barter Island, RNAV (GPS) RWY 7, Orig-C, CANCELED Barter Island, AK, Barter Island, RNAV (GPS) RWY 25, Orig Barter Island, AK, Barter Island, RNAV (GPS) RWY 25, Orig-C, CANCELED Bethel, AK, Bethel, VOR/DME RWY 19R, Amdt 2C, CANCELED Ketchikan, AK, Ketchikan Intl, ILS Y OR LOC Y RWY 11, Amdt 8 Ketchikan, AK, Ketchikan Intl, ILS Z OR LOC Z RWY 11, Amdt 1 Ketchikan, AK, Ketchikan Intl, LOC X RWY 11, Amdt 1 St George, AK, St George, Takeoff Minimums and Obstacle DP, Amdt 2 Auburn, AL, Auburn University Rgnl, ILS OR LOC RWY 36, Amdt 2C Auburn, AL, Auburn University Rgnl, RNAV (GPS) RWY 11, Amdt 2 Auburn, AL, Auburn University Rgnl, RNAV (GPS) RWY 18, Amdt 2 Auburn, AL, Auburn University Rgnl, RNAV (GPS) RWY 29, Amdt 1C Auburn, AL, Auburn University Rgnl, RNAV (GPS) RWY 36, Amdt 2C Auburn, AL, Auburn University Rgnl, Takeoff Minimums and Obstacle DP, Amdt 1A Auburn, AL, Auburn University Rgnl, VOR-A, Amdt 8B Dothan, AL, Dothan Rgnl, RNAV (GPS) RWY 36, Amdt 2 Hot Springs, AR, Memorial Field, VOR Y RWY 5, Amdt 16B, CANCELED Little Rock, AR, Bill and Hillary Clinton National/Adams Field, ILS OR LOC RWY 22R, ILS RWY 22R (SA CAT 1), ILS RWY 22R (CAT II), ILS RWY 22R (CAT III), Amdt 3 Springdale, AR, Springdale Muni, VOR RWY 18, Amdt 15D, CANCELED St. Johns, AZ, St. Johns Industrial Airpark, Takeoff Minimums and Obstacle DP, Amdt 1B Arcata/Eureka, CA, Arcata, VOR/DME RWY 1, Amdt 8A, CANCELED Bishop, CA, Bishop, VOR/DME OR GPS-B, Amdt 4B, CANCELED Brawley, CA, Brawley Muni, VOR/DME-A, Amdt 1B, CANCELED Burbank, CA, Bob Hope, ILS Y OR LOC Y RWY 8, Amdt 6 Burbank, CA, Bob Hope, ILS Z OR LOC Z RWY 8, Amdt 39 Burbank, CA, Bob Hope, RNAV (GPS) Z RWY 8, Amdt 2 Burbank, CA, Bob Hope, RNAV (RNP) Y RWY 8, Amdt 2 Carlsbad, CA, Mc Clellan-Palomar, ILS OR LOC RWY 24, Amdt 9D Carlsbad, CA, Mc Clellan-Palomar, RNAV (GPS) X RWY 24, Orig-C Carlsbad, CA, Mc Clellan-Palomar, RNAV (GPS) Y RWY 6, Orig Carlsbad, CA, Mc Clellan-Palomar, RNAV (GPS) Y RWY 24, Amdt 3C Carlsbad, CA, Mc Clellan-Palomar, RNAV (RNP) Z RWY 6, Orig Lodi, CA, Lodi, RNAV (GPS)-B, Orig-A Los Angeles, CA, Los Angeles Intl, ILS OR LOC RWY 6L, Amdt 13 Los Angeles, CA, Los Angeles Intl, ILS OR LOC RWY 6R, Amdt 18 Los Angeles, CA, Los Angeles Intl, ILS OR LOC RWY 7L, Amdt 8 Los Angeles, CA, Los Angeles Intl, ILS OR LOC RWY 7R, Amdt 7 Los Angeles, CA, Los Angeles Intl, RNAV (GPS) Y RWY 6L, Amdt 2 Los Angeles, CA, Los Angeles Intl, RNAV (GPS) Y RWY 6R, Amdt 2 Los Angeles, CA, Los Angeles Intl, RNAV (GPS) Y RWY 7L, Amdt 3 Los Angeles, CA, Los Angeles Intl, RNAV (GPS) Y RWY 7R, Amdt 3 Los Angeles, CA, Los Angeles Intl, RNAV (RNP) Z RWY 6L, Amdt 1 Los Angeles, CA, Los Angeles Intl, RNAV (RNP) Z RWY 6R, Amdt 1 Los Angeles, CA, Los Angeles Intl, RNAV (RNP) Z RWY 7L, Amdt 1 Los Angeles, CA, Los Angeles Intl, RNAV (RNP) Z RWY 7R, Amdt 1 Los Banos, CA, Los Banos Muni, VOR/DME RWY 14, Amdt 5, CANCELED Modesto, CA, Modesto City-Co-Harry Sham Fld, ILS OR LOC/DME RWY 28R, Amdt 14B Sacramento, CA, Mc Clellan Airfield, ILS OR LOC RWY 16, Orig-E Sacramento, CA, Mc Clellan Airfield, VOR/DME RWY 34, Orig-C San Diego, CA, San Diego Intl, LOC RWY 27, Amdt 6 San Diego, CA, San Diego Intl, RNAV (GPS) Y RWY 27, Amdt 4 San Diego, CA, San Diego Intl, RNAV (RNP) Z RWY 27, Orig Santa Monica, CA, Santa Monica Muni, VOR-A, Amdt 11 Van Nuys, CA, Van Nuys, VOR-B, Amdt 4 Denver, CO, Centennial, RNAV (GPS) RWY 35R, Orig Denver, CO, Centennial, RNAV (GPS) Y RWY 35R, Amdt 2, CANCELED Denver, CO, Centennial, RNAV (GPS) Z RWY 35R, Amdt 1, CANCELED New Haven, CT, Tweed-New Haven, ILS OR LOC RWY 2, Amdt 17 New Haven, CT, Tweed-New Haven, RNAV (GPS) RWY 2, Amdt 1 New Haven, CT, Tweed-New Haven, RNAV (GPS) RWY 20, Orig West Palm Beach, FL, North Palm Beach County General Aviation, RNAV (GPS) RWY 8R, Amdt 1 West Palm Beach, FL, North Palm Beach County General Aviation, RNAV (GPS) RWY 26L, Amdt 1 Atlanta, GA, Fulton County Airport—Brown Field, NDB RWY 8, Amdt 4A, CANCELED Lawrenceville, GA, Gwinnett County—Briscoe Field, NDB RWY 25, Amdt 1B, CANCELED Winder, GA, Northeast Georgia Rgnl, VOR/DME-A, Amdt 9E, CANCELED Burlington, IA, Southeast Iowa Rgnl, ILS OR LOC RWY 36, Amdt 10B Cedar Rapids, IA, The Eastern Iowa, VOR RWY 27, Amdt 13, CANCELED Cedar Rapids, IA, The Eastern Iowa, VOR/DME RWY 9, Amdt 17A, CANCELED Clarion, IA, Clarion Muni, NDB RWY 14, Amdt 4A Fort Madison, IA, Fort Madison Muni, RNAV (GPS) RWY 17, Orig-A Fort Madison, IA, Fort Madison Muni, RNAV (GPS) RWY 35, Orig-B Fort Madison, IA, Fort Madison Muni, VOR/DME-A, Amdt 7A Mason City, IA, Mason City Muni, ILS OR LOC RWY 36, Amdt 6F Mason City, IA, Mason City Muni, LOC/DME BC RWY 18, Amdt 7B Mason City, IA, Mason City Muni, VOR RWY 36, Amdt 6F Mason City, IA, Mason City Muni, VOR/DME RWY 18, Amdt 5B, CANCELED Muscatine, IA, Muscatine Muni, ILS OR LOC RWY 24, Amdt 1B Spencer, IA, Spencer Muni, VOR/DME RWY 12, Amdt 3A, CANCELED Waterloo, IA, Waterloo Rgnl, ILS OR LOC RWY 12, Amdt 9B Boise, ID, Boise Air Terminal/Gowen Fld, VOR/DME RWY 10R, Amdt 1A, CANCELED Burley, ID, Burley Muni, VOR/DME-B, Amdt 4D, CANCELED Driggs, ID, Driggs-Reed Memorial, RNAV (GPS) RWY 4, Amdt 2 Driggs, ID, Driggs-Reed Memorial, RNAV (GPS)-A, Amdt 1 Pocatello, ID, Pocatello Rgnl, VOR/DME RWY 21, Amdt 10C, CANCELED Chicago, IL, Chicago O'Hare Intl, ILS PRM RWY 28C, ILS PRM RWY 28C (SA CAT I), ILS PRM RWY 28C (CAT II), ILS PRM RWY 28C (CAT III) (CLOSE PARALLEL), Orig Chicago, IL, Chicago O'Hare Intl, RNAV (GPS) PRM RWY 28C (CLOSE PARALLEL), Orig Chicago, IL, Chicago O'Hare Intl, RNAV (GPS) PRM Y RWY 28L (CLOSE PARALLEL), Orig Chicago, IL, Chicago O'Hare Intl, RNAV (GPS) Y RWY 28L, Orig Chicago, IL, Chicago O'Hare Intl, RNAV (GPS) Z RWY 28L, Orig-A Chicago/Aurora, IL, Aurora Muni, VOR RWY 15, Orig-B, CANCELED Chicago/Aurora, IL, Aurora Muni, VOR RWY 33, Orig, CANCELED Mount Vernon, IL, Mount Vernon, VOR RWY 23, Amdt 16A, CANCELED Bloomington, IN, Monroe County, ILS OR LOC/DME RWY 35, Amdt 6B Crawfordsville, IN, Crawfordsville Muni, NDB RWY 4, Amdt 6 Crawfordsville, IN, Crawfordsville Muni, RNAV (GPS) RWY 4, Amdt 1 Crawfordsville, IN, Crawfordsville Muni, RNAV (GPS) RWY 22, Amdt 1 Crawfordsville, IN, Crawfordsville Muni, Takeoff Minimums and Obstacle DP, Amdt 1 Evansville, IN, Evansville Rgnl, NDB RWY 22, Amdt 14A, CANCELED Indianapolis, IN, Indianapolis Executive, VOR/DME RWY 36, Amdt 9B, CANCELED Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 5L, ILS RWY 5L (SA CAT I), ILS RWY 5L (CAT II), ILS RWY 5L (CAT III), Amdt 5 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 5R, ILS RWY 5R (CAT II), ILS RWY 5R (CAT III), Amdt 7 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 14, Amdt 7 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 23L, Amdt 7 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 23R, Amdt 5 Indianapolis, IN, Indianapolis Intl, ILS OR LOC RWY 32, Amdt 21 Indianapolis, IN, Indianapolis Intl, RNAV (GPS) Y RWY 5L, Amdt 4 Indianapolis, IN, Indianapolis Intl, RNAV (GPS) Y RWY 5R, Amdt 4 Indianapolis, IN, Indianapolis Intl, RNAV (GPS) Y RWY 14, Amdt 4 Indianapolis, IN, Indianapolis Intl, RNAV (GPS) Y RWY 23L, Amdt 4 Indianapolis, IN, Indianapolis Intl, RNAV (GPS) Y RWY 23R, Amdt 4 Indianapolis, IN, Indianapolis Intl, RNAV (GPS) Y RWY 32, Amdt 4 Indianapolis, IN, Indianapolis Intl, RNAV (RNP) Z RWY 5L, Amdt 2 Indianapolis, IN, Indianapolis Intl, RNAV (RNP) Z RWY 5R, Amdt 2 Indianapolis, IN, Indianapolis Intl, RNAV (RNP) Z RWY 14, Amdt 2 Indianapolis, IN, Indianapolis Intl, RNAV (RNP) Z RWY 23L, Amdt 2 Indianapolis, IN, Indianapolis Intl, RNAV (RNP) Z RWY 23R, Amdt 2 Indianapolis, IN, Indianapolis Intl, RNAV (RNP) Z RWY 32, Amdt 2 Indianapolis, IN, Indianapolis Metropolitan, VOR RWY 33, Amdt 10B Indianapolis, IN, Indianapolis Rgnl, VOR RWY 34, Amdt 2C Kokomo, IN, Kokomo Muni, VOR RWY 23, Amdt 20, CANCELED Marion, IN, Marion Muni, VOR RWY 4, Amdt 13C, CANCELED Marion, IN, Marion Muni, VOR RWY 22, Amdt 16A, CANCELED Shelbyville, IN, Shelbyville Muni, RNAV (GPS) RWY 1, Amdt 1B Shelbyville, IN, Shelbyville Muni, RNAV (GPS) RWY 19, Amdt 1B Shelbyville, IN, Shelbyville Muni, VOR RWY 19, Amdt 1B Baton Rouge, LA, Baton Rouge Metropolitan, Ryan Field, NDB RWY 31, Amdt 3, CANCELED Baton Rouge, LA, Baton Rouge Metropolitan, Ryan Field, VOR/DME RWY 22R, Amdt 9A, CANCELED Ruston, LA, Ruston Regional Airport, NDB RWY 36, Orig-A, CANCELED Elkton, MD, Claremont, RNAV (GPS) RWY 13, Orig-C, CANCELED Elkton, MD, Claremont, RNAV (GPS) RWY 31, Orig-D, CANCELED Elkton, MD, Claremont, RNAV (GPS)-B, Orig Stevensville, MD, Bay Bridge, Takeoff Minimums and Obstacle DP, Amdt 1 Augusta, ME, Augusta State, VOR/DME RWY 8, Amdt 12, CANCELED Augusta, ME, Augusta State, VOR/DME RWY 17, Amdt 5, CANCELED Detroit, MI, Detroit Metropolitan Wayne County, ILS OR LOC RWY 3R, ILS RWY 3R (SA CAT I), ILS RWY 3R (CAT II), ILS RWY 3R (CAT III), Amdt 17 Detroit, MI, Detroit Metropolitan Wayne County, ILS OR LOC RWY 4R, ILS RWY 4R (SA CAT I), ILS RWY 4R (CAT II), ILS RWY 4R (CAT III), Amdt 18 Detroit, MI, Detroit Metropolitan Wayne County, ILS OR LOC RWY 21L, ILS RWY 21L (SA CAT I), ILS RWY 21L (SA CAT II), Amdt 12 Detroit, MI, Detroit Metropolitan Wayne County, ILS OR LOC RWY 22L, ILS RWY 22L (SA CAT I), Amdt 31 Detroit, MI, Detroit Metropolitan Wayne County, ILS OR LOC RWY 27L, ILS RWY 27L (SA CAT I), ILS RWY 27L (SA CAT II), Amdt 5 Detroit, MI, Detroit Metropolitan Wayne County, ILS OR LOC RWY 27R, Amdt 13 Detroit, MI, Detroit Metropolitan Wayne County, ILS PRM RWY 3R, ILS PRM RWY 3R (SA CAT I), ILS PRM RWY 3R (CAT II), ILS PRM RWY 3R (CAT III), (SIMULTANEOUS CLOSE PARALLEL), Amdt 1, CANCELED Detroit, MI, Detroit Metropolitan Wayne County, ILS PRM RWY 4R, ILS PRM RWY 4R (SA CAT I), ILS PRM RWY 4R (CAT II), ILS PRM RWY 4R (CAT III) (CLOSE PARALLEL), Amdt 2 Detroit, MI, Detroit Metropolitan Wayne County, ILS PRM RWY 21L (SIMULTANEOUS CLOSE PARALLEL), Orig-D, CANCELED Detroit, MI, Detroit Metropolitan Wayne County, ILS PRM RWY 22L (CLOSE PARALLEL), Amdt 1 Detroit, MI, Detroit Metropolitan Wayne County, ILS PRM Y RWY 4L (CLOSE PARALLEL), Amdt 1 Detroit, MI, Detroit Metropolitan Wayne County, ILS PRM Y RWY 22R (CLOSE PARALLEL), Amdt 1 Detroit, MI, Detroit Metropolitan Wayne County, ILS Y RWY 4L, Amdt 1 Detroit, MI, Detroit Metropolitan Wayne County, ILS Y RWY 22R, Amdt 1 Detroit, MI, Detroit Metropolitan Wayne County, ILS Z OR LOC RWY 4L, ILS Z RWY 4L (CAT II), ILS Z RWY 4L (CAT III), Amdt 4 Detroit, MI, Detroit Metropolitan Wayne County, ILS Z OR LOC RWY 22R, ILS Z RWY 22R (SA CAT I), ILS Z RWY 22R (SA CAT II), Amdt 4 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 3R, Amdt 3 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 4L, Amdt 2A, CANCELED Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 4R, Amdt 3 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 21L, Amdt 3 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 22L, Amdt 2 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 22R, Amdt 2, CANCELED Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 27L, Amdt 3 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) RWY 27R, Amdt 3 Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) PRM RWY 4R (CLOSE PARALLEL), Orig Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) PRM RWY 22L (CLOSE PARALLEL), Orig Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) PRM Y RWY 4L (CLOSE PARALLEL), Orig Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) PRM Y RWY 22R (CLOSE PARALLEL), Orig Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) Y RWY 4L, Orig Detroit, MI, Detroit Metropolitan Wayne County, RNAV (GPS) Y RWY 22R, Orig Jackson, MI, Jackson County-Reynolds Field, VOR/DME RWY 24, Orig, CANCELED Hawley, MN, Hawley Muni, RNAV (GPS) RWY 34, Orig-A Hawley, MN, Hawley Muni, VOR/DME-A, Amdt 2A Moorhead, MN, Moorhead Muni, RNAV (GPS) RWY 30, Amdt 1B Moorhead, MN, Moorhead Muni, VOR-A, Amdt 1C Cape Girardeau, MO, Cape Girardeau Rgnl, VOR RWY 10, Amdt 3B, CANCELED Macon, MO, Macon-Fower Memorial, VOR/DME RWY 20, Amdt 2, CANCELED St. Louis, MO, Spirit of St Louis, NDB RWY 8R, Amdt 11E, CANCELED St. Louis, MO, Spirit of St Louis, NDB RWY 26L, Amdt 3A, CANCELED Bozeman, MT, Bozeman Yellowstone Intl, VOR/DME RWY 12, Amdt 4B, CANCELED Butte, MT, Bert Mooney, VOR/DME OR GPS-A, Amdt 3B, CANCELED Livingston, MT, Mission Field, VOR-A, Amdt 5C, CANCELED Sidney, MT, Sidney-Richland Muni, NDB RWY 1, Amdt 3, CANCELED Fargo, ND, Hector Intl, ILS OR LOC RWY 18, Orig-C Fargo, ND, Hector Intl, ILS OR LOC RWY 36, Amdt 1C Fargo, ND, Hector Intl, VOR RWY 36, Orig-D Kindred, ND, Robert Odegaard Field, RNAV (GPS) RWY 11, Amdt 1D Kindred, ND, Robert Odegaard Field, RNAV (GPS) RWY 29, Amdt 1D Tioga, ND, Tioga Muni, RNAV (GPS) RWY 12, Orig Norfolk, NE., Karl Stefan Memorial, VOR RWY 1, Amdt 8, CANCELED Wayne, NE., Wayne Muni, NDB RWY 23, Orig-B, CANCELED Nashua, NH, Boire Field, NDB RWY 14, Orig-A, CANCELED Elko, NV, Elko Rgnl, VOR-A, Amdt 6, CANCELED Las Vegas, NV, Mc Carran Intl, Takeoff Minimums and Obstacle DP, Amdt 7 Dunkirk, NY, Chautauqua County/Dunkirk, VOR RWY 6, AMDT 3A, CANCELED Columbus, OH, Bolton Field, RNAV (GPS) RWY 22, Orig Steubenville, OH, Jefferson County Airpark, RNAV (GPS) RWY 14, Amdt 1 Steubenville, OH, Jefferson County Airpark, RNAV (GPS) RWY 32, Amdt 1 Steubenville, OH, Jefferson County Airpark, Takeoff Minimums and Obstacle DP, Amdt 2 Hugo, OK, Stan Stamper Muni, NDB OR GPS RWY 35, Amdt 1A, CANCELED Hugo, OK, Stan Stamper Muni, RNAV (GPS) RWY 17, Orig Hugo, OK, Stan Stamper Muni, RNAV (GPS) RWY 35, Orig Tulsa, OK, Richard Lloyd Jones Jr, VOR RWY 1L, Amdt 4D, CANCELED Corvallis, OR, Corvallis Muni, RNAV (GPS) RWY 35, Amdt 2 Scappoose, OR, Scappoose Industrial Airpark, Takeoff Minimums and Obstacle DP, Amdt 1A Pittsburgh, PA, Pittsburgh Intl, ILS OR LOC RWY 10R, ILS RWY 10R (SA CAT I), ILS RWY 10R (CAT II), ILS RWY 10R (CAT III), Amdt 10F Huntingdon, TN, Carroll County, NDB RWY 1, Amdt 2, CANCELED Dallas, TX, Dallas Love Field, ILS Y OR LOC Y RWY 13R, Amdt 6 Dallas, TX, Dallas Love Field, RNAV (GPS) Z RWY 13R, Amdt 2 Houston, TX, Lone Star Executive, ILS OR LOC RWY 14, Amdt 3A Houston, TX, Lone Star Executive, NDB RWY 14, Amdt 3A Houston, TX, William P Hobby, ILS OR LOC RWY 13R, Amdt 12C Houston, TX, William P Hobby, ILS OR LOC RWY 31L, Amdt 6C Houston, TX, William P Hobby, RNAV (GPS) RWY 13R, Amdt 1C Houston, TX, William P Hobby, RNAV (GPS) RWY 31L, Amdt 2C Houston, TX, William P Hobby, Takeoff Minimums and Obstacle DP, Amdt 6B Mineral Wells, TX, Mineral Wells, GPS RWY 31, Orig-B, CANCELED Mineral Wells, TX, Mineral Wells, ILS OR LOC RWY 31, Amdt 1 Mineral Wells, TX, Mineral Wells, RNAV (GPS) RWY 31, Orig Navasota, TX, Navasota Muni, VOR-A, Amdt 2B Sherman/Denison, TX, North Texas Rgnl/Perrin Field, NDB RWY 17L, Amdt 10A, CANCELED Temple, TX, Draughon-Miller Central Texas Rgnl, VOR RWY 15, Amdt 18, CANCELED Roosevelt, UT, Roosevelt Muni, RNAV (GPS) RWY 25, Amdt 1 Roosevelt, UT, Roosevelt Muni, Takeoff Minimums and Obstacle DP, Amdt 2 Roosevelt, UT, Roosevelt Muni, VOR-A, Amdt 4 Danville, VA, Danville Regional, VOR RWY 2, Amdt 14A, CANCELED Dublin, VA, New River Valley, VOR-A, Amdt 9, CANCELED Roanoke, VA, Roanoke Rgnl/Woodrum Field, VOR RWY 34, Amdt 1C, CANCELED Ephrata, WA, Ephrata Muni, RNAV (GPS) RWY 3, Orig-A Everett, WA, Snohomish County (Paine Fld), VOR RWY 16R, Orig-A, CANCELED Eau Claire, WI, Chippewa Valley Rgnl, LOC BC RWY 4, Amdt 10 Eau Claire, WI, Chippewa Valley Rgnl, RNAV (GPS) RWY 4, Amdt 1 Madison, WI, Dane County Rgnl-Truax Field, VOR/DME OR TACAN RWY 14, Orig-D, CANCELED Madison, WI, Dane County Rgnl-Truax Field, VOR/DME OR TACAN RWY 18, Amdt 1D, CANCELED Madison, WI, Dane County Rgnl-Truax Field, VOR/DME OR TACAN RWY 32, Orig-C, CANCELED Lewisburg, WV, Greenbrier Valley, VOR RWY 4, Amdt 2, CANCELED Casper, WY, Casper/Natrona County Intl, VOR/DME RWY 3, Amdt 6C, CANCELED Evanston, WY, Evanston-Uinta County Burns Field, VOR/DME RWY 23, Amdt 1, CANCELED

Rescinded: On September 30, 2016 (81 FR 67105), the FAA published an Amendment in Docket No. 31094, Amdt No. 3711 to Part 97 of the Federal Aviation Regulations under section 97.23. The following entry, effective November 10, 2016, is hereby rescinded in its entirety:

Butte, MT, Bert Mooney, VOR OR GPS-B, Amdt 1C
[FR Doc. 2016-25782 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 97 [Docket No. 31099; Amdt. No. 3716] Standard Instrument Approach Procedures, and Takeoff Minimums and Obstacle Departure Procedures; Miscellaneous Amendments AGENCY:

Federal Aviation Administration (FAA), DOT.

ACTION:

Final rule.

SUMMARY:

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

DATES:

This rule is effective October 26, 2016. The compliance date for each SIAP, associated Takeoff Minimums, and ODP is specified in the amendatory provisions.

The incorporation by reference of certain publications listed in the regulations is approved by the Director of the Federal Register as of October 26, 2016.

ADDRESSES:

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

For Examination

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

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

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

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

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

Availability

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

FOR FURTHER INFORMATION CONTACT:

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

SUPPLEMENTARY INFORMATION:

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

This amendment provides the affected CFR sections, and specifies the SIAPs and Takeoff Minimums and ODPs with their applicable effective dates. This amendment also identifies the airport and its location, the procedure and the amendment number.

Availability and Summary of Material Incorporated by Reference

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

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

The Rule

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

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

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

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

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

List of Subjects in 14 CFR Part 97

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

Issued in Washington, DC, on September 23, 2016. John S. Duncan, Director, Flight Standards Service. Adoption of the Amendment

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

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

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

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

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

* * * Effective Upon Publication AIRAC date State City Airport FDC No. FDC date Subject 10-Nov-16 WI Middleton Middleton Muni—Morey Field 6/0372 9/8/16 VOR RWY 28, Orig-A. 10-Nov-16 KS Anthony Anthony Muni 6/0583 9/13/16 RNAV (GPS) RWY 36, Orig-A. 10-Nov-16 KS Anthony Anthony Muni 6/0584 9/13/16 VOR-A, Amdt 2. 10-Nov-16 KS Anthony Anthony Muni 6/0585 9/13/16 RNAV (GPS) RWY 18, Amdt 1A. 10-Nov-16 CA Jackson Westover Field Amador County 6/0704 9/15/16 VOR/DME RWY 1, Amdt 1B. 10-Nov-16 NM Artesia Artesia Muni 6/0908 9/8/16 RNAV (GPS) RWY 30, Amdt 1A. 10-Nov-16 IN Indianapolis Indianapolis Executive 6/1595 9/8/16 RNAV (GPS) RWY 36, Orig-C. 10-Nov-16 IN Indianapolis Indianapolis Executive 6/1597 9/8/16 VOR/DME RWY 18, Amdt 1B. 10-Nov-16 IN Indianapolis Indianapolis Executive 6/1598 9/8/16 RNAV (GPS) RWY 18, Amdt 1B. 10-Nov-16 IN Indianapolis Indianapolis Executive 6/1600 9/8/16 ILS OR LOC RWY 36, Amdt 5B. 10-Nov-16 KY Louisville Louisville Intl-Standiford Field 6/2884 9/13/16 LOC RWY 29, Orig. 10-Nov-16 SC Orangeburg Orangeburg Muni 6/2891 9/13/16 RNAV (GPS) RWY 5, Amdt 1A. 10-Nov-16 TX Borger Hutchinson County 6/2988 9/19/16 VOR/DME RWY 35, Amdt 4. 10-Nov-16 OH Medina Medina Muni 6/4982 9/19/16 RNAV (GPS) RWY 27, Orig. 10-Nov-16 OH Medina Medina Muni 6/4983 9/19/16 VOR RWY 27, Amdt 2B. 10-Nov-16 OH Medina Medina Muni 6/4986 9/19/16 RNAV (GPS) RWY 9, Orig-A. 10-Nov-16 OH Middletown Middletown Regional/Hook Field 6/6224 9/7/16 RNAV (GPS) RWY 5, Orig-A. 10-Nov-16 OH Middletown Middletown Regional/Hook Field 6/6225 9/7/16 RNAV (GPS) RWY 23, Orig-A. 10-Nov-16 OH Middletown Middletown Regional/Hook Field 6/6226 9/7/16 LOC RWY 23, Amdt 7G. 10-Nov-16 OH Middletown Middletown Regional/Hook Field 6/6227 9/7/16 NDB RWY 23, Amdt 9A. 10-Nov-16 OH Middletown Middletown Regional/Hook Field 6/6230 9/7/16 NDB-A, Amdt 3. 10-Nov-16 PA Meadville Port Meadville 6/7232 9/7/16 RNAV (GPS) RWY 25, Amdt 1C. 10-Nov-16 NY Weedsport Whitfords 6/8074 9/13/16 RNAV (GPS) RWY 28, Orig. 10-Nov-16 NY Weedsport Whitfords 6/8077 9/13/16 RNAV (GPS) RWY 10, Orig. 10-Nov-16 NE Kimball Kimball Muni/Robert E Arraj Field 6/8271 9/13/16 RNAV (GPS) RWY 10, Amdt 1A. 10-Nov-16 OH Washington Court House Fayette County 6/8273 9/13/16 NDB RWY 23, Amdt 5. 10-Nov-16 OH Washington Court House Fayette County 6/8276 9/13/16 RNAV (GPS) RWY 23, Amdt 1. 10-Nov-16 KY Louisville Bowman Field 6/8360 9/13/16 VOR RWY 24, Amdt 9. 10-Nov-16 GA Swainsboro East Georgia Regional 6/8361 9/20/16 RNAV (GPS) RWY 32, Amdt 2. 10-Nov-16 GA Swainsboro East Georgia Regional 6/8363 9/20/16 NDB RWY 14, Amdt 2. 10-Nov-16 GA Swainsboro East Georgia Regional 6/8365 9/20/16 ILS OR LOC/DME RWY 14, Amdt 1. 10-Nov-16 GA Swainsboro East Georgia Regional 6/8366 9/20/16 RNAV (GPS) RWY 14, Amdt 1A. 10-Nov-16 GA Calhoun Tom B David Fld 6/8369 9/15/16 RNAV (GPS) RWY 17, Amdt 1. 10-Nov-16 GA Calhoun Tom B David Fld 6/8376 9/15/16 RNAV (GPS) RWY 35, Amdt 1. 10-Nov-16 GA Quitman Quitman Brooks County 6/8379 9/15/16 RNAV (GPS) RWY 28, Amdt 1. 10-Nov-16 GA Quitman Quitman Brooks County 6/8385 9/15/16 RNAV (GPS) RWY 10, Amdt 1. 10-Nov-16 GA Americus Jimmy Carter Rgnl 6/8398 9/20/16 RNAV (GPS) RWY 23, Amdt 1. 10-Nov-16 GA Americus Jimmy Carter Rgnl 6/8399 9/20/16 RNAV (GPS) RWY 5, Amdt 1. 10-Nov-16 KS Belleville Belleville Muni 6/8459 9/8/16 RNAV (GPS) RWY 18, Orig-A. 10-Nov-16 KS Belleville Belleville Muni 6/8460 9/8/16 RNAV (GPS) RWY 36, Orig-A. 10-Nov-16 KS Belleville Belleville Muni 6/8461 9/8/16 VOR/DME-A, Amdt 3B. 10-Nov-16 IL Benton Benton Muni 6/8578 9/13/16 RNAV (GPS) RWY 18, Orig-A. 10-Nov-16 PA Meadville Port Meadville 6/8885 9/7/16 LOC RWY 25, Amdt 6C.
[FR Doc. 2016-25785 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 2 [Docket No. FDA-2015-N-1355] RIN 0910-AH36 Use of Ozone-Depleting Substances AGENCY:

Food and Drug Administration, HHS.

ACTION:

Direct final rule.

SUMMARY:

The Food and Drug Administration (FDA, the Agency, or we) is amending its regulation on uses of ozone-depleting substances (ODSs), including chlorofluorocarbons (CFCs), to remove the designation for certain products as “essential uses” under the Clean Air Act. Essential-use products are exempt from the ban by FDA on the use of CFCs and other ODS propellants in FDA-regulated products and from the ban by the Environmental Protection Agency (EPA) on the use of ODSs in pressurized dispensers. The products that will no longer constitute an essential use are: Sterile aerosol talc administered intrapleurally by thoracoscopy for human use and metered-dose atropine sulfate aerosol human drugs administered by oral inhalation. FDA is taking this action because alternative products that do not use ODSs are now available and because these products are no longer being marketed in versions that contain ODSs.

DATES:

This direct final rule is effective February 23, 2017. Submit either electronic or written comments on the direct final rule by December 27, 2016. If FDA receives no significant adverse comments within the specified comment period, the Agency will publish a document confirming the effective date of the final rule in the Federal Register within 30 days after the comment period on this direct final rule ends. If timely significant adverse comments are received, the Agency will publish a document in the Federal Register withdrawing this direct final rule before its effective date.

ADDRESSES:

You may submit comments as follows:

Electronic Submissions

Submit electronic comments in the following way:

Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

• If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

Written/Paper Submissions

Submit written/paper submissions as follows:

Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

• For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

Instructions: All submissions received must include the Docket No. FDA-2015-N-1355 for “Use of Ozone-Depleting Substances.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

• Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.thefederalregister.org/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.

Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

FOR FURTHER INFORMATION CONTACT:

Daniel Orr, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6246, Silver Spring, MD 20993, 240-402-0979, [email protected]

SUPPLEMENTARY INFORMATION: I. Background

Production of ODSs has been phased out worldwide under the terms of the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) (September 16, 1987, S. Treaty Doc. No. 10, 100th Cong., 1st sess., 26 I.L.M. 1541 (1987)). In accordance with the provisions of the Montreal Protocol, under authority of Title VI of the Clean Air Act (section 601 et seq.), the manufacture of ODSs, including CFCs, in the United States was generally banned as of January 1, 1996. To receive permission to manufacture CFCs in the United States after the phase-out date, manufacturers must obtain an exemption from the phase-out requirements from the parties to the Montreal Protocol. Procedures for securing an essential-use exemption under the Montreal Protocol are described in a request by EPA for applications for exemptions (60 FR 54349, October 23, 1995).

Firms that wish to use ODSs manufactured after the phase-out date in medical devices (as defined in section 601(8) of the Clean Air Act) (42 U.S.C. 7671(8)) covered under section 610 of the Clean Air Act (42 U.S.CC. 7671i) must receive exemptions for essential uses under the Montreal Protocol. EPA regulations implementing the provisions of section 610 of the Clean Air Act contain a general ban on the use of ODSs in pressurized dispensers, such as metered-dose inhalers (MDIs) (40 CFR 82.64(c) and 82.66(d)). These EPA regulations exempt from the general ban “medical devices” that FDA considers essential and that are listed in § 2.125(e) (21 CFR 2.125(e)). Section 601(8) of the Clean Air Act defines “medical device” as any device (as defined in the Federal Food, Drug and Cosmetic Act (the FD&C Act) (21 U.S.C. 321)), diagnostic product, drug (as defined in the FD&C Act), and drug delivery system, if such device, diagnostic product, drug, or drug delivery system uses a class I or class II ODS for which no safe and effective alternative has been developed (and where necessary, has been approved by the Commissioner of Food and Drugs), and if such device, diagnostic product, drug, or drug delivery system has, after notice and opportunity for public comment, been approved and determined to be essential by the Commissioner in consultation with the Administrator of EPA. Class I substances include CFCs, halons, carbon tetrachloride, methyl chloroform, methyl bromide, and other chemicals not relevant to this document (see 40 CFR part 82, appendix A to subpart A). Class II substances include hydrochlorofluorocarbons (see 40 CFR part 82, appendix B to subpart A).

A drug, device, cosmetic, or food contained in an aerosol product or other pressurized dispenser that releases a CFC or other ODS propellant is generally not considered an essential use of the ODS under the Clean Air Act except as provided in § 2.125(c) and (e). This prohibition is based on scientific research indicating that CFCs and other ODSs reduce the amount of ozone in the stratosphere and thereby increase the amount of ultraviolet radiation reaching the Earth. An increase in ultraviolet radiation will increase the incidence of skin cancer and produce other adverse effects of unknown magnitude on humans, animals, and plants (80 FR 36937, June 29, 2015). Section 2.125(c) and (e) provide exemptions for essential uses of ODSs for certain products containing ODS propellants that FDA determines provide unique health benefits that would not be available without the use of an ODS.

Faced with the statutorily mandated phase-out of the production of ODSs, drug manufacturers have developed alternatives to MDIs and other self-pressurized drug dosage forms that do not contain ODSs. Examples of these alternative dosage forms are MDIs that use non-ODSs as propellants and dry-powder inhalers. The availability of alternatives to ODSs means that certain drug products listed in § 2.125(e) are no longer essential uses of ODSs. Therefore, due to lack of marketing of approved products containing ODSs, and the availability of alternative products that do not contain ODSs, FDA is amending its regulations to remove essential-use designations for sterile aerosol talc administered intrapleurally by thoracoscopy for human use (§ 2.125(e)(4)(ix)) and for metered-dose atropine sulfate aerosol human drugs administered by oral inhalation (§ 2.125(e)(4)(vi)).

There is currently one sterile aerosol talc product containing ODSs that is approved for administration intrapleurally by thoracoscopy for human use for the treatment of recurrent malignant pleural effusion in symptomatic patients. Section 2.125(g) sets forth standards for determining whether the use of an ODS in a medical product is no longer essential. Under § 2.125(g)(3), an essential-use designation for individual active moieties marketed as ODS products and represented by one new drug application may no longer be essential if:

• At least one non-ODS product with the same active moiety is marketed with the same route of administration, for the same indication, and with approximately the same level of convenience of use as the ODS product containing that active moiety;

• Supplies and production capacity for the non-ODS product(s) exist or will exist at levels sufficient to meet patient need;

• Adequate U.S. postmarketing-use data are available for the non-ODS product(s); and

• Patients who medically require the ODS product are adequately served by the non-ODS product(s) containing that active moiety and other available products (§ 2.125(g)(3)).

On June 29, 2015, FDA published a notice and request for comment concerning its tentative conclusion that sterile aerosol talc administered intrapleurally by thoracoscopy for human use no longer constitutes an essential use under the Clean Air Act under the criteria in § 2.125(g)(3). FDA requested comment on its findings that sterile aerosol talc is currently marketed for intrapleural administration in two non-ODS formulations and on its finding that the route of administration, indications, and level of convenience appear to be the same for the ODS and non-ODS formulations of sterile aerosol talc. FDA also requested comment on its finding that the non-ODS products are available in sufficient quantities to serve the current patient population. FDA received no comments on these findings or on its tentative conclusion that sterile aerosol talc administered intrapleurally by thoracoscopy for human use no longer constitutes an essential use of ODSs under the Clean Air Act.

In the same document published on June 29, 2015, FDA requested comments concerning its tentative conclusion that metered-dose atropine sulfate aerosol human drugs administered by oral inhalation no longer constitute an essential use under the Clean Air Act under the criteria in § 2.125(g)(1). FDA requested comment concerning its finding that metered-dose atropine sulfate aerosol human drugs administered by oral inhalation are no longer marketed in an approved ODS formulation. Under § 2.125(g)(1), an active moiety may no longer constitute an essential use (§ 2.125(e)) if it is no longer marketed in an approved ODS formulation. The failure to market indicates nonessentiality because the absence of a demand sufficient for even one company to market the product is highly indicative that the use is not essential. FDA received no comments concerning its finding that metered-dose atropine sulfate aerosol human drugs administered by oral inhalation are no longer marketed in an ODS formulation or concerning its tentative conclusion that these drugs no longer constitute an essential use of ODSs under the Clean Air Act.

Accordingly, FDA is amending its regulation to remove sterile aerosol talc administered intrapleurally by thoracoscopy for human use (§ 2.125(e)(4)(ix)) and to remove metered-dose atropine sulfate aerosol human drugs administered by oral inhalation (§ 2.125(e)(4)(vi)) as essential uses under the Clean Air Act.

II. Direct Final Rulemaking

FDA has determined that the subject of this rulemaking is suitable for a direct final rule. FDA is amending § 2.125 to remove essential-use designations for sterile aerosol talc administered intrapleurally by thoracoscopy for human use and for metered-dose atropine sulfate aerosol human drugs administered by oral inhalation. This rule is intended to make noncontroversial changes to existing regulations. The Agency does not anticipate receiving any significant adverse comment on this rule.

Consistent with FDA's procedures on direct final rulemaking, we are publishing elsewhere in this issue of the Federal Register a companion proposed rule. The companion proposed rule and this direct final rule are substantively identical. The companion proposed rule provides the procedural framework within which the proposed rule may be finalized in the event the direct final rule is withdrawn because of any significant adverse comment. The comment period for this direct final rule runs concurrently with the comment period of the companion proposed rule. Any comments received in response to the companion proposed rule will also be considered as comments regarding this direct final rule.

FDA is providing a comment period for the direct final rule of 60 days after the date of publication in the Federal Register. If we receive any significant adverse comment, we intend to withdraw this direct final rule before its effective date by publishing a notice in the Federal Register within 30 days after the comment period ends. A significant adverse comment explains why the rule either would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. In determining whether an adverse comment is significant and warrants withdrawing a direct final rule, the Agency will consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process in accordance with section 553 of the Administrative Procedure Act (5 U.S.C. 553).

Comments that are frivolous, insubstantial, or outside the scope of the direct final rule will not be considered significant or adverse under this procedure. For example, a comment recommending a regulation change in addition to the changes in the direct final rule would not be considered a significant adverse comment unless the comment states why the rule would be ineffective without the additional change. In addition, if a significant adverse comment applies to an amendment, paragraph, or section of this rule and that provision can be severed from the remainder of the rule, FDA may adopt as final the provisions of the rule that are not the subject of a significant adverse comment.

If FDA does not receive any significant adverse comment in response to the direct final rule, the Agency will publish a document in the Federal Register confirming the effective date of the final rule. The Agency intends to make the direct final rule effective 30 days after publication of the confirmation document in the Federal Register.

A full description of FDA's policy on direct final rule procedures may be found in a guidance for FDA and industry entitled “Direct Final Rule Procedures” (available on http://www.fda.gov/RegulatoryInformation/Guidances/ucm125166.htm) that was announced in the Federal Register of November 21, 1997 (62 FR 62466).

III. Economic Analysis of Impacts A. Introduction

We have examined the impacts of the direct final rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the proposed rule. We believe that this final rule is not a significant regulatory action as defined by Executive Order 12866.

The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. We certify that the direct final rule will not have a significant economic impact on a substantial number of small entities.

The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before issuing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $146 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. This direct final rule would not result in an expenditure in any year that meets or exceeds this amount.

B. Need for the Regulation

This rule is necessary to comply with the Montreal Protocol under authority of Title VI of the Clean Air Act (section 601 et seq.), which banned the manufacture of ODSs, including CFCs, to reduce the depletion of the ozone layer in the United States as of January 1, 1996. EPA regulations exempted from the ban medical devices, diagnostic products, drugs, and drug delivery systems that FDA considered essential and that are listed in § 2.125(e) when they use a class I or class II ODS for which no safe and effective alternative has been developed. The direct final rule would remove the exemptions for sterile aerosol talc products and for metered-dose atropine sulfate aerosol human drugs containing ODSs.

There is currently at least one sterile aerosol talc product not containing ODSs approved for the administration intrapleurally by thoracoscopy for human use that is a safe and effective alternative, and which meets the criteria outlined in § 2.125(g)(3). Accordingly, the sterile aerosol talc product containing ODSs no longer meets the requirements for an essential use and should no longer be exempted from the ban.

Metered-dose atropine sulfate aerosol human drugs administered by oral inhalation are no longer available in the product market in an approved ODS formulation. The current absence of the product in the market indicates both a lack of demand for the product and that the product is nonessential, under § 2.125(g)(1). With the adoption of this direct final rule, the manufacturer of the sterile aerosol talc with ODSs and any potential future manufacturers of metered-dose atropine sulfate aerosols will have notice of the requirements to comply with the ban of products from containing ODSs.

C. Benefits and Costs 1. Number of Affected Entities

The affected entities covered by this direct final rule are the manufacturing facilities of the products that would have exemptions from the ban removed. Only one manufacturer, the Bryan Corporation that manufactures the sterile aerosol talc product containing ODSs at a single facility, would be affected. Currently, there are no manufacturers of metered-dose atropine sulfate aerosols.

2. Costs

The potential social costs from removing the exemptions are (1) the costs to patient consumers or to their insurers for paying a higher price for alternative non-ODS formulations of sterile aerosol talc products and (2) the costs for disposing of and destroying any remaining product inventory that remains after the effective date of the direct final rule. We lack data about the remaining stocks of product inventory that are likely to remain after the effective date of the direct final rule and the relative price that consumers or their insurers would pay. Because significant notice has been given to the manufacturer about the impending removal of the exemptions, we do not believe a significant stock of inventory will remain for the sterile aerosol talc product. The most recent publically available information shows that the annual revenues for Bryan Corporation are about $10 million (Ref. 1). Public information about this company shows that it manufactures three different surgical and medical instruments including the talc. If total profits for the exempt talc product are 10 percent of the total annual revenues, and if total revenues are exclusively from the exempt talc, then $1 million represents an upper bound for the total social cost of removing the sterile aerosol talc product from the market. Because it is unlikely that their total profits are exclusively from the sterile aerosol talc, it is more likely that the foregone profits are at most one-third of the $1 million; in fact, the true social cost could be significantly less than the total foregone profit of this product.

Metered-dose atropine sulfate aerosol human drugs that would be affected by this rule are no longer marketed; consequently, removal of the exemption for this product would not present the public, consumers, insurers, or producers with any costs.

3. Health Benefits

The direct final rule implements the requirements of the Clean Air Act that ban the use of products containing ODSs that no longer meet the requirements for essential use. The social benefits of the direct final rule derive from greater compliance with the Clean Air Act. The ODSs that either would have been emitted by sterile aerosol talcs that contain them, or from potential market entrants that would have manufactured metered-dose atropine sulfate aerosols that contain ODSs will no longer be emitting them, which will help reduce the depletion of the ozone layer and the ultraviolet radiation reaching the Earth. We lack the ability to quantify the health benefits from the reduced exposure to and from the reduced risk associated with ultraviolet light that result from removing the exemptions to the ban. Because the change in exposure and resulting risk from the final rule is likely to be small, the incremental health impact is likely to be too small to measure.

D. Economic Summary

The direct final rule will remove the exemptions for sterile aerosol talc products and for metered-dose atropine sulfate aerosol human drugs containing ODSs. The primary public health benefit from adoption of the direct final rule is to reduce the depletion of the ozone layer to decrease human exposure to ultraviolet radiation. The reduction in exposure to ultraviolet radiation because of the direct rule is likely to be too small to measure. The potential social costs of the direct final rule would occur if patient consumers or their health care insurers would have to pay more for otherwise comparable products and if the product manufacturers would have to safely destroy any remaining product inventories after the effective date of the rule. We estimate that the social cost of the direct final rule is likely to be significantly less than $1 million but no more than the upper bound estimate of the foregone annual profit of the company that manufactures the sterile aerosol talc or $1 million. Because the metered-dose atropine sulfate aerosol is not currently in the market, there would be no social cost for removing its exemption from the ban.

Imposing no new federal requirement is the baseline for a regulatory analysis. With no new regulation, there are no compliance costs or benefits to the direct final rule. However, because sterile aerosol talc is no longer an essential use of ODSs, under the Clean Air Act, there is no longer a pathway for sterile aerosol talc products containing ODSs to remain on the market.

IV. Final Regulatory Flexibility Analysis

FDA has examined the economic implications of the direct final rule as required by the Regulatory Flexibility Act. If a rule will have a significant economic impact on a substantial number of small entities, the Regulatory Flexibility Act requires Agencies to analyze regulatory options that would lessen the economic effect of the rule on small entities. We certify that the direct final rule will not have a significant economic impact on a substantial number of small entities. This analysis, together with other relevant sections of this document, serves as the final regulatory flexibility analysis, as required under the Regulatory Flexibility Act.

V. Analysis of Environmental Impact

We have determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

VI. Paperwork Reduction Act of 1995

FDA concludes that this direct final rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

VII. Federalism

We have analyzed this final rule in accordance with the principles set forth in Executive Order 13132. We have determined that this final rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

VIII. References

The following reference is on display in the Division of Dockets Management (see ADDRESSES) and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; it is also available electronically at http://www.regulations.gov. FDA has verified the Web site address as of the date this document publishes in the Federal Register, but Web sites are subject to change over time.

1. Bryan Corporation (http://listings.findthecompany.com/l/12165972/Bryan-Corporation-in-Woburn-MA, accessed on February 24, 2016). List of Subjects in 21 CFR Part 2

Administrative practice and procedure, Cosmetics, Drugs, Foods.

Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, 21 CFR part 2 is amended as follows:

PART 2—GENERAL ADMINISTRATIVE RULINGS AND DECISIONS 1. The authority citation for part 2 continues to read as follows: Authority:

15 U.S.C. 402, 409; 21 U.S.C. 321, 331, 335, 342, 343, 346a, 348, 351, 352, 355, 360b, 361, 362, 371, 372, 374; 42 U.S.C. 7671 et seq.

§ 2.125 [Amended]
2. In § 2.125, remove and reserve paragraphs (e)(4)(vi) and (ix). Dated: October 20, 2016. Leslie Kux, Associate Commissioner for Policy.
[FR Doc. 2016-25851 Filed 10-25-16; 8:45 am] BILLING CODE 4164-01-P
DEPARTMENT OF THE INTERIOR Office of Surface Mining Reclamation and Enforcement 30 CFR Part 901 [SATS No. AL-079-FOR; Docket ID: OSMRE-2016-0005; S1D1S SS08011000 SX064A000 178S180110; S2D2S SS08011000 SX064A000 17XS501520] Alabama Regulatory Program AGENCY:

Office of Surface Mining Reclamation and Enforcement, Interior.

ACTION:

Final rule; approval of amendment.

SUMMARY:

We, the Office of Surface Mining Reclamation and Enforcement (OSMRE), are approving an amendment to the Alabama regulatory program (Alabama program) under the Surface Mining Control and Reclamation Act of 1977 (SMCRA or the Act). Alabama proposed revisions to its Program to closely follow the Federal regulations regarding awarding of appropriate costs and expenses including attorneys' fees. Alabama is revising its program to be no less effective than the Federal regulations.

DATES:

Effective Date: October 26, 2016.

FOR FURTHER INFORMATION CONTACT:

Sherry Wilson, Director, Birmingham Field Office, Office of Surface Mining Reclamation and Enforcement, 135 Gemini Circle, Suite 215, Homewood, AL 35209. Telephone: (205) 290-7282. Email: [email protected]

SUPPLEMENTARY INFORMATION:

I. Background on the Alabama Program II. Submission of the Amendment III. OSMRE's Findings IV. Summary and Disposition of Comments V. OSMRE's Decision VI. Procedural Determinations I. Background on the Alabama Program

Section 503(a) of the Act permits a State to assume primacy for the regulation of surface coal mining and reclamation operations on non-Federal and non-Indian lands within its borders by demonstrating that its program includes, among other things, State laws and regulations that govern surface coal mining and reclamation operations in accordance with the Act and consistent with the Federal regulations. See 30 U.S.C. 1253(a)(1) and (7). On the basis of these criteria, the Secretary of the Interior conditionally approved the Alabama program effective May 20, 1982. You can find background information on the Alabama program, including the Secretary's findings, the disposition of comments, and the conditions of approval of the Alabama program in the May 20, 1982, Federal Register (47 FR 22030). You can also find later actions concerning the Alabama program and program amendments at 30 CFR 901.10 and 901.15.

II. Submission of the Amendment

By letter dated March 18, 2016 (Administrative Record No. AL-0669), Alabama sent us an amendment to its program under SMCRA (30 U.S.C. 1201 et seq.) at its own initiative.

We announced receipt of the proposed amendment in the May 20, 2016, Federal Register (81 FR 31881). In the same document, we opened the public comment period and provided an opportunity for a public hearing or meeting on the adequacy of the amendment. We did not hold a public hearing or meeting because no one requested one. The public comment period ended on June 20, 2016. We received one public comment (Administrative Record No. AL-0669-04) that is addressed in the “Public Comments” section of part IV. Summary and Disposition of Comments.

III. OSMRE's Findings

We are approving the amendment as described below. The following are the findings we made concerning Alabama's amendment under SMCRA and the Federal regulations at 30 CFR 732.15 and 732.17. Any revisions that we do not specifically discuss below concerning non-substantive wording or editorial changes can be found in the full text of the program amendment available at www.regulations.gov.

1. Alabama Code 880-X-5A-.35—Assessment of Costs

Alabama revised this section to allow any party the opportunity to be awarded costs and expenses by a final appellate body. Additionally, language was added to protect the public by including a “bad faith” clause so that expenses may only be assessed against any person in favor of the permittee or the regulatory authority upon demonstration that the person initiated or participated in the proceedings in bad faith for the purpose of harassing or embarrassing the permittee or the regulatory authority.

We find that Alabama's revision regarding awarding of expenses protects the public in a manner that is no less effective that the counterpart Federal regulations at 43 CFR 4.1294. Therefore, we are approving Alabama's revision.

IV. Summary and Disposition of Comments Public Comments

We asked for public comments on the amendment and received one (Administrative Record No. AL-0669-04), which is discussed below.

A comment was received supporting the approval of the proposed amendment in order to bring the Alabama program into compliance with SMCRA and correcting deficiencies in Alabama's program which created hardship for citizens, citizen-based groups, and others, by putting them at risk of potentially having to pay substantial fees if they challenged a permit or other decision covered by Alabama's regulations.

We agree with this comment and are approving the amendment.

Federal Agency Comments

On April 7, 2016, under 30 CFR 732.17(h)(11)(i) and section 503(b) of SMCRA, we requested comments on the amendment from various Federal agencies with an actual or potential interest in the Alabama program (Administrative Record No. AL-0669-03). We did not receive any comments.

Environmental Protection Agency (EPA) Concurrence and Comments

Under 30 CFR 732.17(h)(11)(ii), we are required to get a written concurrence from EPA for those provisions of the program amendment that relate to air or water quality standards issued under the authority of the Clean Water Act (33 U.S.C. 1251 et seq.) or the Clean Air Act (42 U.S.C. 7401 et seq.). None of the revisions that Alabama proposed to make in this amendment pertain to air or water quality standards. Therefore, we did not ask EPA to concur on the amendment. However, on April 7, 2016, under 30 CFR 732.17(h)(11)(i), we requested comments from the EPA on the amendment (Administrative Record No. AL-0669-03). The EPA did not respond to our request.

State Historical Preservation Officer (SHPO) and the Advisory Council on Historic Preservation (ACHP)

Under 30 CFR 732.17(h)(4), we are required to request comments from the SHPO and ACHP on amendments that may have an effect on historic properties. On April 7, 2016, we requested comments on Alabama's amendment (Administrative Record No. AL-0669-03), but neither the SHPO nor ACHP responded to our request.

V. OSMRE's Decision

Based on the above findings, we approve the amendment Alabama sent us on March 18, 2016 (Administrative Record No. AL-0669).

To implement this decision, we are amending the Federal regulations, at 30 CFR part 901, that codify decisions concerning the Alabama program. We find that good cause exists under 5 U.S.C. 553(d)(3) to make this final rule effective immediately. Section 503(a) of SMCRA requires that the State's program demonstrate that the State has the capability of carrying out the provisions of the Act and meeting its purposes. Making this rule effective immediately will expedite that process. SMCRA requires consistency of State and Federal standards.

VI. Procedural Determinations Executive Order 12630—Takings

This rulemaking does not have takings implications. This determination is based on the analysis performed for the counterpart Federal regulation.

Executive Order 12866—Regulatory Planning and Review

This rulemaking is exempted from review by the Office of Management and Budget (OMB) under Executive Order 12866.

Executive Order 12988—Civil Justice Reform

The Department of the Interior has conducted the reviews required by section 3 of Executive Order 12988 and has determined that this rulemaking meets the applicable standards of subsections (a) and (b) of that section. However, these standards are not applicable to the actual language of State regulatory programs and program amendments because each program is drafted and promulgated by a specific State, not by OSMRE. Under sections 503 and 505 of SMCRA (30 U.S.C. 1253 and 1255) and the Federal regulations at 30 CFR 730.11, 732.15, and 732.17(h)(10), decisions on proposed State regulatory programs and program amendments submitted by the States must be based solely on a determination of whether the submittal is consistent with SMCRA and its implementing Federal regulations and whether the other requirements of 30 CFR parts 730, 731, and 732 have been met.

Executive Order 13132—Federalism

This rulemaking does not have Federalism implications. SMCRA delineates the roles of the Federal and State governments with regard to the regulation of surface coal mining and reclamation operations. One of the purposes of SMCRA is to “establish a nationwide program to protect society and the environment from the adverse effects of surface coal mining operations.” Section 503(a)(1) of SMCRA requires that State laws regulating surface coal mining and reclamation operations be “in accordance with” the requirements of SMCRA, and section 503(a)(7) requires that State programs contain rules and regulations “consistent with” regulations issued by the Secretary pursuant to SMCRA.

Executive Order 13175—Consultation and Coordination With Indian Tribal Governments

In accordance with Executive Order 13175, we have evaluated the potential effects of this rulemaking on Federally-recognized Indian tribes and have determined that the rulemaking does not 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 basis for this determination is that our decision is on a State regulatory program and does not involve Federal regulations involving Indian lands.

Executive Order 13211—Regulations That Significantly Affect the Supply, Distribution, or Use of Energy

On May 18, 2001, the President issued Executive Order 13211 which requires agencies to prepare a Statement of Energy Effects for a rulemaking that is (1) considered significant under Executive Order 12866, and (2) likely to have a significant adverse effect on the supply, distribution, or use of energy. Because this rulemaking is exempt from review under Executive Order 12866 and is not expected to have a significant adverse effect on the supply, distribution, or use of energy, a Statement of Energy Effects is not required.

National Environmental Policy Act

This rulemaking does not require an environmental impact statement because section 702(d) of SMCRA (30 U.S.C. 1292(d)) provides that agency decisions on proposed State regulatory program provisions do not constitute major Federal actions within the meaning of section 102(2)(C) of the National Environmental Policy Act (42 U.S.C. 4332(2)(C)).

Paperwork Reduction Act

This rulemaking does not contain information collection requirements that require approval by OMB under the Paperwork Reduction Act (44 U.S.C. 3507 et seq.).

Regulatory Flexibility Act

The Department of the Interior certifies that this rulemaking will not have a significant economic impact on a substantial number of small entities under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The State submittal, which is the subject of this rulemaking, is based upon counterpart Federal regulations for which an economic analysis was prepared and certification made that such regulations would not have a significant economic effect upon a substantial number of small entities. In making the determination as to whether this rulemaking would have a significant economic impact, the Department relied upon the data and assumptions for the counterpart Federal regulations.

Small Business Regulatory Enforcement Fairness Act

This rulemaking is not a major rule under 5 U.S.C. 804(2), the Small Business Regulatory Enforcement Fairness Act. This rulemaking: (a) Does not have an annual effect on the economy of $100 million; (b) will not cause a major increase in costs or prices for consumers, individual industries, Federal, State, or local government agencies, or geographic regions; and (c) does not have significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of U.S.-based enterprises to compete with foreign-based enterprises. This determination is based upon the fact that the State submittal, which is the subject of this rulemaking, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation was not considered a major rulemaking.

Unfunded Mandates

This rulemaking will not impose an unfunded mandate on State, local, or tribal governments or the private sector of $100 million or more in any given year. This determination is based upon the fact that the State submittal, which is the subject of this rulemaking, is based upon counterpart Federal regulations for which an analysis was prepared and a determination made that the Federal regulation did not impose an unfunded mandate.

List of Subjects in 30 CFR Part 901

Intergovernmental relations, Surface mining, Underground mining.

Dated: July 14, 2016. Sterling Rideout, Acting Regional Director, Mid-Continent Region.

For the reasons set out in the preamble, 30 CFR part 901 is amended as set forth below:

PART 901—ALABAMA 1. The authority citation for part 901 continues to read as follows: Authority:

30 U.S.C. 1201 et seq.

2. Section 901.15 is amended in the table by adding an entry in chronological order by “Date of final publication” to read as follows:
§ 901.15 Approval of Alabama regulatory program amendments. Original amendment submission date Date of final publication Citation/description *         *         *         *         *         *         * March 18, 2016 October 26, 2016 Alabama Code 880-X-5A-.35.
Editorial note:

This document was received for publication by the Office of the Federal Register on October 21, 2016.

[FR Doc. 2016-25869 Filed 10-25-16; 8:45 am] BILLING CODE 4310-05-P
POSTAL SERVICE 39 CFR Part 20 International Product and Price Changes AGENCY:

Postal ServiceTM.

ACTION:

Final rule.

SUMMARY:

The Postal Service is revising Mailing Standards of the United States Postal Service, International Mail Manual (IMM®), to reflect the prices, product features, and classification changes to Competitive Services, as established by the Governors of the Postal Service.

DATES:

Effective date: January 22, 2017.

FOR FURTHER INFORMATION CONTACT:

Paula Rabkin at 202-268-2537.

SUPPLEMENTARY INFORMATION:

New prices will be posted under Docket Number CP2017-20 on the Postal Regulatory Commission's Web site at http://www.prc.gov.

This final rule describes the international price and classification changes and the corresponding mailing standards changes for the following Competitive Services:

• Global Express Guaranteed® (GXG®);

• International Priority Airmail® (IPA®);

• International Surface Air Lift® (ISAL®);

• Direct Sacks of Printed Matter to One Addressee (Airmail M-bag®); and

• International Extra Services:

○ Priority Mail Express International® (PMEI) Insurance and Priority Mail International® (PMI) Insurance,

○ Registered MailTM Service,

○ International Postal Money Orders, and

• Pickup on Demand®.

New prices will be located on the Postal Explorer® Web site at http://pe.usps.com.

Global Express Guaranteed

Global Express Guaranteed (GXG) provides fast international shipping with international transportation and delivery provided by FedEx Express®. The price increase for GXG service averages 4.9 percent.

The Postal Service continues to provide Commercial Base pricing to online customers who prepare and pay for GXG shipments via USPS®-approved payment methods, with variable discounts up to 5 percent off the published retail prices for GXG.

The Postal Service also continues to offer Commercial Plus pricing incentives for large volume customers who commit to tendering $100,000 in annual postage revenue from GXG, Priority Mail Express International (PMEI), Priority Mail International (PMI), and First-Class Package International Service® (FCPIS®) via USPS-approved payment methods, with variable discounts up to 5 percent off the published retail prices for GXG.

International Priority Airmail and International Surface Air Lift

The structure of IPA and ISAL price categories will continue to be priced by the worldwide and 19 country price groups and applicable mail shapes [letters and postcards, large envelopes (flats), and packages (small packets and rolls)]. These categories correspond to the Universal Postal Convention requirements to use shape-based pricing.

International Priority Airmail (IPA) service, including IPA M-bags, is a bulk commercial service designed for volume mailings of First-Class Mail International® postcards, letters, large envelopes (flats), and FCPIS packages (small packets) weighing up to a maximum 4.4 pounds. IPA is dispatched to the destination country where it is entered into the postal administration's air or surface priority mail system for delivery. The overall price increase for IPA service averages 3.8 percent.

International Surface Air Lift (ISAL) service, including ISAL M-Bags, is a bulk commercial service designed for volume mailings of all First-Class Mail International postcards, letters, large envelopes (flats), and FCPIS packages (small packets) weighing up to 4.4 pounds. ISAL is dispatched to the destination country where it is then entered into the postal administration's surface nonpriority network. The overall price increase for ISAL service averages 3.8 percent.

Direct Sacks of Printed Matter to One Addressee (Airmail M-Bags)

Airmail M-bags are direct sacks of printed matter sent to a single foreign addressee at a single address. Prices are based on the weight of the sack. The price increase for Airmail M-bags averages 4.9 percent.

International Extra Services

Depending on country destination and mail type, customers may add a variety of extra services to their outbound shipments. Prices for some of these extra services are increasing.

For our competitive offerings, we revised the prices for the following international extra services:

PMEI Insurance and PMI Insurance

The price for PMEI Insurance and PMI insurance will increase an average of 4.7 percent.

Registered Mail

The price for Registered Mail service will increase 7.2 percent.

International Postal Money Orders

The price for International Postal Money Orders will increase by 73.7 percent.

Pickup on Demand

The price for Pickup on Demand will increase 10 percent.

We will publish an appropriate amendment to 39 CFR part 20 to reflect these changes.

Stanley F. Mires, Attorney, Federal Compliance.
[FR Doc. 2016-25711 Filed 10-25-16; 8:45 am] BILLING CODE 7710-12-P
POSTAL SERVICE 39 CFR Part 111 Domestic Competitive Products Pricing and Mailing Standards Changes AGENCY:

Postal ServiceTM.

ACTION:

Final rule.

SUMMARY:

The Postal Service is amending Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM®), to reflect changes to prices and mailing standards for competitive products.

DATES:

Effective Date: January 22, 2017.

FOR FURTHER INFORMATION CONTACT:

Karen Key at (202) 268-7492 or Garry Rodriguez at (202) 268-7281.

SUPPLEMENTARY INFORMATION:

This final rule describes new prices and product features for competitive products, by class of mail, established by the Governors of the United States Postal Service®. New prices are available under Docket Number CP2017-20 on the Postal Regulatory Commission's (PRC) Web site at http://www.prc.gov, and also located on the Postal Explorer® Web site at http://pe.usps.com.

The Postal Service will revise Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), to reflect changes to prices and mailing standards for the following competitive products:

• Priority Mail Express®.

• Priority Mail®.

• First-Class Package Service®.

• Parcel Select®.

• USPS Retail GroundTM.

• Extra Services.

• Return Services.

• Mailer Services.

• Recipient Services.

Competitive product prices and changes are identified by product as follows:

Priority Mail Express Prices

Overall, Priority Mail Express prices will increase 3.3 percent. Priority Mail Express will continue to offer zoned Retail, Commercial BaseTM, and Commercial PlusTM pricing tiers.

Retail prices will increase an average of 3.7 percent. The Flat Rate Envelope price will increase to $23.75, the Legal Flat Rate Envelope will increase to $23.95, and the Padded Flat Rate Envelope will increase to $24.45.

Commercial Base prices offer lower prices to customers who use authorized postage payment methods. Commercial Base prices will increase an average of 2.4 percent. Commercial Base pricing offers a flat 11.2 percent discount off retail prices.

Commercial Plus prices were matched to the Commercial Base prices in 2016 and will continue to be matched in 2017.

Priority Mail Prices

Overall, Priority Mail prices will increase 3.9 percent. Priority Mail will continue to offer zoned Retail, Commercial Base, and Commercial Plus pricing tiers.

Retail prices will increase an average of 3.3 percent. The Flat Rate Envelope price will increase to $6.65, the Legal Flat Rate Envelope will increase to $6.95, and the Padded Flat Rate Envelope will increase to $7.20. The Small Flat Rate Box price will increase to $7.15 and the Medium Flat Rate Boxes will increase to $13.60. The Large Flat Rate Box will increase to $18.85 and the APO/FPO/DPO Large Flat Rate Box will increase to $17.35.

Commercial Base prices offer lower prices to customers who use authorized postage payment methods. Commercial Base prices will increase an average of 4.1 percent. Commercial Base pricing offers an average 13.6 percent discount off retail prices.

The Commercial Plus price category offers price incentives to large volume customers. Commercial Plus prices will increase an average of 4.5 percent. Commercial Plus pricing offers an average 16.8 percent discount off retail prices.

First-Class Package Service Prices

Overall, First-Class Package Service prices will increase 4.1 percent.

First-Class Package Service Optional ADC Presort

The Postal Service will offer an optional Area Distribution Center (ADC) presort for First-Class Package Service (FCPS) parcels to improve service for mailers. As a result, a new optional FCPS ADC labeling list, L015, will be added.

Parcel Select Prices

Overall Parcel Select non-lightweight prices will increase an average of 3.5 percent. The average price increase for Parcel Select Destination Entry is 4.9 percent. Parcel Select GroundTM prices will increase an average of 2.7 percent. The prices for Parcel Select Lightweight® (PSLW) will increase an average of 8.0 percent.

USPS Retail Ground

Overall, USPS Retail Ground prices will increase an average of 3.8 percent.

Extra Services Adult Signature Service

Adult Signature Required and Adult Signature Restricted Delivery service prices are increasing 3.5 and 3.4 percent respectively. The price for Adult Signature Required will increase to $5.90 and Adult Signature Restricted Delivery will increase to $6.15.

Return Services Parcel Return Service

Overall, Parcel Return Service (PRS) prices will increase an average of 5.5 percent.

Return Sectional Center Facility (RSCF) prices will increase an average of 5.8 percent and Return Delivery Unit (RDU) prices will increase an average of 5.2 percent.

Information on the Parcel Return Service annual permit fee and annual account maintenance fee can be found in the “Other” section below and in the Domestic Mailing Services Federal Register Notice.

Mailer Services Premium Forwarding Service

Premium Forwarding Service® (PFS®) prices will increase an average of 3.8 percent. The enrollment fee paid at the retail counter will increase to $19.35 and the residential and commercial enrollment fee paid online will increase to $17.75 per application. The price of the weekly reshipment charge for PFS-Residential will increase to $19.35.

Premium Forwarding Service Commercial

The Postal Service will add 1-foot and 2-foot managed mail tray box flat rate pricing as an option to the current shipment containers for Premium Forwarding Service Commercial® dispatches.

USPS Package Intercept

The USPS Package InterceptTM fee will increase 3.2 percent to $12.95.

Pickup on Demand Service

The Pickup on Demand® service daily fee will increase 10.0 percent to $22.00.

Recipient Services Post Office Box Service

The competitive Post Office BoxTM service prices will increase an average of 6.5 percent within the existing price ranges.

Enterprise Post Office Box Online Fee Payment

The Postal Service is providing customers using the Enterprise PO Box Online (EPOBOL) system the option to prorate semi-annual fees one time to align payment periods for multiple boxes. The prorated fee for each such box will be based on the number of months between the expiration of the current fee and the month of the payment alignment. Additional information on prorating of the semi-annual EPOBOL fees can be found in the Domestic Mailing Services Federal Register Notice.

Other Address Enhancement Service

Address Enhancement Service competitive product prices will be increasing between 1.9 and 7.9 percent.

Topological Integrated Geographic Encoding and Referencing (Tiger/ZIP+4)

The Postal Service is retiring Topological Integrated Geographic Encoding and Referencing (Tiger/ZIP+4) service.

Annual Mailing and Account Maintenance Fees

The Postal Service is eliminating the payment of annual mailing fees for Parcel Select and Parcel Select Lightweight. The annual return service permit fee and annual account maintenance fee for Parcel Return Service will also be eliminated. Additional information on the elimination of annual mailing and account maintenance fees can be found in the Domestic Mailing Services Federal Register Notice.

Permit Imprint Application Fee

The Postal Service is eliminating the payment of permit imprint application fees for Priority Mail Express, Priority Mail, First-Class Package Service, Parcel Select, and Parcel Select Lightweight competitive products. Additional information on the elimination of the permit imprint application fee can be found in the Domestic Mailing Services Federal Register Notice.

Resources

The Postal Service provides additional resources to assist customers with this price change for competitive products. These tools include price lists, downloadable price files, and Federal Register Notices, which may be found on the Postal Explorer® Web site at http://pe.usps.com.

List of Subjects in 39 CFR Part 111

Administrative practice and procedure, Postal Service.

The Postal Service adopts the following changes to Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM), incorporated by reference in the Code of Federal Regulations. See 39 CFR 111.1.

Accordingly, 39 CFR part 111 is amended as follows:

PART 111—[AMENDED] 1. The authority citation for 39 CFR part 111 continues to read as follows: Authority:

5 U.S.C. 552(a); 13 U.S.C. 301-307; 18 U.S.C. 1692-1737; 39 U.S.C. 101, 401, 403, 404, 414, 416, 3001-3011, 3201-3219, 3403-3406, 3621, 3622, 3626, 3632, 3633, and 5001.

2. Revise the Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM) as follows: Mailing Standards of the United States Postal Service, Domestic Mail Manual (DMM) 200 Commercial Letters, Cards, Flats, and Parcels 250 Parcel Select 253 Prices and Eligibility

[Delete 1.3, Annual Mailing Fee, in its entirety and renumber current 1.4 as new 1.3.]

4.0 Price Eligibility for Parcel Select and Parcel Select Lightweight 4.3 Parcel Select Lightweight 4.3.1 General Eligibility

Parcel Select Lightweight parcels are presorted machinable or irregular parcels.

The following also applies:

[Revise the text of item c to read as follows:]

c. Postage must be paid under 254.1.1.2.

254 Postage Payment and Documentation 1.0 Basic Standards for Postage Payment 1.1 Postage Payment Options

[Renumber the text of 1.1 as new 1.1.1 and revise the introductory text of 1.1.1 to read as follows:]

1.1.1 Parcel Select

Parcel Select postage may be paid with:

[Add new 1.1.2 to read as follows:]

1.1.2 Parcel Select Lightweight

Parcel Select Lightweight postage may be paid with permit imprint.

280 First-Class Package Service 285 Mail Preparation

[Add new 2.0 to read as follows:]

2.0 Optional ADC Presort

Each optional ADC presorted First-Class Package Service mailing must meet the applicable standards in 280 and must be labeled as follows:

a. Line 1: L015.

b. Line 2: “FC PKG ADC.”

500 Additional Mailing Services 505 Return Services 4.0 Parcel Return Service 4.1 Prices and Fees

[Revise the heading and text of 4.1.1 to read as follows:]

4.1.1 Permit

The participant must obtain a permit and pay postage at the Post Office where the permit is held through an advance deposit account (see Notice 123—Price List).

4.2 Basic Standards 4.2.2 Conditions for Mailing

Parcels may be mailed as PRS when all of the following conditions apply:

[Revise the text of item c to read as follows:]

c. Parcels show the permit number.

4.2.7 Reapplying After Cancellation

To receive a new PRS permit after cancellation under 5.1, the mailer must:

[Delete item b and renumber current items c and d as new items b and c.]

507 Mailer Services 3.0 Premium Forwarding Service 3.3 Premium Forwarding Service Commercial 3.3.3 Conditions

* * * PFS-Commercial service is subject to these conditions:

c. The postage is charged per shipment container as follows:

[Revise the text of item c1 to read as follows:]

1. A sack and its contents are considered one piece for calculation of the price of postage and must not exceed 70 pounds. Postage is calculated by the weight of the sack and the zone, based on the ZIP Code of the servicing Post Office and the delivery address for the shipment, minus the tare weight.

[Renumber item c2 as new item c3 and add new item c2 as follows:]

2. A 1-foot managed mail (MM) tray box or 2-foot MM tray box are considered one piece for the applicable Premium Forwarding Service Commercial branded flat rate tray box price.

509 Other Services 1.0 Address Information System Services 1.1 General Information

[Revise the second sentence of 1.1 to read as follows:]

* * * These services are described in 1.2 through 1.34. * * *

[Delete 1.29, Topological Integrated Geographic Encoding and Referencing, in its entirety and renumber current 1.30 through 1.35 as new 1.29 through 1.34.]

We will publish an appropriate amendment to 39 CFR part 111 to reflect these changes.

Stanley F. Mires, Attorney, Federal Compliance.
[FR Doc. 2016-25712 Filed 10-25-16; 8:45 am] BILLING CODE 7710-12-P
POSTAL SERVICE 39 CFR Part 233 Inspection Service Authority AGENCY:

Postal ServiceTM.

ACTION:

Final rule.

SUMMARY:

The U.S. Postal Service® amends its regulations governing the use of mail covers to make the definitions of sealed and unsealed mail consistent with current classifications.

DATES:

This rule is effective October 26, 2016. The relevant changes to the Mail Classification Schedule were implemented on August 28, 2016.

ADDRESSES:

Questions or comments on this action are welcome. Mail or deliver written comments to Steven Sultan, Acting Assistant Postal Inspector in Charge, Office of Counsel, U.S. Postal Inspection Service, 475 L'Enfant Plaza SW., Room 3114, Washington, DC 20260-3100.

FOR FURTHER INFORMATION CONTACT:

Steven Sultan, Acting Assistant Postal Inspector in Charge, Office of Counsel, U.S. Postal Inspection Service, 202-268-7385, [email protected]

SUPPLEMENTARY INFORMATION:

We are amending our mail cover regulations to accommodate various changes to 39 CFR Appendix A to Subpart A of Part 3020—Mail Classification Schedule, including the following:

• Products added to or removed from the market dominant or competitive product list;

• Changes in product names;

• Removal of Priority Mail International® Flat Rate Envelopes and Small Flat Rate Boxes from the letter post stream to the parcel post stream; 1 and

1Mail Classification Schedule Changes Pertaining to Priority Mail International Flat Rate Envelopes and Priority Mail International Small Flat Rate Boxes, 81 FR22131 (April 14, 2016). See also Mail Classification Schedule Changes Pertaining to Priority Mail International Flat Rate Envelopes and Priority Mail International Small Flat Rate Boxes—Notice of Modified Effective Date, 81 FR 33560 (May 26, 2016).

• Changes that implement management's decision that all Priority Mail International items are to be unsealed.

These changes will provide current information to the public.

List of Subjects in 39 CFR Part 233

Administrative practice and procedure, Crime, Law enforcement, Penalties, Privacy.

For the reasons stated in the preamble, the Postal Service amends 39 CFR part 233 as follows:

PART 233—INSPECTION SERVICE AUTHORITY 1. The authority citation for 39 CFR part 233 is revised to read as follows: Authority:

39 U.S.C. 101, 102, 202, 204, 401, 402, 403, 404, 406, 410, 411, 1003, 3005(e)(1); 12 U.S.C. 3401-3422; 18 U.S.C. 981, 983, 1956, 1957, 2254, 3061; 21 U.S.C. 881; Sec. 662, Pub. L. 104-208, 110 Stat. 3009-378.

2. In § 233.3, paragraphs (c)(3) and (4) are revised to read as follows:
§ 233.3 Mail covers.

(c) * * *

(3) Sealed mail is mail that under postal laws and regulations is included within a class of mail maintained by the Postal Service for the transmission of letters sealed against inspection. Sealed mail includes: First-Class Mail; Priority Mail; Priority Mail Express; Outbound International Expedited Services (Priority Mail Express International; as well as Global Express Guaranteed items containing only documents); Outbound Single-Piece First-Class Package International Service; International Priority Airmail, except M-bags; International Surface Air Lift, except M-bags; Outbound Single-Piece First-Class Mail International; Global Bulk Economy Contracts, except M-bags; and International Transit Mail.

(4) Unsealed mail is mail that under postal laws or regulations is not included within a class of mail maintained by the Postal Service for the transmission of letters sealed against inspection. Unsealed mail includes: Periodicals; Standard Mail (Commercial and Nonprofit); Package Services; incidental First-Class Mail attachments and enclosures; Parcel Select; Parcel Return Service; First Class Package Service; USPS Retail Ground; Global Express Guaranteed items containing non-documents; Outbound Priority Mail International; International Direct Sacks—M-bags; and all items sent via “Free Matter for the Blind or Handicapped” under 39 U.S.C. 3403 and “Free Matter for the Blind” under International Mail Manual 270.

Stanley F. Mires, Attorney, Federal Compliance.
[FR Doc. 2016-25805 Filed 10-25-16; 8:45 am] BILLING CODE 7710-12-P
DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 648 [Docket No. 151130999-6225-01] RIN 0648-XE949 Fisheries of the Northeastern United States; Atlantic Bluefish Fishery; Quota Transfers AGENCY:

National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

ACTION:

Temporary rule; approval of quota transfers.

SUMMARY:

NMFS announces its approval of two transfers of 2016 commercial bluefish quota from the States of New Hampshire and North Carolina to the State of New York. The approval of these transfers complies with the Atlantic Bluefish Fishery Management Plan quota transfer provision. This announcement also informs the public of the revised commercial quotas for New Hampshire, North Carolina, and New York.

DATES:

Effective October 25, 2016, through December 31, 2016.

FOR FURTHER INFORMATION CONTACT:

Reid Lichwell, Fishery Management Specialist, (978) 281-9112.

SUPPLEMENTARY INFORMATION:

Regulations governing the Atlantic bluefish fishery are found in 50 CFR 648.160 through 648.167. The regulations require annual specification of a commercial quota that is apportioned among the coastal states from Maine through Florida. The process to set the annual commercial quota and the percent allocated to each state are described in § 648.162.

The final rule implementing Amendment 1 to the Bluefish Fishery Management Plan published in the Federal Register on July 26, 2000 (65 FR 45844), and provided a mechanism for transferring commercial bluefish quota from one state to another. Two or more states, under mutual agreement and with the concurrence of the Administrator, Greater Atlantic Region, NMFS (Regional Administrator), can request approval of a transfer of bluefish commercial quota under § 648.162(e)(1)(i) through (iii). The Regional Administrator must first approve any such transfers based on the criteria in § 648.162(e).

New Hampshire has agreed to transfer 20,000 lb (9,072 kg), and North Carolina 50,000 lb (22,680 kg) of their 2016 commercial bluefish quotas to New York. These states have certified that the transfers meet all pertinent state requirements. These quota transfers were requested by New York to ensure that its 2016 quota would not be exceeded. The Regional Administrator has approved these quota transfers based on his determination that the criteria set forth in § 648.162(e)(1)(i) through (iii) have been met. The revised bluefish quotas for calendar year 2016 are: New Hampshire, 247 lb (112 kg); North Carolina, 1,341,100 lb (608,313kg) and New York, 747, 289 lb (338,965 kg). These quota adjustments revise the quotas specified in the final rule implementing the 2016-2018 Atlantic Bluefish Specifications published on August 4, 2016 (81 FR 51370), and reflect all subsequent commercial bluefish quota transfers completed to date. For information of previous transfers for fishing year 2016 visit the Greater Atlantic Region's quota monitoring page at http://go.usa.gov/xZT8H.

Classification

This action is taken under 50 CFR part 648 and is exempt from review under Executive Order 12866.

Authority:

16 U.S.C. 1801 et seq.

Dated: October 21, 2016. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
[FR Doc. 2016-25908 Filed 10-25-16; 8:45 am] BILLING CODE 3510-22-P
DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 660 [Docket No. 130808697-6907-02] RIN 0648-XC808 Fisheries Off West Coast States; Coastal Pelagic Species Fisheries; Multi-Year Specifications for Monitored and Prohibited Harvest Species Stock Categories AGENCY:

National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

ACTION:

Final rule.

SUMMARY:

NMFS is implementing annual catch limits (ACL) and, where necessary, other annual reference points (overfishing limits (OFL) and acceptable biological catches (ABC)) for certain stocks in the monitored and prohibited harvest species categories under the Coastal Pelagic Species (CPS) Fishery Management Plan (FMP). The ACLs are: Jack mackerel, 31,000 metric tons (mt); northern subpopulation of northern anchovy, 9,750 mt; central subpopulation of northern anchovy, 25,000 mt; and krill, zero. Additionally, an OFL of 39,000 mt, an ABC of 9,750 mt and an annual catch target (ACT) of 1,500 mt are being implemented for the northern subpopulation of northern anchovy. This rule is intended to conserve and manage these stocks off the U.S. West Coast. If the ACL for any one of these stocks is reached, then fishing for that stock will be closed until it reopens at the start of the next fishing season.

DATES:

The Annual Catch Limits established in this final rule are effective from January 1, 2017, through December 31, 2017.

FOR FURTHER INFORMATION CONTACT:

Joshua Lindsay, West Coast Region, NMFS, (562) 980-4034.

SUPPLEMENTARY INFORMATION:

The CPS fishery in the U.S. exclusive economic zone (EEZ) off the West Coast is managed under the CPS FMP, which was developed by the Pacific Fishery Management Council (Council) pursuant to the Magnuson-Stevens Fishery Conservation and Management Act (MSA), 16 U.S.C. 1801 et seq. The six species managed under the CPS FMP are Pacific sardine, Pacific mackerel, jack mackerel, northern anchovy (northern and central subpopulations), market squid and krill. The CPS FMP is implemented by regulations at 50 CFR part 660, subpart I.

Management unit stocks in the CPS FMP are classified under three management categories: actively managed, monitored and prohibited harvest species. Active stocks are characterized by periodic stock assessments, and/or periodic or annual adjustments of target harvest levels. Management of monitored stocks, by contrast, generally involves tracking landings against the relevant ACL (previously the ABCs) and qualitative comparison to available abundance data, without regular stock assessments or annual adjustments to target harvest levels. Species in both categories may be subject to management measures such as catch allocation, gear regulations, closed areas, closed seasons, or other forms of “active” management. For example, trip limits and a limited entry permit program are already in place for all CPS finfish. The monitored category includes jack mackerel, two sub-populations of the northern anchovy stock, and market squid. Krill is the only stock in the prohibited harvest category. The CPS monitored stocks have not been managed to a hard quota like the active category stocks by NMFS (although the state of California manages market squid with an annual limit). Instead, landings have been monitored against harvest reference levels to determine if overfishing is occurring and to gauge the need for more active management such as requiring periodic stock assessments and regular adjustments to quotas. Catches of the three finfish stocks in the monitored category—northern anchovy (northern and central subpopulations) and jack mackerel—have remained well below their respective ABC (now ACL levels for jack mackerel and the central anchovy subpopulation) since implementation of the CPS FMP in 2000, with average catches over the last 10 years of approximately 7,300 mt (270 mt and 660 mt for the central and northern subpopulations of northern anchovy and jack mackerel, respectively).

In September 2011, NMFS approved Amendment 13 to the CPS FMP, which modified the framework process used to set and adjust fishery specifications and for setting ACLs and accountability measures (AMs). Amendment 13 was intended to ensure the FMP conforms with the 2007 amendments to the MSA and NMFS' revised MSA National Standard 1 guidelines at 50 CFR part 600. Specifically, Amendment 13 maintained the existing reference points and the primary harvest control rules for the monitored stocks (jack mackerel, northern anchovy and market squid), including the large buffer built into the ABC control rule for the finfish stocks, as well as the overfishing criteria for market squid, but modified these reference points and control rules to align with the revised advisory guidelines and to comply with the new statutory requirement to establish a process for setting ACLs and AMs. This included a default management framework under which the OFL for each monitored stock was set equal to the maximum sustainable yield (MSY) value and ABC was reduced from the OFL by 75 percent as an uncertainty buffer (based on the existing ABC control rule where ABC equals 25 percent of OFL/MSY). This default framework is used unless there is determined to be a more appropriate OFL; as is the case for the northern subpopulation of northern anchovy, or stock-specific ABC control rule, like the proxy for the fishing rate that is expected to result in MSY (FMSY proxy) for market squid of Egg Escapement ≥ 30 percent. ACLs are then set equal to the ABC or could be set lower than the ABC, along with ACTs, if deemed necessary. These control rules and harvest policies for monitored CPS stocks are simpler and more precautionary than those used for actively managed stocks in recognition of the low fishing effort and low landings for these stocks, as well as the lack of current estimates of stock biomass.

Through this action, NMFS is implementing the ACLs shown in Table 1 for jack mackerel, the two subpopulations of northern anchovy, and krill, as well as an OFL, ABC and ACT for the northern subpopulation of northern anchovy.

Table 1—ACLs for Monitored CPS Finfish, Including OFL, ABC, and ACT for the Northern Subpopulation of Northern Anchovy Stock OFL ABC ACL ACT Jack mackerel 126,000 mt 31,000 mt 31,000 mt Northern anchovy, (northern subpopulation) 39,000 mt 9,750 mt 9,750 mt 1,500 mt Northern anchovy, (central subpopulation) 100,000 mt 25,000 mt 25,000 mt Market squid FMSY proxy resulting in Egg Escapement ≥30% FMSY proxy resulting in Egg Escapement ≥30% ACL not required (Less than 1-year lifecycle and no overfishing) Krill Undefined Undefined 0

The OFLs and ABCs listed in Table 1 for jack mackerel, the central subpopulation of northern anchovy, market squid and krill are included for information purposes only. The OFL and ABC specifications for those stocks are set in the FMP; NMFS is not establishing or revising them by this action.

These catch levels and reference points were recommended to NMFS by the Council and were based on recommendations from its advisory bodies according to the framework in the FMP established through Amendment 13, including OFL and ABC recommendations from its Science and Statistical Committee (SSC). The ACLs for these monitored stocks will be in place for the calendar year fishing season (January 1-December 31), and would remain in place for each subsequent calendar year until new scientific information becomes available to warrant changing them, or if landings increase and consistently reach the ABC/ACL level, necessitating a change to active management under the FMP. These ACLs provide a means to monitor these stocks on an annual basis and prevent overfishing, as each year the total harvest of each stock will be assessed against their respective ACLs. Furthermore, if the harvest level of a fishery reaches an ACL, the directed fishery would be closed through the end of the year. These ACLs and other reference points remain in place until changed according to the FMP framework. While this rule announces the ACLs for calendar year 2017 only, in a future rulemaking NMFS intends to propose regulatory text codifying the ACLs in 50 CFR part 660 subpart I.

Market squid, because of their short life-cycle, fall under the statutory exception from the requirement to set ACLs and AMs. Section 303(a)(15) of the MSA states that the requirement for ACLs “shall not apply to a fishery for species that has a life cycle of approximately 1 year unless the Secretary has determined the fishery is subject to overfishing of that species”. Market squid have a lifecycle of less than 1 year and have not been determined to be subject to overfishing; therefore, an ACL is not required and is not being implemented for market squid.

NMFS is not establishing or changing the specifications for krill by this rulemaking. Krill are a prohibited harvest species. The targeting, harvesting and transshipment of krill are all explicitly prohibited; therefore, the ACL for krill is zero. Because the harvest level is zero, setting an OFL or ABC for krill would serve no function and is not done in this action.

If an ACL is reached, or is expected to be reached for one of these fisheries, the directed fishery would be closed until the beginning of the next fishing season. The NMFS West Coast Regional Administrator would publish a notice in the Federal Register announcing the date of any such closure. Additionally, nearing or exceeding one of these ACLs would trigger a review of whether the fishery should be moved into the actively managed category of the FMP.

The proposed rule also referenced ACTs in the paragraph above that describes closing fisheries upon attainment of ACLs and reviewing whether the fishery should be moved to the actively managed category. That was an error and NMFS did not intend to propose closing the fishery upon attainment of the ACT, or describe the ACT as trigger point for any post-season AMs, as ACTs are not designed to trigger automatic closures or management category review; therefore, reference to ACTs has been removed from that paragraph. The purpose of the ACT for the northern subpopulation of northern anchovy is only to assist with in-season tracking of fishery landings to help ensure the ACL is not exceeded.

Further background on this action can be found in the proposed rule that solicited public comments for this action (80 FR 72676, November 20, 2015) and is not repeated here.

NMFS received 50 comment letters on the proposed rule. Twenty-six of these comment letters were of very similar form and substance, and were focused only on northern anchovy fishing in Monterey Bay, CA, and the proposed ACL for the central subpopulation of northern anchovy. Additionally, many of the other comment letters provided multiple comments. One comment letter from a non-governmental organization was also represented to NMFS as having been electronically signed by 27,151 individuals. Many of the comments provided, such as reconsideration of the existing OFL and ABC values and control rules, as well as other aspects of CPS management such as spatial management or stock re-categorization, are beyond the scope of this rulemaking and will not be addressed here. However, NMFS found the comments valuable and will consider them for future management planning, and will ensure the Council is aware of the comments. Although changes to the OFL or ABC levels or revisiting these values or the default ABC control rule for monitored stocks was not being proposed in this rulemaking, for information purposes only, NMFS will respond to comments on some aspects of the existing OFL and ABC values, which were previously endorsed by the Council's SSC and NMFS as the best available science. No changes were made in response to the comments received. NMFS summarizes and responds to the comments below.

Comments and Responses

Comment 1: The proposed ACL for the central subpopulation of northern anchovy is too high and a more precautionary/lower quota should be set and additional precautionary measures be adopted, such as area closures. Various rationale were stated for this comment including concern that: the northern anchovy stock may be at a low abundance level, based partially on a recent scientific journal article (MacCall et al. 2016) describing a collapse of anchovy off California; that fishing may be resulting in potential impacts to northern anchovy predators in certain locations; and that the ACL is based on an outdated biomass estimate and should be revised based on more current information.

Response: Northern anchovy, like other small pelagic species, can undergo wide natural fluctuations in total abundance, even in the absence of fishing. This is caused by the fact that northern anchovy recruitment (the number of young fish that enter a population in a given year) is highly variable and likely correlated with prevailing oceanographic conditions. The ACL for the central subpopulation of northern anchovy (CSNA) is currently set equal to its ABC value of 25,000 mt, which is 75,000 mt lower than its OFL. This substantial reduction in allowable catch from the OFL (the estimate of the level of catch above which overfishing is occurring), is primarily in recognition of the high uncertainty in the OFL value and the knowledge that the yearly abundance of this stock can fluctuate as described above. These catch levels are derived from the default OFL specification and ABC control rule framework for monitored stocks, which were used for CSNA, under which its OFL was set equal to its MSY value and its ABC level was reduced from this OFL by 75 percent to account for scientific uncertainty in the OFL and to prevent overfishing, among other considerations. This ABC value is also the upper bound for which the ACL can be set. As previously stated, the existing OFL and ABC values are not subject to this rulemaking. This management framework, including the non-discretionary reduction in allowable catch built into the harvest policy for CPS stocks in the monitored category, was previously recommended by the Council's SSC, adopted by the Council and approved by NMFS as best available science and determined to appropriately account for uncertainty and protect the stock from overfishing. Therefore, until new scientific information becomes available and approved for revising the ABC, it is not necessary to further reduce the ACL from the ABC for precautionary reasons regarding scientific uncertainty in the level of catch intended to prevent overfishing.

Although it is true that the last formal stock assessment for CSNA was completed in 1995, contrary to the perceptions expressed in some of the comments received, the ACL for CSNA is not based on this assessment or any single estimate of biomass. As described above, the ACL has been reduced down from the OFL, which has been set equal to its estimate of MSY—an estimate that is intended to reflect the largest average fishing mortality rate or yield that can be taken from a stock over the long term.

NMFS is aware of the scientific journal article referenced in the comments (MacCall et al. 2016) and the methods used by authors of this article were partially reviewed at the workshop described below. NMFS agrees there is evidence that CSNA did likely go through a decline in the recent past and abundance may still be at some relatively low state. Additionally, NMFS agrees with the finding in the paper that any decline is a result of “natural phenomena” and not fishing. NMFS notes, however, that the time period for which the article discusses a potential decline is from 2008 and 2011, and does not provide analysis for years past 2011. The estimates of biomass in the article also increased by an order of magnitude between 2003 and 2005, highlighting the variability mentioned above that this stock can exhibit. Preliminary data examined by NMFS from 2015 shows that anchovy recruitment along portions of the U.S. West Coast appears to be stronger than previous recruitment levels over the past 10 years. The extent of this potential decline and whether or not the stock is still at low levels is currently unclear. Much of the available compiled data on the central subpopulation of northern anchovy is either outdated or from surveys that are best at providing regional indices of relative availability and variability of the stock, but are not estimates of overall biomass, which are typically best derived from stock assessments. Thus, while the increased recruitment signals seen in 2015 are positive, it would be premature to assess their overall contribution to the stock without conducting a formal assessment of the data. It is important to note that NMFS' decision to approve the ACL for the CSNA is not based on this recent survey data. Similarly, it would not be appropriate to reduce the ACL further below the ABC based on potentially outdated information or information that has not been formally reviewed.

Relating to the comment that the stock has not been assessed recently, and that NMFS should set the ACL based on updated information, NMFS points out that the Council, in coordination with NMFS Southwest Fisheries Science Center, recently held a workshop to examine available approaches to assessing short-lived, data poor species as well the current available data and how it may be used. A report from this workshop is now available and was reviewed by the Council at its September 2016 meeting. Additionally, NMFS is currently analyzing some of the data described above about CSNA and, based on the recommendations from this workshop, is scheduled to provide an assessment of the available information on the stock in the fall of 2016. Although the current management framework for anchovy is not set up to explicitly utilize the abundance information that may be produced, it will hopefully allow NMFS to have a better understanding of the current state of this stock.

With regards to the ACL being implemented for CSNA and the potential indirect impact to CSNA predators through the removal of a prey source, because the ACL is set equal to the ABC, and the ABC has already been substantially reduced to protect CSNA from overfishing, harvesting up to the ACL level should equate to very little risk to the CSNA as a result of fishing. Therefore, it is unlikely that removing up to the ACL will reduce the total abundance of CSNA in a manner that would indirectly impact predator populations. Additionally, given that harvest rates of CSNA have generally been well below this ACL, with little expectation they will increase significantly in the short term, and the fact that CSNA is only one component of much larger forage base that most predators in the California Current Ecosystem (CCE) along the U.S. west coast depend on, harvest at the level of the ACL would likely not have a discernable impact as a removal of a prey source. Furthermore, there is no direct evidence that the current fishing levels are having direct competition effects on species that feed on CSNA. The likely reason for this is that most studies have shown that predators of CPS in the CCE have more opportunistic diets rather than depending on one specific prey item. For example, many documented predators of sardines showed no signs of population stress or decline during periods of very low sardine abundance in the CCE from the 1950s through the 1980s when their diets reflected an absence of this prey resource.

With regards to the comment that spatial fishing area closures may be necessary due to the potential for localized effects of prey limitations through localized depletion of CSNA by fishing, spatial closures such as those requested by some commenters are outside the scope of this action. The only part of this action that relates to CSNA is the ACL for the stock. However, NMFS appreciates some of the commenter's concerns regarding spatial effects. Although additional analysis is needed, recent research suggests that CSNA distribution, as well as other species, including other forage species, may have shifted both spatially and temporally in recent years due to severe environmental changes in the ocean, such as the “Warm Blob” and early El Niño effects. Although most predators of small pelagic species off the west coast are not dependent on the availability of a single species (as described above) but rather on a suite of species whose total and regional abundances may also shift each year, these recent shifts in distribution over time and space may be limiting prey availability to some predators during certain times of the year. NMFS has been working to better understand diet linkages between forage fish species and higher order predators to enhance the ecosystem science used in our fisheries management.

Comment 2: Anchovy fishing within the waters of Monterey Bay, CA, is negatively impacting humpback whales and fishing should be restricted or prohibited in that area.

Response: NMFS appreciates the many comments received by both the general public and business owners concerned about Humpback whales, as they are an important trust resource of NMFS. NMFS found many of the comments and the firsthand information provided in them valuable and will consider it in future management actions; however, changes to CPS management such as area closures are outside the scope of this action. However, NMFS will respond in part to these comments. Humpback whales are globally distributed and are highly migratory; spending spring, summer, and fall feeding in temperate or high-latitude areas of the North Atlantic, North Pacific and Southern Ocean and migrating to the tropics in winter to breed and calve. Humpback whales are believed to be largely opportunistic foragers (Fleming et al., 2015), who target a wide variety of prey species (Whitteveen, 2006). They are known to feed on several types of small schooling fish and krill, and their prey consumption is likely an indicator of dominant prey types in the ecosystem. Recent NMFS status reports show humpbacks are increasing in abundance throughout much of their range with some populations no longer warranting listing under the Endangered Species Act. Humpbacks off the central California coast are highly migratory, breeding in Costa Rica and Mexico and traveling to central California to forage. Coupling their diverse diet and migratory patterns, it is unlikely that the removal of a portion of one prey source in one localized geographic area would have a substantial negative impact on their population.

Comment 3: One commenter stated that the default framework for setting an OFL for the northern subpopulation of northern anchovy was not used, and although not clear from the comment, that presumably had the default framework been used, a different value would have been calculated. Additionally, the comment stated that NMFS did not explain how scientific uncertainty was accounted for in the established OFL.

Response: As it relates to the specific information used to determine the OFL for the northern subpopulation of northern anchovy, NMFS has determined the best available scientific information was used. This value was determined by the Council's SSC and was determined to represent the best available science and therefore recommended to NMFS by the Council. With regards to not using the default framework, as described in the preamble of the proposed rule, the default framework established through Amendment 13 set the OFLs for the central subpopulation of northern anchovy and jack mackerel equal to the existing MSY values in the FMP that were established through Amendment 8 to the FMP. An MSY value was undetermined for the northern subpopulation of northern anchovy at that time; therefore, the default framework could not be used for the northern subpopulation of northern anchovy. In 2015, Amendment 14 to the CPS FMP established an FMSY of 0.3 as the MSY reference point for the northern subpopulation of northern anchovy. However, because the default framework in the FMP for setting OFLs and ABCs is based on applying a percentage to numerical MSY/OFLs, it was necessary to determine a numerical OFL value through the specifications process.

In formulating its recommendation on an appropriate OFL estimate, the SSC reviewed all of the available information on the stock, which although limited, included information such as egg and larvae survey data, density and distribution data, stock productivity and vulnerability information and landings data, which was prepared and presented to them by the Council's CPSMT (Agenda Item I.2.c, CPSMT Report 1, November 2010 and references contained within). Furthermore, the SSC also noted that because the northern subpopulation of anchovy has been lightly fished, with inconsistent effort, that the time series of catch was an unreliable indicator of annual stock status for setting the OFL. In the preamble to the proposed rule, NMFS also explained how uncertainty is accounted for in estimating the OFL. The OFL of 39,000 mt was reduced by 75 percent to 9,750 mt (i.e., the ABC) explicitly to account for uncertainty in the OFL.

Comment 4: The comment stated that the control rules and management reference points for jack mackerel are “fraught with doubt” because the most recent stock assessment is outdated and that NMFS has not explained how scientific uncertainty is accounted for in the jack mackerel ACL. The commenter also recommends NMFS set the ACL for jack mackerel at 1,000 tons based on recent catch as it would better reflect the scientific guidance and best available science.

Response: Although the existing control rules are not subject to this rulemaking, NMFS points out that as is the case for the central subpopulation of northern anchovy (and explained in response to comment one), the existing OFL and ABC control rules for jack mackerel and the resulting values are not based on a single stock assessment. NMFS recognizes that formal stock assessments have not been conducted in many years for either northern anchovy or jack mackerel. However, management of these stocks is not based on single point estimates of biomass; therefore, the fact that the most recent assessments are outdated is not relevant to the current quotas which are based on MSY principles. The OFL is based on the principle of MSY, which is a long-term average and intended to reflect a fishing mortality rate that does not jeopardize the capacity of a stock or stock complex to produce MSY. This OFL is then reduced by 75 percent by the ABC control rule to account for scientific uncertainty in the OFL, which was explained in the preamble to the proposed rule, as well as in this final rule and was also explained in the environmental assessment and other documents that accompanied Amendment 13 to the CPS FMP, which established the ABC control rule. Similar to the other monitored finfish stocks, because jack mackerel is lightly fished, with inconsistent effort over time, the existing time series of catch is likely an unreliable indicator of stock status, making it an unreliable source of information for estimating abundance or setting catch levels.

Comment 5: The California Department of Fish and Wildlife (CDFW) expressed support for the proposed action, but voiced concern over the potential increase in staff workload and monitoring costs that the proposed action may cause. Additionally, CDFW asked for clarification on whether establishing ACLs for the two subpopulations of northern anchovy might require improved monitoring of the two stocks in the ocean area where the populations can overlap.

Response: CDFW is an important co-manager in the management of CPS and NMFS appreciates its input. Based on current fishery operations and landings, NMFS does not expect that changes in monitoring practices will be necessary as a result of this action because the ACLs being implemented are the same as the ABC levels that have been in place in the FMP since 1999. However, NMFS recognizes that these fisheries are dynamic and aspects of the fishery, such as ports of landing, could change, requiring additional work from CDFW. If this were to occur, NMFS would work closely with CDFW to help ensure the burden was minimized and work to find efficiencies in current monitoring procedures to lessen any additional costs. With regards to how catch is currently tracked and reported for the two subpopulations of northern anchovy, similarly this action does not require a change in current practices for differentiating landings between these two subpopulations at this time. However, as the comment points out, we are seeing oceanographic changes that could re-distribute the current core harvesting and landings areas (Los Angeles, CA, Monterey CA, and off near the mouth of the Columbia River in Oregon and Washington). If this were to occur, along with an increase in landings of both these subpopulations, status quo procedures would likely need to change in a manner described in the comment. If this need arises, NMFS will work closely with the CDFW to ensure this is done in an efficient manner.

Classification

Pursuant to section 304(b)(1)(A) of the Magnuson-Stevens Fishery Conservation and Management Act, the NMFS Assistant Administrator has determined that this final rule is consistent with the CPS FMP, other provisions of the Magnuson-Stevens Fishery Conservation and Management Act, and other applicable law.

These final specifications are exempt from review under Executive Order 12866.

The Chief Counsel for Regulation of the Department of Commerce certified to the Chief Counsel for Advocacy of the Small Business Administration during the proposed rule stage that this action would not have a significant economic impact on a substantial number of small entities. The factual basis for the certification was published in the proposed rule and is not repeated here. No comments were received regarding this certification. As a result, a regulatory flexibility analysis was not required and none was prepared.

On December 29, 2015, the National Marine Fisheries Service (NMFS) issued a final rule establishing a small business size standard of $11 million in annual gross receipts for all businesses primarily engaged in the commercial fishing industry (NAICS 11411) for Regulatory Flexibility Act (RFA) compliance purposes only (80 FR 81194, December 29, 2015). The $11 million standard became effective on July 1, 2016, and is to be used in place of the U.S. Small Business Administration's (SBA) current standards of $20.5 million, $5.5 million, and $7.5 million for the finfish (NAICS 114111), shellfish (NAICS 114112), and other marine fishing (NAICS 114119) sectors of the U.S. commercial fishing industry in all NMFS rules subject to the RFA after July 1, 2016. Id. at 81194.

Pursuant to the Regulatory Flexibility Act, and prior to July 1, 2016, a certification was developed for this regulatory action using SBA's size standards. NMFS has reviewed the analyses prepared for this regulatory action in light of the new size standard. All of the entities directly regulated by this regulatory action are marine commercial fishing businesses and were considered small under the SBA's size standards, and thus they all would continue to be considered small under the new standard. Thus, NMFS has determined that the new size standard does not affect analyses prepared for this regulatory action.

This action does not contain a collection of information requirement for purposes of the Paperwork Reduction Act.

Authority:

16 U.S.C. 1801 et seq.

Dated: October 11, 2016. Samuel D. Rauch III, Deputy Assistant Administrator for Regulatory Programs, National Marine Fisheries Service.
[FR Doc. 2016-24989 Filed 10-25-16; 8:45 am] BILLING CODE 3510-22-P
DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration 50 CFR Part 679 [Docket No. 150818742-6210-02] RIN 0648-XE990 Fisheries of the Economic Exclusive Zone Off Alaska; Groundfish Fishery by Vessels Using Trawl Gear in the Gulf of Alaska AGENCY:

National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

ACTION:

Temporary rule; closure.

SUMMARY:

NMFS is prohibiting directed fishing for groundfish by vessels using trawl gear in the Gulf of Alaska (GOA), except for directed fishing for pollock by vessels using pelagic trawl gear in those portions of the GOA open to directed fishing for pollock. This closure also does not apply to fishing by vessels participating in the cooperative fishery in the Rockfish Program for the Central GOA. This action is necessary to prevent exceeding the 2016 Pacific halibut prohibited species catch limit specified for vessels using trawl gear in the GOA.

DATES:

Effective 1200 hrs, Alaska local time (A.l.t.), October 22, 2016, through 2400 hrs, A.l.t., December 31, 2016.

FOR FURTHER INFORMATION CONTACT:

Obren Davis, 907-586-7228.

SUPPLEMENTARY INFORMATION:

NMFS manages the groundfish fishery in the GOA exclusive economic zone according to the Fishery Management Plan for Groundfish of the Gulf of Alaska (FMP) prepared by the North Pacific Fishery Management Council under authority of the Magnuson-Stevens Fishery Conservation and Management Act. Regulations governing fishing by U.S. vessels in accordance with the FMP appear at subpart H of 50 CFR part 600 and 50 CFR part 679.

The 2016 Pacific halibut prohibited species catch (PSC) limit for vessels using trawl gear was established as 1,515 metric tons by the final 2016 and 2017 harvest specifications for groundfish of the GOA (81 FR 14740, March 18, 2016).

In accordance with § 679.21(d)(6)(i), the Regional Administrator has determined that the 2016 Pacific halibut PSC limit allocated to vessels using trawl gear in the GOA has been reached. Therefore, NMFS is prohibiting directed fishing for groundfish by vessels using trawl gear in the GOA, except for directed fishing for pollock by vessels using pelagic trawl gear in those portions of the GOA that remain open to directed fishing for pollock. This closure also does not apply to fishing by vessels participating in the cooperative fishery in the Rockfish Program for the Central GOA.

Classification

This action responds to the best available information recently obtained from the fishery. The Assistant Administrator for Fisheries, NOAA, (AA), finds good cause to waive the requirement to provide prior notice and opportunity for public comment pursuant to the authority set forth at 5 U.S.C. 553(b)(B) as such a requirement is impracticable and contrary to the public interest. This requirement is impracticable and contrary to the public interest as it would prevent NMFS from responding to the most recent fisheries data in a timely fashion and would delay closing directed fishing for groundfish by vessels using trawl gear in the GOA. NMFS was unable to publish a notice providing time for public comment because the most recent, relevant data only became available as of October 20, 2016.

The AA also finds good cause to waive the 30-day delay in the effective date of this action under 5 U.S.C. 553(d)(3). This finding is based upon the reasons provided above for waiver of prior notice and opportunity for public comment.

This action is required by § 679.21 and is exempt from review under Executive Order 12866.

Authority:

16 U.S.C. 1801 et seq.

Dated: October 21, 2016. Emily H. Menashes, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
[FR Doc. 2016-25902 Filed 10-21-16; 4:15 pm] BILLING CODE 3510-22-P
81 207 Wednesday, October 26, 2016 Proposed Rules DEPARTMENT OF THE TREASURY Office of the Comptroller of the Currency 12 CFR Part 30 [Docket ID OCC-2016-0016] RIN 1557-AE06 FEDERAL RESERVE SYSTEM 12 CFR Chapter II [Docket No. R-1550] RIN 7100-AE 61 FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Part 364 RIN 3064-AE45 Enhanced Cyber Risk Management Standards AGENCY:

The Board of Governors of the Federal Reserve System; the Office of the Comptroller of the Currency; and the Federal Deposit Insurance Corporation.

ACTION:

Joint advance notice of proposed rulemaking.

SUMMARY:

The Board of Governors of the Federal Reserve System (Board), the Office of the Comptroller of the Currency (OCC), and the Federal Deposit Insurance Corporation (FDIC) (collectively, the agencies) are inviting comment on an advance notice of proposed rulemaking (ANPR) regarding enhanced cyber risk management standards (enhanced standards) for large and interconnected entities under their supervision and those entities' service providers. The agencies are considering establishing enhanced standards to increase the operational resilience of these entities and reduce the impact on the financial system in case of a cyber event experienced by one of these entities. The ANPR addresses five categories of cyber standards: Cyber risk governance; cyber risk management; internal dependency management; external dependency management; and incident response, cyber resilience, and situational awareness. The agencies are considering implementing the enhanced standards in a tiered manner, imposing more stringent standards on the systems of those entities that are critical to the functioning of the financial sector.

DATES:

Comments must be received by January 17, 2017.

ADDRESSES:

Comments should be directed to:

Board: When submitting comments, please consider submitting your comments by email or fax because paper mail in the Washington, DC area and at the Board may be subject to delay. You may submit comments, identified by Docket No. R-1550 and RIN 7100-AE-61 by any of the following methods:

Agency Web site: http://www.federalreserve.gov. Follow the instructions for submitting comments at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm.

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

Email: [email protected] Include docket and RIN numbers in the subject line of the message.

FAX: (202) 452-3819 or (202) 452-3102.

Mail: Robert deV. Frierson, Secretary, Board of Governors of the Federal Reserve System, 20th Street and Constitution Avenue NW., Washington, DC 20551.

All public comments will be made available on the Board's Web site at http://www.federalreserve.gov/generalinfo/foia/ProposedRegs.cfm as submitted, unless modified for technical reasons. Accordingly, your comments will not be edited to remove any identifying or contact information. Public comments may also be viewed electronically or in paper form in Room 3515, 1801 K Street NW. (between 18th and 19th Streets NW.), Washington, DC 20006 between 9:00 a.m. and 5:00 p.m. on weekdays. For security reasons, the Board requires that visitors make an appointment to inspect comments. You may do so by calling (202) 452-3684. Upon arrival, visitors will be required to present valid government-issued photo identification and to submit to security screening in order to inspect and photocopy comments.

OCC: Because paper mail in the Washington, DC area and at the OCC is subject to delay, commenters are encouraged to submit comments through the Federal eRulemaking Portal or email, if possible. Please use the title “Enhanced Cyber Risk Management Standards” to facilitate the organization and distribution of the comments. You may submit comments by any of the following methods:

Federal eRulemaking Portal—“Regulations.gov”: Go to www.regulations.gov. Enter “Docket ID OCC-2016-0016” in the Search Box and click “Search.” Click on “Comment Now” to submit public comments.

• Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov, including instructions for submitting public comments.

Email: [email protected]

Mail: Legislative and Regulatory Activities Division, Office of the Comptroller of the Currency, 400 7th Street SW., Suite 3E-218, mail stop 9W-11, Washington, DC 20219.

Hand Delivery/Courier: 400 7th Street SW., Suite 3E-218, mail stop 9W-11, Washington, DC 20219.

Fax: (571) 465-4326.

Instructions: You must include “OCC” as the agency name and “Docket ID OCC-2016-0016” in your comment. In general, OCC will enter all comments received into the docket and publish them on the Regulations.gov Web site without change, including any business or personal information that you provide such as name and address information, email addresses, or phone numbers. Comments received, including attachments and other supporting materials, are part of the public record and subject to public disclosure. Do not enclose any information in your comment or supporting materials that you consider confidential or inappropriate for public disclosure.

You may review comments and other related materials that pertain to this rulemaking action by any of the following methods:

• Viewing Comments Electronically: Go to www.regulations.gov. Enter “Docket ID OCC-2016-0016” in the Search box and click “Search.” Click on “Open Docket Folder” on the right side of the screen and then “Comments.” Comments can be filtered by clicking on “View All” and then using the filtering tools on the left side of the screen.

• Click on the “Help” tab on the Regulations.gov home page to get information on using Regulations.gov. Supporting materials may be viewed by clicking on “Open Docket Folder” and then clicking on “Supporting Documents.” The docket may be viewed after the close of the comment period in the same manner as during the comment period.

Viewing Comments Personally: You may personally inspect and photocopy comments at the OCC, 400 7th Street SW., Washington, DC 20219. For security reasons, the OCC requires that visitors make an appointment to inspect comments. You may do so by calling (202) 649-6700 or, for persons who are deaf or hard of hearing, TTY, (202) 649-5597. Upon arrival, visitors will be required to present valid government-issued photo identification and to submit to security screening in order to inspect and photocopy comments.

FDIC: You may submit comments, identified by RIN 3064-AE45, by any of the following methods:

Agency Web site: http://www.fdic.gov/regulations/laws/federal/propose.html. Follow instructions for submitting comments on the Agency Web site.

Email: [email protected] Include the RIN 3064-AE45 on the subject line of the message.

Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.

Hand Delivery: Comments may be hand delivered to the guard station at the rear of the 550 17th Street Building (located on F Street) on business days between 7:00 a.m. and 5:00 p.m.

Public Inspection: All comments received must include the agency name and RIN 3064-AE45 for this rulemaking. All comments received will be posted without change to http://www.fdic.gov/regulations/laws/federal/propose.html, including any personal information provided. Paper copies of public comments may be ordered from the FDIC Public Information Center, 3501 North Fairfax Drive, Room E-1002, Arlington, VA 22226 by telephone at (877) 275-3342 or (703) 562-2200.

FOR FURTHER INFORMATION CONTACT:

Board: Anna Lee Hewko, Associate Director, (202) 530-6260; or Matthew Hayduk, Manager, (202) 973-6190; or Julia Philipp, Senior Supervisory Financial Analyst, (202) 452-3940; or Christopher Olson, Senior Supervisory Financial Analyst, (202) 912-4609, Division of Banking Supervision and Regulation; or Benjamin W. McDonough, Special Counsel, (202) 452-2036; or Claudia Von Pervieux, Counsel, (202) 452-2552; or Michelle Kidd, Counsel, (202) 736-5554, Legal Division; for persons who are deaf or hard of hearing, TTY (202) 263-4869.

OCC: Bethany Dugan, Deputy Comptroller for Operational Risk, (202) 649-6949; or Kevin Greenfield, Director, Bank Information Technology, (202) 649-6954; or Eric Gott, Risk Team Lead for Governance and Operational Risk, Large Bank Supervision, (202) 649-7181; or Patrick Kelly, Bank Examiner, Critical Infrastructure Protection, (202) 649-5519; or Carl Kaminski, Special Counsel, Beth Knickerbocker, Counsel, or Rima Kundnani, Attorney, Legislative and Regulatory Activities Division, (202) 649-5490, Office of the Comptroller of the Currency, 400 7th Street SW., Washington, DC 20219.

FDIC: Donald Saxinger, Senior Examination Specialist, IT Supervision Branch, Division of Risk Management Supervision, (703) 254-0214; or John Dorsey, Counsel, (202) 898-3807. Supervision & Legislation Branch, Legal Division.

I. Background

With advances in financial technology, financial institutions and consumers alike have become increasingly dependent on technology to facilitate financial transactions. In addition, the largest, most complex financial institutions rely heavily on technology to engage in national and international banking activities and to provide critical services to the financial sector and the U.S. economy.

As technology dependence in the financial sector continues to grow, so do opportunities for high-impact technology failures and cyber-attacks. Due to the interconnectedness of the U.S. financial system, a cyber incident or failure at one interconnected entity may not only impact the safety and soundness of the entity, but also other financial entities with potentially systemic consequences. For example, depository institutions and depository institution holding companies play an important role in U.S. payment, clearing, and settlement arrangements and provide access to credit for businesses and households. Nonbank financial companies that the Financial Stability Oversight Council (FSOC) has determined should be supervised by the Board (referred to in the ANPR as nonbank financial companies) perform critical functions for the U.S. financial system, and financial market infrastructures (FMIs) facilitate the payment, clearing, and recording of monetary and other financial transactions and services and play critical roles in fostering financial stability in the United States. Third parties that provide payments processing, core banking, and other financial technology services to these participants in the financial sector also provide services that are vital to the financial sector.

The Board, the OCC, and the FDIC have incorporated information security into their supervisory review of information technology (IT) programs at supervised banking organizations for many years. The agencies also review the services of third-party service providers that support those entities, and the Board includes information security as part of the supervisory program for nonbank financial companies and FMIs.

In response to expanding cyber risks, the agencies are considering establishing enhanced standards for the largest and most interconnected entities under their supervision, as well as for services that these entities receive from third parties. The term “covered entities” is used throughout this document to refer to entities potentially covered by the standards described in this ANPR. The enhanced standards would be designed to increase covered entities' operational resilience and reduce the potential impact on the financial system in the event of a failure, cyber-attack, or the failure to implement appropriate cyber risk management.

The agencies are considering implementing the enhanced standards in a tiered manner, imposing more stringent standards on the systems of covered entities that are critical to the functioning of the financial sector, referred to in this ANPR as “sector-critical systems.”

The agencies are seeking comment on all aspects of the enhanced standards described in this ANPR. The agencies plan to use information collected in this ANPR to develop a more detailed proposal for consideration. The agencies will again invite public comment on a detailed proposal before adopting any final rule.

II. Relationship to Existing Requirements and Guidance a. Existing Supervisory Programs

As noted, the agencies have existing supervisory programs that contain general expectations for cybersecurity practices at financial institutions and third-party service providers. The enhanced standards would be integrated into the existing supervisory framework by establishing enhanced supervisory expectations for the entities and services that potentially pose heightened cyber risk to the safety and soundness of the financial sector.

Through the Federal Financial Institutions Examination Council (FFIEC), the agencies issued the Uniform Rating System for Information Technology (URSIT) in 1978 (revised January 20, 1999).1 The URSIT rating is used by federal and state regulators to uniformly assess IT risks at financial institutions, their affiliates, and service providers 2 for the purpose of identifying those institutions that require special supervisory attention. The URSIT framework includes elements to assess data security and other risk management factors necessary to determine the quality, integrity, and reliability of the financial institution's or third-party service provider's IT. The proposed enhanced standards would not replace the URSIT ratings but could be used, in part, to inform the cyber-related elements of the URSIT rating for covered entities. For example, supervisory work related to the proposed external dependency management standard discussed in this ANPR could be used, in part, to inform the development and acquisition component of the URSIT rating.

1 64 FR 3109, January 20, 1999.

2 The agencies have statutory authority to supervise and examine services provided by third-party service providers to regulated financial institutions under the Bank Service Company Act (12 U.S.C. 1867(c)).

In 2003, the FFIEC published the first in a series of booklets on IT that make up the IT Handbook. The IT Handbook provides guidance to examiners in reviewing financial institutions and services provided by third parties. Certain booklets, such as the Business Continuity Planning booklet and the Information Security booklet, incorporate the agencies' expectations regarding cybersecurity risk management. The IT Handbook also includes work programs that an examiner may use to aid in assessing a company's URSIT rating. IT Handbook guidance would continue to be used for covered entities to assess IT risk management.

In 1999, Title V, Subtitle A of the Gramm-Leach-Bliley Act (GLBA) 3 required that each agency establish appropriate administrative, technical, and physical controls for the safeguarding of financial institutions' customer information. In 2000, the agencies published the Interagency Guidelines Establishing Information Security Standards (Guidelines) implementing the GLBA safeguarding requirements.4 The Guidelines require insured depository institutions to implement information security programs to ensure the security and confidentiality of customer information; protect against any anticipated threats or hazards to the security or integrity of such information; protect against unauthorized access to or use of such information that could result in substantial harm or inconvenience to any customer; and ensure the proper disposal of customer and consumer information.

3 15 U.S.C. 6801-6809.

4See 12 CFR part 208, App. D-2 and 12 CFR part 225, App. F (Board); 12 CFR 30, App. B (OCC); and 12 CFR part 364, App. B and 12 CFR part 391, subpart B, App. B (FDIC).

Additionally, the agencies have interagency guidelines that establish safety and soundness standards, including operational and managerial standards, for depository institutions.5 These guidelines require an insured depository institution to have internal controls and information systems appropriate to the size of the institution and to the nature, scope, and risk of its activities and that provide for, among other requirements, effective risk assessment and adequate procedures to safeguard and manage assets. Insured depository institutions are also required to have internal audit systems based on the same criteria that provide for adequate testing and review of information systems. The Guidelines and safety and soundness standards would continue to apply to covered entities that are insured depository institutions.

5See 12 CFR part 30, App. A and D, 12 CFR part 208, App. D-1, 12 CFR part 225, App. F.

b. FFIEC Cybersecurity Assessment Tool

In June 2015, the FFIEC issued the Cybersecurity Assessment Tool (Assessment) as a voluntary self-assessment tool that financial institutions, including covered entities, may use to help assess their cyber risks and determine their cybersecurity preparedness.

The Assessment provides institutions with a repeatable and measurable process to determine whether the institutions have appropriate controls and risk management in place relative to the inherent risk profile of the institution. The Assessment incorporates baseline cybersecurity-related categories from the FFIEC IT Handbook, as well as key concepts from the National Institute of Standards and Technology (NIST) Cybersecurity Framework (CSF) and other industry best practices. However, the Assessment does not establish binding minimum standards.

c. NIST Cybersecurity Framework

The NIST CSF is a voluntary framework for organizations to better understand, manage, and reduce their cybersecurity risk. The CSF is intended to be customized by different business sectors and individual organizations to best suit their risks, situation, and needs. It was also designed to improve communications, awareness, and understanding among IT, planning and operating units, and senior executives, to better address cyber risks. The NIST CSF Core consists of five concurrent and continuous functions: Identify, Protect, Detect, Respond, and Recover. Taken together, these functions provide a high-level, strategic view of the lifecycle of an organization's management of cybersecurity risk.

Similar to the NIST CSF, the enhanced standards would provide a clear set of objectives for sound cyber risk management. However, the binding requirements set forth in the enhanced standards would be designed specifically to address the cyber risks of the largest, most interconnected U.S. financial entities.

d. CPMI-IOSCO Guidance

In June 2016, the Committee on Payments and Market Infrastructures (CPMI) and the Board of the International Organization of Securities Commissions (IOSCO) released “Guidance on cyber resilience for financial market infrastructures.” 6 According to CPMI and IOSCO, the guidance “aims to add momentum to and instill international consistency in the industry's ongoing efforts to enhance FMIs' ability to preempt cyber-attacks, respond rapidly and effectively to them, and achieve faster and safer target recovery objectives if they succeed.” 7 The guidance is intended to supplement the CPMI-IOSCO Principles for Financial Market Infrastructures (PFMI) and is “not intended to impose additional standards on FMIs beyond those set out in the PFMI, but provides detail related to the preparations and measures that FMIs should undertake to enhance their cyber resilience capabilities with the objective of limiting the escalating risks that cyber threats pose to financial stability.” 8 The agencies reviewed the CPMI-IOSCO guidance and took it into consideration as they developed the proposed enhanced standards described in this ANPR.

6See http://www.bis.org/cpmi/publ/d146.pdf.

7See http://www.bis.org/cpmi/publ/d146.htm.

8See http://www.bis.org/cpmi/publ/d146.pdf.

e. Interagency Paper on Sound Practices To Strengthen the Resilience of the U.S. Financial System

In April 2003, the Board, the OCC, and the Securities and Exchange Commission issued the Interagency Paper on Sound Practices to Strengthen the Resilience of the U.S. Financial System (Sound Practices Paper).9 The Sound Practices Paper focuses on minimizing the immediate systemic effects of a wide-scale disruption on critical financial markets and on establishing the appropriate back-up capacity for recovery and resumption of clearance and settlement activities in wholesale financial markets. As discussed in sections IV and VI, the agencies took the Sound Practices Paper into consideration as they developed the proposed enhanced standards described in this ANPR.

9 Available at: http://www.sec.gov/news/studies/34-47638.htm.

III. Scope of Application

The agencies are considering applying the enhanced standards to certain entities with total consolidated assets of $50 billion or more on an enterprise-wide basis. A cyber-attack or disruption at one or more of these entities could have a significant impact on the safety and soundness of the entity, other financial entities, and the U.S. financial sector. The agencies are considering applying the enhanced standards to these entities on an enterprise-wide basis because cyber risks in one part of an organization could expose other parts of the organization to harm.

Each agency would apply these standards to large institutions subject to their jurisdiction.10 Thus, the Board is considering applying the enhanced standards on an enterprise-wide basis to all U.S. bank holding companies with total consolidated assets of $50 billion or more, the U.S. operations of foreign banking organizations with total U.S. assets of $50 billion or more, and all U.S. savings and loan holding companies with total consolidated assets of $50 billion or more.11 In this regard, the proposed standards would apply to subsidiaries of depository institution holding companies (other than depository institutions supervised by the OCC and FDIC) in view of the subsidiaries' potential to act as points of cyber vulnerability to the covered entities. The Board is also considering applying the standards to nonbank financial companies supervised by the Board pursuant to section 165 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act), which directs the Board to establish enhanced prudential standards, including overall risk management standards, for these entities.12 Similarly, the Board is considering applying the standards to financial market utilities designated by FSOC (designated FMUs) for which the Board is the Supervisory Agency pursuant to sections 805 and 810 of the Dodd-Frank Act; other FMIs over which the Board has primary (not backup) supervisory authority because the FMIs are members of the Federal Reserve System; and FMIs that are operated by the Federal Reserve Banks (collectively referred to as “Board-supervised FMIs”).13

10 12 U.S.C. 321, 1818, 1831p-1 (Board); 12 U.S.C. 1, 93a, 161, 481, 1463, 1464, 1818, 1831p-1, 3901, 3909 (OCC); 12 U.S.C. 1818, 1819, 1831p-1 (FDIC).

11 12 U.S.C. 1467a(g), 5365.

12 12 U.S.C. 5365.

13 12 U.S.C. 5464(a), 5469; 12 U.S.C. 330, 1818, 1831a; 12 U.S.C. 248(j).

The OCC is considering applying the standards to any national bank, federal savings association (and any subsidiaries thereof), or federal branch of a foreign bank that is a subsidiary of a bank holding company or savings and loan holding company with total consolidated assets of $50 billion or more, or any national bank, federal savings association, or federal branch of a foreign bank that has total consolidated assets of $50 billion or more that does not have a parent holding company. The Board is considering applying the standards to any state member bank (and any subsidiaries thereof) that is a subsidiary of a bank holding company with total consolidated assets of $50 billion or more, and to any state member bank that has total consolidated assets of $50 billion or more that is not a subsidiary of a bank holding company. The FDIC is considering applying the standards to any state nonmember bank or state savings association (and any subsidiaries thereof) that is a subsidiary of a bank holding company or savings and loan holding company with total consolidated assets of $50 billion or more. Additionally, the FDIC is considering applying the standards to any state nonmember bank or state savings association that has total consolidated assets of $50 billion or more that does not have a parent holding company.

As noted, the agencies are considering whether to apply the standards to third-party service providers with respect to services provided to depository institutions and their affiliates that are covered entities (covered services). This would ensure consistent, direct application of the standards regardless of whether a depository institution or its affiliate conducted the operation itself, or whether it engaged a third-party service provider to conduct the operation. Direct application of the standards to these service providers could have potential benefits, including facilitating supervisory action in the event that a covered service was not meeting a proposed standard and establishing an obligation for meeting the standard on the depository institution or its affiliate, as well as on the third-party provider of the covered service. The Board also is considering requiring nonbank financial companies and Board-supervised FMIs to verify that any services the nonbank financial company or Board-supervised FMI receives from third parties are subject to the same standards that would apply if the services were being conducted by the nonbank financial company or Board-supervised FMI itself.

Other financial entities, including community banks that are not covered entities, would continue to be subject to existing guidance, standards, and examinations related to the provision of banking services by third parties.

Questions on the Scope of Application

1. How should the agencies consider broadening or narrowing the scope of entities to which the proposed standards would apply? What, if any, alternative size thresholds or measures of risk to the safety and soundness of the financial sector and the U.S. economy should the agencies consider in determining the scope of application of the standards? For example, should “covered entity” be defined according to the number of connections an entity (including its service providers) has to other entities in the financial sector, rather than asset size? If so, how should the agencies define “connections” for this purpose?

2. What are the costs and benefits of applying the standards to covered entities on an enterprise-wide basis? If the agencies were to consider exempting certain subsidiaries within a covered entity from the standards, what criteria should be used to assess any such exemptions? What safeguards should the agencies require from a subsidiary seeking to be exempted from the standards to ensure that an exempted subsidiary does not expose the covered entity to material cyber risk?

3. What, if any, special considerations should be made regarding application of the standards to savings and loan holding companies that engage significantly in insurance or commercial activities?

4. What are the most effective ways to ensure that services provided by third-party service providers to covered entities are performed in such a manner as to minimize cyber risk? What are the advantages and disadvantages of applying the standards to services by requiring covered entities to maintain appropriate service agreements or otherwise receive services only from third-party service providers that meet the standards with regard to the services provided, rather than applying the requirements directly to third-party service providers?

5. What are the advantages and disadvantages of applying the standards directly to service providers to covered entities? What challenges would such an approach pose?

6. What factors are most important in determining an appropriate balance between protecting the safety and soundness of the financial sector through the possible application of the standards and the implementation burden and costs associated with implementing the standards?

IV. Sector-Critical Systems

The financial sector operates through a network of interrelated markets and financial participants. As a result, a technology failure or cyber-attack at one covered entity could have wide-ranging effects on the safety and soundness of other financial entities, both within and outside the United States. While this interconnectedness warrants comprehensive cyber risk management by all financial market participants, it is especially important in the case of covered entities with sector-critical systems.

Thus, the agencies are considering establishing a two-tiered approach, with the enhanced standards applying to all systems of covered entities, and an additional, higher set of expectations, referred to in the ANPR as “sector-critical standards,” applying to those systems of covered entities that are critical to the financial sector.

As discussed below in the ANPR, the agencies are proposing sector-critical standards in four of the five categories of standards that would require covered entities with sector-critical systems to substantially mitigate the risk of a disruption due to a cyber event to their sector-critical systems.

Previously in the Sound Practices Paper, the Board and the OCC, together with the Securities and Exchange Commission, introduced definitions of “critical financial markets” and “firms that play significant roles in critical financial markets,” which emphasized the need to protect the most critical elements of the financial system from serious new risks posed in the post-September 11 environment. In the Sound Practices Paper, “critical financial markets” are defined as the markets for federal funds, foreign exchange, and commercial paper; U.S. Government and agency securities; and corporate debt and equity securities. The Sound Practices Paper further provides: “firms that play significant roles in critical financial markets are those that participate (on behalf of themselves or their customers) with sufficient market share in one or more critical financial markets such that their failure to settle their own or their customers' material pending transactions by the end of the business day could present systemic risk. While there are different ways to gauge the significance of such firms in critical markets, as a guideline, the agencies consider a firm significant in a particular critical market if it consistently clears or settles at least five percent of the value of transactions in that critical market.”

While the scope of the Sound Practices Paper was limited to the resumption of clearance and settlement activities in wholesale financial markets, the definitions presented in the Sound Practices Paper provide a starting point for identifying systems (that is, sector-critical systems) that should be subject to the more stringent, sector-critical standards. Thus, consistent with the Sound Practices Paper, the agencies are considering whether systems that support the clearing or settlement of at least five percent of the value of transactions (on a consistent basis) in one or more of the markets for federal funds, foreign exchange, commercial paper, U.S. Government and agency securities, and corporate debt and equity securities, should be considered sector-critical systems for the purpose of the sector-critical standards. The agencies also are considering whether systems that support the clearing or settlement of at least five percent of the value of transactions (on a consistent basis) in other markets (for example, exchange-traded and over-the-counter derivatives), or that support the maintenance of a significant share (for example, five percent) of the total U.S. deposits or balances due from other depository institutions in the United States, should be considered sector-critical systems.

Because a cyber event may impact the safety and soundness of multiple financial participants and create systemic risk beyond these specific markets, the agencies are considering additional factors to identify sector-critical systems, such as substitutability and interconnectedness. Systems that provide key functionality to the financial sector for which alternatives are limited or nonexistent, or would take excessive time to implement (for example, due to incompatibility) also could have a material impact on financial stability if significantly disrupted. Systems that act as key nodes to the financial sector due to their extensive interconnectedness to other financial entities could have a material impact on financial stability if significantly disrupted.

Consistent with the approach to other services, any services provided by third parties that support a covered entity's sector-critical systems would be subject to the same sector-critical standards.

Questions on Sector-Critical Systems

7. Do covered entities currently have access to sufficient information to determine whether any of their systems would be considered sector-critical systems for the purpose of the standards? If not, what additional information would be necessary for an entity to identify whether it has one or more sector-critical systems for the purposes of the standards?

8. What are the advantages and disadvantages of requiring covered entities to identify and report to the agencies their systems that support operations and meet the applicable thresholds to be considered sector-critical systems? Alternatively, what are the advantages and disadvantages of having the agencies develop a process to identify the systems of covered entities that support operations and meet the applicable thresholds to be considered sector-critical systems and to notify covered entities which of their systems would be subject to the sector-critical standards?

9. What thresholds for transaction value in one or more critical financial markets should the agencies consider for identifying sector-critical systems? Similarly, what, if any, additional thresholds should the agencies consider for identifying sector-critical systems that could have a material impact on financial stability if disrupted? For example, how should the agencies identify systems that provide functionality to the financial sector and for which alternatives are limited, nonexistent, or would take excessive time to implement? How should such factors be weighted? Commenters are encouraged to provide quantitative as well as qualitative support and analysis for proposed alternative methodologies, thresholds and/or factors.

10. What are the advantages and disadvantages of determining that a covered entity which holds a substantial amount of U.S. deposits and/or balances due from other depository institutions in the United States plays a significant role in a critical financial market? At what level of activity should a covered entity's systems related to holding U.S. deposits and/or balances due from other depository institutions in the United States be determined to be critical to the sector?

11. What factors should the agencies consider in a measure of interconnectedness resulting in a system being determined as critical to the financial sector, and how should such factors be weighted? Commenters are asked to provide quantitative as well as qualitative support and analysis for proposed alternative methodologies, thresholds and/or factors.

12. In some cases, entities, such as smaller banking organizations, may provide services considered sector-critical services either directly to the financial sector or through covered entities. What criteria should the agencies use to evaluate whether a financial entity that would not otherwise be subject to the enhanced standards should be subject to the sector-critical standards? How should the agencies weigh the costs of imposing the sector-critical standards to such smaller banking organizations against the potential benefits to the financial system?

V. Enhanced Cyber Risk Management Standards

As noted, the agencies are considering enhanced cyber risk management standards for covered entities to increase the entities' operational resilience and reduce the potential impact on the financial system as a result of, for example, a cyber-attack at a firm or the failure to implement appropriate cyber risk management.

The enhanced standards would emphasize the need for covered entities to demonstrate effective cyber risk governance; continuously monitor and manage their cyber risk within the risk appetite and tolerance levels approved by their boards of directors; 14 establish and implement strategies for cyber resilience and business continuity in the event of a disruption; establish protocols for secure, immutable, transferable storage of critical records; and maintain continuing situational awareness of their operational status and cybersecurity posture on an enterprise-wide basis. The agencies are considering establishing a two-tiered approach, with the proposed enhanced standards applying to all systems of covered entities and an additional, higher set of expectations, or “sector-critical standards,” applying to those systems of covered entities that are critical to the financial sector. The “sector-critical standards” would require covered entities to substantially mitigate the risk of a disruption due to a cyber event to their sector-critical systems.

14 With regard to providers of services, depending on the size and structure of the organization and the relative size of the unit providing services to a depository institution, its subsidiaries or affiliates, it may be appropriate for some functions to be performed by business line executive management instead of the board of directors or a board committee of the organization. For these firms, “enterprise-wide,” for purposes of the ANPR, encompasses the governance processes, policies, procedures, and controls related to or impacting the performance of services by a third party for a depository institution, its subsidiaries, or affiliates.

As noted, the standards would be organized into five categories:

Category 1: Cyber risk governance;

Category 2: Cyber risk management;

Category 3: Internal dependency management;

Category 4: External dependency management; and

Category 5: Incident response, cyber resilience, and situational awareness.

The term “internal dependency” in this ANPR refers to the business assets (i.e., workforce, data, technology, and facilities) of a covered entity upon which such entity depends to deliver services, as well as the information flows and interconnections among those assets. The term “external dependency” refers to an entity's relationships with outside vendors, suppliers, customers, utilities (such as power and telecommunications), and other external organizations and service providers that the covered entity depends on to deliver services, as well as the information flows and interconnections between the entity and those external parties.

The categories are organized in this order to emphasize the core cyber risk governance and cyber risk management standards the agencies would expect a covered entity to develop to establish a foundation for making informed risk-based decisions in support of its business objectives. Standards in the internal dependency management, external dependency management, and incident response, cyber resilience, and situational awareness categories are designed to work together and to be mutually reinforcing.

In the discussion of the individual enhanced standards that follows, a reference to application of the enhanced standards to covered entities is intended to include application of the enhanced standards to services provided to the covered entities, unless otherwise specified. The proposed standards for covered entities are described first; additional proposed standards for sector-critical systems then are listed separately.

Category 1—Cyber Risk Governance

A key aspect of cyber risk governance is developing and maintaining a formal cyber risk management strategy, as well as a supporting framework of policies and procedures to implement the strategy, that is integrated into the overall strategic plans and risk governance structures of covered entities. Therefore, the agencies are considering standards under the cyber risk governance category that would be similar to the governance standards generally expected for large, complex financial organizations.15 For example, the standards would provide that the board of directors, or an appropriate board committee,16 of a covered entity must be responsible for approving the entity's cyber risk management strategy and holding senior management accountable for establishing and implementing appropriate policies consistent with the strategy.

15 For OCC-regulated covered entities, see 12 CFR part 30 Appendix D. An OCC-regulated covered entity would be expected to incorporate its cyber risk management strategy and framework into its overall risk management framework required pursuant to the “OCC Guidelines Establishing Heightened Standards for Certain Large Insured National Banks, Insured Federal Savings Associations, and Insured Federal Branches” set forth at 12 CFR part 30 Appendix D. These OCC guidelines establish minimum standards for the design and implementation of a risk governance framework for large insured national banks, insured federal savings associations, and insured federal branches of foreign banks. Among other items, the OCC guidelines state that the board of directors of a covered bank should require management to establish and implement an effective framework that complies with the guidelines and approve any significant changes to the framework; the board should actively oversee a covered bank's risk-taking activities and hold management accountable for adhering to the framework; and each covered bank should have a comprehensive written statement that articulates the bank's risk appetite and serves as a basis for the framework (i.e., a risk appetite statement). The OCC guidelines set forth roles and responsibilities for front line units, independent risk management, and internal audit. A Board-regulated covered entity would be expected to incorporate its cyber risk management strategy and framework into its overall corporate strategy and the institutional risk appetite maintained by the entity's board of directors. See SR letter 12-17, “Consolidated Supervision Framework for Large Financial Institutions,” which outlines the general supervisory expectation that large bank holding companies and nonbank financial companies maintain a clearly articulated corporate strategy and institutional risk appetite; see also 12 CFR part 252, subparts D and O, which establishes risk management requirements for certain large bank holding companies and nonbank financial companies.

16 In the discussion of the enhanced standards that follows, a reference to the board of directors is intended to include the board of directors or an appropriate board committee.

Specifically, the agencies are considering, as an enhanced standard in this category, a requirement that covered entities develop a written, board-approved, enterprise-wide cyber risk management strategy that is incorporated into the overall business strategy and risk management of the firm.17 The strategy would articulate how the entity intends to address its inherent cyber risk (that is, its cyber risk before mitigating controls or other factors are taken into consideration) and how the entity would maintain an acceptable level of residual cyber risk (that is, its remaining cyber risk after mitigating controls and other factors have been taken into consideration) and maintain resilience on an ongoing basis.

17 For Board-regulated covered entities, this would be part of the larger global risk management framework that is required by 12 CFR 252.33.

A covered entity also would be required to establish cyber risk tolerances consistent with the firm's risk appetite and strategy, and manage cyber risk appropriate to the nature of the operations of the firm. Thus, as part of the enhanced standard in this category, the agencies are considering requiring the entity's board of directors to review and approve the enterprise-wide cyber risk appetite and tolerances of the covered entity. The enhanced standard also would provide that a covered entity must reduce its residual cyber risk to the appropriate level approved by the board of directors.

Covered entities would need to be able to identify and assess those activities and exposures that present cyber risk, then determine ways to aggregate them to assess the entity's residual cyber risk. This is important because cyber risk has the potential to produce losses large enough to threaten an entity's financial health, its reputation, or its ability to maintain core operations if faced with a material cyber event.

The board of directors of a covered entity would oversee and hold senior management accountable for implementing the entity's cyber risk management framework. In this regard, the agencies are considering requiring the board of directors to have adequate expertise in cybersecurity or to maintain access to resources or staff with such expertise. Consistent with existing agency expectations, the enhanced standards would require the board of directors to have and maintain the ability to provide credible challenge to management in matters related to cybersecurity and the evaluation of cyber risks and resilience.

The agencies also are considering requiring senior leaders with responsibility for cyber risk oversight to be independent of business line management. In this regard, these senior leaders would need to have direct, independent access to the board of directors and would independently inform the board of directors on an ongoing basis of the firm's cyber risk exposure and risk management practices, including known and emerging issues and trends.

A covered entity would be required to establish an enterprise-wide cyber risk management framework that would include policies and reporting structures to support and implement the entity's cyber risk management strategy. The entity would be required to include in its framework delineated cyber risk management and oversight responsibilities for the organization, including reporting structures and expectations for independent risk management, internal control, and internal audit personnel; established mechanisms for evaluating whether the organization has sufficient resources to address the cyber risks facing the organization; and established policies for addressing any resource shortfalls or knowledge gaps. The entity also would be required to include in its cyber risk management framework mechanisms for identifying and responding to cyber incidents and threats, as well as procedures for testing the effectiveness of the entity's cybersecurity protocols and updating them as the threat landscape evolves.

Questions on Cyber Risk Governance

13. How would a covered entity determine that it is managing cyber risk consistent with its stated risk appetite and tolerances? What other implementation challenges does managing cyber risk consistent with a covered entity's risk appetite and tolerances present?

14. What are the incremental costs and benefits of establishing the contemplated standards for the roles, responsibilities, and adequate cybersecurity expertise (or access to adequate cybersecurity expertise) of the board of directors? To what extent do covered entities already have governance structures in place that are broadly consistent with the proposed cyber risk governance standards?

Category 2—Cyber Risk Management

In general, the enhanced standards would require covered entities, to the greatest extent possible and consistent with their organizational structure, to integrate cyber risk management into the responsibilities of at least three independent functions (such as the three lines of defense risk-management model) with appropriate checks and balances. This would allow covered entities to more accurately and effectively identify, monitor, measure, manage, and report on cyber risk.

Business Units

The agencies are considering requiring units responsible for the day-to-day business functions of a covered entity to assess, on an ongoing basis, the cyber risks associated with the activities of the business unit. Business units also would need to ensure that information regarding those risks is shared with senior management, including the chief executive officer (CEO), as appropriate, in a timely manner so that senior management can address and respond to emerging cyber risks and cyber incidents as they develop.

As part of this proposed enhanced standard, business units would be required to adhere to procedures and processes necessary to comply with the covered entity's cyber risk management framework. Such procedures and processes would be designed to ensure that the applicable business unit's cyber risk is effectively identified, measured, monitored, and controlled, consistent with the covered entity's risk appetite and tolerances. Business units would assess the cyber risks and potential vulnerabilities associated with every business asset (that is, their workforce, data, technology, and facilities), service, and IT connection point for the respective unit, and update these assessments as threats, technology, and processes evolve. To this end, the covered entity would be expected to ensure that business units maintain, or have access to, resources and staff with the skill sets needed to comply with the unit's cybersecurity responsibilities.

Independent Risk Management

The agencies are considering a requirement that covered entities incorporate enterprise-wide cyber risk management into the responsibilities of an independent risk management function. This function would report to the covered entity's chief risk officer and board of directors, as appropriate, regarding implementation of the firm's cyber risk management framework throughout the organization. Independent risk management would be required to analyze cyber risk at the enterprise level to identify and ensure effective response to events with the potential to impact one or multiple operating units. Additionally, independent risk management would be continually required to assess the firm's overall exposure to cyber risk and promptly notify the CEO and board of directors, as appropriate, when its assessment of a particular cyber risk differs from that of a business unit, as well as of any instances when a unit of the covered entity has exceeded the entity's established cyber risk tolerances.

On a continuous basis, independent risk management would be required to identify, measure, and monitor cyber risk across the enterprise, and to determine whether cyber risk controls are appropriately in place across the enterprise consistent with the entity's established risk appetite and tolerances. On an ongoing basis, the independent risk management function would be required to identify and assess the covered entity's material aggregate risks and determine whether actions need to be taken to strengthen risk management or reduce risk given changes in the covered entity's risk profile or other conditions, placing particular emphasis on sector-critical systems.

Additionally, the agencies are considering requiring covered entities to assess the completeness, effectiveness, and timeliness with which they reduce the aggregate residual cyber risk of their systems to the appropriate, board-of-directors approved level. The Board is considering requiring covered entities, at the holding company level, to measure (quantitatively) the completeness, effectiveness, and timeliness with which they reduce the aggregate residual cyber risk of their systems to the appropriate, board-of-directors approved level. As noted, this is important because cyber risk has the potential to produce losses large enough to threaten an entity's financial health, its reputation, or its ability to maintain core operations if faced with a material cyber event.

Therefore, the independent risk management function would be required to establish and maintain an up-to-date understanding of the structure of a covered entity's cybersecurity programs and supporting processes and systems, as well as their relationships to the evolving cyber threat landscape.

To satisfy these requirements, it is essential that a covered entity's independent risk management function have and maintain sufficient independence, stature, authority, resources, and access to the board of directors to ensure that the operations of the entity are consistent with the cyber risk management framework. The reporting lines must be clear and separate from those for other operations and business units.

Audit Function

Audit evaluates the effectiveness of risk management, internal controls, and governance processes, among other things, and advises management and the board of directors on whether a covered entity's policies and procedures are adequate to keep up with emerging risks and industry regulations. As such, audit plays an important role in risk management, internal control, and corporate governance.

Consistent with a strong overall governance process, the agencies consider cyber risk and cyber risk management as important to the internal audit function at covered entities. Therefore, the agencies are considering explicitly requiring the audit function to assess whether the cyber risk management framework of a covered entity complies with applicable laws and regulations and is appropriate for its size, complexity, interconnectedness, and risk profile.

Further, as part of this enhanced standard, audit would be required to incorporate an assessment of cyber risk management into the overall audit plan of the covered entity. The plan would be required to provide for an evaluation of the adequacy of compliance with the board-approved cyber risk management framework and cyber risk policies, procedures, and processes established by the firm's business units or independent risk management. Such an evaluation would be required to include the entire security lifecycle, including penetration testing and other vulnerability assessment activities as appropriate based on the size, complexity, scope of operations, and interconnectedness of the covered entity. The audit plan would be required to provide for an assessment of the business unit and independent risk management functions' capabilities to adapt as appropriate and remain in compliance with the covered entity's cyber risk management framework and within its stated risk appetite and tolerances.

Questions on Cyber Risk Management

15. The agencies seek comment on the appropriateness of requiring covered entities to regularly report data on identified cyber risks and vulnerabilities directly to the CEO and board of directors and, if warranted, the frequency with which such reports should be made to various levels of management. What policies do covered entities currently follow in reporting material cyber risks and vulnerabilities to the CEO and board of directors?

16. The agencies seek comment on requiring covered entities to organize themselves in a manner that is consistent with the contemplated enhanced standards for cyber risk management. Besides the approach outlined in the ANPR, what other approaches could ensure that entities are effectively identifying, monitoring, measuring, managing, and reporting on cyber risk?

Category 3—Internal Dependency Management

Standards within the internal dependency management category are intended to ensure that covered entities have effective capabilities in place to identify and manage cyber risks associated with their business assets (that is, their workforce, data, technology, and facilities) throughout their lifespans. These risks may arise from a wide range of sources, including insider threats, data transmission errors, or the use of legacy systems acquired through a merger.

A key aspect of the internal dependency management category is ensuring that covered entities continually assess and improve, as necessary, their effectiveness in reducing the cyber risks associated with internal dependencies on an enterprise-wide basis. As part of the overall cyber risk management strategy, as discussed in the cyber risk governance section of this ANPR, the agencies are considering a requirement that a covered entity integrate an internal dependency management strategy into the entity's overall strategic risk management plan. The strategy would guide and inform measures taken to reduce cyber risks associated with a covered entity's internal dependencies. The internal dependency management strategy would be designed to ensure that: Roles and responsibilities for internal dependency management are well defined; policies, standards, and procedures to identify and manage cyber risks associated with internal assets, including those connected to or supporting sector-critical systems, are established and regularly updated throughout those assets' lifespans; appropriate oversight is in place to monitor effectiveness in reducing cyber risks associated with internal dependencies; and appropriate compliance mechanisms are in place.

Another key aspect of the internal dependency management category is having current and complete awareness of all internal assets and business functions that support a firm's cyber risk management strategy. The agencies are considering a requirement that covered entities maintain an inventory of all business assets on an enterprise-wide basis prioritized according to the assets' criticality to the business functions they support, the firm's mission and the financial sector. Thus, covered entities would be required to maintain a current and complete listing of all internal assets and business functions, including mappings to other assets and other business functions, information flows, and interconnections. Covered entities would track connections among assets and cyber risk levels throughout the life cycles of the assets and support relevant data collection and analysis across the organization. This would contribute to establishing and implementing mechanisms to prioritize monitoring, incident response, and recovery of systems critical to the entity and to the financial sector. A covered entity's tracking capability would need to enable timely notification of internal cyber risk management issues to designated internal stakeholders. In addition, covered entities would support the reduction of the cyber risk exposure of business assets to the enterprise and the sector until the board-approved risk appetite and tolerances are achieved; and support timely responses to cyber threats to, and vulnerabilities of, the enterprise and the financial sector.

Another key aspect within the internal dependency management category is establishing and applying appropriate controls to address the inherent cyber risk of a covered entity's assets. The agencies are considering a requirement that covered entities establish and apply appropriate controls to address the inherent cyber risk of their assets (taking into account the prioritization of the entity's business assets and the cyber risks they pose to the entity) by:

• Assessing the cyber risk of assets and their operating environments prior to deployment;

• continually applying controls and monitoring assets and their operating environments (including deviations from baseline cybersecurity configurations) over the lifecycle of the assets; and

• assessing relevant cyber risks to the assets (including insider threats to systems and data) and mitigating identified deviations, granted exceptions and known violations to internal dependency cyber risk management policies, standards, and procedures.

As part of this enhanced standard, the agencies are considering requiring covered entities to continually apply appropriate controls to reduce the cyber risk of business assets to the enterprise and the financial sector to the board-approved level. The agencies are also considering a requirement that covered entities periodically conduct tests of back-ups to business assets to achieve resilience.

Category 4—External Dependency Management

As noted, the term “external dependencies” refers to an entity's relationships with outside vendors, suppliers, customers, utilities, and other external organizations and service providers that the entity depends on to deliver services, as well as the information flows and interconnections between the entity and those external parties. In addition, the external dependency management category includes the management of interconnection risks associated with non-critical external parties that maintain trusted connections to important systems. Standards within the external dependency management category are intended to ensure that covered entities have effective capabilities in place to identify and manage cyber risks associated with their external dependencies and interconnection risks throughout these relationships.

A key aspect of the external dependency management category is ensuring that covered entities continually assess and improve, as necessary, their effectiveness in reducing the cyber risks associated with external dependencies and interconnection risks enterprise-wide. As part of the overall cyber risk management strategy, as discussed in the cyber risk governance section of this ANPR, the agencies are considering a requirement that a covered entity integrate an external dependency management strategy into the entity's overall strategic risk management plan to address and reduce cyber risks associated with external dependencies and interconnection risks. This external dependency management strategy would ensure that roles and responsibilities for external dependency management are well defined; policies, standards, and procedures for external dependency management throughout the lifespan of the relationship (for example, due diligence, contracting and sub-contracting, onboarding, ongoing monitoring, change management, off boarding) are established and regularly updated; appropriate metrics are in place to measure effectiveness in reducing cyber risks associated with external dependencies; and appropriate compliance mechanisms are in place.

As part of an external dependency management strategy, the agencies are considering a requirement that covered entities establish effective policies, plans, and procedures to identify and manage real-time cyber risks associated with external dependencies, particularly those connected to or supporting sector-critical systems and operations, throughout their lifespans.

Another key aspect of the external dependency management category is having the ability to monitor in real time all external dependencies and trusted connections that support a covered entity's cyber risk management strategy. The agencies are considering a requirement that covered entities have a current, accurate, and complete awareness of, and prioritize, all external dependencies and trusted connections enterprise-wide based on their criticality to the business functions they support, the firm's mission, and the financial sector. Thus, covered entities would be able to generate and maintain a current, accurate, and complete listing of all external dependencies and business functions, including mappings to supported assets and business functions. Covered entities would be required to prioritize monitoring, incident response, and recovery of systems critical to the enterprise and the financial sector; support the continued reduction of the cyber risk exposure of external dependencies to the enterprise and the sector until the board-approved cyber risk appetite and tolerances are achieved; support timely responses to cyber risks to the enterprise and the sector; monitor the universe of external dependencies that connect to assets supporting systems critical to the enterprise and the sector; support relevant data collection and analysis across the organization; and track connections among external dependencies, organizational assets, and cyber risk levels throughout their lifespans. A covered entity's tracking capability would enable timely notification of cyber risk management issues to designated stakeholders.

Another key aspect within the external dependency management category is establishing and applying appropriate controls to address the cyber risk presented by each external partner throughout the lifespan of the relationship. The agencies are considering a requirement that covered entities analyze and address the cyber risks that emerge from reviews of their external relationships, and identify and periodically test alternative solutions in case an external partner fails to perform as expected. As part of this requirement and in order to address the rapidly changing and complex threat landscape, the agencies are considering a requirement that covered entities continually apply and evaluate appropriate controls to reduce the cyber risk of external dependencies to the enterprise and the sector.

Questions on Internal and External Dependency Management

17. The agencies request comment on the comprehensiveness and effectiveness of the proposed standards for internal and external dependency management in achieving the agencies' objective of increasing the resilience of covered entities, third-party service providers to covered entities, and the financial sector.

18. What challenges and burdens would covered entities encounter in maintaining an internal and external dependency management strategy consistent with that described by the agencies?

19. How do the proposed internal and external dependency management standards compare with processes already in place at banking organizations?

20. What other approaches could the agencies use to evaluate a covered entity's internal and external dependency management strategies? Please be specific as to each approach.

21. How would the proposed standards for internal and external dependency management impact a covered entity's use of a third-party service provider?

22. What additional issues should the agencies consider related to internal and external dependency management and the covered entities' use of third-party service providers? How should those issues be evaluated by the agencies? Please be specific.

Category 5—Incident Response, Cyber Resilience, and Situational Awareness

Standards within the incident response, cyber resilience, and situational awareness category would be designed to ensure that covered entities plan for, respond to, contain, and rapidly recover from disruptions caused by cyber incidents, thereby strengthening their cyber resilience as well as that of the financial sector. Covered entities would be required to be capable of operating critical business functions in the face of cyber-attacks and continuously enhance their cyber resilience. In addition, covered entities would be required to establish processes designed to maintain effective situational awareness capabilities to reliably predict, analyze, and respond to changes in the operating environment.

The agencies are considering a requirement that covered entities establish and maintain effective incident response and cyber resilience governance, strategies, and capacities that enable the organizations to anticipate, withstand, contain, and rapidly recover from a disruption caused by a significant cyber event. The agencies are considering a requirement that covered entities establish and implement plans to identify and mitigate the cyber risks they pose through interconnectedness to sector partners and external stakeholders to prevent cyber contagion. In addition, the agencies are considering a requirement that covered entities establish and maintain enterprise-wide cyber resilience and incident response programs, based on their enterprise-wide cyber risk management strategies and supported by appropriate policies, procedures, governance, staffing, and independent review. These cyber resilience and incident response programs would be required to include effective escalation protocols linked to organizational decision levels, cyber contagion containment procedures, communication strategies, and processes to incorporate lessons learned back into the program. Cyber resilience strategies and exercises would be required to consider wide-scale recovery scenarios and be designed to achieve institutional resilience, support the achievement of financial sector-wide resilience, and minimize risks to or from interconnected parties.

The IT Handbook calls for examiners to determine whether covered entities have established plans to address recovery and resilience strategies for cyber-attacks that may disrupt access, corrupt data, or destroy data or systems.18 In addition to establishing recovery time objectives (RTOs), recovery and resilience strategies should address the potential for malware or corrupted data to replicate or propagate through connected systems or high availability solutions. For cyber-attacks that may potentially corrupt or destroy critical data, recovery strategies should be designed to achieve recovery point objectives based on the criticality of the data necessary to keep the institution operational.

18 FFIEC IT Examination Handbook, Business Continuity Planning, Appendix J.

In this category, the agencies also are considering a requirement that covered entities establish and implement strategies to meet the entity's obligations for performing core business functions in the event of a disruption, including the potential for multiple concurrent or widespread interruptions and cyber-attacks on multiple elements of interconnected critical infrastructure, such as energy and telecommunications.

The preservation of critical records in the event of a large-scale or significant cyber event is essential to maintaining confidence in the banking system and to facilitating resolution or recovery processes after a catastrophic event. The agencies are therefore considering requiring covered entities to establish protocols for secure, immutable, off-line storage of critical records, including financial records of the institution, loan data, asset management account information, and daily deposit account records, including balances and ownership details, formatted using certain defined data standards to allow for restoration of these records by another financial institution, service provider, or the FDIC in the event of resolution.

Transition plans are essential in the event a service is terminated or an entity cannot meet its obligations. Thus, the agencies are considering a requirement that covered entities establish plans and mechanisms to transfer business, where feasible, to another entity or service provider with minimal disruption and within prescribed time frames if the original covered entity or service provider is unable to perform. As a result, if performance is not feasible and contractual termination/remediation provisions have been exercised, client data would be returned to the original covered entity or service provider in a method that is transferable to an alternate entity or service provider with minimal disruption to the operations of the covered entity.

Testing the cyber resilience of operations and services helps to identify potential threats to the ongoing performance of the operation or service. A prolonged disruption of a significant operation could generate systemic risk. The agencies are considering a requirement that covered entities conduct specific testing that addresses disruptive, destructive, corruptive, or any other cyber event that could affect their ability to service clients; and significant downtime that would threaten the business resilience of clients. In addition, the agencies are considering a requirement that the testing address external interdependencies, such as connectivity to markets, payment systems, clearing entities, messaging services, and other critical service providers or partners; that the testing of cyber resilience be undertaken jointly where critical dependencies exist; and that the testing validate the effectiveness of internal and external communication protocols with stakeholders.

A key element of situational awareness is the timely identification, analysis, and tracking of data about the state of, and potential cyber risks to, the organization. The agencies are considering a requirement that covered entities maintain an ongoing situational awareness of their operational status and cybersecurity posture to pre-empt cyber events and respond rapidly to them. Covered entities also would be required to establish and maintain threat profiles 19 for identified threats to the firm; establish and maintain threat modeling 20 capabilities; gather actionable cyber threat intelligence and perform security analytics on an ongoing basis; and establish and maintain capabilities for ongoing vulnerability management.

19 Threat profiles include information about critical assets, threat actors, and details about how threat actors might attempt to compromise those critical assets.

20 Threat modeling refers to using a structured process to identify how critical assets might be compromised by a threat actor and why, what level of protection is needed for those critical assets, and what the impact would be if that protection failed.

Questions on Incident Response, Cyber Resilience, and Situational Awareness

23. How well do the proposed standards for incident response, cyber resilience, and situational awareness address the safety and soundness of individual financial institutions and potential systemic cyber risk to the financial sector, including with respect to the testing strategies and approaches? How could they be improved?

24. What is the extent to which it would be operationally and/or commercially feasible to comply with requirements to use certain defined data standards in order to increase the substitutability of third-party relationships to reduce recovery times for systems impacted by a significant cyber event?

25. How do covered entities currently evaluate their incident response and cyber resilience capabilities? What factors should the agencies consider essential in considering a covered entity's incident response and cyber response capabilities?

26. How do covered entities currently evaluate their situational awareness capabilities? What factors should the agencies consider essential in considering a covered entity's situational awareness capabilities?

27. What other factors should be included within the incident response, cyber resilience, and situational awareness category?

28. What additional requirements should the agencies consider to improve the resilience or situational awareness of a covered entity or the ability of a covered entity to respond to a cyber-attack?

VI. Standards for Sector-Critical Systems of Covered Entities

As noted, the agencies are considering two tiers of standards, with more stringent standards to apply to systems of covered entities that are critical to the functioning of the financial sector.

In particular, the agencies are considering a requirement that covered entities minimize the residual cyber risk of sector-critical systems by implementing the most effective, commercially available controls. Minimizing residual cyber risk means substantially mitigating the risk of a disruption or failure due to a cyber event.

As a second sector-critical standard, the agencies are considering requiring covered entities to establish an RTO of two hours for their sector-critical systems, validated by testing, to recover from a disruptive, corruptive, or destructive cyber event. Testing programs would include a range of scenarios, including severe but plausible scenarios, and would challenge matters such as communications protocols, governance arrangements, and resumption and recovery practices. As stated in the Sound Practices Paper, an RTO is the “amount of time in which a firm aims to recover clearing and settlement activities after a wide-scale disruption with the overall goal of completing material pending transactions on the scheduled settlement date.” The scope of application of this proposed sector-critical standard could go beyond the core clearing and settlement organizations discussed in the Sound Practices Paper to include other large, interconnected financial systems where a cyber-attack or disruption also could have a significant impact on the U.S. financial sector. With advances in technology and consistent with the two-hour RTO for core clearing and settlement activities in the Sound Practices Paper, the agencies are considering establishing a two-hour RTO for the sector-critical systems of covered entities.

Additionally, the Board is considering requiring Board-supervised covered entities, at the holding company level, to measure (quantitatively) their ability to reduce the aggregate residual cyber risk of their sector-critical systems and their ability to reduce such risk to a minimal level. Such measurement would take into account the risks associated with internal dependencies, external dependencies, and trusted connections with access to sector-critical systems.

Questions on Standards for Sector-Critical Systems of Covered Entities

29. The agencies request comment on the appropriateness and feasibility of establishing a two-hour RTO for all sector-critical systems. What would be the incremental costs to covered entities of moving toward a two-hour RTO objective for these systems?

30. What impact would a two-hour RTO have on covered entities' use of third-party service providers? What challenges or burdens would be presented by the requirement of a two-hour RTO for covered entities who rely on third-party service providers for their critical systems? How should the agencies weigh such costs against other costs associated with implementing the enhanced standards outlined in this ANPR?

31. How should the agencies implement the two-hour RTO objective? For example, would an extended implementation timeline help to mitigate costs, and if so, what timeline would be reasonable?

32. Should different RTOs be set for different types of operations and, if so, how? Should RTOs be expected to become more stringent over time as technology advances?

33. The Board requests comment on the benefits of requiring Board-supervised covered entities, at the holding company level, to measure the residual cyber risk of their sector-critical systems on a quantitative basis. How would this approach to measuring cyber risk compare with efforts already underway at holding companies to manage and measure their cyber risk? For example, what processes do holding companies already have in place to measure their residual cyber risk? What challenges and costs would holding companies face in measuring their residual cyber risk quantitatively? What are the benefits of requiring holding companies to reduce the residual risk of their sector-critical systems to a minimal level, taking into account the risks associated with internal and external dependencies connected to or supporting their sector-critical systems?

VII. Approach to Quantifying Cyber Risk

The agencies are seeking to develop a consistent, repeatable methodology to support the ongoing measurement of cyber risk within covered entities. Such a methodology could be a valuable tool for covered entities and their regulators to assess how well an entity is managing its aggregate cyber risk and mitigating the residual cyber risk of its sector-critical systems. At this time the agencies are not aware of any consistent methodologies to measure cyber risk across the financial sector using specific cyber risk management objectives. The agencies are interested in receiving comments on potential methodologies to quantify inherent and residual cyber risk and compare entities across the financial sector.

The agencies are familiar with different methodologies to measure cyber risk for the financial sector. Among others, these include existing methodologies like the FAIR Institute's Factor Analysis of Information Risk standard and Carnegie Mellon's Goal-Question-Indicator-Metric process. Building upon these and other methodologies, the agencies are considering how best to measure cyber risk in a consistent, repeatable manner.

Questions on Approach to Quantifying Cyber Risk Section

34. What current tools and practices, if any, do covered entities use to assess the cyber risks that their activities, systems and operations pose to other entities within the financial sector, and to assess the cyber risks that other entities' activities, systems and operations pose to them? How is such risk currently identified, measured, and monitored?

35. What other models, frameworks, or reference materials should the agencies review in considering how best to measure and monitor cyber risk?

36. What methodologies should the agencies consider for the purpose of measuring inherent and residual cyber risk quantitatively and qualitatively? What risk factors should agencies consider incorporating into the measurement of inherent risk? How should the risk factors be consistently measured and weighted?

VIII. Considerations for Implementation of the Enhanced Standards

The agencies are considering various regulatory approaches to establishing enhanced standards for covered entities. The approaches range from establishing the standards through a policy statement or guidance to imposing the standards through a detailed regulation. Under one approach, the agencies could propose the standards as a combination of a regulatory requirement to maintain a risk management framework for cyber risks along with a policy statement or guidance that describes minimum expectations for the framework, such as policies, procedures, and practices commensurate with the inherent cyber risk level of the covered entity. This approach would be similar to the approach that the agencies have taken in other areas of prudential supervision, such as the Interagency Guidelines Establishing Standards for Safety and Soundness and the Interagency Guidelines Establishing Information Security Standards. 21

21See 12 CFR part 208, App. D-1, D-2; 12 CFR part 225, App. F (Board); 12 CFR part 364, App. A, B (FDIC); 12 CFR part 30, App. A, B, and D (OCC).

Under a second approach, the agencies could propose regulations that impose specific cyber risk management standards. For example, the standards could require covered entities to establish a cybersecurity framework commensurate with the covered entity's structure, risk profile, complexity, activities, and size. Such standards would address the five categories of cyber risk management, discussed above, that the agencies consider key to a comprehensive cyber risk management program: (1) Cyber risk governance; (2) cyber risk management; (3) internal dependency management; (4) external dependency management; and (5) incident response, cyber resilience, and situational awareness. Within each category, a covered entity would be expected to establish and maintain policies, procedures, practices, controls, personnel and systems that address the applicable category, and to establish and maintain a corporate governance structure that implements the cyber risk management program on an enterprise-wide basis and along business line levels, monitors compliance with the program, and adjusts corporate practices to address the changes in risk presented by the firm's operations.

Under a third approach, the agencies could propose a regulatory framework that is more detailed than the second approach. As with the second approach, the regulation could contain standards for the five categories of cyber risk management. However, in contrast to the second approach, the regulation would include details on the specific objectives and practices a firm would be required to achieve in each area of concern in order to demonstrate that its cyber risk management program can adapt to changes in a firm's operations and to the evolving cyber environment.

In considering which option, or combination of options, to pursue to implement the standards, the agencies will consider whether the approach adopted ensures that the enhanced standards are clear, the additional effort required to implement the standards, whether the standards are sufficiently adaptable to address the changing cyber environment, and the potential costs and other burdens associated with implementing the standards.

Questions on Considerations for Implementation of the Enhanced Standards

37. What are the potential benefits or drawbacks associated with each of the options for implementing the standards discussed above?

38. What are the trade-offs, in terms of the potential costs and other burdens, among the three options discussed above? The agencies invite commenters to submit data about the trade-offs among the three options discussed above.

39. Which approach has the potential to most effectively implement the agencies' expectations for enhanced cyber risk management?

Dated: October 19, 2016. Thomas J. Curry, Comptroller of the Currency. By order of the Board of Governors of the Federal Reserve System, October 19, 2016. Robert deV. Frierson, Secretary of the Board. Dated at Washington, DC, this 19th day of October, 2016.

By order of the Board of Directors.

Federal Deposit Insurance Corporation. Federal Deposit Insurance Corporation by Robert E. Feldman, Executive Secretary.
[FR Doc. 2016-25871 Filed 10-25-16; 8:45 am] BILLING CODE 4810-33-P; 6210-01-P; 6714-01-P
FEDERAL DEPOSIT INSURANCE CORPORATION 12 CFR Parts 324, 329, and 382 RIN 3064-AE46 Restrictions on Qualified Financial Contracts of Certain FDIC-Supervised Institutions; Revisions to the Definition of Qualifying Master Netting Agreement and Related Definitions AGENCY:

Federal Deposit Insurance Corporation (FDIC).

ACTION:

Notice of proposed rulemaking.

SUMMARY:

The FDIC is proposing to add a new part to its rules to improve the resolvability of systemically important U.S. banking organizations and systemically important foreign banking organizations and enhance the resilience and the safety and soundness of certain state savings associations and state-chartered banks that are not members of the Federal Reserve System (“state non-member banks” or “SNMBs”) for which the FDIC is the primary federal regulator (together, “FSIs” or “FDIC-supervised institutions”). Under this proposed rule, covered FSIs would be required to ensure that covered qualified financial contracts (QFCs) to which they are a party provide that any default rights and restrictions on the transfer of the QFCs are limited to the same extent as they would be under the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) and the Federal Deposit Insurance Act (FDI Act). In addition, covered FSIs would generally be prohibited from being party to QFCs that would allow a QFC counterparty to exercise default rights against the covered FSI based on the entry into a resolution proceeding under the FDI Act, or any other resolution proceeding of an affiliate of the covered FSI.

The proposal would also amend the definition of “qualifying master netting agreement” in the FDIC's capital and liquidity rules, and certain related terms in the FDIC's capital rules. These proposed amendments are intended to ensure that the regulatory capital and liquidity treatment of QFCs to which a covered FSI is party would not be affected by the proposed restrictions on such QFCs. The requirements of this proposed rule are substantively identical to those contained in the notice of proposed rulemaking issued by the Board of Governors of the Federal Reserve System (FRB) on May 3, 2016 (FRB NPRM) regarding “covered entities”, and the notice of proposed rulemaking issued by the Office of the Comptroller of the Currency (OCC) on August 19, 2016 (OCC NPRM), regarding “covered banks”.

DATES:

Comments must be received by December 12, 2016, except that comments on the Paperwork Reduction Act analysis in part VI of the SUPPLEMENTARY INFORMATION must be received on or before December 27, 2016.

ADDRESSES:

You may submit comments by any of the following methods:

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

Agency Web site: http://www.FDIC.gov/regulations/laws/federal/.

Mail: Robert E. Feldman, Executive Secretary, Attention: Comments, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.

Hand Delivered/Courier: The guard station at the rear of the 550 17th Street Building (located on F Street), on business days between 7:00 a.m. and 5:00 p.m.

Email: [email protected]

Instructions: Comments submitted must include “FDIC” and “RIN 3064-AE46” in the subject matter line. Comments received will be posted without change to: http://www.FDIC.gov/regulations/laws/federal/, including any personal information provided.

FOR FURTHER INFORMATION CONTACT:

Ryan Billingsley, Acting Associate Director, [email protected], Capital Markets Branch, Division of Risk Management and Supervision; Alexandra Steinberg Barrage, Senior Resolution Policy Specialist, Office of Complex Financial Institutions, [email protected]; David N. Wall, Assistant General Counsel, [email protected], Cristina Regojo, Counsel, [email protected], Phillip Sloan, Counsel, [email protected], Greg Feder, Counsel, [email protected], or Michael Phillips, Counsel, [email protected], Legal Division, Federal Deposit Insurance Corporation, 550 17th Street NW., Washington, DC 20429.

SUPPLEMENTARY INFORMATION:

Table of Contents I. Introduction A. Background B. Overview of the Proposal C. Consultation with U.S. Financial Regulators D. Overview of Statutory Authority and Purpose II. Proposed Restrictions on QFCs of GSIBs A. Covered FSIs B. Covered QFCs C. Definition of “Default Right” D. Required Contractual Provisions Related to the U.S. Special Resolution Regimes E. Prohibited Cross-Default Rights F. Process for Approval of Enhanced Creditor Protections III. Transition Periods IV. Expected Effects V. Revisions to Certain Definitions in the FDIC's Capital and Liquidity Rules VI. Regulatory Analysis A. Paperwork Reduction Act B. Regulatory Flexibility Act: Initial Regulatory Flexibility Analysis C. Riegle Community Development and Regulatory Improvement Act of 1994 D. Solicitation of Comments on the Use of Plain Language I. Introduction A. Background

This proposed rule addresses one of the ways the failure of a major financial firm could destabilize the financial system. The disorderly failure of a large, interconnected financial company could cause severe damage to the U.S. financial system and, ultimately, to the economy as a whole, as illustrated by the failure of Lehman Brothers in September 2008. Protecting the financial stability of the United States is a core objective of the Dodd-Frank Act,1 which Congress passed in response to the 2007-2009 financial crisis and the ensuing recession. One way the Dodd-Frank Act helps to protect the financial stability of the United States is by reducing the damage that such a company's failure would cause to the financial system if it were to occur. This strategy centers on measures designed to help ensure that a failed company's resolution proceeding—such as bankruptcy or the special resolution process created by the Dodd-Frank Act—would be more orderly, thereby helping to mitigate destabilizing effects on the rest of the financial system.2

1 The Dodd-Frank Act was enacted on July 21, 2010 (Pub. L. 111-203). According to its preamble, the Dodd-Frank Act is intended “[t]o promote the financial stability of the United States by improving accountability and transparency in the financial system, to end `too big to fail', [and] to protect the American taxpayer by ending bailouts.”

2 The Dodd-Frank Act itself pursues this goal through numerous provisions, including by requiring systemically important financial companies to develop resolution plans (also known as “living wills”) that lay out how they could be resolved in an orderly manner under bankruptcy if they were to fail and by creating a new back-up resolution regime, the Orderly Liquidation Authority, applicable to systemically important financial companies. 12 U.S.C. 5365(d), 5381-5394.

On May 3, 2016, the FRB issued a Notice of Proposed Rulemaking, the FRB NPRM, pursuant to section 165 of the Dodd-Frank Act.3 The FRB's proposed rule stated that it is intended as a further step to increase the resolvability of U.S. global systemically important banking organizations (GSIBs) 4 and global systemically important foreign banking organizations (foreign GSIBs) that operate in the United States (collectively, “covered entities”).5 Subsequent to the FRB NPRM, the OCC issued the OCC NPRM, which applies the same QFC requirements to “covered banks” within the OCC's jurisdiction.

3 The FRB received seventeen comment letters on the FRB NPRM during the comment period, which ended on August 5, 2016.

4 Under the GSIB surcharge rule's methodology, there are currently eight U.S. GSIBs: Bank of America Corporation, The Bank of New York Mellon Corporation, Citigroup Inc., Goldman Sachs Group, Inc., JPMorgan Chase & Co., Morgan Stanley Inc., State Street Corporation, and Wells Fargo & Company. See FRB NPRM, 81 FR 29169, 29175 (May 11, 2016). This list may change in the future in light of changes to the relevant attributes of the current U.S. GSIBs and of other large U.S. bank holding companies.

5See FRB NPRM at § 252.83(a) (defining “covered entity” to include: (1) A bank holding company that is identified as a global systemically important [bank holding company] pursuant to 12 CFR 217.402; (2) A subsidiary of a company identified in paragraph (a)(1) of [section 252.83(a)] (other than a subsidiary that is a covered bank); or (3) A U.S. subsidiary, U.S. branch, or U.S. agency of a global systemically important foreign banking organization (other than a U.S. subsidiary, U.S. branch, or U.S. agency that is a covered bank, section 2(h)(2) company or a DPC branch subsidiary)). In addition to excluding a “covered bank” from the definition of a “covered entity,” the FDIC expects that in its final rule, the FRB would also exclude “covered FSIs” from the NPRM's definition of a “covered entity.” 81 FR 29169 (May 11, 2016)

The FDIC is issuing this parallel proposed rule applicable to FSIs that are subsidiaries of a “covered entity” as defined in the FRB NPRM and to subsidiaries of such FSIs (collectively, “covered FSIs”). The policy objective of this proposal focuses on improving the orderly resolution of a GSIB by limiting disruptions to a failed GSIB through its FSI subsidiaries' financial contracts with other companies. The FRB NPRM, the OCC NPRM, and this proposal complement the ongoing work of the FRB and the FDIC on resolution planning requirements for GSIBs, and the FDIC intends this proposed rule to work in tandem with the FRB NPRM and the OCC NPRM.6

6 For additional background regarding the interconnectivity of the largest financial firms, see FRB NPRM, 81 FR 29175-29176 (May 11, 2016).

As discussed in Part I.D. below, the FDIC has a strong interest in preventing a disorderly termination of covered FSIs' QFCs upon a GSIB's entry into resolution proceedings. In fulfilling the FDIC's responsibilities as (i) the primary federal supervisor for SNMBs and state savings associations; 7 (ii) the insurer of deposits and manager of the Deposit Insurance Fund (DIF); and (iii) the resolution authority for all FDIC-insured institutions under the FDI Act and, if appointed by the Secretary of the Treasury, for large complex financial institutions under Title II of the Dodd-Frank Act, the FDIC's interests include ensuring that large complex financial institutions are resolvable in an orderly manner, and that FDIC-insured institutions operate safely and soundly.8

7 Although the FDIC is the insurer for all insured depository institutions in the United States, it is the primary federal supervisor only for state-chartered banks that are not members of the Federal Reserve System, state-chartered savings associations, and insured state-licensed branches of foreign banks. As of March 31, 2016, the FDIC had primary supervisory responsibility for 3,911 SNMBs and state-chartered savings associations.

8See https://www.fdic.gov/about/strategic/strategic/supervision.html.

The proposed rule specifically addresses QFCs, which are typically entered into by various operating entities in a GSIB group, including covered FSIs. These covered FSIs are affiliates of U.S. GSIBs or foreign GSIBs that have OTC derivatives exposure, making these entities interconnected with other large financial firms. The exercise of default rights against an otherwise healthy covered FSI resulting from the failure of its affiliate—e.g., its top-tier U.S. holding company—may cause it to weaken or fail. Accordingly, FDIC-supervised affiliates of U.S. or foreign GSIBs are exposed, through the interconnectedness of their QFCs and their affiliates' QFCs, to destabilizing effects if their counterparties or the counterparties of their affiliates exercise default rights upon the entry into resolution of the covered FSI itself or its GSIB affiliate.

These potentially destabilizing effects are best addressed by requiring all GSIB entities to amend their QFCs to include contractual provisions aimed at avoiding such destabilization. It is imperative that all entities within the GSIB group amend their QFCs in a similar way, thereby eliminating an incentive for counterparties to concentrate QFCs in entities subject to fewer restrictions. Therefore, the application of this proposed rule to the QFCs of covered FSIs is not only necessary for the safety and soundness of covered FSIs individually and collectively, but also to avoid potential destabilization of the overall banking system.

This proposed rule imposes substantively identical requirements contained in the FRB NPRM on covered FSIs. The FDIC consulted with the FRB and the OCC in developing this proposed rule, and intends to continue coordinating with the FRB and the OCC in developing the final rule.

Qualified financial contracts, default rights, and financial stability. Like the FRB NPRM, this proposal pertains to several important classes of financial transactions that are collectively known as QFCs.9 QFCs include swaps, other derivatives contracts, repurchase agreements (also known as “repos”) and reverse repos, and securities lending and borrowing agreements.10 GSIBs enter into QFCs for a variety of purposes, including to borrow money to finance their investments, to lend money, to manage risk, and to enable their clients and counterparties to hedge risks, make markets in securities and derivatives, and take positions in financial investments.

9 The proposal would adopt the definition of “qualified financial contract” set out in section 210(c)(8)(D) of the Dodd-Frank Act, 12 U.S.C. 5390(c)(8)(D). See proposed rule § 382.1.

10 The definition of “qualified financial contract” is broader than this list of examples, and the default rights discussed are not common to all types of QFCs.

QFCs play a role in economically valuable financial intermediation when markets are functioning normally. But they are also a major source of financial interconnectedness, which can pose a threat to financial stability in times of market stress. This proposal—along with the FRB NPRM and OCC NPRM—focuses on a context in which that threat is especially great: The failure of a GSIB that is party to large volumes of QFCs, likely including QFCs with counterparties that are themselves systemically important.

QFC continuity is important for the orderly resolution of a GSIB because it helps to ensure that the GSIB entities remain viable and to avoid instability caused by asset fire sales. Together, the FRB and FDIC have identified the exercise of certain default rights in financial contracts as a potential obstacle to orderly resolution in the context of resolution plans filed pursuant to section 165(d) of the Dodd-Frank Act,11 and have instructed systemically important firms to demonstrate that they are “amending, on an industry-wide and firm-specific basis, financial contracts to provide for a stay of certain early termination rights of external counterparties triggered by insolvency proceedings.” 12 More recently, in April 2016,13 the FRB and FDIC noted the important changes that have been made to the structure and operations of the largest financial firms, including the adherence by all U.S. GSIBs and their affiliates to the ISDA 2015 Universal Resolution Stay Protocol.14

11 12 U.S.C. 5365(d).

12 FRB and FDIC, “Agencies Provide Feedback on Second Round Resolution Plans of `First-Wave' Filers” (August 5, 2014), available at https://www.fdic.gov/news/news/press/2014/pr14067.html. See also FRB and FDIC, “Agencies Provide Feedback on Resolution Plans of Three Foreign Banking Organizations” (March 23, 2015), available at https://www.fdic.gov/news/news/press/2015/pr15027.html; FRB and FDIC, “Guidance for 2013 165(d) Annual Resolution Plan Submissions by Domestic Covered Companies that Submitted Initial Resolution Plans in 2012” 5-6 (April 15, 2013), available at https://www.fdic.gov/news/news/press/2013/pr13027.html.

13See https://www.fdic.gov/news/news/press/2016/pr16031a.pdf, at 13.

14 International Swaps and Derivatives Association, Inc., “ISDA 2015 Universal Resolution Stay Protocol” (November 4, 2015), available at http://assets.isda.org/media/ac6b533f-3/5a7c32f8-pdf.

Direct defaults and cross-defaults. Like the FRB NPRM and the OCC NPRM, this proposal focuses on two distinct scenarios in which a non-defaulting party to a QFC is commonly able to exercise default rights. These two scenarios involve a default that occurs when either the GSIB entity that is a direct party 15 to the QFC or an affiliate of that entity enters a resolution proceeding.16 The first scenario occurs when a GSIB entity that is itself a direct party to the QFC enters a resolution proceeding; this preamble refers to such a scenario as a “direct default” and refers to the default rights that arise from a direct default as “direct default rights.” The second scenario occurs when an affiliate of the GSIB entity that is a direct party to the QFC (such as the direct party's parent holding company) enters a resolution proceeding; this preamble refers to such a scenario as a “cross-default” and refers to default rights that arise from a cross-default as “cross-default rights.” A GSIB parent entity will often guarantee the derivatives transactions of its subsidiaries and those derivatives contracts could contain cross-default rights against a subsidiary of the GSIB that would be triggered by the bankruptcy filing of the GSIB parent entity even though the subsidiary continues to meet all of its financial obligations.

15 In general, a “direct party” refers to a party to a financial contract other than a credit enhancement (such as a guarantee). The definition of “direct party” and related definitions are discussed in more detail below on page 38.

16 This preamble uses phrases such as “entering a resolution proceeding” and “going into resolution” to encompass the concept of “becoming subject to a receivership, insolvency, liquidation, resolution, or similar proceeding.” These phrases refer to proceedings established by law to deal with a failed legal entity. In the context of the failure of a systemically important banking organization, the most relevant types of resolution proceeding include the following: For most U.S.-based legal entities, the bankruptcy process established by the U.S. Bankruptcy Code (Title 11, United States Code); for U.S. insured depository institutions, a receivership administered by the Federal Deposit Insurance Corporation (FDIC) under the FDI Act (12 U.S.C. 1821); for companies whose “resolution under otherwise applicable Federal or State law would have serious adverse effects on the financial stability of the United States,” the Dodd-Frank Act's Orderly Liquidation Authority (12 U.S.C. 5383(b)(2)); and, for entities based outside the United States, resolution proceedings created by foreign law.

Importantly, like the FRB NPRM and the OCC NPRM, this proposal does not affect all types of default rights, and, where it affects a default right, the proposal does so only temporarily for the purpose of allowing the relevant resolution authority to take action to continue to provide for continued performance on the QFC. Moreover, the proposal is concerned only with default rights that run against a GSIB entity—that is, direct default rights and cross-default rights that arise from the entry into resolution of a GSIB entity. The proposal would not affect default rights that a GSIB entity (or any other entity) may have against a counterparty that is not a GSIB entity. This limited scope is appropriate because, as described above, the risk posed to financial stability by the exercise of QFC default rights is greatest when the defaulting counterparty is a GSIB entity.

Resolution Strategies

Single-point-of-entry resolution. Cross-default rights are especially significant in the context of a GSIB failure because GSIBs typically enter into large volumes of QFCs through different entities controlled by the GSIB. For example, a U.S. GSIB is made up of a U.S. bank holding company and numerous operating subsidiaries that are owned, directly or indirectly, by the bank holding company. As stated in the FRB NPRM, from the standpoint of financial stability, the most important of these operating subsidiaries are generally a U.S. insured depository institution, a U.S. broker-dealer, or similar entities organized in other countries.

Many complex GSIBs have developed resolution strategies that rely on the single-point-of-entry (SPOE) resolution strategy. In an SPOE resolution of a GSIB, only a single legal entity—the GSIB's top-tier bank holding company—would enter a resolution proceeding. The effect of losses that led to the GSIB's failure would pass up from the operating subsidiaries that incurred the losses to the holding company and would then be imposed on the equity holders and unsecured creditors of the holding company through the resolution process. This strategy is designed to help ensure that the GSIB subsidiaries remain adequately capitalized, and that operating subsidiaries of the GSIB are able to stabilize and continue meeting their financial obligations without immediately defaulting or entering resolution themselves. The expectation that the holding company's equity holders and unsecured creditors would absorb the GSIB's losses in the event of failure would help to maintain the confidence of the operating subsidiaries' creditors and counterparties (including their QFC counterparties), reducing their incentive to engage in potentially destabilizing funding runs or margin calls and thus lowering the risk of asset fire sales. A successful SPOE resolution would also avoid the need for separate resolution proceedings for separate legal entities run by separate authorities across multiple jurisdictions, which would be more complex and could therefore destabilize the resolution. An SPOE resolution can also avoid the need for insured bank subsidiaries, including covered FSIs, to be placed into receivership or similar proceedings as the likelihood of their continuing to operate as going concerns will be significantly enhanced if the parent's entry into resolution proceedings does not trigger the exercise of cross-default rights. Accordingly, this proposed rule, by limiting such cross-default rights based on an affiliate's entry into resolution proceedings, assists in stabilizing both the covered FSIs and the larger banking system.

Multiple-Point-of-Entry Resolution. This proposal would also yield benefits for other approaches to resolution. For example, preventing early terminations of QFCs would increase the prospects for an orderly resolution under a multiple-point-of-entry (MPOE) strategy involving a foreign GSIB's U.S. intermediate holding company going into resolution or a resolution plan that calls for a GSIB's U.S. insured depository institution to enter resolution under the FDI Act. As discussed above, this proposal would help support the continued operation of affiliates of an entity experiencing resolution to the extent the affiliate continues to perform on its QFCs.

U.S. Bankruptcy Code. While insured depository institutions are not subject to resolution under the Bankruptcy Code, if a bank holding company were to fail, it would likely be resolved under the Bankruptcy Code. When an entity goes into resolution under the Bankruptcy Code, attempts by the debtor's creditors to enforce their debts through any means other than participation in the bankruptcy proceeding (for instance, by suing in another court, seeking enforcement of a preexisting judgment, or seizing and liquidating collateral) are generally blocked by the imposition of an automatic stay.17 A key purpose of the automatic stay, and of bankruptcy law in general, is to maximize the value of the bankruptcy estate and the creditors' ultimate recoveries by facilitating an orderly liquidation or restructuring of the debtor. The automatic stay thus solves a collective action problem in which the creditors' individual incentives to become the first to recover as much from the debtor as possible, before other creditors can do so, collectively cause a value-destroying disorderly liquidation of the debtor.18

17See 11 U.S.C. 362.

18See, e.g., Aiello v. Providian Financial Corp., 239 F.3d 876, 879 (7th Cir. 2001).

However, the Bankruptcy Code largely exempts QFC 19 counterparties from the automatic stay through special “safe harbor” provisions.20 Under these provisions, any rights that a QFC counterparty has to terminate the contract, set off obligations, and liquidate collateral in response to a direct default are not subject to the stay and may be exercised against the debtor immediately upon default. (The Bankruptcy Code does not itself confer default rights upon QFC counterparties; it merely permits QFC counterparties to exercise certain rights created by other sources, such as contractual rights created by the terms of the QFC.)

19 The Bankruptcy Code does not use the term “qualified financial contract,” but the set of transactions covered by its safe harbor provisions closely tracks the set of transactions that fall within the definition of “qualified financial contract” used in Title II of the Dodd-Frank Act and in this proposal.

20 11 U.S.C. 362(b)(6), (7), (17), (27), 362(o), 555, 556, 559, 560, 561. The Bankruptcy Code specifies the types of parties to which the safe harbor provisions apply, such as financial institutions and financial participants. Id.

The Bankruptcy Code's automatic stay also does not prevent the exercise of cross-default rights against an affiliate of the party entering resolution. The stay generally applies only to actions taken against the party entering resolution or the bankruptcy estate,21 whereas a QFC counterparty exercising a cross-default right is instead acting against a distinct legal entity that is not itself in resolution: The debtor's affiliate.

21See 11 U.S.C. 362(a).

Title II of the Dodd-Frank Act and the Orderly Liquidation Authority. Title II of the Dodd-Frank Act (Title II) imposes somewhat broader stay requirements on QFCs of companies that enter resolution under that back-up resolution authority. In general, a U.S. bank holding company (such as the top-tier holding company of a U.S. GSIB) that fails would be resolved under the Bankruptcy Code. With Title II, Congress recognized, however, that a financial company might fail under extraordinary circumstances in which an attempt to resolve it through the bankruptcy process would have serious adverse effects on financial stability in the United States. Title II of the Dodd-Frank Act establishes the Orderly Liquidation Authority, an alternative resolution framework intended to be used rarely to manage the failure of a firm that poses a significant risk to the financial stability of the United States in a manner that mitigates such risk and minimizes moral hazard.22 Title II authorizes the Secretary of the Treasury, upon the recommendation of other government agencies and a determination that several preconditions are met, to place a financial company into a receivership conducted by the FDIC as an alternative to bankruptcy.23

22 Section 204(a) of the Dodd-Frank Act, 12 U.S.C. 5384(a).

23See section 203 of the Dodd-Frank Act, 12 U.S.C. 5383.

Title II empowers the FDIC to transfer QFCs to a bridge financial company or some other financial company that is not in a resolution proceeding and should therefore be capable of performing under the QFCs.24 To give the FDIC time to effect this transfer, Title II temporarily stays QFC counterparties of the failed entity from exercising termination, netting, and collateral liquidation rights “solely by reason of or incidental to” the failed entity's entry into Title II resolution, its insolvency, or its financial condition.25 Once the QFCs are transferred in accordance with the statute, Title II permanently stays the exercise of default rights for those reasons.26

24See 12 U.S.C. 5390(c)(9).

25 12 U.S.C. 5390(c)(10)(B)(i)(I). This temporary stay generally lasts until 5:00 p.m. eastern time on the business day following the appointment of the FDIC as receiver.

26 12 U.S.C. 5390(c)(10)(B)(i)(II).

Title II addresses cross-default rights through a similar procedure. It empowers the FDIC to enforce contracts of subsidiaries or affiliates of the failed covered financial company that are “guaranteed or otherwise supported by or linked to the covered financial company, notwithstanding any contractual right to cause the termination, liquidation, or acceleration of such contracts based solely on the insolvency, financial condition, or receivership of” the failed company, so long as, in the case of guaranteed or supported QFCs, the FDIC takes certain steps to protect the QFC counterparties' interests by the end of the business day following the company's entry into Title II resolution.27

27 12 U.S.C. 5390(c)(16); 12 CFR 380.12.

These stay-and-transfer provisions of the Dodd-Frank Act are intended to mitigate the threat posed by QFC default rights. At the same time, the provisions allow for appropriate protections for QFC counterparties of the failed financial company. The provisions stay the exercise of default rights based on the failed company's entry into resolution, the fact of its insolvency, or its financial condition. And the stay period is temporary, unless the FDIC transfers the QFCs to another financial company that is not in resolution (and should therefore be capable of performing under the QFCs) or, in the case of cross-default rights relating to guaranteed or supported QFCs, the FDIC takes the action required in order to continue to enforce those contracts.28

28See id.

The Federal Deposit Insurance Act. Under the FDI Act, a failing insured depository institution would generally enter a receivership administered by the FDIC.29 The FDI Act addresses direct default rights in the failed bank's QFCs with stay-and-transfer provisions that are substantially similar to the provisions of Title II of the Dodd-Frank Act discussed above.30 However, the FDI Act does not address cross-default rights, leaving the QFC counterparties of the failed depository institution's affiliates free to exercise any contractual rights they may have to terminate, net, and liquidate collateral based on the depository institution's entry into resolution. Moreover, as with Title II, there is a possibility that a court of a foreign jurisdiction might decline to enforce the FDI Act's stay-and-transfer provisions under certain circumstances.

29 12 U.S.C. 1821(c).

30See 12 U.S.C. 1821(e)(8)-(10).

B. Overview of the Proposal

The FDIC invites comment on all aspects of this proposed rulemaking, which is intended to increase GSIB resolvability by addressing two QFC-related issues and thereby enhance resiliency of FSIs and the overall banking system. First, the proposal seeks to address the risk that a court in a foreign jurisdiction may decline to enforce the QFC stay-and-transfer provisions of Title II and the FDI Act discussed above. The proposed rule directly enhances the prospects of orderly resolution by establishing the applicability of U.S. special resolution regimes to all counterparties, whether they are foreign or domestic. Although domestic entities are clearly subject to the temporary stay provisions of Title II and the FDI Act, these stays may be difficult to enforce in a cross-border context. As a result, domestic counterparties of a failed U.S. financial institution may be disadvantaged relative to foreign counterparties, as domestic counterparties would be subject to the stay, and accompanying potential market volatility, while, if the stay was not enforced by foreign authorities, foreign counterparties could close out immediately. Furthermore, a mass close out by such foreign counterparties would likely exacerbate market volatility, which in turn would likely magnify harm to the stayed U.S. counterparties' positions. This proposed rule would reduce the risk of these adverse consequences by requiring covered FSIs to condition the exercise of default rights in covered contracts on the stay provisions of Title II and the FDI Act.

Second, the proposal seeks to address the potential disruption that may occur if a counterparty to a QFC with an affiliate of a GSIB entity that goes into resolution under the Bankruptcy Code or the FDI Act is allowed to exercise cross-default rights. Affiliates of a GSIB that goes into resolution under the Bankruptcy Code may face disruptions to their QFCs as their counterparties exercise cross-default rights. Thus, a healthy covered FSI whose parent bank holding company entered resolution proceedings could fail due to its counterparties exercising cross-default rights. This proposed rule would address this issue by generally restricting the exercise of cross-default rights by counterparties against a covered FSI.

Scope of application. The proposal's requirements would apply to all “covered FSIs.” “Covered FSIs” include: Any state savings associations (as defined in 12 U.S.C. 1813(b)(3)) or state non-member bank (as defined in 12 U.S.C. 1813(e)(2)) that is a direct or indirect subsidiary of (i) a global systemically important bank holding company that has been designated pursuant to section 252.82(a)(1) of the FRB's Regulation YY (12 CFR 252.82); or (ii) a global systemically important foreign banking organization 31 that has been designated pursuant to section 252.87 of the FRB's Regulation YY (12 CFR 252.87). This proposed rule also makes clear that the mandatory contractual stay requirements apply to the subsidiaries of any covered FSI. Under the proposed rule, the term “covered FSI” also includes “any subsidiary of a covered FSI.” For the reasons noted above, all subsidiaries of covered FSIs should also be subject to mandatory contractual stay requirements—e.g., to avoid concentrating QFCs in entities subject to fewer restrictions.

31 The definition of covered FSI does not include insured state-licensed branches of FBOs. Any insured state-licensed branches of global systemically important FBOs would be covered by the Board NPRM. Therefore, unlike the FRB NPRM, the FDIC is not including in this proposal any exclusion for certain QFCs subject to a multi-branch netting arrangement.

“Qualified financial contract” or “QFC” would be defined to have the same meaning as in section 210(c)(8)(D) of the Dodd-Frank Act,32 and would include, among other things, derivatives, repos, and securities lending agreements. Subject to the exceptions discussed below, the proposal's requirements would apply to any QFC to which a covered FSI is party (covered QFC).33

32 12 U.S.C. 5390(c)(8)(D). See proposed rule § 382.1.

33 In addition, the proposed rule states at § 382.2(d) that it does not modify or limit, in any manner, the rights and powers of the FDIC as receiver under the FDI Act or Title II of the Dodd-Frank Act, including, without limitation, the rights of the receiver to enforce provisions of the FDI Act or Title II of the Dodd-Frank Act that limit the enforceability of certain contractual provisions. For example, the suspension of payment and delivery obligations to QFC counterparties during the stay period as provided under the FDI Act and Title II when an entity is in receivership under the FDI Act or Title II remains valid and unchanged irrespective of any contrary contractual provision and may continue to be enforced by the FDIC as receiver. Similarly, the use by a counterparty to a QFC of a contractual provision that allows the party to terminate a QFC on demand, or at its option at a specified time, or from time to time, for any reason, to terminate a QFC on account of the appointment of the FDIC as receiver (or the insolvency or financial condition of the company) remains unenforceable, and the QFC may be enforced by the FDIC as receiver notwithstanding any such purported termination.

Required contractual provisions related to the U.S. special resolution regimes. Covered FSIs would be required to ensure that covered QFCs include contractual terms explicitly providing that any default rights or restrictions on the transfer of the QFC are limited to the same extent as they would be pursuant to the U.S. special resolution regimes—that is, Title II and the FDI Act.34 The proposed requirements are not intended to imply that the statutory stay-and-transfer provisions would not in fact apply to a given QFC, but rather to help ensure that all covered QFCs—including QFCs that are governed by foreign law, entered into with a foreign party, or for which collateral is held outside the United States—would be treated the same way in the context of an FDIC receivership under the Dodd-Frank Act or the FDI Act. This provision would address the first issue listed above and would decrease the QFC-related threat to financial stability posed by the failure and resolution of an internationally active GSIB. This section of the proposal is also consistent with analogous legal requirements that have been imposed in other national jurisdictions 35 and with the Financial Stability Board's “Principles for Cross-border Effectiveness of Resolution Actions.” 36

34See proposed rule § 382.3.

35See, e.g., Bank of England Prudential Regulation Authority, Policy Statement, “Contractual stays in financial contracts governed by third-country law” (November 2015), available at http://www.bankofengland.co.uk/pra/Documents/publications/ps/2015/ps2515.pdf.

36 Financial Stability Board, “Principles for Cross-border Effectiveness of Resolution Actions” (November 3, 2015), available at http://www.fsb.org/wp-content/uploads/Principles-for-Cross-border-Effectiveness-of-Resolution-Actions.pdf.

The Financial Stability Board (FSB) was established in 2009 to coordinate the work of national financial authorities and international standard-setting bodies and to develop and promote the implementation of effective regulatory, supervisory, and other financial sector policies to advance financial stability. The FSB brings together national authorities responsible for financial stability in 24 countries and jurisdictions, as well as international financial institutions, sector-specific international groupings of regulators and supervisors, and committees of central bank experts. See generally Financial Stability Board, available at http://www.fsb.org.

Prohibited cross-default rights. A covered FSI would be prohibited from entering into covered QFCs that would allow the exercise of cross-default rights—that is, default rights related, directly or indirectly, to the entry into resolution of an affiliate of the direct party—against it.37 Covered FSIs would similarly be prohibited from entering into covered QFCs that would provide for a restriction on the transfer of a credit enhancement supporting the QFC from the covered FSI's affiliate to a transferee upon or following the entry into resolution of the affiliate.

37See proposed rule § 382.3(b) and § 382.4(b).

The FDIC does not propose to prohibit covered FSIs from entering into QFCs that contain direct default rights. Under the proposal, a counterparty to a direct QFC with a covered FSI also could, to the extent not inconsistent with Title II or the FDI Act, be granted and could exercise the right to terminate the QFC if the covered FSI fails to perform its obligations under the QFC.

As an alternative to bringing their covered QFCs into compliance with the requirements set out in this section of the proposed rule, covered FSIs would be permitted to comply by adhering to the ISDA 2015 Resolution Stay Protocol.38 The FDIC views the ISDA 2015 Resolution Stay Protocol as consistent with the requirements of the proposed rule.

38See proposed rule § 382.5(a).

The purpose of this section of the proposal is to help ensure that, when a GSIB entity enters resolution under the Bankruptcy Code or the FDI Act,39 its affiliates' covered QFCs will be protected from disruption to a similar extent as if the failed entity had entered resolution under Title II. In particular, this section would facilitate resolution under the Bankruptcy Code by preventing the QFC counterparties of a GSIB's subsidiary from exercising default rights on the basis of the entry into bankruptcy by the GSIB's top-tier holding company or any other affiliate of the subsidiary. This section generally would not prevent covered QFCs from allowing the exercise of default rights upon a failure by the direct party to satisfy a payment or delivery obligation under the QFC, the direct party's entry into bankruptcy, or the occurrence of any other default event that is not related to the entry into a resolution proceeding or the financial condition of an affiliate of the direct party.

39 The FDI Act does not stay cross-default rights against affiliates of an insured depository institution based on the entry of the insured depository institution into resolution proceedings under the FDI Act.

Process for approval of enhanced creditor protection conditions. As noted above, in the context of addressing the potential disruption that may occur if a counterparty to a QFC with an affiliate of a GSIB entity that goes into resolution under the Bankruptcy Code or the FDI Act is allowed to exercise cross-default rights, the proposed rule generally restricts the exercise of cross-default rights by counterparties against a covered FSI. The proposal would allow the FDIC, at the request of a covered FSI, to approve as compliant with the requirements of 382.5 proposed creditor protection provisions for covered QFCs.40

40See proposed rule § 382.5(c).

The FDIC could approve such a request if, in light of several enumerated considerations,41 the alternative approach would mitigate risks to the financial stability of the United States presented by a GSIB's failure to at least the same extent as the proposed requirements. The FDIC expects to consult with the FRB and OCC during its consideration of a request under this section.

41See id.

Amendments to certain definitions in the FDIC 's capital and liquidity rules. The proposal would also amend certain definitions in the FDIC's capital and liquidity rules to help ensure that the regulatory capital and liquidity treatment of QFCs to which a covered FSI is party is not affected by the proposed restrictions on such QFCs. Specifically, the proposal would amend the definition of “qualifying master netting agreement” in the FDIC's regulatory capital and liquidity rules and would similarly amend the definitions of the terms “collateral agreement,” “eligible margin loan,” and “repo-style transaction” in the FDIC's regulatory capital rules.42

42See proposed rule §§ 324.2 and 329.3.

C. Consultation With U.S Financial Regulators

In developing this proposal, the FDIC consulted with the FRB and the OCC as a means of promoting alignment across regulations and avoiding redundancy. The proposal reflects input that the FDIC received during this consultation process. Furthermore, the FDIC expects to consult with foreign financial regulatory authorities regarding this proposal and the establishment of other standards that would maximize the prospects for the cooperative and orderly cross-border resolution of a failed GSIB on an international basis.

D. Overview of Statutory Authority and Purpose

The FDIC is issuing this proposed rule under its authorities under the FDI Act (12 U.S.C. 1811 et seq.), including its general rulemaking authorities.43 The FDIC views the proposed rule as consistent with its overall statutory mandate.44 An overarching purpose of this proposed rule is to limit disruptions to an orderly resolution of a GSIB and its subsidiaries, thereby furthering financial stability generally. Another purpose is to enhance the safety and soundness of covered FSIs by addressing the two main issues raised by covered QFCs (noted above): Cross-border recognition and cross-default rights.

43See 12 U.S.C. 1819.

44 The FDIC is (i) the primary federal supervisor for SNMBs and state savings associations; (ii) insurer of deposits and manager of the deposit insurance fund (DIF); and (iii) the resolution authority for all FDIC-insured institutions under the Federal Deposit Insurance Act and for large complex financial institutions under Title II of the Dodd-Frank Act. See 12 U.S.C. 1811, 1816, 1818, 1819, 1820(g), 1828, 1828m, 1831p-1, 1831-u, 5301 et seq.

As discussed above and in the FRB NPRM, the exercise of default rights by counterparties of a failed GSIB can have significant impacts on financial stability. These financial stability concerns are necessarily intertwined with the safety and soundness of covered FSIs and the banking system—the disorderly exercise of default rights can produce a sudden, contemporaneous threat to the safety and soundness of individual institutions, including insured depository institutions, throughout the system, which in turn threatens the system as a whole. Furthermore, the failure of multiple insured depository institutions in the same time period can stress the DIF, which is managed by the FDIC. Covered FSIs could themselves be a contributing factor to financial destabilization due to the interconnectedness of these institutions to each other and to other entities within the financial system.

While the covered FSI may not itself be considered systemically important, as part of a GSIB, the disorderly resolution of the covered FSI could result in a significant negative impact on the financial system. Additionally, the application of this proposed rule to the QFCs of covered FSIs should avoid creating what may otherwise be an incentive for GSIBs and their counterparties to concentrate QFCs in entities that are subject to fewer counterparty restrictions.

Question 1: The FDIC invites comment on all aspects of this notice of proposed rulemaking.

II. Proposed Restrictions on QFCs of Covered FSIs A. Covered FSIs (Section 382.2(a) of the Proposed Rule)

The proposed rule would apply to “covered FSIs.” The term “covered FSI” would be defined to include: Any state savings associations (as defined in 12 U.S.C. 1813(b)(3)) or state non-member bank (as defined in 12 U.S.C. 1813(e)(2)) that is a direct or indirect subsidiary of (i) a global systemically important bank holding company that has been designated pursuant to section 252.82(a)(1) of the FRB's Regulation YY (12 CFR 252.82); or (ii) a global systemically important foreign banking organization that has been designated pursuant to section 252.87 of the FRB's Regulation YY (12 CFR 252.87). The mandatory contractual stay requirements would also apply to the subsidiaries of any covered FSI. Under the proposed rule, the term “covered FSI” also includes any “subsidiary of covered FSI.”

Question 2: The FDIC invites comment on the proposed definition of the term “covered FSI.”

B. Covered QFCs

General definition. The proposal would apply to any “covered QFC,” generally defined as any QFC that a covered FSI enters into, executes, or otherwise becomes party to.45 “Qualified financial contract” or “QFC” would be defined as in section 210(c)(8)(D) of Title II of the Dodd-Frank Act and would include swaps, repo and reverse repo transactions, securities lending and borrowing transactions, commodity contracts, securities contracts, and forward agreements.46

45See proposed rule § 382.3(a). For convenience, this preamble generally refers to “a covered FSI's QFCs” or “QFCs to which a covered FSI is party” as shorthand to encompass this definition.

46See proposed rule § 382.1; 12 U.S.C. 5390(c)(8)(D).

The proposed definition of “covered QFC” is intended to limit the proposed restrictions to those financial transactions whose disorderly unwind has substantial potential to frustrate the orderly resolution of a GSIB and its affiliates, as discussed above. By adopting the Dodd-Frank Act's definition, the proposed rule would extend the benefits of the stay-and-transfer protections to the same types of transactions in the event a GSIB enters bankruptcy. In this way, the proposal enhances the prospects for an orderly resolution in bankruptcy (as opposed to resolution under Title II of the Dodd-Frank Act) of a GSIB.

Question 3: The FDIC invites comment on the proposed definitions of “QFC” and “covered QFC.”

Exclusion of cleared QFCs. The proposal would exclude from the definition of “covered QFC” all QFCs that are cleared through a central counterparty.47 The FDIC, in consultation with the FRB and OCC, will continue to consider the appropriate treatment of centrally cleared QFCs, in light of differences between cleared and non-cleared QFCs with respect to contractual arrangements, counterparty credit risk, default management, and supervision.

47See proposed rule § 382.7(a).

Question 4: The FDIC invites comment on the proposed exclusion of cleared QFCs, including the potential effects on the financial stability of the United States of excluding cleared QFCs as well as the potential effects on U.S. financial stability of subjecting covered entities' relationships with central counterparties to restrictions analogous to this proposal's restrictions on covered entities' non-cleared QFCs. In addition, the FDIC invites comment on whether the proposed exclusion of covered entity QFCs in § 382.7 is sufficiently clear. Where a credit enhancement supports a covered QFC, and where a direct party to a covered QFC is a covered FSI, covered entity, or covered bank, would an alternative process better facilitate compliance with this proposal?

C. Definition of “Default Right”

As discussed above, a party to a QFC generally has a number of rights that it can exercise if its counterparty defaults on the QFC by failing to meet certain contractual obligations. These rights are generally, but not always, contractual in nature. One common default right is a setoff right: the right to reduce the total amount that the non-defaulting party must pay by the amount that its defaulting counterparty owes. A second common default right is the right to liquidate pledged collateral and use the proceeds to pay the defaulting party's net obligation to the non-defaulting party. Other common rights include the ability to suspend or delay the non-defaulting party's performance under the contract or to accelerate the obligations of the defaulting party. Finally, the non-defaulting party typically has the right to terminate the QFC, meaning that the parties would not make payments that would have been required under the QFC in the future. The phrase “default right” in the proposed rule is broadly defined to include these common rights as well as “any similar rights.” 48 Additionally, the definition includes all such rights regardless of source, including rights existing under contract, statute, or common law.

48See proposed rule § 382.1.

However, the proposed definition excludes two rights that are typically associated with the business-as-usual functioning of a QFC. First, same-day netting that occurs during the life of the QFC in order to reduce the number and amount of payments each party owes the other is excluded from the definition of “default right.” 49 Second, contractual margin requirements that arise solely from the change in the value of the collateral or the amount of an economic exposure are also excluded from the definition.50 The function of these exclusions is to leave such rights unaffected by the proposed rule.

49See id.

50See id.

However, certain QFCs are also commonly subject to rights that would increase the amount of collateral or margin that the defaulting party (or a guarantor) must provide upon an event of default. The financial impact of such default rights on a covered entity could be similar to the impact of the liquidation and acceleration rights discussed above. Therefore, the proposed definition of “default right” includes such rights (with the exception discussed in the previous paragraph for margin requirements that depend solely on the value of collateral or the amount of an economic exposure).51

51See id.

Finally, contractual rights to terminate without the need to show cause, including rights to terminate on demand and rights to terminate at contractually specified intervals, are excluded from the definition of “default right” for purposes of the proposed rule's restrictions on cross-default rights (section 382.4 of the proposed rule).52 This is consistent with the proposal's objective of restricting only default rights that are related, directly or indirectly, to the entry into resolution of an affiliate of the covered entity, while leaving other default rights unrestricted.53

52See proposed rule §§ 382.1, 382.4.

53 The definition of “default right” in this proposal parallels the definition contained in the ISDA Protocol. The proposed rule does not modify or limit the FDIC's powers in its capacity as receiver under the FDI Act or the Dodd-Frank Act with respect to a counterparties' contractual or other rights.

Question 5: The FDIC invites comment on all aspects of the proposed definition of “default right.”

D. Required Contractual Provisions Related to the U.S. Special Resolution Regimes (Section 382.3 of the Proposed Rule)

Under the proposal, a covered QFC would be required to explicitly provide both (a) that the transfer of the QFC (and any interest or obligation in or under it and any property securing it) from the covered entity to a transferee will be effective to the same extent as it would be under the U.S. special resolution regimes if the covered QFC were governed by the laws of the United States or of a state of the United States and (b) that default rights with respect to the covered QFC that could be exercised against a covered entity could be exercised to no greater extent than they could be exercised under the U.S. special resolution regimes if the covered QFC were governed by the laws of the United States or of a state of the United States.54 The proposal would define the term “U.S. special resolution regimes” to mean the FDI Act 55 and Title II of the Dodd-Frank Act,56 along with regulations issued under those statutes.57

54See proposed rule § 382.3.

55 12 U.S.C. 1811-1835a.

56 12 U.S.C. 5381-5394.

57See proposed rule § 382.1.

The proposed requirements are not intended to imply that a given covered QFC is not governed by the laws of the United States or of a state of the United States, or that the statutory stay-and-transfer provisions would not in fact apply to a given covered QFC. Rather, the requirements are intended to provide certainty that all covered QFCs would be treated the same way in the context of a receivership under the Dodd-Frank Act or the FDI Act. The stay-and-transfer provisions of the U.S. special resolution regimes should be enforced with respect to all contracts of any U.S. GSIB entity that enters resolution under a U.S. special resolution regime as well as all transactions of the subsidiaries of such an entity. Nonetheless, it is possible that a court in a foreign jurisdiction would decline to enforce those provisions in cases brought before it (such as a case regarding a covered QFC between a covered FSI and a non-U.S. entity that is governed by non-U.S. law and secured by collateral located outside the United States). By requiring that the effect of the statutory stay-and-transfer provisions be incorporated directly into the QFC contractually, the proposed requirement would help ensure that a court in a foreign jurisdiction would enforce the effect of those provisions, regardless of whether the court would otherwise have decided to enforce the U.S. statutory provisions themselves.58 For example, the proposed provisions should prevent a U.K. counterparty of a U.S. GSIB from persuading a U.K. court that it should be permitted to seize and liquidate collateral located in the United Kingdom in response to the U.S. GSIB's entry into Title II resolution. And the knowledge that a court in a foreign jurisdiction would reject the purported exercise of default rights in violation of the required provisions would deter counterparties from attempting to exercise such rights.

58See generally Financial Stability Board, “Principles for Cross-border Effectiveness of Resolution Actions” (November 3, 2015), available at http://www.fsb.org/wp-content/uploads/Principles-for-Cross-border-Effectiveness-of-Resolution-Actions.pdf.

This requirement would advance the proposal's goal of removing QFC-related obstacles to the orderly resolution of a GSIB. As discussed above, restrictions on the exercise of QFC default rights are an important prerequisite for an orderly GSIB resolution.59

59See FRB NPRM, 81 FR 29178 (May 11, 2016) for additional discussion regarding consistency of this proposal with similar regulatory efforts in foreign jurisdictions.

Question 6: The FDIC invites comment on all aspects of this section of the proposal.

E. Prohibited Cross-Default Rights (Section 382.4 of the Proposed Rule)

Definitions. Section 382.4 of the proposal applies in the context of insolvency proceedings 60 and pertains to cross-default rights in QFCs between covered FSIs and their counterparties, many of which are subject to credit enhancements (such as a guarantee) provided by an affiliate of the covered FSI. Because credit enhancements on QFCs are themselves “qualified financial contracts” under the Dodd-Frank Act's definition of that term (which this proposal would adopt), the proposal includes the following additional definitions in order to facilitate a precise description of the relationships to which it would apply.

60See proposed rule § 382.4 (noting that section does not apply to proceedings under Title II of the Dodd-Frank Act).

First, the proposal distinguishes between a credit enhancement and a “direct QFC,” defined as any QFC that is not a credit enhancement.61 The proposal also defines “direct party” to mean a covered FSI that is itself a party to the direct QFC, as distinct from an entity that provides a credit enhancement.62 In addition, the proposal defines “affiliate credit enhancement” to mean “a credit enhancement that is provided by an affiliate of the party to the direct QFC that the credit enhancement supports,” as distinct from a credit enhancement provided by either the direct party itself or by an unaffiliated party.63 Moreover, the proposal defines “covered affiliate credit enhancement” to mean an affiliate credit enhancement provided by a covered entity, covered bank, or covered FSI, and defines “covered affiliate support provider” to mean the covered entity, covered bank, or covered FSI that provides the covered affiliate credit enhancement.64 Finally, the proposal defines the term “supported party” to mean any party that is the beneficiary of a covered affiliate credit enhancement (that is, the QFC counterparty of a direct party, assuming that the direct QFC is subject to a covered affiliate credit enhancement).65

61See proposed rule § 382.4(c)(2).

62See proposed rule § 382.4(c)(1).

63See proposed rule § 382.4(c)(3).

64See proposed rule § 382.4(f)(2).

65See proposed rule § 382.4(f)(4).

General prohibitions. Subject to the substantial exceptions discussed below, the proposal would prohibit a covered FSI from being party to a covered QFC that allows for the exercise of any default right that is related, directly or indirectly, to the entry into resolution of an affiliate of the covered FSI.66 The proposal also would generally prohibit a covered FSI from being party to a covered QFC that would prohibit the transfer of any credit enhancement applicable to the QFC (such as another entity's guarantee of the covered FSI's obligations under the QFC), along with associated obligations or collateral, upon the entry into resolution of an affiliate of the covered FSI.67

66See proposed rule § 382.4(b)(1).

67See proposed rule § 382.4(b)(2). This prohibition would be subject to an exception that would allow supported parties to exercise default rights with respect to a QFC if the supported party would be prohibited from being the beneficiary of a credit enhancement provided by the transferee under any applicable law, including the Employee Retirement Income Security Act of 1974 and the Investment Company Act of 1940. This exception is substantially similar to an exception to the transfer restrictions in section 2(f) of the ISDA 2014 Resolution Stay Protocol (2014 Protocol) and the ISDA 2015 Universal Resolution Stay Protocol, which was added to address concerns expressed by asset managers during the drafting of the 2014 Protocol.

A primary purpose of the proposed restrictions is to facilitate the resolution of a GSIB outside of Title II, including under the Bankruptcy Code. As discussed above, the potential for mass exercises of QFC default rights is one reason why a GSIB's failure could do severe damage to financial stability. In the context of an SPOE resolution, if the GSIB parent's entry into resolution led to the mass exercise of cross-default rights by the subsidiaries' QFC counterparties, then the subsidiaries could themselves fail or experience financial distress. Moreover, the mass exercise of QFC default rights could entail asset fire sales, which likely would affect other financial companies and undermine financial stability. Similar disruptive results can occur with an MPOE resolution of an affiliate of an otherwise performing entity triggers default rights on QFCs involving the performing entity.

In an SPOE resolution, this damage could be avoided if actions of the following two types are prevented: The exercise of direct default rights against the top-tier holding company that has entered resolution, and the exercise of cross-default rights against the operating subsidiaries based on their parent's entry into resolution. (Direct default rights against the subsidiaries would not be exercisable because the subsidiaries would not enter resolution.) In an MPOE resolution, this damage could occur from exercise of default rights against a performing entity based on the failure of an affiliate.

Under Title II, the stay-and-transfer provisions would address both direct default rights and cross-default rights. But, as explained above, no similar statutory provisions would apply to a resolution under the Bankruptcy Code. This proposal attempts to address these obstacles to orderly resolution under the Bankruptcy Code by extending the stay-and-transfer provisions to any type of resolution of an affiliate of a covered FSI that is not an insured depository institution. Similarly, the proposal would facilitate a transfer of the GSIB parent's interests in its subsidiaries, along with any credit enhancements it provides for those subsidiaries, to a solvent financial company by prohibiting covered FSIs from having QFCs that would allow the QFC counterparty to prevent such a transfer or to use it as a ground for exercising default rights.68

68See proposed rule § 382.4(b).

The proposal also is intended to facilitate other approaches to GSIB resolution. For example, it would facilitate a similar resolution strategy in which a U.S. depository institution subsidiary of a GSIB enters resolution under the FDI Act while its subsidiaries continue to meet their financial obligations outside of resolution.69 Similarly, the proposal would facilitate the orderly resolution of a foreign GSIB under its home jurisdiction resolution regime by preventing the exercise of cross-default rights against the foreign GSIB's U.S. operations. The proposal would also facilitate the resolution of the U.S. intermediate holding company of a foreign GSIB, and the recapitalization of its U.S. operating subsidiaries, as part of a broader MPOE resolution strategy under which the foreign GSIB's operations in other regions would enter separate resolution proceedings. Finally, the proposal would broadly prevent the unanticipated failure of any one GSIB entity from bringing about the disorderly failures of its affiliates by preventing the affiliates' QFC counterparties from using the first entity's failure as a ground for exercising default rights against those affiliates that continue meet to their obligations.

69 As discussed above, the FDI Act would prevent the exercise of direct default rights against the depository institution, but it does not address the threat posed to orderly resolution by cross-default rights in the QFCs of the depository institution's subsidiaries. This proposal would facilitate orderly resolution under the FDI Act by filling that gap.

The proposal is intended to enhance the potential for orderly resolution of a GSIB under the Bankruptcy Code, the FDI Act, or a similar resolution regime. By doing so, the proposal would advance the Dodd-Frank Act's goal of making orderly GSIB resolution under the Bankruptcy Code workable.70

70See 12 U.S.C. 5365(d).

The proposal could also benefit the counterparties of a subsidiary of a failed GSIB, by preventing the disorderly failure of an otherwise-solvent subsidiary and allowing it to continue to meet its obligations. While it may be in the individual interest of any given counterparty to exercise any available rights against a subsidiary of a failed GSIB, the mass exercise of such rights could harm the counterparties' collective interest by causing an otherwise-solvent subsidiary to fail. Therefore, like the automatic stay in bankruptcy, which serves to maximize creditors' ultimate recoveries by preventing a disorderly liquidation of the debtor, the proposal would mitigate this collective action problem to the benefit of the failed firm's creditors and counterparties by preventing a disorderly resolution. And because many creditors and counterparties of GSIBs are themselves systemically important financial firms, improving outcomes for those creditors and counterparties would further protect the financial stability of the United States.

General creditor protections. While the proposed restrictions would facilitate orderly resolution, they would also diminish the ability of covered FSI's QFC counterparties to include certain protections for themselves in covered QFCs. In order to reduce this effect, the proposal includes several substantial exceptions to the proposed restrictions.71 These permitted creditor protections are intended to allow creditors to exercise cross-default rights outside of an orderly resolution of a GSIB (as described above) and therefore would not be expected to undermine such a resolution.

71See proposed rule § 382.4(e).

First, in order to ensure that the proposed prohibitions would apply only to cross-default rights (and not direct default rights), the proposal would provide that a covered QFC may permit the exercise of default rights based on the direct party's entry into a resolution proceeding, other than a proceeding under a U.S. or foreign special resolution regime.72 This provision would help ensure that, if the direct party to a QFC were to enter bankruptcy, its QFC counterparties could exercise any relevant direct default rights. Thus, a covered FSI's direct QFC counterparties would not risk the delay and expense associated with becoming involved in a bankruptcy proceeding, and would be able to take advantage of default rights that would fall within the Bankruptcy Code's safe harbor provisions.

72See proposed rule § 382.4(e)(1). Special resolution regimes typically stay direct default rights, but may not stay cross-default rights. For example, as discussed above, the FDI Act stays direct default rights, see 12 U.S.C. 1821(e)(10)(B), but does not stay cross-default rights, whereas Title II stays direct default rights and cross-defaults arising from a parent's receivership, see 12 U.S.C. 5390(c)(10)(B), 5390(c)(16).

The proposal would also allow, in the context of an insolvency proceeding, and subject to the statutory requirements and restrictions thereunder, covered QFCs to permit the exercise of default rights based on (i) the failure of the direct party; (ii) the direct party not satisfying a payment or delivery obligation; or (iii) a covered affiliate support provider or transferee not satisfying its payment or delivery obligations under the direct QFC or credit enhancement.73 Moreover, the proposal would allow covered QFCs to permit the exercise of a default right in one QFC that is triggered by the direct party's failure to satisfy its payment or delivery obligations under another contract between the same parties.

73See proposed rule § 382.4(e).

The proposed exceptions for the creditor protections described above are intended to help ensure that the proposal permits a covered FSI's QFC counterparties to protect themselves from imminent financial loss and does not create a risk of delivery gridlocks or daisy-chain effects, in which a covered entity's failure to make a payment or delivery when due leaves its counterparty unable to meet its own payment and delivery obligations (the daisy-chain effect would be prevented because the covered entity's counterparty would be permitted to exercise its default rights, such as by liquidating collateral). These exceptions are generally consistent with the treatment of payment and delivery obligations, following the applicable stay period, under the U.S. special resolution regimes.

Additional creditor protections for supported QFCs. The proposal would allow additional creditor protections for a non-defaulting counterparty that is the beneficiary of a credit enhancement from an affiliate of the covered FSI that is a covered entity, covered bank, or covered FSI under the proposal.74 The proposal would allow these creditor protections in recognition of the supported party's interest in receiving the benefit of its credit enhancement.

74See proposed rule § 382.4(g).

Where a covered QFC is supported by a covered affiliate credit enhancement,75 the covered QFC and the credit enhancement would be permitted to allow the exercise of default rights 76 under the circumstances discussed below after the expiration of a stay period. Under the proposal, the applicable stay period would begin when the receiver is appointed and would end at the later of 5:00 p.m. (eastern time) on the next business day and 48 hours after the entry into resolution.77 This portion of the proposal is similar to the stay treatment provided in a resolution under Title II or the FDI Act.78

75 Note that the exception in § 382.4(g) of the proposed rule would not apply with respect to credit enhancements that are not covered affiliate credit enhancements. In particular, it would not apply with respect to a credit enhancement provided by a non-U.S. entity of a foreign GSIB, which would not be a covered entity under the proposal.

76See 12 U.S.C. 1821(e)(8)(G)(ii), 5390(c)(8)(F)(ii) (suspending payment and delivery obligations for one business day or less).

77See proposed rule § 382.4(h)(1).

78See 12 U.S.C. 1821(e)(10)(B)(I), 5390(c)(10)(B)(i), 5390(c)(16)(A). While the proposed stay period is similar to the stay periods that would be imposed by the U.S. special resolution regimes, it could run longer than those stay periods under some circumstances.

Under the proposal, default rights could be exercised at the end of the stay period if the covered affiliate credit enhancement has not been transferred away from the covered affiliate support provider and that support provider becomes subject to a resolution proceeding other than a proceeding under Chapter 11 of the Bankruptcy Code or the FDI Act.79 Default rights could also be exercised at the end of the stay period if the transferee (if any) of the credit enhancement enters an insolvency proceeding, protecting the supported party from a transfer of the credit enhancement to a transferee that is unable to meet its financial obligations.

79See proposed rule § 382.4(g)(1). Chapter 11 (11 U.S.C. 1101-1174) is the portion of the Bankruptcy Code that provides for the reorganization of the failed company, as opposed to its liquidation, and, relative to special resolution regimes, is generally well-understood by market participants.

Default rights could also be exercised at the end of the stay period if the original credit support provider does not remain, and no transferee becomes, obligated to the same (or substantially similar) extent as the original credit support provider was obligated immediately prior to entering a resolution proceeding (including a Chapter 11 proceeding) with respect to (a) the credit enhancement applicable to the covered QFC, (b) all other credit enhancements provided by the credit support provider on any other QFCs between the same parties, and (c) all credit enhancements provided by the credit support provider between the direct party and affiliates of the direct party's QFC counterparty.80 Such creditor protections would be permitted in order to prevent the support provider or the transferee from “cherry picking” by assuming only those QFCs of a given counterparty that are favorable to the support provider or transferee. Title II and the FDI Act contain similar provisions to prevent cherry picking.

80See proposed rule § 382.4(g)(3).

Finally, if the covered affiliate credit enhancement is transferred to a transferee, then the non-defaulting counterparty could exercise default rights at the end of the stay period unless either (a) all of the support provider's ownership interests in the direct party are also transferred to the transferee or (b) reasonable assurance is provided that substantially all of the support provider's assets (or the net proceeds from the sale of those assets) will be transferred to the transferee in a timely manner. These conditions would help to assure the supported party that the transferee would be providing substantively the same credit enhancement as the covered affiliate support provider.81

81 12 U.S.C. 5390(c)(16)(A).

Creditor protections related to FDI Act proceedings. Moreover, in the case of a covered QFC that is supported by a covered affiliate credit enhancement, both the covered QFC and the credit enhancement would be permitted to allow the exercise of default rights related to the credit support provider's entry into resolution proceedings under the FDI Act 82 under the following circumstances: (a) After the FDI Act stay period,83 if the credit enhancement is not transferred under the relevant provisions of the FDI Act 84 and associated regulations, and (b) during the FDI Act stay period, to the extent that the default right permits the supported party to suspend performance under the covered QFC to the same extent as that party would be entitled to do if the covered QFC were with the credit support provider itself and were treated in the same manner as the credit enhancement.85 This provision is intended to ensure that a QFC counterparty of a subsidiary of a covered FSI that goes into FDI Act receivership can receive the equivalent level of protection that the FDI Act provides to QFC counterparties of the covered FSI itself.86

82 As discussed above, the FDI Act stays direct default rights against the failed depository institution but does not stay the exercise of cross-default rights against its affiliates.

83 Under the FDI Act, the relevant stay period runs until 5:00 p.m. (eastern time) on the business day following the appointment of the FDIC as receiver. 12 U.S.C. 1821(e)(10)(B)(I).

84 12 U.S.C. 1821(e)(9)-(10).

85See proposed rule § 382.4(i).

86See id. (noting that the general creditor protections in section 382.4(e), and the additional creditor protections for supported QFCs in section 382.4(g), are inapplicable to FDI Act proceedings).

Prohibited terminations. In case of a legal dispute as to a party's right to exercise a default right under a covered QFC, the proposal would require that a covered QFC must provide that, after an affiliate of the direct party has entered a resolution proceeding, (a) the party seeking to exercise the default right bears the burden of proof that the exercise of that right is indeed permitted by the covered QFC; and (b) the party seeking to exercise the default right must meet a “clear and convincing evidence” standard, a similar standard,87 or a more demanding standard.

87 The reference to a “similar” burden of proof is intended to allow covered QFCs to provide for the application of a standard that is analogous to clear and convincing evidence in jurisdictions that do not recognize that particular standard. A covered QFC would not be permitted to provide for a lower standard.

The purpose of this proposed requirement is to deter the QFC counterparty of a covered entity from thwarting the purpose of this proposal by exercising a default right because of an affiliate's entry into resolution under the guise of other default rights that are unrelated to the affiliate's entry into resolution.

Agency transactions. In addition to entering into QFCs as principals, GSIBs may engage in QFCs as agents for other principals. For example, a GSIB subsidiary may enter into a master securities lending arrangement with a foreign bank as agent for a U.S.-based pension fund. The GSIB subsidiary would document its role as agent for the pension fund, often through an annex to the master agreement, and would generally provide to its customer (the principal party) a securities replacement guarantee or indemnification for any shortfall in collateral in the event of the default of the foreign bank.88 Similarly, a covered FSI may also enter into a QFC as agent acting on behalf of a principal.

88 The definition of QFC under Title II of the Dodd-Frank Act includes security agreements and other credit enhancements as well as master agreements (including supplements). 12 U.S.C. 5390(c)(8)(D).

This proposal would apply to a covered QFC regardless of whether the covered FSI is acting as a principal or as an agent. Section 382.3 and section 382.4 do not distinguish between agents and principals with respect to default rights or transfer restrictions applicable to covered QFCs. Section 382.3 would limit default rights and transfer restrictions that a counterparty may have against a covered FSI consistent with the U.S. special resolution regimes.89 Section 382.4 would ensure that, subject to the enumerated creditor protections, counterparties could not exercise cross-default rights under the covered QFC against the covered FSI, acting as agent or principal, based on the resolution of an affiliate of the covered FSI.90

89See proposed rule § 382.3(a)(3).

90See proposed rule § 382.4(d). If a covered FSI (acting as agent) is a direct party to a covered QFC, then the general prohibitions of section 382.4(b) would only affect the substantive rights of the agent's principal(s) to the extent that the covered QFC provides default rights based directly or indirectly on the entry into resolution of an affiliate of the covered FSI (acting as agent). See also proposed rule § 382.4(a)(3).

Compliance with the ISDA 2015 Resolution Stay Protocol. As an alternative to compliance with the requirements of section 382.4 that are described above, a covered FSI could comply with the proposed rule to the extent its QFCs are amended by adherence to the current ISDA 2015 Universal Resolution Stay Protocol, including the Securities Financing Transaction Annex and the Other Agreements Annex, as well as subsequent, immaterial amendments to the Protocol.91

91 International Swaps and Derivatives Association, Inc., ISDA 2015 Universal Resolution Stay Protocol (November 4, 2015), available at http://assets.isda.org/media/ac6b533f-3/5a7c32f8-pdf/. The ISDA 2015 Universal Resolution Stay Protocol (ISDA Protocol) expanded the 2014 ISDA Resolution Stay Protocol to cover securities financing transactions in addition to over-the-counter derivatives documented under ISDA Master Agreements. As between adhering parties, the ISDA Protocol replaces the 2014 ISDA Protocol (which does not cover securities financing transactions). Securities financing transactions (which generally include repurchase agreements and securities lending transactions) are documented under non-ISDA master agreements.

The Protocol was developed by a working group of member institutions of the International Swaps and Derivatives Association, Inc. (ISDA), in coordination with the FRB, the FDIC, the OCC, and foreign regulatory agencies. The Securities Financing Transaction Annex was developed by the International Capital Markets Association, the International Securities Lending Association, and the Securities Industry and Financial Markets Association, in coordination with ISDA. ISDA is expected to continue supplementing the Protocol with ISDA Resolution Stay Jurisdictional Modular Protocols for the United States and other jurisdictions. A jurisdictional module for the United States that is substantively identical to the Protocol in all respects (aside from exempting QFCs between adherents that are not covered entities, covered FSIs, or covered banks) would be consistent with the current proposal. For additional detail on the development of the 2014 and 2015 ISDA Resolution Stay Protocols, see FRB NPRM, 81 FR at 29181-29182 (May 11, 2016).

The Protocol has the same general objective as the proposed rule: to make GSIBs more resolvable by amending their contracts to, in effect, contractually recognize the applicability of U.S. special resolution regimes 92 and to restrict cross-default provisions to facilitate orderly resolution under the U.S. Bankruptcy Code. Moreover, the provisions of the Protocol largely track the requirements of the proposed rule.93 Consistent with the FDIC's objective of increasing GSIB resolvability, the proposed rule would allow a covered entity to bring its covered QFCs into compliance by amending them through adherence to the Protocol.

92 The Protocol also includes other special resolution regimes. Currently, the Protocol includes special resolution regimes in place in France, Germany, Japan, Switzerland, and the United Kingdom. Other special resolution regimes that meet the definition of “Protocol-eligible Regime” may be added to the Protocol.

93 Sections 2(a) and (b) of the Protocol provide the stays required under paragraph (b)(1) of proposed rule § 382.4 for the most common U.S. insolvency regimes. Section 2(f) of the Protocol overrides transfer restrictions as required under paragraph (b)(2) of proposed rule § 382.4 for transfers that are consistent with the Protocol. The Protocol's exemptions from the stay for “Performance Default Rights” and the “Unrelated Default Rights” described in paragraph (a) of the definition are consistent with the proposal's general creditor protections permitted under paragraph (b) of proposed rule § 382.4. The Protocol's burden of proof provisions (see section 2(i) of the Protocol and the definition of Unrelated Default Rights) and creditor protections for credit enhancement providers in FDI Act proceedings (see Section 2(d) of the Protocol) are also consistent with the paragraphs (j) and (i), respectively, of proposed rule § 382.4. Note also that, although exercise of Performance Default Rights under the Protocol does not require a showing of clear and convincing evidence while these same rights under the proposal (proposed rule § 252.84(e)) would require such a showing, this difference between the Protocol and the proposal does not appear to be meaningful because clearly documented evidence for such default rights (i.e., payment and performance failures, entry into resolution proceedings) should exist.

Question 7: The FDIC invites comment on the proposed restrictions on cross-default rights in covered FSI's QFCs. Is the proposal sufficiently clear such that parties to a conforming QFC will understand what default rights are and are not exercisable in the context of a GSIB resolution? How could the proposed restrictions be made clearer?

Question 8: The FDIC invites comment on its proposal to treat as compliant with section 382.4 of the proposal any covered QFC that has been amended by the Protocol. Does adherence to the Protocol suffice to meet the goals of this proposal and appropriately safeguard U.S. financial stability?

F. Process for Approval of Enhanced Creditor Protections (Section 382.5 of the Proposed Rule)

As discussed above, the proposed restrictions would leave many creditor protections that are commonly included in QFCs unaffected. The proposal would also allow any covered FSI to submit to the FDIC a request to approve as compliant with the rule one or more QFCs that contain additional creditor protections—that is, creditor protections that would be impermissible under the restrictions set forth above. A covered FSI making such a request would be required to provide an analysis of the contractual terms for which approval is requested in light of a range of factors that are set forth in the proposed rule and intended to facilitate the FDIC's consideration of whether permitting the contractual terms would be consistent with the proposed restrictions.94 The FDIC also expects to consult with the FRB and OCC during its consideration of such a request—in particular, when the covered QFC is between a covered FSI and either a covered bank or a covered entity.

94 Proposed rule § 382.5(d)(1)-(10).

The first two factors concern the potential impact of the requested creditor protections on GSIB resilience and resolvability. The next four concern the potential scope of the proposal: adoption on an industry-wide basis, coverage of existing and future transactions, coverage of one or multiple QFCs, and coverage of some or all covered entities, covered banks, and covered FSIs. Creditor protections that may be applied on an industry-wide basis may help to ensure that impediments to resolution are addressed on a uniform basis, which could increase market certainty, transparency, and equitable treatment. Creditor protections that apply broadly to a range of QFCs and covered entities, covered banks and covered FSIs would increase the chance that all of a GSIB's QFC counterparties would be treated the same way during a resolution of that GSIB and may improve the prospects for an orderly resolution of that GSIB. By contrast, proposals that would expand counterparties' rights beyond those afforded under existing QFCs would conflict with the proposal's goal of reducing the risk of mass unwinds of GSIB QFCs. The proposal also includes three factors that focus on the creditor protections specific to supported parties. The FDIC may weigh the appropriateness of additional protections for supported QFCs against the potential impact of such provisions on the orderly resolution of a GSIB.

In addition to analyzing the request under the enumerated factors, a covered FSI requesting that the FDIC approve enhanced creditor protections would be required to submit a legal opinion stating that the requested terms would be valid and enforceable under the applicable law of the relevant jurisdictions, along with any additional relevant information requested by the FDIC.

Question 9: The FDIC invites comment on all aspects of the proposed process for approval of enhanced creditor protections. Should the FDIC provide greater specificity on this process? If so, what processes and procedures could be adopted without imposing undue regulatory burden?

III. Transition Periods

Under the proposal, the final rule would take effect on the first day of the first calendar quarter that begins at least one year after the issuance of the final rule (effective date).95 Entities that are covered FSIs when the final rule is issued would be required to comply with the proposed requirements beginning on the effective date. Thus, a covered FSI would be required to ensure that covered QFCs entered into on or after the effective date comply with the rule's requirements.96 Moreover, a covered FSI would be required to bring a preexisting covered QFC entered into prior to the effective date into compliance with the rule no later than the first date on or after the effective date on which the covered FSI or an affiliate (that is also a covered entity, covered bank, or covered FSI) enters into a new covered QFC with the counterparty to the preexisting covered QFC or an affiliate of the counterparty.97 (Thus, a covered FSI would not be required to conform a preexisting QFC if that covered FSI and its affiliates do not enter into any new QFCs with the same counterparty or its affiliates on or after the effective date.) Finally, an entity that becomes a covered FSI after the final rule is issued would be required to comply by the first day of the first calendar quarter that begins at least one year after the entity becomes a covered FSI.98

95 Under section 302(b) of the Riegle Community Development and Regulatory Improvement Act of 1994, new FRB regulations that impose requirements on insured depository institutions generally must “take effect on the first day of a calendar quarter which begins on or after the date on which the regulations are published in final form.” 12 U.S.C. 4802(b).

96See proposed rule §§ 382.3(a)(2)(i); 382.4(a)(2).

97See proposed rule §§ 382.3(a)(2)(ii), 382.4(a)(2).

98See proposed rule § 382.2(b).

By permitting a covered FSI to remain party to noncompliant QFCs entered into before the effective date unless the covered FSI or any affiliate (that is also a covered entity, covered bank, or covered FSI) enters into new QFCs with the same counterparty or its affiliates, the proposal strikes a balance between ensuring QFC continuity if the GSIB were to fail and ensuring that covered FSIs and their existing counterparties can avoid any compliance costs and disruptions associated with conforming existing QFCs by refraining from entering into new QFCs. The requirement that a covered FSI ensure that all existing QFCs with a particular counterparty and its affiliates are compliant before it or any affiliate of the covered FSI (that is also a covered entity, covered bank, or covered FSI) enters into a new QFC with the same counterparty or its affiliates after the effective date will provide covered FSIs with an incentive to seek the modifications necessary to ensure that their QFCs with their most important counterparties are compliant. Moreover, the volume of preexisting, noncompliant covered QFCs outstanding can be expected to decrease over time and eventually to reach zero. In light of these considerations, and to avoid creating potentially inappropriate compliance costs with respect to existing QFCs with counterparties that, together with their affiliates, do not enter new covered QFCs with the GSIB on or after the effective date, it would be appropriate to permit a limited number of noncompliant QFCs to remain outstanding, in keeping with the terms described above. The FDIC will monitor covered FSIs' levels of noncompliant QFCs and evaluate the risk, if any, that they pose to the safety and soundness of the covered FSIs, the banking system, or to U.S. financial stability.

Question 10: The FDIC invites comment on the proposed transition periods and the proposed treatment of preexisting QFCs.

IV. Expected Effects

The proposed rule is intended to promote the financial stability of the United States by reducing the potential that resolution of a GSIB, particularly through bankruptcy, will be disorderly. The proposed rule will help meet this policy objective by more effectively and efficiently managing the exercise of default rights and restrictions contained in QFCs. It would therefore help mitigate the risk of future financial crises and imposition of substantial costs on the U.S. economy.99 The proposed rule furthers the FDIC's mission and responsibilities, which include resolving failed institutions in the least costly manner and ensuring that FDIC-insured institutions operate safely and soundly. It also furthers the fulfillment of the FDIC's role as the (i) primary federal supervisor for SNMBs and state savings associations; (ii) resolution authority for all FDIC-insured institutions under the FDI Act; and (iii) resolution authority for large complex financial institutions under Title II of the Dodd-Frank Act.

99 A recent estimate of the unrealized economic output that resulted from 2007-09 financial crisis in the United States amounted to between $6 and $14 trillion. See “How Bad Was It? The Costs and Consequences of the 2007-09 Financial Crisis,” Staff Paper No. 20, Federal Reserve Bank of Dallas, July 2013. https://dallasfed.org/assets/documents/research/staff/staff1301.pdf.

The proposal would likely benefit the counterparties of a subsidiary of a failed GSIB by preventing the disorderly failure of the subsidiary and enabling it to continue to meet its obligations. Preventing the mass exercise of QFC default rights at the time the parent or other affiliate enters resolution proceedings makes it more likely that the subsidiaries or other affiliates will be able to meet their obligations to QFC counterparties. Moreover, the creditor protections permitted under the proposal would allow any counterparty that does not continue to receive payment under the QFC to exercise its default rights, after any applicable stay period.

Because financial crises impose enormous costs on the economy, even small reductions in the probability or severity future financial crises create substantial economic benefits.100 The proposal would materially reduce the risk to the financial stability of the United States that could arise from the failure of a GSIB by enhancing the prospects for the orderly resolution of such a firm, and would thereby materially reduce the probability and severity of financial crises in the future.

100See id.

The costs of the proposed rule are likely to be relatively small and only affect twelve covered FSIs. Covered FSIs and their counterparties are likely to incur administrative costs associated with drafting and negotiating compliant QFCs, but to the extent such parties adhere to the ISDA Protocol, these administrative costs would likely be reduced. While potential administrative costs are difficult to accurately predict, these costs are likely to be small relative to the revenue of the organizations affected by the proposed rule, and to the costs of doing business in the financial sector generally.

In addition, the FDIC anticipates that covered FSIs would likely share resources with its parent GSIB and/or GSIB affiliates—which are subject to parallel requirements—to help cover compliance costs. The stay-and-transfer provisions of the Dodd-Frank Act and the FDI Act are already in force, and the ISDA Protocol is already partially effective for the 23 existing GSIB adherents. The partial effectiveness of the ISDA Protocol (regarding Section 1, which addresses recognition of stays on the exercise of default rights and remedies in financial contracts under special resolution regimes, including in the United States, the United Kingdom, Germany, France, Switzerland and Japan) suggests that to the extent covered FSIs already adhere to the ISDA Protocol, some implementation costs will likely be reduced.

The proposal could also impose costs on covered FSIs to the extent that they may need to provide their QFC counterparties with better contractual terms in order to compensate those parties for the loss of their ability to exercise default rights that would be restricted by the proposal. These costs may be higher than drafting and negotiating costs. However, they are also expected to be relatively small because of the limited reduction in the rights of counterparties and the availability of other forms of protection for counterparties.

The proposal could also create economic costs by causing a marginal reduction in QFC-related economic activity. For example, a covered FSI may not enter into a QFC that it would have otherwise entered into in the absence of the proposed rule. Therefore, economic activity that would have been associated with that QFC absent the proposed rule (such as economic activity that would have otherwise been hedged with a derivatives contract or funded through a repo transaction) might not occur.

While uncertainty surrounding the future negotiations of economic actors makes an accurate quantification of any such costs difficult, costs from reduced QFC activity are likely to be very low. The proposed restrictions on default rights in covered QFCs are relatively narrow and would not change a counterparty's rights in response to its direct counterparty's entry into a bankruptcy proceeding (that is, the default rights covered by the Bankruptcy Code's “safe harbor” provisions). Counterparties are also able to prudently manage risk through other means, including entering into QFCs with entities that are not GSIB entities and therefore would not be subject to the proposed rule.

Question 11: The FDIC invites comment on all aspects of this evaluation of costs and benefits; in particular, whether covered FSIs expect to be able to share the costs of complying with this rulemaking with affiliated entities.

V. Revisions to Certain Definitions in the FDIC's Capital and Liquidity Rules

This proposal would also amend several definitions in the FDIC's capital and liquidity rules to help ensure that the proposal would not have unintended effects for the treatment of covered FSIs' netting agreements under those rules, consistent with the proposed amendments contained in the FRB NPRM and the OCC NPRM.101

101 On September 20, 2016, the FDIC adopted a separate final rule (the Final QMNA Rule), following the earlier notice of proposed rulemaking issued in January 2015, see 80 FR 5063 (Jan. 30, 2015), covering amendments to the definition of “qualifying master netting agreement” in the FDIC's capital and liquidity rules and related definitions in its capital rules. The Final QMNA Rule is designed to prevent similar unintended effects from implementation of special resolution regimes in non-U.S. jurisdictions, or by parties' adherence to the ISDA Protocol. The amendments contained in the Final QMNA Rule also are similar to revisions that the FRB and the OCC made in their joint 2014 interim final rule to ensure that the regulatory capital and liquidity rules' treatment of certain financial contracts is not affected by the implementation of special resolution regimes in foreign jurisdictions. See 79 FR 78287 (Dec. 30, 2014).

The FDIC's regulatory capital rules permit a banking organization to measure exposure from certain types of financial contracts on a net basis and recognize the risk-mitigating effect of financial collateral for other types of exposures, provided that the contracts are subject to a “qualifying master netting agreement” or agreement that provides for certain rights upon the default of a counterparty.102 The FDIC has defined “qualifying master netting agreement” to mean a netting agreement that permits a banking organization to terminate, apply close-out netting, and promptly liquidate or set-off collateral upon an event of default of the counterparty, thereby reducing its counterparty exposure and market risks.103 On the whole, measuring the amount of exposure of these contracts on a net basis, rather than on a gross basis, results in a lower measure of exposure and thus a lower capital requirement.

102See 12 CFR 324.34(a)(2).

103See the definition of “qualifying master netting agreement” in 12 CFR 324.2 (capital rules) and 329.3 (liquidity rules).

The current definition of “qualifying master netting agreement” recognizes that default rights may be stayed if the financial company is in resolution under the Dodd-Frank Act, the FDI Act, a substantially similar law applicable to government-sponsored enterprises, or a substantially similar foreign law, or where the agreement is subject by its terms to any of those laws. Accordingly, transactions conducted under netting agreements where default rights may be stayed in those circumstances may qualify for the favorable capital treatment described above. However, the current definition of “qualifying master netting agreement” does not recognize the restrictions that the proposal would impose on the QFCs of covered FSIs. Thus, a master netting agreement that is compliant with this proposal would not qualify as a qualifying master netting agreement. This would result in considerably higher capital and liquidity requirements for QFC counterparties of covered FSIs, which is not an intended effect of this proposal.

Accordingly, the proposal would amend the definition of “qualifying master netting agreement” so that a master netting agreement could qualify where the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty is limited to the extent necessary to comply with the requirements of this proposal. This revision would maintain the existing treatment for these contracts under the FDIC's capital and liquidity rules by accounting for the restrictions that the proposal would place on default rights related to covered FSIs' QFCs. The FDIC does not believe that the disqualification of master netting agreements that would result in this proposed amendment to the definition of “qualifying master netting agreement” in this proposal would accurately reflect the risk posed by the affected QFCs. As discussed above, the implementation of consistent restrictions on default rights in GSIB QFCs would increase the prospects for the orderly resolution of a failed GSIB and thereby protect the financial stability of the United States.

The proposal would similarly revise certain other definitions in the regulatory capital rules to make analogous conforming changes designed to account for this proposal's restrictions and ensure that a banking organization may continue to recognize the risk-mitigating effects of financial collateral received in a secured lending transaction, repo-style transaction, or eligible margin loan for purposes of the FDIC's capital rules. Specifically, the proposal would revise the definitions of “collateral agreement,” “eligible margin loan,” and “repo-style transaction” to provide that a counterparty's default rights may be limited as required by this proposal without unintended adverse impacts under the FDIC's capital rules.

The interagency rule establishing margin and capital requirements for covered swap entities (swap margin rule) defines the term “eligible master netting agreement” in a manner similar to the definition of “qualifying master netting agreement.” 104 Thus, it may also be appropriate to amend the definition of “eligible master netting agreement” to account for the proposed restrictions on covered FSIs' QFCs. Because the FDIC issued the swap margin rule jointly with other U.S. regulatory agencies, however, the FDIC would consult with the other agencies before proposing amendments to that rule's definition of “eligible master netting agreement.”

104 80 FR 74840, 74861-74862 (November 30, 2015). The FDIC's definition of “eligible master netting agreement” for purposes of the swap margin rule is codified at 12 CFR 349.2.

Question 12: The FDIC invites comment on all aspects of the proposed amendments to the definitions of “qualifying master netting agreement” in the regulatory capital and liquidity rules and “collateral agreement,” “eligible margin loan,” and “repo-style transaction” in the capital rules, including whether the definitions recognize the stay of termination rights under the appropriate resolution regimes.

VI. Regulatory Analysis A. Paperwork Reduction Act

The FDIC is proposing to add a new Part 382 to its rules to require certain FDIC-supervised institutions to ensure that covered QFCs to which they are a party provide that any default rights and restrictions on the transfer of the QFCs are limited to the same extent as they would be under the Dodd-Frank Act and the FDI Act. In addition, covered FSIs would generally be prohibited from being party to QFCs that would allow a QFC counterparty to exercise default rights against the covered FSI based on the entry into a resolution proceeding under the Dodd-Frank Act, FDI Act, or any other resolution proceeding of an affiliate of the covered FSI.

In accordance with the requirements of the Paperwork Reduction Act of 1995, 44 U.S.C. 3501 through 3521, (PRA), the FDIC may not conduct or sponsor, and the respondent is not required to respond to, an information collection unless it displays a currently valid OMB control number. Section 382.5 of the proposed rule contains “collection of information” requirements within the meaning of the PRA. Accordingly, the FDIC will obtain an OMB control number relating to the information collection associated with that section.

This information collection consists of amendments to covered QFCs and, in some cases, approval requests prepared and submitted to the FDIC regarding modifications to enhanced creditor protection provisions (in lieu of adherence to the ISDA Protocol). Section 382.5(b) of the proposed rule would require a covered banking entity to request the FDIC to approve as compliant with the requirements of section 382.4 of this subpart provisions of one or more forms of covered QFCs or amendments to one or more forms of covered QFCs, with enhanced creditor protection conditions. A covered FSI making a request must provide (1) an analysis of the proposal under each consideration of paragraph 382.5(d); (2) a written legal opinion verifying that proposed provisions or amendments would be valid and enforceable under applicable law of the relevant jurisdictions, including, in the case of proposed amendments, the validity and enforceability of the proposal to amend the covered QFCs; and (3) any additional information relevant to its approval that the FDIC requests.

Covered FSIs would also have recordkeeping associated with proposed amendments to their covered QFCs. However, much of the recordkeeping associated with amending the covered QFCs is already expected from a covered FSI. Therefore, the FDIC would expect minimal additional burden to accompany the initial efforts to bring all covered QFCs into compliance. The existing burden estimates for the information collection associated with section 382.5 are as follows:

Title Times/year Respondents Hours per
  • response
  • Total burden
  • hours
  • Paperwork for proposed revisions On occasion 6 40 240 Total Burden 240

    Question 13: The FDIC invites comments on:

    (a) Whether the collections of information are necessary for the proper performance of the FDIC's functions, including whether the information has practical utility;

    (b) The accuracy of the FDIC's estimates of the burden of the information collections, including the validity of the methodology and assumptions used;

    (c) Ways to enhance the quality, utility, and clarity of the information to be collected;

    (d) Ways to minimize the burden of information collections on respondents, including through the use of automated collection techniques or other forms of information technology; and

    (e) Estimates of capital or start-up costs and costs of operation, maintenance, and purchase of services to provide information.

    All comments will become a matter of public record. Comments on aspects of this notice that may affect reporting, recordkeeping, or disclosure requirements and burden estimates should be sent to the addresses listed in the ADDRESSES section. A copy of the comments may also be submitted to the OMB desk officer for the FDIC by mail to U.S. Office of Management and Budget, 725 17th Street NW., #10235, Washington, DC 20503, or by facsimile to 202-395-5806, or by email to [email protected], Attention, Federal Banking Agency Desk Officer.

    B. Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA), 5 U.S.C. 601 et seq., requires that each federal agency either certify that a proposed rule will not, if promulgated, have a significant economic impact on a substantial number of small entities or prepare and make available for public comment an initial regulatory flexibility analysis of the proposal.105 For the reasons provided below, the FDIC certifies that the proposed rule will not have a significant economic impact on a substantial number of small entities. Nevertheless, the FDIC is publishing and inviting comment on this initial regulatory flexibility analysis.

    105 See 5 U.S.C. 603, 605.

    The proposed rule would only apply to FSIs that form part of GSIB organizations, which include the largest, most systemically important banking organizations and certain of their subsidiaries. More specifically, the proposed rule would apply to any covered FSI that is a subsidiary of a U.S. GSIB or foreign GSIB—regardless of size—because an exemption for small entities would significantly impair the effectiveness of the proposed stay-and-transfer provisions and thereby undermine a key objective of the proposal: To reduce the execution risk of an orderly GSIB resolution.

    The FDIC estimates that the proposed rule would apply to approximately twelve FSIs. As of March 31, 2016, only six of the twelve covered FSIs have derivatives portfolios that could be affected. None of these six banking organizations would qualify as a small entity for the purposes of the RFA.106 In addition, the FDIC anticipates that any small subsidiary of a GSIB that could be affected by this proposed rule would not bear significant additional costs as it is likely to rely on its parent GSIB, or a large affiliate, that will be subject to similar reporting, recordkeeping, and compliance requirements.107 The proposed rule complements the FRB NPRM and OCC NPRM. It is not designed to duplicate, overlap with, or conflict with any other federal regulation.

    106 Under regulations issued by the Small Business Administration, small entities include banking organizations with total assets of $550 million or less.

    107 See FRB NPRM, 81 FR 29169 (May 11, 2016) and OCC NPRM, 81 FR 55381 (August 19, 2016).

    This initial regulatory flexibility analysis demonstrates that the proposed rule would not, if promulgated, have a significant economic impact on a substantial number of small entities, and the FDIC so certifies.108

    108 5 U.S.C. 605.

    Question 14: The FDIC welcomes written comments regarding this initial regulatory flexibility analysis, and requests that commenters describe the nature of any impact on small entities and provide empirical data to illustrate and support the extent of the impact. A final regulatory flexibility analysis will be conducted after consideration of comment received during the public comment period.

    C. Riegle Community Development and Regulatory Improvement Act of 1994

    The Riegle Community Development and Regulatory Improvement Act of 1994 (RCDRIA), 12 U.S.C. 4701, requires that each Federal banking agency, in determining the effective date and administrative compliance requirements for new regulations that impose additional reporting, disclosure, or other requirements on insured depository institutions, consider, consistent with principles of safety and soundness and the public interest, any administrative burdens that such regulations would place on depository institutions, including small depository institutions, and customers of depository institutions, as well as the benefits of such regulations. In addition, new regulations that impose additional reporting, disclosures, or other new requirements on insured depository institutions generally must take effect on the first day of a calendar quarter that begins on or after the date on which the regulations are published in final form.

    The FDIC has invited comment on these matters in other sections of this proposal and will continue to consider them as part of the overall rulemaking process.

    Question 15: The FDIC invites comment on this section, including any additional comments that will inform the FDIC's consideration of the requirements of RCDRIA.

    D. Solicitation of Comments on the Use of Plain Language

    Section 722 of the Gramm-Leach-Bliley Act, 12 U.S.C. 4809, requires the FDIC to use plain language in all proposed and final rules published after January 1, 2000. The FDIC invites comment on how to make this proposed rule easier to understand.

    Question 16: Has the FDIC organized the material to inform your needs? If not, how could the FDIC present the rule more clearly?

    Question 17: Are the requirements of the proposed rule clearly stated? If not, how could they be stated more clearly?

    Question 18: Does the proposal contain unclear technical language or jargon? If so, which language requires clarification?

    Question 19: Would a different format (such as a different grouping and ordering of sections, a different use of section headings, or a different organization of paragraphs) make the regulation easier to understand? If so, what changes would make the proposal clearer?

    Question 20: What else could the FDIC do to make the proposal clearer and easier to understand?

    List of Subjects 12 CFR Part 324

    Administrative practice and procedure, Banks, banking, Capital adequacy, Reporting and recordkeeping requirements, Securities, State savings associations, State non-member banks.

    12 CFR Part 329

    Administrative practice and procedure, Banks, banking, Federal Deposit Insurance Corporation, FDIC, Liquidity, Reporting and recordkeeping requirements.

    12 CFR Part 382

    Administrative practice and procedure, Banks, banking, Federal Deposit Insurance Corporation, FDIC, Qualified financial contracts, Reporting and recordkeeping requirements, State savings associations, State non-member banks.

    For the reasons stated in the supplementary information, the Federal Deposit Insurance Corporation proposes to amend 12 CFR Chapter III, parts 324, 329 and 382 as follows:

    PART 324—CAPITAL ADEQUACY OF FDIC-SUPERVISED INSTITUTIONS 1. The authority citation for part 324 continues to read as follows: Authority:

    12 U.S.C. 1815(a), 1815(b), 1816, 1818(a), 1818(b), 1818(c), 1818(t), 1819(Tenth), 1828(c), 1828(d), 1828(i), 1828(n), 1828(o), 1831o, 1835, 3907, 3909, 4808; 5371; 5412; Pub. L. 102-233, 105 Stat. 1761, 1789, 1790 (12 U.S.C. 1831n note); Pub. L. 102-242, 105 Stat. 2236, 2355, as amended by Pub. L. 103-325, 108 Stat. 2160, 2233 (12 U.S.C. 1828 note); Pub. L. 102-242, 105 Stat. 2236, 2386, as amended by Pub. L. 102-550, 106 Stat. 3672, 4089 (12 U.S.C. 1828 note); Pub. L. 111-203, 124 Stat. 1376, 1887 (15 U.S.C. 78o-7 note).

    2. Section 324.2 is amended by revising the definitions of “Collateral agreement,” “Eligible margin loan,” “Qualifying master netting agreement,” and “Repo-style transaction” to read as follows:
    § 324.2 Definitions.

    Collateral agreement means a legal contract that specifies the time when, and circumstances under which, a counterparty is required to pledge collateral to an FDIC-supervised institution for a single financial contract or for all financial contracts in a netting set and confers upon the FDIC-supervised institution a perfected, first-priority security interest (notwithstanding the prior security interest of any custodial agent), or the legal equivalent thereof, in the collateral posted by the counterparty under the agreement. This security interest must provide the FDIC-supervised institution with a right to close-out the financial positions and liquidate the collateral upon an event of default of, or failure to perform by, the counterparty under the collateral agreement. A contract would not satisfy this requirement if the FDIC-supervised institution's exercise of rights under the agreement may be stayed or avoided under applicable law in the relevant jurisdictions, other than:

    (1) In receivership, conservatorship, or resolution under the Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under any similar insolvency law applicable to GSEs, or laws of foreign jurisdictions that are substantially similar 4 to the U.S. laws referenced in this paragraph (1) in order to facilitate the orderly resolution of the defaulting counterparty; or

    4 The FDIC expects to evaluate jointly with the Federal Reserve and the OCC whether foreign special resolution regimes meet the requirements of this paragraph.

    (2) Where the agreement is subject by its terms to any of the laws referenced in paragraph (1) of this definition; or

    (3) Where the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty is limited only to the extent necessary to comply with the requirements of part 382 of this title or any similar requirements of another U.S. federal banking agency, as applicable.

    Eligible margin loan means:

    (1) An extension of credit where:

    (i) The extension of credit is collateralized exclusively by liquid and readily marketable debt or equity securities, or gold;

    (ii) The collateral is marked to fair value daily, and the transaction is subject to daily margin maintenance requirements; and

    (iii) The extension of credit is conducted under an agreement that provides the FDIC-supervised institution the right to accelerate and terminate the extension of credit and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, insolvency, liquidation, conservatorship, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than:

    (A) In receivership, conservatorship, or resolution under the Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under any similar insolvency law applicable to GSEs,5 or laws of foreign jurisdictions that are substantially similar 6 to the U.S. laws referenced in this paragraph in order to facilitate the orderly resolution of the defaulting counterparty; or

    5 This requirement is met where all transactions under the agreement are (i) executed under U.S. law and (ii) constitute “securities contracts” under section 555 of the Bankruptcy Code (11 U.S.C. 555), qualified financial contracts under section 11(e)(8) of the Federal Deposit Insurance Act, or netting contracts between or among financial institutions under sections 401-407 of the Federal Deposit Insurance Corporation Improvement Act or the Federal Reserve Board's Regulation EE (12 CFR part 231).

    6 The FDIC expects to evaluate jointly with the Federal Reserve and the OCC whether foreign special resolution regimes meet the requirements of this paragraph.

    (B) Where the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty is limited only to the extent necessary to comply with the requirements of part 382 of this title or any similar requirements of another U.S. federal banking agency, as applicable.

    (2) In order to recognize an exposure as an eligible margin loan for purposes of this subpart, an FDIC-supervised institution must comply with the requirements of § 324.3(b) with respect to that exposure.

    Qualifying master netting agreement means a written, legally enforceable agreement provided that:

    (1) The agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default following any stay permitted by paragraph (2) of this definition, including upon an event of receivership, insolvency, conservatorship, liquidation, or similar proceeding, of the counterparty;

    (2) The agreement provides the FDIC-supervised institution the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, conservatorship, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than:

    (i) In receivership, conservatorship, or resolution under the Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under any similar insolvency law applicable to GSEs, or laws of foreign jurisdictions that are substantially similar 7 to the U.S. laws referenced in this paragraph (2)(i) in order to facilitate the orderly resolution of the defaulting counterparty;

    7 The FDIC expects to evaluate jointly with the Federal Reserve and the OCC whether foreign special resolution regimes meet the requirements of this paragraph.

    (ii) Where the agreement is subject by its terms to, or incorporates, any of the laws referenced in paragraph (2)(i) of this definition; or

    (iii) Where the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty is limited only to the extent necessary to comply with the requirements of part 382 of this title or any similar requirements of another U.S. federal banking agency, as applicable;

    (3) The agreement does not contain a walkaway clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it otherwise would make under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement); and

    (4) In order to recognize an agreement as a qualifying master netting agreement for purposes of this subpart, an FDIC-supervised institution must comply with the requirements of § 324.3(d) of this chapter with respect to that agreement.

    Repo-style transaction means a repurchase or reverse repurchase transaction, or a securities borrowing or securities lending transaction, including a transaction in which the FDIC-supervised institution acts as agent for a customer and indemnifies the customer against loss, provided that:

    (1) The transaction is based solely on liquid and readily marketable securities, cash, or gold;

    (2) The transaction is marked-to-fair value daily and subject to daily margin maintenance requirements;

    (3)(i) The transaction is a “securities contract” or “repurchase agreement” under section 555 or 559, respectively, of the Bankruptcy Code (11 U.S.C. 555 or 559), a qualified financial contract under section 11(e)(8) of the Federal Deposit Insurance Act, or a netting contract between or among financial institutions under sections 401-407 of the Federal Deposit Insurance Corporation Improvement Act or the Federal Reserve's Regulation EE (12 CFR part 231); or

    (ii) If the transaction does not meet the criteria set forth in paragraph (3)(i) of this definition, then either:

    (A) The transaction is executed under an agreement that provides the FDIC-supervised institution the right to accelerate, terminate, and close-out the transaction on a net basis and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than in receivership, conservatorship, or resolution under the Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under any similar insolvency law applicable to GSEs, or laws of foreign jurisdictions that are substantially similar 8 to the U.S. laws referenced in this paragraph (3)(ii)(A) in order to facilitate the orderly resolution of the defaulting counterparty; or where the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty is limited only to the extent necessary to comply with the requirements of part 382 of this title or any similar requirements of another U.S. federal banking agency, as applicable; or

    8 The FDIC expects to evaluate jointly with the Federal Reserve and the OCC whether foreign special resolution regimes meet the requirements of this paragraph.

    (B) The transaction is:

    (1) Either overnight or unconditionally cancelable at any time by the FDIC-supervised institution; and

    (2) Executed under an agreement that provides the FDIC-supervised institution the right to accelerate, terminate, and close-out the transaction on a net basis and to liquidate or set off collateral promptly upon an event of counterparty default; and

    (4) In order to recognize an exposure as a repo-style transaction for purposes of this subpart, an FDIC-supervised institution must comply with the requirements of § 324.3(e) with respect to that exposure.

    PART 329—LIQUIDITY RISK MEASUREMENT STANDARDS 3. The authority citation for part 329 continues to read as follows: Authority:

    12 U.S.C. 1815, 1816, 1818, 1819, 1828, 1831p-1, 5412.

    4. Section 329.3 is amended by revising the definition of “Qualifying master netting agreement” to read as follows:
    § 329.3 Definitions.

    Qualifying master netting agreement means a written, legally enforceable agreement provided that:

    (1) The agreement creates a single legal obligation for all individual transactions covered by the agreement upon an event of default following any stay permitted by paragraph (2) of this definition, including upon an event of receivership, conservatorship, insolvency, liquidation, or similar proceeding, of the counterparty;

    (2) The agreement provides the FDIC-supervised institution the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default, including upon an event of receivership, conservatorship, insolvency, liquidation, or similar proceeding, of the counterparty, provided that, in any such case, any exercise of rights under the agreement will not be stayed or avoided under applicable law in the relevant jurisdictions, other than:

    (i) In receivership, conservatorship, or resolution under the Federal Deposit Insurance Act, Title II of the Dodd-Frank Act, or under any similar insolvency law applicable to GSEs, or laws of foreign jurisdictions that are substantially similar 109 to the U.S. laws referenced in this paragraph (2)(i) in order to facilitate the orderly resolution of the defaulting counterparty;

    109 The FDIC expects to evaluate jointly with the Federal Reserve and the OCC whether foreign special resolution regimes meet the requirements of this paragraph.

    (ii) Where the agreement is subject by its terms to, or incorporates, any of the laws referenced in paragraph (2)(i) of this definition; or

    (iii) Where the right to accelerate, terminate, and close-out on a net basis all transactions under the agreement and to liquidate or set-off collateral promptly upon an event of default of the counterparty is limited only to the extent necessary to comply with the requirements of part 382 of this title or any similar requirements of another U.S. federal banking agency, as applicable;

    (3) The agreement does not contain a walkaway clause (that is, a provision that permits a non-defaulting counterparty to make a lower payment than it otherwise would make under the agreement, or no payment at all, to a defaulter or the estate of a defaulter, even if the defaulter or the estate of the defaulter is a net creditor under the agreement); and

    (4) In order to recognize an agreement as a qualifying master netting agreement for purposes of this subpart, an FDIC-supervised institution must comply with the requirements of § 329.4(a) with respect to that agreement.

    12 CFR Chapter III Authority and Issuance

    For the reasons set forth in the supplementary information, the Federal Deposit Insurance Corporation proposes to amend 12 CFR Chapter III of the Code of Federal Regulations as follows:

    8. Add part 382 to read as follows: PART 382—RESTRICTIONS ON QUALIFIED FINANCIAL CONTRACTS Sec. 382.1 Definitions. 382.2 Applicability. 382.3 U.S. Special resolution regimes. 382.4 Insolvency proceedings. 382.5 Approval of enhanced creditor protection conditions. 382.6 [Reserved.] 382.7 Exclusion of certain QFCs. Authority:

    12 U.S.C. 1816, 1818, 1819, 1820(g) 1828, 1828(m), 1831n, 1831o, 1831p-l, 1831(u), 1831w.

    PART 382—RESTRICTIONS ON QUALIFIED FINANCIAL CONTRACTS
    § 382.1 Definitions.

    Affiliate has the same meaning as in section 12 U.S.C. 1813(w).

    Central counterparty (CCP) has the same meaning as in Part 324.2 of the FDIC's Regulations (12 CFR 324.2).

    Chapter 11 proceeding means a proceeding under Chapter 11 of Title 11, United States Code (11 U.S.C. 1101-74).

    Control has the same meaning as in section 12 U.S.C. 1813(w).

    Covered bank has the same meaning as in Part 47.3 of the Office of the Comptroller's Regulations (12 CFR 47.3).

    Covered entity has the same meaning as in section 252.82(a) of the Federal Reserve Board's Regulation YY (12 CFR 252.82).

    Covered QFC means a QFC as defined in sections 382.3 and 382.4 of this part.

    Covered FSI means any state savings association or state non-member bank (as defined in the Federal Deposit Insurance Act, 12 U.S.C. 1813(e)(2)) that is a direct or indirect subsidiary of (i) a global systemically important bank holding company that has been designated pursuant to section 252.82(a)(1) of the Federal Reserve Board's Regulation YY (12 CFR part 252.82); or (ii) a global systemically important foreign banking organization that has been designated pursuant to Subpart I of 12 CFR part 252 (FRB Regulation YY), and any subsidiary of a covered FSI.

    Credit enhancement means a QFC of the type set forth in §§ 210(c)(8)(D)(ii)(XII), (iii)(X), (iv)(V), (v)(VI), or (vi)(VI) of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5390(c)(8)(D)(ii)(XII), (iii)(X), (iv)(V), (v)(VI), or (vi)(VI)) or a credit enhancement that the Federal Deposit Insurance Corporation determines by regulation, rule or order is a QFC pursuant to section 210(c)(8)(D)(i) of Title II of the act (12 U.S.C. 5390(c)(8)(D)(i)).

    Default right (1) Means, with respect to a QFC, any

    (i) Right of a party, whether contractual or otherwise (including, without limitation, rights incorporated by reference to any other contract, agreement, or document, and rights afforded by statute, civil code, regulation, and common law), to liquidate, terminate, cancel, rescind, or accelerate such agreement or transactions thereunder, set off or net amounts owing in respect thereto (except rights related to same-day payment netting), exercise remedies in respect of collateral or other credit support or property related thereto (including the purchase and sale of property), demand payment or delivery thereunder or in respect thereof (other than a right or operation of a contractual provision arising solely from a change in the value of collateral or margin or a change in the amount of an economic exposure), suspend, delay, or defer payment or performance thereunder, or modify the obligations of a party thereunder, or any similar rights; and

    (ii) Right or contractual provision that alters the amount of collateral or margin that must be provided with respect to an exposure thereunder, including by altering any initial amount, threshold amount, variation margin, minimum transfer amount, the margin value of collateral, or any similar amount, that entitles a party to demand the return of any collateral or margin transferred by it to the other party or a custodian or that modifies a transferee's right to reuse collateral or margin (if such right previously existed), or any similar rights, in each case, other than a right or operation of a contractual provision arising solely from a change in the value of collateral or margin or a change in the amount of an economic exposure;

    (2) With respect to section 382.4, does not include any right under a contract that allows a party to terminate the contract on demand or at its option at a specified time, or from time to time, without the need to show cause.

    FDI Act means the Federal Deposit Insurance Act (12 U.S.C. 1811 et seq.).

    FDI Act proceeding means a proceeding that commences upon the Federal Deposit Insurance Corporation being appointed as conservator or receiver under section 11 of the Federal Deposit Insurance Act (12 U.S.C. 1821).

    FDI Act stay period means, in connection with an FDI Act proceeding, the period of time during which a party to a QFC with a party that is subject to an FDI Act proceeding may not exercise any right that the party that is not subject to an FDI Act proceeding has to terminate, liquidate, or net such QFC, in accordance with section 11(e) of the Federal Deposit Insurance Act (12 U.S.C. 1821(e)) and any implementing regulations.

    Global systemically important foreign banking organization means a global systemically important foreign banking organization that has been designated pursuant to Subpart I of 12 CFR part 252 (FRB Regulation YY).

    Master agreement means a QFC of the type set forth in section 210(c)(8)(D)(ii)(XI), (iii)(IX), (iv)(IV), (v)(V), or (vi)(V) of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5390(c)(8)(D)(ii)(XI), (iii)(IX), (iv)(IV), (v)(V), or (vi)(V)) or a master agreement that the Federal Deposit Insurance Corporation determines by regulation is a QFC pursuant to section 210(c)(8)(D)(i) of Title II of the act (12 U.S.C. 5390(c)(8)(D)(i)).

    Qualified financial contract (QFC) has the same meaning as in section 210(c)(8)(D) of Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5390(c)(8)(D)).

    Subsidiary of a covered FSI means any subsidiary of a covered FSI as defined in 12 U.S.C. 1813(w).

    U.S. special resolution regimes means the Federal Deposit Insurance Act (12 U.S.C. 1811-1835a) and regulations promulgated thereunder and Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (12 U.S.C. 5381-5394) and regulations promulgated thereunder.

    § 382.2 Applicability.

    (a) Scope of applicability. This part applies to a “covered FSI,” which means any state savings association or state non-member bank (as defined in the Federal Deposit Insurance Act, 12 U.S.C. 1813(e)(2)) that is a direct or indirect subsidiary of (i) a global systemically important bank holding company that has been designated pursuant to section 252.82(a)(1) of the Federal Reserve Board's Regulation YY (12 CFR part 252.82); or (ii) a global systemically important foreign banking organization that has been designated pursuant to Subpart I of 12 CFR part 252 (FRB Regulation YY), and any subsidiary of a covered FSI.

    (b) Initial applicability of requirements for covered QFCs. A covered FSI must comply with the requirements of §§ 382.3 and 382.4 beginning on the later of

    (1) The first day of the calendar quarter immediately following 365 days (1 year) after becoming a covered FSI; or

    (2) The date this subpart first becomes effective.

    (c) Rule of construction. For purposes of this subpart, the exercise of a default right with respect to a covered QFC includes the automatic or deemed exercise of the default right pursuant to the terms of the QFC or other arrangement.

    (d) Rights of receiver unaffected. Nothing in this subpart shall in any manner limit or modify the rights and powers of the FDIC as receiver under the FDI Act or Title II of the Dodd-Frank Act, including, without limitation, the rights of the receiver to enforce provisions of the FDI Act or Title II of the Dodd-Frank Act that limit the enforceability of certain contractual provisions.

    § 382.3 U.S. Special resolution regimes.

    (a) QFCs required to be conformed. (1) A covered FSI must ensure that each covered QFC conforms to the requirements of this section 382.3.

    (2) For purposes of this § 382.3, a covered QFC means a QFC that the covered FSI:

    (i) Enters, executes, or otherwise becomes a party to; or

    (ii) Entered, executed, or otherwise became a party to before the date this subpart first becomes effective, if the covered FSI or any affiliate that is a covered entity, covered bank, or covered FSI also enters, executes, or otherwise becomes a party to a QFC with the same person or affiliate of the same person on or after the date this subpart first becomes effective.

    (3) To the extent that the covered FSI is acting as agent with respect to a QFC, the requirements of this section apply to the extent the transfer of the QFC relates to the covered FSI or the default rights relate to the covered FSI or an affiliate of the covered FSI.

    (b) Provisions required. A covered QFC must explicitly provide that

    (1) The transfer of the covered QFC (and any interest and obligation in or under, and any property securing, the covered QFC) from the covered FSI will be effective to the same extent as the transfer would be effective under the U.S. special resolution regimes if the covered QFC (and any interest and obligation in or under, and any property securing, the covered QFC) were governed by the laws of the United States or a state of the United States and the covered FSI were under the U.S. special resolution regime; and

    (2) Default rights with respect to the covered QFC that may be exercised against the covered FSI are permitted to be exercised to no greater extent than the default rights could be exercised under the U.S. special resolution regimes if the covered QFC was governed by the laws of the United States or a state of the United States and (A) the covered FSI were under the U.S. special resolution regime; or (B) an affiliate of the covered FSI is subject to a U.S. special resolution regime.

    (c) Relevance of creditor protection provisions. The requirements of this section apply notwithstanding paragraphs §§ 382.4 and 382.5.

    § 382.4 Insolvency proceedings.

    This section 382.4 does not apply to proceedings under Title II of the Dodd-Frank Act. For purposes of this section:

    (a) QFCs required to be conformed. (1) A covered FSI must ensure that each covered QFC conforms to the requirements of this § 382.4.

    (2) For purposes of this § 382.4, a covered QFC has the same definition as in paragraph (a)(2) of § 382.3.

    (3) To the extent that the covered FSI is acting as agent with respect to a QFC, the requirements of this section apply to the extent the transfer of the QFC relates to the covered FSI or the default rights relate to an affiliate of the covered FSI.

    (b) General Prohibitions.

    (1) A covered QFC may not permit the exercise of any default right with respect to the covered QFC that is related, directly or indirectly, to an affiliate of the direct party becoming subject to a receivership, insolvency, liquidation, resolution, or similar proceeding.

    (2) A covered QFC may not prohibit the transfer of a covered affiliate credit enhancement, any interest or obligation in or under the covered affiliate credit enhancement, or any property securing the covered affiliate credit enhancement to a transferee upon or after an affiliate of the direct party becoming subject to a receivership, insolvency, liquidation, resolution, or similar proceeding unless the transfer would result in the supported party being the beneficiary of the credit enhancement in violation of any law applicable to the supported party.

    (c) Definitions relevant to the general prohibitions.

    (1) Direct party. Direct party means a covered entity, covered bank, or covered FSI referenced in paragraph (a) of § 382.2, that is a party to the direct QFC.

    (2) Direct QFC. Direct QFC means a QFC that is not a credit enhancement, provided that, for a QFC that is a master agreement that includes an affiliate credit enhancement as a supplement to the master agreement, the direct QFC does not include the affiliate credit enhancement.

    (3) Affiliate credit enhancement. Affiliate credit enhancement means a credit enhancement that is provided by an affiliate of a party to the direct QFC that the credit enhancement supports.

    (d) Treatment of agent transactions. With respect to a QFC that is a covered QFC for a covered FSI solely because the covered FSI is acting as agent under the QFC, the covered FSI is the direct party.

    (e) General creditor protections. Notwithstanding paragraph (b) of this section, a covered direct QFC and covered affiliate credit enhancement that supports the covered direct QFC may permit the exercise of a default right with respect to the covered QFC that arises as a result of

    (1) The direct party becoming subject to a receivership, insolvency, liquidation, resolution, or similar proceeding other than a receivership, conservatorship, or resolution under the FDI Act, Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or laws of foreign jurisdictions that are substantially similar to the U.S. laws referenced in this paragraph (e)(1) in order to facilitate the orderly resolution of the direct party;

    (2) The direct party not satisfying a payment or delivery obligation pursuant to the covered QFC or another contract between the same parties that gives rise to a default right in the covered QFC; or

    (3) The covered affiliate support provider or transferee not satisfying a payment or delivery obligation pursuant to a covered affiliate credit enhancement that supports the covered direct QFC.

    (f) Definitions relevant to the general creditor protections.

    (1) Covered direct QFC. Covered direct QFC means a direct QFC to which a covered entity, covered bank, or covered FSI referenced in paragraph (a) of 382.2, is a party.

    (2) Covered affiliate credit enhancement. Covered affiliate credit enhancement means an affiliate credit enhancement in which a covered entity, covered bank, or covered FSI referenced in paragraph (a) of § 382.2, is the obligor of the credit enhancement.

    (3) Covered affiliate support provider. Covered affiliate support provider means, with respect to a covered affiliate credit enhancement, the affiliate of the direct party that is obligated under the covered affiliate credit enhancement and is not a transferee.

    (4) Supported party. Supported party means, with respect to a covered affiliate credit enhancement and the direct QFC that the covered affiliate credit enhancement supports, a party that is a beneficiary of the covered affiliate support provider's obligation(s) under the covered affiliate credit enhancement.

    (g) Additional creditor protections for supported QFCs. Notwithstanding paragraph (b) of this section, with respect to a covered direct QFC that is supported by a covered affiliate credit enhancement, the covered direct QFC and the covered affiliate credit enhancement may permit the exercise of a default right that is related, directly or indirectly, to the covered affiliate support provider after the stay period if:

    (1) The covered affiliate support provider that remains obligated under the covered affiliate credit enhancement becomes subject to a receivership, insolvency, liquidation, resolution, or similar proceeding other than a Chapter 11 proceeding;

    (2) Subject to paragraph (i) of this section, the transferee, if any, becomes subject to a receivership, insolvency, liquidation, resolution, or similar proceeding;

    (3) The covered affiliate support provider does not remain, and a transferee does not become, obligated to the same, or substantially similar, extent as the covered affiliate support provider was obligated immediately prior to entering the receivership, insolvency, liquidation, resolution, or similar proceeding with respect to:

    (i) The covered affiliate credit enhancement;

    (ii) All other covered affiliate credit enhancements provided by the covered affiliate support provider in support of other covered direct QFCs between the direct party and the supported party under the covered affiliate credit enhancement referenced in paragraph (g)(3)(i) of this section; and

    (iii) All covered affiliate credit enhancements provided by the covered affiliate support provider in support of covered direct QFCs between the direct party and affiliates of the supported party referenced in paragraph (g)(3)(ii) of this section; or

    (4) In the case of a transfer of the covered affiliate credit enhancement to a transferee,

    (i) All of the ownership interests of the direct party directly or indirectly held by the covered affiliate support provider are not transferred to the transferee; or

    (ii) Reasonable assurance has not been provided that all or substantially all of the assets of the covered affiliate support provider (or net proceeds therefrom), excluding any assets reserved for the payment of costs and expenses of administration in the receivership, insolvency, liquidation, resolution, or similar proceeding, will be transferred or sold to the transferee in a timely manner.

    (h) Definitions relevant to the additional creditor protections for supported QFCs.

    (1) Stay period. Stay period means, with respect to a receivership, insolvency, liquidation, resolution, or similar proceeding, the period of time beginning on the commencement of the proceeding and ending at the later of 5:00 p.m. (eastern time) on the business day following the date of the commencement of the proceeding and 48 hours after the commencement of the proceeding.

    (2) Business day. Business day means a day on which commercial banks in the jurisdiction the proceeding is commenced are open for general business (including dealings in foreign exchange and foreign currency deposits).

    (3) Transferee. Transferee means a person to whom a covered affiliate credit enhancement is transferred upon or following the covered affiliate support provider entering a receivership, insolvency, liquidation, resolution, or similar proceeding or thereafter as part of the restructuring or reorganization involving the covered affiliate support provider.

    (i) Creditor protections related to FDI Act proceedings. Notwithstanding paragraphs (e) and (g) of this section, which are inapplicable to FDI Act proceedings, and notwithstanding paragraph (b) of this section, with respect to a covered direct QFC that is supported by a covered affiliate credit enhancement, the covered direct QFC and the covered affiliate credit enhancement may permit the exercise of a default right that is related, directly or indirectly, to the covered affiliate support provider becoming subject to FDI Act proceedings

    (1) After the FDI Act stay period, if the covered affiliate credit enhancement is not transferred pursuant to 12 U.S.C. 1821(e)(9)-(e)(10) and any regulations promulgated thereunder; or

    (2) During the FDI Act stay period, if the default right may only be exercised so as to permit the supported party under the covered affiliate credit enhancement to suspend performance with respect to the supported party's obligations under the covered direct QFC to the same extent as the supported party would be entitled to do if the covered direct QFC were with the covered affiliate support provider and were treated in the same manner as the covered affiliate credit enhancement.

    (j) Prohibited terminations. A covered QFC must require, after an affiliate of the direct party has become subject to a receivership, insolvency, liquidation, resolution, or similar proceeding,

    (1) The party seeking to exercise a default right to bear the burden of proof that the exercise is permitted under the covered QFC; and

    (2) Clear and convincing evidence or a similar or higher burden of proof to exercise a default right.

    § 382.5 Approval of enhanced creditor protection conditions.

    (a) Protocol compliance. Notwithstanding paragraph (b) of section 382.4, a covered QFC may permit the exercise of a default right with respect to the covered QFC if the covered QFC has been amended by the ISDA 2015 Universal Resolution Stay Protocol, including the Securities Financing Transaction Annex and Other Agreements Annex, published by the International Swaps and Derivatives Association, Inc., as of May 3, 2016, and minor or technical amendments thereto.

    (b) Proposal of enhanced creditor protection conditions. (1) A covered FSI may request that the FDIC approve as compliant with the requirements of § 382.4 proposed provisions of one or more forms of covered QFCs, or proposed amendments to one or more forms of covered QFCs, with enhanced creditor protection conditions.

    (2) Enhanced creditor protection conditions means a set of limited exemptions to the requirements of § 382.4(b) of this subpart that are different than that of paragraphs (e), (g), and (i) of § 382.4.

    (3) A covered FSI making a request under paragraph (b)(1) of this section must provide

    (i) An analysis of the proposal that addresses each consideration in paragraph (d) of this section;

    (ii) A written legal opinion verifying that proposed provisions or amendments would be valid and enforceable under applicable law of the relevant jurisdictions, including, in the case of proposed amendments, the validity and enforceability of the proposal to amend the covered QFCs; and

    (iii) Any other relevant information that the FDIC requests.

    (c) FDIC approval. The FDIC may approve, subject to any conditions or commitments the FDIC may set, a proposal by a covered FSI under paragraph (b) of this section if the proposal, as compared to a covered QFC that contains only the limited exemptions in paragraphs of (e), (g), and (i) of § 382.4 or that is amended as provided under paragraph (a) of this section, would promote the safety and soundness of covered FSIs by mitigating the potential destabilizing effects of the resolution of a global significantly important banking entity that is an affiliate of the covered FSI to at least the same extent.

    (d) Considerations. In reviewing a proposal under this section, the FDIC may consider all facts and circumstances related to the proposal, including:

    (1) Whether, and the extent to which, the proposal would reduce the resiliency of such covered FSIs during distress or increase the impact on U.S. financial stability were one or more of the covered FSIs to fail;

    (2) Whether, and the extent to which, the proposal would materially decrease the ability of a covered FSI, or an affiliate of a covered FSI, to be resolved in a rapid and orderly manner in the event of the financial distress or failure of the entity that is required to submit a resolution plan;

    (3) Whether, and the extent to which, the set of conditions or the mechanism in which they are applied facilitates, on an industry-wide basis, contractual modifications to remove impediments to resolution and increase market certainty, transparency, and equitable treatment with respect to the default rights of non-defaulting parties to a covered QFC;

    (4) Whether, and the extent to which, the proposal applies to existing and future transactions;

    (5) Whether, and the extent to which, the proposal would apply to multiple forms of QFCs or multiple covered FSIs;

    (6) Whether the proposal would permit a party to a covered QFC that is within the scope of the proposal to adhere to the proposal with respect to only one or a subset of covered FSIs;

    (7) With respect to a supported party, the degree of assurance the proposal provides to the supported party that the material payment and delivery obligations of the covered affiliate credit enhancement and the covered direct QFC it supports will continue to be performed after the covered affiliate support provider enters a receivership, insolvency, liquidation, resolution, or similar proceeding;

    (8) The presence, nature, and extent of any provisions that require a covered affiliate support provider or transferee to meet conditions other than material payment or delivery obligations to its creditors;

    (9) The extent to which the supported party's overall credit risk to the direct party may increase if the enhanced creditor protection conditions are not met and the likelihood that the supported party's credit risk to the direct party would decrease or remain the same if the enhanced creditor protection conditions are met; and

    (10) Whether the proposal provides the counterparty with additional default rights or other rights.

    § 382.6 [Reserved.]
    § 382.7 Exclusion of certain QFCs.

    (a) Exclusion of CCP-cleared QFCs. A covered FSI is not required to conform a covered QFC to which a CCP is party to the requirements of §§ 382.3 or 382.4.

    (b) Exclusion of covered entity or covered bank QFCs. A covered FSI is not required to conform a covered QFC to the requirements of §§ 382.3 or 382.4 to the extent that a covered entity or covered bank is required to conform the covered QFC to similar requirements of the Federal Reserve Board or Office of the Comptroller of the Currency if the QFC is either (A) a direct QFC to which a covered entity or a covered bank is a direct party or (B) an affiliate credit enhancement to which a covered entity or a covered bank is the obligor.

    Dated at Washington, DC, this 20th day of September, 2016.

    By order of the Board of Directors.

    Federal Deposit Insurance Corporation. Robert E. Feldman, Executive Secretary.
    [FR Doc. 2016-25605 Filed 10-25-16; 8:45 am] BILLING CODE P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 25 [Docket No. FAA-2015-2393; Notice No. 25-16-07-SC] Special Conditions: Bombardier Inc. Models BD-700-2A12 and BD-700-2A13 Airplanes; Fuselage Post-Crash Fire Survivability AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed special conditions.

    SUMMARY:

    This action proposes special conditions for the Bombardier Inc. (Bombardier) Model BD-700-2A12 and BD-700-2A13 airplanes. These airplanes will have novel or unusual design features when compared to the state of technology envisioned in the airworthiness standards for transport category airplanes. These features are associated with an aluminum-lithium fuselage construction that may provide different levels of protection from post-crash fire threats than similar aircraft constructed from traditional aluminum structure. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

    DATES:

    Send your comments on or before December 12, 2016.

    ADDRESSES:

    Send comments identified by docket number FAA-2015-2393 using any of the following methods:

    Federal eRegulations Portal: Go to http://www.regulations.gov/ and follow the online instructions for sending your comments electronically.

    Mail: Send comments to Docket Operations, M-30, U.S. Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room W12-140, West Building Ground Floor, Washington, DC 20590-0001.

    Hand Delivery or Courier: Take comments to Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 8 a.m. and 5 p.m., Monday through Friday, except federal holidays.

    Fax: Fax comments to Docket Operations at 202-493-2251.

    Privacy: The FAA will post all comments it receives, without change, to http://www.regulations.gov/, including any personal information the commenter provides. Using the search function of the docket Web site, anyone can find and read the electronic form of all comments received into any FAA docket, including the name of the individual sending the comment (or signing the comment for an association, business, labor union, etc.). DOT's complete Privacy Act Statement can be found in the Federal Register published on April 11, 2000 (65 FR 19477-19478), as well as at http://DocketsInfo.dot.gov/.

    Docket: Background documents or comments received may be read at http://www.regulations.gov/ at any time. Follow the online instructions for accessing the docket or go to the Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except federal holidays.

    FOR FURTHER INFORMATION CONTACT:

    Alan Sinclair, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone 425-227-2195; facsimile 425-227-1232.

    SUPPLEMENTARY INFORMATION: Comments Invited

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

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

    Background

    On May 30, 2012, Bombardier applied for an amendment to type certificate no. T00003NY to include the new Model BD-700-2A12 and BD-700-2A13 airplanes. These airplanes are derivatives of the Model BD-700 series of airplanes and are marketed as the Bombardier Global 7000 (Model BD-700-2A12) and Global 8000 (Model BD-700-2A13). These airplanes are twin-engine, transport-category, executive-interior business jets. The maximum passenger capacity is 19 and the maximum takeoff weights are 106,250 lbs. (Model BD-700-2A12) and 104,800 lbs. (Model BD-700-2A13).

    Type Certification Basis

    Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Bombardier must show that the Model BD-700-2A12 and BD-700-2A13 airplanes meet the applicable provisions of the regulations listed in Type Certificate no. T00003NY, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

    In addition, the certification basis includes other regulations, special conditions, and exemptions that are not relevant to these proposed special conditions. Type Certificate no. T00003NY will be updated to include a complete description of the certification basis for these airplane models.

    If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Model BD-700-2A12 and BD-700-2A13 airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

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

    In addition to the applicable airworthiness regulations and special conditions, the Model BD-700-2A12 and BD-700-2A13 airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

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

    Novel or Unusual Design Features

    Bombardier Inc. Model BD-700-2A12 and BD-700-2A13 airplanes will incorporate the following novel or unusual design feature: The fuselage will be fabricated using aluminum-lithium materials instead of conventional aluminum.

    Discussion

    The certification basis for the Bombardier Model BD-700-2A12 and BD-700-2A11 airplanes does not include the burn-through requirements defined in § 25.856(b) because both airplane models have a passenger capacity of fewer than 20. The Model BD-700-2A12 and BD-700-2A13 airplanes are introducing a new material other than what has traditionally been shown to be survivable from a “toxic” standpoint. The applicant must ensure that the material being installed on an airplane does not introduce a new hazard that would reduce the survivability of the passengers during a post-crash situation, or that would provide levels of toxic fumes that would be lethal or incapacitating, thus preventing evacuation of the airplane in a crash scenario.

    In accordance with § 21.16, fuselage structure that includes aluminum-lithium construction is an unusual design feature for large, transport-category airplanes certificated under 14 CFR part 25.

    Regulations applicable to burn requirements, including §§ 25.853 and 25.856(a), remain valid for these airplanes, but do not reflect the threat generated from potentially toxic levels of gases produced from aluminum-lithium materials.

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

    Applicability

    As discussed above, these special conditions are applicable to the Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes. Should Bombardier apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to the other model as well.

    Conclusion

    This action affects only certain novel or unusual design features on Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes. It is not a rule of general applicability.

    List of Subjects in 14 CFR Part 25

    Aircraft, Aviation safety, Reporting and recordkeeping requirements.

    The authority citation for these special conditions is as follows:

    Authority:

    49 U.S.C. 106(g), 40113, 44701, 44702, 44704.

    The Special Conditions

    Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes.

    The Model BD-700-2A12 and BD-700-2A13 airplanes must show that toxic levels of gases produced from the aluminum-lithium material, when exposed to a post-crash fire threat, are in no way an additional threat to the passengers, including, but not limited to, their ability to evacuate, when compared to traditional aluminum airplane materials.

    Issued in Renton, Washington, on October 14, 2016. Michael Kaszycki, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25808 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 25 [Docket No. FAA-2016-4158; Notice No. 25-16-06-SC] Special Conditions: Bombardier Inc. Model BD-700-2A12 and BD-700-2A13 Airplanes; Fuselage In-Flight Fire Safety and Flammability Resistance of Aluminum-Lithium Material AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed special conditions.

    SUMMARY:

    This action proposes special conditions for the Bombardier Inc. (Bombardier) Model BD-700-2A12 and BD-700-2A13 airplanes. These airplanes will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport-category airplanes. This design feature is a fuselage fabricated using aluminum-lithium materials instead of conventional aluminum. The applicable airworthiness regulations do not contain adequate or appropriate fire-safety standards for this design feature. These proposed special conditions contain the additional fire-safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

    DATES:

    Send your comments on or before December 12, 2016.

    ADDRESSES:

    Send comments identified by docket number FAA-2016-4158 using any of the following methods:

    Federal eRegulations Portal: Go to http://www.regulations.gov/ and follow the online instructions for sending your comments electronically.

    Mail: Send comments to Docket Operations, M-30, U.S. Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room W12-140, West Building Ground Floor, Washington, DC 20590-0001.

    Hand Delivery or Courier: Take comments to Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Fax: Fax comments to Docket Operations at 202-493-2251.

    Privacy: The FAA will post all comments it receives, without change, to http://www.regulations.gov/, including any personal information the commenter provides. Using the search function of the docket Web site, anyone can find and read the electronic form of all comments received into any FAA docket, including the name of the individual sending the comment (or signing the comment for an association, business, labor union, etc.). DOT's complete Privacy Act Statement can be found in the Federal Register published on April 11, 2000 (65 FR 19477-19478), as well as at http://DocketsInfo.dot.gov/.

    Docket: Background documents or comments received may be read at http://www.regulations.gov/ at any time. Follow the online instructions for accessing the docket or go to Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    FOR FURTHER INFORMATION CONTACT:

    Alan Sinclair, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington, 98057-3356; telephone 425-227-2195; facsimile 425-227-1320.

    SUPPLEMENTARY INFORMATION:

    Comments Invited

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

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

    Background

    On May 30, 2012, Bombardier applied for an amendment to type certificate no. T00003NY to include the new Model BD-700-2A12 and BD-700-2A13 airplanes. These airplanes are derivatives of the Model BD-700 series of airplanes and are marketed as the Bombardier Global 7000 (Model BD-700-2A12) and Global 8000 (Model BD-700-2A13). These airplanes are twin-engine, transport-category, executive-interior business jets. The maximum passenger capacity is 19 and the maximum takeoff weights are 106,250 lb. (Model BD-700-2A12) and 104,800 lb. (Model BD-700-2A13).

    Type Certification Basis

    Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Bombardier must show that the Model BD-700-2A12 and BD-700-2A13 airplanes meet the applicable provisions of the regulations listed in Type Certificate no. T00003NY, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

    In addition, the certification basis includes other regulations, special conditions, and exemptions that are not relevant to these proposed special conditions. Type Certificate no. T00003NY will be updated to include a complete description of the certification basis for these airplane models.

    If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Model BD-700-2A12 and BD-700-2A13 airplanes because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

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

    In addition to the applicable airworthiness regulations and special conditions, the Model BD-700-2A12 and BD-700-2A13 airplanes must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36.

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

    Novel or Unusual Design Features

    Bombardier Inc. Model BD-700-2A12 and BD-700-2A13 airplanes will incorporate the following novel or unusual design feature: The fuselage will be fabricated using aluminum-lithium materials instead of conventional aluminum.

    Discussion

    The Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes will be fabricated using aluminum-lithium materials. The performance of airplanes consisting of a conventional aluminum fuselage, in an in-flight, inaccessible-fire scenario, is understood based on service history, and extensive intermediate- and large-scale fire testing. Experience has shown that eliminating fire propagation of the interior and insulation materials tends to increase survivability because other aspects of in-flight fire safety (e.g., toxic-gas emission and smoke obscuration) are typically byproducts of the propagating fire. The fuselage itself does not contribute to in-flight fire propagation. This may not be the case for a fuselage fabricated from aluminum-lithium materials. Therefore, a special condition is necessary so that the Model BD-700-2A12 and BD-700-2A13 airplanes provide protection against in-flight fires propagating along the surface of the fuselage.

    In the past, fatal in-flight fires have originated in inaccessible areas of airplanes where thermal or acoustic insulation was located adjacent to the airplane's aluminum fuselage skin. Research revealed that this area has been the path for flame propagation and fire growth. The FAA determined, in five incidents in the 1990s, that unexpected flame spread along thermal and acoustic insulation-film covering material, raising concerns about the fire performance of this material. In all cases, the ignition source was relatively modest and, in most cases, was electrical in origin (e.g., electrical short circuit, arcing caused by chafed wiring, ruptured ballast case, etc.).

    In 1996, the FAA Technical Center began a program to develop new fire-test criteria for insulation films directly relating to in-flight fire resistance. This development program resulted in a new test method—the radiant-panel test—and also resulted in test criteria specifically established for improving the in-flight fire ignition and flame propagation of thermal and acoustic insulation materials based on actual, on-board fire scenarios.

    The FAA determined that a test similar to the test for the measurement of insulation burnthrough resistance (14 CFR part 25, Appendix F, Part VII, “Test Method to Determine the Burnthrough Resistance of Thermal/Acoustic Insulation Materials”) could be used to assess the flammability characteristics of the proposed fuselage aluminum-lithium material. The only change to the test is the size of the sample and the sample holder, to accommodate panels of the fuselage material.

    Bombardier must use the test method contained in Part VII of Appendix F, Test Method, to determine the burnthrough resistance of thermal-acoustic insulation materials, with the slight changes to the sample size and sample holder, as described in these special conditions, to show compliance with applicable requirements.

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

    Applicability

    As discussed above, these special conditions are applicable to Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes. Should Bombardier apply at a later date for a change to the type certificate to include another model incorporating the same novel or unusual design feature, these special conditions would apply to the other model as well.

    Conclusion

    This action affects only certain novel or unusual design features on Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes. It is not a rule of general applicability.

    List of Subjects in 14 CFR Part 25

    Aircraft, Aviation safety, Reporting and recordkeeping requirements.

    The authority citation for these special conditions is as follows:

    Authority:

    49 U.S.C. 106(g), 40113, 44701, 44702, 44704.

    The Proposed Special Conditions

    Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Bombardier Model BD-700-2A12 and BD-700-2A13 airplanes.

    1. Bombardier Inc. must demonstrate that the aluminum-lithium material has equal or better flammability-resistance characteristics than the aluminum-alloy sheet material typically used as skin material on similar airplanes.

    2. The test set-up and methodology must be in accordance with the tests described in 14 CFR part 25, Appendix F, Part VII, except for the following.

    a. Each test sample must consist of a flat test specimen. A set of three samples of aluminum-lithium sheet material must be tested. The size of each sample must be 16 inches wide by 24 inches long by 0.063 inch thick.

    b. The test samples must be installed into a steel-sheet subframe with outside dimensions of 18 inches by 32 inches. The subframe must have a 14.5-inch by 22.5-inch opening cut into it. The tests samples must be mounted onto the subframe using 0.250-20 UNC threaded bolts.

    c. Test specimens must be conditioned at 70 °F ± 5 °F, and 55% ± 5% humidity, for at least 24 hours before testing.

    3. The aluminum-lithium material must not ignite during any of the tests.

    Issued in Renton, Washington, on October 14, 2016. Michael Kaszycki, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25809 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 25 [Docket No. FAA-2016-8247; Notice No. 25-16-08-SC] Special Conditions: Aerocon Engineering Company, Boeing Model 777-200 Airplane; Access Hatch Installed Between the Cabin and the Class C Cargo Compartment To Allow In-Flight Access to the Cargo Compartment AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed special conditions.

    SUMMARY:

    This action proposes special conditions for the Boeing Model 777-200 airplane. This airplane, as modified by Aerocon Engineering Company (Aerocon), will have a novel or unusual design feature when compared to the state of technology envisioned in the airworthiness standards for transport-category airplanes. This design feature is an access hatch, installed between the cabin and the Class C cargo compartment, to allow in-flight access to the Class C cargo compartment. The applicable airworthiness regulations do not contain adequate or appropriate safety standards for this design feature. These proposed special conditions contain the additional safety standards that the Administrator considers necessary to establish a level of safety equivalent to that established by the existing airworthiness standards.

    DATES:

    Send your comments on or before December 12, 2016.

    ADDRESSES:

    Send comments identified by docket number FAA-2016-8247 using any of the following methods:

    Federal eRegulations Portal: Go to http://www.regulations.gov/ and follow the online instructions for sending your comments electronically.

    Mail: Send comments to Docket Operations, M-30, U.S. Department of Transportation (DOT), 1200 New Jersey Avenue SE., Room W12-140, West Building Ground Floor, Washington, DC, 20590-0001.

    Hand Delivery or Courier: Take comments to Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Fax: Fax comments to Docket Operations at 202-493-2251.

    Privacy: The FAA will post all comments it receives, without change, to http://www.regulations.gov/, including any personal information the commenter provides. Using the search function of the docket Web site, anyone can find and read the electronic form of all comments received into any FAA docket, including the name of the individual sending the comment (or signing the comment for an association, business, labor union, etc.). DOT's complete Privacy Act Statement can be found in the Federal Register published on April 11, 2000 (65 FR 19477-19478), as well as at http://DocketsInfo.dot.gov/.

    Docket: Background documents or comments received may be read at http://www.regulations.gov/ at any time. Follow the online instructions for accessing the docket or go to Docket Operations in Room W12-140 of the West Building Ground Floor at 1200 New Jersey Avenue SE., Washington, DC, between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    FOR FURTHER INFORMATION CONTACT:

    John Shelden, FAA, Airframe and Cabin Safety Branch, ANM-115, Transport Airplane Directorate, Aircraft Certification Service, 1601 Lind Avenue SW., Renton, Washington 98057-3356; telephone 425-227-2785; facsimile 425-227-1320.

    SUPPLEMENTARY INFORMATION: Comments Invited

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

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

    Background

    On June 26, 2015, Aerocon applied for a supplemental type certificate to install an access hatch between the cabin and Class C cargo compartment in the Boeing Model 777-200 airplane. This airplane is a twin-engine, transport-category airplane with a VIP interior configuration. The Model 777-200 has a maximum passenger capacity of 440, and a maximum takeoff weight of 535,000 pounds.

    Type Certification Basis

    Under the provisions of Title 14, Code of Federal Regulations (14 CFR) 21.101, Aerocon must show that the Boeing Model 777-200 airplane, as changed, continues to meet the applicable provisions of the regulations listed in Type Certificate No. T00001SE, or the applicable regulations in effect on the date of application for the change, except for earlier amendments as agreed upon by the FAA.

    If the Administrator finds that the applicable airworthiness regulations (i.e., 14 CFR part 25) do not contain adequate or appropriate safety standards for the Boeing Model 777-200 airplane because of a novel or unusual design feature, special conditions are prescribed under the provisions of § 21.16.

    Special conditions are initially applicable to the model for which they are issued. Should the applicant apply for a supplemental type certificate to modify any other model included on the same type certificate to incorporate the same novel or unusual design feature, these special conditions would also apply to the other model under § 21.101.

    In addition to the applicable airworthiness regulations and special conditions, the Boeing Model 777-200 airplane, as modified by Aerocon, must comply with the fuel-vent and exhaust-emission requirements of 14 CFR part 34, and the noise-certification requirements of 14 CFR part 36

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

    Novel or Unusual Design Features

    The Boeing Model 777-200 airplane, as modified by Aerocon, will incorporate the following novel or unusual design feature: An access hatch installed between the cabin and the Class C cargo compartment, to allow in-flight access to the Class C cargo compartment.

    Discussion

    The VIP operator requests to have access to the aft lower-deck Class C cargo compartment on their Boeing Model 777-200 airplane to store trash during flight. The installation consists of an access hatch from the main passenger cabin, with an access ladder, and a trash container mounted on its own standard airliner pallet in the lower-deck Class C cargo compartment.

    The FAA considers that the access hatch may impact the isolation of the passenger cabin from the cargo compartment. Isolation is necessary to protect the passengers, as required by § 25.857(c), from fire and smoke that may start within the cargo compartment. In addition, the in-flight access to the lower-deck Class C compartment creates unique hazards resulting from passengers having access to cargo and baggage in the compartment. These hazards include the safety of the persons entering the cargo compartment, possible hazards to the airplane as a result of the access, and security concerns with access to the checked baggage and cargo. The proposed special conditions defined herein provide additional requirements necessary to ensure sufficient cabin isolation from fire and smoke in this unusual design configuration, and for passenger safety while occupying the Class C compartment.

    The current rules relating to Class C cargo compartments do not address provisions for in-flight accessibility. The intent of the Class C cargo compartment was that it be a self-contained and isolated compartment intended to carry baggage and cargo, but not intended for human habitation. The FAA gave no consideration to an in-flight-accessible Class C cargo compartment when the classification was first developed, as no manufacturer had ever incorporated such a feature into their design. Inherently, a “cargo compartment” was not intended for in-flight access, especially by the traveling public. An allowance has been made specifically for crew access into a Class B cargo compartment for the express purpose of firefighting. Access into a cargo compartment carries with it an increased level of risk to the occupant entering the compartment, and to the airplane, as baggage or cargo could shift, a decompression could occur in the compartment, or a fire could develop during flight.

    The FAA has determined that the existing airworthiness standards do not contain adequate or appropriate safety standards relative to passenger access to cargo compartments. As a result, special conditions are the appropriate means to address this and all future in-flight-accessible Class C cargo compartments.

    Based upon the above discussion, the cargo-compartment isolation criterion is the main concern related to the access-hatch design, which is intended to be installed between the cabin and the Class C cargo compartment.

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

    Applicability

    As discussed above, these proposed special conditions are applicable to the Boeing Model 777-200 airplane modified by Aerocon. Should Aerocon apply at a later date for a supplemental type certificate to modify any other model included on Type Certificate No. T00001SE to incorporate the same novel or unusual design feature, these special conditions would apply to that model as well.

    Conclusion

    This action affects only certain novel or unusual design features on one model series of airplane. It is not a rule of general applicability and affects only the applicant who applied to the FAA for approval of these features on the airplane.

    List of Subjects in 14 CFR Part 25

    Aircraft, Aviation safety, Reporting and recordkeeping requirements.

    The authority citation for these special conditions is as follows:

    Authority:

    49 U.S.C. 106(g), 40113, 44701, 44702, 44704.

    The Proposed Special Conditions

    Accordingly, the Federal Aviation Administration (FAA) proposes the following special conditions as part of the type certification basis for Boeing Model 777-200 airplanes modified by Aerocon.

    1. The flight deck must contain an indicator to advise the flightcrew when the access hatch is opened.

    2. One cabin crewmember must be present to monitor the hatch from the main cabin when another cabin crewmember is using the access hatch to access the aft lower-deck Class C cargo compartment. This access-hatch procedure must be included in the Cabin Crew Operating Manual.

    3. Means must be provided to keep the access hatch open while the aft lower-deck Class C cargo compartment is occupied during flight.

    4. Access to the aft lower-deck Class C cargo compartment or using the access hatch is not allowed during:

    a. Taxi, takeoff, and landing,

    b. when the fasten-seat-belt sign is illuminated,

    c. in the event of emergency not limited to smoke and fire detected in the cargo compartment.

    5. A placard stating, “Do Not Enter During Taxi, Takeoff, Landing, or Emergency” (or similar wording) must be located outside of, and on or near the access hatch of, the aft lower-deck Class C cargo compartment.

    6. The airplane must be operated as private, not for hire, not for common carriage. This provision does not preclude the operator from receiving remuneration to the extent consistent with 14 CFR parts 125 and 91, subpart F, as applicable.

    7. Use of the access hatch, and access to the aft Class C cargo compartment, is limited to the crew only. A placard stating, “Crew Only Access” must be located outside of, and on or near the access hatch of, the aft lower-deck Class C cargo compartment.

    8. The Airplane Flight Manual must instruct the crew to close the access hatch when crew are not accessing the aft lower-deck Class C cargo compartment.

    9. Special conditions 4, 6, and 7 must be documented in the Limitations section of the Airplane Flight Manual.

    Note:

    The airplane owner or operator must contact the Transport Security Administration (TSA) prior to operating within United States airspace to ensure that this design, and related operational procedures, comply with TSA requirements.

    Issued in Renton, Washington, on October 14, 2016. Michael Kaszycki, Assistant Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25810 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9300; Directorate Identifier 2016-NM-124-AD] RIN 2120-AA64 Airworthiness Directives; The Boeing Company Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all The Boeing Company Model DC-6, DC-6A, C-118A, R6D-1, DC-6B, and R6D-1Z airplanes. This proposed AD was prompted by a report of a fuel leak in a Model C-118A airplane that resulted from a crack in the wing lower skin. This proposed AD would require repetitive radiographic, electromagnetic testing high frequency (ETHF), and electromagnetic testing low frequency (ETLF) inspections for cracking of the wing lower skin, and repairs if necessary. We are proposing this AD to detect and correct fatigue cracking in the wing lower skin, which could adversely affect the structural integrity of the wing.

    DATES:

    We must receive comments on this proposed AD by December 12, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

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

    Fax: 202-493-2251.

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

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221. It is also available on the internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9300.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9300; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Haytham Alaidy, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles Aircraft Certification Office (ACO), 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5224; fax: 562-627-5210; email: [email protected]

    SUPPLEMENTARY INFORMATION: Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9300; Directorate Identifier 2016-NM-124-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    We have received a report of a fuel leak in a Model C-118A airplane. The fuel leak, discovered during a post-flight inspection, resulted from a crack in the wing lower skin just inboard of the number 2 nacelle attach angle at wing station 175.

    Related AD 80-12-02 R1, Amendment 39-5499, applies to Model DC-6, DC-6A, DC-6B, R6D, and C-118 series airplanes. AD 80-12-02 R1 requires repetitive inspections for cracking of the left and right wing lower skin at certain locations. Although wing station 175 is covered by the inspection mandated in AD 80-12-02 R1, the crack was missed during an AD-required inspection.

    Boeing Alert Service Bulletin DC6-57A001, dated April 28, 2016 (“ASB DC6-57A001, Revision 0”) is an alternative method of compliance (AMOC) to the inspections required by paragraph (c)(1) of AD 80-12-02 R1. This AMOC only applies to the areas inspected in accordance with ASB DC6-57A001, Revision 0. The service information referenced in this NPRM contains revised inspection procedures for crack detection in the area around wing station 175. Such cracking in the wing lower skin could adversely affect the structural integrity of the wing.

    Related Service Information Under 1 CFR Part 51

    We reviewed ASB DC6-57A001, Revision 0. The service information describes procedures for radiographic, ETHF, and ETLF inspections for cracking of the wing lower skin at station 175, and repairs. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of these same type designs.

    Proposed AD Requirements

    This proposed AD would require accomplishing the actions specified in the service information described previously, except as discussed under “Differences Between this Proposed AD and the Service Information.” For information on the procedures and compliance times, see this service information at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9300.

    Differences Between This Proposed AD and the Service Information

    ASB DC6-57A001, Revision 0, specifies to contact the manufacturer for certain instructions, but this proposed AD would require accomplishment of repair methods, modification deviations, and alteration deviations in one of the following ways:

    • In accordance with a method that we approve; or

    • Using data that meet the certification basis of the airplane, and that have been approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) whom we have authorized to make those findings.

    Costs of Compliance

    We estimate that this proposed AD affects 36 airplanes of U.S. registry. We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per product Cost on U.S. operators Inspections 17 work-hours × $85 per hour = $1,445 per inspection cycle $0 $1,445 per inspection cycle $52,020 per inspection cycle.

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

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

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

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

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): The Boeing Company: Docket No. FAA-2016-9300; Directorate Identifier 2016-NM-124-AD. (a) Comments Due Date

    We must receive comments by December 12, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to all The Boeing Company Model DC-6, DC-6A, DC-6B, C-118A, R6D-1, and R6D-1Z airplanes, certificated in any category.

    (d) Subject

    Air Transport Association (ATA) of America Code 57, Wings.

    (e) Unsafe Condition

    This AD was prompted by a report of a fuel leak in a Model C-118A airplane that resulted from a crack in the wing lower skin just inboard of the number 2 nacelle attach angle at wing station 175. We are issuing this AD to detect and correct fatigue cracking in the wing lower skin, which could adversely affect the structural integrity of the wing.

    (f) Compliance

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

    (g) Repetitive Inspections

    Except as specified in paragraph (i) of this AD: At the applicable time specified in paragraph 1.E., “Compliance,” of Boeing Alert Service Bulletin DC6-57A001, dated April 28, 2016 (“ASB DC6-57A001, Revision 0”), do radiographic, electromagnetic testing high frequency (ETHF), and electromagnetic testing low frequency (ETLF) inspections for cracking of the wing lower skin at station 175, in accordance with the Accomplishment Instructions of ASB DC6-57A001, Revision 0. Repeat the radiographic, ETHF, and ETLF inspections of any unrepaired areas thereafter at the applicable intervals specified in paragraph 1.E., “Compliance,” of ASB DC6-57A001, Revision 0.

    (h) Repairs

    If any cracking is found during any inspection required by this AD: Before further flight, repair the cracking using a method approved in accordance with the procedures specified in paragraph (j) of this AD.

    (i) Service information Exception

    Where paragraph 1.E., “Compliance,” of ASB DC6-57A001, Revision 0, specifies a compliance time “after the original issue date of this service bulletin,” this AD requires compliance within the specified compliance time after the effective date of this AD.

    (j) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Los Angeles Aircraft Certification Office (ACO), FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the manager of the ACO, send it to the attention of the person identified in paragraph (k)(1) of this AD. Information may be emailed to: [email protected]

    (2) Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office.

    (3) An AMOC that provides an acceptable level of safety may be used for any repair, modification, or alteration required by this AD if it is approved by the Boeing Commercial Airplanes Organization Designation Authorization (ODA) that has been authorized by the Manager, Los Angeles ACO, to make those findings. To be approved, the repair method, modification deviation, or alteration deviation must meet the certification basis of the airplane, and the approval must specifically refer to this AD.

    (4) For service information that contains steps that are labeled as Required for Compliance (RC), the provisions of paragraphs (j)(4)(i) and (j)(4)(ii) of this AD apply.

    (i) The steps labeled as RC, including substeps under an RC step and any figures identified in an RC step, must be done to comply with the AD. If a step or substep is labeled “RC Exempt,” then the RC requirement is removed from that step or substep. An AMOC is required for any deviations to RC steps, including substeps and identified figures.

    (ii) Steps not labeled as RC may be deviated from using accepted methods in accordance with the operator's maintenance or inspection program without obtaining approval of an AMOC, provided the RC steps, including substeps and identified figures, can still be done as specified, and the airplane can be put back in an airworthy condition.

    (k) Related Information

    (1) For more information about this AD, contact Haytham Alaidy, Aerospace Engineer, Airframe Branch, ANM-120L, FAA, Los Angeles ACO, 3960 Paramount Boulevard, Lakewood, CA 90712-4137; phone: 562-627-5224; fax: 562-627-5210; email: [email protected]

    (2) For service information identified in this AD, contact Boeing Commercial Airplanes, Attention: Contractual & Data Services (C&DS), 2600 Westminster Blvd., MC 110-SK57, Seal Beach, CA 90740-5600; telephone 562-797-1717; Internet https://www.myboeingfleet.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on October 13, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25663 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9298; Directorate Identifier 2015-NM-161-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all Airbus Model A300 series airplanes. This AD was prompted by an evaluation by the design approval holder (DAH) that indicates a section of the wing and aft fuselage is subject to widespread fatigue damage (WFD). This proposed AD would require an inspection to determine if certain modifications have been done. For airplanes on which the specified modifications have not been done, this proposed AD would require accomplishing those modifications, including doing related investigative and corrective actions if necessary. We are proposing this AD to prevent reduced structural integrity of these airplanes due to the failure of certain structural components.

    DATES:

    We must receive comments on this proposed AD by December 12, 2016.

    ADDRESSES:

    You may send comments by any of the following methods:

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

    Fax: 202-493-2251.

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

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

    For service information identified in this NRPM, contact Airbus SAS, Airworthiness Office-EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email: [email protected]; Internet http://www.airbus.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9298; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

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

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9298; Directorate Identifier 2015-NM-161-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    Structural fatigue damage is progressive. It begins as minute cracks, and those cracks grow under the action of repeated stresses. This can happen because of normal operational conditions and design attributes, or because of isolated situations or incidents such as material defects, poor fabrication quality, or corrosion pits, dings, or scratches. Fatigue damage can occur locally, in small areas or structural design details, or globally. Global fatigue damage is general degradation of large areas of structure with similar structural details and stress levels. Multiple-site damage is global damage that occurs in a large structural element such as a single rivet line of a lap splice joining two large skin panels. Global damage can also occur in multiple elements such as adjacent frames or stringers. Multiple-site-damage and multiple-element-damage cracks are typically too small initially to be reliably detected with normal inspection methods. Without intervention, these cracks will grow, and eventually compromise the structural integrity of the airplane, in a condition known as WFD. As an airplane ages, WFD will likely occur, and will certainly occur if the airplane is operated long enough without any intervention.

    The FAA's WFD final rule (75 FR 69746, November 15, 2010) became effective on January 14, 2011. The WFD rule requires certain actions to prevent structural failure due to WFD throughout the operational life of certain existing transport category airplanes and all transport category airplanes that will be certificated in the future. For existing and future airplanes subject to the WFD rule, the rule requires that DAHs establish a limit of validity (LOV) of the engineering data that support the structural maintenance program. Operators affected by the WFD rule may not fly an airplane beyond its LOV, unless an extended LOV is approved.

    The WFD rule (75 FR 69746, November 15, 2010) does not require identifying and developing maintenance actions if the DAHs can show that such actions are not necessary to prevent WFD before the airplane reaches the LOV. Many LOVs, however, do depend on accomplishment of future maintenance actions. As stated in the WFD rule, any maintenance actions necessary to reach the LOV will be mandated by airworthiness directives through separate rulemaking actions.

    In the context of WFD, this action is necessary to enable DAHs to propose LOVs that allow operators the longest operational lives for their airplanes, and still ensure that WFD will not occur. This approach allows for an implementation strategy that provides flexibility to DAHs in determining the timing of service information development (with FAA approval), while providing operators with certainty regarding the LOV applicable to their airplanes.

    The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive AD 2015-0173, dated August 24, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for all Airbus Model A300 series airplanes. The MCAI states:

    A widespread fatigue damage (WFD) analysis conducted on A300 aeroplanes identified areas which are susceptible to crack development.

    This condition, if not corrected, could affect the structural integrity of the aeroplane.

    To address this issue, Airbus developed a modification (mod) to reinforce the structure of the aeroplane.

    Airbus issued Service Bulletin (SB) A300-53-0271 to provide instructions for a cold expansion of the foot attachment holes of certain fuselage frames, and DGAC [Direction Générale de l'Aviation Civile] France issued AD F-2004-001 to require this mod [which corresponds with certain requirements in FAA AD 2004-23-20, Amendment 39-13875 (69 FR 68779, November 26, 2004)].

    Since that [DGAC] AD was issued, Airbus released twelve other mods with corresponding SBs, to complete the set of inspections and repairs in the frame of the A300 WFD campaign. EASA issued AD 2015-0115 to require ten of these mods through section 3 of ALS [Airworthiness Limitations Section] Part 2, and decision is made to delete section 3 from ALS Part 2.

    For the reasons described above, this [EASA] AD retains the requirements of DGAC France AD F-2004-001, which is superseded, and requires implementation of the additional inspection, modification and/or repair actions, as applicable to aeroplane model.

    Required actions include an inspection to determine if certain modifications have been done. For airplanes on which the specified modifications have not been done, this proposed AD would require accomplishing those modifications, including doing related investigative and corrective actions if necessary. Depending on airplane configuration, the compliance times for modifying the airplane structure range between 13,300 flight cycles and 48,000 flight cycles since first flight of the airplane,. You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9298.

    Related Service Information Under 1 CFR Part 51

    Airbus issued the following service information:

    • Airbus Service Bulletin A300-53-0239, Revision 02, dated March 6, 2000. This service information describes procedures to modify the longitudinal junction. The modification includes the addition of external doublers and installation of interference fit attachments and related investigative and corrective actions. The related investigative actions are rotary probe inspections for cracking of the fastener holes. The corrective action is repair.

    • Airbus Service Bulletin A300-53-0247, Revision 02, dated July 20, 1990. This service information describes procedures to modify the fuselage upper door frame structure, which consists of eddy current inspections of certain structure for cracks, and structural modification or repair.

    • Airbus Mandatory Service Bulletin A300-53-0271, Revision 05, dated June 21, 2013. This service information describes procedures to modify the fuselage frame (FR), which includes cold expansion of the fastener holes between FR 41 and FR 54, and related investigative and corrective actions. The related investigative actions including rotary probe inspections for cracking of the fastener holes. The corrective action is repair.

    • Airbus Mandatory Service Bulletin A300-53-0366, dated April 7, 2005. This service information describes procedures to modify the fuselage frame, which includes installing an additional external doubler on the fuselage lap joint at fuselage stringers (STGR) 22, left and right, between FR 26 and FR 40.

    • Airbus Service Bulletin A300-53-0368, dated April 7, 2005. This service information describes procedures to modify the rear fuselage, which includes installing an additional external doubler on the fuselage lap joint at STGR 51, left and right, between FR 72 and FR 80.

    • Airbus Mandatory Service Bulletin A300-53-0369, Revision 03, dated September 1, 2010. This service information describes procedures to modify the rear fuselage, which includes reinforcing the butt joint at FR 72 by installation of an additional external doubler at the butt joint of FR 72 at STGR 14, left and right.

    • Airbus Mandatory Service Bulletin A300-53-0373, Revision 03, dated September 1, 2010. This service information describes procedures to modify the rear fuselage, which includes reinforcing the butt joint at FR 65 by installation of an additional external doubler at the butt joint of FR 65 between STGR 13 left and right.

    • Airbus Mandatory Service Bulletin A300-53-0374, Revision 04, dated July 5, 2013. This service information describes procedures to modify the rear fuselage, which includes reinforcing the butt joints at FR 55 and FR 58 by installation of additional external doublers without cutout at certain butt joints.

    • Airbus Mandatory Service Bulletin A300-53-0375, Revision 01, dated June 24, 2013. This service information describes procedures to modify the forward fuselage, which includes reinforcing the fuselage circumferential butt joint at FR 26 by installation of an additional external doubler at the butt joint of FR 26 between STGR 13 left and STGR 13 right.

    • Airbus Mandatory Service Bulletin A300-53-0393, dated September 27, 2013. This service information describes procedures to modify the fuselage frame which includes reinforcing the longitudinal butt joints with additional butt straps at certain fuselage frames and stringers.

    • Airbus Mandatory Service Bulletin A300-57-0203, Revision 04, dated February 18, 2015. This service information describes procedures to modify the outer wing, which includes removal of the wing stringer and run-out plate at STGR 19 on the bottom wing skin; replacement of the taper-lok bolts with interference fit parallel bolts; and related investigative and corrective actions. Related investigative actions include detailed visual and high frequency eddy current (HFEC) inspections for cracks and damage in the stringer run-outs; and eddy current inspections for cracks initiating from certain fastener holes. Corrective actions include repair.

    • Airbus Mandatory Service Bulletin A300-57-0258, dated September 30, 2014. This service information describes procedures to modify the wing structure, which includes a first oversize of the critical holes on certain wing stringers, and related investigative and corrective actions. Related investigated actions include detailed visual inspections for damage of the top wing skin external surface and the stringer joint; and roto-probe inspections for damage of the fastener holes. Corrective actions include repair.

    • Airbus Mandatory Service Bulletin A300-57-0259, dated September 30, 2014. This service information describes procedures to modify the wing structure, which includes a first oversize of the critical holes on certain wing stringers, and related investigative and corrective actions. Related investigated actions include detailed visual inspections for damage of the top wing skin external surface and the stringer joint; and roto-probe inspections for damage of the fastener holes. Corrective actions include repair.

    This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination and Requirements of This Proposed AD

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

    Costs of Compliance

    We estimate that this proposed AD affects 8 airplanes of U.S. registry.

    We also estimate that it will take about 3,291 work-hours per product to comply with the basic requirements of this proposed AD. The average labor rate is $85 per work-hour. Required parts would cost about $142,845 per product. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $3,380,640, or $422,580 per product.

    In addition, we estimate that any necessary follow-on actions would take about 15 work-hours and require parts costing $10,000, for a cost of $11,275 per product. We have no way of determining the number of aircraft that might need this action.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new Airworthiness Directive (AD): Airbus: Docket No. FAA-2016-9298; Directorate Identifier 2015-NM-161-AD. (a) Comments Due Date

    We must receive comments by December 12, 2016.

    (b) Affected ADs

    This AD affects AD 2004-23-20, Amendment 39-13875 (69 FR 68779, November 26, 2004) (“AD 2004-23-20”).

    (c) Applicability

    This AD applies to Airbus Model A300 B2-1A, B2-1C, B2K-3C, B2-203, B4-2C, B4-103, and B4-203 airplanes, certificated in any category, all manufacturer serial numbers.

    (d) Subject

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

    (e) Reason

    This AD was prompted by an evaluation by the design approval holder (DAH) that indicates a section of the wing and aft fuselage is subject to widespread fatigue damage (WFD). We are issuing this AD to prevent reduced structural integrity of these airplanes due to the failure of certain structural components.

    (f) Compliance

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

    (g) Verification of Embodied Modifications

    Within 4 months after the effective date of this AD, verify whether the Airbus modifications listed in table 1 to paragraphs (g), (h), and (i) of this AD, as applicable to airplane model, have been embodied on the airplane in accordance with the Accomplishment Instructions of the applicable Airbus service bulletin listed in table 1 to paragraphs (g), (h), and (i) of this AD. A review of the airplane maintenance records is acceptable to accomplish the verification required by this paragraph, provided those records can conclusively determine whether the modifications have been embodied.

    Table 1 to Paragraphs (g), (h), and (i) of This AD—Airbus Modification and Applicable Service Bulletin Set Airbus modification Applicable airbus service bulletin Set 1A 751 A300-53-0247, Revision 02, dated July 20, 1990. 7301 A300-53-0239, Revision 02, dated March 6, 2000. 10326 A300-57-0203, Revision 04, dated February 18, 2015. 12735 A300-53-0366, dated April 7, 2005. 12736 A300-53-0368, dated April 7, 2005. 12737 A300-53-0369, Revision 03, dated September 1, 2010. 12798 A300-53-0375, Revision 01, dated June 24, 2013. 07757 and 12977 A300-53-0271, Revision 05, dated June 21, 2013. 13611 A300-57-0258, dated September 30, 2014. 13692 A300-53-0393, dated September 27, 2013. 13716 A300-57-0259, dated September 30, 2014. Set 1B 12794 A300-53-0374, Revision 04, dated July 5, 2013. 12796 A300-53-0373, Revision 03, dated September 1, 2010. (h) Corrective Actions for Modifications Which Have Not Been Embodied

    If, during the verification required by paragraph (g) of this AD, it is determined that any modification has not been embodied, do the applicable actions specified in paragraphs (h)(1), (h)(2), and (h)(3) of this AD.

    (1) If it is determined that any Airbus modification, specified in the applicable Airbus Service Bulletin, identified in “Set 1A” of table 1 to paragraphs (g), (h), and (i) of this AD is not embodied: Within the applicable compliance time specified in the applicable Airbus Service Bulletin identified in “Set 1A” of table 1 to paragraphs (g), (h), and (i) of this AD, or within 4 months after the effective date of this AD, whichever occurs later, do the applicable actions specified in paragraphs (h)(1)(i) through (h)(1)(xi) of this AD, except as required by paragraph (i) of this AD. Do all applicable related investigative and corrective actions before further flight.

    (i) For airplanes on which Airbus Service Bulletin A300-53-0239, Revision 02, dated March 6, 2000, has not been embodied: Modify the longitudinal junction and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A300-53-0239, Revision 02, dated March 6, 2000.

    (ii) For airplanes on which Airbus Service Bulletin A300-53-0247, Revision 02, dated July 20, 1990, has not been embodied: Modify the fuselage upper door frame structure by doing eddy current inspections for cracks of the structure specified in Airbus Service Bulletin A300-53-0247, Revision 02, dated July 20, 1990, and a structural modification or repair, as applicable, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A300-53-0247, Revision 02, dated July 20, 1990.

    (iii) For airplanes on which Airbus Mandatory Service Bulletin A300-53-0271, Revision 05, dated June 21, 2013, has not been embodied: Modify the fuselage frame, and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-53-0271, Revision 05, dated June 21, 2013.

    (iv) For airplanes on which Airbus Mandatory Service Bulletin A300-53-0366, dated April 7, 2005, has not been embodied: Modify the fuselage frame, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-53-0366, dated April 7, 2005.

    (v) For airplanes on which Airbus Service Bulletin A300-53-0368, dated April 7, 2005, has not been embodied: Modify the rear fuselage, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-53-0366, dated April 7, 2005.

    (vi) For airplanes on which Airbus Mandatory Service Bulletin A300-53-0369, Revision 03, dated September 1, 2010, has not been embodied: Modify the rear fuselage, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-53-0369, Revision 03, dated September 1, 2010.

    (vii) For airplanes on which Airbus Mandatory Service Bulletin A300-53-0375, Revision 01, dated June 24, 2013, has not been embodied: Modify the forward fuselage, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-53-0375, Revision 01, dated June 24, 2013.

    (viii) For airplanes on which Airbus Mandatory Service Bulletin A300-53-0393, dated September 27, 2013, has not been embodied: Modify the fuselage frame, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-53-0393, dated September 27, 2013.

    (ix) For airplanes on which Airbus Mandatory Service Bulletin A300-57-0203, Revision 04, dated February 18, 2015, has not been embodied: Modify the outer wing, and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-57-0203, Revision 04, dated February 18, 2015.

    (x) For airplanes on which Airbus Mandatory Service Bulletin A300-57-0258, dated September 30, 2014, has not been embodied: Modify the wing structure and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-57-0258, dated September 30, 2014.

    (xi) For airplanes on which Airbus Mandatory Service Bulletin A300-57-0259, dated September 30, 2014, has not been embodied: Modify the wing structure, and do all applicable related investigative and corrective actions, in accordance with the Accomplishment Instructions of Airbus Mandatory Service Bulletin A300-57-0259, dated September 30, 2014.

    (2) If it is determined that Airbus Service Bulletin A300-53-0374, Revision 04, dated July 5, 2013 (mod 12794) has not been embodied: Within the compliance time specified in paragraphs (h)(2)(i), (h)(2)(ii), (h)(2)(iii), and (h)(2)(iv) of this AD, as applicable, modify the rear fuselage, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A300-53-0374, Revision 04, dated July 5, 2013, except as required by paragraph (i) of this AD.

    (i) For Model A300 B2 and A300 B4-100 airplanes, fuselage frame (FR) 55: Within 31,300 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (ii) For Model A300 B2 and A300 B4-100 airplanes, FR 58: Within 49,700 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (iii) For Model A300 B4-200 airplanes, FR 55: Within 33,600 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (iv) For Model A300 B4-200 airplanes, FR 58: Within 55,800 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (3) If it is determined that Airbus Service Bulletin A300-53-0373, Revision 03, dated September 1, 2010 (mod 12796) has not been embodied: Within the compliance time specified in paragraphs (h)(3)(i), (h)(3)(ii), and (h)(3)(iii) of this AD, as applicable, modify the rear fuselage, in accordance with the Accomplishment Instructions of Airbus Service Bulletin A300-53-0373, Revision 03, dated September 1, 2010, except as required by paragraph (i) of this AD.

    (i) For Model A300 B2 airplanes: Within 42,700 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (ii) For Model A300 B4-100 airplanes: Within 41,700 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (iii) For Model A300 B4-200 airplanes: Within 47,900 flight cycles since first flight of the airplane, or within 4 months after the effective date of this AD, whichever occurs later.

    (i) Service Information Exception

    Where any service information identified in table 1 to paragraphs (g), (h), and (i) of this AD specifies to contact the manufacturer for instructions or solutions, before further flight, repair using a method approved by the Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA; or the European Aviation Safety Agency (EASA); or Airbus's EASA Design Organization Approval (DOA).

    (j) Terminating Action for Certain Requirements in AD 2004-23-20

    Accomplishing the modification required by paragraph (h)(1)(iii) of this AD terminates the modification required by paragraph (i) of AD 2004-23-20 for that airplane only.

    (k) Other FAA AD Provisions

    The following provisions also apply to this AD:

    (1) Alternative Methods of Compliance (AMOCs): The Manager, International Branch, ANM-116, Transport Airplane Directorate, FAA, has the authority to approve AMOCs for this AD, if requested using the procedures found in 14 CFR 39.19. In accordance with 14 CFR 39.19, send your request to your principal inspector or local Flight Standards District Office, as appropriate. If sending information directly to the International Branch, send it to ATTN: Dan Rodina, Aerospace Engineer, International Branch, ANM-116, Transport Airplane Directorate, FAA, 1601 Lind Avenue SW., Renton, WA 98057-3356; telephone 425-227-1405; fax 425-227-2125. Information may be emailed to: [email protected] Before using any approved AMOC, notify your appropriate principal inspector, or lacking a principal inspector, the manager of the local flight standards district office/certificate holding district office. The AMOC approval letter must specifically reference this AD.

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

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

    (l) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) EASA AD 2015-0173, dated August 24, 2015, for related information. You may examine the MCAI on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9298.

    (2) For service information identified in this final rule, contact Airbus SAS, Airworthiness Office-EAW, 1 Rond Point Maurice Bellonte, 31707 Blagnac Cedex, France; telephone: +33 5 61 93 36 96; fax: +33 5 61 93 44 51; email: [email protected]; Internet http://www.airbus.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on October 13, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25662 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-8836; Directorate Identifier 2016-NE-17-AD] RIN 2120-AA64 Airworthiness Directives; Pratt & Whitney Division Turbofan Engines AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for all Pratt & Whitney Division (PW) PW4074, PW4074D, PW4077, PW4077D, PW4084, PW4084D, PW4090, and PW4090-3 turbofan engines. This proposed AD was prompted by an uncontained failure of a high-pressure turbine (HPT) hub during takeoff. This proposed AD would require an inspection to measure the surface condition of the aft side web/rim fillet of HPT 1st stage hubs and removal from service of hubs that fail inspection. We are proposing this AD to prevent failure of the HPT 1st stage hub, uncontained hub release, damage to the engine, and damage to the airplane.

    DATES:

    We must receive comments on this proposed AD by December 12, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

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

    Fax: 202-493-2251.

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

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Pratt & Whitney Division, 400 Main St., East Hartford, CT 06118; phone: 800-565-0140; fax: 860-565-5442. You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-8836; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Office (phone: 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Jo-Ann Theriault, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7105; fax: 781-238-7199; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposal. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-8836; Directorate Identifier 2016-NE-07-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD because of those comments.

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

    Discussion

    We received a report of an uncontained failure of an HPT hub during takeoff. The root cause of the event is a machining anomaly (cutter mismatch) in the aft web/rim fillet area of the HPT 1st stage hub. The machining mismatch raises the stress and significantly reduces the life of the hub. The defect was introduced when the part was originally manufactured. This condition, if not corrected, could result in failure of the HPT 1st stage hub, uncontained hub release, damage to the engine, and damage to the airplane.

    Related Service Information Under 1 CFR Part 51

    We reviewed PW Service Bulletin (SB) PW4G-112-72-342, dated September 23, 2016. This PW SB provides guidance on performing the HPT 1st stage hub web/rim fillet replication inspection and measurement for the affected HPT hubs. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination

    We are proposing this AD because we evaluated all the relevant information and determined the unsafe condition described previously is likely to exist or develop in other products of the same type design.

    Proposed AD Requirements

    This proposed AD would require an inspection to measure the surface condition of the aft side web/rim fillet of HPT 1st stage hubs and removal from service of hubs that fail inspection.

    Costs of Compliance

    We estimate that this proposed AD affects 119 engines installed on airplanes of U.S. registry. We also estimate that it would take about 1 hour per engine to do the inspection. The average labor rate is $85 per hour. Based on these figures, we estimate the cost of this proposed AD on U.S. operators to be $10,115.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    (3) Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction, and

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

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Pratt & Whitney Division: Docket No. FAA-2016-8836; Directorate Identifier 2016-NE-17-AD. (a) Comments Due Date

    We must receive comments by December 12, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to all Pratt & Whitney Division (PW) PW4074, PW4074D, PW4077, PW4077D, PW4084, PW4084D, PW4090, and PW4090-3 turbofan engines.

    (d) Unsafe Condition

    This AD was prompted by an uncontained failure of a high-pressure turbine (HPT) hub during takeoff. We are issuing this AD to prevent failure of the HPT 1st stage hub, uncontained hub release, damage to the engine, and damage to the airplane.

    (e) Compliance

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

    (1) At the next engine shop visit after the effective date of this AD, perform the HPT 1st stage hub web/rim fillet replication inspection and measurement using the Accomplishment Instructions, Part A, paragraphs 2.A. and 2.B.(1) to 2.B.(4) or Part B, paragraphs 1.A. and 1.B.(1) to 1.B.(4), of PW Service Bulletin (SB) PW4G-112-72-342, dated September 23, 2016.

    (2) If the hub fails inspection, remove the hub from service before further flight and replace with a part eligible for installation.

    (f) Definition

    For the purpose of this AD, an “engine shop visit” is the induction of an engine into the shop for maintenance involving the separation of any major mating flange, except that the separation of engine flanges solely for the purposes of transportation without subsequent maintenance does not constitute an engine shop visit.

    (g) Installation Prohibition

    After the effective date of this AD, do not install or re-install into any engine any HPT 1st stage hub that has not been inspected and passed the inspection required by paragraph (e) of this AD.

    (h) Alternative Methods of Compliance (AMOCs)

    The Manager, Engine Certification Office, FAA, may approve AMOCs for this AD. Use the procedures found in 14 CFR 39.19 to make your request. You may email your request to: [email protected]

    (i) Related Information

    (1) For more information about this AD, contact Jo-Ann Theriault, Aerospace Engineer, Engine Certification Office, FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA 01803; phone: 781-238-7105; fax: 781-238-7199; email: [email protected]

    (2) PW SB PW4G-112-72-342, dated September 23, 2016, can be obtained from PW using the contact information in paragraph (i)(3) of this AD.

    (3) For service information identified in this AD, contact Pratt & Whitney Division, 400 Main St., East Hartford, CT 06118; phone: 800-565-0140; fax: 860-565-5442.

    (4) You may view this service information at the FAA, Engine & Propeller Directorate, 1200 District Avenue, Burlington, MA. For information on the availability of this material at the FAA, call 781-238-7125.

    Issued in Burlington, Massachusetts, on October 19, 2016. Colleen M. D'Alessandro, Manager, Engine & Propeller Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25799 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-9299; Directorate Identifier 2016-NM-119-AD] RIN 2120-AA64 Airworthiness Directives; Bombardier, Inc. Airplanes AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to adopt a new airworthiness directive (AD) for certain Bombardier Inc. Model DHC-8-102, -103, and -106 airplanes; DHC-8-200 series airplanes; and Model DHC-8-300 series airplanes. This proposed AD was prompted by reports of incorrect installation of the auto-ignition system due to crossed wires at one of the splices in the auto-relight system. This proposed AD would require inspecting the auto-ignition system for correct wiring, and doing corrective actions if necessary. We are proposing this AD to detect and correct incorrect wiring of the auto-ignition system, which could result in inability to restart the engine in flight and consequent reduced controllability of the airplane.

    DATES:

    We must receive comments on this proposed AD by December 12, 2016.

    ADDRESSES:

    You may send comments, using the procedures found in 14 CFR 11.43 and 11.45, by any of the following methods:

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

    Fax: 202-493-2251.

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

    Hand Delivery: Deliver to Mail address above between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    For service information identified in this NPRM, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416-375-4000; fax 416-375-4539; email [email protected]; Internet http://www.bombardier.com. You may view this referenced service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9299; or in person at the Docket Management Facility between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the regulatory evaluation, any comments received, and other information. The street address for the Docket Operations office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    FOR FURTHER INFORMATION CONTACT:

    Morton Lee, Aerospace Engineer, Propulsion and Services Branch, ANE-173, FAA, New York Aircraft Certification Office, 1600 Stewart Avenue, Suite 410, Westbury, NY 11590; telephone 516-228-7355; fax 516-794-5531.

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to send any written relevant data, views, or arguments about this proposed AD. Send your comments to an address listed under the ADDRESSES section. Include “Docket No. FAA-2016-9299; Directorate Identifier 2016-NM-119-AD” at the beginning of your comments. We specifically invite comments on the overall regulatory, economic, environmental, and energy aspects of this proposed AD. We will consider all comments received by the closing date and may amend this proposed AD based on those comments.

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

    Discussion

    Transport Canada Civil Aviation (TCCA), which is the aviation authority for Canada, has issued Canadian Airworthiness Directive CF-2013-36, dated November 19, 2013 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Bombardier Inc. Model DHC-8-102, -103, and -106 airplanes; DHC-8-200 series airplanes; and Model DHC-8-300 series airplanes. The MCAI states:

    There have been reports of incorrect installation of the auto-ignition system introduced by MS [ModSum] 8Q100813 of SB 8-74-02, where wires crossed at one of the splices in the auto-relight system. The incorrect wire installation may result in the inability to achieve an in-flight engine relight when the ignition switch is selected in the AUTO position.

    Bombardier has issued SB 8-74-05 to introduce an inspection to check for correct wiring connection and rectification as required. This [Canadian] AD mandates incorporation of Bombardier SB 8-74-05.

    Corrective actions include reconnecting any incorrect wiring of the auto-ignition system and performing a functional test. You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9299.

    Related Service Information Under 1 CFR Part 51

    We reviewed Bombardier Service Bulletin 8-74-05, Revision B, dated April 14, 2014. This service information describes procedures for inspecting the auto-ignition system for correct wiring, and doing corrective actions that include rewiring if needed, followed by a functional test of the auto-ignition system. This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    FAA's Determination and Requirements of This Proposed AD

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

    Costs of Compliance

    We estimate that this proposed AD affects 88 airplanes of U.S. registry.

    We estimate the following costs to comply with this proposed AD:

    Estimated Costs Action Labor cost Parts cost Cost per
  • product
  • Cost on U.S.
  • operators
  • Inspection 1 work-hour × $85 per hour = $85 $0 $85 $7,480

    In addition, we estimate that any necessary corrective actions would take about 2 work-hours, for a cost of $170 per product. We have no way of determining the number of aircraft that might need these actions.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed above, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska; and

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

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by adding the following new airworthiness directive (AD): Bombardier, Inc.: Docket No. FAA-2016-9299; Directorate Identifier 2016-NM-119-AD. (a) Comments Due Date

    We must receive comments by December 12, 2016.

    (b) Affected ADs

    None.

    (c) Applicability

    This AD applies to Bombardier, Inc. airplanes identified in paragraphs (c)(1), (c)(2), and (c)(3) of this AD, certificated in any category, serial numbers 003 through 672 inclusive, on which Bombardier ModSum 8Q100813 or Bombardier Service Bulletin 8-74-02 is incorporated.

    (1) Model DHC-8-102, -103, and -106 airplanes.

    (2) Model DHC-8-201 and -202 airplanes.

    (3) Model DHC-8-301, -311, and -315 airplanes.

    (d) Subject

    Air Transport Association (ATA) of America Code 74, Ignition.

    (e) Reason

    This AD was prompted by reports of incorrect installation of the auto-ignition system due to crossed wires at one of the splices in the auto-relight system. We are issuing this AD to detect and correct incorrect wiring of the auto-ignition system, which could result in inability to restart the engine in flight and consequent reduced controllability of the airplane.

    (f) Compliance

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

    (g) Inspection and Corrective Actions

    Within 2,000 flight hours or 12 months after the effective date of this AD, whichever occurs first: Inspect the auto-ignition system for correct wiring and do all applicable corrective actions, in accordance with the Accomplishment Instructions of Bombardier Service Bulletin 8-74-05, Revision B, dated April 14, 2014. All applicable corrective actions must be done before further flight.

    (h) Credit for Previous Actions

    This paragraph provides credit for the actions required by paragraph (g) of this AD, if those actions were performed before the effective date of this AD using Bombardier Service Bulletin 8-74-05, dated July 12, 2013; or Revision A, dated January 27, 2014.

    (i) Other FAA AD Provisions

    The following provisions also apply to this AD:

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

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

    (j) Related Information

    (1) Refer to Mandatory Continuing Airworthiness Information (MCAI) Canadian Airworthiness Directive CF-2013-36, dated November 19, 2013, for related information. This MCAI may be found in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-9299.

    (2) For service information identified in this AD, contact Bombardier, Inc., Q-Series Technical Help Desk, 123 Garratt Boulevard, Toronto, Ontario M3K 1Y5, Canada; telephone 416-375-4000; fax 416-375-4539; email [email protected]; Internet http://www.bombardier.com. You may view this service information at the FAA, Transport Airplane Directorate, 1601 Lind Avenue SW., Renton, WA. For information on the availability of this material at the FAA, call 425-227-1221.

    Issued in Renton, Washington, on October 14, 2016. Michael Kaszycki, Acting Manager, Transport Airplane Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25664 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF TRANSPORTATION Federal Aviation Administration 14 CFR Part 39 [Docket No. FAA-2016-3343; Directorate Identifier 2015-SW-078-AD] RIN 2120-AA64 Airworthiness Directives; Airbus Helicopters (Previously Eurocopter France) AGENCY:

    Federal Aviation Administration (FAA), DOT.

    ACTION:

    Notice of proposed rulemaking (NPRM).

    SUMMARY:

    We propose to supersede Airworthiness Directive (AD) 2014-12-12 for Airbus Helicopters (previously Eurocopter France) Model EC130B4 and Model EC120B helicopters. AD 2014-12-12 currently requires inspecting and, if necessary, replacing parts of the sliding door star support attachment assembly. This proposed AD would expand the applicability and provide revised instructions for reinforcing the sliding door. These proposed actions are intended to prevent failure of the sliding door star support attachment, which could inhibit the operation of the sliding door from the inside, delaying the evacuation of passengers during an emergency.

    DATES:

    We must receive comments on this proposed AD by December 27, 2016.

    ADDRESSES:

    You may send comments by any of the following methods:

    Federal eRulemaking Docket: Go to http://www.regulations.gov. Follow the online instructions for sending your comments electronically.

    Fax: 202-493-2251.

    Mail: Send comments to the U.S. Department of Transportation, Docket Operations, M-30, West Building Ground Floor, Room W12-140, 1200 New Jersey Avenue SE., Washington, DC 20590-0001.

    Hand Delivery: Deliver to the “Mail” address between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays.

    Examining the AD Docket

    You may examine the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-3343; or in person at the Docket Operations Office between 9 a.m. and 5 p.m., Monday through Friday, except Federal holidays. The AD docket contains this proposed AD, the European Aviation Safety Agency (EASA) AD, the economic evaluation, any comments received and other information. The street address for the Docket Operations Office (telephone 800-647-5527) is in the ADDRESSES section. Comments will be available in the AD docket shortly after receipt.

    For service information identified in this proposed rule, contact Airbus Helicopters, 2701 N. Forum Drive, Grand Prairie, TX 75052; telephone (972) 641-0000 or (800) 232-0323; fax (972) 641-3775; or at http://www.airbushelicopters.com/techpub. You may review service information at the FAA, Office of the Regional Counsel, Southwest Region, 10101 Hillwood Pkwy., Room 6N-321, Fort Worth, TX 76177.

    FOR FURTHER INFORMATION CONTACT:

    David Hatfield, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5116; email [email protected]

    SUPPLEMENTARY INFORMATION:

    Comments Invited

    We invite you to participate in this rulemaking by submitting written comments, data, or views. We also invite comments relating to the economic, environmental, energy, or federalism impacts that might result from adopting the proposals in this document. The most helpful comments reference a specific portion of the proposal, explain the reason for any recommended change, and include supporting data. To ensure the docket does not contain duplicate comments, commenters should send only one copy of written comments, or if comments are filed electronically, commenters should submit only one time.

    We will file in the docket all comments that we receive, as well as a report summarizing each substantive public contact with FAA personnel concerning this proposed rulemaking. Before acting on this proposal, we will consider all comments we receive on or before the closing date for comments. We will consider comments filed after the comment period has closed if it is possible to do so without incurring expense or delay. We may change this proposal in light of the comments we receive.

    Discussion

    On June 13, 2014, we issued AD 2014-12-12, Amendment 39-17873 (79 FR 36638, June 30, 2014) for Airbus Helicopters Model EC120B helicopters with serial numbers up to and including 1367 and with a sliding door part number (P/N) C526A2370101 installed and Model EC130B4 helicopters with sliding door P/N C526S1101051 installed. AD 2014-12-12 does not apply to helicopters with modification (MOD) 07 3796 or 07 2921 installed. AD 2014-12-12 requires inspecting the upper and lower locking pin control rod fittings and the star support pin for a crack and reinforcing the sliding door star support stringer by installing three carbon fabric plies.

    AD 2014-12-12 was prompted by AD No. 2013-0093, dated April 15, 2013, and corrected on April 17, 2013, issued by EASA, which is the Technical Agent for the Member States of the European Union. EASA AD No. 2013-0093 was issued to correct an unsafe condition for Model EC120B and EC130B4 helicopters after a case was reported where passengers could not open a helicopter's sliding door after landing. EASA advises that an investigation revealed a failure of the sliding door star axle support.

    Actions Since AD 2014-12-12 Was Issued

    Since we issued AD 2014-12-12, EASA has issued EASA AD No. 2015-0020, dated February 11, 2015, to correct an unsafe condition for Model EC120B helicopters with sliding door P/N C526A2370101 and Model EC130B4 helicopters sliding door P/N C526S1101051. EASA AD No. 2015-0020 does not apply to helicopters with MOD A00565, 07 3796, or 07 2921. EASA AD No. 2015-0020 supersedes EASA AD No. 2013-0093. EASA advises that after it issued AD No. 2013-0093, it discovered that the doors could be installed on all serial-numbered EC120B helicopters. Also, Eurocopter (now Airbus Helicopters) learned of difficulties with installing the angle bracket and plate used to reinforce the sliding door star support. Because of the distance between the star support pin and the bottom of the stringer on composite sliding doors, installation of the angle bracket and plate is not possible in a small number of sliding doors. Eurocopter subsequently revised its repair procedures to provide an alternate method for reinforcing the sliding door star support.

    EASA advises that it consequently issued AD No. 2015-0020 to extend the applicability to all serial-numbered EC120B helicopters with the affected sliding doors. EASA AD No. 2015-0020 also requires compliance with the revised service information.

    FAA's Determination

    These helicopters have been approved by the aviation authority of France and are approved for operation in the United States. Pursuant to our bilateral agreement with France, EASA, its technical representative, has notified us of the unsafe condition described in its AD. We are proposing this AD because we evaluated all known relevant information and determined that an unsafe condition is likely to exist or develop on other products of the same type design.

    Related Service Information Under 1 CFR Part 51

    We reviewed Eurocopter (now Airbus Helicopters) Alert Service Bulletin (ASB) No. EC120-52A014, Revision 2, dated October 28, 2013, for Model EC120B helicopters and ASB No. 130-52A009, Revision 1, dated January 25, 2013, for Model EC130B4 helicopters. This service information specifies visual and dye penetrant inspections of sections of the sliding door attachment assembly and reinforcement of the sliding door star support. ASB EC120-52A014 was changed at Revision 2 to expand the applicability for all serial-numbered Model 120B helicopters and provides an alternative procedure for reinforcing the sliding door star support.

    This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

    Proposed AD Requirements

    This proposed AD would require, within 165 hours time-in-service (TIS):

    • Visually inspecting each upper and lower locking pin control rod end fitting (control end fitting) and replacing it before further flight if it is bent, twisted, or broken.

    • Cleaning and dye-penetrant inspecting the star support pin for a crack and replacing it before further flight if it is cracked.

    • Reinforcing the sliding door star support stringer by installing three carbon fabric plies.

    This proposed AD would also prohibit installing a sliding door P/N C526A2370101 on a Model EC120B helicopter, or a sliding door P/N C526S1101051 on a Model EC130B4 helicopter, unless the sliding door star support stringer is reinforced as required by this proposed AD.

    Costs of Compliance

    We estimate that this proposed AD would affect 261 helicopters of U.S. Registry and that labor costs average $85 a work hour. Based on these estimates, we expect the following costs:

    • Visually inspecting the control rod end fittings would require 1 work-hour and a minimal amount for consumable materials for an estimated cost of $85 per helicopter, or $22,185 for the U.S. fleet.

    • Replacing the control rod end fittings with airworthy fittings would require 5 work-hours for a labor cost of $425. Parts would cost about $242 for an estimated total cost of $667 per helicopter.

    • Dye-penetrant inspecting the star support pin for a crack would require 2 work-hours and no parts for an estimated cost of $170 per helicopter and $44,370 for the U.S. fleet.

    • Replacing the star support pin would require 5 work-hours. Parts would cost about $200 for an estimated total cost of $625 per helicopter.

    • Installing three carbon fabric plies to reinforce the sliding door star support would require 5 work-hours. Parts would cost $200 for an estimated total cost of $625 per helicopter and $163,125 for the U.S. fleet.

    Authority for This Rulemaking

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

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

    Regulatory Findings

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

    For the reasons discussed, I certify this proposed regulation:

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

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

    3. Will not affect intrastate aviation in Alaska to the extent that it justifies making a regulatory distinction; and

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

    We prepared an economic evaluation of the estimated costs to comply with this proposed AD and placed it in the AD docket.

    List of Subjects in 14 CFR Part 39

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

    The Proposed Amendment

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

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

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

    § 39.13 [Amended]
    2. The FAA amends § 39.13 by removing Airworthiness Directive (AD) 2014-12-12, Amendment 39-17873 (79 FR 36638, June 30, 2014), and adding the following new AD: Airbus Helicopters (Previously Eurocopter France): Docket No. FAA-2016-3343; Directorate Identifier 2015-SW-078-AD. (a) Applicability

    This AD applies to the following helicopters, certificated in any category, except those with modification A00565, 07 3796, or 07 2921 installed:

    (1) Model EC120B helicopters with a sliding door part number (P/N) C526A2370101 installed; and

    (2) Model EC130B4 helicopters with a sliding door P/N C526S1101051 installed.

    (b) Unsafe Condition

    This AD defines the unsafe condition as a failure of the sliding door star axle support. This condition could prevent operation of a sliding door from inside, which could delay evacuation of passengers during an emergency.

    (c) Affected ADs

    This AD supersedes AD 2014-12-12, Amendment 39-17873 (79 FR 36638, June 30, 2014).

    (d) Comments Due Date

    We must receive comments by December 27, 2016.

    (e) Compliance

    You are responsible for performing each action required by this AD within the specified compliance time unless it has already been accomplished prior to that time.

    (f) Required Actions

    (1) Within 165 hours time-in-service:

    (i) Visually inspect each upper and lower locking pin control rod end fitting (control end fitting) for a bend, twist, or breakage. If a control end fitting is bent, twisted, or broken, before further flight, replace the control end fitting with an airworthy control end fitting.

    (ii) Clean and dye penetrant inspect the star support pin for a crack in the areas identified as Zone X and Zone Y in Figure 3 of Eurocopter Alert Service Bulletin No. EC120-52A014, Revision 2, dated October 28, 2013 (ASB No. EC120-52A014) or Eurocopter Alert Service Bulletin No. EC130-52A009, Revision 1, dated January 25, 2013 (ASB No. EC130-52A009), as applicable to your model helicopter. If there is a crack in the star support pin, before further flight, replace the star support pin with an airworthy star support pin.

    (iii) Reinforce the sliding door star support stringer by installing three carbon fiber plies and re-identify the sliding door by following the Accomplishment Instructions, paragraphs 3.B.2.d. and 3.B.2.e of ASB No. EC120-52A014, or paragraph 3.B.2.d. and the table under paragraph 3.C of ASB No. EC130-52A009, whichever is applicable to your model helicopter.

    (2) After the effective date of this AD, do not install a sliding door P/N C526A2370101 on an EC120B helicopter, or a sliding door P/N C526S1101051 on an EC130B4 helicopter, unless the sliding door has been reinforced as required by paragraph (f)(1)(iii) of this AD.

    (g) Credit for Actions Previously Completed

    Compliance with AD 2014-12-12 (79 FR 366838, June 30, 2014) before the effective date of this AD is considered acceptable for compliance with the corresponding actions specified in paragraph (f)(1) of this AD.

    (h) Alternative Methods of Compliance (AMOCs)

    (1) The Manager, Safety Management Group, FAA, may approve AMOCs for this AD. Send your proposal to: David Hatfield, Aviation Safety Engineer, Safety Management Group, Rotorcraft Directorate, FAA, 10101 Hillwood Pkwy., Fort Worth, TX 76177; telephone (817) 222-5116; email [email protected]

    (2) For operations conducted under a 14 CFR part 119 operating certificate or under 14 CFR part 91, subpart K, we suggest that you notify your principal inspector, or lacking a principal inspector, the manager of the local flight standards district office or certificate holding district office before operating any aircraft complying with this AD through an AMOC.

    (i) Additional Information

    The subject of this AD is addressed in European Aviation Safety Agency (EASA) AD No. 2015-0020, dated February 11, 2015. You may view the EASA AD on the Internet at http://www.regulations.gov in Docket No. FAA-2016-3343.

    (j) Subject

    Joint Aircraft Service Component (JASC) Code: 5220, Emergency Exits.

    Issued in Fort Worth, Texas, on October 18, 2016. James A. Grigg, Acting Manager, Rotorcraft Directorate, Aircraft Certification Service.
    [FR Doc. 2016-25748 Filed 10-25-16; 8:45 am] BILLING CODE 4910-13-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 2 [Docket No. FDA-2015-N-1355] RIN 0910-AH36 Use of Ozone-Depleting Substances AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Food and Drug Administration (FDA, the Agency, or we) is proposing to amend its regulation on uses of ozone-depleting substances (ODSs), including chlorofluorocarbons (CFCs), to remove the designation for certain products as “essential uses” under the Clean Air Act. Essential-use products are exempt from the ban by FDA on the use of CFCs and other ODS propellants in FDA-regulated products and from the ban by the Environmental Protection Agency (EPA) on the use of ODSs in pressurized dispensers. This action, if finalized, will remove the essential-use exemptions for sterile aerosol talc administered intrapleurally by thoracoscopy for human use and for metered-dose atropine sulfate aerosol human drugs administered by oral inhalation. FDA is proposing this action because alternative products that do not use ODSs are now available and because these products are no longer being marketed in versions that contain ODSs.

    DATES:

    Submit either electronic or written comments on the proposed rule by December 27, 2016. If FDA receives any significant adverse comments, the Agency will publish a document withdrawing the direct final rule before its effective date. FDA will then proceed to respond to comments under this proposed rule using the usual notice-and-comment procedures.

    ADDRESSES:

    You may submit comments as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

    • If you want to submit a comment with confidential information that you do not wish to be made available to the public submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

    Instructions: All submissions received must include the Docket No. FDA-2015-N-1355 for “Use of Ozone-Depleting Substances.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    • Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.thefederalregister.org/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    FOR FURTHER INFORMATION CONTACT:

    Daniel Orr, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6246, Silver Spring, MD 20993, 240-402-0979, [email protected].

    SUPPLEMENTARY INFORMATION:

    I. Background

    Production of ODSs has been phased out worldwide under the terms of the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) (September 16, 1987, S. Treaty Doc. No. 10, 100th Cong., 1st sess., 26 I.L.M. 1541 (1987)). In accordance with the provisions of the Montreal Protocol, under authority of Title VI of the Clean Air Act (section 601 et seq.), the manufacture of ODSs, including CFCs, in the United States was generally banned as of January 1, 1996. To receive permission to manufacture CFCs in the United States after the phase-out date, manufacturers must obtain an exemption from the phase-out requirements from the parties to the Montreal Protocol. Procedures for securing an essential-use exemption under the Montreal Protocol are described in a request by EPA for applications for exemptions (60 FR 54349, October 23, 1995).

    A drug, device, cosmetic, or food contained in an aerosol product or other pressurized dispenser that releases a CFC or other ODS propellant is generally not considered an essential use of the ODS under the Clean Air Act except as provided in § 2.125(c) and (e) (21 CFR 2.125(c) and (e)). This prohibition is based on scientific research indicating that CFCs and other ODSs reduce the amount of ozone in the stratosphere and thereby increase the amount of ultraviolet radiation reaching the Earth. An increase in ultraviolet radiation will increase the incidence of skin cancer, and produce other adverse effects of unknown magnitude on humans, animals, and plants (80 FR 36937, June 29, 2015). Section 2.125(c) and (e) provide exemptions for essential uses of ODSs for certain products containing ODS propellants that FDA determines provide unique health benefits that would not be available without the use of an ODS.

    Firms that wish to use ODSs manufactured after the phase-out date in medical devices (as defined in section 601(8) of the Clean Air Act (42 U.S.C. 7671(8)) covered under section 610 of the Clean Air Act (42 U.S.C. 7671i) must receive exemptions for essential uses under the Montreal Protocol. EPA regulations implementing the provisions of section 610 of the Clean Air Act contain a general ban on the use of ODSs in pressurized dispensers, such as metered-dose inhalers (MDIs) (40 CFR 82.64(c) and 82.66(d)). These EPA regulations exempt from the general ban “medical devices” that FDA considers essential and that are listed in § 2.125(e). Section 601(8) of the Clean Air Act defines “medical device” as any device (as defined in the Federal Food, Drug, and Cosmetic Act (the FD&C Act) (21 U.S.C. 321), diagnostic product, drug (as defined in the FD&C Act), and drug delivery system, if such device, diagnostic product, drug, or drug delivery system uses a class I or class II ODS for which no safe and effective alternative has been developed (and, where necessary, has been approved by the Commissioner of Food and Drugs), and if such device, diagnostic product, drug, or drug delivery system has, after notice and opportunity for public comment, been approved and determined to be essential by the Commissioner in consultation with the Administrator of EPA. Class I substances include CFCs, halons, carbon tetrachloride, methyl chloroform, methyl bromide, and other chemicals not relevant to this document (see 40 CFR part 82, appendix A to subpart A). Class II substances include hydrochlorofluorocarbons (see 40 CFR part 82, appendix B to subpart A).

    Faced with the statutorily mandated phase-out of the production of ODSs, drug manufacturers have developed alternatives to MDIs and other self-pressurized drug dosage forms that do not contain ODSs. Examples of these alternative dosage forms are MDIs that use non-ODSs as propellants and dry-powder inhalers. The availability of alternatives to the ODSs means that certain drug products listed in § 2.125(e) are no longer essential uses of ODSs. Therefore, due to the lack of marketing of approved products containing ODSs, and the availability of alternative products that do not contain ODSs, FDA is proposing to amend its regulations to remove essential-use designations for sterile aerosol talc administered intrapleurally by thoracoscopy for human use (§ 2.125(e)(4)(ix)) and for metered-dose atropine sulfate aerosol human drugs administered by oral inhalation (§ 2.125(e)(4)(vi)).

    There is currently one sterile aerosol talc product containing ODSs that is approved for administration intrapleurally by thoracoscopy for human use for the treatment of recurrent malignant pleural effusion in symptomatic patients. Section 2.125(g) sets forth standards for determining whether the use of an ODS in a medical product is no longer essential. Under § 2.125(g)(3), an essential-use designation for individual active moieties marketed as ODS products and represented by one new drug application may no longer be essential if:

    • At least one non-ODS product with the same active moiety is marketed with the same route of administration, for the same indication, and with approximately the same level of convenience of use as the ODS product containing that active moiety;

    • Supplies and production capacity for the non-ODS product(s) exist or will exist at levels sufficient to meet patient need;

    • Adequate U.S. postmarketing-use data are available for the non-ODS product(s); and

    • Patients who medically require the ODS product are adequately served by the non-ODS product(s) containing that active moiety and other available products (§ 2.125(g)(3)).

    On June 29, 2015, FDA published a notice and request for comment concerning its tentative conclusion that sterile aerosol talc administered intrapleurally by thoracoscopy for human use no longer constitutes an essential use under the Clean Air Act under the criteria in (§ 2.125(g)(3). FDA requested comment on its findings that sterile aerosol talc is currently marketed for intrapleural administration in two non-ODS formulations and on its finding that the route of administration, indications, and level of convenience appear to be the same for the ODS and non-ODS formulations of sterile aerosol talc. FDA also requested comment on its finding that the non-ODS products are available in sufficient quantities to serve the current patient population. FDA received no comments on these findings or on its tentative conclusion that sterile aerosol talc administered intrapleurally by thoracoscopy for human use no longer constitutes an essential use of ODSs under the Clean Air Act.

    In the same document published on June 29, 2015, FDA requested comments concerning its tentative conclusion that metered-dose atropine sulfate aerosol human drugs administered by oral inhalation no longer constitute an essential use under the Clean Air Act under the criteria in (§ 2.125(g)(1). FDA requested comment concerning its finding that metered-dose atropine sulfate aerosol human drugs administered by oral inhalation are no longer marketed in an approved ODS formulation. Under § 2.125(g)(1), an active moiety may no longer constitute an essential use (§ 2.125(e)) if it is no longer marketed in an approved ODS formulation. The failure to market indicates nonessentiality because the absence of a demand sufficient for even one company to market the product is highly indicative that the use is not essential. FDA received no comments concerning its finding that metered-dose atropine sulfate aerosol human drugs administered by oral inhalation are no longer marketed in an ODS formulation or concerning its tentative conclusion that these drugs no longer constitute an essential use of ODSs under the Clean Air Act.

    Accordingly, FDA is proposing to amend its regulation to remove sterile aerosol talc administered intrapleurally by thoracoscopy for human use (§ 2.125(e)(4)(ix)) and to remove metered-dose atropine sulfate aerosol human drugs administered by oral inhalation (§ 2.125(e)(4)(vi)) as essential uses under the Clean Air Act.

    II. Companion Rule to Direct Final Rulemaking

    This proposed rule is a companion document to the direct final rule published elsewhere in this issue of the Federal Register. FDA is proposing to amend § 2.125 to remove essential-use designations for sterile aerosol talc administered intrapleurally by thoracoscopy for human use and for metered-dose atropine sulfate aerosol human drugs administered by oral inhalation. This proposed rule is intended to make noncontroversial changes to existing regulations. The Agency does not anticipate receiving any significant adverse comment on this rule.

    Consistent with FDA's procedures on direct final rulemaking, we are publishing elsewhere in this issue of the Federal Register a companion direct final rule. The direct final rule and this companion proposed rule are substantively identical. This companion proposed rule provides the procedural framework within which the proposed rule may be finalized in the event the direct final rule is withdrawn because of any significant adverse comment. The comment period for this proposed rule runs concurrently with the comment period of the companion direct final rule. Any comments received in response to the companion direct final rule will also be considered as comments regarding this proposed rule.

    FDA is providing a comment period for the proposed rule of 60 days after the date of publication in the Federal Register. If we receive a significant adverse comment, we intend to withdraw the direct final rule before its effective date by publishing a notice in the Federal Register within 30 days after the comment period ends. A significant adverse comment explains why the rule either would be inappropriate, including challenges to the rule's underlying premise or approach, or would be ineffective or unacceptable without a change. In determining whether an adverse comment is significant and warrants withdrawing a direct final rule, the Agency will consider whether the comment raises an issue serious enough to warrant a substantive response in a notice-and-comment process in accordance with section 553 of the Administrative Procedure Act (5 U.S.C. 553).

    Comments that are frivolous, insubstantial, or outside the scope of the proposed rule will not be considered significant or adverse under this procedure. For example, a comment recommending a regulation change in addition to the changes in the proposed rule would not be considered a significant adverse comment unless the comment states why the proposed rule would be ineffective without the additional change. In addition, if a significant adverse comment applies to an amendment, paragraph, or section of this proposed rule and that provision can be severed from the remainder of the rule, FDA may adopt as final the provisions of the proposed rule that are not the subject of a significant adverse comment.

    If FDA does not receive any significant adverse comment in response to the proposed rule, the Agency will publish a document in the Federal Register confirming the effective date of the direct final rule. The Agency intends to make the direct final rule effective 30 days after publication of the confirmation document in the Federal Register.

    A full description of FDA's policy on direct final rule procedures may be found in a guidance for FDA and industry entitled “Direct Final Rule Procedures” (available at http://www.fda.gov/RegulatoryInformation/Guidances/ucm125166.htm) that was announced in the Federal Register on November 21, 1997 (62 FR 62466).

    III. Economic Analysis of Impacts A. Introduction

    We have examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the proposed rule. We believe that this proposed rule is not a significant regulatory action as defined by Executive Order 12866.

    The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. We propose to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.

    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $146 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount.

    B. Need for the Regulation

    This rule is necessary to comply with the Montreal Protocol under authority of Title VI of the Clean Air Act (section 601 et seq.), which banned the manufacture of ODSs, including CFCs, to reduce the depletion of the ozone layer in the United States as of January 1, 1996. EPA regulations exempted from the ban medical devices, diagnostic products, drugs, and drug delivery systems that FDA considered essential and that are listed in § 2.125(e) when they use a class I or class II ODS for which no safe and effective alternative has been developed. The proposed rule would remove the exemptions for sterile aerosol talc products and for metered-dose atropine sulfate aerosol human drugs containing ODSs.

    There is currently at least one sterile aerosol talc product not containing ODSs approved for administration intrapleurally by thoracoscopy for human use that is a safe and effective alternative, and which meets the criteria outlined in § 2.125(g)(3). Accordingly, the sterile aerosol talc product containing ODSs no longer meets the requirements for essential use and should no longer be exempted from the ban.

    Metered-dose atropine sulfate aerosol human drugs administered by oral inhalation are no longer available in the product market in an approved ODS formulation. The current absence of the product in the market indicates both a lack of demand for the product and that the product is nonessential, under § 2.125(g)(1). With the adoption of this rule, the manufacturer of the sterile aerosol talc with ODSs and any potential future manufacturers of metered-dose atropine sulfate aerosols will have notice of the requirement to comply with the ban of products from containing ODSs.

    C. Costs and Benefits 1. Number of Affected Entities

    The affected entities covered by this rule are the manufacturing facilities of the products that would have exemptions from the ban removed. Only one manufacturer, the Bryan Corporation that manufactures the sterile aerosol talc product containing ODSs at a single facility, would be affected. Currently, there are no manufacturers of metered-dose atropine sulfate aerosols.

    2. Costs

    The potential social costs from removing the exemptions are (1) the costs to patient consumers or to their insurers for paying a higher price for alternative non-ODS formulations of sterile aerosol talc products and (2) the costs for disposing of and destroying any remaining product inventory that remains after the effective date of the final rule. We lack data about the stocks of product inventory that are likely to remain after the effective date of the final rule and the relative price that consumers or their insurers would pay. Because significant notice has been given to the manufacturer about the impending removal of the exemptions, we do not believe a significant stock of inventory will remain for the sterile aerosol talc product. The most recent publicly available information shows that the annual revenues for Bryan Corporation are about $10 million (Ref. 1). Public information about this company shows that it manufactures three different surgical and medical instruments including the talc. If total profits for the exempt talc product are 10 percent of the total annual revenues, and if total revenues are exclusively from the exempt talc, then $1 million represents an upper bound for the total social cost of removing the sterile aerosol talc product from the market. Because it is unlikely that the company's total profits are exclusively from the sterile aerosol talc, it is more likely that the foregone profits are at most one-third of the $1 million; in fact, the true social cost could be significantly less than the total foregone profit of this product.

    Metered-dose atropine sulfate aerosol human drugs that would be affected by this rule are no longer marketed; consequently, removal of the exemption for these products would not present the public, consumers, insurers, or producers with any costs.

    3. Health Benefits

    The proposed rule would implement the requirements of the Clean Air Act that ban the use of products containing ODSs that no longer meet the requirements for essential use. The social benefits of the proposed rule derive from greater compliance with the Clean Air Act. The ODSs that either would have been emitted by sterile aerosol talcs that contain them, or from potential market entrants that would have manufactured metered-dose atropine sulfate aerosols that contain ODSs will no longer be emitting them, which will help reduce the depletion of the ozone layer and the ultraviolet radiation reaching the Earth. We lack the ability to quantify the health benefits from the reduced exposure to and from the reduced risk associated with ultraviolet light that result from removing the exemptions to the ban. Because the change in exposure and resulting risk from the proposed rule is likely to be small, the incremental health impact is likely to be too small to measure.

    D. Economic Summary

    The proposed rule, if finalized, will remove the exemptions for sterile aerosol talc products and for metered-dose atropine sulfate aerosol human drugs containing ODSs. The primary public health benefit from adoption of the proposed rule is to reduce the depletion of the ozone layer to decrease human exposure to ultraviolet radiation. The reduction in exposure to ultraviolet radiation because of the rule is likely to be too small to measure. The potential social costs of the proposed rule would occur if patient consumers or their health care insurers would have to pay more for otherwise comparable products and if the product manufacturers would have to safely destroy any remaining product inventories after the effective date of the rule. We estimate that the social cost of the proposed rule is likely to be significantly less than $1 million but no more than the upper-bound estimate of the foregone annual profit of the company that manufactures the sterile aerosol talc or $1 million. Because the metered-dose atropine sulfate aerosol is not currently in the market, there would be no social cost for removing its exemption from the ban.

    Imposing no new federal requirement is the baseline for a regulatory analysis. With no new regulation, there are no compliance costs or benefits to the proposed rule. However, because sterile aerosol talc is no longer an essential use of ODSs, under the Clean Air Act, there is no longer a pathway for sterile aerosol talc products containing ODSs to remain on the market.

    IV. Regulatory Flexibility Analysis

    FDA has examined the economic implications of the proposed rule as required by the Regulatory Flexibility Act. If a rule will have a significant economic impact on a substantial number of small entities, the Regulatory Flexibility Act requires Agencies to analyze regulatory options that would lessen the economic effect of the rule on small entities. We certify that the final rule will not have a significant economic impact on a substantial number of small entities. This analysis, together with other relevant sections of this document, serves as the proposed regulatory flexibility analysis, as required under the Regulatory Flexibility Act.

    V. Analysis of Environmental Impact

    We have determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

    VI. Paperwork Reduction Act of 1995

    FDA tentatively concludes that this proposed rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

    VII. Federalism

    We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. We have determined that this proposed rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive order and, consequently, a federalism summary impact statement is not required.

    VIII. References

    The following reference is on display in the Division of Dockets Management (see ADDRESSES) and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; it is also available electronically at http://www.regulations.gov. FDA has verified the Web site address, as of the date this document publishes in the Federal Register, but Web sites are subject to change over time.

    1. Bryan Corporation (http://listings.findthecompany.com/l/12165972/Bryan-Corporation-in-Woburn-MA, accessed on February 24, 2016). List of Subjects in 21 CFR Part 2

    Administrative practice and procedure, Cosmetics, Drugs, Foods.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, we propose that 21 CFR part 2 be amended as follows:

    PART 2—GENERAL ADMINISTRATIVE RULINGS AND DECISIONS 1. The authority citation for part 2 continues to read as follows: Authority:

    15 U.S.C. 402, 409; 21 U.S.C. 321, 331, 335, 342, 343, 346a, 348, 351, 352, 355, 360b, 361, 362, 371, 372, 374; 42 U.S.C. 7671 et seq.

    § 2.125 [Amended]
    2. In § 2.125, remove and reserve paragraphs (e)(4)(vi) and (ix). Dated: October 20, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-25850 Filed 10-25-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Part 2 [Docket No. FDA-2015-N-1355] RIN 0910-AH36 Use of Ozone-Depleting Substances AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Proposed rule.

    SUMMARY:

    The Food and Drug Administration (FDA, the Agency, or we) is proposing to amend its regulation on uses of ozone-depleting substances (ODSs), including chlorofluorocarbons (CFCs), to remove the designation for certain products as “essential uses” under the Clean Air Act. Essential-use products are exempt from the ban by FDA on the use of CFCs and other ODS propellants in FDA-regulated products and from the ban by the Environmental Protection Agency (EPA) on the use of ODSs in pressurized dispensers. This action, if finalized, will remove the essential-use exemption for anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application. FDA is proposing this action because these products are no longer being marketed in approved versions that contain ODSs and because alternative products that do not use ODSs are now available.

    DATES:

    Submit either electronic or written comments on the proposed rule by December 27, 2016.

    ADDRESSES:

    You may submit comments as follows:

    Electronic Submissions

    Submit electronic comments in the following way:

    Federal eRulemaking Portal: http://www.regulations.gov. Follow the instructions for submitting comments. Comments submitted electronically, including attachments, to http://www.regulations.gov will be posted to the docket unchanged. Because your comment will be made public, you are solely responsible for ensuring that your comment does not include any confidential information that you or a third party may not wish to be posted, such as medical information, your or anyone else's Social Security number, or confidential business information, such as a manufacturing process. Please note that if you include your name, contact information, or other information that identifies you in the body of your comments, that information will be posted on http://www.regulations.gov.

    • If you want to submit a comment with confidential information that you do not wish to be made available to the public, submit the comment as a written/paper submission and in the manner detailed (see “Written/Paper Submissions” and “Instructions”).

    Written/Paper Submissions

    Submit written/paper submissions as follows:

    Mail/Hand delivery/Courier (for written/paper submissions): Division of Dockets Management (HFA-305), Food and Drug Administration, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    • For written/paper comments submitted to the Division of Dockets Management, FDA will post your comment, as well as any attachments, except for information submitted, marked and identified, as confidential, if submitted as detailed in “Instructions.”

    Instructions: All submissions received must include the Docket No. FDA-2015-N-1355 for “Use of Ozone-Depleting Substances.” Received comments will be placed in the docket and, except for those submitted as “Confidential Submissions,” publicly viewable at http://www.regulations.gov or at the Division of Dockets Management between 9 a.m. and 4 p.m., Monday through Friday.

    • Confidential Submissions—To submit a comment with confidential information that you do not wish to be made publicly available, submit your comments only as a written/paper submission. You should submit two copies total. One copy will include the information you claim to be confidential with a heading or cover note that states “THIS DOCUMENT CONTAINS CONFIDENTIAL INFORMATION.” The Agency will review this copy, including the claimed confidential information, in its consideration of comments. The second copy, which will have the claimed confidential information redacted/blacked out, will be available for public viewing and posted on http://www.regulations.gov. Submit both copies to the Division of Dockets Management. If you do not wish your name and contact information to be made publicly available, you can provide this information on the cover sheet and not in the body of your comments and you must identify this information as “confidential.” Any information marked as “confidential” will not be disclosed except in accordance with 21 CFR 10.20 and other applicable disclosure law. For more information about FDA's posting of comments to public dockets, see 80 FR 56469, September 18, 2015, or access the information at: http://www.thefederalregister.org/fdsys/pkg/FR-2015-09-18/pdf/2015-23389.pdf.

    Docket: For access to the docket to read background documents or the electronic and written/paper comments received, go to http://www.regulations.gov and insert the docket number, found in brackets in the heading of this document, into the “Search” box and follow the prompts and/or go to the Division of Dockets Management, 5630 Fishers Lane, Rm. 1061, Rockville, MD 20852.

    FOR FURTHER INFORMATION CONTACT:

    Daniel Orr, Center for Drug Evaluation and Research, Food and Drug Administration, 10903 New Hampshire Ave., Bldg. 51, Rm. 6246, Silver Spring, MD 20993, 240-402-0979, [email protected]

    SUPPLEMENTARY INFORMATION:

    I. Background

    Production of ODSs has been phased out worldwide under the terms of the Montreal Protocol on Substances that Deplete the Ozone Layer (Montreal Protocol) (September 16, 1987, S. Treaty Doc. No. 10, 100th Cong., 1st sess., 26 I.L.M. 1541 (1987)). In accordance with the provisions of the Montreal Protocol, under authority of Title VI of the Clean Air Act (section 601 et seq.), the manufacture of ODSs, including CFCs, in the United States was generally banned as of January 1, 1996. To receive permission to manufacture CFCs in the United States after the phase-out date, manufacturers must obtain an exemption from the phase-out requirements from the parties to the Montreal Protocol. Procedures for securing an essential-use exemption under the Montreal Protocol are described in a request by EPA for applications for exemptions (60 FR 54349, October 23, 1995).

    Firms that wished to use ODSs manufactured after the phase-out date in medical devices (as defined in section 601(8) of the Clean Air Act (42 U.S.C. 7671(8)) covered under section 610 of the Clean Air Act (42 U.S.C. 7671i) must receive exemptions for essential uses under the Montreal Protocol. EPA regulations implementing the provisions of section 610 of the Clean Air Act contain a general ban on the use of ODSs in pressurized dispensers, such as metered-dose inhalers (MDIs) (40 CFR 82.64(c) and 82.66(d)). These EPA regulations exempt from the general ban “medical devices” that FDA considers essential and that are listed in § 2.125(e) (21 CFR 2.125(e)). Section 601(8) of the Clean Air Act defines “medical device” as any device (as defined in the Federal Food, Drug & Cosmetic Act (the FD&C Act) (21 U.S.C. 321)), diagnostic product, drug (as defined in the FD&C Act), and drug delivery system, if such device, diagnostic product, drug, or drug delivery system uses a class I or class II ODS for which no safe and effective alternative has been developed (and, where necessary, has been approved by the Commissioner of Food and Drugs), and if such device, diagnostic product, drug, or drug delivery system has, after notice and opportunity for public comment, been approved and determined to be essential by the Commissioner in consultation with the Administrator of EPA. Class I substances include CFCs, halons, carbon tetrachloride, methyl chloroform, methyl bromide, and other chemicals not relevant to this document (see 40 CFR part 82, appendix A to subpart A). Class II substances include hydrochlorofluorocarbons (see 40 CFR part 82, appendix B to subpart A).

    A drug, device, cosmetic, or food contained in an aerosol product or other pressurized dispenser that releases a CFC or other ODS propellant generally is not considered an essential use of the ODS under the Clean Air Act except as provided in § 2.125(c) and (e). This prohibition is based on scientific research indicating that CFCs and other ODSs reduce the amount of ozone in the stratosphere and thereby increase the amount of ultraviolet radiation reaching the Earth. An increase in ultraviolet radiation will increase the incidence of skin cancer, and produce other adverse effects of unknown magnitude on humans, animals, and plants (80 FR 36937, June 29, 2015). Sections 2.125(c) and (e) provide exemptions for essential uses of ODSs for certain products containing ODS propellants that FDA determines provide unique health benefits that would not be available without the use of an ODS.

    Faced with the statutorily mandated phase-out of the production of ODSs, drug manufacturers have developed alternatives to MDIs and other self-pressurized drug dosage forms that do not contain ODSs. Examples of these alternative dosage forms are MDIs that use non-ODSs as propellants and dry-powder inhalers. The availability of alternatives to ODSs means that certain drug products listed in § 2.125(e) are no longer essential uses of ODSs. Therefore, due to lack of marketing of an approved product containing an ODS, and the availability of alternative products that do not contain an ODS, FDA is proposing to amend its regulations to remove the essential-use designation for anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application (§ 2.125(e)(4)(iii)).

    On June 29, 2015, FDA published a notice and request for comment concerning its tentative conclusion that anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application no longer constitute an essential use under the Clean Air Act (June 2015 notice). FDA requested comment concerning its tentative finding that anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application are no longer being sold in an approved ODS formulation. Under § 2.125(g)(1), an active moiety may no longer constitute an essential use (§ 2.125(e)) if it is no longer marketed in an approved ODS formulation. The failure to market indicates nonessentiality because the absence of a demand sufficient for even one company to market the product is highly indicative that the use is not essential.

    II. Comment on the June 2015 Notice and FDA Response

    FDA received one comment concerning its tentative finding that anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application are no longer marketed in an approved ODS formulation and, therefore, no longer constitute an essential use (see June 2015 notice). On August 21, 2015, Cetylite Industries, Inc. (Cetylite) submitted a comment stating that “FDA's belief that no products are marketed under this exemption is incorrect” (Comment 1). According to the comment, Cetylite manufactures Cetacaine Spray (CETACAINE), a topical anesthetic spray with an active ingredient combination of benzocaine, tetracaine HCl, and butamben that uses a blend of CFCs as the propellant under the essential-use exemption found in § 2.125(e)(4)(iii). However, CETACAINE is not an approved drug product and does not qualify as an essential use under § 2.125(e)(4)(iii). As described in § 2.125(c), an aerosol drug product or other pressurized dispenser that releases an ODS is an essential use of the ODS under the Clean Air Act only if it is listed in § 2.125(e) and if an investigational application or an approved marketing application is in effect.

    Cetylite states that CETACAINE has been marketed continuously since the mid-1950s under a request for a Drug Efficacy Study Implementation (DESI) review that was submitted in 1976. FDA published a DESI notice (DESI 8076 (Docket No. 75N-0203) in the Federal Register of December 9, 1975 (40 FR 57379)) in which the Agency offered an opportunity for a hearing on a proposal to withdraw approval of a combination drug product containing two of the three ingredients contained in CETACAINE. In response to this DESI notice, Cetylite requested a hearing regarding the effectiveness of CETACAINE. While FDA's review of the product's effectiveness has been pending, Cetylite has been marketing CETACAINE without an approved new drug application.

    In 1979, based on a citizen petition submitted by Cetylite regarding its CETACAINE product, FDA proposed that anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application were essential uses of ODSs (44 FR 33114, June 8, 1979) (1979 Proposed Rule). In the preamble to the 1979 Proposed Rule, FDA noted that its tentative finding as to CETACAINE's essentiality under § 2.125 was “conditional” on the product being found effective. Similarly, in the preamble to the Final Rule amending § 2.125, FDA stated that “the determination in this document that CETACAINE Aerosol is an essential use of a chlorofluorocarbon is also conditional” on a finding that CETACAINE is effective for the use described in § 2.125(e)(4)(iii) (45 FR 22902, April 4, 1980).

    To date, FDA has not made a finding that CETACAINE is effective for the use described in § 2.125(e)(4)(iii). There is no investigational new drug application or approved marketing application in effect for the ODS formulation of CETACAINE, as required for a finding of essentiality under § 2.125(c). Accordingly, CETACAINE does not meet the conditions to qualify as an essential use of ODSs under § 2.125(e)(4)(iii), and FDA believes that its proposed finding that anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application are no longer marketed in an approved ODS formulation remains correct. Moreover, alternative products for the same use that do not use ODSs, such as lidocaine, are now available, further suggesting that anesthetic drugs for topical use are no longer an essential use of ODSs. In addition, a recently completed laboratory study demonstrated that lidocaine may be a safer alternative to benzocaine (Ref. 1). The study found that benzocaine was substantially more likely than lidocaine to form methemoglobin, the cause of the serious blood disorder called methemoglobinemia.

    III. Economic Analysis of Impacts A. Introduction

    We have examined the impacts of the proposed rule under Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act (5 U.S.C. 601-612), and the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4). Executive Orders 12866 and 13563 direct us to assess all costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety, and other advantages; distributive impacts; and equity). We have developed a comprehensive Economic Analysis of Impacts that assesses the impacts of the proposed rule. We believe that this proposed rule is not a significant regulatory action as defined by Executive Order 12866.

    The Regulatory Flexibility Act requires Agencies to analyze regulatory options that would minimize any significant impact of a rule on small entities. We propose to certify that the proposed rule will not have a significant economic impact on a substantial number of small entities.

    The Unfunded Mandates Reform Act of 1995 (section 202(a)) requires us to prepare a written statement, which includes an assessment of anticipated costs and benefits, before proposing “any rule that includes any Federal mandate that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more (adjusted annually for inflation) in any one year.” The current threshold after adjustment for inflation is $146 million, using the most current (2015) Implicit Price Deflator for the Gross Domestic Product. This proposed rule would not result in an expenditure in any year that meets or exceeds this amount.

    B. Need for the Regulation

    This rule is necessary to comply with the Montreal Protocol under authority of Title VI of the Clean Air Act (section 601 et seq.), which banned the manufacture of ODSs, including CFCs, to reduce the depletion of the ozone layer in the United States as of January 1, 1996. EPA regulations exempted from the ban medical devices, diagnostic products, drugs, and drug delivery systems that FDA considered essential and that are listed in § 2.125(e) when they use a class I or class II ODS for which no safe and effective alternative has been developed.

    Anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application are not available in the product market in an approved ODS formulation. Because the product is not marketed under an investigational new drug (IND), new drug application (NDA), or abbreviated new drug application (ANDA) and alternative products for the same use that do not use ODSs, such as lidocaine, are now available, the product is nonessential under § 2.125(g)(1). With the adoption of this rule, any potential manufacturers of these anesthetic drugs will have notice about their requirements to comply with the ban of products from containing ODSs.

    C. Costs and Benefits 1. Number of Affected Entities

    There are no affected entities covered by this rule because there are no current manufacturers of approved products that would qualify as “essential” products under the current regulation.

    2. Costs

    ODS-containing anesthetic products for topical use on accessible mucous membranes of humans where a cannula is used for application are not marketed under an IND, NDA, or ANDA and would not qualify as “essential” products under the current regulation; consequently, removal of the exemption for such drugs would not present the public, consumers, insurers, or producers with any costs.

    3. Health Benefits

    The proposed rule would implement the requirements of the Clean Air Act that ban the use of products containing ODSs that no longer meet the requirements for essential use. The benefits stem from preventing the ODSs that would have been emitted by potential market entrants. The social benefits of the proposed rule derive from greater compliance with the Clean Air Act. Because there will not be any change in exposure and any resulting risk from the proposed rule, there will not be any direct public health benefits.

    D. Economic Summary

    The proposed rule, if finalized, will remove the essential-use exemption for anesthetic drugs for topical use on accessible mucous membranes of humans where a cannula is used for application. The primary public health benefit from adoption of the proposed rule is to reduce the depletion of the ozone layer to decrease human exposure to ultraviolet radiation. Because anesthetic drugs for topical use are not currently sold in the market in an approved form, there would be no health benefit or social cost for removing the exemption for such products from the ban.

    IV. Regulatory Flexibility Analysis

    FDA has examined the economic implications of the proposed rule as required by the Regulatory Flexibility Act. If a rule will have a significant economic impact on a substantial number of small entities, the Regulatory Flexibility Act requires Agencies to analyze regulatory options that would lessen the economic effect of the rule on small entities. We propose to certify that this proposed rule will not have a significant economic impact on a substantial number of small entities. This analysis, together with other relevant sections of this document, serves as the proposed regulatory flexibility analysis.

    V. Analysis of Environmental Impacts

    We have determined under 21 CFR 25.30(h) that this action is of a type that does not individually or cumulatively have a significant effect on the human environment. Therefore, neither an environmental assessment nor an environmental impact statement is required.

    VI. Paperwork Reduction Act of 1995

    FDA tentatively concludes that this proposed rule contains no collection of information. Therefore, clearance by the Office of Management and Budget under the Paperwork Reduction Act of 1995 is not required.

    VII. Federalism

    We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. We have determined that this proposed rule does not contain policies that have substantial direct effects on the States, on the relationship between the National Government and the States, or on the distribution of power and responsibilities among the various levels of government. Accordingly, we conclude that the rule does not contain policies that have federalism implications as defined in the Executive Order and, consequently, a federalism summary impact statement is not required.

    VIII. Reference

    The following reference is on display in the Division of Dockets Management (see ADDRESSES) and are available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; it are also available electronically at http://www.regulations.gov.

    1. Hartman, N. R., J. J. Mao, H. Zhou, et al., “More Methemoglobin is Produced by Benzocaine Treatment Than Lidocaine Treatment in Human In Vitro Systems.” Regulatory Toxicology and Pharmacology, 70:182-188, 2014. List of Subjects In 21 CFR Part 2

    Administrative practice and procedure, Cosmetics, Drugs, Foods.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, we propose that 21 CFR part 2 be amended as follows:

    PART 2—GENERAL ADMINISTRATIVE RULINGS AND DECISIONS 1. The authority citation for part 2 continues to read as follows: Authority:

    15 U.S.C. 402, 409; 21 U.S.C. 321, 331, 335, 342, 343, 346a, 348, 351, 352, 355, 360b, 361, 362, 371, 372, 374; 42 U.S.C. 7671 et seq.

    § 2.125 [Amended]
    2. In § 2.125, remove and reserve paragraph (e)(4)(iii). Dated: October 20, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-25852 Filed 10-25-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Part 982 [Docket No. FR-5585-P-01] RIN 2577-AD00 Tenant-Based Assistance: Enhanced Vouchers AGENCY:

    Office of the Assistant Secretary for Public and Indian Housing, HUD.

    ACTION:

    Proposed rule.

    SUMMARY:

    This rule proposes to codify HUD's policy regarding enhanced vouchers, a type of tenant-based voucher provided for under section 8 of the U.S. Housing Act of 1937 in the following four scenarios, which are prescribed and limited by statute: The prepayment of certain mortgages, the voluntary termination of the insurance contract for the mortgage, the termination or the expiration of a project-based section 8 rental assistance contract, and the transaction under which a project that receives or has received assistance under the Flexible Subsidy Program is preserved as affordable housing. Specifically, this rule would codify existing policy concerning the eligibility criteria for enhanced vouchers, as well as provide rental payment standards and subsidy standards applicable to enhanced vouchers, the right of enhanced voucher holders to remain in their units, procedures for addressing over-housed families, and the calculation of the enhanced voucher housing assistance payment.

    DATES:

    Comment Due Date: December 27, 2016.

    ADDRESSES:

    Interested persons are invited to submit comments regarding this proposed rule to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500. Communications must refer to the above docket number and title. There are two methods for submitting public comments. All submissions must refer to the above docket number and title.

    1. Submission of Comments by Mail. Comments may be submitted by mail to the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410-0500.

    2. Electronic Submission of Comments. Interested persons may submit comments electronically through the Federal eRulemaking Portal at www.regulations.gov. HUD strongly encourages commenters to submit comments electronically. Electronic submission of comments allows the commenter maximum time to prepare and submit a comment, ensures timely receipt by HUD, and enables HUD to make them immediately available to the public. Comments submitted electronically through the www.regulations.gov Web site can be viewed by other commenters and interested members of the public. Commenters should follow the instructions provided on that site to submit comments electronically.

    Note:

    To receive consideration as public comments, comments must be submitted through one of the two methods specified above. Again, all submissions must refer to the docket number and title of the rule.

    No Facsimile Comments. Facsimile (FAX) comments are not acceptable.

    Public Inspection of Public Comments. All properly submitted comments and communications submitted to HUD will be available for public inspection and copying between 8 a.m. and 5 p.m. weekdays at the above address. Due to security measures at the HUD Headquarters building, an advance appointment to review the public comments must be scheduled by calling the Regulations Division at 202-402-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the Federal Relay Service, toll-free, at 800-877-8339. Copies of all comments submitted are available for inspection and downloading at www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    For information about HUD's Public Housing and Voucher programs, contact Rebecca Primeaux, Director, Housing Voucher Management and Operations Division, Office of Public and Indian Housing, Department of Housing and Urban Development, 451 7th Street, Room 4226, Washington, DC 20140, telephone number 202-708-0477. The listed telephone number is not a toll-free number. Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 1-800-877-8339.

    SUPPLEMENTARY INFORMATION: I. Background

    General. Section 8(t) of the U.S. Housing Act of 1937 (1937 Act) (42 U.S.C. 1437f(t)) provides unified authority for families to be offered enhanced vouchers upon the occurrence of an “eligibility event,” which is defined in section 8(t)(2) as one of four categories of events that results in families in the project being eligible for enhanced voucher assistance under one of three statutes: (1) The Low-Income Housing Preservation and Resident Homeownership Act of 1990, 12 U.S.C. 4101 et seq. (LIHPRHA), (2) the Multifamily Assisted Housing Reform and Affordability Act of 1997, 42 U.S.C. 1437f note (MAHRA), or (3) of the Housing and Community Development Amendments of 1978, 42 U.S.C. 5301 note (HCDA). The four categories of events are: (1) The prepayment of a mortgage that results in families residing in the project being eligible under section 223(f) of LIHPRHA for an enhanced voucher; (2) the voluntary termination of the insurance contract that results in families residing in the project being eligible under section 223(f) of LIHPRHA for an enhanced voucher; (3) the termination or expiration of a project-based section 8 rental assistance contract that results in assisted families residing in the project being eligible under section 515(c)(3) or section 524(d) of MAHRA for an enhanced voucher; 1 and (4) a transaction under which a project that receives or has received assistance under the Flexible Subsidy program is preserved as affordable housing, which results in families residing in the project being eligible under section 201(p) of the HCDA for an enhanced voucher.

    1 Section 515(c)(3) pertains to a determination by the Department to renew an expiring project-based section 8 contract with tenant-based assistance, whereas section 524(d) applies when a rental assistance contract to which a covered project is subject expires and is not renewed, whether the owner opts out by giving the notice required under 42 U.S.C. 1437f(c)(8)(A) or the HAP contract simply expires. If the HAP contract expires without the required notice, the owner may not evict tenants or increase their rent payment until notice has been given and one year elapses per 42 U.S.C. 1437f(c)(8)(B). Families remaining during this period would not get enhanced vouchers because these families are already protected from eviction or rent increase under section 1437f(c)(8)(B). Once the notice has been given and the required year has elapsed, HUD issues enhanced vouchers to any eligible family.

    Section 8(t) states that enhanced vouchers provided under previous authorities are, regardless of date that the funds were made available, treated and subject to the same requirements as enhanced vouchers under 8(t). Section 8(t) was enacted as section 538, title V, Departments of Veterans Affairs and Housing and Urban Development, Independent Agencies Appropriations Act, 2000 (Pub. L. 106-74) (FY 2000 Appropriation), and the heading of section 538 of the FY 2000 Appropriation was “Unified Enhanced Voucher Authority” (see 113 Stat. 1122). This section heading emphasizes the fact that 8(t) brings current and prior enhanced voucher authority under a single statute and unifies their legal requirements.2

    2 The previous voucher authorities included in 8(t) as currently codified are: The 10th, 11th, and 12th provisos under the “Preserving Existing Housing Investment” account in title II of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1997 (Pub. L. 104-204; 110 Stat. 2884); the first proviso under the “Housing Certificate Fund” account in title II of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1998 (Pub. L. 105-65; 111 Stat. 1351), or the first proviso under the “Housing Certificate Fund” account in title II of the Departments of Veterans Affairs and Housing and Urban Development, and Independent Agencies Appropriations Act, 1999 (Pub. L. 105-276; 112 Stat. 2469); and section 515(c)(3) and (4) of MAHRA, as in effect before October 20, 1999.

    Under the statute, eligibility events are: Owner decisions to opt out of or not renew certain Section 8 project-based contracts; owner prepayment of certain mortgages on the project; voluntary termination of mortgage insurance; the termination or expiration of the contract for rental assistance under section 8 of the 1937 Act (Section 8) for such housing project; or a transaction for preservation of a project that, under certain sections of the MAHRA, results in the tenants of the project being eligible for enhanced vouchers.

    Enhanced voucher assistance. Enhanced voucher assistance differs from regular housing choice voucher assistance under section 8(o) of the 1937 Act (42 U.S.C. 1437f(o)) in two major respects. First, a family eligible to receive an enhanced voucher may elect to remain in the project, and, if the family does so, a higher “enhanced” payment standard is used to determine the amount of subsidy when the gross rent exceeds the normally applicable public housing agency (PHA) payment standard. Second, the family must continue to contribute towards rent at an amount that is at least the amount the family was paying for rent at the time of the eligibility event.

    Section 8(t)(1)(B) of the 1937 Act (42 U.S.C. 1437f(t)(1)(B)) provides that for enhanced vouchers, if the gross rent for the dwelling unit exceeds the Section 8 payment standard under the regular voucher program, the amount of rental assistance provided on behalf of the family using the enhanced voucher shall be determined using a payment standard that is equal to the gross rent for the dwelling unit (as such rent may be increased from time-to-time). The gross rent for a unit leased by an enhanced voucher holder is subject to the limitation in section 8(o)(10)(A) of the 1937 Act (42 U.S.C. 1437f(o)(10)(A)) that rents shall be reasonable in comparison to rents charged for comparable, unassisted units in the private market, and any other reasonable limits prescribed by the Secretary, such as a use agreement that restricts the rent to an amount below the PHA-determined rent reasonableness cap, State rent controls, or any other similar legally binding, reasonable limitation.

    Preservation prepayments. A preservation prepayment occurs when an owner prepays a qualifying mortgage or voluntarily terminates the mortgage insurance on a project that meets the definition of eligible low-income housing under LIHPRHA, 12 U.S.C. 4119 and in such cases, tenant-based assistance is offered to eligible residents of projects. The term “eligible low-income housing” means any housing financed by a loan or mortgage—

    (A) That is—

    (i) Insured or held by the Secretary under section 221(d)(3) of the National Housing Act and receiving loan management assistance under section 8 of the United States Housing Act of 1937 due to a conversion from section 101 of the Housing and Urban Development Act of 1965;

    (ii) Insured or held by the Secretary and bears interest at a rate determined under the proviso of section 221(d)(5) of the National Housing Act;

    (iii) Insured, assisted, or held by the Secretary or a State or State agency under section 236 of the National Housing Act; or

    (iv) Held by the Secretary and formerly insured under a program referred to in clause (i), (ii), or (iii); and

    (B) That, under regulation or contract in effect before February 5, 1988, is or will within 24 months become eligible for prepayment without prior approval of the Secretary. (12 U.S.C. 4119(1)).

    Flexible subsidy project. This is any project that receives or has received assistance under Section 201 of the HCDA (the flexible subsidy program) and which project, in accordance with section 201(p), is the subject of a transaction under which the project is preserved as affordable Housing (as determined by HUD). Such a project shall be considered eligible low income housing under section 229 of LIHPRHA for purposes of eligibility of residents for enhanced tenant-based assistance. HUD will determine on a case-by-case basis if a flexible subsidy project meets the requirements of section 201(p) concerning the applicability of enhanced vouchers.

    Eligible low-income housing and flexible subsidy projects qualifying under section 201(p) are commonly referred to in PIH guidance as “preservation eligible projects.” A family is eligible for enhanced voucher assistance in preservation eligible projects only if the resident family is residing in the preservation eligible project on the effective date of prepayment or voluntary termination of mortgage insurance (or the effective date of the transaction in the case of a covered flexible subsidy project), and must be income-eligible on that effective date. Both unassisted and assisted residents may be eligible for enhanced voucher assistance as the result of a preservation prepayment.

    Eligibility requirements. In preservation-eligible projects, in order to be eligible for enhanced voucher assistance, the resident family must be either:

    A low-income family (including a very low-income family);

    A moderate-income elderly or disabled family; or

    A moderate-income family residing in a low-vacancy area.

    HUD determines whether the project where the owner is prepaying or voluntarily terminating the mortgage insurance is located in a low-vacancy area. A low-income family is a family whose annual income does not exceed 80 percent of the median income for the area as determined by HUD. A moderate-income family is a family whose annual income is above 80 percent but does not exceed 95 percent of the area median income as determined by HUD. A resident family who does not fall into one of those categories on the effective date of the prepayment or voluntary termination is not eligible for enhanced voucher assistance. (See notice PIH 2001-41 at p. 22).

    By agreeing to administer enhanced vouchers for families affected by conversion actions, the PHA does not relinquish its responsibility for screening potentially eligible families or its ability to deny assistance for any grounds allowed or provided by 24 CFR 982.552 3 and 982.553.4 The screening of families and decisions to deny admission to the program must be consistent with the PHA policy for screening regular admissions of families from the PHA waiting list. The PHA must provide a family with an opportunity for an informal review if it denies the family admission to the voucher program in accordance with the housing choice voucher regulations.

    3 Title III, section 327 of the Transportation, Treasury, Housing and Urban Development, The Judiciary, The District of Columbia, and Independent Agencies Appropriations Act, Public Law 109-115; 42 U.S.C. 1437f(d)(1)(B)(iii); 42 U.S.C. 1437f(o)(7)(D)); 42 U.S.C. 13662; and 42 U.S.C. 3535(o).

    4 42 U.S.C. 13661-13664; 42 U.S.C. 3535(o).

    Voluntary termination of mortgage insurance or prepayment of mortgage on Section 236 projects where Section 236 rent rules remain applicable (decoupling actions). Where an owner voluntarily terminates the mortgage insurance or prepays the Section 236 mortgage in a preservation eligible Section 236 project and the rent setting requirements of the Section 236 program are still applicable to the project by the terms of a use agreement, the enhanced voucher rent would be no greater than the Section 236 Basic Rent established in accordance with HUD guidance. (See notice PIH 2001-41 at pp. 23-24.)

    Project Based Opt-Outs. An “opt-out” refers to the case of a contract for project-based assistance where the owner opts out of, or elects not to renew, an expiring contract. In such a case, enhanced voucher assistance, subject to appropriations, will be offered to income eligible families covered by the expiring contract. The project must consist of 4 or more dwelling units and be covered in whole or part by a contract for project-based assistance. For the family to be eligible in the event of an owner opt-out, the family must be low-income and must be residing in a unit covered by the expiring Section 8 project-based contract on the date the contract expires. The project-based assistance contract must be for one of the following programs:

    The new construction or substantial rehabilitation program under section 8(b)(2) of the 1937 Act (as in effect before October 1, 1983);

    The property disposition program under Section 8(b) of the 1937 Act;

    The loan management assistance program under Section 8(b) of the 1937 Act;

    The rent supplement program under section 101 of the Housing and Urban Development Act of 1965, provided that at the same time there is also a Section 8 project-based contract at the same project that is expiring or terminating on the same day and will not be renewed;

    Section 8 of the 1937 Act, following conversion from assistance under section 101 of the Housing and Urban Development Act of 1965; or

    The moderate rehabilitation program under section 8(e)(2) of the 1937 Act (as in effect before October 1, 1991).

    Sections 515 and 524 of MAHRA. Section 515 of MAHRA addresses section 8 renewals and long-term affordability commitments by owners. Sections 515(c)(3) and (4) of MAHRA address expiring project-based section 8 contracts that are renewed with tenant-based assistance. Covered project-based contracts are those listed above. Families living in units covered by the expiring project-based assistance contract where the project is being renewed with tenant-based assistance are eligible for enhanced voucher assistance. In the case of the expiration of a covered Section 8 project-based contract under 515(c) of MAHRA only, all families assisted under the expiring contract are considered income eligible for enhanced voucher assistance.

    Section 524(d) of MAHRA, which applies in the case of a contract for project-based assistance under section 8 for a covered project that is not renewed under section 524(a) or (b) of MAHRA (or any other authority), thereby resulting in the expiration of assistance, provides that enhanced vouchers are to be provided to families residing in the project on the date of the expiration of assistance.

    Other situations. If the opt-out of the Section 8 project-based contract by an owner occurs after the owner has prepaid the mortgage or voluntarily terminated the mortgage insurance of a preservation-eligible property, families who do not meet the definition of a low-income family may still be eligible to receive an enhanced voucher. In addition to meeting the usual requirement of residing in a project covered by the expiring contract on the date of expiration, the family must have also resided there on the effective date of prepayment and meet the income requirements for enhanced voucher eligibility for residents affected by a preservation prepayment (see the discussion under the heading “Preservation prepayments” in this preamble). (See notice PIH 2001-41 at p. 20.)

    In a case where the owner has materially violated HUD's program regulations or the condition of the project is not decent, safe, and sanitary, resulting in termination of the assistance to the project, the tenants would not remain in the project and would receive regular Section 8 tenant-based assistance. (See notice PIH 2001-41 at p. 4.)

    Questions for public comment. In addition to other relevant issues, HUD is interested in receiving public comments on three specific issues. Responses should reference specific data to be utilized in the determination and explain the reasoning to support recommendations.

    1. Low-income area. How should the vacancy rate for a “low-vacancy area” be defined? The low-vacancy area designation, because it can result in assistance being provided to families and individuals that are at the moderate income level, which is higher than the program generally is intended to serve, should be a narrow exception. In addition, the following should be considered:

    • Whether the low-vacancy area should be based on a constant vacancy percentage applied universally, or whether it should vary with differing factors, such as area population growth, demand for rental, or any other relevant factors;

    • Whether the low-vacancy area definition should be unique to this enhanced voucher program, or should be constant across all HUD programs that use the concept of a low-vacancy area.

    2. Separate enhanced voucher tenant screening. As proposed, this rule would not revise the regulations concerning discretionary or required tenant screening at §§ 982.307, 982.552 and 982.553. As noted in this preamble, “The screening of families and decisions to deny admission to the program must be consistent with the PHA policy for screening regular admissions of families from the PHA waiting list.” HUD requests comment on whether this result is appropriate, or whether, to the contrary, this constitutes an unnecessary “rescreening” of tenants.

    3. Right to remain. Proposed § 982.309(d)(2) states, “[t]he owner may not terminate the tenancy of a family that exercises its right to remain except as provided in § 982.310.” Section 982.310 includes a variety of provisions under which the owner may terminate tenancy. HUD seeks public comment on whether, in consideration of the right to remain under section 8(t) of the 1937 Act (42 U.S.C. 1437f(t)), the exception to the right to remain under § 982.310 (including any specific paragraphs under that section), should be removed, qualified or modified in some way, or made final as stated in this proposed rule.

    II. This Proposed Rule

    This proposed rule would amend HUD's regulations in 24 CFR part 982 that govern Section 8 Tenant-Based Assistance: Housing Choice Vouchers to codify HUD's policy on enhanced vouchers. Currently, HUD's policy is based on the statutory requirements, and summarized in guidance provided in PIH notices.5

    5 PIH 2001-41 on Enhanced and Regular Housing Choice Vouchers for Housing Conversion Actions; PIH 2010-18 on PHA Determinations of Rent Reasonableness in the Housing Choice Voucher (HCV) Program—Comparable Unassisted Units; PIH 2011-46 on Determination of Rent Reasonableness in the Housing Choice Voucher Program; and PIH 2016-02 on Enhanced Voucher Requirements for Over-housed Families, all at http://portal.hud.gov/hudportal/HUD?src=/program_offices/public_indian_housing/publications/notices.

    Definitions. The proposed rule would add definitions for “enhanced voucher assistance,” “enhanced voucher housing assistance payment” and “Eligibility event” to the definitions in § 982.4. The definitions for “enhanced voucher assistance” and “eligibility event” essentially reflect the statutory requirements under section 8(t) of the 1937 Act (42 U.S.C. 1437f(t)), including the basic characteristics of an enhanced voucher, along with some explanation of what constitutes an eligibility event. The definition of “enhanced voucher housing assistance payment” refers to the term as used in § 982.505. Because the rule proposes to revise and reorganize § 982.515, the proposed rule would make technical amendments to the definitions of “Family rent to owner” and “Family share” to remove the references to specific paragraphs of currently codified § 982.515.

    Section 982.4 of this rule cross-references the definition of “extremely low-income family” in 24 CFR part 5, subpart F. A general provision of the Consolidated Appropriations Act, 2014, Public Law 113-76, added a statutory definition of “extremely low-income families” at 42 U.S.C. 1437a(b)(2), and required that this new definition, which would amend HUD's current regulatory definition, be implemented by HUD via Federal Register notice followed by rulemaking with public comment (see Pub. L. 113-76, Division L, Title IV, sections 238 and 243). The implementing notice was published at 79 FR 35940 (June 25, 2014). A rule for public comment including this revision, entitled “Streamlining Administrative Regulations for Public Housing, Housing Choice Voucher, Multifamily Housing, and Community Planning and Development Programs,” was published at 80 FR 423 (January 6, 2015).

    Determining adjusted per-unit cost. Section 982.102 governs HUD's determination of costs in allocating budget authority for renewals of expiring funding increments. Under § 982.102(e), as currently codified, HUD determines the adjusted per-unit cost based on data from the PHA's most recent HUD-approved year-end statement. This proposed rule would update § 982.102(e)(1)(i) and (e)(3)(iii) to provide that HUD will use data from the PHA's most recent validated Voucher Management System submission.

    Eligibility and Targeting Requirements. The proposed rule would revise § 982.201, which addresses eligibility and targeting requirements, to include additional eligibility criteria (but not targeting requirements, which do not apply to enhanced voucher holders) in § 982.201(b)(1) for enhanced vouchers. As proposed to be amended, § 982.201(b)(1) would provide that eligible families include: Families, regardless of income, residing in projects with a project-based Section 8 contract that has expired and is renewed under section 515(c) of MAHRA and its implementing regulations, which may include families residing in projects under section 515(c)(3) of MAHRA (tenant-based assistance based on a rental assistance assessment plan as provided in section 515(c)(2) of MAHRA) and section 515(c)(4) of MAHRA (enhanced voucher assistance) (See notice PIH 2001-41 at pp. 19-20); low-income families residing in a project where the project-based assistance contract has expired and is not renewed (see section 524(d) of MAHRA, 42 U.S.C. 1437f note); certain low and moderate income families, as well as moderate income elderly or disabled families, where the mortgage insurance is voluntarily terminated or prepaid under the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4113(f)), or where the project is preserved as affordable housing under 12 U.S.C. 1715z-1a(p), which addresses assistance for troubled multifamily housing projects and provides that “any project that receives or has received assistance under this section and which is the subject of a transaction under which the project is preserved as affordable housing, as determined by the Secretary, shall be considered eligible low-income housing under section 229 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (12 U.S.C. 4119) for purposes of eligibility of residents of such project for enhanced voucher assistance provided under section 8(t) of the United States Housing Act of 1937 . . .”.

    PHA Approval of Assisted Tenancy. The proposed rule would revise § 982.305(a)(5) to provide for an exception to the 40 percent of monthly adjusted income limit at the time the family initially receives HCV assistance, in the case of enhanced voucher assistance. (See notice PIH 2001-41 at p. 8.)

    Term of Assisted Tenancy. The proposed rule would amend § 982.309 to add a new paragraph (d) that would provide that, absent repeated lease violation or other good cause, a family that receives an enhanced voucher has a right to remain in the project in which the family qualified for the voucher at the time of the eligibility event. This new paragraph (d) would implement the statutory requirement at section 8(t)(1)(B) of the 1937 Act (42 U.S.C. 1437f(t)(1)(B)), which provides that the assisted family may elect to remain in the same project in which the family was residing at the time of the eligibility event, which has been HUD's policy to date. HUD plans to issue a tenancy addendum to be incorporated into the owner's lease to reflect this right to remain under this new paragraph.

    Subsidy Standards. The proposed rule would revise §§ 982.402(c) and (d) to incorporate cross-references to the proposed new enhanced voucher rules, particularly references to oversized units and the payment standard.

    Voucher Tenancy: Payment Standard in Restructured Multifamily Housing or in Housing Converted Under Certain Conversion Actions. The proposed rule would revise § 982.504, concerning the payment standard for a family in a restructured subsidized multifamily project where tenant-based assistance is provided to the family pursuant to 24 CFR 402.421 when HUD has approved a restructuring plan and the participating administrative entity has approved the use of tenant-based assistance to provide continued assistance for such family. This section would also apply to conversion actions under other circumstances. Specifically, these would be owner opt-outs or non-renewals of Section 8 project-based contracts; owner prepayments of mortgages or voluntary termination of mortgage insurance on preservation-eligible properties; or where HUD takes an enforcement action against the owner, which in some cases may result in the family being eligible for the enhanced voucher payment standard. (See notice PIH 2001-41 at p. 1.) The payment standard as proposed in § 982.504(b)(2) is the gross rent for the family's unit, that is, the rent to owner plus the applicable PHA utility allowance for any tenant-supplied utilities. The rent must be reasonable as determined by the PHA under § 982.507.

    The proposed changes would comply with MAHRA regarding projects that have a project-based assistance contract where the project is eligible for restructuring, the assistance is terminated, the contract is renewed as tenant based assistance, and the tenants who remain are eligible for enhanced vouchers (see section 515(c) of MAHRA) and, through reorganization of § 982.504, address housing converted under certain conversion actions, which result in families receiving enhanced vouchers. The proposed rule would revise paragraphs (a) and (b) of this section to comply with MAHRA. The payment standard for a family living in housing that has undergone certain other conversion actions would largely be addressed in a new paragraph (c). The heading of this section is also revised to clarify that it also addresses housing converted under certain conversion actions.

    Section 982.504(a) would establish the events as a result of which families are eligible for enhanced voucher assistance.

    New paragraph (b)(2) would establish the enhanced voucher payment standard, which would be the gross rent which must be reasonable, as determined by the PHA, based on comparable rents of private, unassisted units in the local area (comparability would be further defined in § 982.507(b) as proposed to be revised by this rule).

    New paragraph (b)(3) would provide that if the rent is increased for an enhanced voucher family, the new gross rent shall be the payment standard for the unit provided such rent is determined reasonable.

    New paragraph (b)(4) would codify HUD's policy regarding enhanced voucher families in oversized units (that is, a family living in a unit of a bedroom size greater than what the family qualifies for, as determined by the PHA under current § 982.402, which addresses subsidy standards). Essentially, if the family is over-housed and wishes to remain at the project with enhanced voucher assistance, and an appropriate-sized unit becomes available, the family must move to the appropriate sized unit within 30 days. If the family wishes to stay in the larger unit, their assistance payment will be based on a regular voucher for the appropriate-sized unit and the family will have to pay the remainder of the gross rent. If there is no appropriate-sized unit, the family may remain in the larger unit at the enhanced voucher payment standard for the larger unit size until an appropriate-sized unit or smaller unit that is not smaller than the size unit for which the family qualifies under the PHA's subsidy standards becomes available, in which case the family must move to such unit. Similarly, if a family becomes over-housed due to a change in family size during the enhanced voucher tenancy, the family may remain in the unit at the enhanced voucher payment standard for the larger unit size until an appropriate-sized or smaller sized unit, as stated in the previous sentence becomes available, in which case the family must move within 30 days.

    This proposed rule would add § 982.504(b)(4)(vi), which requires the owner of an assisted project to immediately inform the PHA and the over-housed family when an appropriate size unit or smaller size unit as stated in the previous paragraph becomes available in the project. If the owner does not do so, the owner can be subject to an enforcement action (see notice PIH 2016-02) . The rent to owner can be reduced to the reasonable rent for the appropriate or smaller size unit.

    Rent to Owner: Reasonable Rent. The proposed rule would amend paragraph (b) of § 982.507 to clarify what is meant by assisted units for comparability purposes. The proposed rule would provide that assisted units are units that are assisted under a Federal, State, or local government program, including Low-Income Housing Tax Credit assistance, and rent-controlled or restricted units except where the restricting law or court order applies to voucher participants. In these cases, the units are not used in the comparability analysis, because they are “assisted” units (§ 982.507(b)(1)).

    Proposed § 982.507(b)(2) would also clarify what is meant by assisted units for comparability purposes for projects that undergo a housing conversion action. The proposed rule provides that assisted units include units in a property undergoing a housing conversion action occupied by tenants who, on the date of the eligibility event, do not receive vouchers and where the owner chooses to continue charging below market rents to those families by offering lower rents, rent concessions, or other assistance to those families. (See notice PIH 2010-18 at pp. 2-3, 2011-46 at pp. 1-2.) The comparability analysis performed by the PHA must include the location, quality, size, type, and age of the unit and any amenities.

    Proposed § 982.507(b)(3) would apply to unassisted units, that is, those not receiving any form of Federal, State, or local government assistance, but not to projects where the owner simply decides to charge below market rents. Rents for unassisted units must be considered when determining comparability under (b)(4).

    Proposed § 982.507(b)(4) provides for comparability analysis, and is similar to currently codified § 982.507(b). The PHA must consider the location, quality, size, unit type, and age of the contract unit; and any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease.

    Decoupling transactions. Section 982.511 of this proposed rule would add specificity regarding decoupling transactions. Section 236 of the National Housing Act, 12 U.S.C 1715z-1, authorizes decoupling transactions, where, although the mortgage under section 236 (mortgage insurance for rental or cooperative housing for low income families) is prepaid or refinanced, interest reduction payments (which reduce debt service) are retained and continued “if the project owner enters into such binding commitments as the Secretary may require” to continue to operate the project as low-income housing. In these decoupling transactions the 236 rent rules remain in effect by the terms of a use agreement. As such, where an owner voluntarily terminates the mortgage insurance on a Section 236 project or prepays the Section 236 mortgage in a preservation eligible Section 236 project, and the rent setting requirements of the Section 236 program are still applicable to the project, the enhanced voucher rent would be no greater than the HUD-approved basic rent for the 236 program.

    Family Share: Family Responsibility. The proposed rule would amend § 982.515 to add a new paragraph specifying that the current prohibition in § 982.515 against the PHA using housing assistance payments or other program funds, including any administrative fee reserve, to pay the family share applies. The enhanced voucher housing assistance payment would be discussed in new § 982.505(e). As provided in section 8(t) of the 1937 Act (42 U.S.C. 1437f(t)), a family that was previously assisted under a project-based Section 8 contract on the date of the eligibility event, shall, under the enhanced voucher, pay no less than the dollar amount of the total tenant payment on that date. Similarly, a family living in the project that was assisted under the regular voucher program, and not living in a unit assisted under the project based contract, shall, with an enhanced voucher, pay no less than the dollar amount of the family share of rent and utilities on the date of the eligibility event.

    A family residing in the project, but living in an unassisted unit (i.e., not receiving assistance under either the Section 8 project based contract nor receiving assistance under the regular voucher program), if eligible for enhanced voucher assistance, shall pay no less than the dollar amount of the gross rent on the date of the eligibility event (minimum rent). A family assisted under the enhanced voucher program shall pay the enhanced voucher minimum rent, notwithstanding any other requirement of the voucher program, even if it means the family pays more than 40 percent of their adjusted income for rent, an amount which is prohibited for initial tenancy under the housing choice voucher program (see §§ 982.305(a)(5); 982.508, which would be revised to clarify this point in this proposed rule). This can occur, for example, if a family was paying for rent more than 40 percent of their adjusted income on the date of the eligibility event.

    The proposed rule would provide under § 982.518(d) that if the gross income of the family declines significantly, the enhanced voucher minimum rent shall be revised to an amount calculated based on a percentage of current monthly adjusted income, which is the greater of 30 percent or the percentage of monthly adjusted income the family was paying on the date of the eligibility event. Once the minimum rent is changed to a percentage of income, it remains that way unless and until the family's income increases to an amount that the family's enhanced voucher minimum rent established using a percentage of income calculation would require the assisted family to pay an amount that is more than the greater of the family's original enhanced voucher minimum rent payment (established as of the date of the eligibility event) or 30 percent of the family's adjusted income. At such time, the family's enhanced voucher minimum rent shall be determined by the PHA in accordance with § 982.515(b)(1) using the dollar amount of the family's original enhanced voucher minimum rent. In no circumstance shall the family's enhanced voucher minimum rent be less than the amount established as of the date of the eligibility event.

    Section 982.518 is revised to include provisions regarding the enhanced voucher minimum rent. The minimum rent under the enhanced voucher would be the amount of rent the family was paying on the date of the eligibility event even if it is more than the 40 percent statutory limitation on the amount of adjusted income a family can initially pay under the voucher program. A family that was residing in a project that has undergone a preservation prepayment on the date of the eligibility event, shall, under the enhanced voucher, pay no less than the dollar amount of the gross rent on the date of the eligibility event (minimum rent). Similarly, a family living in the preservation eligible project on the date of the eligibility event with assistance under the regular voucher program may receive enhanced voucher assistance and shall pay no less than the enhanced voucher minimum rent

    Regular Tenancy: How to Calculate Housing Assistance Payment. The proposed rule would address the calculation of the enhanced voucher housing assistance payment in proposed new § 982.505(e), and would add a new § 982.518 to address the enhanced voucher minimum rent. By codifying existing policy and procedures concerning enhanced vouchers, HUD provides PHAs, eligible families, and interested members of the public with a more convenient location to find these requirements.

    Through this proposed rule, HUD is not making significant changes to the treatment of enhanced vouchers as has been carried out to date. Much of what is discussed in this preamble is based on statutory requirements and current HUD policy, but HUD welcomes comment on where such requirements may need further clarification or elaboration.

    III. Findings and Certifications Unfunded Mandates Reform Act

    Title II of the Unfunded Mandates Reform Act of 1995 (2 U.S.C. 1531-1538) (UMRA) establishes requirements for Federal agencies to assess the effects of their regulatory actions on State, local, and tribal governments and the private sector. This rule does not impose any Federal mandate on any State, local, or tribal government or the private sector within the meaning of UMRA.

    Regulatory Flexibility Act

    The Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), generally requires an agency to conduct a regulatory flexibility analysis of any rule subject to notice and comment rulemaking requirements, unless the agency certifies that the rule will not have a significant economic impact on a substantial number of small entities. This proposed rule codifies HUD's existing policy on eligibility for and requirements pertaining to enhanced vouchers, which are largely based on statutory requirements, and with which public housing agencies area already familiar. As noted in the preamble, this proposed rule is not significantly revising treatment to date of enhanced vouchers. Therefore, the undersigned certifies that this rule will not have a significant impact on a substantial number of small entities.

    Notwithstanding HUD's view that this rule will not have a significant effect on a substantial number of small entities, HUD specifically invites comments regarding any less burdensome alternatives to this rule that will meet HUD's objectives as described in this preamble.

    Environmental Impact

    This proposed rule does not direct, provide for assistance or loan and mortgage insurance for, or otherwise govern, or regulate, real property acquisition, disposition, leasing (other than tenant-based assistance), rehabilitation, alteration, demolition, or new construction, or establish, revise or provide for standards for construction or construction materials, manufactured housing, or occupancy. Accordingly, under 24 CFR 50.19(c)(1), this proposed rule is categorically excluded from environmental review under the National Environmental Policy Act of 1969 (42 U.S.C. 4321).

    Executive Order 13132, Federalism

    Executive Order 13132 (entitled “Federalism”) prohibits, to the extent practicable and permitted by law, an agency from promulgating a regulation that has federalism implications and either imposes substantial direct compliance costs on State and local governments and is not required by statute or preempts State law, unless the relevant requirements of section 6 of the Executive Order are met. This rule does not have federalism implications and does not impose substantial direct compliance costs on State and local governments or preempt State law within the meaning of the Executive Order.

    Catalog of Federal Domestic Assistance Number

    The Catalog of Federal Domestic Assistance number for 24 CFR part 982 is 14.871.

    List of Subjects in 24 CFR 982

    Grant programs—housing and community development, Grant programs—Indians, Indians, Public housing, Rent subsidies, Reporting and recordkeeping requirements.

    Accordingly, for the reasons stated in the preamble, HUD proposes to amend 24 CFR part 982 as follows:

    PART 982—SECTION 8 TENANT-BASED ASSISTANCE: HOUSING CHOICE VOUCHER PROGRAM 1. The authority statement for part 982 continues to read as follows: Authority:

    42 U.S.C. 1437f and 3535(d).

    2. Revise § 982.1 to read as follows:
    § 982.1 Programs: purpose and structure.

    (a) General description. In the HUD Housing Choice Voucher Program (HCV Program), HUD pays rental subsidies so eligible families can afford decent, safe and sanitary housing. The HCV Program is generally administered by State or local governmental entities called public housing agencies (PHAs). HUD provides housing assistance funds to the PHA. HUD also provides funds for PHA administration of the program.

    (b) Tenant-based and project-based assistance. HCV Program assistance may be “tenant-based” or “project-based.” In the project-based program, rental assistance is paid for families who live in specific housing developments or units (see 24 CFR part 983). With tenant-based assistance, the assisted unit is selected by the family. The family may rent a unit anywhere in the United States in the jurisdiction of a PHA that runs an HCV Program.

    (c) Tenant-based assistance. (1) To receive tenant-based assistance, the family selects a suitable unit. A PHA may not approve a tenancy unless the unit meets program housing quality standards, and the rent is reasonable.

    (2) After approving the tenancy, the PHA enters into a contract to make rental subsidy payments to the owner to subsidize occupancy by the family. The PHA contract with the owner only covers a single unit and a specific assisted family. If the family moves out of the leased unit, the contract with the owner terminates. The family may move to another unit with continued assistance so long as the family is complying with program requirements.

    (3) The rental subsidy is determined by a formula. The subsidy is based on a local “payment standard” that reflects the cost to lease a unit in the local housing market. If the rent is less than the payment standard, the family generally pays 30 percent of adjusted monthly income for rent. If the rent is more than the payment standard, the family pays a larger share of the rent.

    3. Revise § 982.2 to read as follows:
    § 982.2 Applicability.

    Part 982 is a unified statement of program requirements for the tenant-based HCV Program under Section 8 of the United States Housing Act of 1937 (42 U.S.C. 1437f).

    4. Amend § 982.4 to: (a) Revise paragraph (a)(2); (b) In paragraph (b), to add the definitions of “Eligibility event,” “Enhanced voucher assistance,” and “Enhanced voucher housing assistance payment” in alphabetical order; to remove the definition of “Merger date,” and to revise the definitions of “Family rent to owner” and “Family share,” to read as follows:
    § 982.4 Definitions.

    (a) * * *

    (2) Definitions concerning family income and rent. The terms “adjusted income,” “annual income,” “extremely low income family,” “total tenant payment,” “utility allowance,” and “welfare assistance” are defined in part 5, subpart F of this title.

    (b) * * *

    Eligibility event. A housing conversion action as to which Federal law requires the provision of enhanced voucher assistance to affected tenants who are eligible for such assistance, subject to the availability of appropriations. Eligibility events include the prepayment of the mortgage or the voluntary termination of the mortgage insurance contract by the owner (such as a preservation pre-payment under the Low-Income Housing Preservation and Resident Homeownership Act, 12 U.S.C. 4101 et seq. (LIHPRA)); the termination or expiration of the Section 8 project-based HAP contract (owner opt-out) (other than Project Based Vouchers, and Section 8 Moderate Rehabilitation SRO HAP contracts as authorized by title IV of the McKinney-Vento Homeless Assistance Act)); or a transaction that preserves the project as affordable housing under sections 515(c)(3) and (4) and 524(d) of the Multifamily Assisted Housing Reform and Affordability Act of 1997 (42 U.S.C. 1437f note) (MAHRA), and section 201(p) of the Housing and Community Development Amendments of 1978 (12 U.S.C. 1715z-1a(p)(Flexible Subsidy Program)). In some cases, enforcement actions by HUD may be eligibility events.

    Enhanced voucher assistance. Rental assistance that is authorized under section 8(t) of the 1937 Act (42 U.S.C. 1437f(t)) and provided to families residing in certain projects on the date of an eligibility event who elect to remain in the project. The characteristics of enhanced voucher assistance are:

    (1) The family pays as their family share no less than the amount the family was paying for rent on the date of the eligibility event; and

    (2) If, while the family continues to reside in the project, the rent for the project exceeds the regular Section 8 tenant-based payment standard, the amount of rental assistance provided on behalf of the family shall be determined using a payment standard that is equal to the gross rent for the dwelling unit, subject to the limitation of reasonableness in relation to rents of comparable unassisted units in the local private market (section 8(o)(10)(A) of the 1937 Act (42 U.S.C. 1437f(o)(10)(A)) and other limits imposed by HUD. Families who receive enhanced vouchers are entitled to this potentially higher payment standard only as long as they remain in the unit.

    Enhanced voucher housing assistance payment. The gross rent for a unit occupied by a family receiving enhanced voucher assistance minus the higher of the enhanced voucher minimum rent or the total tenant payment.

    Family rent to owner. In the HCV Program, the portion of rent to owner paid by the family. For calculation of family rent to owner, see § 982.515.

    Family share. The portion of rent and utilities paid by the family. For calculation of family share, see § 982.515.

    5. Amend § 982.102 to: (a) Revise paragraph (e)(1)(i) to read as follows; (b) Revise paragraph (e)(3)(iii) to read as follows:
    § 982.102 Allocation of budget authority for renewal of expiring consolidated ACC funding increments.

    (e) * * *

    (1) Step 1: Determining monthly program expenditure—(i) Use of most recent validated data submitted to the Voucher Management System. HUD will determine the PHA's monthly per unit program expenditure for the HCV Program (including project-based assistance) under the consolidated ACC with HUD using data from the PHA's most recent validated Voucher Management System submission.

    * * *

    (3) * * *

    (iii) Use of annual adjustment factors in effect subsequent to most recent validated data submitted to the Voucher Management System. HUD will use the Annual Adjustment Factors in effect during the time period subsequent to the time covered by the most recent validated data submitted to the Voucher Management System and the time of the processing of the contract funding increment to be renewed.

    * * *

    6. Amend § 982.152 to remove paragraph (c) and redesignate paragraph (d) as (c). 7. Amend § 982.201 to: (a) Revise paragraph (b)(1)(ii) to read as follows; and (b) Add paragraphs (b)(1)(vii) and (viii).

    The revision and addition read as follows:

    § 982.201 Eligibility and Targeting.

    (b) * * *

    (1) * * *

    (ii) A low-income family that is “continuously assisted” under the 1937 Housing Act (which includes a low-income family residing in an assisted unit that qualifies for enhanced voucher assistance due to the expiration of a section 8 project-based HAP contract pursuant to section 524(d) of MAHRA);

    (vii) A family (regardless of income) residing in an assisted unit who qualifies for enhanced voucher assistance due to the expiration of the Section 8 project-based HAP contract and its renewal pursuant to section 515(c) of MAHRA and the implementing regulation; and

    (viii) A low-income family, or a moderate-income family residing in a low-vacancy area, or a moderate-income elderly or disabled family who qualifies for enhanced voucher assistance due to the prepayment of the mortgage or the voluntary termination of the mortgage insurance contract pursuant to sections 223(f) and 229 of the Low-Income Housing Preservation and Resident Homeownership Act of 1990 (LIHPRHA) ((12 U.S.C. 4113(f)) and 12 U.S.C. 4119, respectively, or a transaction under which the project is preserved as affordable housing pursuant to section 201(p) of the Housing and Community Development Amendments of 1978, (12 U.S.C. 1715z-1a(p)).

    8. Amend § 982.305 to revise paragraph (a)(5) to read as follows:
    § 982.305 PHA approval of assisted tenancy.

    (a) * * *

    (5) At the time a family initially receives tenant-based assistance for occupancy of a dwelling unit, and where the gross rent of the unit exceeds the applicable payment standard for the family, the family share does not exceed 40 percent of the family's monthly adjusted income, except in the case where the family is eligible for, and is receiving, enhanced voucher assistance.

    9. Amend § 982.309 to add paragraph (d) to read as follows:
    § 982.309 Term of assisted tenancy.

    (d) Right to remain for enhanced voucher tenancy. (1) A family that receives an enhanced voucher has the right to remain in the project in which the family qualified for enhanced voucher assistance at the time of the eligibility event for as long as the units are used for rental housing and are otherwise eligible for voucher assistance.

    (2) The owner may not terminate the tenancy of a family that exercises its right to remain except as provided in § 982.310.

    10. Amend § 982.402 to revise paragraphs (c) and (d) to read as follows:
    § 982.402 Subsidy standards.

    (c) Effect of family unit size on maximum subsidy in HCV Program. The family unit size as determined for a family under the PHA subsidy standard is used to determine the maximum subsidy for a family assisted in the HCV Program. The PHA establishes payment standards by number of bedrooms. Except for an enhanced voucher family (see § 982.504(b)), the payment standard amount for a family shall be the lower of:

    (1) The payment standard amount for the family unit size; or

    (2) The payment standard amount for the unit size of the unit leased by the family.

    (3) HCV Program. For a voucher tenancy, the PHA establishes payment standards by number of bedrooms. The payment standard for the family must be the lower of:

    (i) The payment standard for the family unit size; or

    (ii) The payment standard for the unit size leased by the family.

    (d) Size of unit occupied by family. (1) The family may lease an otherwise acceptable dwelling unit with fewer bedrooms than the family unit size. However, the dwelling unit shall meet the applicable HQS space requirements.

    (2) Except for an enhanced voucher family (see § 982.504), the family may lease an otherwise acceptable dwelling unit with more bedrooms than the family unit size, provided the family would not be required to initially pay more than 40 percent of adjusted monthly income as the family share. However, utility allowances must follow § 982.517(d).

    11. Revise § 982.504 to read as follows:
    § 982.504 Payment standard for family in restructured subsidized multifamily project, or in housing converted under certain conversion actions.

    (a) Restructured projects. This section applies to restructured subsidized multifamily projects where HCV assistance is provided to a family pursuant to 24 CFR 401.421 when HUD has approved a restructuring plan, and the participating administrative entity has approved the use of tenant-based assistance to provide continued assistance for such family. This section also applies to conversion actions involving:

    (1) Owner opt-outs or owner non-renewal of a section 8 project-based contract;

    (2) Prepayments of the owner's mortgage;

    (3) Voluntary terminations of mortgage insurance for a preservation-eligible property; and

    (4) Certain HUD actions against the owner, in cases where such actions result in a family being eligible for the enhanced voucher payment standard.

    (b) Payment standard for family in restructured subsidized multifamily project and in housing converted under certain housing conversion actions. (1) Enhanced voucher assistance. This paragraph (b) of this section applies to families receiving enhanced voucher assistance under the HCV Program.

    (i) Enhanced voucher assistance is provided to an eligible family as a result of an eligibility event.

    (ii) In order to receive enhanced voucher assistance, an eligible family must remain in the project in which the family qualified for enhanced voucher assistance and lease a unit for which the family qualifies in accordance with HUD guidance;

    (iii) If the family chooses to move from the project in which the family qualified for enhanced voucher assistance, the payment standard is determined in accordance with § 982.503. If the family moves from the project at any time, this § 982.504 does not apply.

    (2) Enhanced voucher payment standard. The payment standard for a family that remains in the project in which they qualified for enhanced voucher assistance at the time of the eligibility event is the gross rent (rent to owner plus the applicable PHA utility allowance for any tenant-supplied utilities) for the family's unit. The rent must be reasonable as determined by the PHA in accordance with § 982.507.

    (3) Subsequent rent increases. If an owner subsequently raises the rent for an enhanced voucher family in accordance with the lease, State and local law, and HCV Program regulations (including rent reasonableness requirements under § 982.507), the new gross rent shall be the payment standard for the unit.

    (4) Enhanced voucher family residing in an oversized unit. (i) If the bedroom size of the family's unit exceeds the number of bedrooms for which the family qualifies in accordance with § 982.402, the family is residing in an oversized unit, and the family is an over-housed family.

    (ii) If the family wishes to remain at the project with enhanced voucher assistance, the over-housed family must move to an appropriate size unit in the project (the unit size is the same size as the number of bedrooms for which the family qualifies under the PHA subsidy standards) if one is available and the unit must meet all HCV Program requirements. If the family moves to the appropriate size unit, the payment standard for that unit is determined in accordance with paragraph (b)(2) of this section.

    (iii) If there are no appropriate size units available at the project at the time of the housing conversion action, the family may continue to reside in the oversized unit and the payment standard shall be determined based on the gross rent for the oversized unit in accordance with paragraph (b)(2) of this section except that if an appropriate size unit is not available or does not physically exist at the project, but a unit is available that is smaller than the family's current unit but not smaller than the appropriate size unit for which the family qualifies under the PHA subsidy standards, the family must move to the smaller bedroom size unit within 30 days, and the payment standard shall be determined based on the gross rent for the smaller bedroom size unit in accordance with paragraph (b)(2) of this section.

    (iv) If an appropriate size unit or smaller bedroom size unit as described in paragraph (b)(4)(iii) subsequently becomes available, the family residing in the oversized unit must move to the appropriate size unit or the smaller bedroom size unit as described in paragraph (b)(4)(iii), within 30 days, and the payment standard shall be determined based on the gross rent for the appropriate bedroom size or the smaller bedroom size unit in accordance with paragraph (b)(2) of this section.

    (v) If the family refuses to move to an appropriate size unit or a smaller bedroom size unit as described in paragraph (b)(4)(iii) of this section and one becomes available at the project, the payment standard is determined in accordance with § 982.402(c)(1), that is, the payment standard amount for the family unit size for a regular voucher holder under § 982.503.

    (vi) When an appropriate size unit or a smaller size unit as described in paragraph (b)(4)(iii) of this section becomes available in the project, the owner must immediately inform the PHA and the family. If the owner leases an appropriate size unit or a smaller bedroom size unit as described in paragraph (b)(4)(iii) without notifying the PHA and the over-housed family, an enforcement action may be taken against the owner and the PHA shall calculate the housing assistance payment on behalf of the over-housed family in accordance with 982.505(b) and the rent to owner shall not exceed the reasonable rent for the appropriate unit size or the smaller bedroom size unit as described in paragraph (b)(4)(iii). The family share is determined in accordance with § 982.515.

    (vii) If a decrease in family size subsequently occurs during an enhanced voucher tenancy, causing the family to occupy an oversized unit, the payment standard for the unit is calculated based on the gross rent for the oversized unit and in accordance with paragraph (b)(2) of this section until such time an appropriate size unit, or a smaller size unit as described in paragraph (b)(4)(iii) of this section, becomes available.

    12. Amend § 982.505 to: (a) Revise paragraph (b); (b) Revise paragraphs (c)(1) introductory text and (c)(2) to read as follows; and (c) Add paragraph (e).

    The revisions and addition read as follows:

    § 982.505 How to calculate housing assistance payment.

    (b) Amount of monthly housing assistance payment. (1) Regular voucher tenancy. The PHA shall pay a monthly housing assistance payment on behalf of the family that is equal to the lower of:

    (i) The payment standard for the family minus the total tenant payment; or

    (ii) The gross rent minus the total tenant payment.

    (2) Enhanced voucher tenancy. The PHA shall pay a monthly housing assistance payment on behalf of the family that is equal to the enhanced voucher payment standard (see § 982.504(b)(2)) minus the higher of:

    (i) The total tenant payment; or

    (ii) The enhanced voucher minimum rent as determined in accordance with § 982.518.

    (c) Payment standard for family. (1) Except as provided in § 982.504(b), the payment standard for the family is the lower of:

    (2) If the PHA has established a separate payment standard amount for a designated part of an FMR area in accordance with § 982.503 (including an exception payment standard amount as determined in accordance with § 982.503(b)(2) and § 982.503(c)), and the dwelling unit is located in such designated part, the PHA must use the appropriate payment standard amount for such designated part to calculate the payment standard for the family. Where § 982.504(b) does not apply, the payment standard for the family shall be calculated in accordance with this paragraph and paragraph (c)(1) of this section.

    (e) Enhanced voucher housing assistance payment. Regardless of whether the owner's gross rent after the eligibility event exceeds the normally applicable PHA voucher payment standard amount, the housing assistance payment for a family receiving enhanced voucher assistance is equal to the gross rent for the unit (provided such rent is reasonable) minus the higher of total tenant payment or the enhanced voucher minimum rent (see § 982.518).

    13. Amend § 982.507 to revise paragraph (b), to read as follows:
    § 982.507 Rent to owner: Reasonable rent.

    (b) Comparability—(1) Assisted units. Assisted units include units that are assisted under a Federal, State, or local government program, including Low-Income Housing Tax Credit assistance. Units where rents and/or rent increases are controlled or restricted by law or a court order are assisted units for purposes of determining rent comparability except in the case where such law or court order applies to HCV Program participants. With the exception of units described in paragraph (b)(2) of this section, assisted units do not include units for which the owner has simply decided to charge rents that are below what other tenants are charged and below what the market could actually bear. Rents for assisted units must not be considered when determining comparability.

    (2) Assisted units in projects that undergo a housing conversion action. Units in a property undergoing a housing conversion action occupied by tenants who, on the date of the eligibility event, do not receive vouchers are considered assisted if the owner of the project continues to offer and accept below market rent or offers other rent concessions to the impacted families. Owners, who choose to charge such lower rents to impacted families, must provide written notification to the PHA and other required documentation in accordance with HUD guidance.

    (3) Unassisted units. Unassisted units do not receive any form of Federal, State, or local government assistance including units where rents and/or rent increases are controlled or restricted by law or a court order. Units for which the owner has simply decided to charge rents that are below what other tenants are charged and below what the market could actually bear are unassisted for purposes of determining comparability. Rents for unassisted units must be considered when determining comparability in accordance with paragraph (b)(4) of this section.

    (4) Comparability analysis. The PHA must determine whether the rent to owner is a reasonable rent in comparison to rent for other comparable unassisted units. To make this determination, the PHA must consider factors such as:

    (i) The location, quality, size, unit type, and age of the contract unit; and

    (ii) Any amenities, housing services, maintenance and utilities to be provided by the owner in accordance with the lease.

    14. Revise § 982.508 to read as follows:
    § 982.508 Maximum family share at initial occupancy.

    At the time the PHA approves a tenancy for initial occupancy of a dwelling unit by a family with tenant-based assistance under the program, and where the gross rent of the unit exceeds the applicable payment standard for the family, except in a case where the family is eligible for and receives enhanced voucher assistance, the family share must not exceed 40 percent of the family's adjusted monthly income. The determination of adjusted monthly income must be based on verification information received by the PHA no earlier than 60 days before the date that a PHA issues a voucher to the family.

    15. Add § 982.511 to read as follows:
    § 982.511 Rent to Owner: Decoupling Transactions.

    (a) In decoupling transactions in the section 236 program, authorized under section 236 of the National Housing Act, 12 U.S.C. 1715z-1, the rent to owner shall be no greater than the HUD-approved basic rent for the section 236 program.

    (b) The rent to owner shall be determined in accordance with section 236 program requirements. This determination is not subject to the prohibition against increasing the rent to owner during the initial lease term (see § 982.309).

    16. Revise § 982.515 to read as follows:
    § 982.515 Family share: Family responsibility.

    (a) Regular and enhanced voucher tenancy. (1) The family share is calculated by subtracting the amount of the housing assistance payment from the gross rent.

    (2) The family rent to owner is calculated by subtracting the amount of the housing assistance payment to the owner from the rent to owner.

    (3) The PHA may not use housing assistance payments or other program funds (including any administrative fee reserve) to pay any part of the family share, including the family rent to owner. Payment of the whole family share is the responsibility of the family.

    (b) Enhanced voucher tenancy and family responsibility. The prohibition in § 982.515(a)(3) also applies to enhanced vouchers.

    17. Add § 982.518 to read as follows:
    § 982.518 Enhanced voucher minimum rent.

    (a) A family receiving enhanced voucher assistance shall pay for rent no less than the rent the family was paying on the date of the eligibility event, as follows:

    (1) A family previously assisted under a Section 8 project-based HAP contract shall pay no less than the dollar amount of the total tenant payment on the date of the eligibility event;

    (2) A family previously assisted under the HCV Program shall pay no less than the dollar amount of the family share of rent and utilities on the date of the eligibility event. The voucher family may choose not to accept the enhanced voucher assistance, in which case all the regular voucher rules apply, regardless of whether the family chooses to remain at the property;

    (3) A family not previously assisted under a Section 8 project-based or tenant-based HAP contract shall pay no less than the dollar amount of the gross rent the family was paying on the date of the eligibility event. The PHA utility allowance is used to calculate the gross rent on the date of the eligibility event if all utilities were not included in the rent.

    (b) A family receiving enhanced voucher assistance shall pay the enhanced voucher minimum rent, notwithstanding any other requirement of the HCV Program. For example, if the enhanced voucher minimum rent exceeds 40 percent of the family's monthly adjusted income, a family shall still pay at least the enhanced voucher minimum rent, and the restriction on the initial family contribution under § 982.508 is not applicable.

    (c) The enhanced voucher minimum rent requirement remains in effect for a family as long as the family remains at the property in which they qualified for enhanced voucher assistance, but may be revised in accordance with paragraph (d) of this section.

    (d) If the gross income of the family receiving enhanced voucher assistance subsequently declines to a significant extent, in accordance with HUD guidance, the enhanced voucher minimum rent shall be revised to an amount calculated based on a percentage of current monthly adjusted income, provided that:

    (1) The percentage used in this calculation is the greatest of: 30 percent of monthly adjusted income; or the percentage of monthly adjusted income paid by the family for rent (including the utility allowance for any tenant-paid utilities) on the date of the eligibility event;

    (2) After the minimum rent is changed from a dollar amount to a percentage of income calculation, the enhanced voucher minimum rent for the family remains that specific percentage of income and will not revert to a dollar amount, unless and until the family's income increases to an amount whereby the family's enhanced voucher minimum rent established by a percentage of income calculation would require the assisted family to pay an amount equaling more than the greater of the family's original enhanced voucher minimum rent payment (established as of the date of the eligibility event) or 30 percent of the family's adjusted income based on such increase. At such time, the family's enhanced voucher minimum rent shall be determined by the PHA using the dollar amount of the family's original enhanced voucher minimum rent. The enhanced voucher holder's family share shall be determined in accordance with § 982.515(a). In no circumstance shall the family's enhanced voucher minimum rent be less than the amount established as of the date of the eligibility event.

    Dated: August 29, 2016. Lourdes Castro Ramírez, Principal Deputy Assistant Secretary, Office of Public and Indian Housing.
    [FR Doc. 2016-25520 Filed 10-25-16; 8:45 am] BILLING CODE 4210-67-P
    DEPARTMENT OF VETERANS AFFAIRS 38 CFR Part 36 RIN 2900-AP32 Loan Guaranty Vendee Loan Fees AGENCY:

    Department of Veterans Affairs.

    ACTION:

    Proposed rule.

    SUMMARY:

    This document proposes to amend the Department of Veterans Affairs (VA) Loan Guaranty Service (LGY) regulations to establish reasonable fees that VA may charge in connection with the origination and servicing of vendee loans made by VA. Fees proposed in this rulemaking are consistent with those charged in the private mortgage industry, and such fees would help VA to ensure the sustainability of this vendee loan program. The loans that would be subject to the fees are not veterans' benefits. This rule would also ensure that all direct and vendee loans made by the Secretary are safe harbor qualified mortgages.

    DATES:

    Comments must be received by VA on or before December 27, 2016.

    ADDRESSES:

    Written comments may be submitted through www.Regulations.gov; by mail or hand-delivery to Director, Regulation Policy and Management (00REG), Department of Veterans Affairs, 810 Vermont Avenue NW., Room 1068, Washington, DC 20420; or by fax to (202) 273-9026. Comments should indicate that they are submitted in response to “RIN 2900-AP32—Loan Guaranty Vendee Loan Fees.” Copies of comments received will be available for public inspection in the Office of Regulation Policy and Management, Room 1068, between the hours of 8:00 a.m. and 4:30 p.m., Monday through Friday (except holidays). Please call (202) 461-4902 for an appointment. (This is not a toll-free number.) In addition, during the comment period, comments may be viewed online through the Federal Docket Management System (FDMS) at www.Regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Andrew Trevayne, Assistant Director for Loan and Property Management (261), Veterans Benefits Administration, Department of Veterans Affairs, 810 Vermont Avenue NW., Washington, DC 20420, (202) 632-8795. (This is not a toll-free number.)

    SUPPLEMENTARY INFORMATION:

    This document proposes to amend VA regulations to establish reasonable fees in connection with loans made by VA, commonly referred to as vendee loans. The proposed fees associated with vendee loans are standard in the mortgage industry. The vendee loans that would be subject to the fees are not veterans' benefits and are available to any purchasers, including investors, who qualify for the loan.

    Specifically, this rulemaking would permit VA to establish a fee to help cover costs associated with loan origination. The proposed rule would also permit certain reasonable fees to be charged following loan origination, during loan servicing. Fees permitted would be those charged for ad hoc services performed at the borrower's request or for the borrower's benefit, as well as standard fees specified in loan instruments. Lastly, third-party fees, those not charged by VA, would be included in this proposed rule solely to clarify for borrowers the various costs that a borrower may incur when obtaining a vendee loan.

    Vendee Loans

    When a holder forecloses a VA-guaranteed loan, the holder has the option, pursuant to 38 U.S.C. 3732 and 3720, of conveying the foreclosed property to the Secretary of Veterans Affairs (the Secretary). For properties VA acquires this way, VA sells them as a salvage operation and deposits the sales proceeds into the Veterans Housing Benefit Program Fund (VHBPF), as required by 38 U.S.C. 3722, to help offset the housing operation costs of the Home Loan Guaranty Program.

    In addition to selling properties as part of the salvage operation, the Secretary has authority under 38 U.S.C. 3720 and 3733 to finance the sales upon such terms as the Secretary determines reasonable. VA refers to loans made pursuant to these provisions as vendee loans. The loans are not classified as veterans' benefits and are available to any purchaser VA determines creditworthy and whose bid is awarded a sales contract. Purchasers can be individuals or corporations, and the properties can be purchased as owner-occupied residences or as investments. Additionally, the Secretary may make vendee loans to certain entities pursuant to 38 U.S.C. 2041 for the purpose of assisting homeless veterans and their families acquire shelter.

    Under 38 U.S.C. 3733(a)(4), vendee loans may generally be made for up to 95 percent of the purchase price of the property. A vendee loan may exceed 95 percent of the purchase price to the extent the Secretary determines necessary to competitively market the property. A vendee loan may also exceed 95 percent of the purchase price in instances where the Secretary includes, as part of the vendee loan, an amount to be used for the purpose of rehabilitating such property. Additionally, 38 U.S.C. 3733(a)(6) provides that the Secretary shall make a vendee loan at an interest rate that is lower than the prevailing mortgage market interest rate in areas where, and to the extent the Secretary determines, in light of prevailing conditions in the real estate market involved, that such lower interest rate is necessary in order to market the property competitively and is in the interest of the long-term stability and solvency of the VHBPF. These provisions demonstrate that this program is to be competitively marketed to borrowers so long as it is financially sustainable. In fiscal years (FYs) 2011 and 2012, the most recent period when VA made direct loans, VA sold, on average, 175 real-estate owned (REO) properties per month with vendee financing, with an average loan amount of $114,925.

    Vendee financing is not a veterans' benefit; rather, it is a competitive lending program with the primary goal of providing financing to help VA dispose of its REO properties. Vendee loans enable VA to sell more of its properties and to sell them quicker. Nevertheless, this program helps veterans by contributing to the long-term viability of the VHBPF, as the principal and interest resulting from repayment of vendee loans are deposited into the VHBPF to help offset the housing operation costs of the Home Loan Guaranty Program.

    Authority for Fees

    Section 3720 of title 38 U.S.C. states that the Secretary may purchase property upon such terms and for such prices as the Secretary determines to be reasonable, and similarly sell, at public or private sale, any such property. It also authorizes the Secretary to otherwise deal with any property acquired or held pursuant to chapter 37 of title 38, U.S.C.

    Section 3720 authorizes the Secretary to sell REO properties upon such terms and for such prices as the Secretary determines reasonable. See 38 U.S.C. 3720(a). Section 3720 further authorizes the Secretary to exercise this discretion notwithstanding any other provision of law. Given the common industry practice of including fees when negotiating the terms and prices of real estate transactions, and for other reasons explained below, the Secretary has determined that it is reasonable to negotiate fees in the terms and prices of any sale of the Secretary's REO properties. The specific types of allowable fees will be explained in-depth later in this preamble.

    VA considered alternatives to charging fees. One option was to increase the sales prices of properties to account for the funds that fees would generate. VA decided, however, that increasing sales prices might extend the time that VA must hold properties before selling them. This would also increase costs for taxpayers, rather than the small population of borrowers enjoying the advantages of vendee loans. VA also considered adjusting interest rates, but as explained earlier, Congress has established a preference for lower-than-market interest rates in order to market properties competitively. See 38 U.S.C. 3733(a)(6). Consequently, VA believes that having the flexibility to negotiate fees is the most fiscally sound way to protect the integrity of the VHBPF and ensure that taxpayers who do not participate in the vendee program do not unfairly bear the burden of its costs.

    All origination-related fees and post-origination fees proposed under this rule will be deposited into the VHBPF. Under 38 U.S.C. 3722, amounts paid into the VHBPF under section 3729 or any other provision of law or regulation established by the Secretary imposing fees on persons or other entities constitute assets of the VHBPF. See 38 U.S.C. 3722(c)(2). These fees would be designated to the proper account as required under the Federal Credit Reform Act of 1990. See 2 U.S.C. 661, et seq.

    The Proposed Rule

    To help ensure that VA's REO portfolio is administered in a cost-effective manner, VA is proposing to authorize certain reasonable fees in connection with the origination and post-origination servicing of vendee loans. The proposed fees would prevent against windfalls to the small population of vendee borrowers by ensuring that they, rather than the taxpayers at-large, pay for the unique advantages of vendee financing. The types of fees proposed are standard in the lending industry, and as such, would not significantly affect the program's competitiveness.

    In addition to the reasonable fees proposed herein, borrowers obtaining vendee financing may be required to pay certain third-party fees. Third-party fees are collected on behalf of, or payable to, persons other than the Secretary. These include, for instance, recording fees, force-placed insurance premiums, and inspection fees. VA does not control these third-party fees, as they are not collected on behalf of the Secretary. VA is identifying them in this proposed rule to help participants more fully understand the types of expenses that typically could affect borrowers.

    Section 36.4500 Applicability and Qualified Mortgage Status

    VA proposes to add § 36.4500(e) to clarify the applicability of the sections proposed under this rulemaking. It would state that proposed §§ 36.4528, 36.4529, and 36.4530 would be applicable to all vendee loans.

    VA also proposes to amend paragraph (c)(2), regarding which vendee loans are qualified mortgages. The purpose and effects of this proposed change are explained later in this preamble in the section on safe harbor qualified mortgages.

    Section 36.4501 Definitions

    VA proposes to update the authority citation for the definition of vendee loan, as provided in § 36.4501. The authority citation currently includes 38 U.S.C. 3720 and 3733. VA proposes to add 38 U.S.C. 2041 to this citation. This change would have no substantive effect on vendee loans but would merely ensure that the authority citation for the definition of vendee loans fully reflects the authorities under which the Secretary may make these loans.

    VA also proposes to clarify existing policy with regard to vendee loan terms. The rule would state specifically that the terms of a vendee loan (e.g., amount of down payment; amortization term; whether to escrow taxes, insurance premiums, or homeowners' association dues; fees etc.) are negotiated between the Secretary and the borrower on a case-by-case basis, subject to the requirements of 38 U.S.C. 2041 or 3733. The terms may vary depending on, among other factors, the creditworthiness of the buyer/borrower and the purpose of the realty purchase—investment versus residence. Except for the addition of the Secretary's discretion to negotiate fees, this is not a substantive change. VA would also state that the terms related to allowable fees are subject to proposed §§ 36.4528 through 36.4530 of this part.

    In addition, the rule would add a new definition for safe harbor qualified mortgage. The definition is consistent with that in the guaranteed loan program. See 38 CFR 36.4300(b)(1). It is necessary to add the definition to clarify the applicability of safe harbor provisions to all of VA's direct loan programs, not just the guaranteed programs.

    Section 36.4528 Vendee Loan Origination Fee

    VA is proposing a new regulatory provision to be found in 38 CFR 36.4528. Proposed § 36.4528 would authorize an allowable fee that may be charged in connection with the origination of vendee loans. This proposed rule would permit VA to charge an origination fee not to exceed one-and-a-half percent of the loan amount. The proposed origination fee is distinct, and in addition to, the loan fee required to be paid by 38 U.S.C. 3729 for vendee loans made pursuant to 38 U.S.C. 3733. All or part of the proposed origination fee may be paid in cash at loan closing, or all or part of the fee may be included in the loan. In computing the fee, VA would disregard any amount included in the loan to enable the borrower to pay such fee. In other words, if a borrower opts to include the fee into the loan amount, VA would not increase the amount of origination fee due. Under no circumstance may the total fee agreed upon between the Secretary and the borrower result in an amount that would cause the loan to be designated as a high-cost mortgage, as defined by section 103(bb) of the Truth in Lending Act (TILA), codified in 15 U.S.C. 1602(bb), and implementing regulations in 12 CFR part 1026.

    VA understands that it is common industry practice for lenders to charge an “origination fee” of approximately one percent of the loan value. Bankrate.com explains that for many loans a one percent origination fee is common.1 This fee is customarily charged by lenders to cover certain expenses involved with evaluating borrowers' creditworthiness and preparing a mortgage loan. VA currently permits a one percent fee to be charged in connection with originating loans in its Home Loan Guaranty Benefit Program (38 CFR 36.4313(d)(2)). Vendee financing is distinct from VA's benefit program. Nonetheless, VA believes that if private lenders are permitted to charge a one percent origination fee to eligible servicemembers and veterans utilizing their home loan benefit, then it is reasonable to establish up to a one-and-a-half percent fee in connection with the origination of non-benefit vendee loans, which may be made to any borrowers, including investors, who qualify.

    1Loan Comparison Calculator, Bankrate.com, http://www.bankrate.com/calculators/home-equity/compare-loans-calculator.aspx#ixzz34FMEFGk5 (last visited May 8, 2015).

    To the extent the maximum one-and-a-half percent fee proposed herein may on occasion exceed the total amount charged at origination by certain private lenders, the unique characteristics of vendee financing would make the extra one-half percent reasonable and help the vendee program remain competitive. As explained above in the section on vendee loans, 38 U.S.C. 3733(a)(6) requires the Secretary to make vendee loans at an interest rate lower than the prevailing mortgage market interest rate in situations where, based on the local conditions in an area's real estate market, such lower interest rate is necessary to market the property competitively. In such situations, VA does not have the flexibility to charge above market interest rates to offset costs associated with loan origination, as a private lender might. Further, VA offers these lower interest rates without charging discount points collected in exchange for this lower interest rate at the time of loan origination. In private sector transactions, borrowers can pay up to three or four discount points, depending on how much they want to lower their interest rates. One discount point is an upfront payment of one percent of the loan amount, in addition to the other fees. The mortgage's interest rate is usually reduced by a quarter of a percentage point for every discount point paid.

    In addition to offering below-market interest rates without discount points, VA offers vendee financing for up to 95 percent of the purchase price of the property and, in instances where the Secretary deems it necessary to market the property competitively, may offer vendee financing in an amount that exceeds 95 percent of the purchase price. The average loan amount to sale price ratio for vendee loans exceeded 85 percent in FY11 and 88 percent in FY12.

    Generally, if a borrower's down payment on a home is less than 20 percent of the sale price, a private lender will require mortgage insurance to protect itself in case the borrower defaults on the payments. The borrower pays the premiums, and the lender is the beneficiary.2 Private mortgage insurance typically costs about 0.25 to two percent of the loan balance per year, depending on the amount of the down payment, loan term, and borrower's credit score, and continues until the borrower reaches 20 percent equity.3 In contrast, VA does not require a borrower to purchase private mortgage insurance on any vendee loan, regardless of the loan-to-purchase price ratio.

    2Private mortgage insurance—The Basics of PMI, Bankrate.com, http://www.bankrate.com/finance/mortgages/the-basics-of-private-mortgage-insurance-pmi.aspx (last visited May 8, 2015).

    3Definition Of `Private Mortgage Insurance-PMI', Investopedia.com, http://www.investopedia.com/terms/p/privatemortgageinsurance.asp (last visited May 8, 2015).

    Furthermore, the rule would provide that under no circumstances may the total fees agreed upon between the Secretary and the borrower result in an amount that would cause the loan to be designated as a high-cost mortgage loan under TILA and its implementing regulations (15 U.S.C. 1602(bb); 12 CFR part 1026). High-cost mortgages are those where the annual percentage rate (APR) or points and fees charged exceed certain threshold amounts. Loans that meet such high-cost coverage tests are subject to special disclosure requirements and restrictions on loan terms.

    Accordingly, this rulemaking would include authority for VA to charge an amount not to exceed a one-and-a-half percent origination fee in connection with the origination of vendee loans. Fees that may be charged by third parties at the time of loan origination (for example, courier fees or fees for termite inspection) are not included under 38 CFR 36.4528 and are discussed later in this preamble. In establishing this reasonable fee to cover costs associated with loan origination, VA is managing the non-benefit, vendee loan program in a business-like manner more consistent with private industry standards, and in so doing, ensuring that purchasers who utilize this financing, rather than taxpayers at-large, help bear the expenses associated with originating vendee loans.

    Section 36.4529 Vendee Loan Post-Origination Fees

    VA is also proposing a new regulatory provision, 38 CFR 36.4529, which would allow VA to charge reasonable service-related fees following loan origination. These fees would not constitute the general servicing fee paid by VA to its contractor to perform functions normally considered part of prudent loan servicing activities. Rather, these fees would be charged to the borrower to cover the costs of ad hoc, special services that are requested and performed on the borrower's behalf, and are beyond the regular services performed in connection with loan servicing.

    It is common industry practice to charge specific fees in accord with the rendering of additional services on an account. Accordingly, VA is establishing, under proposed § 36.4529(a), maximum amounts to be charged per fee in exchange for the Secretary's performance of certain services that are above and beyond ordinary and customary loan servicing activities. VA surveyed some of the larger private entities that perform loan servicing. The frequency, applicability, and amount of these fees generally vary by state, loan status, and other loan characteristics. As such, VA notes that the amounts proposed in this rulemaking would represent maximums; the specific fees to be charged on each account may be negotiated between the Secretary and the borrower.

    Under the proposed rule, VA could charge a borrower an assumption processing fee when a purchaser assumes a VA direct loan. This fee would be assessed when VA approves a request for the transfer of legal liability of repaying the mortgage. VA intends for the assumption fee to help offset the costs associated with processing the application, determining the creditworthiness of the assumptor, and revising the ownership records when the approved transfer is complete. VA would be permitted to charge an amount not to exceed $300, plus the actual cost of any credit report required. If the assumption were denied, VA would only charge the actual cost of the credit report. The disclosed maximum assumption fees in the fee schedules surveyed for this rulemaking ranged from $350 (including the cost of the credit report) to $1300 (however, the $1300 fee also included attorney fees).

    The rule would also permit VA to charge the borrower a fee, not to exceed $350, for processing a subordination request to ensure that a modified vendee loan retains first lien position over another debt on the same property. VA will only modify a loan if it will retain its priority lien position on that property. State laws differ as to whether a basic loan modification will affect priority status of a senior loan holder, and in which situations such a modification would affect priority status. Accordingly, if VA consents to the modification of a loan, VA must ensure that its modified mortgage loan retains first-lien position. The maximum subordination fee disclosed by the private servicers surveyed for this rulemaking was $350.

    The proposed rule would permit a reasonable partial release fee, not to exceed $350, to be charged when a borrower seeks to exclude some of the collateral from the mortgage contract once a certain amount of the mortgage loan has been paid. A borrower might request a partial release of real property from the security for a number of reasons; for example, to release acreage from the original secured lot so that it can be used for other purposes or to release some portion of the property to adjust the lot line or resolve a lot line dispute. Of the private servicers surveyed, two disclosed a maximum fee of $350 and the third disclosed a maximum fee for this service of $500.

    If VA agrees to release an obligor from a mortgage loan in connection with a division of real property, this rule would permit VA to charge a release of lien fee not to exceed $15 for executing and providing documentation of this release. Occasionally, joint owners of real property may be subject to a judicial decree (such as a divorce judgment) that divides the property into separately owned parcels according to each owner's proportionate share in the property. Generally, neither owner receives any cash consideration in connection with the partition. In these circumstances, following this division, the fee may be incurred if the borrower who has possession of the land that is to be released from the security requests a release from liability under the mortgage loan. Consistent with VA's proposed maximum, the maximum fee disclosed in VA's survey of private industry is $15.

    VA could charge a fee not to exceed $30 for processing payoff statements. Consistent with VA's proposed maximum, the private industry servicers VA surveyed disclosed a maximum payoff statement fee of $30.

    VA could charge a reasonable fee to the borrower to offset the costs of processing payments a borrower may elect to submit by phone. To cover the expenses associated with providing this service, which borrowers may prefer to traditional payment by check, the fee would not exceed $12 when a representative handles the payment, and would not exceed $10 when an interactive voice response system (an automated phone system) handles the payment. The industry fee schedules that VA surveyed for this rulemaking disclosed maximum payment by phone fees that ranged from $9 to $20. The schedules also showed that, when a borrower makes a payment by phone, it usually costs the borrower $3 to $10 more to speak with a representative than it does for the borrower to use an interactive voice response system.

    In addition to the proposed fees being standard in private industry, there is precedent for the collection of fees in exchange for the performance of special ad hoc services in another Federal Government direct home loan program. Specifically, the Rural Housing Service (RHS) at the Department of Agriculture (USDA) regulates the collection of fees in exchange for the performance of certain special services. RHS provides financing to help very low and low income individuals, who cannot obtain credit from other sources, obtain housing in rural areas. VA notes that RHS permits these fees even though its loan program is targeted to very low and low income families, whereas sales of REO properties with vendee financing are intended to help VA dispose of its REO inventory helping fund the VHBPF.

    For example, 7 CFR 3550.161(c) states that RHS may charge a fee for payoff statements if more than two statements are requested for the same account in any 30-day period. Under § 3550.161(d), RHS explains that borrowers who make cash payments, rather than submitting payment through check, money order, or bank draft, will be assessed a fee to cover the conversion to money order. RHS stated in its Interim Final Rule, Reengineering and Reinvention of the Direct Section 502 and 504 Single Family Housing Programs, published on November 22, 2006 (61 FR 59762, 59772), that two commentators strongly opposed RHS's requirement that a cash payment must be accompanied by an amount sufficient to cover the cost of a money order, stating that such proposal was unfair to very low and low income families. It explained, however, that RHS provides supervised credit. RHS encourages, like all lenders, customers to send payments by check, money order or bank draft. Cash payments in local offices are discouraged. Since RHS must obtain a money order in order to transmit the payment, the customer should pay that fee. Id.

    In addition, RHS regulations at 7 CFR 3550.159 provide that certain borrower actions require RHS approval. Specifically, § 3550.159(c) explains that RHS may consent to a transaction affecting the security, such as a sale or exchange of security property, and grant a partial release of the security, so long as certain conditions are met. Among those conditions is the requirement that the proceeds from the sale of any portion of the security property or other similar transaction requiring RHS consent must first be used to pay customary and reasonable costs related to the transaction that must be paid by the borrower. Additionally, if an appraisal must be conducted, the regulation states that the appraisal fee will be charged to the borrower.

    As authority for its rule permitting such fees, RHS cites 42 U.S.C. 1480, which provides that the Secretary of Agriculture shall have the power to sell RHS-acquired properties based on terms and conditions the Secretary of Agriculture determines reasonable and to make loans to the purchasers of such properties. The statutory authority cited by RHS to permit fees to cover the costs of performing additional post-origination services is analogous to 38 U.S.C. 3720, which provides the Secretary the power to dispose of VA-owned properties on terms the Secretary determines reasonable. Thus, the proposed rule would be consistent with the rule of at least one other Federal Government direct home loan program that authorizes reasonable fees to cover unanticipated, additional expenses incurred after loan origination.

    The rule would state expressly, at proposed § 36.4529(b), that the Secretary may negotiate fees on a case-by-case basis. It would also require the Secretary to review, bi-annually, the maximum fees proposed under § 36.4529(a) to ensure that the fees continue to reflect the reasonable costs for the services performed. If VA determines that the maximum fees listed in § 36.4529(a) no longer reflect the reasonable amounts necessary to perform the associated services, VA would propose amendment of the regulation. This would allow VA to timely address any imbalance in the maximum fee schedule and keep the vendee loan program both cost-effective and competitively priced for its participants.

    In addition to the ad hoc post-origination fees proposed under § 36.4529(a), proposed § 36.4529(c) would identify, for informational purposes, standard fees as established in loan instruments. Fees established in loan instruments are generally considered deterrents to default, and a means by which the lender can minimize losses if a loan does default. These expenses often relate to termination of the loan, regardless of whether the loan is ultimately foreclosed, and are capitalized into the indebtedness.

    VA, like many lenders, uses the standard loan documents developed and adopted by the Federal National Mortgage Association (Fannie Mae). Fannie Mae's security instruments usually provide that the lender may charge reasonable fees for services performed in connection with default and loan termination to protect the lender's interest in the property and rights under the deed of trust. Various Fannie Mae security instruments can be viewed at https://www.fanniemae.com/singlefamily/security-instruments.

    Fannie Mae's standard security instruments also generally provide that if the borrower fails to perform the covenants and agreements contained in the security instrument, the lender may do and pay for whatever is reasonable or appropriate to protect the lender's interest in the property and rights under the security instrument. A lender may not charge any fees prohibited by the instrument or by applicable federal, state, or local laws or regulations. State laws control whether any fees charged by the lender, or amounts expended by the lender to protect its interest in the property and rights under the loan instrument, are to be added to the borrower's indebtedness.

    Pursuant to proposed § 36.4529(d), any fee included in the loan instrument and permitted under proposed § 36.4529(c) would be based on the amount customarily charged in the industry for the performance of the service in the particular area, the status of the loan, and the characteristics of the affected property. VA is not prescribing specific maximum amounts for these fees. Rather, as these fees are governed by the loan instrument and may be capitalized into the principal balance of the loan, state law sets the maximum amounts for these fees. Nevertheless, VA seeks to clarify through this rulemaking that any borrower obtaining vendee financing may incur reasonable fees as provided for in standard loan instruments.

    An example of a fee permitted by the standard loan instrument would be a property inspection fee that VA could collect. For instance, when a foreclosure seems necessary, VA must perform a limited inspection to determine the physical condition or occupancy status of a property purchased with vendee financing. In situations where VA must perform work to maintain a vacant property, the loan instrument permits a reasonable property preservation fee to be charged to the borrower. As a result, this fee would cover services to protect a vacant property from further damage or to maintain a property to prevent city code violations. Such services could range from mowing the yard to constructing a fence around the property to winterizing the property. The fees charged would need to reflect the reasonable cost of performing the particular type of property preservation service.

    Additionally, standard loan instruments used by VA permit VA to collect reasonable appraisal or attorneys' fees. Appraisal fees would include, for example, the cost of obtaining a liquidation appraisal in the event of default to determine the value of a property prior to a liquidation sale or short sale. Appraisal fees could also include the cost of an appraisal of property to determine its value prior to a partial release. Attorneys' fees may be incurred in cases where the property goes into serious delinquency and servicers must hire attorneys to assure VA's interests are protected. Examples of legal work incurring attorneys' fees include providing proper and timely notice to borrowers in the event of foreclosure, determining lien position if there are multiple liens on the property, and, in judicial foreclosure states, assuring correct paperwork is submitted to the court. In addition, attorneys' fees may be incurred in cases where a loan is referred to foreclosure, but the foreclosure is not completed, the default is cured, and the loan is reinstated.

    Along with the fees for default-related services, there are other reasonable fees that are specified in the loan instrument that, if incurred, can be capitalized as part of the borrower's total indebtedness. These fees offset the additional expense of collection activities and usually serve as incentives for repaying a loan obligation in a timely manner or, more aptly, as deterrents to delinquency that might otherwise interrupt the Government's scheduled flow of income. These fees include, but are not limited to, late fees incurred to cover the added expense involved in handling delinquent payments, and a returned-check (non-sufficient funds) fee incurred when a mortgage payment is made from an account that does not have sufficient funds to cover the payment. Other fees that are reasonably necessary for the protection of the lender's investment are also permitted under the loan instrument.

    VA notes that RHS, in addition to including standard fees in its loan instrument, also addresses some of these fees in regulation. For example, RHS servicing regulations state that RHS may assess reasonable fees including a tax service fee, fees for late payments, and fees returned for insufficient funds (7 CFR 3550.153). In justifying the potential to charge late fees to its very low and low income borrowers, RHS explains that it recognizes its mission to provide supervised credit, but that it also believes a late fee encourages its clients to make payments on a timelier basis. See 61 FR 59763. Further, § 3550.156(a) explains that RHS borrowers are expected to meet a variety of obligations outlined in the loan documents, including maintaining the security property and paying hazard and flood insurance and other related costs when due. Paragraph (b) of the rule states that if a borrower fails to fulfill these obligations, RHS may obtain the needed service and charge the cost to the borrower's account. Accordingly, VA is similarly including reasonable fees established in loan instruments under this proposed rulemaking.

    Section 36.4530 Vendee Loan Other Fees

    The loan fee required by 38 U.S.C. 3729 and the fees included in proposed 38 CFR 36.4528 and 36.4529 are not the only types of fees associated with vendee loans. There are other types of fees necessary for the origination and servicing of vendee loans that may be permitted under this rulemaking. As such, VA is proposing to add § 36.4530 to clarify for borrowers of vendee loans that they may incur fees associated with their financing, in addition to, and unaffected by, those fees specified in 38 U.S.C. 3729 and proposed §§ 36.4528 and 36.4529.

    Other types of fees that that may be charged in connection with vendee loans are fees charged by third parties. These fees, which are also permitted in connection with the guaranteed loan benefit program, are not collected on behalf of the Secretary. These types of fees are collected to pay for goods or services such as termite inspections, hazard and force-placed insurance premiums, courier fees, tax certificates, and recorder's fees. They are standard in closing transactions, and borrowers of vendee loans would be expected to pay these fees for the goods and services provided by the third parties. VA is identifying these fees in this proposed rule to help clarify the types of expenses that may be incurred in connection with vendee financing and ensure that borrowers of vendee loans clearly understand the financial obligations that may be expected of them. The list of third-party fees in proposed 38 CFR 36.4530 is not exhaustive. Rather, it is meant to provide examples.

    Safe Harbor Qualified Mortgages

    VA proposes a change to § 36.4500(c)(2) to clarify that all direct loans would be safe harbor qualified mortgages. VA's qualified mortgage rule was first published on May 9, 2014. See 79 FR 26620. Although VA intended to designate as qualified mortgages all VA direct loans, VA did not expressly include all authorities under which VA makes loans. Consequently, it might appear as if VA intentionally excluded some of VA's direct loans from qualified mortgage status.

    To eliminate ambiguity, the proposed change would state expressly that any VA direct loan made by the Secretary pursuant to chapter 20 or 37 of title 38, U.S.C., is to be considered a safe harbor qualified mortgage. VA would also revise the authority citation for paragraph (c)(2) to include citations to 38 U.S.C. 2041, 3711, 3720, 3733, and 3761 in addition to the current citation to 38 U.S.C. 3710 and 15 U.S.C. 1639C(b)(3)(B)(ii). Again, this change is not intended to be substantive, but rather, would ensure the paragraph's authority reflects all of the different statutory authorities under which VA may make direct loans.

    Executive Orders 12866 and 13563

    Executive Orders 12866 and 13563 direct agencies to assess the costs and benefits of available regulatory alternatives and, when regulation is necessary, to select regulatory approaches that maximize net benefits (including potential economic, environmental, public health and safety effects, and other advantages, distributive impacts, and equity). Executive Order 13563 (Improving Regulation and Regulatory Review) emphasizes the importance of quantifying both costs and benefits, reducing costs, harmonizing rules, and promoting flexibility. Executive Order 12866 (Regulatory Planning and Review) defines a “significant regulatory action” requiring review by the Office of Management and Budget (OMB), unless OMB waives such review, as “any regulatory action that is likely to result in a rule that may: (1) Have an annual effect on the economy of $100 million or more or adversely affect in a material way the economy, a sector of the economy, productivity, competition, jobs, the environment, public health or safety, or State, local, or tribal governments or communities; (2) Create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) Materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) Raise novel legal or policy issues arising out of legal mandates, the President's priorities, or the principles set forth in this Executive Order.”

    The economic, interagency, budgetary, legal, and policy implications of this regulatory action have been examined, and it has been determined not to be a significant regulatory action under Executive Order 12866. VA's impact analysis can be found as a supporting document at http://www.regulations.gov, usually within 48 hours after the rulemaking document is published. Additionally, a copy of the rulemaking and its impact analysis are available on VA's Web site at http://www.va.gov/orpm/, by following the link for VA Regulations Published from FY2004 to FYTD.

    Unfunded Mandates

    The Unfunded Mandates Reform Act of 1995, 2 U.S.C. 1532, requires agencies to prepare an assessment of anticipated costs and benefits before issuing any rule that may result in the expenditure by State, local, and tribal governments, in the aggregate, or by the private sector, of $100 million or more (adjusted annually for inflation) in any one year. This proposed rule would have no such effect on State, local, and tribal governments, or on the private sector.

    Paperwork Reduction Act

    This proposed rule contains no provisions constituting a collection of information under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3521).

    Regulatory Flexibility Act

    This proposed rule would affect individuals and small businesses who choose to obtain a vendee loan from VA to finance the purchase of a VA-owned property rather than alternate financing. A party who wants to purchase a VA-owned property may choose whatever source of financing he wishes. Presumably the purchaser would select the least expensive financing option available, which may or may not be a VA vendee loan. VA does not believe that this proposed rule would impose any significant economic impact for the following reasons. Should the purchaser decide that the VA vendee program was not the most economically advantageous to the purchaser then he would obtain alternate financing. Parties would have to choose to be subject to the impact, if any, imposed by this rule.

    Accordingly, the Secretary certifies that the adoption of this proposed rule would not have a significant economic impact on a substantial number of small entities as they are defined in the Regulatory Flexibility Act (5 U.S.C. 601-612). Therefore, under 5 U.S.C. 605(b), this rulemaking is exempt from the initial and final regulatory flexibility analysis requirements of sections 603 and 604.

    Catalog of Federal Domestic Assistance

    The Catalog of Federal Domestic Assistance number and title for the program affected by this document is 64.114, Veterans Housing—Guaranteed and Insured Loans.

    Signing Authority

    The Secretary of Veterans Affairs, or designee, approved this document and authorized the undersigned to sign and submit the document to the Office of the Federal Register for publication electronically as an official document of the Department of Veterans Affairs. Gina S. Farrisee, Deputy Chief of Staff, Department of Veterans Affairs, approved this document on October 18, 2016, for publication.

    Dated: October 18, 2016. Jeffrey Martin, Office Program Manager, Office of Regulation Policy & Management, Office of the Secretary, Department of Veterans Affairs. List of Subjects in 38 CFR Part 36

    Condominiums, Flood insurance, Housing, Indians, Individuals with disabilities, Loan programs—housing and community development, Loan programs—Indians, Loan programs—veterans, Manufactured homes, Mortgage insurance, Reporting and recordkeeping requirements, Veterans.

    For the reasons set out in the preamble, VA proposes to amend 38 CFR part 36, subpart D as set forth below:

    PART 36—LOAN GUARANTY 1. The authority citation for part 36 continues to read as follows: Authority:

    38 U.S.C. 501 and as otherwise noted.

    Subpart D—Direct Loans 2. Amend § 36.4500 by: a. Revising paragraph (c)(2). b. Revising the authority citation for paragraph (c)(2). c. Adding paragraph (e).

    The revisions and addition read as follows:

    § 36.4500 Applicability and qualified mortgage status.

    (c) * * *

    (2) Applicability of safe harbor qualified mortgage. Any VA direct loan made by the Secretary pursuant to chapter 20 or 37 of title 38, U.S.C., is a safe harbor qualified mortgage.

    (Authority: 15 U.S.C. 1639C(b)(3)(B)(ii), 38 U.S.C. 2041, 3710, 3711, 3720, 3733, and 3761)

    (e) Sections 36.4528, 36.4529, and 36.4530, which concern vendee loans, shall be applicable to all vendee loans.

    3. Amend § 36.4501 by adding in alphabetical order a definition for “Safe harbor qualified mortgage” and revising the definition “Vendee Loan” to read as follows:
    § 36.4501 Definitions.

    Safe harbor qualified mortgage means a mortgage that meets the Ability-to-Repay requirements of sections 129B and 129C of the Truth-in-Lending Act (TILA) regardless of whether the loan might be considered a high cost mortgage transaction as defined by section 103bb of TILA (15 U.S.C. 1602bb).

    Vendee loan means a loan made by the Secretary for the purpose of financing the purchase of a property acquired pursuant to chapter 37 of title 38, United States Code. The terms of a vendee loan (e.g., amount of down payment; amortization term; whether to escrow taxes, insurance premiums, or homeowners' association dues; fees, etc.) are negotiated between the Secretary and the borrower on a case-by-case basis, subject to the requirements of 38 U.S.C. 2041 or 3733. Terms related to allowable fees are also subject to §§ 36.4528 through 36.4530 of this part.

    (Authority: 38 U.S.C. 2041, 3720, 3733)
    4. Add §§ 36.4528, 36.4529, and 36.4530 to read as follows:
    § 36.4528 Vendee loan origination fee.

    (a) In addition to the loan fee required pursuant to 38 U.S.C. 3729, the Secretary may, in connection with the origination of a vendee loan, charge a borrower a loan origination fee not to exceed one-and-a-half percent of the loan amount.

    (b) All or part of such fee may be paid in cash at loan closing or all or part may be included in the loan. The Secretary will not increase the loan origination fee because the borrower chooses to include such fee in the loan amount financed.

    (c) In no event may the total fee agreed upon between the Secretary and the borrower result in an amount that will cause the loan to be designated as a high-cost mortgage as defined in 15 U.S.C. 1602(bb) and 12 CFR part 1026.

    (Authority: 38 U.S.C. 2041, 3720, 3733)
    § 36.4529 Vendee loan post-origination fees.

    (a) The Secretary may charge a borrower the following reasonable fees, per use, following origination, in connection with the servicing of any vendee loan:

    (1) Processing assumption fee for the transfer of legal liability of repaying the mortgage when the individual assuming the loan is approved. Such fee will not exceed $300, plus the actual cost of the credit report. If the assumption is denied, the fee will not exceed the actual cost of the credit report.

    (2) Processing subordination fee, not to exceed $350, to ensure that a modified vendee loan retains its first lien position;

    (3) Processing partial release fee, not to exceed $350, to exclude collateral from the mortgage contract once a certain amount of the mortgage loan has been paid;

    (4) Processing release of lien fee, not to exceed $15, for the release of an obligor from a mortgage loan in connection with a division of real property;

    (5) Processing payoff statement fee, not to exceed $30, for a payoff statement showing the itemized amount due to satisfy a mortgage loan as of a specific date;

    (6) Processing payment by phone fee, not to exceed $12, when a payment is made by phone and handled by a servicing representative;

    (7) Processing payment by phone fee, not to exceed $10, when a payment is made by phone and handled through an interactive voice response system, without contacting a servicing representative.

    (b) The specific fees to be charged on each account may be negotiated between the Secretary and the borrower. The Secretary will review the maximum fees under paragraph (a) of this section bi-annually to determine that they remain reasonable.

    (c) The Secretary may charge a borrower reasonable fees established in the loan instrument, including but not limited to the following:

    (1) Property inspection fees;

    (2) Property preservation fees;

    (3) Appraisal fees;

    (4) Attorneys' fees;

    (5) Returned-check fees;

    (6) Late fees; and

    (7) Any other fee the Secretary determines reasonably necessary for the protection of the Secretary's investment.

    (d) Any fee included in the loan instrument and permitted under paragraph (c) of this section would be based on the amount customarily charged in the industry for the performance of the service in the particular area, the status of the loan, and the characteristics of the affected property.

    (Authority: 38 U.S.C. 2041, 3720, 3733)
    § 36.4530 Vendee loan other fees.

    (a) In addition to the fees that may be charged pursuant to 38 CFR 36.4528 and 36.4529 and the statutory loan fee charged pursuant to 38 U.S.C. 3729, the borrower may be required to pay third-party fees for services performed in connection with a vendee loan.

    (b) Examples of the third party fees that may be charged in connection with a vendee loan include, but are not limited to:

    (1) Termite inspections;

    (2) Hazard insurance premiums;

    (3) Force-placed insurance premiums;

    (4) Courier fees;

    (5) Tax certificates; and

    (6) Recorder's fees.

    (Authority: 38 U.S.C. 2041, 3720, 3733)
    [FR Doc. 2016-25738 Filed 10-25-16; 8:45 am] BILLING CODE 8320-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Centers for Medicare & Medicaid Services 42 CFR Chapter IV [CMS-4183-N] Medicare Program; Listening Session Regarding the Implementation of Certain Medicare Part D Provisions in the Comprehensive Addiction and Recovery Act of 2016 (CARA) AGENCY:

    Centers for Medicare & Medicaid Services (CMS), HHS.

    ACTION:

    Notice of meeting.

    SUMMARY:

    This document announces a listening session to solicit input from stakeholders regarding our implementation of section 704 of the Comprehensive Addiction and Recovery Act of 2016 (CARA), which includes provisions to permit Part D sponsors to establish drug management programs for at-risk beneficiaries under which Part D sponsors may limit such beneficiaries' access to frequently abused drugs to certain prescribers and pharmacies.

    Medicare beneficiaries with Part A or Part B, advocacy groups representing Medicare beneficiaries, physicians, pharmacists, and other clinicians (particularly other lawful prescribers of controlled substances), retail pharmacies, plan sponsors, entities delegated by plan sponsors (such as pharmacy benefit managers), biopharmaceutical manufacturers, and other interested parties are invited to participate. The Listening Session will be held via teleconference and is open to the public.

    DATES:

    Meeting Date: The Listening Session announced in this document will be held via teleconference on Monday, November 14, 2016 from 1 p.m. to 4 p.m., Eastern Standard Time (e.s.t.).

    Deadline for Submitting a Request for Special Accommodations: Individuals planning to participate in the teleconference who have a condition that requires special assistance or accommodations are asked to submit their requests as specified in the ADDRESSES section of this document no later than 5:00 p.m., e.s.t Tuesday, November 1, 2016.

    Deadline for Meeting Registration: Individuals may register online at https://www.cms.gov/Outreach-and-Education/training/CTEO/Upcoming_Current_events.html. or by phone by contacting the person listed in the FOR FURTHER INFORMATION CONTACT section of this document by 1 p.m. e.s.t., Monday, November 14, 2016.

    Deadline for Submission of Written Comments or Statements: Written comments or statements on the topics listed in section II.A. of this document may be sent via mail or electronically to the address specified in the ADDRESSES section of this document and must be received by 5 p.m. e.s.t., Friday, December 2, 2016.

    ADDRESSES:

    Meeting Location: The Listening Session will be held via teleconference only.

    Meeting Registration: Persons interested in participating in the teleconference must register by completing the online registration. Online registration is available via the CMS Compliance Training, Education & Outreach—Upcoming/Current Events Web site: https://www.cms.gov/Outreach-and-Education/training/CTEO/Upcoming_Current_events.html.

    Requests for Special Accommodations: Individuals who require special accommodations should send a request via email to [email protected]

    Written Comments or Statements: Any interested party may send written comments or statements by mail to Attn: Chad Buskirk, Centers for Medicare & Medicaid Services, Mail Stop C1-24-23, 7500 Security Boulevard, Baltimore, MD 21244-1850 or by email to [email protected]

    FOR FURTHER INFORMATION CONTACT:

    Chad Buskirk, 410-786-1630. News Media Representatives must contact our Public Affairs Office at (202) 690-6145.

    SUPPLEMENTARY INFORMATION: I. Background

    Section 704 of the Comprehensive Addiction and Recovery Act of 2016 (CARA) (Pub. L. 114-198) includes provisions to permit Part D sponsors to establish drug management programs for at-risk beneficiaries under which Part D sponsors may limit such beneficiaries' access to frequently abused drugs to certain prescribers and pharmacies. Section 704(g)(2)(A) of CARA requires the Secretary of Health and Human Services to convene stakeholders for input regarding specific topics in sufficient time for the Secretary to take such input into account in promulgating regulations to implement the relevant provisions. Stakeholders include Medicare beneficiaries with Part A or Part B, advocacy groups representing Medicare beneficiaries, physicians, pharmacists, and other clinicians (particularly other lawful prescribers of controlled substances), retail pharmacies, plan sponsors, entities delegated by plan sponsors (such as pharmacy benefit managers), and biopharmaceutical manufacturers.

    II. Listening Session Topics and Format A. Listening Session Topics

    Section 704 of CARA is the basis for the listening session and provides the information for which we are soliciting stakeholder input. The first topic is found in section 704(a) of CARA and the nine other topics are from the listing in section 704(g)(2)(B) of CARA. Therefore, we are soliciting feedback from stakeholders and other interested parties on the following 10 topics:

    • The clinical guidelines that indicate misuse or abuse of frequently abused drugs. Section 704(a) of CARA refers to such clinical guidelines and requires the Secretary to develop such guidelines in consultation with Part D sponsors and other stakeholders.

    • The anticipated impact of drug management programs for at-risk beneficiaries under section 1860D-4(c)(5) of the Social Security Act (the Act) on cost-sharing and ensuring accessibility to prescription drugs for enrollees in prescription drug plans (PDPs), and MA-PD plans who are at-risk beneficiaries for prescription drug abuse (as defined in section 1860D-4(c)(5)(C) of the Act).

    • The use of an expedited appeals process under which such an enrollee may appeal the enrollee's identification as an at-risk beneficiary for prescription drug abuse (similar to the processes established under the Medicare Advantage program that allow an automatic escalation to external review of claims submitted under Part C).

    • The types of enrollees that should be treated as exempted individuals, as described in section 1860D-4(c)(5)(C)(ii) of the Act.

    • The manner in which terms and definitions should be applied, such as the use of clinical appropriateness in determining whether an enrollee is an at-risk beneficiary for prescription drug abuse as defined in section 1860D-4(c)(5)(C) of Act.

    • The information to be included in the notices described in section 1860D-4(c)(5)(B) of Act and the standardization of such notices.

    • The responsibility for the implementation of the program of the PDP sponsor (or Medicare Advantage organization) that establishes a drug management program for at-risk beneficiaries under section 1860D-4(c)(5) of the Act.

    • Notices for plan enrollees at the point of sale that would explain why an at-risk beneficiary has been prohibited from receiving a prescription at a location outside of the designated pharmacy.

    • Evidence-based prescribing guidelines for opiates.

    • The sharing of claims data under Parts A and B of title XVIII of the Act with Part D sponsors.

    B. Listening Session Format

    Stakeholders and other interested parties will be convened by teleconference for this listening session. The session will begin with teleconference logistics and an overview of objectives for the session. The remainder of the session will be devoted to receiving input on the 10 topics specified in section II.A. of this document. Time allotted for each topic will be limited.

    III. Registration Instructions

    Persons interested in participating the teleconference must register by completing the on-line registration via the CMS Compliance Training, Education & Outreach—Upcoming/Current Events Web site: https://www.cms.gov/Outreach-and-Education/training/CTEO/Upcoming_Current_events.html by the deadline specified in the DATES section of this document. You will receive a registration confirmation with the dial-in information to participate in the listening session.

    Individuals requiring special accommodations should refer to the DATES and ADDRESSES section of this document.

    Dated: October 7, 2016. Andrew M. Slavitt, Acting Administrator, Centers for Medicare & Medicaid Services.
    [FR Doc. 2016-25806 Filed 10-21-16; 4:15 pm] BILLING CODE 4120-01-P
    81 207 Wednesday, October 26, 2016 Notices ARCHITECTURAL AND TRANSPORTATION BARRIERS COMPLIANCE BOARD Meetings; Architectural and Transportation Barriers Compliance Board AGENCY:

    Architectural and Transportation Barriers Compliance Board.

    ACTION:

    Notice of meetings.

    SUMMARY:

    The Architectural and Transportation Barriers Compliance Board (Access Board) plans to hold its regular committee and Board meetings in Washington, DC, Monday through Wednesday, November 7-9, 2016 at the times and location listed below.

    DATES:

    The schedule of events is as follows:

    Monday, November 7, 2016 2:00 p.m.-3:00 p.m. Technical Programs Committee 3:00-4:00 Ad Hoc Committee on Design Guidance Tuesday, November 8, 2016 9:30 a.m.-10:00 a.m. Budget Committee 10:00-11:00 Planning and Evaluation 11:00-Noon Access Board Rulemaking Update (Closed) 1:30 p.m.-3:00 p.m. Ad Hoc Committee on Frontier Issues 3:00-4:00 Department of Transportation Federal Advisory Committee on Accessible Air Transportation, Update Wednesday, November 9, 2016 1:30 p.m.-3:00 p.m. Board Meeting ADDRESSES:

    Meetings will be held at the Access Board Conference Room, 1331 F Street NW., Suite 800, Washington, DC 20004.

    FOR FURTHER INFORMATION CONTACT:

    For further information regarding the meetings, please contact David Capozzi, Executive Director, (202) 272-0010 (voice); (202) 272-0054 (TTY).

    SUPPLEMENTARY INFORMATION:

    At the Board meeting scheduled on the afternoon of Wednesday, November 9, 2016, the Access Board will consider the following agenda items:

    • Approval of the draft September 14, 2016 meeting minutes (vote) • Ad Hoc Committee Reports: Design Guidance; Frontier Issues • Technical Programs Committee • Budget Committee • Planning and Evaluation Committee • Election Assistance Commission Report • Executive Director's Report • Public Comment (final 15 minutes of the meeting)

    Members of the public can provide comments either in-person or over the telephone during the final 15 minutes of the Board meeting on Wednesday, November 9, 2016. Any individual interested in providing comment is asked to pre-register by sending an email to [email protected] with the subject line “Access Board meeting—Public Comment” with your name, organization, state, and topic of comment included in the body of your email. All emails to register for public comment must be received by Wednesday, November 2, 2016. Registered commenters will be provided with a call-in number and passcode before the meeting. Commenters will be called on in the order by which they pre-registered. Due to time constraints, each commenter is limited to two minutes. Commenters on the telephone will be in a listen-only capacity until they are called on.

    All meetings are accessible to persons with disabilities. An assistive listening system, Communication Access Realtime Translation (CART), and sign language interpreters will be available at the Board meeting and committee meetings.

    Persons attending Board meetings are requested to refrain from using perfume, cologne, and other fragrances for the comfort of other participants (see www.access-board.gov/the-board/policies/fragrance-free-environment for more information).

    You may view the Wednesday, November 9, 2016 meeting through a live webcast from 1:30 p.m. to 3:00 p.m. at: www.access-board.gov/webcast.

    David M. Capozzi, Executive Director.
    [FR Doc. 2016-25843 Filed 10-25-16; 8:45 am] BILLING CODE 8150-01-P
    DEPARTMENT OF COMMERCE Bureau of Economic Analysis Meeting of Bureau of Economic Analysis Advisory Committee AGENCY:

    Bureau of Economic Analysis, Economics and Statistics Administration, Department of Commerce

    ACTION:

    Notice of public meeting.

    SUMMARY:

    Pursuant to the Federal Advisory Committee Act (Pub. L. 92-463 as amended by Pub. L. 94-409, Pub. L. 96-523, Pub. L. 97-375 and Pub. L. 105-153), we are announcing a meeting of the Bureau of Economic Analysis Advisory Committee. The meeting will address ways in which the national economic accounts can be presented more effectively for current economic analysis and recent statistical developments in national accounting.

    DATES:

    Friday, November 18, the meeting will begin at 9:00 a.m. and adjourn at 3:30 p.m.

    ADDRESSES:

    The meeting will take place at the Westin, Washington DC City Center, 1400 M Street NW., Washington, DC 20005.

    FOR FURTHER INFORMATION CONTACT:

    Dondi Staunton, Senior Advisor, Bureau of Economic Analysis, U.S. Department of Commerce, Washington, DC 20233; telephone number: (301) 278-9798.

    SUPPLEMENTARY INFORMATION:

    The Committee was established September 2, 1999. The Committee advises the Director of BEA on matters related to the development and improvement of BEA's national, regional, industry, and international economic accounts, especially in areas of new and rapidly growing economic activities arising from innovative and advancing technologies, and provides recommendations from the perspectives of the economics profession, business, and government. This will be the Committee's twenty-ninth meeting.

    Public Participation: This meeting is open to the public. Because of security procedures, anyone planning to attend the meeting must contact Dondi Staunton of BEA at (301) 278-9798 in advance. The meeting is physically accessible to people with disabilities. Requests for foreign language interpretation or other auxiliary aids should be directed to Dondi Staunton at (301) 278-9798.

    Dated: August 30, 2016. Brian C. Moyer, Director, Bureau of Economic Analysis.
    [FR Doc. 2016-25795 Filed 10-25-16; 8:45 am] BILLING CODE 3510-06-P
    DEPARTMENT OF COMMERCE Economic Development Administration Notice of Petitions by Firms for Determination of Eligibility To Apply for Trade Adjustment Assistance AGENCY:

    Economic Development Administration, Department of Commerce.

    ACTION:

    Notice and opportunity for public comment.

    Pursuant to Section 251 of the Trade Act 1974, as amended (19 U.S.C. 2341 et seq.), the Economic Development Administration (EDA) has received petitions for certification of eligibility to apply for Trade Adjustment Assistance from the firms listed below. Accordingly, EDA has initiated investigations to determine whether increased imports into the United States of articles like or directly competitive with those produced by each of these firms contributed importantly to the total or partial separation of the firm's workers, or threat thereof, and to a decrease in sales or production of each petitioning firm.

    List of Petitions Received by EDA for Certification Eligibility To Apply for Trade Adjustment Assistance [10/15/2016 through 10/21/2016] Firm name Firm address Date
  • accepted for
  • investigation
  • Product(s)
    Advance Corporation 8200 97th Street, South Cottage Grove, MN 55016 10/18/2016 The firm manufactures award plaques. Fisher Cast Steel Products, Inc 6 West Town Street, West Jefferson, OH 43162 10/19/2016 The firm manufactures parts of cast steel for machinery for the manufacture of food or drink, as well as parts for hydroelectric machinery, water distribution systems, and similar items. Hatch & Kirk, Inc. 5111 Leary Avenue Northwest, Seattle, WA 98107 10/19/2016 The firm manufactures and supplies heavy duty diesel engine parts.

    Any party having a substantial interest in these proceedings may request a public hearing on the matter. A written request for a hearing must be submitted to the Trade Adjustment Assistance for Firms Division, Room 71030, Economic Development Administration, U.S. Department of Commerce, Washington, DC 20230, no later than ten (10) calendar days following publication of this notice.

    Please follow the requirements set forth in EDA's regulations at 13 CFR 315.9 for procedures to request a public hearing. The Catalog of Federal Domestic Assistance official number and title for the program under which these petitions are submitted is 11.313, Trade Adjustment Assistance for Firms.

    Miriam Kearse, Lead Program Analyst.
    [FR Doc. 2016-25911 Filed 10-25-16; 8:45 am] BILLING CODE 3510-WH-P
    DEPARTMENT OF COMMERCE Bureau of Industry and Security In the Matter of: Junaid Peerani, 1331 NW. 115th Ave., Plantation, FL 33323 Order Denying Export Privileges

    On August 14, 2013, in the U.S. District Court for the Southern District of Florida, Junaid Peerani (“Peerani”) was convicted of violating the International Emergency Economic Powers Act (50 U.S.C. 1701, et seq. (2012)) (“IEEPA”). Specifically, Peerani knowingly and willfully attempted to export and caused to be exported from the United States to Turkey, two Inertial Navigation Unit LTN-72's, without first having obtained the required authorization from the United States Department of Commerce.

    Section 766.25 of the Export Administration Regulations (“EAR” or “Regulations”) 1 provides, in pertinent part, that “[t]he Director of the Office of Exporter Services, in consultation with the Director of the Office of Export Enforcement, may deny the export privileges of any person who has been convicted of a violation of the Export Administration Act (“EAA”), the EAR, or any order, license or authorization issued thereunder; any regulation, license, or order issued under the International Emergency Economic Powers Act (50 U.S.C. 1701-1706); 18 U.S.C. 793, 794 or 798; section 4(b) of the Internal Security Act of 1950 (50 U.S.C. 783(b)), or section 38 of the Arms Export Control Act (22 U.S.C. 2778).” 15 CFR 766.25(a); see also Section 11(h) of the EAA, 50 U.S.C. 4610(h). The denial of export privileges under this provision may be for a period of up to 10 years from the date of the conviction. 15 CFR 766.25(d); see also 50 U.S.C. 4610(h). In addition, Section 750.8 of the Regulations states that the Bureau of Industry and Security's Office of Exporter Services may revoke any Bureau of Industry and Security (“BIS”) licenses previously issued in which the person had an interest in at the time of his conviction.

    1 50 U.S.C. 4601-4623 (Supp. III 2015) (available at http://uscode.house.gov). Since August 21, 2001, the Act has been in lapse and the President, through Executive Order 13222 of August 17, 2001 (3 CFR, 2001 Comp. 783 (2002)), which has been extended by successive Presidential Notices, the most recent being that of August 4, 2016 (81 FR 52,587 (Aug. 8, 2016)), has continued the Regulations in effect under the International Emergency Economic Powers Act (50 U.S.C. 1701, et seq. (2012)).

    BIS has received notice of Peerani's conviction for violating IEEPA, and in accordance with Section 766.25 of the Regulations, BIS has provided notice and an opportunity for Peerani to make a written submission to BIS. BIS has received a submission from Peerani.

    Based upon my review and consultations with BIS's Office of Export Enforcement, including its Director, and the facts available to BIS, I have decided to deny Peerani's export privileges under the Regulations for a period of five years from the date of Peerani's conviction. I have also decided to revoke all licenses issued pursuant to the Act or Regulations in which Peerani had an interest at the time of his conviction.

    Accordingly, it is hereby ordered:

    First, from the date of this Order until August 14, 2018, Junaid Peerani, with a last known address of 1331 NW. 115th Ave., Plantation, FL 33323, and when acting for or on his behalf, his successors, assigns, employees, agents or representatives (the “Denied Person”), may not, directly or indirectly, participate in any way in any transaction involving any commodity, software or technology (hereinafter collectively referred to as “item”) exported or to be exported from the United States that is subject to the Regulations, including, but not limited to:

    A. Applying for, obtaining, or using any license, License Exception, or export control document;

    B. Carrying on negotiations concerning, or ordering, buying, receiving, using, selling, delivering, storing, disposing of, forwarding, transporting, financing, or otherwise servicing in any way, any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations; or

    C. Benefitting in any way from any transaction involving any item exported or to be exported from the United States that is subject to the Regulations, or in any other activity subject to the Regulations.

    Second, no person may, directly or indirectly, do any of the following:

    A. Export or reexport to or on behalf of the Denied Person any item subject to the Regulations;

    B. Take any action that facilitates the acquisition or attempted acquisition by the Denied Person of the ownership, possession, or control of any item subject to the Regulations that has been or will be exported from the United States, including financing or other support activities related to a transaction whereby the Denied Person acquires or attempts to acquire such ownership, possession or control;

    C. Take any action to acquire from or to facilitate the acquisition or attempted acquisition from the Denied Person of any item subject to the Regulations that has been exported from the United States;

    D. Obtain from the Denied Person in the United States any item subject to the Regulations with knowledge or reason to know that the item will be, or is intended to be, exported from the United States; or

    E. Engage in any transaction to service any item subject to the Regulations that has been or will be exported from the United States and which is owned, possessed or controlled by the Denied Person, or service any item, of whatever origin, that is owned, possessed or controlled by the Denied Person if such service involves the use of any item subject to the Regulations that has been or will be exported from the United States. For purposes of this paragraph, servicing means installation, maintenance, repair, modification or testing.

    Third, after notice and opportunity for comment as provided in Section 766.23 of the Regulations, any other person, firm, corporation, or business organization related to Peerani by ownership, control, position of responsibility, affiliation, or other connection in the conduct of trade or business may also be made subject to the provisions of this Order in order to prevent evasion of this Order.

    Fourth, in accordance with Part 756 of the Regulations, Peerani may file an appeal of this Order with the Under Secretary of Commerce for Industry and Security. The appeal must be filed within 45 days from the date of this Order and must comply with the provisions of Part 756 of the Regulations.

    Fifth, a copy of this Order shall be delivered to the Peerani. This Order shall be published in the Federal Register.

    Sixth, this Order is effective immediately and shall remain in effect until August 14, 2018.

    Dated: October 19, 2016. Karen H. Nies-Vogel, Director, Office of Exporter Services.
    [FR Doc. 2016-25858 Filed 10-25-16; 8:45 am] BILLING CODE P
    DEPARTMENT OF COMMERCE International Trade Administration [A-570-970] Multilayered Wood Flooring From the People's Republic of China: Rescission of Antidumping Duty New Shipper Reviews; 2014-2015 AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (Department) finds that the sale made by Dongtai Zhangshi Wood Industry Co., Ltd. (Zhangshi) and the sale made by Huzhou Muyun Wood Co., Ltd. (Muyun) are non-bona fide. Therefore, we are rescinding these new shipper reviews (NSRs).

    DATES:

    Effective October 26, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Robert Galantucci (202-482-2923) or Aleksandras Nakutis (202-482-3147), AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230.

    SUPPLEMENTARY INFORMATION:

    Background

    The Department published its Preliminary Rescission of the NSRs of the antidumping duty order on multilayered wood flooring from the People's Republic of China (PRC) on May 31, 2016.1 We preliminarily found that the sale made by Zhangshi and the sale made by Muyun were not bona fide, and announced our preliminary intent to rescind the NSRs.

    1See Multilayered Wood Flooring From the People's Republic of China: Preliminary Rescission of 2014-2015 Antidumping Duty New Shipper Reviews, 81 FR 34310 (May 31, 2016) (Preliminary Rescission); see also Memorandum from Robert Galantucci to Abdelali Elouaradia, “Antidumping Duty New Shipper Review of Multilayered Wood Flooring from the People's Republic of China: Bona Fide Sale Analysis for Dongtai Zhangshi Wood Industry Co., Ltd.,” dated May 20, 2016 (Zhangshi Prelim Bona Fide Memo); Memorandum from Aleksandras Nakutis to Abdelali Elouaradia, “Antidumping Duty New Shipper Review of Multilayered Wood Flooring from the People's Republic of China: Bona Fide Sale Analysis for Huzhou Muyun Wood Co., Ltd.,” dated May 20, 2016 (Muyun Prelim Bona Fide Memo).

    For a complete description of the events that followed the publication of the Preliminary Rescission, see the Issues and Decision Memorandum. 2 The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping Duty (AD) and Countervailing Duty (CVD) Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at http://access.trade.gov and in the Central Records Unit, room B8024 of the main Department of Commerce building. In addition, a complete version of the Issues and Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/index.html. The signed Issues and Decision Memorandum and the electronic version of the Issues and Decision Memorandum are identical in content.

    2See Memorandum from Christian Marsh to Ronald K. Lorentzen, “Multilayered Wood Flooring from the People's Republic of China: Issues and Decision Memorandum for the Final Rescission of the 2014-2015 New Shipper Reviews” issued concurrently with and hereby adopted by this notice (Issues and Decision Memorandum).

    Scope of the Order

    The merchandise covered by the order is multilayered wood flooring, which is composed of an assembly of two or more layers or plies of wood veneers 3 in combination with a core.4 Merchandise covered by this review is classifiable under subheadings 4412.31.0520; 4412.31.0540; 4412.31.0560; 4412.31.2510; 4412.31.2520; 4412.31.4040; 4412.31.4050; 4412.31.4060; 4412.31.4070; 4412.31.4075; 4412.31.4080; 4412.31.5125; 4412.31.5135; 4412.31.5155; 4412.31.5165; 4412.31.6000; 4412.31.9100; 4412.32.0520; 4412.32.0540; 4412.32.0560; 4412.32.0565; 4412.32.0570; 4412.32.2510; 4412.32.2520; 4412.32.2525; 4412.32.2530; 4412.32.3125; 4412.32.3135; 4412.32.3155; 4412.32.3165; 4412.32.3175; 4412.32.3185; 4412.32.5600; 4412.39.1000; 4412.39.3000; 4412.39.4011; 4412.39.4012; 4412.39.4019; 4412.39.4031; 4412.39.4032; 4412.39.4039; 4412.39.4051; 4412.39.4052; 4412.39.4059; 4412.39.4061; 4412.39.4062; 4412.39.4069; 4412.39.5010; 4412.39.5030; 4412.39.5050; 4412.94.1030; 4412.94.1050; 4412.94.3105; 4412.94.3111; 4412.94.3121; 4412.94.3131; 4412.94.3141; 4412.94.3160; 4412.94.3171; 4412.94.4100; 4412.94.5100; 4412.94.6000; 4412.94.7000; 4412.94.8000; 4412.94.9000; 4412.94.9500; 4412.99.0600; 4412.99.1020; 4412.99.1030; 4412.99.1040; 4412.99.3110; 4412.99.3120; 4412.99.3130; 4412.99.3140; 4412.99.3150; 4412.99.3160; 4412.99.3170; 4412.99.4100; 4412.99.5100; 4412.99.5105; 4412.99.5115; 4412.99.5710; 4412.99.6000; 4412.99.7000; 4412.99.8000; 4412.99.9000; 4412.99.9500; 4418.71.2000; 4418.71.9000; 4418.72.2000; 4418.72.9500; and 9801.00.2500 of the Harmonized Tariff Schedule of the United States (HTSUS). Although the HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of the order is dispositive.

    3 A “veneer” is a thin slice of wood, rotary cut, sliced or sawed from a log, bolt or flitch. Veneer is referred to as a ply when assembled.

    4 For a complete description of the scope of the order, see the Issues and Decision Memorandum.

    Analysis of Comments Received

    All issues raised in the case briefs by parties are addressed in the Issues and Decision Memorandum. 5 A list of the issues which parties raised is attached to this notice as an Appendix.

    5See Issues and Decision Memorandum. The Department has also issued business proprietary discussions of the comments raised, as many of the comments relied heavily on business proprietary information (BPI). See Memorandum to Abdelali Elouaradia, “Final Results of the Antidumping Duty New Shipper Review—Multilayered Wood Flooring from the People's Republic of China: Business Proprietary Information Discussion of the Comments Regarding Dongtai Zhangshi Wood Industry Co., Ltd.,” dated October 17, 2016 (BPI Discussion of Zhangshi's Comments); Memorandum to Abdelali Elouaradia, “Final Results of the Antidumping Duty New Shipper Review—Multilayered Wood Flooring from the People's Republic of China: Business Proprietary Information Discussion of the Comments Regarding Huzhou Muyun Wood Co., Ltd.,” dated October 17, 2016 (BPI Discussion of Muyun's Comments).

    Bona Fide Analysis

    For the Preliminary Rescission, the Department analyzed the bona fides of Zhangshi's single sale and Muyun's single sale and preliminarily found that they were not bona fide sales.6 Based on the Department's complete analysis of all of the information and comments on the record of this review, the Department continues to find Zhangshi's and Muyun's sales not bona fide, and thus not reviewable pursuant to section 751(a)(2)(B)(iv) of the Tariff Act of 1930, as amended (the Act). The Department reached this conclusion with respect to Zhangshi based on its consideration of the totality of circumstances, including: The sale price, the timing of the payment, a comparison between the payment and the invoiced amount, the parties' implementation of the terms of sale, statements regarding the customer/importer's affiliations, and the single sale. The Department reached this conclusion with respect to Muyun based on its consideration of the totality of circumstances, including: The sale price, the timing of the payment, and the single sale. For a complete discussion, see the Issues and Decision Memorandum as well as the BPI Discussion of Zhangshi's Comments and the BPI Discussion of Muyun's Comments.

    6See Zhangshi Prelim Bona Fide Memo; Muyun Prelim Bona Fide Memo.

    Rescission of New Shipper Reviews

    For the foregoing reasons, the Department continues to find that Zhangshi's sale and Muyun's sale are not bona fide, and that the sales do not provide a reasonable or reliable basis for calculating a dumping margin. Accordingly, the Department is rescinding these NSRs.

    Assessment

    As the Department is rescinding these NSRs, we are not making a determination as to whether or not Zhangshi or Muyun qualify for a separate rate. Therefore, these companies remain part of the PRC-entity. The PRC-entity is not under review in the ongoing review covering the 2014-2015 period. Accordingly, these companies' entries will be assessed at rates equal to the cash deposit of, or bond for, estimated antidumping duties required on their merchandise at the time of entry, or withdrawal from warehouse, for consumption. The Department intends to issue liquidation instructions for any entries during the relevant period made by Zhangshi and Muyun 15 days after publication of this rescission notice.

    Cash Deposit Requirements

    Effective upon publication of this notice of final rescission of the NSRs of Zhangshi and Muyun, the Department will instruct U.S. Customs and Border Protection to discontinue the option of posting a bond or security in lieu of a cash deposit for entries of subject merchandise from Zhangshi and Muyun.7 Because we did not review Zhangshi or Muyun, we will instruct CBP to continue to collect the cash deposit previously ordered which was the cash deposit rate for the PRC-wide entity of 25.62 percent. These cash deposit requirements shall remain in effect until further notice.

    7See 19 CFR 351.214(e).

    Administrative Protective Order

    This notice also serves as a reminder to parties subject to Administrative Protective Order (APO) of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305, which continues to govern business proprietary information in these segments of the proceeding. Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.

    We are issuing and publishing this notice in accordance with sections 751(a)(2)(B) and 777(i) of the Act and 19 CFR 351.214.

    Dated: October 17, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix—Issues and Decision Memorandum Summary Background Scope of the Order Discussion of the Issues Comment 1: Whether the Department should revise its analysis with respect to Zhangshi's sales price and quantity. Comment 2: Whether the Department should revise its analysis regarding Zhangshi's customer's resale of the subject merchandise. Comment 3: Whether the Department should revise its analysis regarding Zhangshi's implementation of the terms of sale. Comment 4: Whether the Department should revise its analysis regarding the circumstances surrounding Zhangshi's receipt of payment. Comment 5: Whether the Department made procedural errors in conducting this review. Comment 6: Whether Muyun's sale was resold at a profit. Comment 7: Whether the timing of Muyun's sale was consistent with normal commercial practices. Comment 8: Whether Muyun's sale price was based on normal commercial considerations. Comment 9: Whether the totality of the circumstances indicates that Muyun's sale was bona fide. Recommendation
    [FR Doc. 2016-25901 Filed 10-25-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-357-818] Lemon Juice From Argentina: Continuation of Suspension of Antidumping Investigation AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce

    DATES:

    Effective Date: October 20, 2016.

    SUMMARY:

    The Department of Commerce (“the Department”) is continuing to suspend the antidumping duty investigation on lemon juice from Argentina. The basis for this action is an agreement between the Department and signatory producers/exporters accounting for substantially all imports of lemon juice from Argentina, wherein each signatory producer/exporter has agreed to revise its prices to eliminate completely the injurious effects of exports of the subject merchandise to the United States.

    FOR FURTHER INFORMATION CONTACT:

    Sally Craig Gannon or Julie Santoboni at (202) 482-0162 or (202) 482-3063, respectively; Bilateral Agreements Unit, Office of Policy, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street & Constitution Avenue NW., Washington, DC 20230.

    SUPPLEMENTARY INFORMATION:

    Background

    On September 10, 2007, the Department entered into an agreement with S.A. San Miguel A.G.I.C.I. y F., (“San Miguel”) and Citrusvil, S.A., Argentine producers/exporters accounting for substantially all imports of lemon juice from Argentina. See Suspension of Antidumping Duty Investigation: Lemon Juice From Argentina, 72 FR 53991 (September 21, 2007) (“2007 Agreement”). On September 17, 2009, Citromax S.A.C.I. acceded to the 2007 Agreement. On July 11, 2014, La Moraleja, S.A. and Cooperativa de Productores Citricolas de Tafi Viejo (“COTA”) acceded to the 2007 Agreement.

    On April 28, 2016, the Department notified the interested parties and the International Trade Commission (“ITC”) of the intent to suspend the investigation on Lemon Juice from Argentina pursuant to section 734(c) of the Tariff Act of 1930 (“the Act”). See April 28, 2016, letters from Sally C. Gannon to Interested Parties and Catherine DeFillipo, re “Lemon Juice from Argentina—Intent to Suspend Investigation Pursuant to Section 734(c) of the Act”. On September 23, 2016, the Department and Argentine lemon juice growers/exporters accounting for substantially all lemon juice imported into the United States from Argentina initialed a proposed agreement pursuant to section 734(c) of the Act to suspend the antidumping investigation on lemon juice from Argentina. The Department released the proposed agreement and accompanying memorandum detailing the fulfillment of the statutory requirements to interested parties on September 23, 2016, and afforded them an opportunity to comment on the initialed agreement and the memorandum by September 30, 2016. See September 23, 2016, Memorandum from Sally C. Gannon to Interested Parties, re “Agreement Suspending the Antidumping Duty Investigation on Lemon Juice from Argentina”. On September 26, 2016, in accordance with section 734(e)(2)of the Act, the Department consulted with the successor-in-interest to the petitioner, Ventura Coastal, LLC (“Ventura”),1 and explained how the agreement will be carried out and enforced and how the agreement will meet the requirements of sections 734(c) and (d) of the Act. See September 29, 2016, Memorandum from Julie H. Santoboni to The File re “Telephone Call with Counsel for Ventura Coastal”.

    1See Lemon Juice From Argentina: Final Results of the Expedited First Sunset Review of the Suspended Antidumping Duty Investigation, 77 FR 73021 (Dec. 7, 2012).

    On September 30, 2016, Ventura requested, and the Department granted, an extension of the deadline for submitting comments to October 3, 2016. See September 30, 2016, letter from Matthew T. McGrath, re: “Agreement Suspending the Antidumping Duty Investigation on Lemon Juice from Argentina: Extension Request” and September 30, 2016, letter from Sally C. Gannon to Matthew T. McGrath, re “Agreement Suspending the Antidumping Investigation on Lemon Juice from Argentina: Extension for Comments on Draft Agreement”. We received comments from COTA, San Miguel and Ventura. See October 3, 2016, letter from Gregory S. Menegaz re: “Lemon Juice from Argentina COTA Comment Draft Suspension Agreement: Correction of Formal Name” (“COTA comments”); October 3, 2016, letter from Gregory J. Spak re: “Lemon Juice from Argentina Comments on Draft Suspension Agreement” (“San Miguel comments”); and, September 30, 2016 (filed October 3, 2016), letter from Matthew T. McGrath re: “Agreement Suspending the Antidumping Duty Investigation on Lemon Juice from Argentina: Comments on Proposed New Suspension Agreement”. On October 11, 2016, we received additional comments from Ventura. See October 10, 2016, letter from Matthew T. McGrath re: “Agreement Suspending the Antidumping Duty Investigation on Lemon Juice from Argentina: Additional Comments on Proposed New Suspension Agreement” (“Ventura additional comments”).

    The Department examined the comments and incorporated changes in the agreement text and statutory memorandum, where appropriate, to address those comments. Specifically, in its comments, in response to COTA's comments we revised the company's name to reflect the full legal name of the company, Cooperativa de Productores Citricolas de Tafi Viejo, Agricola, de Transformacion y Comercializacion Limitada, however we note that COTA also uses the name Cooperativa de Productores Citricolas de Tafi Viejo in the ordinary course of business. See COTA comments. In response to Ventura's comments, the definition of `reference price' was revised to clarify that the price applies to the price of exports to the United States. Section VII.A.3 of the 2016 Suspension Agreement was revised to reflect that the quarterly Argentine customs data will reflect shipments, rather than sales data. In San Miguel's comments it requested that the Department expedite the signature and entry into force of the new suspension agreement. In Ventura's additional comments it waived the remainder of the 30 day consultation period allotted under Section 734(e)(1) of the Act.

    On October 20, 2016, the Department signed a new suspension agreement (“2016 Suspension Agreement”) with substantially all growers/exporters of lemon juice from Argentina. The 2016 Suspension Agreement is attached to this notice of Continuation of Suspension of Antidumping Investigation. By agreement of the Department and each signatory producer/exporter, the 2007 Agreement shall cease to have force or effect as of the Effective Date of this Agreement.

    Scope of Agreement

    See Section I, Product Coverage, of the 2016 Suspension Agreement.

    Continuation of Suspension of Investigation

    The Department consulted with the Argentine lemon juice producers/exporters and Ventura, the successor in interest to the petitioner, and has considered the comments submitted by interested parties with respect to the proposal to suspend the antidumping investigation. In accordance with section 734(c) and (d) of the Act, we have determined that extraordinary circumstances are present in this case, as defined by section 734(c)(2)(A) of the Act. See the memorandum titled “Agreement Suspending the Antidumping Duty Investigation on Argentine Lemon Juice from Argentina: Statutory Requirements” from Lynn Fischer Fox, Deputy Assistant Secretary for Policy and Negotiations, to Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance, dated October 20, 2016 (“Statutory Requirements Memorandum”).

    The 2016 Suspension Agreement provides, in accordance with 734(c)(1) of the Act, that the subject merchandise will be sold for export to the United States at or above the established reference price and, for each entry of each exporter, the amount by which the estimated normal value exceeds the export price (or constructed export price) will not exceed 15 percent of the weighted-average amount by which the estimated normal value exceeded the export price (or constructed export price) for all less-than-fair-value entries of the producer/exporter examined during the course of the investigation. We have determined that the 2016 Suspension Agreement will eliminate completely the injurious effect of exports to the United States of the subject merchandise and prevent the suppression or undercutting of price levels of domestic lemon juice by imports of that merchandise from Argentina, as required by section 734(c)(1) of the Act. See Statutory Requirements Memorandum.

    We have also determined that the 2016 Suspension Agreement is in the public interest and can be monitored effectively, as required under section 734(d) of the Act. See Statutory Requirements Memorandum.

    For the reasons outlined above, we find that the 2016 Suspension Agreement meets the criteria of sections 734(c) and (d) of the Act.

    The terms and conditions of this 2016 Suspension Agreement, signed on October 20, 2016, are set forth in the 2016 Suspension Agreement, which is attached to this notice.

    Suspension of Liquidation

    Pursuant to section 734(f)(2)(A) of the Act, upon acceptance of the 2007 Agreement the Department terminated the suspension of liquidation of all entries of lemon juice from Argentina. However, because the 2016 Suspension Agreement is made pursuant to section 734(c) of the Act, the suspension of liquidation of all entries of lemon juice from Argentina is hereby resumed. See section 734(f)(2)(B) of the Act.

    Within 20 days after the publication of this notice in the Federal Register, certain interested parties may, by a petition filed with the ITC and with notice given to the Department, ask for a review of the 2016 Suspension Agreement. See section 734(h)(1) of the Act. If no review is requested, the suspension of liquidation will be terminated at the close of the 20-day period. If a review is requested and the ITC determines that the injurious effects of imports of lemon juice from Argentina have been eliminated completely by the agreement, the suspension of liquidation will be terminated on the date that determination is published. If a review is requested and the ITC instead determines that the injurious effects of imports of lemon juice from Argentina have not been eliminated completely by the agreement, pursuant to section 734(h)(2) of the Act, then the investigation shall resume. If the investigation resumes, the suspension of liquidation shall continue as though the publication date of ITC's determination pursuant to section 734(h)(2) of the Act were the publication date of an affirmative preliminary determination pursuant to section 733(b) of the Act.

    The suspension of liquidation was ordered in the preliminary affirmative determination in this case published on April 26, 2007. See Lemon Juice from Argentina: Preliminary Determination of Sales at Less Than Fair Value and Preliminary Determination of Critical Circumstances, 72 FR 20820 (April 26, 2007) (“Preliminary Determination”). Section 734(f)(2)(B) of the Act provides that the Department may adjust the security required to reflect the effect of the 2016 Suspension Agreement. The Department has found that the 2016 Suspension Agreement eliminates completely the injurious effects of the subject imports and, thus, the Department is adjusting the security required from signatories to zero. The security rates in effect for imports from non-signatories remain as published in the Preliminary Determination.

    International Trade Commission

    In accordance with section 734(f) of the Act, the Department has notified the ITC of the 2016 Suspension Agreement.

    Administrative Protective Order Access

    The Administrative Protective Order (“APO”) the Department granted in the investigation segment of this proceeding remains in place. While the investigation is suspended, parties subject to the APO may retain, but may not use, information received under that APO. All parties wishing access to business proprietary information submitted during the administration of the 2016 Suspension Agreement must submit new APO applications in accordance with the Department's regulations currently in effect. See section 777(c)(1) of the Act; 19 CFR 351.103, 351.304, 351.305, and 351.306. An APO for the administration of the 2016 Suspension Agreement will be placed on the record within five days of the date of publication of this notice in the Federal Register. This notice also serves as a reminder to parties subject to the APO for the 2007 Agreement of their responsibility concerning the return or destruction of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely written notification of the return or destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and terms of an APO is a violation which is subject to sanction.

    We are issuing and publishing this notice in accordance with section 734(f)(1)(A) of the Act and 19 CFR 351.208(g)(2).

    Dated: October 20, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Attachment AGREEMENT SUSPENDING THE ANTIDUMPING DUTY INVESTIGATION ON LEMON JUICE FROM ARGENTINA

    Pursuant to section 734(c) of the Tariff Act of 1930, as amended (the Act) and 19 C.F.R. § 351.208 (the Regulations), and in satisfaction of the requirements of those provisions, the U.S. Department of Commerce (the Department) and the signatory producers and exporters of Lemon Juice from Argentina (the Signatories) have entered into this agreement suspending the antidumping duty investigation of Lemon Juice (defined below) from Argentina (Agreement). As of the Effective Date (defined below), this Agreement supersedes the suspension agreement entered into by the Department and Argentine producers and exporters on September 10, 2007.

    I. PRODUCT COVERAGE

    The product covered by this Agreement is lemon juice for further manufacture, with or without addition of preservatives, sugar, or other sweeteners, regardless of the GPL (grams per liter of citric acid) level of concentration, brix level, brix/acid ratio, pulp content, clarity, grade, horticulture method (e.g., organic or not), processed form (e.g., frozen or not-from-concentrate), FDA standard of identity, the size of the container in which packed, or the method of packing.

    Excluded from the scope are: (1) Lemon juice at any level of concentration packed in retail-sized containers ready for sale to consumers, typically at a level of concentration of 48 GPL; and (2) beverage products such as lemonade that typically contain 20% or less lemon juice as an ingredient.

    Lemon juice is classifiable under subheadings 2009.39.6020, 2009.31.6020, 2009.31.4000, 2009.31.6040, and 2009.39.6040 of the Harmonized Tariff Schedule of the United States (HTSUS). While HTSUS subheadings are provided for convenience and customs purposes, our written description of the scope of this Agreement is dispositive.

    II. DEFINITIONS

    For purposes of this Agreement, the following definitions apply:

    A. “Anniversary Month” means the month in which the Agreement becomes effective.

    B. “Argentina” means the customs territory of the Republic of Argentina and foreign trade zones located within the territory of Argentina.

    C. “Date of Export” means the date on which the product is exported from Argentina to the United States.

    D. “Effective Date” means the date on which the Department and the signatory producers/exporters sign the Agreement.

    E. “Interested Party” means any person or entity that meets the definitions provided in section 771(9) of the Act.

    F. “Lemon Juice” means the product described in Section I, “Product Coverage,” of the Agreement.

    G. “Reference Price” means the minimum price at which merchandise subject to this Agreement can be sold to the United States.

    H. “Substantially all” of the subject merchandise means producers and exporters that have accounted for not less than 85 percent by value or volume of the subject merchandise.

    I. “United States” means the customs territory of the United States of America (the 50 States, the District of Columbia and Puerto Rico) and foreign trade zones located within the territory of the United States.

    J. “Violation” means noncompliance with the terms of this Agreement, whether through an act or omission, except for noncompliance that is inconsequential or inadvertent, and does not substantially frustrate the purposes of this Agreement. Examples of a Violation include: 1) sales that are at net prices (after rebates, back-billing, discounts, and other claims) that are below the Reference Prices; 2) any act, practice or omission which would have the effect of hiding the real price of the Lemon Juice being sold; and 3) any other Violation or breach, as determined by the Department.

    Any term or phrase not defined by this section shall be defined using either a definition provided in the Act for that term or phrase, or the plain meaning of that term, as appropriate.

    III. SUSPENSION OF INVESTIGATION

    On September 10, 2007, the Department entered into an agreement with S.A. San Miguel A.G.I.C. y F. and Citrusvil, S.A., which suspended the antidumping duty investigation on Lemon Juice from Argentina. See Suspension of Antidumping Duty Investigation: Lemon Juice From Argentina, 72 FR 53991 (September 21, 2007) (2007 Agreement). On September 17, 2009, Citromax S.A.C.I. acceded to the 2007 Agreement. See Accession to the Agreement Suspending the Antidumping Duty Investigation on Lemon Juice From Argentina (September 17, 2009). On July 11, 2014, La Moraleja S.A. and Cooperativa de Productores Citricolas de Tafi Viejo acceded to the 2007 Agreement. See Accessions to the Agreement Suspending the Antidumping Duty Investigation on Lemon Juice From Argentina (July 11, 2014). In 2015, the Argentine signatories to the 2007 Agreement indicated a preference to enter into a suspension agreement pursuant to section 734(c) of the Act. Effective October 20, 2016, in accordance with section 734(c) of the Act and 19 C.F.R. § 351.208, this Agreement supersedes the 2007 Agreement. By agreement of the Department and the Signatories, the 2007 Agreement shall cease to have force or effect as of the Effective Date of this Agreement. On the basis of this Agreement, the Department shall continue to suspend its antidumping investigation with respect to Lemon Juice from Argentina, subject to the terms and provisions set forth herein.

    IV. U.S. IMPORT COVERAGE

    In accordance with section 734(c)(1) of the Act, the Signatories are the producers and exporters in Argentina which account for substantially all of the subject merchandise imported into the United States. The Department may at any time during the period of the Agreement require additional producers and exporters in Argentina to sign the Agreement to ensure that not less than substantially all imports into the United States are subject to this Agreement.

    V. STATUTORY CONDITIONS FOR THE AGREEMENT

    The Department has determined that the statutory conditions for suspension of the investigation have been met. In accordance with section 734(c) of the Act, the Department determines that extraordinary circumstances are present because suspension of the investigation will be more beneficial to the domestic industry than continuation of the investigation and the investigation is complex within the meaning of section 734(c)(2)(B); that the Agreement constitutes an agreement to revise prices from exporters of the subject merchandise who account for substantially all of the imports of subject merchandise into the United States; that the Agreement will eliminate completely the injurious effect of exports to the United States of subject merchandise; that the suppression or undercutting of price levels of domestic products by imports of subject merchandise will be prevented; and that for each entry of each exporter the amount by which the estimated normal value exceeds the export price (or the constructed export price) will not exceed 15 percent of the weighted average amount by which the estimated normal value exceeded the export price (or the constructed export price) for all less-than-fair-value entries of the exporter examined during the course of the investigation. In accordance with section 734(d) of the Act, the Department also determines that it is satisfied that suspension of the investigation is in the public interest and effective monitoring of the Agreement is practicable.

    VI. PRICE UNDERTAKING

    Each Signatory individually agrees that, to prevent price suppression or undercutting, it will not sell for export to the United States, on or after the Effective Date, Lemon Juice at prices that are less than the Reference Prices established in Appendix 1.

    Each Signatory individually agrees that for each entry of Lemon Juice subject to this Agreement, the amount by which the estimated normal value exceeds the export price (or the constructed export price) will not exceed 15 percent of the weighted average amount by which the estimated normal value exceeded the export price (or the constructed export price) for all less-than-fair-value entries of the producer/exporter examined during the investigation, in accordance with the Act and the Department's regulations and procedures, including but not limited to the calculation methodologies described in Appendix II of this Agreement.

    VII. MONITORING OF THE AGREEMENT A. Import Monitoring

    1. The Department will monitor entries of Lemon Juice from Argentina to ensure compliance with section VI of this Agreement.

    2. The Department will review publicly-available data and other official import data, including, as appropriate, records maintained by U.S. Customs and Border Protection (CBP), to determine whether there have been imports that are inconsistent with the provisions of this Agreement.

    3. Not later than thirty days after the end of each quarter, the Signatories, collectively, will submit Argentine customs data for the most recently completed quarter. These data will include the quantity and value of shipments for all exporters of Lemon Juice during the most recently completed quarter.

    B. Compliance Monitoring

    1. The Department may require, and each Signatory agrees to provide confirmation through documentation provided to the Department, that the price received on any sale subject to this Agreement was not less than the established Reference Prices. The Department may require that such documentation be provided and be subject to verification.

    2. The Department may require, and each Signatory agrees to report in the prescribed format and using the prescribed method of data compilation, each sale of Lemon Juice, either directly or indirectly to unrelated purchasers in the United States, including each adjustment applicable to each sale, as specified by the Department. The information to be reported may include, for example, F.O.B. sales value, unit price, date of sale, sales order number(s), importer of record, trading company, customer, customer relationship, destination, as well as any other information deemed by the Department to be relevant. Each Signatory agrees to permit review and on-site inspection of all information deemed necessary by the Department to verify the reported information.

    3. The Department may initiate administrative reviews under section 751(a) of the Act in the month immediately following the Anniversary Month, upon request or upon its own initiative, to ensure that exports of Lemon Juice from Argentina satisfy the requirements of sections 734(c)(1)(A) and (B) of the Act. The Department may conduct administrative reviews under sections 751(b) and (c), and 781 of the Act, as appropriate. The Department may perform verifications pursuant to administrative reviews conducted under section 751 of the Act.

    4. At any time it deems appropriate, and without prior notice, the Department may conduct verifications of persons or entities handling Signatory merchandise to determine whether they are selling Signatory merchandise in accordance with the terms of this Agreement. The Department may also conduct verifications at locations and times it deems appropriate to ensure compliance with the terms of this Agreement.

    C. Shipping and Other Arrangements

    1. All reference prices will be expressed in U.S. $/Gallon in accordance with Appendix I of this Agreement. All reference prices are F.O.B. Buenos Aires, Argentina.

    2. Signatories agree not to take any action that would circumvent or otherwise evade, or defeat the purpose of, this Agreement. Signatories agree to undertake any measures that will help to prevent circumvention.

    3. Not later than thirty days after the end of each quarter, each Signatory will submit a written statement to the Department certifying that all sales during the most recently completed quarter were at net prices (after rebates, back billing, discounts for quality and other claims) at or above the Reference Prices in effect and were not part of, or related to, any act or practice which would have the effect of hiding the real price of the Lemon Juice being sold. Further, each Signatory will certify in this same statement that all sales made during the relevant quarter were not part of or related to any bundling arrangement, discounts/free goods/financing package, end-of-year rebates, swap, or other exchange where such arrangement is designed to circumvent the basis of the Agreement. Each Signatory will also include the quantity and value of sales, by product type, and, separately, of shipments, by product type, during the most recently completed quarter. Each Signatory that did not export Lemon Juice to the United States during any given quarter will submit a written statement to the Department certifying that it made no sales to the United States during the most recently completed quarter. Each Signatory agrees to permit full verification of its certification as the Department deems necessary. Failure to provide a quarterly certification may be considered a Violation of the Agreement.

    D. Rejection of Submissions

    The Department may reject: (1) any information submitted after the deadlines set forth in this Agreement; (2) any submission that does not comply with the filing, format, translation, service, and certification of documents requirements under 19 C.F.R. § 351.303; (3) submissions that do not comply with the procedures for establishing business proprietary treatment under 19 C.F.R. § 351.304; and (4) submissions that do not comply with any other applicable regulations, as appropriate. If information is not submitted in a complete and timely fashion or is not fully verifiable, the Department may use facts otherwise available for the basis of its decision, as it determines appropriate, consistent with section 776 of the Act.

    E. Consultations 1. Compliance Consultations

    a. When the Department identifies, through import or compliance monitoring or otherwise, that sales may have been made at prices inconsistent with section VI of this Agreement, or that the sales may be otherwise in circumvention of this Agreement, the Department will notify each Signatory which it believes is responsible or, if applicable, notify the Signatory's representative. The Department will consult with each such party for a period of up to 60 days to establish a factual basis regarding sales that may be inconsistent with section VI of this Agreement.

    b. During the consultation period, the Department will examine any information that it develops or which is submitted, including information requested by the Department under any provision of this Agreement.

    c. If the Department is not satisfied at the conclusion of the consultation period that sales by such Signatory are being made in compliance with section VI of this Agreement, or that the sales are not circumventing this Agreement, the Department may evaluate under section 351.209 of its regulations, or section 751 of the Act whether this Agreement is being violated, as defined in section VIII of this Agreement, by such Signatory.

    d. These compliance consultation provisions do not limit the Department's ability to make an immediate determination under 351.209(b) of its regulations when it determines that a signatory has violated the suspension agreement.

    If the Department concludes that sales by a Signatory have been made at prices inconsistent with section VI of this Agreement, or that sales are circumventing the Agreement, the Department shall take action, as warranted. See, e.g., 351.209 of the Department's regulations. The provisions of this section do not supersede the provisions of paragraphs VIII.A-VIII.C if the Department determines that the sales were made at prices inconsistent with section VI of this Agreement.

    2. Operations Consultations

    a. The Department will consult with the Signatories regarding the operation of this Agreement. A party to the Agreement may request such consultations, as necessary.

    b. Notwithstanding the previous paragraph, the parties may agree to revise the Reference Prices subject to consultations.

    VIII. VIOLATIONS

    A. If the Department determines that a Violation of the Agreement has occurred or that the Agreement no longer meets the requirements of section 734(c) or (d) of the Act, the Department shall take whatever action it deems appropriate under section 734(i) of the Act and the Regulations.

    B. Pursuant to section 734(i) of the Act, the Department will refer to CBP any Violations of the Agreement that appear to be intentional. See also 19 C.F.R. § 351.209(b)(4). Any person who intentionally commits a Violation of the Agreement shall be subject to a civil penalty assessed in the same amount, in the same manner, and under the same procedures as the penalty imposed for a fraudulent violation of section 592(a) of the Act. A fraudulent violation of section 592(a) of the Act is punishable by a civil penalty in an amount not to exceed the domestic value of the merchandise. For purposes of the Agreement, the domestic value of the merchandise will be deemed to be not less than the quantity multiplied by the Reference Price, as the Signatories agree to not sell the subject merchandise at prices that are less than the Reference Price and to ensure that sales of the subject merchandise are made consistent with the terms of the Agreement.

    C. In addition, the Department will examine the activities of Signatories and any other party to a sale subject to the Agreement to determine whether any activities conducted by any party aided or abetted another party's Violation of the Agreement. If any such parties are found to have aided or abetted another party's Violation of the Agreement, they shall be subject to the same civil penalties described in section VIII.B above. Signatories to this Agreement consent to release of all information presented to or obtained by the Department during the conduct of investigations involving CBP.

    IX. DISCLOSURE AND COMMENT

    This section provides the terms for disclosure and comment following consultations or during segments of the proceeding not involving a review under section 751 of the Act.

    A. The Department may make available to representatives of each Interested Party, pursuant to and consistent with 19 C.F.R.§§ 351.304-351.306, any business proprietary information submitted to and/or collected by the Department pursuant to section VII of this Agreement, as well as the results of the Department's analysis of that information.

    B. If the Department proposes to revise the Reference Price(s) as a result of consultations under this Agreement, the Department will disclose the preliminary Reference Price(s), including any calculation methodology, not less than 30 days before the date on which the price(s) would become final and effective.

    C. Interested Parties shall file all communications and other submissions made pursuant to section VII or other sections of the Agreement via the Department's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS), which is available to registered users at https://access.trade.gov and to all parties at the following address:

    U.S. Department of Commerce Central Records Unit, Room B8024 1401 Constitution Ave., NW Washington, DC 20230

    Such communications and submissions shall be filed consistent with the requirements provided in 19 C.F.R. § 351.303.

    X. OTHER PROVISIONS

    A. Upon request, the Department will advise any Signatory of the Department's methodology for calculating its export price (or constructed export price) and normal value in accordance with the Act and the Department's regulations and procedures, including but not limited to, the calculation methodologies described in Appendix II of this Agreement.

    B. By entering into this Agreement, the Signatories do not admit that any sales of Lemon Juice have been made at less than fair value or that imports of Lemon Juice from Argentina have caused injury to the producers of Lemon Juice in the United States.

    XI. DURATION

    A. This Agreement has no scheduled termination date. Termination of the suspended investigation shall be considered in accordance with the five-year review provisions of section 751(c) of the Act, and section 351.218 of the Department's regulations.

    B. An individual Signatory may withdraw from this Agreement at any time. The Signatory's withdrawal shall be effective no later than 60 days after the date written notice of withdrawal is provided to the Department.

    C. The Signatories, collectively, or the Department may terminate this Agreement at any time. Termination of the Agreement shall be effective no later than 60 days after the date written notice of termination is provided to the Department or the Signatories, respectively.

    D. Upon termination, the Department shall follow the procedures outlined in section 734(i)(1) of the Act. See also 19 C.F.R. § 351.209.

    For U.S. Department of Commerce: Ronald K. Lorentzen Acting Assistant Secretary Enforcement and Compliance U.S. Department of Commerce Date For the Argentine Exporters: Jessica Lynd Counsel for Argenti Lemon S.A.; F.G.F. Trapani S.R.; Latin Lemon S.R.L.; Ledesma S.A.A.I.; and S.A. San Miguel A.G.I.C.I. y F. Date Judith Lynn Holdsworth Counsel for Citrusvil S.A.; Cooperativa de Productores Citricolas de Tafi Viejo, Agricola, de Transformacion y Comercializacion Limitada; and La Moraleja S.A. Date Kierstan Carlson Counsel for Citromax S.A.C.I. Date Appendix I—Agreement Suspending the Antidumping Duty Investigation on Lemon Juice from Argentina: Reference Prices

    Consistent with the requirements of section 734 (c) of the Act, to eliminate completely the injurious effect of exports to the United States and to prevent the suppression or undercutting of price levels of domestic lemon juice, the reference prices are as follows:

    Lemon juice type Reference price U.S. dollars per gallon (FOB Buenos Aires, Argentina) 1 Characteristics of frozen
  • concentrated juice
  • Frozen
  • concentrated juice at
  • 400 GPL
  • Frozen
  • concentrated juice at
  • 200 GPL
  • Frozen
  • concentrated juice at
  • 300 GPL
  • Frozen
  • concentrated juice at
  • 500 GPL
  • Conversion Factors 200/400 300/400 500/400 Clear Less than 0.5% pulp 13.27 6.64 9.95 16.58 Cloudy 0.5% pulp or greater 12.48 6.24 9.36 15.60
    Appendix II—Agreement Suspending the Antidumping Duty Investigation on Lemon Juice From Argentina: Analysis of Prices at Less Than Fair Value A. Normal Value

    The cost or price information reported to the Department that will form the basis of the normal value (NV) calculations for purposes of the Agreement must be comprehensive in nature and based on a reliable accounting system (e.g., a system based on well-established standards and that can be tied either to the audited financial statements or to the tax return filed with the Argentinian government).

    1 The reference prices specified above are for all sales of Lemon Juice at the specified GPL, regardless of horticultural method (i.e., whether organic or not).

    Additional conversion factors and product types may be added to the Agreement. Signatories may request that the Department add a new conversion factor or product type by filing a written public request on the official record of the Agreement. Within ten days of the filing of the request, interested parties may comment on the requested additional conversion factor or product types, including the appropriate reference price that should apply to a new product type. The Department will consider such requests for new conversion factors or product types and issue a determination in a timely manner. Additional conversion factors or product types would apply to sales by all Signatories going forward.

    The Reference Prices will remain in effect until changed. In accordance with section VII.E.2.b of the Agreement, the Reference Prices may be revised. No revision will be considered before October 1, 2017.

    1. Based on Sales Prices in the Comparison Market

    When the Department bases normal value on sales prices, such prices will be the prices at which the foreign like product is first sold for consumption in the comparison market in the usual commercial quantities and in the ordinary course of trade. Also, to the extent practicable, the comparison shall be made at the same level of trade as the export price (EP) or constructed export price (CEP).

    Calculation of NV:

    Gross Unit Price

    ± Billing Adjustments

    − Movement Expenses

    − Discounts and Rebates

    − Direct Selling Expenses

    −Commissions

    −Home Market Packing Expenses

    = Normal Value (NV)

    2. Constructed Value

    When normal value is based on constructed value, the Department will compute constructed values (CVs), as appropriate, based on the sum of each respondent's costs, plus amounts for selling, general and administrative expenses (SG&A), U.S. packing costs, and profit. The Department will collect this cost data in order to determine the accurate per-unit CV.

    Calculation of CV:

    + Direct Materials

    + Direct Labor

    + Factory overhead

    = Cost of Manufacturing

    + Home Market SG&A *

    = Cost of Production

    + U.S. Packing

    + Profit *

    = Constructed Value (CV)

    * SG&A and profit are based on home-market sales of the foreign like product made in the ordinary course of trade. SG&A includes financing but not movement expenses.

    B. Export Price and Constructed Export Price

    EP and CEP refer to the two types of calculated prices for merchandise imported into the United States. Both EP and CEP are based on the price at which the subject merchandise is first sold to a person not affiliated with the foreign producer or exporter.

    Calculation of EP:

    Gross Unit Price − Movement Expenses − Discounts and Rebates ± Billing Adjustments + Packing Expenses + Rebated Import Duties = Export Price (EP)

    Calculation of CEP:

    Gross Unit Price − Movement Expenses − Discounts and Rebates ± Billing Adjustments − Direct Selling Expenses − Indirect Selling Expenses that relate to commercial activity in the United States − The cost of any further manufacture or assembly incurred in the United States − CEP Profit + Rebated Import Duties − Commissions = Constructed Export Price (CEP) C. Fair Comparisons

    To ensure that a fair comparison with EP or CEP is made, the Department will make adjustments to normal value. The Department will adjust for physical differences between the merchandise sold in the United States and the merchandise sold in the home market. For EP sales, the Department will add in U.S. direct selling expenses, U.S. commissions 2 and packing expenses. For CEP sales, the Department will subtract the amount of the CEP offset, if warranted, and add in U.S. packing expenses.

    2 If there are not commissions in both markets, then the Department will apply a commission offset. See, e.g., 19 C.F.R. § 351.410(e).

    [FR Doc. 2016-25947 Filed 10-25-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-469-805] Stainless Steel Bar From Spain: Initiation and Preliminary Results of Changed Circumstances Review AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the Department) is initiating a changed circumstances review of the antidumping duty order on stainless steel bar (SSB) from Spain with respect to Sidenor Aceros Especiales S.L. Based on the information on the record, we preliminarily determine that Sidenor Aceros Especiales S.L. is the successor-in-interest to Gerdau Aceros Especiales Europa for purposes of determining antidumping duty liability. We invite interested parties to comment on these preliminary results.

    DATES:

    Effective October 26, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Michael A. Romani, AD/CVD Operations, Office I, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-0198.

    SUPPLEMENTARY INFORMATION:

    Background

    The Department published the antidumping duty order on SSB from Spain on March 2, 1995.1 In its September 6, 2016, request for a changed circumstances review, Sidenor Aceros Especiales S.L. (Sidenor), informed the Department that, effective May 20, 2016, the following occurred: (1) Gerdau S.A., the Brazilian owner of Gerdau Holdings Europa S.A.U., including its Spanish subsidiary company Gerdau Aceros Especiales Europa, S.L. (Gerdau), sold its European holdings to Clerbil S.L.; and (2) Clerbil S.L. renamed Gerdau Holdings Europa S.A.U. to be Sidenor Holdings Europa S.A.U., and Gerdau Aceros Especiales Europa, S.L., to be Sidenor Aceros Especiales S.L. leaving its operations mostly unchanged.2 Gerdau is a respondent in the ongoing administrative review of the antidumping duty order on SSB from Spain covering the period March 1, 2015, through February 29, 2016.3 Because this changed circumstances review was requested for an effective date after the POR of the ongoing administrative review, it does not have any bearing on that review.4 Citing section 751(b) of the Act, and 19 CFR 351.216 Sidenor, requested that the Department initiate a changed circumstances review and determine that Sidenor Aceros Especiales S.L., is the successor-in-interest to Gerdau. Sidenor also requested that the Department issue the initiation and preliminary results as a single notice, pursuant to 19 CFR 351.221(c)(ii).

    1See Amended Final Determination and Antidumping Duty Order: Stainless Steel Bar From Spain, 60 FR 11656 (March 2, 1995).

    2See Sidenor's Letter to the Secretary of Commerce, entitled, “Stainless Steel Bar from Spain: Sidenor request for changed-circumstances review,” dated September 22, 2016, (Sidenor Request) at 3-6.

    3See Initiation of Antidumping Duty and Countervailing Duty Administrative Reviews, 81 FR 26203 (May 2, 2016).

    4Id.

    Scope of the Order

    The merchandise subject to the order is SSB. The term SSB with respect to the order means articles of stainless steel in straight lengths that have been either hot-rolled, forged, turned, cold-drawn, cold-rolled or otherwise cold-finished, or ground, having a uniform solid cross section along their whole length in the shape of circles, segments of circles, ovals, rectangles (including squares), triangles, hexagons, octagons or other convex polygons. SSB includes cold-finished SSBs that are turned or ground in straight lengths, whether produced from hot-rolled bar or from straightened and cut rod or wire, and reinforcing bars that have indentations, ribs, grooves, or other deformations produced during the rolling process. Except as specified above, the term does not include stainless steel semi-finished products, cut-length flat-rolled products (i.e., cut-length rolled products which if less than 4.75 mm in thickness have a width measuring at least 10 times the thickness, or if 4.75 mm or more in thickness having a width which exceeds 150 mm and measures at least twice the thickness), wire (i.e., cold-formed products in coils, of any uniform solid cross section along their whole length, which do not conform to the definition of flat-rolled products), and angles, shapes and sections.

    The SSB subject to the order is currently classifiable under subheadings 7222.10.00, 7222.11.00, 7222.19.00, 7222.20.00, 7222.30.00 of the Harmonized Tariff Schedule of the United States (HTSUS).

    Although the HTSUS subheadings are provided for convenience and customs purposes, the written description of the scope of the order is dispositive.5

    5 The HTSUS numbers provided in the scope changed since the publication of the order. See Amended Final Determination and Antidumping Duty Order: Stainless Steel Bar From Spain, 60 FR 11656 (March 2, 1995).

    Initiation of Changed Circumstances Review

    Pursuant to section 751(b)(1) of the Tariff Act of 1930, as amended (the Act) and 19 CFR 351.216(d), the Department will conduct a changed circumstances review upon receipt of a request from an interested party or receipt of information concerning an antidumping duty order which shows changed circumstances sufficient to warrant a review of the order. Based on the request from Sidenor, and in accordance with section 751(b)(1) of Act and 19 CFR 351.216(b), we are initiating a changed circumstances review to determine whether Sidenor is the successor-in-interest to Gerdau. The Department's regulations at section 351.221(c)(3)(ii) instruct that, if we conclude that an expedited action is warranted, we may combine the notices of initiation and preliminary results of a changed circumstances review. In this instance, because we have the information necessary on the record to make a preliminary finding, we find that an expedited action is warranted and are combining the notices of initiation and preliminary results.

    Preliminary Results of Expedited Changed Circumstances Review

    In making a successor-in-interest determination, the Department examines several factors including, but not limited to, changes in management, production facilities, supplier relationships, and customer base.6 While no single factor or combination of these factors will necessarily provide a dispositive indication of a successor-in-interest relationship, the Department will generally consider the new company to be the successor to the previous company if the new company's operations are not materially dissimilar to those of its predecessor.7 Thus, if the evidence demonstrates that, with respect to the production and sales of the subject merchandise, the new company operates as the same business entity as the former company, the Department will accord the new company the same antidumping treatment as its predecessor.8

    6See, e.g., Pressure Sensitive Plastic Tape from Italy: Preliminary Results of Antidumping Duty Changed Circumstances Review, 75 FR 8925 (February 26, 2010), unchanged in Pressure Sensitive Plastic Tape From Italy: Final Results of Antidumping Duty Changed Circumstances Review, 75 FR 27706 (May 18, 2010); and Brake Rotors From the People's Republic of China: Final Results of Changed Circumstances Antidumping Duty Administrative Review, 70 FR 69941 (November 18, 2005) (Brake Rotors), citing Brass Sheet and Strip from Canada; Final Results of Antidumping Duty Administrative Review, 57 FR 20460 (May 13, 1992).

    7See, e.g., Brake Rotors.

    8Id. See also e.g., Notice of Initiation and Preliminary Results of Antidumping Duty Changed Circumstances Review: Certain Frozen Warmwater Shrimp From India, 77 FR 64953 (October 24, 2012), unchanged in Final Results of Antidumping Duty Changed Circumstances Review: Certain Frozen Warmwater Shrimp From India, 77 FR 73619 (December 11, 2012).

    In its review request,9 and its response to our supplemental questionnaire,10 Sidenor has provided evidence for us to determine preliminarily that it is the successor-in-interest to Gerdau. Sidenor states that its management, production facilities, and customer/supplier relationships have not changed as a result of the changes in ownership or name of the company.11 Sidenor provided corporate structure documentation showing changes to the ownership and name of the company.12 Furthermore, Sidenor provided internal documents evidencing that its domestic and overseas customers and suppliers remained the same after the changes, as they were prior to them.13 Sidenor provided internal documentation evidencing that its production facilities are the same before and after the changes in ownership and the name change.14 Sidenor also provided a list of members of the management team and supporting documentation indicating that Gerdau's managers hold the same positions in Sidenor that they did in Gerdau, with the exception of the replacement of the Human Resources Director.15

    9See Sidenor Request.

    10See Sidenor's Letter to the Secretary of Commerce, entitled, “Stainless Steel Bar from Spain, CCR (Sidenor): Sidenor response to supplemental questions,” dated October 7, 2016 (SQR).

    11Id.

    12See Sidenor Request at Exhibit 1 (the two structures are identical except for the parent), Exhibit 2 (public deed registered in the Central Mercantile Registry reflecting name change), Exhibit 3 (registration of the name change), Exhibits 4-5 (taxpayer identification certificates before and after), and Exhibit 6 (SEC form 6-K filing at note 3 and 4).

    13See SQR at 3-5, and Exhibit 2 (customers), and at 2-3, and Exhibit 1 (supplier).

    14See Sidenor Request at 4, and Exhibit 9 (list of production assets).

    15Id., at 4 and Exhibit 7 (organization charts before, unchanged with one exception after). The administration of the company changed from a Board of Directors to a Sole Administrator. See Sidenor Request at Exhibit 2.

    Based on record evidence, we preliminarily determine that Sidenor is the successor-in-interest to Gerdau for purposes of antidumping duty liability because the ownership and name changes of the company resulted in no significant changes to management, production facilities, supplier relationships, and customers. As a result, we preliminarily determine that Sidenor operates as the same business entity as Gerdau. Thus, we preliminarily determine that Sidenor should receive the same antidumping duty cash deposit rate with respect to the subject merchandise as Gerdau, its predecessor company.

    Because cash deposits are only estimates of the amount of antidumping duties that will be due, changes in cash deposit rates are not made retroactive and, therefore, no change will be made to Sidenor's cash deposit rate as a result of these preliminary results. If Sidenor believes that the deposits paid exceed the actual amount of dumping, it is entitled to request an administrative review during the anniversary month of the publication of the order of those entries, i.e., March, to determine the proper assessment rate and receive a refund of any excess deposits.16 As a result, if these preliminary results are adopted in our final results of this changed circumstances review, we will instruct CBP to suspend shipments of subject merchandise made by Sidenor, at Gerdau's cash deposit rate, effective on the publication date of our final results.

    16See Certain Hot-Rolled Lead and Bismuth Carbon Steel Products From the United Kingdom: Final Results of Changed-Circumstances Antidumping and Countervailing Duty Administrative Reviews, 64 FR 66880 (November 30, 1999).

    Public Comment

    Interested parties may submit case briefs no later than 14 days after the publication of this notice.17 Rebuttal briefs, which must be limited to issues raised in case briefs, may be filed not later than five days after the deadline for filing case briefs.18 Parties who submit case briefs or rebuttal briefs in this changed circumstance review are requested to submit with each argument: (1) A statement of the issue; (2) a brief summary of the argument; and (3) a table of authorities. Interested parties who wish to comment on the preliminary results must file briefs electronically using Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS) and is available to registered users at http://access.trade.gov. An electronically-filed document must be received successfully in its entirety by the ACCESS no later than 5:00 p.m. Eastern Time on the date the document is due. Interested parties that wish to request a hearing must submit a written request to the Assistant Secretary for Enforcement and Compliance, filed electronically via ACCESS, within 14 days of publication of this notice.19 Parties will be notified of the time and date of any hearing, if requested.20

    17See 19 CFR 351.309(c)(ii).

    18See 19 CFR 351.309(d).

    19See 19 CFR 351.310(c). See also 19 CFR 351.303 for general filing requirements.

    20See 19 CFR 351.310.

    Notifications to Interested Parties

    Consistent with 19 CFR 351.216(e), we intend to issue the final results of this changed circumstances review no later than 270 days after the date on which this review was initiated, or within 45 days after the publication of the preliminary results if all parties in this review agree to our preliminary results. The final results will include the Department's analysis of issues raised in any written comments.

    This notice of initiation and preliminary results is in accordance with section 751(b)(1) of the Act, 19 CFR 351.216(b) and (d), and 19 CFR 351.221(b)(1).

    Dated: October 18, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance.
    [FR Doc. 2016-25906 Filed 10-25-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XE987 Mid-Atlantic Fishery Management Council (MAFMC); Meeting AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice of public hearing meetings.

    SUMMARY:

    The Mid-Atlantic Fishery Management Council will hold three public hearings in November 2016 to solicit public input on a request by the State of New Jersey to designate 13 of its artificial reef sites located in federal waters as Special Management Zones (SMZ). The Council is also soliciting written comments on the NJ SMZ request through 11:59 p.m. on Friday November 25, 2016.

    DATES:

    The public hearings will begin at 7 p.m. on November 15, 2016 and end at 10 p.m. on November 17, 2016, to view the agenda see SUPPLEMENTARY INFORMATION.

    ADDRESSES:

    The Council will hold three public hearings, the dates, times, and locations of which are listed below.

    1. Tuesday November 15, 2016, from 7 p.m. to 9:30 p.m., Kingsborough Community College, 2001 Oriental Blvd., Brooklyn, NY 11235, Room M239 of the Marina and Academic Center (The Lighthouse).

    2. Wednesday November 16, 2016, from 7 p.m. to 10 p.m., Clarion Hotel & Conference Center, 815 Route 37 West, Toms River, NJ 08755.

    3. Thursday November 17, 2016, 7 p.m. to 10 p.m., Congress Hall, 200 Congress Place, Cape May, NJ 08204.

    Addresses for written comments: Written comments may be sent through mail, email, or fax through 11:59 p.m. on Friday November 25, 2016. Comments may be mailed to: Dr. Chris Moore, Executive Director, Mid-Atlantic Fishery Management Council, 800 North State Street, Suite 201, Dover, DE 19901. Comments may be faxed to: Dr. Chris Moore, Executive Director, Mid-Atlantic Fishery Management Council at fax number 302-674-5399. Comments may be emailed to Richard Seagraves, Senior Scientist, at [email protected] If sending comments through the mail, please write “NJ SMZ Request” on the outside of the envelope. If sending comments through email or fax, please write “NJ SMZ Request comments” in the subject line.

    Council address: Mid-Atlantic Fishery Management Council, 800 N. State Street, Suite 201, Dover, DE 19901; telephone: 302-674-2331 or on their Web site, at www.mafmc.org.

    FOR FURTHER INFORMATION CONTACT:

    Christopher M. Moore, Ph.D., Executive Director, Mid-Atlantic Fishery Management Council, telephone: 302-526-5255.

    SUPPLEMENTARY INFORMATION: Agenda

    In the November 2015, the New Jersey Department of Environmental Protection (DEP) petitioned the Mid-Atlantic Council to designate 13 artificial reef sites as SMZ's in the EEZ under provisions of Amendment 9 to the Summer Flounder, Scup and Black Sea Bass Fishery Management Plan. The justification for this request was based on the need to ameliorate gear conflicts between hook and line fishermen and fixed pot/trap gear at those sites. The Council received a report from the SMZ Monitoring Team (MT) at its October 2016 meeting which evaluated the NJDEP request relative to the following factors: (1) Fairness and equity; (2) promotion of conservation; (3) avoidance of excessive shares; (4) consistency with the objectives of Amendment 9, the Magnuson-Stevens Act, and other applicable law; (5) the natural bottom in and surrounding potential SMZs; and (6) impacts on historical uses. The MT's analysis concluded that the designation of the NJDEP 13 reef sites appears to be compatible with the Magnuson-Stevens Act and other applicable federal law. Based on evaluation of all relevant factors and issues as outlined in Amendment 9, the SMZ Monitoring Team recommended that the Council designate all 13 New Jersey's artificial reefs located in the EEZ as SMZs. The SMZ designation could stipulate that no fishing vessel or person on a fishing vessel may fish in the 13 New Jersey Special Management Zones with any gear except hook and line and spear fishing (including the taking of fish by hand). The MT analysis indicated that commercial fishing vessels deploying pot/trap gear off the coast of New Jersey would likely face minimal to no losses in ex-vessel revenue if the artificial reefs are designated as SMZs. The Council discussed the MT's recommendations and decided to hold public hearings in November 2016 in NJ and NY to solicit public comments on the NJ SMZ request. The Council is seeking public comment on NJ's SMZ request and is scheduled to make a decision relative to NJ's request at its December 2016 meeting in Annapolis, MD.

    Special Accommodations

    These meetings are physically accessible to people with disabilities. Requests for sign language interpretation or other auxiliary aid should be directed to M. Jan Saunders, 302-526-5251, at least 5 business days prior to the meeting date.

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: October 21, 2016. Tracey L. Thompson, Acting Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2016-25849 Filed 10-25-16; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XE991 Fisheries of the South Atlantic; South Atlantic Fishery Management Council; Public Meeting AGENCY:

    National Marine Fisheries Service (NMFS), National Oceanic and Atmospheric Administration (NOAA), Commerce.

    ACTION:

    Notice of a public meeting.

    SUMMARY:

    The South Atlantic Fishery Management Council (Council) Devil's Hole Research Planning Group will meet to coordinate research in the proposed Devil's Hole Spawning Special Management Zone.

    DATES:

    The meeting will be held on Wednesday, November 2, 2016, from 8:30 a.m. until 12 p.m.

    ADDRESSES:

    The meeting will be held at the Crowne Plaza Hotel, 4831 Tanger Outlet Blvd., North Charleston, SC 29418.

    Council address: South Atlantic Fishery Management Council, 4055 Faber Place Drive, Suite 201, N. Charleston, SC 29405.

    FOR FURTHER INFORMATION CONTACT:

    Kim Iverson, Public Information Officer, South Atlantic Fishery Management Council, 4055 Faber Place Drive, Suite 201, N. Charleston, SC 29405; phone 843/571-4366 or toll free (866) SAFMC-10; fax: (843) 769-4520; email: [email protected]

    SUPPLEMENTARY INFORMATION:

    The Council selected preferred locations for designation as Spawning Special Management Zones (SMZs) in Amendment 36 to the Snapper Grouper Fishery Management Plan in 2016. Amendment 36, which is under Secretarial review, includes an action to prohibit harvest or possession of species managed under the Council's snapper grouper fishery management unit in the designated Spawning SMZs because of the area's potential to be spawning areas for multiple species. The Council is holding a meeting to coordinate research for the proposed Devil's Hole Spawning SMZ, one of the proposed Spawning SMZs off the coast of South Carolina. The Devil's Hole Research Planning Group is meeting to discuss past research in the proposed Spawning SMZ and discuss and coordinate future sampling events in the area. The group is comprised of research scientists, state and federal agency representatives, commercial fishermen, recreational fishermen, and non-governmental organization representatives.

    Special Accommodations

    This meeting is accessible to people with disabilities. Requests for auxiliary aids should be directed to the SAFMC office (see ADDRESSES) at least 5 business days prior to the meeting.

    Note:

    The times and sequence specified in this agenda are subject to change.

    Authority:

    16 U.S.C. 1801 et seq.

    Dated: October 21, 2016. Jeffrey N. Lonergan, Acting Deputy Director, Office of Sustainable Fisheries, National Marine Fisheries Service.
    [FR Doc. 2016-25910 Filed 10-25-16; 8:45 am] BILLING CODE 3510-22-P
    DEPARTMENT OF COMMERCE National Oceanic and Atmospheric Administration RIN 0648-XE995 Pacific Fishery Management Council; Public Meetings AGENCY:

    National Marine Fisheries Service, National Oceanic and Atmospheric Administration, Commerce.

    ACTION:

    Notice of public meetings.

    SUMMARY:

    The Pacific Fishery Management Council (Pacific Council) and its advisory entities will hold public meetings.

    DATES:

    The Pacific Council and its advisory entities will meet November 13-21, 2016. The Pacific Council meeting will begin on Wednesday, November 16, 2016 at 9 a.m., reconvening at 8 a.m. each day through Monday, November 21, 2016. All meetings are open to the public, except a closed session will be held from 8 a.m. to 9 a.m., Wednesday, November 16 to address litigation and personnel matters. The Pacific Council will meet as late as necessary each day to complete its scheduled business.

    ADDRESSES:

    Meetings of the Council and its advisory entities will be held at the Hyatt Regency Orange County, 11999 Harbor Blvd., Garden Grove, CA 92840; telephone: (714) 750-1234.

    Council address: Pacific Fishery Management Council, 7700 NE. Ambassador Place, Suite 101, Portland, OR 97220. Instructions for attending the meeting via live stream broadcast are given under SUPPLEMENTARY INFORMATION, below.

    FOR FURTHER INFORMATION CONTACT:

    Mr. Chuck Tracy, Executive Director; telephone: (503) 820-2280 or (866) 806-7204 toll-free; or access the Pacific Council Web site, http://www.pcouncil.org for the current meeting location, proposed agenda, and meeting briefing materials.

    SUPPLEMENTARY INFORMATION:

    The November 13-21, 2016 meeting of the Pacific Council will be streamed live on the Internet. The broadcasts begin initially at 9 a.m. Pacific Time (PT) Wednesday, November 16, 2016 and continue at 8 a.m. daily through Monday, November 21, 2016. Broadcasts end daily at 6 p.m. PT or when business for the day is complete. Only the audio portion and presentations displayed on the screen at the Pacific Council meeting will be broadcast. The audio portion is listen-only; you will be unable to speak to the Pacific Council via the broadcast. To access the meeting online please use the following link: http://www.gotomeeting.com/online/webinar/join-webinar and enter the November Webinar ID, 102-405-515, and your email address. You can attend the webinar online using a computer, tablet, or smart phone, using the GoToMeeting application. It is recommended that you use a computer headset to listen to the meeting, but you may use your telephone for the audio portion only of the meeting. The audio portion may be attended using a telephone by dialing the toll number 1-562-247-8422 (not a toll-free number), audio access code 879-397-319, and enter the audio pin shown after joining the webinar.

    The following items are on the Pacific Council agenda, but not necessarily in this order. Agenda items noted as “Final Action” refer to actions requiring the Council to transmit a proposed fishery management plan, proposed plan amendment, or proposed regulations to the U.S. Secretary of Commerce, under Sections 304 or 305 of the Magnuson-Stevens Fishery Conservation and Management Act. Additional detail on agenda items, Council action, advisory entity meeting times, and meeting rooms are described in Agenda Item A.4, Proposed Council Meeting Agenda, and will be in the advance November 2016 briefing materials and posted on the Council Web site at www.pcouncil.org.

    A. Call to Order 1. Opening Remarks 2. Roll Call 3. Executive Director's Report 4. Approve Agenda B. Open Comment Period 1. Comments on Non-Agenda Items C. Administrative Matters 1. West Coast Regional Operating Agreement Final Review 2. National Standard Guidelines Update 3. Fiscal Matters 4. Approval of Council Meeting Record 5. Membership Appointments and Council Operating Procedures 6. Future Council Meeting Agenda and Workload Planning D. Salmon Management 1. National Marine Fisheries Service Report 2. Salmon Methodology Review 3. Chinook Fishery Regulation Assessment Model Update 4. Preseason Salmon Management Schedule for 2017 Final Action E. Pacific Halibut Management 1. Final 2017 Catch Sharing Plan and Annual Regulation Changes F. Groundfish Management 1. National Marine Fisheries Service Report 2. Methodology Review Final Topic Selection 3. Inseason Management Final Action 4. Groundfish Essential Fish Habitat (EFH) and Rockfish Conservation Area (RCA) Amendment 28 Alternatives (Part 1 and Part 2) 5. Trawl Gear Modification Exempted Fishing Permit (EFP) Final Action 6. Five-Year Catch Share Program and Intersector Allocation Review Plans and Fishery Management Plan Update 7. Mid-Biennium Harvest Specification Adjustment Policies G. Coastal Pelagic Species Management 1. National Marine Fisheries Service Report 2. Methodology Review Preliminary Topic Selection 3. Small-Scale Fishery Management Alternatives 4. Northern Anchovy Stock Assessment and Management Measures H. Current Habitat Issues 1. Current Habitat Issues I. Highly Migratory Species Management 1. National Marine Fisheries Service Report 2. International Issues 3. U.S.-Canada Albacore Tuna Treaty 4. Deep-Set Buoy Gear Exempted Fishing Permits (EFPs) 5. Swordfish Fishery Management Advisory Body Agendas

    Advisory body agendas will include discussions of relevant issues that are on the Council agenda for this meeting, and may also include issues that may be relevant to future Council meetings. Proposed advisory body agendas for this meeting will be available on the Council Web site http://www.pcouncil.org/council-operations/council-meetings/current-briefing-book/ no later than Tuesday, November 1, 2016.

    Schedule of Ancillary Meetings Day 1—Sunday, November 13, 2016 SSC Economic and Groundfish Subcommittees 1 p.m. Day 2—Monday, November 14, 2016 SSC Economic and Groundfish Subcommittees 8 a.m. Day 3—Tuesday, November 15, 2016 Coastal Pelagic Species Advisory Subpanel 8 a.m. Coastal Pelagic Species Management Team 8 a.m. Groundfish Management Team 8 a.m. Salmon Advisory Subpanel 8 a.m. Scientific and Statistical Committee 8 a.m. Habitat Committee 8:30 a.m. Groundfish Advisory Subpanel 1 p.m. Budget Committee 1 p.m. Day 4—Wednesday, November 16, 2016 California State Delegation 7 a.m. Oregon State Delegation 7 a.m. Washington State Delegation 7 a.m. Coastal Pelagic Species Advisory Subpanel 8 a.m. Coastal Pelagic Species Management Team 8 a.m. Groundfish Advisory Subpanel 8 a.m. Groundfish Management Team 8 a.m. Salmon Advisory Subpanel 8 a.m. Scientific and Statistical Committee 8 a.m. Habitat Committee 8:30 a.m. Enforcement Consultants 3 p.m. Day 5—Thursday, November 17, 2016 California State Delegation 7 a.m. Oregon State Delegation 7 a.m. Washington State Delegation 7 a.m. Groundfish Advisory Subpanel 8 a.m. Groundfish Management Team 8 a.m. Enforcement Consultants Ad hoc. Day 6—Friday, November 18, 2016 California State Delegation 7 a.m. Oregon State Delegation 7 a.m. Washington State Delegation 7 a.m. Groundfish Advisory Subpanel 8 a.m. Groundfish Management Team 8 a.m. Highly Migratory Species Advisory Subpanel 8 a.m. Highly Migratory Species Management Team 8 a.m. Enforcement Consultants Ad hoc. Day 7—Saturday, November 19, 2016 California State Delegation 7 a.m. Oregon State Delegation 7 a.m. Washington State Delegation 7 a.m. Groundfish Advisory Subpanel 8 a.m. Groundfish Management Team 8 a.m. Highly Migratory Species Advisory Subpanel 8 a.m. Highly Migratory Species Management Team 8 a.m. Enforcement Consultants Ad hoc. U.S. Government Accountability Office (GAO) 7 p.m. Engagement on Commercial Fishing Vessel Classification Standards Day 8—Sunday, November 20, 2016 <