Federal Register Vol. 81, No.209,

Federal Register Volume 81, Issue 209 (October 28, 2016)

Page Range74917-75314
FR Document

81_FR_209
Current View
Page and SubjectPDF
81 FR 75166 - Sunshine Act Meeting NoticePDF
81 FR 75050 - Sunshine Act MeetingsPDF
81 FR 75164 - Sunshine Act MeetingPDF
81 FR 75055 - Clearing Target of 108 Megahertz Set for Stage 3 of the Broadcast Television Spectrum Incentive Auction; Stage 3 Bidding in the Reverse Auction Will Start on November 1, 2016PDF
81 FR 75050 - Sunshine Act Meetings NoticePDF
81 FR 75169 - Temporary Emergency Committee of the Board of Governors; Sunshine Act MeetingPDF
81 FR 75090 - Medicare Program; Approval of Request for an Exception to the Prohibition on Expansion of Facility Capacity Under the Hospital Ownership and Rural Provider Exceptions to the Physician Self-Referral Prohibition for Rockwall Regional Hospital, Limited Liability Company Doing Business as (d/b/a) Texas Health Presbyterian Hospital RockwallPDF
81 FR 75171 - Plan for Ocean Research in the Coming DecadePDF
81 FR 75088 - Medicare Program; Approval of Request for an Exception to the Prohibition on Expansion of Facility Capacity Under the Hospital Ownership and Rural Provider Exceptions to the Physician Self-Referral ProhibitionPDF
81 FR 75138 - Privacy Act of 1974; System of Records NoticePDF
81 FR 75164 - Notice of Proposed Information Collection RequestsPDF
81 FR 75045 - Circular Welded Carbon-Quality Steel Pipe From Pakistan: Final Affirmative Countervailing Duty DeterminationPDF
81 FR 75028 - Circular Welded Carbon-Quality Steel Pipe From Pakistan: Final Affirmative Determination of Sales at Less Than Fair ValuePDF
81 FR 75042 - Circular Welded Carbon-Quality Steel Pipe From the Socialist Republic of Vietnam: Final Determination of Sales at Less Than Fair ValuePDF
81 FR 75051 - Defense Science Board; Notice of Federal Advisory Committee MeetingsPDF
81 FR 75053 - Radio Broadcasting Services; AM or FM Proposals To Change the Community of LicensePDF
81 FR 75053 - Environmental Impact Statements; Notice of AvailabilityPDF
81 FR 75026 - Circular Welded Carbon-Quality Steel Pipe From the Sultanate of Oman: Final Determination of Sales at Less Than Fair ValuePDF
81 FR 75030 - Circular Welded Carbon-Quality Steel Pipe From the United Arab Emirates: Final Determination of Sales at Less Than Fair ValuePDF
81 FR 75039 - Certain Iron Mechanical Transfer Drive Components From Canada: Final Affirmative Determination of Sales at Less Than Fair ValuePDF
81 FR 75037 - Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components From the People's Republic of China: Final Affirmative DeterminationPDF
81 FR 75032 - Certain Iron Mechanical Transfer Drive Components From the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair ValuePDF
81 FR 75181 - AAAHI Acquisition Corporation-Acquisition of Control-All Aboard America! Holdings, Inc., Ace Express Coaches, LLC, All Aboard America! School Transportation, LLC, All Aboard Transit Services, LLC, Hotard Coaches, Inc., Industrial Bus Lines, Inc. d/b/a All Aboard America, and Sureride Charter Inc. d/b/a Sundiego Charter Co.PDF
81 FR 75145 - Notice of Filing of Plats of Survey; MontanaPDF
81 FR 75142 - Fisheries and Habitat Conservation; Final Supplemental Environmental Impact Statement for the Ballville Dam Project on the Sandusky River, Sandusky County, OhioPDF
81 FR 75052 - Notice of Availability of Government-Owned Inventions; Available for LicensingPDF
81 FR 75052 - Notice of Performance Review Board MembershipPDF
81 FR 75138 - National Vaccine Injury Compensation Program: Revised Amount of the Average Cost of a Health Insurance PolicyPDF
81 FR 75181 - Culturally Significant Objects Imported for Exhibition Determinations: “Picasso and Rivera: Conversations Across Time” ExhibitionPDF
81 FR 75181 - Culturally Significant Object Imported for Exhibition Determinations: “Archaic Bronze Globular Jug With Figured Handle” ExhibitionPDF
81 FR 74966 - Intercountry AdoptionsPDF
81 FR 74918 - Administrative Wage Garnishment ProceduresPDF
81 FR 75183 - List of Units of the National Park System Exempt From the Provisions of the National Parks Air Tour Management ActPDF
81 FR 75163 - Division of Energy Employees Occupational Illness Compensation; Proposed Extension of Existing Collection; Comment RequestPDF
81 FR 75186 - Notice of Availability of the Record of Decision for the Proposed Airport, Angoon, AlaskaPDF
81 FR 75147 - Exemptions From Certain Prohibited Transaction RestrictionsPDF
81 FR 75185 - Public Notice for Waiver of Aeronautical Land-Use AssurancePDF
81 FR 75160 - Division of Longshore and Harbor Workers' Compensation; Proposed Revision of Existing Collection; Comment RequestPDF
81 FR 75161 - Agency Information Collection Activities; Submission for OMB Review; Comment Request; Family and Medical Leave Act (FMLA) Wave 4 SurveysPDF
81 FR 75168 - Advisory Committee on Reactor Safeguards; Notice of MeetingPDF
81 FR 75191 - Submission for OMB Review; Comment RequestPDF
81 FR 75047 - Board of Overseers of the Malcolm Baldrige National Quality AwardPDF
81 FR 75049 - Procurement List; DeletionsPDF
81 FR 75050 - Procurement List; Proposed DeletionsPDF
81 FR 75026 - Submission for OMB Review; Comment RequestPDF
81 FR 74918 - New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade; Technical CorrectionPDF
81 FR 75049 - Marine Protected Areas Federal Advisory Committee; Public MeetingPDF
81 FR 75188 - Petition for Exemption From the Federal Motor Vehicle Theft Prevention Standard; Fiat Chrysler Automobiles US LLCPDF
81 FR 75058 - Federal Reserve Bank ServicesPDF
81 FR 75167 - Information Collections: DOE/NRC Form 740M, “Concise Note;” DOE/NRC Form 741, “Nuclear Material Transaction Report;” DOE/NRC Form 742, “Material Balance Report;” and DOE/NRC Form 742C, “Physical Inventory Listing”PDF
81 FR 75092 - Authorizations of Emergency Use of In Vitro Diagnostic Devices for Detection and/or Diagnosis of Zika Virus; AvailabilityPDF
81 FR 75136 - Listing of Ingredients in Tobacco Products; Revised Draft Guidance for Industry; AvailabilityPDF
81 FR 75130 - Agency Information Collection Activities; Submission for Office of Management and Budget Review; Comment Request; General Licensing Provisions: Biologics License Application, Changes to an Approved Application, Labeling, Revocation and Suspension, and Postmarketing Studies Status ReportsPDF
81 FR 75165 - Notice of Availability and Notice of Public Meetings for the Draft Environmental Impact Statement (DEIS) for the Arecibo Observatory, Arecibo, Puerto RicoPDF
81 FR 75024 - Media Bureau Seeks Comment on Updates to Catalog of Reimbursement ExpensesPDF
81 FR 75139 - Agency Information Collection Activities; Proposed Collection; Public Comment RequestPDF
81 FR 75051 - Proposed Collection; Comment RequestPDF
81 FR 75145 - National Register of Historic Places; Notification of Pending Nominations and Related ActionsPDF
81 FR 75178 - ALAIA Market Linked Trust and Beech Hill Securities, Inc.; Notice of ApplicationPDF
81 FR 75171 - Self-Regulatory Organizations; Miami International Securities Exchange LLC; Notice of Filing and Immediate Effectiveness of a Proposed Rule Change to Amend the MIAX Options Fee SchedulePDF
81 FR 75174 - Self-Regulatory Organizations; NASDAQ PHLX LLC; Notice of Filing and Immediate Effectiveness of Proposed Rule Change To Adopt Phlx Rule 765 (Prohibition Against Trading Ahead of Customer Orders)PDF
81 FR 75054 - Information Collection Being Reviewed by the Federal Communications CommissionPDF
81 FR 75048 - Proposed Information Collection; Comment Request; West Coast Swordfish Fishery SurveyPDF
81 FR 75140 - National Institute of General Medical Sciences; Amended Notice of MeetingPDF
81 FR 75140 - Center for Scientific Review; Notice of Closed MeetingsPDF
81 FR 75053 - Notice of Federal Accounting Standards Advisory Board Member AppointmentPDF
81 FR 75159 - Workforce Information Advisory Council (WIAC)PDF
81 FR 75157 - Proposed Extension of Information Collection Requests Submitted for Public CommentPDF
81 FR 75190 - Request for Comment on Cybersecurity Best Practices for Modern VehiclesPDF
81 FR 75134 - Agency Information Collection Activities; Proposed Collection; Comment Request; Testing Communications on Medical Devices and Radiation-Emitting ProductsPDF
81 FR 74962 - New Animal Drugs; Updating Tolerances for Residues of New Animal Drugs in FoodPDF
81 FR 75164 - Membership of the National Endowment for the Arts Senior Executive Service Performance Review BoardPDF
81 FR 75188 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel QUIET CHAOS; Invitation for Public CommentsPDF
81 FR 75187 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel KINSHIP; Invitation for Public CommentsPDF
81 FR 75187 - Requested Administrative Waiver of the Coastwise Trade Laws: Vessel VALKYRIE; Invitation for Public CommentsPDF
81 FR 74997 - Revival of Abandoned Applications, Reinstatement of Abandoned Applications and Cancelled or Expired Registrations, and Petitions to the DirectorPDF
81 FR 74925 - Clean Air Act Title V Operating Permit Program Revision; New JerseyPDF
81 FR 74987 - Informal Discussion on Hazard Communication RulemakingPDF
81 FR 74923 - Approval and Promulgation of Implementation Plans; Louisiana; Prevention of Significant Deterioration Significant Monitoring Concentration for Fine ParticulatesPDF
81 FR 75005 - Approval and Promulgation of Implementation Plans; Louisiana; Prevention of Significant Deterioration Significant Monitoring Concentration for Fine ParticulatesPDF
81 FR 74921 - Approval and Promulgation of Implementation Plans; Oklahoma; Disapproval of Prevention of Significant Deterioration for Particulate Matter Less Than 2.5 Micrometers-Significant Impact Levels and Significant Monitoring ConcentrationPDF
81 FR 75143 - Notice of Availability of the Final Environmental Impact Statement for the 3 Bars Ecosystem and Landscape Restoration Project in Eureka County, NVPDF
81 FR 74979 - Proposed Establishment of the Petaluma Gap Viticultural Area and Modification of the North Coast Viticultural AreaPDF
81 FR 74987 - Revision of the Duty To Disclose Information in Patent Applications and Reexamination ProceedingsPDF
81 FR 74927 - State of Kentucky Underground Injection Control (UIC) Class II Program; Primacy ApprovalPDF
81 FR 75006 - Commonwealth of Kentucky Underground Injection Control (UIC) Class II Program; Primacy ApprovalPDF
81 FR 75170 - Agency Forms Submitted for OMB Review, Request for CommentsPDF
81 FR 75146 - North Cumberland Wildlife Management Area, Tennessee Lands Unsuitable for Mining Final Petition Evaluation Document and Environmental Impact Statement OSM-EIS-37PDF
81 FR 75006 - Definitions; Cost Standards and Procedures; Purchasing and Property ManagementPDF
81 FR 74917 - Energy Labeling RulePDF
81 FR 74930 - Freedom of Information RegulationsPDF
81 FR 74967 - Floodplain Management and Protection of Wetlands; Minimum Property Standards for Flood Hazard Exposure; Building to the Federal Flood Risk Management StandardPDF
81 FR 75266 - Magnuson-Stevens Act Provisions; Fisheries Off West Coast States; Pacific Coast Groundfish Fishery; 2017-2018 Biennial Specifications and Management Measures; Amendment 27PDF
81 FR 75194 - Energy Conservation Program: Energy Conservation Standards for Miscellaneous Refrigeration ProductsPDF
81 FR 74950 - Energy Conservation Program: Energy Conservation Standards for Miscellaneous Refrigeration ProductsPDF

Issue

81 209 Friday, October 28, 2016 Contents Agriculture Agriculture Department NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75026 2016-26076 Alcohol Tobacco Tax Alcohol and Tobacco Tax and Trade Bureau PROPOSED RULES Establishment of the Petaluma Gap Viticultural Area and Modification of the North Coast Viticultural Area, 74979-74987 2016-25972 Centers Medicare Centers for Medicare & Medicaid Services NOTICES Medicare Program: Request for an Exception to the Prohibition on Expansion of Facility Capacity under the Hospital Ownership and Rural Provider Exceptions to the Physician Self-Referral Prohibition, 75088-75092 2016-26117 2016-26119 Commerce Commerce Department See

International Trade Administration

See

National Institute of Standards and Technology

See

National Oceanic and Atmospheric Administration

See

Patent and Trademark Office

Committee for Purchase Committee for Purchase From People Who Are Blind or Severely Disabled NOTICES Procurement List; Additions and Deletions, 75049-75050 2016-26077 2016-26078 Commodity Futures Commodity Futures Trading Commission NOTICES Meetings; Sunshine Act, 75050 2016-26268 Consumer Product Consumer Product Safety Commission NOTICES Meetings; Sunshine Act, 75050 2016-26142 Defense Department Defense Department See

Navy Department

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75051-75052 2016-26057 Meetings: Defense Science Board, 75051 2016-26111
Employee Benefits Employee Benefits Security Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75157-75159 2016-26046 Exemptions: Prohibited Transaction Restrictions, 75147-75157 2016-26089 Employment and Training Employment and Training Administration NOTICES Meetings: Workforce Information Advisory Council, 75159-75160 2016-26047 Energy Department Energy Department RULES Energy Conservation Programs: Energy Conservation Standards for Miscellaneous Refrigeration Products, 75194-75263 2016-24759 PROPOSED RULES Energy Conservation Programs: Energy Conservation Standards for Miscellaneous Refrigeration Products, 74950-74962 2016-24758 Environmental Protection Environmental Protection Agency RULES Air Quality State Implementation Plans; Approvals and Promulgations: Louisiana; Prevention of Significant Deterioration Significant Monitoring Concentration for Fine Particulates, 74923-74925 2016-25992 Oklahoma; Disapproval of Prevention of Significant Deterioration for Particulate Matter Less than 2.5 Micrometers—Significant Impact Levels and Significant Monitoring Concentration, 74921-74922 2016-25982 Clean Air Act Operating Permit Programs: New Jersey, 74925-74926 2016-26017 Primacy Approvals: Kentucky Underground Injection Control Class II Program, 74927-74930 2016-25931 PROPOSED RULES Air Quality State Implementation Plans; Approvals and Promulgations: Louisiana; Prevention of Significant Deterioration Significant Monitoring Concentration for Fine Particulates, 75005 2016-25991 Primacy Approvals: Commonwealth of Kentucky Underground Injection Control Class II Program, 75006 2016-25929 NOTICES Environmental Impact Statements; Availability, etc., 75053 2016-26109 Federal Accounting Federal Accounting Standards Advisory Board NOTICES Advisory Board Member Appointments, 75053 2016-26048 Federal Aviation Federal Aviation Administration NOTICES Aeronautical Land-Use Assurances; Waivers: Cherry Capital Airport, Traverse City, MI, 75185-75186 2016-26087 2016-26088 Environmental Impact Statements; Availability, etc.: Proposed Airport, Angoon, AK, 75186 2016-26090 List of Exempt Parks: Units of the National Park System Exempt from Provisions of the National Parks Air Tour Management Act, 75183-75185 2016-26092 Federal Communications Federal Communications Commission PROPOSED RULES Updates to Catalog of Reimbursement Expenses, 75024-75025 2016-26059 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75054-75055 2016-26052 Broadcast Television Spectrum Incentive Auctions: Stage 3 Bidding in Reverse Auction, 75055-75058 2016-26196 Radio Broadcasting Services: AM or FM Proposals to Change the Community of License, 75053-75054 2016-26110 Federal Reserve Federal Reserve System NOTICES Bank Services, 75058-75088 2016-26068 Federal Trade Federal Trade Commission RULES Energy Labeling, 74917-74918 2016-25725 Fish Fish and Wildlife Service NOTICES Environmental Impact Statements; Availability, etc.: Ballville Dam Project on the Sandusky River, Sandusky County, OH, 75142-75143 2016-26101 Food and Drug Food and Drug Administration PROPOSED RULES New Animal Drugs: Updating Tolerances for Residues of New Animal Drugs in Food, 74962-74966 2016-26043 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: General Licensing Provisions—Biologics License Application, Changes to an Approved Application, Labeling, Revocation and Suspension, and Postmarketing Studies Status Reports, 75130-75134 2016-26064 Testing Communications on Medical Devices and Radiation-Emitting Products, 75134-75136 2016-26044 Emergency Use; Authorizations: In Vitro Diagnostic Devices for Detection and/or Diagnosis of Zika Virus, 75092-75130 2016-26066 Guidance: Listing of Ingredients in Tobacco Products, 75136-75137 2016-26065 Health and Human Health and Human Services Department See

Centers for Medicare & Medicaid Services

See

Food and Drug Administration

See

Health Resources and Services Administration

See

National Institutes of Health

RULES Freedom of Information, 74930-74949 2016-25684 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75139-75140 2016-26058 Privacy Act; Systems of Records, 75138-75139 2016-26116
Health Resources Health Resources and Services Administration NOTICES National Vaccine Injury Compensation Programs: Revised Amount of the Average Cost of a Health Insurance Policy, 75138 2016-26098 Homeland Homeland Security Department See

U.S. Customs and Border Protection

Housing Housing and Urban Development Department PROPOSED RULES Floodplain Management and Protection of Wetlands; Minimum Property Standards for Flood Hazard Exposure; Building to the Federal Flood Risk Management Standard, 74967-74979 2016-25521 NOTICES Federal Properties Suitable as Facilities to Assist the Homeless, 75140-75142 2016-25773 Interior Interior Department See

Fish and Wildlife Service

See

Land Management Bureau

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: Certain Iron Mechanical Transfer Drive Components from the People's Republic of China, 75037-75039 2016-26105 Circular Welded Carbon-Quality Steel Pipe from Pakistan, 75045-75047 2016-26114 Determinations of Sales at Less than Fair Value: Certain Iron Mechanical Transfer Drive Components from Canada, 75039-75042 2016-26106 Certain Iron Mechanical Transfer Drive Components from the People's Republic of China, 75032-75037 2016-26104 Circular Welded Carbon-Quality Steel Pipe from Pakistan, 75028-75030 2016-26113 Circular Welded Carbon-Quality Steel Pipe from the Socialist Republic of Vietnam, 75042-75045 2016-26112 Circular Welded Carbon-Quality Steel Pipe From the Sultanate of Oman, 75026-75028 2016-26108 Circular Welded Carbon-Quality Steel Pipe From the United Arab Emirates, 75030-75032 2016-26107 Labor Department Labor Department See

Employee Benefits Security Administration

See

Employment and Training Administration

See

Occupational Safety and Health Administration

See

Workers Compensation Programs Office

RULES Administrative Wage Garnishment Procedures, 74918-74921 2016-26093 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Division of Longshore and Harbor Workers' Compensation, 75160-75161 2016-26085 Family and Medical Leave Act Wave 4 Surveys, 75161-75163 2016-26084
Land Land Management Bureau NOTICES Environmental Impact Statements; Availability, etc.: 3 Bars Ecosystem and Landscape Restoration Project in Eureka County, NV, 75143-75145 2016-25978 Plats of Surveys: Montana, 75145 2016-26102 Legal Legal Services Corporation PROPOSED RULES Definitions; Cost Standards and Procedures; Purchasing and Property Management, 75006-75024 2016-25831 NOTICES Meetings; Sunshine Act, 75164 2016-26249 Maritime Maritime Administration NOTICES Requests for Administrative Waivers of the Coastwise Trade Laws: Vessel KINSHIP, 75187 2016-26037 Vessel QUIET CHAOS, 75188 2016-26040 Vessel VALKYRIE, 75187-75188 2016-26036 National Endowment for the Arts National Endowment for the Arts NOTICES Membership of the Senior Executive Service Performance Review Board, 75164 2016-26042 National Foundation National Foundation on the Arts and the Humanities See

National Endowment for the Arts

National Highway National Highway Traffic Safety Administration NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Cybersecurity Best Practices for Modern Vehicles, 75190-75191 2016-26045 Federal Motor Vehicle Theft Prevention Standard; Exemption Approvals: Fiat Chrysler Automobiles US LLC, 75188-75190 2016-26072 National Institute National Institute of Standards and Technology NOTICES Meetings: Board of Overseers of the Malcolm Baldrige National Quality Award, 75047-75048 2016-26081 National Institute National Institutes of Health NOTICES Meetings: Center for Scientific Review, 75140 2016-26049 National Institute of General Medical Sciences; Amended, 75140 2016-26050 National Mediation National Mediation Board NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75164-75165 2016-26115 National Oceanic National Oceanic and Atmospheric Administration PROPOSED RULES Fisheries Off West Coast States: Pacific Coast Groundfish Fishery; Biennial Specifications and Management Measures; Amendment 27, 75266-75314 2016-25517 NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: West Coast Swordfish Fishery Survey, 75048-75049 2016-26051 Meetings: Marine Protected Areas Federal Advisory Committee, 75049 2016-26074 National Park National Park Service NOTICES List of Exempt Parks: Units of the National Park System Exempt from Provisions of the National Parks Air Tour Management Act, 75183-75185 2016-26092 National Register of Historic Places: Pending Nominations and Related Actions, 75145-75146 2016-26056 National Science National Science Foundation NOTICES Environmental Impact Statements; Availability, etc.: Arecibo Observatory, Arecibo, PR; Meetings, 75165-75166 2016-26061 Navy Navy Department NOTICES Government-Owned Inventions; Availability for Licensing, 75052 2016-26100 Performance Review Board Membership, 75052-75053 2016-26099 Nuclear Regulatory Nuclear Regulatory Commission NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75167-75168 2016-26067 Meetings: Advisory Committee on Reactor Safeguards, 75168-75169 2016-26083 Meetings; Sunshine Act, 75166-75167 2016-26271 Occupational Safety Health Adm Occupational Safety and Health Administration PROPOSED RULES Informal Discussion on Hazard Communication Rulemaking, 74987 2016-26003 Patent Patent and Trademark Office PROPOSED RULES Duty to Disclose Information in Patent Applications and Reexamination Proceedings, 74987-74997 2016-25966 Revival of Abandoned Applications, Reinstatement of Abandoned Applications and Cancelled or Expired Registrations, and Petitions to the Director, 74997-75005 2016-26035 Postal Service Postal Service NOTICES Meetings; Sunshine Act, 75169-75170 2016-26127 Railroad Retirement Railroad Retirement Board NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75170 2016-25889 Science Technology Science and Technology Policy Office NOTICES Requests for Information: Plan for Ocean Research in the Coming Decade, 75171 2016-26118 Securities Securities and Exchange Commission NOTICES Applications: ALAIA Market Linked Trust and Beech Hill Securities, Inc., 75178-75181 2016-26055 Self-Regulatory Organizations; Proposed Rule Changes: Miami International Securities Exchange LLC, 75171-75174 2016-26054 NASDAQ PHLX LLC, 75174-75178 2016-26053 State Department State Department PROPOSED RULES Intercountry Adoptions, 74966-74967 2016-26094 NOTICES Culturally Significant Objects Imported for Exhibition: Archaic Bronze Globular Jug with Figured Handle, 75181 2016-26095 Picasso and Rivera: Conversations Across Time, 75181 2016-26097 Surface Mining Surface Mining Reclamation and Enforcement Office NOTICES Environmental Impact Statements; Availability, etc.: North Cumberland Wildlife Management Area, Tennessee Lands Unsuitable for Mining, 75146-75147 2016-25868 Surface Transportation Surface Transportation Board NOTICES Acquisition of Control Exemptions: AAAHI Acquisition Corp., All Aboard America! Holdings, Inc., et al., 75181-75183 2016-26103 Transportation Department Transportation Department See

Federal Aviation Administration

See

Maritime Administration

See

National Highway Traffic Safety Administration

Treasury Treasury Department See

Alcohol and Tobacco Tax and Trade Bureau

NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals, 75191-75192 2016-26082
Customs U.S. Customs and Border Protection RULES New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade; Correction, 74918 2016-26075 Workers' Workers Compensation Programs Office NOTICES Agency Information Collection Activities; Proposals, Submissions, and Approvals: Division of Energy Employees Occupational Illness Compensation; Proposed Extension of Existing Collection, 75163-75164 2016-26091 Separate Parts In This Issue Part II Energy Department, 75194-75263 2016-24759 Part III Commerce Department, National Oceanic and Atmospheric Administration, 75266-75314 2016-25517 Reader Aids

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

To subscribe to the Federal Register Table of Contents electronic mailing list, go to https://public.govdelivery.com/accounts/USGPOOFR/subscriber/new, enter your e-mail address, then follow the instructions to join, leave, or manage your subscription.

81 209 Friday, October 28, 2016 Rules and Regulations FEDERAL TRADE COMMISSION 16 CFR Part 305 [RIN 3084-AB03] Energy Labeling Rule AGENCY:

Federal Trade Commission.

ACTION:

Final rule; correction.

SUMMARY:

The Federal Trade Commission is correcting a final rule published in the Federal Register of September 15, 2016 (81 FR 63634). This document corrects provisions in the final rule related to ceiling fan labeling requirements.

DATES:

Effective September 17, 2018.

FOR FURTHER INFORMATION CONTACT:

Hampton Newsome, Attorney, Division of Enforcement, Bureau of Consumer Protection, Federal Trade Commission, Washington, DC 20580; (202) 326-2889.

SUPPLEMENTARY INFORMATION:

This document makes corrections to the September 15, 2016 final rule document (81 FR 63634) amending the Energy Labeling Rule (“Rule”), 16 CFR part 305. Specifically, it corrects instruction 7 on page 63649 to indicate that the labeling requirements in section 305.13 of the Rule (Labeling for ceiling fans) apply to ceiling fans less than or equal to 84 inches in diameter, consistent with Department of Energy testing requirements (see 81 FR 48620 (July 25, 2016)). It also replaces “Sample Label 17—Ceiling Fan” in Appendix L on page 63661 to correct range and performance numbers in that sample label.

In FR Doc. 2016-21854, appearing on page 63634 in the Federal Register of Thursday, September 15, 2016, the following corrections are made:

§ 305.13 [Corrected]
1. On page 63649, in the second column, in § 305.13 Labeling for ceiling fans, in paragraph (a)(1), “models 84 inches or greater in diameter” is corrected to read “large diameter.” 2. On page 63649, in the third column, in § 305.13 Labeling for ceiling fans, in paragraph (a)(1)(xii), “and less than 84 inches” is corrected to read “and less than or equal to 84 inches.” 3. On page 63649, in the third column, in § 305.13 Labeling for ceiling fans, in paragraph (a)(5), “(cubic feet per watt)” is corrected to read “(cubic feet per minute per watt).” Appendix L to Part 305—Sample Labels [Corrected] 4. On page 63661, in Appendix L to Part 305, remove the graphic “Sample Label 17—Ceiling Fan” and add the following graphic in its place: ER28OC16.065

By direction of the Commission.

Donald S. Clark, Secretary.
[FR Doc. 2016-25725 Filed 10-27-16; 8:45 am] BILLING CODE 6750-01-P
DEPARTMENT OF HOMELAND SECURITY U.S. Customs and Border Protection 19 CFR Part 177 [CBP Dec. 16-19] RIN 1515-AE17 New Mailing Address for the National Commodity Specialist Division, Regulations and Rulings, Office of Trade; Technical Correction AGENCY:

U.S. Customs and Border Protection, Department of Homeland Security.

ACTION:

Final rule.

SUMMARY:

This document amends the U.S. Customs and Border Protection (CBP) regulations to reflect that the mail room servicing the Director, National Commodity Specialist Division, Regulations and Rulings, in the Office of Trade, has relocated within New York, and a new location has been established to receive non-electronic correspondence. E-rulings procedures will remain the same and are not affected by the change in office location.

DATES:

Final rule effective October 28, 2016.

FOR FURTHER INFORMATION CONTACT:

Steven Mack, Director, National Commodity Specialist Division, Regulations and Rulings, Office of Trade, (646) 733-3001.

SUPPLEMENTARY INFORMATION:

Background

On January 14, 2016, Customs and Border Protection (CBP) published a notice in the Federal Register (81 FR 1960), announcing a temporary change of office location effective January 28, 2016, due to the relocation of the National Commodity Specialist Division (NCSD). In that notice, CBP stated that it would update its regulation once the relocation of the NCSD is complete. The relocation is now completed and a permanent address is established. As such, CBP is revising section 177.2(a) of title 19 of the Code of Federal Regulations (19 CFR 177.2(a)) to reflect the new mailing address. Starting October 28, 2016, all non-electronic correspondence to the NCSD should be sent to the following address: Director, National Commodity Specialist Division, Regulations and Rulings, Office of Trade, 201 Varick Street, Suite 501, New York, New York 10014.E-rulings procedures will remain the same and are not affected by the change in office location.

Inapplicability of Notice and Delayed Effective Date Requirements

Because the technical correction set forth in this document merely updates a mailing address, CBP finds that good cause exists for dispensing with notice and public procedure as unnecessary under 5 U.S.C. 553(b)(A). For this same reason, pursuant to 5 U.S.C. 553(d)(3), CBP finds that good cause exists for dispensing with the requirement for a delayed effective date.

Executive Order 12866

The amendment does not meet the criteria for a “significant regulatory action” as specified in Executive Order 12866.

Regulatory Flexibility Act

Because this document is not subject to the notice and public procedure requirements of 5 U.S.C. 553, it is not subject to the provisions of the Regulatory Flexibility Act (5 U.S.C. 601 et seq.).

Signing Authority

This document is limited to a technical correction of the CBP regulations. Accordingly, it is being signed under the authority of 19 CFR 0.1(b)(1).

List of Subjects in 19 CFR Part 177

Administrative practice and procedure, Customs duties and inspection, Government procurement, Reporting and recordkeeping requirements.

Amendments to the Regulations

For the reasons set forth above, part 177 of the CBP Regulations (19 CFR part 177) is amended as set forth below.

PART 177—ADMINISTRATIVE RULINGS 1. The general authority citation for part 177 continues to read as follows: Authority:

5 U.S.C. 301; 19 U.S.C. 66, 1202 (General Note 3(i), Harmonized Tariff Schedule of the United States), 1502, 1624, 1625.

§ 177.2 [Amended]
2. In § 177.2, paragraph (a), the third sentence is amended by removing the words “New York, New York 10119, Attn: Classification Ruling Requests, New York, New York 10048, or to any service port office of the Customs and Border Protection” and adding in its place the words “201 Varick Street, Suite 501, New York, New York 10014”. Dated: October 25, 2016. R. Gil Kerlikowske, Commissioner, U.S. Customs and Border Protection.
[FR Doc. 2016-26075 Filed 10-27-16; 8:45 am] BILLING CODE 9111-14-P
DEPARTMENT OF LABOR Office of the Secretary 29 CFR Part 20 RIN 1290-AA27 Administrative Wage Garnishment Procedures AGENCY:

Office of the Secretary, Labor.

ACTION:

Final rule.

SUMMARY:

This rule will allow the U.S. Department of Labor (Department) to garnish the disposable wages of non-federal workers who are indebted to the Department without first obtaining a court order. It implements the administrative wage garnishment provisions contained in the Debt Collection Improvement Act of 1996 (DCIA) in accordance with the regulations issued by the Secretary of the Treasury.

DATES:

This final rule is effective on October 28, 2016.

FOR FURTHER INFORMATION CONTACT:

Shelia Alexander, Office of the Chief Financial Officer, (202) 693-4472; or Rachel Rikleen, Office of the Solicitor, (202) 693-5702.

SUPPLEMENTARY INFORMATION: I. Debt Collection Improvement Act Requirements and Background

Section 31001(o) of the Debt Collection Improvement Act of 1996 (DCIA), which is codified at 31 U.S.C. 3720D, authorizes federal agencies to use administrative procedure to garnish the disposable pay of an individual to collect delinquent non-tax debt owed to the United States in accordance with regulations promulgated by the Secretary of the Treasury. Wage garnishment is a process whereby an employer withholds amounts from an employee's wages and pays those amounts to the employee's creditor pursuant to a withholding order. Under the DCIA, agencies may garnish up to 15% of a delinquent non-tax debtor's disposable wages. Prior to the enactment of the DCIA, agencies were generally required to obtain a court judgment before garnishing the wages of non-Federal employees.

The DCIA requires the Secretary of the Treasury to issue regulations implementing the administrative wage garnishment requirements. These implementing regulations, which are at 31 CFR 285.11, provide for due process for nontax debtors and require agencies to publish regulations for administrative wage garnishment hearings. Pursuant to 31 CFR 285.11(f), federal agencies must either prescribe regulations for the conduct of an administrative wage garnishment hearing consistent with the procedures set forth in section 285.11 or adopt section 285.11 without change by reference. Through this rule, the Department has decided to issue its own regulations consistent with the procedural requirements of section 285.11.

This final rule governs only administrative wage garnishment. Nothing in this regulation precludes the use of collection remedies not contained in the regulation. The Department and other federal agencies may simultaneously use multiple collection remedies to collect a debt, except as prohibited by law.

The Department may, but is not required to, promulgate additional policies, procedures, and understandings consistent with this regulation and other applicable Federal laws, policies, and procedures, subject to the approval of the Department's Chief Financial Officer or their delegate. The Department does not intend for its components, agencies, and entities to be able to adopt different policies, procedures, or understandings.

II. Discussion of Comments

In response to its Interim Final Rule (IFR) concerning Administrative Wage Garnishment (80 FR 60797 October 8, 2015), the Department received five comments from private citizens and an industry association. The comments focused primarily on three subject areas: The justification for the regulation, due process concerns, and the burden of proof requirements.

Two commenters asked why the regulation is necessary, arguing that the Department must explain why the current debt collection tool are insufficient. The Department has determined that it is legally obligated to prescribe regulations for the conduct of administrative wage garnishment. On May 6, 1998 (63 FR 25136), the Department of the Treasury published a final rule implementing the statutory administrative wage garnishment requirements at 31 CFR 285.11. Paragraph (f) of 31 CFR 285.11 provides that “[a]gencies shall prescribe regulations for the conduct of administrative wage garnishment hearings consistent with this section or shall adopt this section without change by reference.” This regulatory obligation is what necessitates this final rule. No changes were made to the final rule in response to the comments received regarding the regulation's justification.

The Department received four comments raising concerns related to due process. In general, these comments argued that garnishing wages through an administrative process, instead of through the courts, would remove protections for debtors and may cause unnecessary hardships to impoverished individuals. The Department has determined the regulation protects due process rights that must be afforded to a debtor when an agency seeks to collect a debt, including the ability to verify, challenge, and compromise claims, and provide access to administrative appeals procedures. Under section 20.205, debtors must be notified of the potential of a wage garnishment. Under section 20.206, a hearing must be held prior to the issuance of a withholding order if the debtor submits a timely request. The Department will provide the debtor with an opportunity to inspect and copy records related to the debt, and to establish a repayment agreement under section 20.205. All of these requirements protect the due process rights of the debtors, and, as a result, no changes have been made to the final rule in response to comments received.

As for concerns about imposing untenable burdens on debtors, the proposed rule included multiple provisions to protect against this outcome. For example, under section 20.210, the Department may not garnish the wages of a debtor who has been involuntarily separated from employment until that individual has been re-employed continuously for at least 12 months. Additionally, section 20.209 sets out clear limits on the amounts the Department may seek to garnish, and section 20.211 allows the debtor to request adjustments to the garnishment based on new financial hardships. The Department has determined that these protections are sufficient to ensure that no undue burden is put on impoverished debtors.

One commenter indicated the rule should be modified to require “an oral, in-person, face-to-face meeting.” Currently, under section 20.20.206, a hearing may be conducted in writing, by telephone or other communications technology, or in person. The commenter was concerned that anything other than a face to face meeting would fail to demonstrate the individuals' situation and would harm the process. Under 31 CFR 285.11(f)(3)(ii), “[a]ll travel expenses incurred by the debtor in connection with an in-person hearing will be borne by the debtor.” The Department has determined requiring debtors to appear in-person would constitute an unconscionable financial burden on debtors and serve as an unreasonable obstacle to appropriate disputes. The Department notes that in-person hearings are not required to ensure that due process is served. As a result, no changes have been made to the final rule in response to comments received.

Finally, one commenter raised a concern about the burden of proof requirements found in section 20.206(f). The commenter contends that the section does not describe requirements for what documentation the Department must produce to “establish the existence of the debt and the amount of the debt” and that more information would be necessary for a court-ordered garnishment. Under section 20.206(f), the Department will have the initial burden of proving, by a preponderance of the evidence, the existence or amount of the debt by submitting a certified copy of the adjudication or other document. By requiring this documentation, the Department has set a standard for the kind of document that will be acceptable to meet its burden of proof. This documentation requirement is equivalent to the proof that would be needed in some courts for a garnishment order. Additionally, this rule parallels existing regulations of other agencies, including the Department of the Treasury, those promulgated by other Federal agencies, and the Federal Claims Collection Standards (FCCS), as required by the Debt Collection Improvement Act of 1996.

III. Summary of Key Aspects of the Rule

This rule allows the Department to initiate proceedings administratively to garnish the wages of a delinquent debtor. It applies to debts owed to the Department or in connection with any program administered by the Department. The administrative wage garnishment process will be applied consistently throughout the Department.

The Department can enter into agreements, such as memoranda of understanding, with other Federal agencies permitting that agency to administer part or all of the Department's administrative wage garnishment process. Nothing in this regulation requires the Department to duplicate notices or administrative proceedings required by contract, this regulation, or other laws or regulations. Thus, for example, the Department is not required to provide a debtor with two hearings on the same issue merely because two different collection tools are used, each of which requires that the debtor be provided with a hearing.

Section 20.205 lists the notice requirements, which includes an explanation of the debtor's rights. The debtor is allowed to inspect Department records related to the debt, enter into a written repayment agreement, and have a hearing.

Under section 20.206, a debtor can request one of two types of available hearings—a paper hearing or an oral hearing. The format of oral hearings is not limited to in-person and telephone hearings, it may include new forms of technology. The hearing official has the authority to determine the kind of hearing and the amount of time allotted each hearing.

If a hearing is held, the Department can meet its initial burden by offering documentation, including a copy of the debt adjudication, which demonstrates the existence of the debt and its amount as is required under section 20.206(f). Once the Department has established its prima facie case, the debtor can dispute the existence or amount of the debt. For example, debtors can meet their burden by demonstrating that they are not the person who owes a debt to the Department, that they have not received payments from the Department or have not been fined by the Department, or that they have already paid the debt.

Additionally, the Federal Employees Compensation Act (FECA), 5 U.S.C. 8101-8193, contains a provision that precludes administrative and judicial review of agency determinations, which normally includes a repayment schedule. As a result, for hearings related to FECA debts, once the Department has made its prima facie case, the debtor has only two limited grounds on which he or she can demonstrate that an administrative wage garnishment is not appropriate. The debtor may not challenge the underlying merits of the determination that created the debt.

Section 20.207 outlines the timing and elements of the withholding order to the debtor's employer. Pursuant to section 20.208, employers must complete and return a certification noting, in addition to other information, that they have received the withholding order and verifying the debtor's employment.

Section 20.209 describes how much the Department can withhold through administrative wage garnishment, which is up to 15% of the debtor's disposable pay, and the employer's administrative wage garnishment duties. A withholding order for family support would always have priority over an administrative wage garnishment order. If there are multiple federal garnishment orders, priority depends on which garnishment order was first obtained. When a debtor's disposable pay is already subject to one or more withholding orders with higher or equal priority with the Department's administrative wage garnishment order, the amount that the employer must withhold and remit to the Department would not be more than an amount calculated by subtracting the amount(s) withheld under the other withholding order(s) from 25% of the debtor's disposable pay. For example, if the employer is withholding 20% of a debtor's disposable pay for a family support or prior withholding order, the amount withheld for the subsequent withholding order issued under this section is limited to 5% of the debtor's disposable pay. When the family support or prior withholding order terminates, the amount withheld for the subsequent withholding order issued under this section may be increased to 15%.

Finally, sections 20.210 and 20.211 provide protections to employees that are facing financial hardships. Section 20.210 prohibits the Department from garnishing the wages of a debtor who was involuntarily separated from employment. The debtor has the obligation under this section to inform the Department of the involuntary separation. Section 20.211 outlines how a debtor can request a review of their garnishment due to materially changed circumstances that have created a financial hardship.

IV. Compliance With Statutory and Regulatory Requirements for Rulemakings

The Administrative Procedure Act. The Department has determined this rule involves an agency procedure or practice, and therefore no notice of proposed rulemaking is required under the Administrative Procedure Act (APA) at 5 U.S.C. 553(b)(A) and (B).

This rule parallels the existing operational regulations of other agencies to effectuate the collection of non-tariff and nontax debts to implement 31 U.S.C. 3711. Because this rule parallels existing, long-standing rules that have already been subject to APA notice and comment procedures, we believe that publishing this rule with the usual notice and comment procedures is unnecessary. Accordingly, the Department has determined that prior notice and public comment procedures would be unnecessary pursuant to 5 U.S.C. 553(b)(B).

The Paperwork Reduction Act. The Department has determined that the provisions of the Paperwork Reduction Act of 1995, as amended, 44 U.S.C. 3501, et seq., do not apply to any collections of information contained in this rule because any such collections of information are made during the conduct of administrative action taken by an agency against specific individuals or entities. 5 CFR 1320.4(a)(2). In the IFR, the Department specifically invited comments about this determination, but none were received.

The Regulatory Flexibility Act. The Regulatory Flexibility Act (RFA), Public Law 96-354, as amended (5 U.S.C. 601 et seq.), requires administrative agencies to consider the effect of their actions on small entities, including small businesses. As a procedural rule, the requirements of the RFA pertaining to regulatory flexibility analysis do not apply. However, even if the RFA were to apply, the Department certifies that this rule will not have a significant impact on a substantial number of small entities as defined in RFA. Although small entities will be subject to this regulation and to the certification requirement in this rule, the requirements will not have a significant economic impact on these entities. Employers of delinquent debtors must certify certain information about the debtor such as the debtor's employment status and earnings. This information is contained in the employer's payroll records. Therefore, it will not take a significant amount of time or result in a significant cost for an employer to complete the certification form. Even if an employer is served withholding orders on several employees over the course of a year, the cost imposed on the employer to complete the certifications would not have a significant economic impact on that entity. Employers are not required to vary their normal pay cycles in order to comply with a withholding order issued pursuant to this rule.

Unfunded Mandates Reform Act. Title II of the Unfunded Mandates Reform Act of 1995 (UMRA), Public Law 104-4, requires Federal agencies to assess the effects of their regulatory actions on state, local, and tribal governments or the private sector. This rule contains no Federal mandates, as defined by Title II of the UMRA, for State, local, and tribal governments or the private sector. Therefore, this rule is not subject to the requirements of sections 202 and 205 of UMRA.

Executive Orders 12866, 12988, and 13132. This rule is not a significant regulatory action as defined in Executive Order 12866. The rule has been reviewed in accordance with Executive Order 12988. This rule preempts state laws that are inconsistent with its provisions. Before a judicial action may be brought concerning this rule or action taken under this rule, all administrative remedies must be exhausted. This regulation will not have a substantial direct effect on the states, on the relationship between the national government and the states, or on distribution of power and responsibilities among the various levels of Government. Therefore, in accordance with E.O. 13132, it is determined this regulation does not have sufficient Federalism implications to warrant the preparation of a Federalism Assessment.

List of Subjects in 29 CFR Part 20

Administrative wage garnishment, Debt collection, Labor.

Signed at Washington, DC, on this 17th day of October, 2016. Thomas E. Perez, U.S. Secretary of Labor. PART 20—FEDERAL CLAIMS COLLECTION Accordingly, the interim rule amending 29 CFR part 20 which was published at 80 FR 60797 on October 8, 2015, is adopted as a final rule without change.
[FR Doc. 2016-26093 Filed 10-27-16; 8:45 am] BILLING CODE 4510-7C-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-OAR-2012-0263; FRL-9953-46-Region 6] Approval and Promulgation of Implementation Plans; Oklahoma; Disapproval of Prevention of Significant Deterioration for Particulate Matter Less Than 2.5 Micrometers—Significant Impact Levels and Significant Monitoring Concentration AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Final rule.

SUMMARY:

The Environmental Protection Agency (EPA) is disapproving the severable portions of the February 6, 2012, Oklahoma State Implementation Plan (SIP) submittal which establish certain de minimis thresholds for particulate matter less than 2.5 micrometers in diameter (PM2.5) in the Prevention of Significant Deterioration (PSD) permitting requirements. Specifically, we are disapproving provisions that adopt and implement the PM2.5 significant impact levels (SILs) and significant monitoring concentration (SMC); both of which were vacated by a federal court and subsequently removed from federal PSD regulations. We are disapproving the submitted provisions as inconsistent with federal laws and regulations for the permitting of PM2.5. The EPA is finalizing this disapproval under section 110 and part C of the Clean Air Act (CAA).

DATES:

This rule is effective on November 28, 2016.

ADDRESSES:

The EPA has established a docket for this action under Docket ID No. EPA-R06-OAR-2012-0263. All documents in the docket are listed on the http://www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., Confidential Business Information or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available either electronically through http://www.regulations.gov or in hard copy at the EPA Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas 75202-2733.

FOR FURTHER INFORMATION CONTACT:

Adina Wiley, (214) 665-2115, [email protected]

SUPPLEMENTARY INFORMATION:

Throughout this document wherever “we,” “us,” or “our” is used, we mean the EPA.

I. Background

The background for this action is discussed in detail in our August 11, 2016, proposed disapproval at 81 FR 53098. In that document, we proposed to disapprove the severable portions of the February 6, 2012, Oklahoma SIP submittal which establish the voluntary PM2.5 SILs provision and SMC. We presented our preliminary determination that these submitted revisions to the Oklahoma SIP must be disapproved because they establish permitting SIP requirements that are inconsistent with the federal statutory and regulatory permitting requirements for PM2.5. We did not receive any comments regarding our proposed disapproval

II. Final Action

We are disapproving the following severable portions of the February 6, 2012, Oklahoma SIP submittal establishing the voluntary PM2.5 SILs provision and SMC. We are taking this final action under section 110 and part C of the CAA.

• Substantive revisions to the Oklahoma SIP at OAC 252:100-8-33(c)(1)(C) establishing the PM2.5 SMC as submitted on February 6, 2012; and

• Substantive revisions to the Oklahoma PSD program in OAC 252:100-8-35(a)(2) establishing the PM2.5 PSD SILs provision as submitted on February 6, 2012.

The EPA is disapproving the revisions listed because the submitted provisions are inconsistent with the federal statutory and regulatory permitting requirements for PM2.5. Upon the effective date of this final disapproval, owners or operators of a proposed source or modification will continue to satisfy the source impact analysis provisions for PM2.5 as required under the Oklahoma SIP at OAC 252:100-8-35(a)(1). Additionally, the State of Oklahoma will continue to have the necessary authority to require monitoring of PM2.5 under the Oklahoma SIP at OAC 252:100-8-35.1(b)(3), consistent with the provisions of 40 CFR 52.21(m). This final disapproval does not require the EPA to promulgate a Federal Implementation Plan, because the Oklahoma PSD SIP program continues to satisfy the Federal PSD SIP requirements for PM2.5 monitoring and source impact analysis. We are finalizing this disapproval under section 110 and part C of the Act; as such, the EPA will not impose sanctions as a result of this final disapproval.

III. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

This action is not a significant regulatory action and was therefore not submitted to the Office of Management and Budget (OMB) for review.

B. Paperwork Reduction Act (PRA)

This action does not impose an information collection burden under the PRA. There is no burden imposed under the PRA because this action disapproves submitted revisions that are no longer consistent with federal laws and regulations for the regulation and permitting of PM2.5.

C. Regulatory Flexibility Act (RFA)

I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. This action will not impose any requirements on small entities. This action disapproves submitted revisions that are no longer consistent with federal laws and regulations for the regulation and permitting of PM2.5, and therefore will have no impact on small entities.

D. Unfunded Mandates Reform Act (UMRA)

This action does not contain any unfunded mandate as described in UMRA, 2 U.S.C. 1531-1538, and does not significantly or uniquely affect small governments. The action imposes no enforceable duty on any state, local or tribal governments or the private sector. This action disapproves submitted revisions that are no longer consistent with federal laws and regulations for the regulation and permitting of PM2.5, and therefore will have no impact on small governments.

E. Executive Order 13132: Federalism

This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

F. Executive Order 13175: Consultation and Coordination With Indian Tribal Governments

This action does not have tribal implications as specified in Executive Order 13175. This action disapproves provisions of state law that are no longer consistent with federal law for the regulation and permitting of PM2.5; there are no requirements or responsibilities added or removed from Indian Tribal Governments. Thus, Executive Order 13175 does not apply to this action.

G. Executive Order 13045: Protection of Children From Environmental Health Risks and Safety Risks

The EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that the EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it disapproves state permitting provisions that are inconsistent with federal laws and regulations for the regulation and permitting of PM2.5.

H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution or Use

This action is not subject to Executive Order 13211, because it is not a significant regulatory action under Executive Order 12866.

I. National Technology Transfer and Advancement Act (NTTAA)

This rulemaking does not involve technical standards.

J. Executive Order 12898: Federal Actions To Address Environmental Justice in Minority Populations and Low-Income Populations

The EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations. This action is not subject to Executive Order 12898 because it disapproves state permitting provisions that are inconsistent with federal laws and regulations for the regulation and permitting of PM2.5.

K. Congressional Review Act (CRA)

This action is subject to the CRA, and the EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

L. Judicial Review

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See CAA section 307(b)(2).)

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Incorporation by reference, Intergovernmental relations, Particulate matter, Reporting and recordkeeping requirements.

Authority:

42 U.S.C. 7401 et seq.

Dated: October 21, 2016. Ron Curry, Regional Administrator, Region 6.

40 CFR part 52 is amended as follows:

PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS 1. The authority citation for part 52 continues to read as follows: Authority:

42 U.S.C. 7401 et seq.

Subpart LL—Oklahoma 2. Section 52.1922 is revised to read as follows:
§ 52.1922 Approval status.

(a) With the exceptions set forth in this subpart, the Administrator approves Oklahoma's State Implementation Plan under section 110 of the Clean Air Act for the attainment and maintenance of the national standards.

(b) The EPA is disapproving the following severable portions of the February 6, 2012, Oklahoma SIP submittal:

(1) Revisions establishing Minor New Source Review Greenhouse Gas (GHG) permitting requirements at OAC 252:100-7-2.1 as submitted on February 6, 2012.

(2) Revisions to the Oklahoma Prevention of Significant Deterioration (PSD) program in OAC 252:100-8-31 establishing PSD permitting requirements for sources that are classified as major and thus required to obtain a PSD permit based solely on their potential GHG emissions (“Step 2 sources”) at paragraph (E) of the definition of “subject to regulation” as submitted on February 6, 2012.

(3) Revisions to the Oklahoma PSD Program at OAC 252:100-8-33(c)(1)(C) establishing the PM2.5 Significant Monitoring Concentration as submitted on February 6, 2012.

(4) Revisions to the Oklahoma PSD Program in OAC 252:100-8-35(a)(2) establishing the PM2.5 PSD Significant Impact Levels as submitted on February 6, 2012.

(c) The EPA is disapproving the revisions to the Oklahoma State Implementation Plan definitions of “carbon dioxide equivalent emissions” at OAC 252:100-1-3 and “subject to regulation” at OAC 252:100-8-31 to implement the Greenhouse Gas Biomass Deferral as submitted on January 18, 2013.

[FR Doc. 2016-25982 Filed 10-27-16; 8:45 am] BILLING CODE 6560-50-P
ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-OAR-2016-0450; FRL-9953-94-Region 6] Approval and Promulgation of Implementation Plans; Louisiana; Prevention of Significant Deterioration Significant Monitoring Concentration for Fine Particulates AGENCY:

Environmental Protection Agency (EPA).

ACTION:

Direct final rule.

SUMMARY:

The Environmental Protection Agency (EPA) is approving two revisions to the Louisiana State Implementation Plan (SIP) that revise the Louisiana Prevention of Significant Deterioration (PSD) permitting program to establish the significant monitoring concentration (SMC) for fine particles (PM2.5) at a zero microgram per cubic meter (0 μg/m3) threshold level consistent with federal permitting requirements. The EPA is approving this action under section 110 and part C of the Clean Air Act (CAA or Act).

DATES:

This rule is effective on December 27, 2016 without further notice, unless the EPA receives relevant adverse comment by November 28, 2016. If the EPA receives such comment, the EPA will publish a timely withdrawal in the Federal Register informing the public that this rule will not take effect.

ADDRESSES:

Submit your comments, identified by Docket No. EPA-R06-OAR-2016-0450, at http://www.regulations.gov or via email to [email protected] Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e. on the web, cloud, or other file sharing system). For additional submission methods, please contact Adina Wiley, (214) 665-2115, [email protected] For the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

Docket: The index to the docket for this action is available electronically at www.regulations.gov and in hard copy at EPA Region 6, 1445 Ross Avenue, Suite 700, Dallas, Texas. While all documents in the docket are listed in the index, some information may be publicly available only at the hard copy location (e.g., copyrighted material), and some may not be publicly available at either location (e.g., CBI).

FOR FURTHER INFORMATION CONTACT:

Adina Wiley, 214-665-2115, [email protected] To inspect the hard copy materials, please schedule an appointment with Ms. Adina Wiley or Mr. Bill Deese at 214-665-7253.

SUPPLEMENTARY INFORMATION:

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

I. Background A. CAA and SIPs

Section 110 of the CAA requires states to develop and submit to the EPA a SIP to ensure that state air quality meets National Ambient Air Quality Standards. These ambient standards currently address six criteria pollutants: Carbon monoxide, nitrogen dioxide, ozone, lead, particulate matter, and sulfur dioxide. Each federally-approved SIP protects air quality primarily by addressing air pollution at its point of origin through air pollution regulations and control strategies. The EPA approved SIP regulations and control strategies are federally enforceable.

B. Prior Federal Action

Under Section 165(a) of the CAA, a major source may not commence construction unless the source has been issued a permit and has satisfied certain requirements. Among those requirements, the permit applicant must demonstrate that emissions from construction or operation of the facility will not cause, or contribute to, air pollution in excess of any increment, NAAQS, or any other applicable emission standard of standard of performance. This statutory requirement has been incorporated into federal regulations at 40 CFR 51.166(k)(1). Moreover, to support this analysis, PSD permit applications must be supported by air quality monitoring data representing air quality in the area affected by the proposed source for the 1-year period preceding receipt of the application. This statutory requirement has been incorporated into federal regulations at 40 CFR 51.166(m)(ii)-(iv).

In 2010, the EPA promulgated regulations for SIPs concerning PSD permitting for PM2.5 which included two voluntary screening tools: S ignificant impact levels (SILs) and SMC. 75 FR 64864 (October 20, 2010). The SILs are screening tools that states and local permitting authorities with PSD SIPs apply in the issuance of a PSD permit to demonstrate that the proposed source's allowable emissions will not cause or contribute to a violation of the NAAQS or increment. The SMC is a screening technique that has been used to exempt sources from the requirement in the CAA to collect preconstruction monitoring data for up to 1 year before submitting a permit application in order to help determine existing ambient air quality. 78 FR 73699 (December 9, 2013).

Sierra Club filed a petition for review of the PSD regulations containing the PM2.5 SILs and SMC with the United States Court of Appeals for the District of Columbia Circuit (the Court). On January 22, 2013, the Court issued an opinion granting a request from the EPA to vacate and remand to the EPA portions of the October 20, 2010, PSD regulations establishing the PM2.5 SIL and further vacating the portions of the PSD regulations establishing a PM2.5 SMC. See, Sierra Club v. EPA, 706 F.3d 428 (D.C. Cir. 2013).

In response to the Court's decision, the EPA amended its regulations to remove the affected PM2.5 SIL regulations from the federal regulations and to replace the existing PM2.5 SMC value with a “zero” threshold. 78 FR 73698 (December 9, 2013). In that rulemaking, the EPA removed the regulatory text related to the affected PM2.5 SILs at sections 51.166(k)(2) and 52.21(k)(2). Although the Court vacated the PM2.5 SMC provisions in 40 CFR 51.166(i)(5)(i)(c) and 52.21(i)(5)(i)(c), the EPA did not remove the affected regulatory text, but instead revised the concentration for the PM2.5 SMC listed in sections 51.166(i)(5)(i)(c) and 52.21(i)(5)(i)(c) to zero micrograms per cubic meter (0 µg/m3). Because 40 CFR 51.166(i)(5)(iii) and 40 CFR 52.21(i)(5)(iii) establish an exemption from air monitoring requirements for any pollutant “not listed in paragraph (i)(5)(i),” the EPA explained that it would not be appropriate to remove the reference to PM2.5 in paragraph (i)(5)(i). Were the EPA to completely remove PM2.5 from the list of pollutants in sections 51.166(i)(5)(i)(c) and 52.21(i)(5)(i)(c) of the PSD regulations, PM2.5 would no longer be a listed pollutant and the paragraph (iii) provision could be interpreted as giving reviewing authorities the discretion to exempt permit applicants from the requirement to conduct monitoring for PM2.5, in contravention of the Court's decision and the CAA. Instead, the EPA revised the concentration listed in sections 51.166(i)(5)(i)(c) and 52.21(i)(5)(i)(c) to zero micrograms per cubic meter (0 µg/m3). This means that there is no air quality impact level below which a reviewing authority has the discretion to exempt a source from the PM2.5 monitoring requirements at 40 CFR 52.21(m).

C. Louisiana's Submittals

On February 27, 2013, Louisiana submitted revisions to its PSD SIP at LAC 33:III.509 that adopted provisions substantively identical to the EPA PSD SIP's requirement for PM2.5 PSD SMC. 40 CFR 51.166(i)(5)(i). The February 27, 2013, submittal included other revisions to the Louisiana SIP that have been separately approved by the EPA on November 5, 2015. See 80 FR 68451. On July 22, 2016, Louisiana submitted revisions to its PSD SIP at LAC 33:III.509 to revise the previously adopted and submitted PM2.5 SMC at LAC 33:III.509(I)(5)(a). Louisiana has not adopted or submitted provisions addressing the PM2.5 SIL.

II. The EPA's Evaluation

Our analysis, available in our Technical Support Document (TSD) in the rulemaking docket, finds that the State of Louisiana adopted and submitted on February 27, 2013, revisions to the Louisiana SIP that were substantively consistent with the voluntary exemptions from PSD monitoring at 40 CFR 51.166(i)(5)(i) promulgated on October 20, 2010. Subsequent to the submittal of these provisions, the Court vacated and remanded these provisions to the EPA. On December 9, 2013, we promulgated revisions to the PSD SIP rules that replaced the existing PM2.5 SMC value with a zero micrograms per cubic meter (0 µg/m3) threshold level at 40 CFR 51.166.

To address the EPA's December 9, 2013, rulemaking, the State of Louisiana submitted further revisions to the Louisiana PSD program on July 22, 2016, setting the PM2.5 SMC to zero; effectively removing any exemption from pre- and post-construction monitoring under the Louisiana PSD SIP.

Our evaluation of the Louisiana PSD program finds that the adoption and revision of the PSD PM2.5 SMC at a zero threshold value is consistent with federal PSD permitting provisions for PSD SMCs. We further find that the Louisiana PSD program does not provide an exemption from the PSD pre- and post-construction monitoring requirements for emissions of PM2.5 that are SIP-approved at LAC 33:III.509(M) as consistent with federal PSD permitting provisions.

III. Final Action

We are approving revisions to the Louisiana PSD program into the Louisiana SIP that establish the PSD PM2.5 SMC and set the SMC to zero micrograms per cubic meter (0 µg/m3) consistent with federal PSD permitting requirements and the CAA. Specifically, the EPA is approving the following revisions to the Louisiana PSD SIP:

• New provisions at LAC 33:III.509(I)(5)(a) adopted on December 20, 2012 and submitted on February 27, 2013, establishing the PM2.5 SMC;

• Revisions to LAC 33:III.509(I)(5)(a), adopted on March 20, 2016 and submitted on July 22, 2016 setting the PM2.5 SMC to 0 μg/m3.

The EPA is publishing this rule without prior proposal because we view this as a non-controversial amendment and anticipate no adverse comments. However, in the proposed rule s section of this Federal Register publication, we are publishing a separate document that will serve as the proposal to approve the SIP revision if relevant adverse comments are received. This rule will be effective on December 27, 2016 without further notice unless we receive relevant adverse comment by November 28, 2016. If we receive relevant adverse comments, we will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. We will address all public comments in a subsequent final rule based on the proposed rule. We will not institute a second comment period on this action. Any parties interested in commenting must do so now. Please note that if we receive relevant adverse comment on an amendment, paragraph, or section of this rule and if that provision may be severed from the remainder of the rule, we may adopt as final those provisions of the rule that are not the subject of an adverse comment.

IV. Incorporation by Reference

In this rule, we are finalizing regulatory text that includes incorporation by reference. In accordance with the requirements of 1 CFR 51.5, we are finalizing the incorporation by reference of the revisions to the Louisiana regulations as described in the Final Action section above. We have made, and will continue to make, these documents generally available electronically through www.regulations.gov and/or in hard copy at the EPA Region 6 office.

V. Statutory and Executive Order Reviews

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

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

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

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

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

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

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

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

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

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

In addition, the SIP is not approved to apply on any Indian reservation land or in any other area where EPA or an Indian tribe has demonstrated that a tribe has jurisdiction. In those areas of Indian country, the rule does not have tribal implications and will not impose substantial direct costs on tribal governments or preempt tribal law as specified by Executive Order 13175 (65 FR 67249, November 9, 2000).

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

Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this rule for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

List of Subjects in 40 CFR Part 52

Environmental protection, Air pollution control, Incorporation by reference, Nitrogen dioxide, Particulate matter, Reporting and recordkeeping requirements, Sulfur oxides.

Dated: October 21, 2016. Ron Curry, Regional Administrator, Region 6.

40 CFR part 52 is amended as follows:

PART 52—APPROVAL AND PROMULGATION OF IMPLEMENTATION PLANS 1. The authority citation for part 52 continues to read as follows: Authority:

42 U.S.C. 7401 et seq.

Subpart T—Louisiana 2. In § 52.970(c), the table titled “EPA Approved Louisiana Regulations in the Louisiana SIP” is amended by revising the entry for Section 509 to read as follows:
§ 52.970 Identification of plan.

(c) * * *

EPA-Approved Louisiana Regulations in the Louisiana SIP State citation Title/subject State approval
  • date
  • EPA approval date Comments
    *         *         *         *         *         *         * Chapter 5—Permit Procedures *         *         *         *         *         *         * Section 509 Prevention of Significant Deterioration 03/20/2016 10/28/2016, [Insert Federal Register citation] SIP does not include provisions for permitting of GHGs as effective on 04/20/2011 at LAC 33:III.509(B) definition of “carbon dioxide equivalent emissions”, “greenhouse gases”, “major stationary source”, and “significant”. *         *         *         *         *         *         *
    [FR Doc. 2016-25992 Filed 10-27-16; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 70 [EPA-R02-OAR-2015-0837; FRL-9954-61-Region 2] Clean Air Act Title V Operating Permit Program Revision; New Jersey AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Final rule.

    SUMMARY:

    The Environmental Protection Agency is approving a revision to the New Jersey Operating Permit Program related to the permitting of stationary sources subject to title V of the Clean Air Act (CAA) in the state of New Jersey. The revision consists of amendments to Subchapter 22 of Chapter 27 of Title 7 of the New Jersey Administrative Code, “Operating Permits.” The revision was submitted to change the fee schedule for certain permitting activities for major facilities. The changes provide additional needed fee revenues for New Jersey's Operating Permit Program. This approval action will help ensure New Jersey properly implements the requirements of title V of the CAA.

    DATES:

    This rule will be effective November 28, 2016.

    ADDRESSES:

    The EPA has established a docket for this action under Docket ID No. EPA-R02-OAR-2015-0837. All documents in the docket are listed on the www.regulations.gov Web site. Although listed in the index, some information is not publicly available, e.g., CBI or other information whose disclosure is restricted by statute. Certain other material, such as copyrighted material, is not placed on the Internet and will be publicly available only in hard copy form. Publicly available docket materials are available through www.regulations.gov, or contact the person identified in the For Further Information Contact section for additional availability information.

    FOR FURTHER INFORMATION CONTACT:

    Suilin Chan, Air Programs Branch, Environmental Protection Agency, 290 Broadway, 25th Floor, New York, New York 10007-1866, (212) 637-4019.

    SUPPLEMENTARY INFORMATION:

    I. What was included in New Jersey's submittal?

    On May 15, 2015, the New Jersey Department of Environmental Protection (NJDEP) requested that the EPA approve revisions to the New Jersey title V Operating Permit Program; the EPA proposed to approve those revisions on June 24, 2016 (81 FR 41283). The revisions consisted of amendments to sections 22.1 and 22.31 of New Jersey's Operating Permits Rule, codified at Title 7 of the New Jersey Administrative Code, Chapter 27, Subchapter 22, that updated the fees paid for certain permitting activities for major facilities, including application fees for significant modifications and fees to authorize general operating permit registration and operation of used oil space heaters. As discussed further in the June 24, 2016 proposed rule, the revisions help NJ raise additional fees to cover its permit program costs, as required by CAA title V. These revisions were adopted by the State on December 29, 2014, and became effective on February 27, 2015. For a detailed discussion on the content of the relevant revisions to New Jersey's Operating Permits Rule, the reader is referred to the EPA's June 24, 2016 proposed rule and the public docket.

    II. What comments did the EPA receive in response to its proposal?

    In response to the EPA's June 24, 2016, proposed rulemaking action, the EPA received no comments.

    III. What is the EPA's conclusion?

    The EPA has evaluated New Jersey's submittal for consistency with the Act, EPA regulations, and EPA policy. The EPA has determined that the revisions to Subchapter 22, New Jersey's Operating Permits Rule meet the requirements of title V of the CAA and its implementing regulations codified at title 40 of the Code of Federal Regulations, part 70. Therefore, the EPA is approving the subject revisions.

    IV. Statutory and Executive Order Reviews

    This action merely approves state law as meeting federal requirements and imposes no additional requirements beyond those imposed by state law. For that reason, this action:

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

    • Does not impose an information collection burden under the provisions of the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.);

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

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

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

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

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

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

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

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

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

    Under section 307(b)(1) of the CAA, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by December 27, 2016. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action which approves the May 15, 2015 program revision submittal by the State of New Jersey as a revision to the New Jersey Operating Permits Program may not be challenged later in proceedings to enforce its requirements. See CAA section 307(b)(2).

    List of Subjects in 40 CFR Part 70

    Environmental protection, Administrative practice and procedure, Air pollution control, Incorporation by reference, Intergovernmental relations, Operating permits, Reporting and recordkeeping requirements.

    Authority:

    42 U.S.C. 7401 et seq.

    Dated: October 18, 2016. Judith A. Enck, Regional Administrator, Region 2.

    Part 70, chapter I, title 40 of the Code of Federal Regulations is amended as follows:

    PART 70—STATE OPERATING PERMIT PROGRAMS 1. The authority citation for part 70 continues to read as follows: Authority:

    42 U.S.C. 7401, et seq.

    2. Appendix A to part 70 is amended by adding paragraph (e) in the entry for New Jersey to read as follows: Appendix A to Part 70—Approval Status of State and Local Operating Permit Programs New Jersey

    (e) The New Jersey Department of Environmental Protection submitted program revisions on May 15, 2015; the revisions related to fees imposed in connection with the permitting of major sources are approved effective November 28, 2016.

    [FR Doc. 2016-26017 Filed 10-27-16; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 147 [EPA-HQ-OW-2015-0372; FRL 9953-37-OW] State of Kentucky Underground Injection Control (UIC) Class II Program; Primacy Approval AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Direct final rule.

    SUMMARY:

    The U.S. Environmental Protection Agency (EPA) is taking direct final action to approve the Commonwealth of Kentucky's Underground Injection Control Class II (UIC) Program for primacy. The EPA determined that the state's program is consistent with the provisions of the Safe Drinking Water Act (SDWA) at Section 1425 to prevent underground injection activities that endanger underground sources of drinking water. The agency's approval allows the state to implement and enforce state regulations for UIC Class II injection wells located within the state. The Commonwealth's authority excludes the regulation of injection well Classes I, III, IV, V and VI and all wells on Indian lands, as required by rule under the SDWA.

    DATES:

    This rule is effective on January 26, 2017 without further notice, unless EPA receives adverse comment by November 28, 2016. If EPA receives adverse comment, we will publish a timely withdrawal in the Federal Register informing the public that the rule will not take effect. For judicial purposes, this final rule is promulgated as of January 26, 2017. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of January 26, 2017.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-HQ-OW-2015-0372, to the Federal eRulemaking Portal: http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Holly S. Green, Drinking Water Protection Division, Office of Ground Water and Drinking Water (4606M), U.S. Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 566-0651; fax number: (202) 564-3754; email address: [email protected]; or Nancy H. Marsh, Safe Drinking Water Branch, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street, SW., Atlanta, Georgia 30303; telephone number (404) 562-9450; fax number: (404) 562-9439; email address: [email protected]

    SUPPLEMENTARY INFORMATION: I. Why is EPA issuing a direct final rule?

    EPA published this rule without a prior proposed rule because the agency views this action as noncontroversial and anticipates no adverse comment. However, in the “Proposed Rules” section of today's Federal Register, EPA published a separate document that serves as the proposed rule if the agency receives adverse comment on this direct final rule. The agency will not institute a second comment period on this action. Any parties interested in commenting must do so at this time. For further information about commenting on this rule, see the ADDRESSES section of this document.

    If EPA receives adverse comment, the agency will publish a timely withdrawal in the Federal Register, informing the public that this direct final rule will not take effect. The agency will then address all public comments in any subsequent final rule based on the proposed rule.

    II. Does this action apply to me? Regulated Entities Category Examples of potentially regulated entities North American
  • industry
  • classification
  • system
  • Industry Private owners and operators of Class II injection wells located within the state (Enhance Recovery, Produce Fluid Disposal and Hydrocarbon Storage) 211111 & 213111

    This table is intended to be a guide for readers regarding entities likely to be regulated by this action. This table lists the types of entities that EPA is now aware could potentially be regulated by this action. If you have questions regarding the applicability of this action to a particular entity, consult the persons listed in the preceding FOR FURTHER INFORMATION CONTACT section.

    III. Legal Authorities

    EPA approves the Commonwealth of Kentucky's UIC Program primacy application for Class II injection wells located within the state, as required by rule under the SDWA, to prevent underground injection activities that endanger underground sources of drinking water. Accordingly, the agency codifies the state's program in the Code of Federal Regulations (CFR) at 40 CFR part 147, under the authority of the SDWA, sections 1425, 42 U.S.C. 300h-4. The state applied to EPA under sections 1425 of the SDWA, 42 U.S.C. Sections 300h-4, for primacy (primary enforcement responsibility) for all Class II injection wells within the state except those on Indian lands.

    The agency's approval is based on a legal and technical review of the state's primacy application as directed at 40 CFR part 145 and the requirements for state permitting and compliance evaluation programs, enforcement authority and information sharing to determine that the state's program is effective. EPA oversees the state's administration of the UIC program; part of the agency's oversight responsibility requires quarterly reports of non-compliance and annual UIC performance reports pursuant to 40 CFR 144.8. The Memorandum of Agreement between EPA and the Commonwealth of Kentucky, signed by the Regional Administrator on October 20, 2015, provides the agency with the opportunity to review and comment on all permits. The agency continues to administer the UIC program for Class I, III, VI, V and VI injection wells in the state and all wells on Indian lands (if any such lands exist in the state in the future).

    IV. Kentucky's Application A. Public Participation Activities Conducted by the Commonwealth of Kentucky

    As part of the primacy application requirements, the state held a public hearing on the state's intent to apply for primacy. The hearing was held on September 23, 2014, in the city of Frankfort, Kentucky. Both oral and written comments received for the hearing were generally supportive of the state pursuing primacy for the UIC Class II injection well program.

    B. Public Participation Activities Conducted by EPA

    On November 10, 2015, the agency published a notice of the state's application in the Federal Register (80 FR 69629). This notice provided a comment period and that a public hearing would be held if requested. The EPA received one comment during the comment period, and no requests for a public hearing. An anonymous commenter suggested the state agency give permission to construct these Class II wells so that energy dependency and job creation remain domestic and that extraction of oil and gas resources be done in an environmentally sound manner. The agency determined that the issue was outside the scope of the UIC program and not relevant as to whether the state's regulations are effective to manage the UIC Class II injection well program in accordance with section 1425 of the Safe Drinking Water Act.

    C. Incorporation by Reference

    This direct final rule amends 40 CFR part 147 and incorporates by reference EPA-approved state statutes and regulations. The provisions of the Commonwealth of Kentucky Code that contain standards, requirements and procedures applicable to owners or operators of UIC Class II wells are incorporated by reference into 40 CFR part 147. Any provisions incorporated by reference, as well as all permit conditions or permit denials issued pursuant to such provisions, will be enforceable by EPA pursuant to the SDWA, section 1423 and 40 CFR 147.1(e).

    In order to better serve the public, the agency is reformatting the codification of the EPA-approved state statutes and regulations. Instead of codifying the Commonwealth of Kentucky's Statutes and Regulations as separate paragraphs, the agency is now codifying a binder that contains the “EPA-Approved Commonwealth of Kentucky Safe Drinking Water Act § 1425 Underground Injection Control (UIC) Program Statutes and Regulations for Class II wells.” This binder will be incorporated by reference into 40 CFR part 147 and available at www.regulations.gov in the docket for this rule. The agency is also codifying a table listing the “EPA-Approved Commonwealth of Kentucky Safe Drinking Water Act § 1425 Underground Injection Control (UIC) Program Statutes and Regulations for Class II wells” in 40 CFR part 147.

    V. Statutory and Executive Order Reviews A. Executive Order 12866: Regulatory Planning and Review and Executive Order 13563: Improving Regulation and Regulatory Review

    This action is exempt from review by the Office of Management and Budget (OMB) because OMB has determined that the approval of state UIC primacy for Class II rules are not significant regulatory actions.

    B. Paperwork Reduction Act

    This action does not impose any new information collection burden. EPA determined that there is no need for an Information Collection Request under the Paperwork Reduction Act because this direct final rule does not impose any new federal reporting or recordkeeping requirements. Reporting or recordkeeping requirements are based on the Commonwealth of Kentucky's UIC Regulations, and the state is not subject to the Paperwork Reduction Act. However, OMB has previously approved the information collection requirements contained in the existing UIC regulations at 40 CFR parts 144-148 for SDWA section 1422 states and also for section 1425 states under the provisions of the Paperwork Reduction Act, 44 U.S.C. 3501 et seq. and assigned OMB control number 2040-0042. The OMB control numbers for EPA's regulations in 40 CFR are listed in 40 CFR part 9.

    C. Regulatory Flexibility Act (RFA)

    I certify that this action will not have a significant economic impact on a substantial number of small entities under the RFA. In making this determination, the impact of concern is any significant adverse economic impact on small entities. An agency may certify that a rule will not have a significant economic impact on a substantial number of small entities if the rule relieves regulatory burden, has no net burden or otherwise has a positive economic effect on the small entities subject to the rule. This action does not impose any new requirements on any regulated entities. It simply codifies the Commonwealth of Kentucky's UIC Program regulations, which meets the effectiveness standard under SDWA section 1425 for regulating a Class II well program. I have therefore concluded that this action will have no net regulatory burden for any directly regulated small entities.

    D. Unfunded Mandates Reform Act (UMRA)

    This action does not contain an unfunded mandate as described in UMRA, 2 U.S.C. 1521-1538. The action imposes no enforceable duty on any state, local or tribal governments or the private sector.

    E. Executive Order 13132—Federalism

    This action does not have federalism implications. It will not have substantial direct effects on the states, on the relationship between the national government and the states, or on the distribution of power and responsibilities among the various levels of government.

    F. Executive Order 13175—Consultation and Coordination With Indian Tribal Governments

    This action does not have tribal implications as specified in Executive Order 13175 as explained in section V.C. Thus, Executive Order 13175 does not apply to this action.

    G. Executive Order 13045: Protection of Children From Environmental Health & Safety Risks

    EPA interprets Executive Order 13045 as applying only to those regulatory actions that concern environmental health or safety risks that EPA has reason to believe may disproportionately affect children, per the definition of “covered regulatory action” in section 2-202 of the Executive Order. This action is not subject to Executive Order 13045 because it approves a state action as explained in section V.C.

    H. Executive Order 13211: Actions Concerning Regulations That Significantly Affect Energy Supply, Distribution, or Use

    This action is not subject to Executive Order 13211 because it is not a significant regulatory action under Executive Order 12866.

    I. National Technology Transfer and Advancement Act (NTTAA)

    This rulemaking does not involve technical standards.

    J. Executive Order 12898: Federal Actions to Address Environmental Justice in Minority Populations and Low-Income Populations

    EPA believes the human health or environmental risk addressed by this action will not have potential disproportionately high and adverse human health or environmental effects on minority, low-income or indigenous populations because the rule does not change the level of protection provided to human health or the environment.

    K. Congressional Review Act (CRA)

    This action is subject to the CRA, and EPA will submit a rule report to each House of the Congress and to the Comptroller General of the United States. This action is not a “major rule” as defined by 5 U.S.C. 804(2).

    List of Subjects in 40 CFR Part 147

    Environmental protection, Appeals, Incorporation by reference, Penalties, Requirements for plugging and abandonment, Underground Injection Control, Protection for USDWs.

    Dated: October 19, 2016. Gina McCarthy, Administrator.

    For the reasons set out in the preamble, title 40 of the Code of Federal Regulations is amended as follows:

    PART 147—STATE, TRIBAL, AND EPA-ADMINISTERED UNDERGROUND INJECTION CONTROL PROGRAMS 1. The authority citation for part 147 is revised to read as follows: Authority:

    42 U.S.C. 300h-4.

    2. Section 147.900 is added to read as follows: Subpart S—Kentucky
    § 147.900 State-administered program—Class II wells.

    The UIC program for Class II injection wells in the Commonwealth of Kentucky, except for those on Indian lands, is the program administered by the Kentucky Department of Natural Resources, Division of Oil and Gas approved by the EPA pursuant to section 1425 of the SDWA. Notification of this approval was published in the Federal Register on October 28, 2016]; the effective date of this program is January 26, 2017. Table 1 to paragraph (a) of this section is the table of contents of the Kentucky state statutes and regulations incorporated as follows by reference. This program consists of the following elements, as submitted to the EPA in the state's program application.

    (a) Incorporation by reference. The requirements set forth in the Kentucky State statutes and regulations cited in the binder entitled “EPA-Approved Commonwealth of Kentucky Safe Drinking Water Act § 1425 Underground Injection Control (UIC) Program Statutes and Regulations for Class II wells,” dated August 2016 is hereby incorporated by reference and made a part of the applicable UIC program under the SDWA for the Commonwealth of Kentucky. This incorporation by reference was approved by the Director of the Federal Register in accordance with 5 U.S.C. 552(a) and 1 CFR part 51. Copies of the Kentucky regulations may be obtained or inspected at the Kentucky Department of Natural Resources, Division of Oil and Gas, 3th Floor, 300 Sower Blvd., Frankfort, Kentucky 40601, (315) 532-0191; at the U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303-8960, (404) 562-8190; or at the National Archives and Records Administration (NARA). For information on availability of this material at NARA, call (202) 741-6030, or go to: http://www.archives.gov/federal-register/cfr/ibr-locations.html.

    Table 1 to Paragraph (a)—EPA-Approved Kentucky SDWA § 1425 Underground Injection Control Program Statutes and Regulations for Class II Wells State citation Title/subject State effective date EPA approval date 1 Kentucky Revised Statutes Chapter 13B Kentucky Administrative Procedures Act KRS 13B.005 to 13B.170 June 15, 1994 [Insert Federal Register citation]. Kentucky Revised Statutes 353.180 Requirements for plugging abandoned well—Bids—Remedy for possessor of adjacent land or for department June 24, 2015 [Insert Federal Register citation]. Kentucky Revised Statutes 353.510 Definition of KRS 353.500 to 353.720 July 15, 2010 [Insert Federal Register citation]. Kentucky Revised Statutes 353.520 Territorial application of KRS 353.500 to 353.720—Waste of oil and gas prohibited June 24, 2003 [Insert Federal Register citation]. Kentucky Revised Statutes 353.550 Specific authority over oil and gas operators July 15, 1996 [Insert Federal Register citation]. Kentucky Revised Statutes 353.570 Permit Required—May authorize operation prior to issuance of permit July 15, 1998 [Insert Federal Register citation]. Kentucky Revised Statutes 353.590 Application for permit-Fees-Plat-Bond to insure plugging—Schedule—Blanket bonds-Corporate guarantee—Use of forfeited funds-Oil and gas well. plugging fund-Wells not included in “water supply well” July 15, 2010 [Insert Federal Register citation]. Kentucky Revised Statutes 353.591 Purpose and application of KRS 353.592 and 353.593 July 15, 1986 [Insert Federal Register citation]. Kentucky Revised Statutes 353.592 Powers of the department June 24, 2015 [Insert Federal Register citation]. Kentucky Revised Statutes 353.593 Appeals July 15, 1996 [Insert Federal Register citation]. Kentucky Revised Statutes 353.992 Penalties July 15, 1986 [Insert Federal Register citation]. 805 Kentucky Administrative Regulations 1:020 Providing Protection for USDWs August 9, 2007 [Insert Federal Register citation]. 805 Kentucky Administrative Regulations 1:030 Well location and as-drilled location plat, preparation, form and contents October 23, 2009 [Insert Federal Register citation]. 805 Kentucky Administrative Regulations 1:060 Plugging wells; non-coal-bearing strata June 11, 1975 [Insert Federal Register citation]. 805 Administrative Regulations 1:070 Plugging wells; coal bearing strata October 23, 1975 [Insert Federal Register citation]. 805 Kentucky Administrative Regulations 1:110 Underground Injection Control April 4, 2008 [Insert Federal Register citation]. 1 In order to determine the EPA effective date for a specific provision listed in this table, consult the Federal Register document cited in this column for the particular provision.

    (b) Memorandum of Agreement (MOA). The MOA between EPA Region 4 and the Commonwealth of Kentucky Department of Natural Resources signed by EPA Regional Administrator on October 20, 2015.

    (c) Statements of Legal Authority. “Underground Injection Control Program, Attorney General's Statement,” signed by General Counsel of Kentucky Energy and Environmental Cabinet on June 7, 2010.

    (d) Program Description. The Program Description submitted as part of Kentucky's application, and any other materials submitted as part of this application or as a supplement thereto.

    3. Section 147.901 is amended by revising the section heading and the first sentence of paragraph (a) to read as follows:
    § 147.901 EPA-administered program—Class I, III, IV, V, and VI wells and Indian lands.

    (a) Contents. The UIC program for Class I, III, IV, V and VI wells and all wells on Indian lands in the Commonwealth of Kentucky is administered by the EPA. * * *

    4. Add § 147.902 to read as follows:
    § 147.902 Aquifer Exemptions.

    (a) This section identifies any aquifers or their portions exempted in accordance with §§ 144.7(b) and 146.4 of this chapter. These aquifers are not being proposed for exemption under the Commonwealth of Kentucky's primacy approval. Rather, the exempted aquifers listed below were previously approved while EPA had primary enforcement authority for the Class II UIC program in the Commonwealth of Kentucky and are included here for reference. Additional information pertinent to these exempted aquifers or their portions resides in EPA Region 4.

    (1) The following eight aquifers (underground sources of drinking water) in the Commonwealth of Kentucky have been exempted in accordance with the provisions of §§ 144.7(b) and 146.4 of this chapter for Class II injection activities only: A portion of the Tar Springs sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.7261 and longitude −86.6914. The formation has a true vertical depth from surface of 280 feet.

    (2) A portion of the Tar Springs sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.7294 and longitude −867212. The formation has a true vertical depth from surface of 249 feet.

    (3) A portion of the Tar Springs sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.7055 and longitude −86.7177. The formation has a true vertical depth from surface of 210 feet.

    (4) A portion of the Pennsylvanian Age sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.5402 and longitude −87.2551. The formation has a true vertical depth from surface of 1,050 feet.

    (5) A portion of the Tar Springs sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.7301 and longitude −87.6922. The formation has a true vertical depth from surface of 240 feet.

    (6) A portion of the Caseyville sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.5776 and longitude −87.1321. The formation had a true vertical depth from surface of 350 feet.

    (7) A portion of the Caseyville sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.5778 and longitude −87.1379. The formation has a true vertical depth from surface of 1,080 feet.

    (8) A portion of the Caseyville sandstone formation that has a quarter mile radius areal extent (125.6 acres) that is located at latitude 37.5652 and longitude −87.1222. The formation has a true vertical depth from surface of 1,060 feet.

    (b) [Reserved]

    5. Section 147.903 is amended by revising the section heading to read as follows:
    § 147.903. Existing Class I and III wells authorized by rule.
    § 147.904 [Removed and reserved]
    6. Section 147.904 is removed and reserved.
    [FR Doc. 2016-25931 Filed 10-27-16; 8:45 am] BILLING CODE 6560-50-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Office of the Secretary 45 CFR Part 5 RIN 0991-AC04 Freedom of Information Regulations AGENCY:

    Office of the Secretary, Department of Health and Human Services (HHS).

    ACTION:

    Final rule.

    SUMMARY:

    This rule amends the Department of Health and Human Services (HHS's) Freedom of Information Act (FOIA) regulations. The regulations have been revised in order to incorporate changes made to the FOIA by the Electronic FOIA Act of 1996 (E-FOIA Act), the Openness Promotes Effectiveness in our National Government Act of 2007 (OPEN Government Act), and the FOIA Improvement Act of 2016 (FOIA Improvement Act). Additionally, the regulations have been updated to reflect changes to the organization, to make the FOIA process easier for the public to navigate, to update HHS's fee schedule, and to make provisions clearer.

    DATES:

    This rule is effective on November 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Michael Marquis, Michael Bell, Deborah Peters, and/or Brandon Lancey by email to: [email protected] These individuals also can be reached by telephone at 202-690-7453.

    SUPPLEMENTARY INFORMATION:

    HHS published a proposed rule to amend its FOIA regulations for public comment in the Federal Register at 81 FR 39003 on June 15, 2016. The comment period ended on August 15, 2016. In total, we received 10 public comments in response to the proposed rule. We have given due consideration to each of the comments we received, and, in response, we have made several modifications to the proposed rule. These modifications include clarifying, revising, expanding, or adding various provisions, withdrawing provisions, and making minor technical edits. We have addressed the substantive comments that we received in narrative form below; grouped by the section the comment corresponds to, as located in the proposed rule.

    Purpose (§ 5.1)

    One commenter recommended removing a provision that we originally proposed in § 5.1(b)(1) concerning records that are subject to a statutorily-based fee schedule program. The commenter interpreted this provision to suggest that we would withhold records in response to a FOIA request simply because a separate statute provided for charging fees for those records. In order to help clarify the meaning of that provision, the commenter's recommendation has been accepted and the proposed provision has been removed. An additional provision relating to records that are subject to other statutes specifically providing for fees has been added at § 5.52(f). In addition to the language in § 5.1(b)(1) concerning records that are subject to a statutorily-based fee schedule program, we have also removed the language concerning §§ 5.1(b)(2), (3) and (5), as we consider the provisions of § 5.2 to adequately address proactive disclosures and the provisions of § 5.5 and § 5.22 to adequately address the interrelationship between the FOIA and the Privacy Act and how to make a first-party request.

    Presumption of Openness and Proactive Disclosures (§ 5.2)

    Three commenters suggested revising the language of this section to more closely conform to the provisions of the FOIA Improvement Act, which codified the presumption of openness into the statute. This recommended change has been made and the rule reflects the statutory language at 5 U.S.C. 552(a)(8).

    Two commenters suggested that we add language concerning proactive disclosures to this section. One of these commenters provided suggested language, which included a reference to two types of records that government agencies are required to make available to the public in an electronic format pursuant to the FOIA Improvement Act and 5 U.S.C. 552(a)(2)(D). Another commenter suggested that we consider the Department of Justice's FOIA regulation and government-wide guidance when drafting language on the subject. After considering these comments, we have added additional language to this section describing the responsibility of HHS Operating and Staff Divisions to proactively make certain records available to the public under the FOIA. This includes describing the responsibility for HHS Operating and Staff Divisions to identify additional records of interest to the public that are appropriate for public disclosure and referencing frequently requested records, which the rule defines in § 5.3 to include records, regardless of form or format, that have been released to any person and have been requested three or more times. This conforms with the proactive disclosure provisions of the FOIA, as amended by the FOIA Improvement Act.

    One commenter suggested that requesters who make requests for records that ultimately become frequently requested records should have the option to receive credit for their FOIA requests, or, in the event that that seems like too much work, the Department should simply always give credit. We decline to accept the commenter's suggestion. There is no provision in the FOIA requiring agencies to give “credit” to requests for records that ultimately become frequently requested records. There also does not appear to be any policy rationale behind this suggestion. The purpose of the FOIA is not to provide “credit” to individuals or entities that make requests. Rather, it is to ensure an informed citizenry and inform the public about the operations and activities of the government.

    One commenter, in connection with the requirements that we make certain records available proactively for public inspection in an electronic format and make available in an electronic format frequently requested records, suggested that we properly track and make available Public Use Files (PUFs) and ensure that they are adequately maintained. In addition, the commenter suggested we proactively track and publish score cards for PUF release reliability alongside data about FOIA performance. This comment is outside the scope of the rule. The purpose of this rule is to provide guidelines for the processing of agency records under the FOIA. The rule does not specify how we will treat specific category of records unless those categories are specifically delineated in the FOIA statute.

    One commenter suggested that the Department should use the systems it has to proactively release information pursuant to 5 U.S.C. 552(a)(2) to highlight types of records that HHS is obligated to have but could not locate in response to a FOIA request. After reviewing this comment, we have decided not to accept the suggestion. The purpose of 5 U.S.C. 552(a)(2) is to make certain categories of records available to the public automatically and without waiting for a FOIA request. Our main goal in implementing this provision of the FOIA is to determine which records we must make publicly available (including frequently requested records), to identify additional records of interest to the public that are appropriate for public disclosure, and to post and index such records.

    One commenter stated that HHS should track Structured Query Languages (SQLs) used to respond to data FOIA requests. The commenter believes these should be tracked to make sure that PUF files released as a frequently requested record are consistent over time even after contractors or personnel change. The commenter also wanted the SQL and schema definitions to be provided with the response to the FOIA request/data result and if software was used, that should be provided with the data too. This comment is outside the scope of the rule. The rule does not specify how we will treat specific category of records unless those categories are specifically delineated in the FOIA statute.

    Definitions (§ 5.3)

    One commenter suggested revising the definition of “educational institution” to include a student who makes a request in furtherance of their coursework or other school-sponsored activities, which reflects a recent development in the case law. The suggested change has been accepted.

    In order to comport with a recent development in the case law, two commenters suggested removing the following line from the definition of “representative of the news media”: “We decide whether to grant a requester media status on a case-by-case basis, based on the requester's intended use of the requested records.” We have accepted this suggestion. Another commenter also had a concern with this language, but that comment is now moot since the language has been removed.

    One commenter recommended including a comprehensive list of entities that would qualify as a “representative of the news media” instead of citing examples such as television, radio stations, and periodicals. The commenter noted that modern journalism has moved online. We have decided to reject the commenter's suggestion to include a comprehensive list of entities that would qualify as “representatives of the news media.” Such a list would be difficult to devise and could become quickly outdated, given the ever-changing media landscape. We do note, however, that the rule acknowledges the presence of online media and makes reference to “online publications that disseminate news”.

    One commenter thought that the following wording used to describe the term “representative of the news media” was unclear: “We do not consider requests for records that support the news-dissemination function of the requester to be a commercial use.” In response to this comment, we do not believe that this wording requires additional clarification. This wording was derived from the Uniform Freedom of Information Fee Schedule and Guidelines published by the Office of Management and Budget (OMB). The OMB has policy-making responsibility for issuing fee guidance, and we defer to the OMB for any further interpretation of this wording.

    One commenter suggested that the rule include performance metrics to evaluate the Chief FOIA Officer and the Deputy Chief FOIA Officer and that these metrics be based on objective measures of external collaboration (e.g., number of emails answered, average response time to answer FOIA requester questions, etc.). While we believe strongly in providing good customer service and being held accountable for providing timely responses to FOIA requests, we believe the mechanisms to achieve these goals are already in place. Requesters can seek assistance with the processing of their requests by contacting the appropriate FOIA Public Liaison at the FOIA Requester Service Center processing their request. Requesters can also seek assistance with their FOIA request through the services provided by the Office of Government Information Services (OGIS). Moreover, each year we submit to the Department of Justice and make available to the public two reports evaluating the Department's performance on FOIA: the Annual FOIA Report and the Chief FOIA Officer Report. The Annual FOIA Report contains detailed statistics on the numbers of requests received and processed by the Department, the time taken to respond, and the outcome of each request, as well as many other vital statistics regarding the administration of the FOIA at the Department. The Chief FOIA Officer Report includes detailed descriptions of the steps taken by the Department to improve FOIA compliance and transparency. Together, these reports provide the public with an accurate representation of the Department's performance on FOIA.

    One commenter suggested making a grammatical change to the first sentence of the definition of the term “FOIA request” and suggested removing the second sentence of the definition because it does not enhance the reader's understanding of the meaning of the term. The commenter also thought that the second sentence of the definition might restrict the Department's ability to communicate with requesters. After considering this comment, we have made the suggested grammatical change to the first sentence of the definition and removed the second sentence.

    Two commenters noted that we included a link in the definition of “Freedom of Information (FOIA)” that is no longer active and suggested that we either remove the link or update it. In response to these comments, we have updated the link. The updated link includes the current text of the FOIA.

    One commenter suggested that the term “Freedom of Information Officer” be replaced with the term “Freedom of Information Act Officer” for the sake of consistency. The commenter noted that the word “act” is used in the titles of the Chief Freedom of Information Act Officer and the Deputy Chief Freedom of Information Act Officer and that the term “Freedom of Information Officer” has been shortened to “FOIA Officer” in §§ 5.27(b) and 5.28(a). After considering this comment, we have decided to accept the suggestion and have replaced the term “Freedom of Information Officer” with the term “Freedom of Information Act Officer”.

    One commenter suggested that the term “frequently requested records” be modified to include records that have been released to any person under the FOIA and that have been requested 3 or more times. The FOIA Improvement Act requires federal agencies to make this category of records available to the public in an electronic format. In accordance with the FOIA Improvement Act, we have amended the term “frequently requested records” as suggested.

    One commenter recommended changes to the definition of the term “submitter”. The commenter suggested clarifying that a person or entity that provides financial information qualifies as a submitter under the definition. The commenter also recommended adding language to the definition stating that a federal agency cannot be considered a submitter for the purposes of this rule. After considering this comment, the definition of the term submitter has been amended to include persons or entities that provide financial information to the agency. We have also included language in the definition stating that Federal government entities do not qualify as submitters.

    Who can file a FOIA request? (§ 5.21)

    One commenter noted that two of the three sentences in the section state that federal agencies may not submit FOIA requests; the commenter thought that one statement to that effect would suffice. At the recommendation of the commenter, the second sentence in this section has been removed. The revised section only has one sentence stating a federal agency may not submit FOIA requests.

    How does HHS process my FOIA request? (formerly § 5.25)

    One commenter noted that in § 5.25(b)(1)(iii) we referred to a “requestor” but throughout the rest of the rule, we referred to a “requester”. In order to be consistent, we will use “requester” for all references to the term.

    Two commenters expressed concern with the criteria set forth in § 5.25(b)(1) for considering a request perfected and the amount of time provided in § 5.25(b)(2) for a requester to respond to a request to perfect their request. With regard to § 5.25(b)(1), both commenters noted that the FOIA statute states that the twenty-working-day statutory response period begins to run when the request is received by the responsible FOIA office, but not later than ten days after it is received by an HHS component designated to receive requests. Section 5.25(b)(1) has been amended at the recommendation of the commenters and in order to comply with the requirements of 5 U.S.C. 552(a)(6)(A). In addition, one of the commenters considered the contents of § 5.25(b)(1) to be contrary to the FOIA statute itself and recommended that the provision be removed from the rule in its entirety. In the view of the commenter, the provision added additional requirements to the FOIA that were not authorized by law. We disagree with this comment. The FOIA requires requesters to satisfy two conditions when submitting a FOIA request: that the request reasonably describes the records sought and that it is made in accordance with agency's published rule setting forth the procedures for filing a FOIA request. If a requester fails to satisfy these conditions, § 5.25(b) requires an Operating Division or Staff Division to attempt to contact the requester and inform him or her of what additional information is needed to meet the requirements of the FOIA and this rule. This includes attempts to contact the requester in order to reformulate or modify a request in cases where we do not consider the records sought to be reasonably described. In addition, in instances where we close a request because of a failure to reasonably describe the records sought, the requester will be given administrative appeal rights to challenge the decision since this is an adverse determination. Finally, although such a requirement was legally permissible, we have decided to make it easier for requesters to perfect their requests by eliminating the requirement that, in order to perfect, a requester agree to pay all or an established amount of applicable fees or request a fee waiver. We do, however, encourage requesters to include such information in their requests and make reference to that suggestion in § 5.22.

    As it relates to § 5.25(b)(2), the two commenters expressed concern with the amount of time requesters were provided with to respond to a request to perfect their requests. One commenter claimed that there was no authorization in the FOIA for an agency to unilaterally “administratively close” a FOIA request; that an agency can only grant a request in full or in part or deny it; and that § 5.25(b)(2) should be removed in its entirety. In the alternative, the commenter suggested affording the requester no less than 30 days to respond to a request to perfect their request in order to ensure that they have sufficient time to respond. The second commenter thought that requesters should be given at least 20 working days to respond to communications from the agency, and if the agency takes more than twenty working days from the date of the request to initiate communication with the requester, the requester should receive the same amount of time to respond to the agency. The second commenter also thought the agency should be required to make at least three good-faith efforts to contact a requester by various forms of communication (mail, email, telephone), if a communication goes unanswered because it is returned as undeliverable. In response to these comments, we have increased the amount of time requesters are provided with to respond to a request to perfect their request from “at least 10 working days” to “at least 20 working days”. We believe that this provides requesters with a reasonable amount of time to review the request to perfect, conduct any necessary research, and respond to the agency. In instances where a communication goes unanswered because it is returned as undeliverable, we will attempt to reach the requester using any alternative contact information provided before administratively closing the request. However, we do not think it is necessary to state the number of times we will attempt to contact a requester before administratively closing the request. Finally, we disagree with the comment suggesting that agencies do not have a right to administratively close a request. The FOIA specified two requirements for an access request: It must reasonably describe the records being sought and it must be made in accordance with published rules stating the time, place, fees (if any), and procedures to be followed. If a requester fails to satisfy these conditions, the rule requires HHS to attempt to contact the requester to seek clarification and provides the requester with a reasonable amount of time to respond. If a requester does not respond to communication within the specified timeframe, it is reasonable to deny the request and administratively close it because of a failure to reasonably describe the records sought or make the request in accordance with the published rules. Such a provision is found in a number of agency FOIA regulations throughout the government including the regulations of four other cabinet-level departments. Therefore, we decline to accept the comment.

    The same two commenters expressed concern with the amount of time requesters were provided with in § 5.25(c) to respond to a request to respond to requests for additional information or clarification regarding the specifics of a request or fee assessment. In response to these comments and in order to provide requesters with a reasonable amount of time to respond, we have increased the amount of time to respond to a request for additional information or clarification regarding the specifics of a request or fee assessment from “at least 10 working days” to “at least 20 working days”. The commenters also expressed concern with the language in § 5.25(c) stating “[s]hould you not answer any correspondence, or should the correspondence be returned undeliverable, we reserve the right to administratively close the FOIA request.” The concerns expressed about this provision were the same as those stated for § 5.25(b)(2), namely that the agency should be required to make at least three good-faith efforts to contact a requester by various forms of communication (mail, email, telephone), if a communication goes unanswered because it is returned as undeliverable, and that there is no authorization in the FOIA for an agency to unilaterally administratively close a FOIA request. For the same reasons stated with regard to § 5.25(b)(2), we decline to accept the comment concerning undeliverable communications. With respect to whether the agency has the authority to administratively close requests when a communication goes unanswered, we again disagree with the comment. If a requester does not respond to communication within a reasonable amount of time, we have legitimate reason to believe that the requester is no longer interested in pursuing their request. Moreover, a provision allowing for the administrative closure of requests where a request for additional information or clarification goes unanswered is commonly included in a number of agency FOIA regulations throughout the government including the regulations of four other cabinet-level departments.

    Multiple commenters provided input on §§ 5.25(e), (f), and (h), which describe the Department's procedures for multitrack processing and handling requests that involve unusual circumstances. One commenter expressed a concern that § 5.25(h) could be read to provide the agency with the authority to provide itself with unlimited time to respond to complex FOIA requests. Another commenter requested that §§ 5.25(e) and (f) be modified to include a commitment to provide requesters with an estimated completion date if their request is placed in the complex processing queue or if unusual circumstances exist. Additionally, the commenter recommended that § 5.25(h) be modified to require an agency to notify a requester of an expected delay because of unusual circumstances and that such a notice should provide requesters with an explanation of the unusual circumstances and an estimated completion date. The commenter recommended providing such a notice prior to having any conversations regarding the scope of the request. After considering these comments, the contents of §§ 5.25(e), (f), and (h) have been modified to distinguish requests that are placed in the complex processing queue from requests involving unusual circumstances and to align these sections with the FOIA statute. In cases where unusual circumstances require us to extend the processing time by more than 10 working days, we have clarified that requesters will have an opportunity to modify the request or arrange an alternative time period for processing the original or modified request. Finally, with regard to estimated completion dates, we have clarified the language of the rule indicating that we will provide requesters with an estimated completion date when we notify them of the unusual circumstances involved with their request. However, we decline to accept the commenter's recommendation to provide an estimated completion date for all requests placed in the complex processing queue. Such a policy is not required by the FOIA and, while we estimate the completion date based on our reasonable judgment as to how long it will likely take to complete the request, given the uncertainty inherent in establishing any estimate, the estimated completion date would be subject to change at any time.

    One commenter recommended giving priority to records and data requests that give detailed and accurate information about where to find the records in question. The commenter believes that requesters who make such requests should be rewarded with cheaper fees and faster processing time. Requesters who give detailed and accurate information receive a number of benefits under the FOIA and this regulation already. First, if a request provides detailed and accurate information about where to find the records, there is a strong likelihood that the request will be considered perfected and quickly routed for search. Second, there is a strong likelihood that it will be unnecessary to toll the processing time to clarify the scope of the request if the requested records are well-described and we are given accurate information about where to find the records in question. Third, if the request provides accurate information about where to find the records in question, the search can be conducted more quickly which could reduce search fees, if those are associated with the request, and it could speed up the processing time. Finally, we have adopted multitrack processing and place requests on the simple or complex track based on the estimated amount of work or time needed to process the request. Providing information that helps us locate documents responsive to a request makes it more likely that the request will be placed on the simple track and processed more quickly. Given these advantages, we do not believe it is necessary to provide any additional benefits to requesters who provide detailed and accurate information about where to find the records in question.

    One commenter suggested that the rule be modified to inform requesters that they are entitled to judicial review if the agency does not meet statutorily imposed deadlines. The commenter further stated that HHS should reference 5 U.S.C. 552(a)(6)(C) in the rule and clarify how a requester may exhaust his or her administrative remedies. After carefully considering this comment, we decline to adopt the commenter's suggested change. The FOIA statute itself already makes clear that a failure to comply with the time limits for either an initial request or an administrative appeal may be treated as a “constructive exhaustion” of administrative remedies. Once there has been a “constructive exhaustion”, a requester may immediately thereafter seek judicial review if he or she wishes to do so. It is unnecessary for this rule to simply restate information that is already in the FOIA statute concerning the exhaustion of administrative remedies.

    One commenter suggested defining the term “voluminous” in § 5.25(f). In revising the rule, we have removed the term “voluminous” from the referenced section. The term “voluminous” was contained in a recitation of the statutory definition of unusual circumstances. Since the FOIA statute already contains this information, it was unnecessary to include in the rule. However, even if the term “voluminous” remained in the rule, we do not believe it is appropriate to define it here. The term “voluminous” can be understood by the plain meaning in the statute, legislative intent, and any case law interpreting that term.

    One commenter suggested we consider adding subsections that fully explain referrals, consultations, and coordination with other federal agencies or entities. We have accepted the commenter's suggestion. Section 5.25 provides a full explanation of the Department's procedures for rerouting of misdirected requests, referrals, consultations, and coordination.

    How does HHS determine estimated completion dates for FOIA requests? (§ 5.26)

    One commenter expressed a concern about § 5.26(a). In the view of the commenter, the language of this provision suggested that estimated completion dates are only provided when a requester asks for them. The commenter recommended that we provide estimated completion dates whenever a request is first placed in the complex processing queue, whenever we determine that an estimated completion date must change for a request, or when a requester asks for an update on expected completion date, and that the language in this section be updated to reflect that. In response to this comment, we have amended the language in this section to clarify that we will provide estimated completion dates when we notify requesters of any unusual circumstances involved with their request and when a requester has asked for an estimated completion date. However, we decline to accept the commenter's recommendation of providing an estimated completion date for any request placed in the complex processing queue or whenever an estimated completion date must change for a request. As previously stated, while we estimate the completion date based on our reasonable judgment as to how long it will likely take to complete the request, given the uncertainty inherent in establishing any estimate, the estimated completion date would be subject to change at any time.

    How do I request expedited processing? (§ 5.27)

    Multiple commenters submitted comments concerning the criteria for granting expedited processing of FOIA request described in § 5.27(c). One commenter expressed concern that we did not include the need to meet a litigation deadline in an administrative appeal or in a court action as a case deemed appropriate for granting expedited processing. In the opinion of the commenter, a failure to include this policy into the rule would contradict the statute and constitute an invalid departure from established agency precedent. The commenter expressed three specific concerns with the rule as it relates to the omission of any express provision to grant expedited processing in cases where the information is needed to meet a deadline in litigation. First, the commenter believes the proposed rule is in conflict with the FOIA statute. The FOIA statute provides for expedited processing “in other situations”. The commenter is of the opinion that this meant Congress intended for agencies to make expedited processing available for a broader range of FOIA requests than just those defined as serving a “compelling need.” Second, the commenter is under the impression that HHS has a longstanding policy of allowing expedited processing in cases where the information is needed to meet a deadline in litigation. In support of this, the commenter cited a stipulated court order in Home Health Line, Inc. v. Health Care Financing Admin., 90-cv-1006-LFO (D.D.C.1990), and a notice published by the Centers for Medicare & Medicaid Services (CMS) (formerly the Health Care Financing Administration (HCFA)), as a stipulation of dismissal and settlement of the case, outlining its policy for expedited processing. The notice was published at 55 FR 51342 (Dec. 13, 1990). The cited notice includes language stating that “HCFA follows its first-in/first-out practice for processing requests except where the requester demonstrates exceptional need or urgency.” 55 FR 51342. The notice further states that there are three categories of requester needs which HCFA has determined frequently [demonstrate exceptional need of urgency].” Id. One of the three categories of requester needs described in the notice is “where the requester needs the specific records in question to meet a deadline in litigation, either in a court or before an administrative tribunal.” Id. The commenter asserted that the agency cannot change its policy on expedited processing without violating the court order and the conditions of settlement in the Home Health Line, Inc. case. Finally, the commenter cited the Administrative Procedure Act to state that agencies must both acknowledge and explain the reasons for a departure from established policies or precedent. In the opinion of the commenter, there is no good reason for the agency to depart from a policy of granting expedited processing to meet a litigation deadline in an administrative appeal or court. The commenter has particular concern because, according to the commenter, under HHS regulations governing appeals to the PRRB, FOIA is the only means available to hospitals and other providers to obtain relevant and material evidence concerning the accuracy of Medicare payment determinations by HHS.

    We reject this comment and will discuss each point in the order it was raised by the commenter. First, the commenter is incorrect when stating that the rule is in conflict with the FOIA statute because the rule does not provide for the expedited processing of requests “in other cases determined by the agency.” 5 U.S.C. Sec. 552(a)(6)(E)(i)(II). The plain language of the FOIA statute makes clear that the decision to provide for expedited processing “in other cases” is left to the discretion of the agency and the agency is free not to deem any other case appropriate. Second, we acknowledge that CMS had a policy of ordinarily granting expedited processing on a variety of circumstances, both administrative in nature and in response to specific needs stated by a requester, and that this policy was published in the Federal Register for the public's benefit. However, at the time, HHS had not promulgated any rule with respect to expedited processing. This rule now promulgates rules for the entire Department providing for expedited processing of requests for records and supersedes the guidance CMS published at 55 FR 51342. Finally, while the adopted regulations do not represent a change in policy for the whole Department, we acknowledge that the only circumstance in CMS's policy which we have chosen to retain in this rule is when a failure to obtain requested records on an expedited basis could reasonably be expected to pose an imminent threat to the life or physical safety of an individual. We believe that this change to CMS's policy is necessary to establish fairness in the FOIA process. When granting expedited processing, we must consider the interest of all requesters in having their requests treated equally. We must also bear in mind that whenever we grant expedited processing to one requester, other requesters waiting patiently in line will have to wait longer for a response. As a result, the Department must only grant expedited processing in truly exceptional circumstances. The basic purpose of FOIA is to ensure that there is an informed citizenry, which is vital to the functioning of a democratic society, necessary to check against corruption, and needed to hold government officials accountable to the public. All members of the public are beneficiaries of the FOIA, and while this includes parties to a litigation, historically, a requester's rights are not affected by his or her litigation need for government records. See NLRB v. Robbins Tire & Rubber Co., 437 U.S. 214, 242 n.23 (1978). We additionally note that the number of FOIA requests which the Department must process has increased exponentially since 1990, which is yet another reason why we have decided to only grant expedited processing in very limited circumstances. For these reasons, we disagree with the commenter's contention that CMS does not have a good reason to depart from its current expedited processing policy.

    A second commenter recommended that HHS provide for expedited processing of state survey documents such as investigator notes, witness statements, witness lists, and documents reviewed during the course of the investigation. The commenter believes that HHS should commit to responding to these types of requests so that nursing home residents can receive these documents before their claims are time barred by a statute of limitations. We must, unfortunately, decline to accept this recommendation. While specific requesters may have a strong personal need to receive responsive records as quickly as possible, the agency must consider the interests of all requesters waiting patiently in line and make sure that everyone is treated equally. As a result, we only grant expedited processing in truly exceptional circumstances. Moreover, the FOIA is fundamentally meant to inform the public about agency action and not to benefit private litigants. NLRB v. Sears Roebuck & Co., 421 U.S. 132, 143 n.10 (1975). For those reasons, we decline to accept this recommendation.

    One commenter recommended that a requester's history of making requests for expedited processing should be considered when determining whether to grant expedited processing. In the opinion of the commenter, organizations that always request expedited processing for all requests should receive greater scrutiny in their requests for expedited processing than organizations that do not request expedited processing when their requests are obviously not urgent. In response to this comment, we decline to accept the commenter's recommendation. Each request for expedited processing is evaluated on its own merits. We do not provide special treatment to some requesters over others based on their history of making requests.

    When granting expedited processing, one commenter thought that we should consider the fact that a requester has a history of making requests for records that eventually became frequently requested records. In response to this comment, we decline to accept the commenter's recommendation. Each request for expedited processing is evaluated on its own merits. We do not provide special treatment to some requesters over others based on a history of requesting records that become frequently requested records.

    One commenter recommended granting expedited processing in situations where the requested records implicate an ongoing public health issue. We grant expedited processing in two cases: (1) Where a failure to obtain requested records on an expedited basis could reasonably be expected to pose an imminent threat to the life or physical safety of an individual, and (2) where there is an urgent need to inform the public about an actual or alleged Federal Government activity. We only grant expedited processing in limited circumstances because we must consider the interests of all requesters waiting patiently in line and make sure that everyone is treated equally. For this reason, we must decline to adopt this comment.

    Finally, one commenter suggested that records released in response to a request that receives expedited processing or a fee waiver should be made proactively available one year after it is released to the requester even if the information has not been requested three or more times. We have decided not to accept this comment. Even if a record has not been released and requested three or more times, we will make available additional records if we believe they are of interest to the public and are appropriate for public disclosure. However, not every record released in response to a request that receives expedited processing or a fee waiver may fall into that category.

    How does HHS respond to my request? (§ 5.28)

    Several commenters recommended modifying the rule to incorporate changes made to the FOIA as a result of the FOIA Improvement Act. As a result of the FOIA Improvement Act, we have modified the language of § 5.28(a) to indicate that we will provide requesters with a notification of their right to seek assistance from the appropriate FOIA Public Liaison in all disclosure determination letters, and we have modified § 5.28(b) to indicate that we will provide requesters with a notification of their right to seek dispute resolution services from the appropriate FOIA Public Liaison and the Office of Government Information Services in all disclosure determination letters that include an adverse determination.

    How may I request assistance with the FOIA process? (§ 5.29)

    One commenter wanted to know who at the various offices is available for helping to ensure that the FOIA is processed properly. The commenter can seek assistance from the FOIA Requester Service Center that is processing the request. Each FOIA Requester Service Center also has a FOIA Public Liaison who can assist in reducing delays, clarifying the scope of a request, increasing transparency, providing status updates, and assisting in dispute resolution. The contact information for each FOIA Requester Service Center and the name of each FOIA Public Liaison is available through the web link included in this section. In addition, requesters can seek assistance from the Office of Government Information Services (OGIS) including mediation services.

    Several commenters suggested modifying the rule to incorporate the requirements of the FOIA resulting from the FOIA Improvement Act. Section 3 of the FOIA Improvement Act requires each agency to include procedures for engaging in dispute resolution with the FOIA Public Liaison and the Office of Government Information Services (OGIS). These procedures are included in this section of the rule. In addition, throughout the rule, we have included provisions that provide for the assistance of the appropriate FOIA Public Liaison and the Office of Government Information Services (OGIS) or give notification of their services.

    What are the reasons records may be withheld? (§ 5.31)

    One commenter stated that a section describing the exemptions to the FOIA was unnecessary, and at most should simply restate the exemptions set forth in 5 U.S.C. 552(b). The commenter further stated that the scope of the exemptions is determined by the courts and not agency regulations. After considering this comment and other comments concerning this section, we have removed language describing the scope of each exemption and simply restated the exemptions as set forth in the FOIA statute.

    One commenter suggested revising the opening paragraph of § 5.31 to reflect the presumption of openness codified in the FOIA Improvement Act. Another commenter suggested adding similar language to the end of the section. We have made the recommended change and have included a reference to the foreseeable harm standard in this section. We have chosen to place this reference in the opening paragraph of the section.

    One commenter noted that all FOIA exemptions are discretionary, not mandatory. Therefore, all language describing an Exemption should state that an Exemption “authorizes” the withholding of information instead of “requires”. We have accepted this comment and made the recommended change. We note, however, that the ability to make a discretionary release will vary according to the exemption involved and whether the information is required to be protected by some other legal authority. Some of the FOIA's exemptions, such as Exemption 2 and Exemption 5, protect a type of information that is not generally subject to a disclosure prohibition. By contrast, the exemptions covering national security, commercial and financial information, personal privacy, and matters within the scope of nondisclosure statutes protect records that are also encompassed within other legal authorities that restrict their disclosure to the public. See Attorney General Holder's FOIA Guidelines, 74 FR 51879, (October 8, 2009) (describing exemptions where discretionary disclosure can most readily be made and those for which discretionary disclosure is not available). Thus, agencies are constrained in their ability to make discretionary disclosures of records covered by Exemptions 1, 3, 4, 6, and & certain subparts of Exemption 7.

    Several commenters expressed concern regarding the descriptions of the scope of Exemptions 4, 5, and 6. These comments have been rendered moot, however, since the language in this section now simply restates the Exemptions as they are set forth in the FOIA statute.

    One commenter provided feedback on § 5.31(d)(4)(ii) concerning the amount of time we provide submitters to respond to a predisclosure notification. The provision states that submitters have ten working days to object to disclosure and that HHS FOIA Offices may extend this period as appropriate and necessary. The commenter thought that we should take into consideration the time limits within which agencies must respond to FOIA requests. Furthermore, the commenter recommended that the regulation state that the agency will expeditiously provide predisclosure notification and should make clear that the amount of time provided to a submitter to respond to a predisclosure notification should not exceed the remaining amount of time in which the agency is required by law to process the request. After considering this comment, we have decided not to accept it. We attempt to process all FOIA requests as expeditiously as possible. However, it sometimes is not possible to know whether a predisclosure notification is necessary to process a request or where a predisclosure notification needs to be sent until a search for records has been conducted and a review of the records has begun. It is unclear how adding a requirement that we expeditiously provide predisclosure notification would speed up that process. We also do not think it is reasonable to restrict a submitter's opportunity to object to disclosure based on the amount of time in which we are required by law to process the request. All submitters should be given ten working days (or where appropriate and necessary, ten or more working days) to object to the disclosure of information they provided to the government regardless of how long it takes for HHS to conduct the search or determine that a predisclosure notification is required.

    One commenter provided input regarding § 5.41(d)(4)(iii). More specifically, the commenter expressed concern with the rule's language regarding the requirements of a notice of intent to disclose. The language, as written, suggested that we would release information over the objection of a submitter within five days of the date of the notice of intent to disclose. The commenter suggested that this could potentially allow for a release of information less than five days after the notice of intent to release, which would be unreasonable. The commenter also noted that the timeframe for the release of records after a notice of intent to disclose was based on the date of the notice whereas with § 5.41(d)(4)(ii), the date to provide objections to a predisclosure notification was based on the date of receipt of the notification. Moreover, as written, FOIA Offices were given the authority to extend the timeframe for responding to a predisclosure notification letter but not for releasing records after providing a notice of intent to release. In accordance with Executive Order 12600 and in response to this comment, we have modified the requirements regarding the notice of intent to disclose to require that the notice include a specified disclosure date and that the date be at least five working days after the date of the notice. This will provide a reasonable number of days before a release and it gives flexibility to FOIA Offices to provide more than five working days when necessary. In order to be consistent, we also have revised the predisclosure notification procedures to base the amount of time to object on the date of the notice rather than the date of receipt. This is administratively easier to track and, as communication has become more electronic, the date of the notice and the date of receipt are often the same. Finally, all provisions regarding confidential commercial information are now located in their own subpart, Subpart D.

    Multiple commenters suggested modifying the description of Exemption 5 to include the restriction on applying the deliberative process privilege to records that were created 25 years or more before the date on which the records were requested. This limitation to the deliberative process privilege was added by the FOIA Improvement Act and it is now reflected in this rule.

    Records Not Subject to the Requirements of the FOIA—Law Enforcement Exclusions (§ 5.32)

    One commenter stated that they found it unusual and highly irregular for HHS to include a description of the law enforcement record exclusions. In response to this comment, we have removed the descriptions of the exclusions and have simply included a citation to the section of the FOIA statute that references exclusions.

    General Information on Fees for All FOIA Requests (Formerly § 5.41)

    One commenter recommended that requesters be given at least 20 working days to make an advance payment (§ 5.41(b)) or respond to an agency communication in the course of negotiating fees (§ 5.41(e)) and, if the agency takes more than twenty working days from the date of the request to initiate these actions with the requester, the requester should receive the same amount of time to respond to the agency. In response to this comment, we have increased the number of days to make an advance payment and respond to an agency communication from at least 10 working days to at least 20 working days. We believe that this provides requesters with a reasonable amount of time to respond to us before we assume that they are no longer interested in pursuing their request.

    What Fee Policies Apply to HHS Records? (Formerly § 5.42)

    One commenter suggested editing the provision on minimum fees to state that “[w]e do not send an invoice to requesters if assessable processing fees are less than $25.” We have accepted the commenter's suggestion and made the change.

    What is the FOIA Fee Schedule for Obtaining Records? (Formerly § 5.43)

    Two commenters recommended removing language related to the fees we charge for the use of a computer to conduct a search in § 5.43(a)(2). One commenter thought that the language was archaic and should be removed. The second commenter considered the cost of a computer to be a sunk cost to the Department and stated that the computer would have been running anyway if it hadn't been used to conduct the search. We decline to accept the commenters' recommendations. When establishing the fee schedule, we follow the Uniform Freedom of Information Fee Schedule and Guidelines published by the Office of Management and Budget (OMB), which establishes uniform standards for fee matters. Conformity with the OMB Guidelines is required by the FOIA. See 5 U.S.C. 552(a)(4)(A)(i). The OMB Fee Guidelines state that with regard to computer searches for records “[a]gencies should charge at the actual direct cost of providing the service. This will include the cost of operating the [computer] for that portion of operating time that is directly attributable to searching for records responsive to a FOIA request and operator/programmer salary apportionable to the search.” In order to conform with the OMB Fee Guidelines, we have included the same provision in our rule.

    How does HHS Calculate FOIA Fees for Different Categories of Requesters? (Formerly § 5.44)

    The commenter thought that some of the language in § 5.44(c) was potentially redundant and ambiguous. The commenter did not consider it necessary to state both that if you do not fall into the categories in paragraphs (a) and (b) of this section (a commercial requester or an educational or noncommercial scientific institution requester, or a member of the news media), you are an “other requester”. The commenter believed that this language suggested a conjunctive relationship when none was intended to exist. The commenter suggested using “i.e.” instead of “and are” to clarify things. In response to this comment, we have edited § 5.44(c) to make the language identifying an “other requester” clearer.

    Multiple commenters recommended amending this section in order to reference new provisions to the FOIA created by the FOIA Improvement Act that place further limitations on assessing search fees (or, for a requester with preferred status, duplication fees) if response time is delayed. At the recommendation of the commenters and in accordance with the FOIA Improvement Act, the recommended change has been made to this section.

    How may I request a fee waiver? (formerly § 5.45)

    One commenter expressed concern with the description of the factors described in § 5.45(b) used to determine whether a requester is eligible for a fee waiver or a reduction in fees. The commenter specifically pointed out an issue with § 5.45(b)(5) which stated that, to be eligible for a fee waiver, a requester must explain how the requester “intend[s] to disseminate the requested information to a broad spectrum of the public.” The commenter noted that in Cause of Action v. FTC, the D.C. Circuit specifically held that “proof of the ability to disseminate the released information to a broad cross-section of the public is not required.” 799 F.3d 1108, 1116 (D.C. Cir. 2015). Rather, “the relevant inquiry . . . is whether the requester will disseminate the disclosed records to a reasonably broad audience of persons interested in the subject.” Id. In addition to noticing an issue with § 5.45(b)(5), the commenter also thought § 5.45(b)(5) and § 5.45(b)(4) were duplicative. Likewise, the commenter thought that § 5.45(b)(3) should be deleted because it duplicated §§ 5.45(b)(1), (2), (4) & (6). The commenter expressed concern that if these duplicative provisions remained in the rule, requesters would have to repeat the same information numerous times in order to be eligible for a fee waiver. In response to this comment, we have modified this section to include a streamlined list of the fee waiver factors based on Cause of Action v. FTC. We believe that this streamlined list satisfies the commenter's concerns of correctly stating the standard for being able to disseminate information and reducing redundancy.

    How do I file an appeal? (formerly § 5.52)

    As a result of an amendment to the FOIA by the FOIA Improvement Act, two commenters recommended increasing the number of days to appeal an adverse determination to no less than 90 days after the date of an adverse determination. We have accepted this comment and increased the number of days to appeal to 90 days after the date of an adverse determination. Note that the contents of this provision have moved to § 5.61 (When may I appeal HHS's FOIA determination?).

    One commenter suggested that we use the postmark date rather than the date the appeal is received by the agency when determining whether an appeal has been submitted in a timely manner. The same commenter suggested that the appeal timeframe commence once the disclosure determination is received by the requester instead of the date of the adverse determination letter. After considering this comment, we have decided to partially accept it. The rule has been modified to indicate that we will base the timeliness of an appeal on the postmark date or, in the case of an electronic submission, the transmittal date. The rule has been further modified, however, to stipulate that if a postmark date is illegible, we will revert to using the date of receipt to determine the timeliness of the appeal submission. We also specify that an electronic submission transmitted after normal business hours will be considered transmitted on the next day for the purposes of determining the timeliness of an appeal submission. Finally, we reject the commenter's suggestion that the appeal timeframe commence once notice of the adverse determination is received by the requester. The FOIA statute itself bases the minimum timeframe that agencies must provide for a requester to appeal a request on a specific number of days “after the date of such adverse determination”, not on the date such determination is received by the requester. Moreover, we believe that a 90 day appeal timeframe, as currently structured, provides requesters with a reasonable amount of time to submit a timely request. Note that the provision discussed by this comment has moved to § 5.61 (When may I appeal HHS's FOIA determination?).

    One commenter observed that § 5.52(b) stated that an appeal could be submitted electronically; however, in the opinion of the commenter, the rule failed to identify a means of submitting administrative appeals electronically. In response to this comment, we have clarified that instructions on how to submit a FOIA appeal electronically can be found by using the web links provided in the section.

    What avenues are available to me if I disagree with HHS's appeal decision? (formerly § 5.54)

    One commenter expressed concern with the language in paragraph (a) of § 5.54, which states that a requester must submit an administrative appeal in order to seek judicial review. In expressing this concern, the commenter suggested that this language was dubious and referenced examples cited in the Department of Justice Guide to the Freedom of Information Act where multiple courts had held that “exhaustion of administrative remedies is not required prior to seeking court review of an agency's denial of requested expedited access.” U.S. DEP'T OF JUSTICE, Litigation Considerations 44 & n. 144, GUIDE TO THE FREEDOM OF INFORMATION ACT (last updated Nov. 26, 2013), available at https://www.justice.gov/sites/default/files/oip/legacy/2014/07/23/litigation-considerations.pdf#p29. In response to this comment, we have amended the language to state that “[b]efore seeking review by a court of an adverse determination, you generally must first submit a timely administrative appeal.” The modified language informs requesters of the need to generally submit an administrative appeal prior to seeking judicial review without suggesting that this is required in all cases.

    Miscellaneous

    One commenter suggested that we provide our understanding of what the term “due diligence” means. Based on the context of the comment, it appears that the commenter was referring to the use of the term in the FOIA statute at 5 U.S.C. 552(a)(6)(C)(i), which states that “[i]f the Government can show exceptional circumstances exist and that the agency is exercising due diligence in responding to the request, the court may retain jurisdiction and allow the agency additional time to complete its review of the records.” We believe that the concept of exceptional circumstances is adequately explained in the FOIA statute and it is unnecessary to include a provision about that subject in this rule. With regard to the term “due diligence”, we believe that the term can best be understood by the plain meaning in the statute, legislative intent, and any case law interpreting that term. We, therefore, decline to provide any further interpretation of this term.

    One commenter noted that in certain cases we spelled out numbers and in other cases we used figures. Compare, e.g., § 5.31(d)(4)(iii)(“5 working days”), and § 5.23(b)(“10 working days”), with § 5.31(d)(5)(iv)(“five working days”), and § 5.25(f)(“ten working days”). In response to this comment, we have replaced the referenced spelled out numbers with figures.

    Finally, in response to public comments and feedback from within the Department, we have made the following changes: moved and clarified the provision on oral requests from § 5.2(a) to § 5.22(e); clarified the definition of non-commercial scientific institution (§ 5.3); clarified the definition of fee waiver (§ 5.3); removed references to the Program Support Center (PSC) (§§ 5.3, 5.62(b)(2) (formerly § 5.52(b)(2))) (the PSC FOIA Office has been dissolved and its responsibilities have transferred to the Office of the Secretary (OS) FOIA Office); renamed “reading room” “FOIA Library” (§ 5.3, § 5.22(i)); clarified the definition of “record” (§ 5.3); clarified the definition of “submitter” (§ 5.3); clarified that an individual seeking records under the Privacy Act has access rights under the FOIA (§ 5.5); clarified the information needed to make a first-party request (§ 5.22(f)) and a third-party request (§ 5.22(g)); added additional information describing when a requester should provide a HIPAA Authorization Form (§ 5.22(h) (formerly § 5.22(c)); merged the contents of § 5.24 (Does HHS accept electronic FOIA requests?) with § 5.23 (Where do I send my FOIA request?); removed unnecessary language from § 5.25(a); revised language in §§ 5.24(b) and (c) (formerly §§ 5.25 (b) and (c)) to distinguish the procedures used to assist a requester in perfecting their request from those used to clarify a reasonably described request through tolling; removed unnecessary language from §§ 5.27(a) and 5.28(a); clarified the language in § 5.28(d); moved confidential commercial information procedures to its own subpart (§§ 5.41-5.42); removed former § 5.31(d)(4)(iv) because it was redundant to § 5.31(d)(4)(v) (now located at § 5.42(a)(4)); removed unnecessary language from former § 5.31(d)(4)(iii) (now located at § 5.42(a)(3)); merged former § 5.42 (What fee policies apply to HHS records?) with former § 5.41 (General information on fees for all FOIA requests.) (now located at § 5.51); clarified the notice provisions of § 5.51(a) (formerly § 5.41(a)) to conform with the OMB Fee Guidelines; removed § 5.51(i) (formerly § 5.42(c)) as a result of the clarification of § 5.51(a) (formerly § 5.41(a)); replaced a reference to a Web site where FOIA fee rates would be posted with a description of the calculation used to determine hourly rates for manual searching, computer operator/programmer time, and time spent reviewing records (§ 5.52 What is the FOIA fee schedule for obtaining records?) (formerly § 5.43); and clarified § 5.52(c)(2) (formerly § 5.43(c)(2)).

    Regulatory Analysis Executive Order 12866

    The rule has been drafted and reviewed in accordance with Executive Order 12866, 58 FR 51735 (Sept. 30, 1993), section 1(b), Principles of Regulation, and Executive Order 13563, 76 FR 3821 (January 18, 2011), Improving Regulation and Regulatory Review. The rule is not a “significant regulatory action” under section 3(f) of Executive Order 12866. Accordingly, the rulemaking has not been reviewed by the Office of Management and Budget.

    Regulatory Flexibility Act

    The Department certifies under 5 U.S.C. 605(b) that the rule will not have a significant economic impact on a substantial number of small entities because the proposed revisions do not impose any burdens upon FOIA requesters, including those that might be small entities. Therefore, a regulatory flexibility analysis is not required by the Regulatory Flexibility Act.

    Unfunded Mandates Reform Act of 1995

    The rule will not result in the expenditure by State, local, or tribal governments in the aggregate, or by the private sector, of $100 million or more in any one year, and it will not significantly or uniquely affect small governments. Therefore, no actions are deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

    Executive Order 12612

    This rule has been reviewed under Executive Order 12612, Federalism, and it has been determined that it does not have sufficient implications for federalism to warrant preparation of a Federalism Assessment.

    Paperwork Reduction Act

    The rule contains no new information collection requirements subject to review by the Office of Management and Budget under the Paperwork Reduction Act (44 U.S.C. chapter 35).

    List of Subjects in 45 CFR Part 5

    Freedom of information.

    In consideration of the foregoing, HHS revises part 5 of title 45, Code of Federal Regulations, to read as follows: PART 5—FREEDOM OF INFORMATION REGULATIONS Subpart A—General Information About Freedom of Information Act Requests Sec. 5.1 Purpose. 5.2 Presumption of openness and proactive disclosures. 5.3 Definitions. 5.4 Regulatory scope. 5.5 Interrelationship between the FOIA and the Privacy Act of 1974. Subpart B—How to Request Records under FOIA 5.21 Who can file a FOIA request? 5.22 What do I include in my FOIA request? 5.23 Where do I send my FOIA request? 5.24 How does HHS process my FOIA request? 5.25 How does HHS handle requests that involve more than one OpDiv, StaffDiv, or Federal agency? 5.26 How does HHS determine estimated completion dates for FOIA requests? 5.27 How do I request expedited processing? 5.28 How does HHS respond to my request? 5.29 How may I request assistance with the FOIA process? Subpart C —Exemptions to Disclosure 5.31 What are the reasons records may be withheld? 5.32 Records not subject to the requirements of the FOIA—law enforcement exclusions. Subpart D—Confidential Commercial Information 5.41 How does a submitter identify records containing confidential commercial information? 5.42 How does HHS process FOIA requests for confidential commercial information? Subpart E—Fees 5.51 General information on fees for all FOIA requests. 5.52 What is the FOIA fee schedule for obtaining records? 5.53 How does HHS calculate FOIA fees for different categories of requesters? 5.54 How may I request a fee waiver? Subpart F—Appeals 5.61 When may I appeal HHS's FOIA determination? 5.62 How do I file an appeal? 5.63 How does HHS process appeals? 5.64 What avenues are available to me if I disagree with HHS's appeal decision? Subpart G—Records Retention 5.71 How does HHS retain FOIA records? Authority:

    5 U.S.C. 552, 18 U.S.C. 1905, 31 U.S.C. 9701, 42 U.S.C. 1306(c), E.O. 12600, E.O.13392

    Subpart A — General Information About Freedom of Information Act Requests
    § 5.1 Purpose.

    This part implements the provisions of the Freedom of Information Act (FOIA), 5 U.S.C. 552, as amended, for Department of Health and Human Services (HHS) records that are subject to the FOIA. This part should be read in conjunction with the text of the FOIA and the Uniform Freedom of Information Fee Schedule and Guidelines published by the Office of Management and Budget. This part contains the rules that we follow to process FOIA requests, such as the amount of time we have to make a determination regarding the release of records, who can decide to release records and who can decide not to release them, the fees we may charge, if applicable, the reasons why some records are exempt from disclosure under the FOIA, and the administrative and legal remedies available should a requester disagree with our initial disclosure determination.

    (a) The FOIA provides a right of access to agency records, except to the extent that any portions of the records are protected from public disclosure by an exemption or exclusion in the statute. The FOIA does not require us to perform research for you or to answer your questions. The FOIA does not require agencies to create new records or to perform analysis of existing records; for example, by extrapolating information from existing agency records, reformatting publicly available information, preparing new electronic programs or databases, or creating data through calculations of ratios, proportions, percentages, trends, frequency distributions, correlations, or comparisons. However, at our discretion and if it would conserve government resources, we may decide to supply requested information by consolidating information from various records.

    (b) This part does not apply to data generated by an agency grant recipient under the provisions of 45 CFR part 75 to the extent the requirements of 45 CFR 75.322(e) do not apply to the data. We will not process your request under the FOIA or these regulations if that data is already available to the public through an archive or other source. In that situation, we will refer you to that other source. The procedures for requesting research data made available under the provisions of 45 CFR 75.322(e) are referenced in § 5.23(a).

    § 5.2 Presumption of openness and proactive disclosures.

    (a) We will administer the FOIA with a presumption of openness. In accordance with 5 U.S.C. 552(a)(8) we will disclose records or information exempt from disclosure under the FOIA whenever disclosure would not foreseeably harm an interest protected by a FOIA exemption and disclosure is not prohibited by law. We also will consider whether partial disclosure of information is possible whenever we determine that a full disclosure of a requested record is not possible. This includes taking reasonable steps to segregate and release nonexempt information.

    (b) Records that the FOIA requires agencies to make available for public inspection in an electronic format may be accessed through each OpDiv's and Staff Div's Web site. Each OpDiv and StaffDiv is responsible for determining which of its records must be made publicly available (including frequently requested records), for identifying additional records of interest to the public that are appropriate for public disclosure, and for posting and indexing such records. Each OpDiv and StaffDiv must ensure that its Web site of posted records and indices is reviewed and updated on an ongoing basis. Each OpDiv and StaffDiv has a FOIA Requester Service Center or FOIA Public Liaison who can assist individuals in locating records. A list of agency FOIA Public Liaisons is available at http://www.foia.gov/report-makerequest.html.

    § 5.3 Definitions.

    The following definitions apply to this part:

    Agency is defined at 5 U.S.C. 551(1). HHS is an agency. Private entities performing work under a contractual agreement with the government are not agencies for the purpose of this definition. However, information maintained on behalf of an agency under Government contract, for the purposes of records management, is considered an agency record.

    Chief FOIA Officer means a senior official of HHS, at the Assistant Secretary or equivalent level, who has agency-wide responsibility for ensuring efficient and appropriate compliance with the FOIA, monitoring implementation of the FOIA throughout the agency, and making recommendations to the head of the agency to improve the agency's implementation of the FOIA. The Secretary of HHS has designated the Assistant Secretary, Office of the Assistant Secretary for Public Affairs (ASPA), as the Agency Chief FOIA Officer (ACFO); that official may be contacted at [email protected]

    Commercial use means a use or purpose that furthers a commercial, trade, or profit interest of the requester or the person or entity on whose behalf the request is made.

    Department or HHS means the U.S. Department of Health and Human Services.

    Deputy Agency Chief FOIA Officer (DACFO) means a designated official within the Office of the Assistant Secretary for Public Affairs, who has been authorized by the Chief FOIA Officer to act upon their behalf to implement compliance with the FOIA, as described above.

    This official is also the approving review authority for FOIA administrative appeals.

    Direct costs mean those expenses that an agency incurs in searching for and duplicating (and, in the case of commercial use requests, reviewing) records in order to respond to a FOIA request. For example, direct costs include the salary of the employee performing the work (i.e., the basic rate of pay for the employee, plus 16 percent of that rate to cover benefits) and the cost of operating computers and other electronic equipment, such as photocopiers and scanners. Direct costs do not include overhead expenses such as the costs of space, and of heating or lighting a facility.

    Duplication means the process of making a copy of a record and sending it to the requester, to the extent necessary to respond to the request. Such copies include both paper copies and electronic records. Fees for duplication are further explained within § 5.52.

    Educational institution means any school that operates a program of scholarly research. A requester in this fee category must show that the request is made in connection with his or her role at the educational institution. Agencies may seek assurance from the requester that the request is in furtherance of scholarly research.

    Example 1. A request from a professor of geology at a university for records relating to soil erosion, written on letterhead of the Department of Geology, would be presumed to be from an educational institution.

    Example 2. A request from the same professor of geology seeking drug information from the Food and Drug Administration in furtherance of a murder mystery he is writing would not be presumed to be an institutional request, regardless of whether it was written on institutional stationery.

    Example 3. A student who makes a request in furtherance of their coursework or other school-sponsored activities and provides a copy of a course syllabus or other reasonable documentation to indicate the research purpose for the request, would qualify as part of this fee category.

    Expedited processing means the process set forth in the FOIA that allows requesters to request faster processing of their FOIA request, if they can demonstrate a specific compelling need.

    Fee category means one of the four categories established by the FOIA to determine whether a requester will be charged fees for search, review, and duplication. The categories are: commercial use requests; non-commercial scientific or educational institutions requests; news media requests; and all other requests. Fee categories are further explained within § 5.53.

    Fee waiver means the waiver or reduction of fees if a requester is able to demonstrate that certain standards set forth in the FOIA and this part are satisfied, including that disclosure of the records is in the public interest because it is likely to contribute significantly to public understanding of the operations or activities of the government and is not primarily in the commercial interest of the requester.

    First-party request means a request by an individual for records pertaining to that individual, or an authorized representative acting on such an individual's behalf.

    FOIA Public Liaison means an agency official who reports to the agency Chief FOIA Officer and serves as a supervisory official to whom a requester can raise concerns about the service the requester has received from the FOIA Requester Service Center. This individual is responsible for assisting in reducing delays, increasing transparency and understanding of the status of requests, and assisting in the resolution of disputes.

    FOIA request means a written request that reasonably describes the records sought.

    Freedom of Information Act (FOIA) means the law codified at 5 U.S.C. 552 that provides the public with the right to request agency records from Federal executive branch agencies. A link to the text of the FOIA is at https://www.justice.gov/oip/freedom-information-act-5-usc-552.

    FOIA library records are records that are required to be made available to the public without a specific request under 5 U.S.C. 552(a)(2). We make FOIA library records available to the public electronically through our Web pages (http://www.hhs.gov/foia/reading/index.html) and at certain physical locations. A list of the physical locations is available at http://www.hhs.gov/foia/contacts/index.html. Other records may also be made available at our discretion through our Web pages (http://www.hhs.gov).

    Freedom of Information Act (FOIA) Officer means an HHS official who has been delegated the authority to release or withhold records; to assess, waive, or reduce fees in response to FOIA requests; and to determine whether to grant expedited processing. In that capacity, the Freedom of Information Act (FOIA) Officer has the authority to task agency organizational components to search for records in response to a FOIA request, and to provide records located in their offices. Apart from records subject to proactive disclosure pursuant to subsection (a)(2) of the FOIA, only FOIA Officers have the authority to release or withhold records or to waive fees in response to a FOIA request. Our FOIA operations are decentralized, and each FOIA Requester Service Center has a designated official with this authority; the contact information for each FOIA Requester Service Center is available at http://www.hhs.gov/foia/contacts/index.html.

    (1) The HHS Freedom of Information Act (FOIA) Officer in the Office of the Secretary means the HHS official who in addition to overseeing the daily operations of the FOIA program in that office and having the authority of a Freedom of Information Act (FOIA) Officer, is also responsible for the Department-wide administration and coordination of the FOIA and its implementing regulations and policies as they pertain to the programs and activities of the Department. This individual serves as the principal resource with respect to the articulation of procedures designed to implement and ensure compliance with the FOIA and its implementing regulations and policies as they pertain to the Department. This individual reports through the DACFO to the ACFO to support oversight and compliance with the OPEN Government Act.

    (2) [Reserved]

    Frequently requested records means records, regardless of form or format, that have been released to any person under the FOIA and that have been requested 3 or more times or because of the nature of their subject matter, the agency determines have become or are likely to become the subject of subsequent requests for substantially the same records.

    Immediate Office of the Secretary (IOS) means offices within the Office of the Secretary, responsible for operations and work of the Secretary. It includes the Office of the Deputy Secretary, Office of the Chief of Staff, the Secretary's Counselors, the Executive Secretariat, the Office of Health Reform, and the Office of Intergovernmental and External Affairs.

    Non-commercial scientific institution means an institution that is not operated to further a commercial, trade, or profit interest and that is operated solely for the purpose of conducting scientific research the results of which are not intended to promote any particular product or industry. A requester in this category must show that the request is authorized by and is made under the auspices of a qualifying institution and that the records are sought to further scientific research and are not for a commercial use.

    Office of the Inspector General (OIG) means the Staff Division within the Office of the Secretary (OS), which is responsible for protecting the integrity of HHS programs and the health and welfare of the beneficiaries of those programs. OIG is responsible for processing FOIA requests for the records it maintains.

    Office of the Secretary (OS) means the HHS's chief policy officer and general manager, who administers and oversees the organization, its programs and activities. The Deputy Secretary and a number of Assistant Secretaries and Staff Divisions support OS. The HHS FOIA Office within ASPA processes FOIA requests for records maintained by OS Staff Divisions other than the OIG. In certain circumstances and at the HHS FOIA Office's discretion, the HHS FOIA office may also process FOIA requests involving other HHS OpDivs, as further described in § 5.28(a).

    Operating Division (OpDiv) means any of the following divisions within HHS which are subject to this regulation:

    Office of the Secretary (OS) Administration for Children and Families (ACF) Administration for Community Living (ACL) Agency for Healthcare Research and Quality (AHRQ) Agency for Toxic Substances and Disease Registry (ATSDR) Centers for Disease Control and Prevention (CDC) Centers for Medicare & Medicaid Services (CMS) Food and Drug Administration (FDA) Health Resources and Services Administration (HRSA) Indian Health Service (IHS) National Institutes of Health (NIH) Substance Abuse and Mental Health Services Administration (SAMHSA).

    Operating Division and Staff Division Freedom of Information Act (FOIA) Officers means the officials who are responsible for overseeing the daily operations of their FOIA programs in their respective Operating Divisions or Staff Divisions, with the full authority as described in the definition of Freedom of Information Act (FOIA) Officer. These individuals serve as the principal resource and authority for FOIA operations and implementation within their respective Operating Divisions or Staff Divisions.

    Other requester means any individual or organization whose request does not qualify as a commercial-use request, representative of the news media request (including a request made by a freelance journalist), or an educational or non-commercial scientific institution request.

    Record means any information that would be an agency record when maintained by an agency in any format, including an electronic format; and any information that is maintained for an agency by an entity under Government contract, for the purposes of records management.

    Redact means delete or mark over.

    Representative of the news media means any person or entity that actively gathers information of potential interest to a segment of the public, uses its editorial skills to turn raw materials into a distinct work, and distributes that work to an audience. The term “news” means information that is about current events or that would be of current interest to the public. Examples of news media entities include television or radio stations that broadcast news to the public at large and publishers of periodicals, including print and online publications that disseminate news and make their products available through a variety of means to the general public. We do not consider requests for records that support the news-dissemination function of the requester to be a commercial use. We consider “freelance” journalists who demonstrate a solid basis for expecting publication through a news media entity as working for that entity. A publishing contract provides the clearest evidence that a journalist expects publication; however, we also consider a requester's past publication record.

    Review means examining records responsive to a request to determine whether any portions are exempt from disclosure. Review time includes processing a record for disclosure (i.e., doing all that is necessary to prepare the record for disclosure), including redacting the record and marking the appropriate FOIA exemptions.

    Search means the process of identifying, locating, and retrieving records to find records responsive to a request, whether in hard copy or in electronic form or format.

    Staff Division (StaffDiv) means an organization component that provides leadership, direction, and policy and management guidance to the Office of the Secretary and the Department. The following StaffDivs are subject to the regulations in this part:

    Immediate Office of the Secretary (IOS) Assistant Secretary for Administration (ASA) Assistant Secretary for Financial Resources (ASFR) Assistant Secretary for Health (OASH) Assistant Secretary for Legislation (ASL) Assistant Secretary for Planning and Evaluation (ASPE) Assistant Secretary for Public Affairs (ASPA) Assistant Secretary for Preparedness and Response (ASPR) Departmental Appeals Board (DAB) Office for Civil Rights (OCR) Office of the General Counsel (OGC) Office of Global Affairs (OGA) Office of the Inspector General (OIG) Office of Medicare Hearings and Appeals (OMHA) Office of the National Coordinator for Health Information Technology (ONC)

    Submitter means any person or entity, including a corporation, State, or foreign government, but not including another Federal Government entity, that provides commercial or financial information, either directly or indirectly to the Federal Government.

    Tolling means temporarily stopping the running of a time limit. We may toll a request to seek clarification or to address fee issues, as further described in § 5.24.

    § 5.4 Regulatory scope.

    The requirements in this part apply to all OpDivs and StaffDivs of HHS. Some OpDivs and StaffDivs may establish or continue to maintain additional rules because of unique program requirements, but such rules must be consistent with this part and the FOIA. If additional rules are issued, they must be published in the Federal Register and you may get copies online at https://www.federalregister.gov/, http://www.regulations.gov/or by contacting one of our FOIA Requester Service Centers.

    § 5.5 Interrelationship between the FOIA and the Privacy Act of 1974.

    The FOIA allows any person (whether an individual or entity) to request access to records. The Privacy Act, at 5 U.S.C. 552a(d), provides an additional right of access, allowing individuals to request records about themselves, if the records are maintained in a system of records (defined in 5 U.S.C. 552a(a)(5)).

    (a) Requesting records about you. If any part of your request includes records about yourself that are maintained within a system of records as defined by the Privacy Act at 5 U.S.C. 552a(a)(5), you should make your request in accordance with the Privacy Act and the Department's implementing regulations at 45 CFR part 5b. This includes requirements to verify your identity. We will process the request under the Privacy Act and, if it is not fully granted under the Privacy Act, we will process it under the FOIA. You may obtain, under the FOIA, information that is exempt from access under the Privacy Act, if the information is not excluded or exempt under the FOIA. If you request records about yourself that are not maintained within a system of records, we will process your request under the FOIA only.

    (b) Requesting records about another individual. If you request records about another individual, we will process your request under the FOIA. You may receive greater access by following the procedures described in § 5.22(g).

    Subpart B—How to Request Records under FOIA
    § 5.21 Who can file a FOIA request?

    Any individual, partnership, corporation, association, or public or private organization other than a Federal agency, regardless of nationality, may submit a FOIA request to us. This includes state and local governments.

    § 5.22 What do I include in my FOIA request?

    In your FOIA request:

    (a) Provide a written description of the records you seek in sufficient detail to enable our staff to locate them with a reasonable amount of effort. The more information you provide, the better possibility we have of finding the records you are seeking. Information that will help us find the records would include:

    (1) The agencies, offices, or individuals involved;

    (2) The approximate date(s) when the records were created;

    (3) The subject, title, or description of the records sought; and

    (4) Author, recipient, case number, file designation, or other reference number, if available.

    (b) Include your name, full mailing address, and phone number and if available, your email address. This information allows us to reach you faster if we have any questions about your request. It is your responsibility to keep your current mailing address up to date with the office where you have filed the FOIA request.

    (c) State your willingness to pay all fees, or the maximum amount of fees you are willing to pay, and/or include a request for a fee waiver/reduction.

    (d) Mark both your letter and envelope, or the subject line of your email, with the words “FOIA Request.”

    (e) If you are unable to submit a written request to us due to circumstances such as disability or literacy, you may make a request orally to a FOIA Officer. FOIA Officers will put in writing an oral request made directly to them.

    (f) If you are making a first-party request, you must comply with the verification of identity procedures set forth in 45 CFR part 5b.

    (g) Where your request for records pertains to another individual, you may receive greater access by submitting either a notarized authorization signed by that individual or a declaration made in compliance with the requirements set forth in 28 U.S.C. 1746 by that individual authorizing disclosure of the records to the requester, or by submitting proof that the individual is deceased (e.g., a copy of a death certificate or an obituary). At our discretion, we may require you to supply additional information if necessary to verify that a particular individual has consented to disclosure of records about them.

    (h) If you are requesting the medical records of an individual other than yourself from a government program that pays or provides for health care (e.g. Medicare, Indian Health Service) and you are not that individual's legally authorized representative, you should submit a Health Insurance Portability and Accountability Act (HIPAA) compliant release authorization form signed by the subject of records or the individual's legally authorized representative. The HIPAA Privacy Rule requires that an authorization form contain certain core elements and statements which are described in the Privacy Rule's requirements at 45 CFR 164.508. If you are submitting a request for Medicare records to CMS, CMS has a release authorization form at the following link: ttps://www.cms.gov/Medicare/CMS-Forms/CMS-Forms/Downloads/CMS10106.pdf.

    (i) Before filing your request, you may find it helpful to consult the HHS FOIA Requester Service Centers online at http://www.hhs.gov/foia/contacts/index.html, which provides additional guidance to assist in submitting a FOIA request to a specific OpDiv or StaffDiv or to regional offices or divisions within an OpDiv or StaffDiv. You may also wish to check in the agency's electronic FOIA libraries available online at http://www.hhs.gov/foia/reading/index.html, to see if the information you wish to obtain is already available.

    § 5.23 Where do I send my FOIA request?

    We have several FOIA Requester Service Centers (FOIA offices) that process FOIA requests. You should send your FOIA request to the appropriate FOIA Requester Service Center that you believe would have the records you seek. An up-to-date listing is maintained online at http://www.hhs.gov/foia/contacts/index.html. You also may submit your request electronically by emailing it to the appropriate FOIA Requester Service Center or by submitting it to the Department's web portal located at https://requests.publiclink.hhs.gov/palMain.aspx.

    (a) If you are requesting research data made available under the provisions of 45 CFR 75.322(e), requests for such data should be addressed to the OpDiv that made the award under which the data were first produced. That OpDiv will process your request in accordance with established procedures consistent with the FOIA and 45 CFR 75.322(e).

    (b) We officially receive your request when it reaches the FOIA Requester Service Center with responsibility for the OpDiv or StaffDiv where requested records are likely to be located, but no later than 10 working days after the request first arrives at any of our FOIA Requester Service Centers.

    (c) If you have questions concerning the processing of your FOIA request, you may contact the FOIA Requester Service Center processing your request. If that initial contact does not resolve your concerns, you may wish to contact the designated FOIA Public Liaison for the OpDiv or StaffDiv processing your request. You can find a list of our FOIA Requester Service Centers and Public Liaisons at http://www.hhs.gov/foia/contacts/index.html.

    § 5.24 How does HHS process my FOIA request?

    (a) Acknowledgement. We acknowledge all FOIA requests in writing within 10 working days after receipt by the appropriate office. The acknowledgement letter or email informs you of your request tracking number, provides contact information, and informs you of any complexity we are aware of in processing that may lengthen the time required to reach a final decision on the release of the records. In addition, the acknowledgement letter or email or a subsequent communication may also seek additional information to clarify your request.

    (b) Perfected requests. (1) A request is considered to be perfected (i.e., the 20 working day statutory response time begins to run) when—

    (i) The request either has been received by the responsible FOIA office, or, in any event, not later than 10 working days after the request has been received by any HHS FOIA office;

    (ii) The requested records are reasonably described; and

    (iii) The request contains sufficient information to enable the FOIA office to contact you and transmit records to you.

    (2) We provide at least 20 working days for you to respond to a request to perfect your request, after notification. Requests must reasonably describe the records sought and contain sufficient information to enable the FOIA office to contact you and transmit records to you. If we determine that a request does not meet these requirements, we will attempt to contact you if possible. Should you not answer any correspondence, or should the correspondence be returned as undeliverable, we reserve the right to administratively close the FOIA request.

    (c) Stops in processing time (tolling). We may stop the processing of your request one time if we require additional information regarding the specifics of the request. The processing time resumes upon our receipt of your response. We also may stop the processing of your request if we require clarification regarding fee assessments. If additional information or clarification is required, we will attempt to contact you using the contact information you have provided. The processing time will resume upon our receipt of your response. We will provide at least 20 working days after notification for you to respond to a request for additional information or clarification regarding the specifics of your request or fee assessment. Should you not answer any correspondence, or should the correspondence be returned as undeliverable, we may administratively close the FOIA request.

    (d) Search cut-off date. As the end or cut-off date for a records search, we use the date on which we first begin our search for documents responsive to your request, unless you specify an earlier cut-off date, or a specific date range for the records search. We will use the date of the first search in those cases when you request records “through the present,” “through today,” or similar language. The FOIA allows you to request existing agency records. The FOIA cannot be used to request records which the agency may create in the future in the course of carrying out its mission.

    (e) Processing queues. We place FOIA requests in simple or complex processing queues to be processed in the order received, on a first-in, first-out basis, absent approval for expedited processing based upon a compelling need, as further explained and defined in § 5.27. We will place your request in the simple or complex processing queue based on the estimated amount of work or time needed to process the request. Among the factors we may consider are the number of records requested, the number of pages involved in processing the request, and the need for consultations or referrals. We will advise requesters of potential complicating factors in our acknowledgement letter or email, or in subsequent communications regarding your request and, when appropriate, we will offer requesters an opportunity to narrow or modify their request so that it can be placed in the simple processing track.

    (f) Unusual Circumstances. Whenever we cannot meet the statutory time limit for processing a request because of “unusual circumstances,” as defined in the FOIA, and we extend the time limit on that basis, we will notify you, before expiration of the 20-day period to respond and in writing of the unusual circumstances involved and of the date by which we estimate processing of the request will be completed. Where the extension exceeds 10 working days, we will provide you, as described by the FOIA, with an opportunity to modify the request or arrange an alternative time period for processing the original or modified request. We will make available a designated FOIA contact in the appropriate FOIA Requester Service Center or the appropriate FOIA Public Liaison for this purpose. In addition, we will inform you of the right to seek dispute resolution services from the Office of Government Information Services (OGIS).

    (g) Aggregating requests. For the purposes of satisfying unusual circumstances, we may aggregate requests in cases where it reasonably appears that multiple requests, submitted either by a requester or by a group of requesters acting in concert, constitute a single request, involving clearly related matters, that would otherwise involve unusual circumstances. In the event that requests are aggregated, they will be treated as one request for the purposes of calculating both response time and fees.

    § 5.25 How does HHS handle requests that involve more than one OpDiv, StaffDiv, or Federal agency?

    (a) Re-routing of misdirected requests. When a FOIA Requester Service Center determines that a request was misdirected within HHS, the receiving FOIA Requester Service Center must route the request to the FOIA Requester Service Center of the proper OpDiv or StaffDiv within HHS.

    (b) Consultation, referral, and coordination. When reviewing records located by an OpDiv or StaffDiv in response to a request, the OpDiv or StaffDiv will determine whether another agency of the Federal Government is better able to determine whether the record is exempt from disclosure under the FOIA. As to any such record, the OpDiv or StaffDiv must proceed in one of the following ways:

    (1) Consultation. When records originated with an OpDiv or StaffDiv processing the request, but contain within them information of interest to another OpDiv, StaffDiv, agency or other Federal Government office, the OpDiv or StaffDiv processing the request should typically consult with that other entity prior to making a release determination.

    (2) Referral. (i) When the OpDiv or StaffDiv processing the request believes that a different OpDiv, StaffDiv, or agency is best able to determine whether to disclose the record, the OpDiv or StaffDiv typically should refer the responsibility for responding to the request regarding that record to that other entity. Ordinarily, the entity that originated the record is presumed to be the best entity to make the disclosure determination. However, if the OpDiv or StaffDiv processing the request and the originating entity jointly agree that the OpDiv or StaffDiv processing the request is in the best position to respond regarding the record, then the record may be handled as a consultation.

    (ii) Whenever an OpDiv or StaffDiv refers any part of the responsibility for responding to a request to another OpDiv, StaffDiv, or federal agency, it must document the referral, maintain a copy of the record that it refers, and notify the requester of the referral; informing the requester of the name(s) of the entity to which the record was referred, including that entity's FOIA contact information.

    (3) Coordination. The standard referral procedure is not appropriate where disclosure of the identity of the OpDiv, StaffDiv, or federal agency to which the referral would be made could harm an interest protected by an applicable exemption, such as the exemptions that protect personal privacy or national security interests. In such instances, in order to avoid harm to an interest protected by an applicable exemption, the OpDiv or StaffDiv that received the request should coordinate with the originating entity to seek its views on the disclosability of the record. The release determination for the record that is the subject of the coordination should then be conveyed to the requester by the OpDiv or StaffDiv that originally received the request.

    (c) Classified information. On receipt of any request involving classified information, the OpDiv or StaffDiv must determine whether the information is currently and properly classified in accordance with applicable classification rules. Whenever a request involves a record containing information that has been classified or may be appropriate for classification by another agency under any applicable executive order concerning the classification of records, the OpDiv or StaffDiv must refer the responsibility for responding to the request regarding that information to the agency that classified the information, or which should consider the information for classification. Whenever an OpDiv's or StaffDiv's record contains information that has been derivatively classified (for example, when it contains information classified by another agency), the OpDiv or StaffDiv must refer the responsibility for responding to that portion of the request to the agency that classified the underlying information.

    (d) Timing of responses to consultations and referrals. All consultations and referrals received by the Department will be handled according to the date that the FOIA request initially was received by the first OpDiv, StaffDiv, or federal agency.

    (e) Agreements regarding consultations and referrals. OpDivs or StaffDivs may establish agreements with other OpDivs, StaffDivs, or federal agencies to eliminate the need for consultations or referrals with respect to particular types of records.

    § 5.26 How does HHS determine estimated completion dates for FOIA requests?

    (a) When we provide an estimated completion date, in accordance with § 5.24(f) and upon request, for the processing of records that do not require consultation with another agency, we estimate the completion date on the basis of our reasonable judgment as to how long it will take to complete the request. Given the uncertainty inherent in establishing any estimate, the estimated completion date is subject to change at any time.

    (b) When we provide an estimated completion date, in accordance with § 5.24(f) and upon request, for records that must be reviewed by another agency, our estimate may also be based on information from the other agency.

    § 5.27 How do I request expedited processing?

    (a) To request expedited processing, you must submit a statement, certified to be true and correct, explaining the basis for your need for expedited processing. You must send the request to the appropriate FOIA Officer at the address listed at http://www.hhs.gov/foia/contacts/index.html. You may request expedited processing when you first request records or at any time during our processing of your request or appeal.

    (b) We process requests on an expedited basis whenever we determine that one or more of the following criteria exist:

    (1) That a failure to obtain requested records on an expedited basis could reasonably be expected to pose an imminent threat to the life or physical safety of an individual; or

    (2) There is an urgent need to inform the public about an actual or alleged Federal Government activity (this criterion applies only to those requests made by a person primarily engaged in disseminating information to the public).

    (c) We will respond to your request for expedited processing within 10 calendar days of our receipt of your request to expedite. If we grant your request, the OpDiv or StaffDiv responsible for the review of the requested records will process your request as a priority, and it will be processed as soon as practicable. We will inform you if we deny your request for expedited processing and provide you with appeal rights. If you decide to appeal that denial, we will expedite our review of your appeal.

    (d) If we must refer records to another agency, we will inform you and suggest that you seek expedited review from that agency.

    § 5.28 How does HHS respond to my request?

    (a) The appropriate FOIA Officer will send you a response informing you of our release determination, including whether any responsive records were located, how much responsive material was located, whether the records are being released in full or withheld in full or in part, any fees you must pay for processing of the request, and your right to seek assistance from the appropriate FOIA Public Liaison.

    (b) If we deny any part of your request, our response will explain the reasons for the denial, which FOIA exemptions apply to the withheld records, your right to appeal that determination, and your right to seek dispute resolution services from the appropriate FOIA Public Liaison or the Office of Government Information Services (OGIS). We will advise you of the number of pages withheld or the estimated volume of withheld records, unless providing such information would harm an interest protected by an applicable FOIA exemption.

    (c) Records may be withheld in full or in part if any of the nine FOIA exemptions apply. If we determine to withhold part of a record pursuant to an exemption, we will provide access to reasonably segregable non-exempt information contained in the record. On the released portion of the record, we indicate where the information has been redacted and the exemption(s) we applied, unless including that indication would harm an interest the exemption protects. In Subpart C of this part, we list the exemptions to disclosure that may apply to agency records.

    (d) We also may deny your request for other reasons, including that a request does not reasonably describe the records sought; the information requested is not a record subject to the FOIA; the requested records do not exist, cannot be located, or have been destroyed; or that the requested records are not readily reproducible in the form or format requested.

    (e) If a request involves a voluminous amount of material or searches in multiple locations, we may provide you with interim responses if feasible and reasonably possible, releasing the records on a rolling basis.

    (f) Copies of records in the format you request will be provided if the records already exist in that format or if they are reasonably and readily reproducible in the format you request.

    § 5.29 How may I request assistance with the FOIA process?

    (a) If you have questions concerning the processing of your FOIA request, you should first contact the FOIA Requester Service Center processing your request. Additionally, for assistance at any point in the FOIA process, you may contact the FOIA Public Liaison at the FOIA Requester Service Center processing your request. The FOIA Public Liaison is responsible for assisting you to reduce delays, increasing transparency and understanding of the status of requests, and assisting to resolve any FOIA disputes. Some FOIA Requester Service Centers allow you to check the status of your request online. You can find a list of our FOIA Requester Service Centers and Public Liaisons at http://www.hhs.gov/foia/contacts/index.html.

    (b) The Office of Government Information Services (OGIS), which is part of the National Archives and Records Administration, serves as the Federal FOIA ombudsman and assists requesters and agencies to prevent and resolve FOIA disputes through mediation. Mediation is a voluntary process. If we participate in the dispute resolution services provided by OGIS, we will actively engage as a partner to the process in an attempt to resolve the dispute and will follow the principles of confidentiality in accordance with the Administrative Dispute Resolution Act, 5 U.S.C. 571-8. You may contact OGIS at the following address: National Archives and Records Administration, Office of Government Information Services, 8601 Adelphi Road—OGIS, College Park, MD 20740-6001, or by email at [email protected], or by telephone at 202-741-5770 or 1-877-684-6448 (toll free).

    Subpart C—Exemptions to Disclosure
    § 5.31 What are the reasons records may be withheld?

    While we are committed to providing public access to as many of our records as possible, there are instances in which information falls within one or more of the FOIA's nine exemptions and disclosure would either foreseeably harm an interest protected by a FOIA exemption or disclosure is prohibited by law. We review all records and weigh and assess all legal and policy requirements prior to making a final disclosure determination. A description of the nine FOIA exemptions is provided in paragraphs (a) through (i) of this section.

    (a) Exemption 1. Exemption 1 protects from disclosure information specifically authorized under criteria established by an Executive order to be kept secret in the interest of national defense or foreign policy and are in fact properly classified pursuant to such Executive order.

    (b) Exemption 2. Exemption 2 authorizes our agency to withhold records that are related solely to the internal personnel rules and practices of an agency.

    (c) Exemption 3. Exemption 3 authorizes our agency to withhold records which are specifically exempted from disclosure by statute (other than 5 U.S.C. 552(b)) provided that such statute requires that the matters be withheld from the public in such a manner as to leave no discretion on the issue; or establishes particular criteria for withholding or refers to particular types of matters to be withheld; and if enacted after the date of enactment of the OPEN FOIA Act of 2009, October 28, 2009, specifically cites to 5 U.S.C. 552(b)(3).

    (d) Exemption 4. Exemption 4 authorizes our agency to withhold trade secrets and commercial or financial information obtained from a person and privileged or confidential.

    (e) Exemption 5. Exemption 5 authorizes our agency to withhold inter-agency or intra agency memorandums or letters that would not be available by law to a party other than an agency in litigation with the agency, provided that the deliberative process privilege shall not apply to records created 25 years or more before the date on which the records were requested.

    (f) Exemption 6. Exemption 6 authorizes our agency to protect information in personnel and medical files and similar files when the disclosure of such information would constitute a clearly unwarranted invasion of personal privacy.

    (g) Exemption 7. Exemption 7 authorizes our agency to withhold records or information compiled for law enforcement purposes, but only to the extent that the production of such law enforcement records or information would cause the following harm(s):

    (1) Could reasonably be expected to interfere with enforcement proceedings;

    (2) Would deprive a person of a right to a fair trial or an impartial adjudication;

    (3) Could reasonably be expected to constitute an unwarranted invasion of personal privacy;

    (4) Could reasonably be expected to disclose the identity of a confidential source, including a state, local, or foreign agency or authority, or any private institution which furnished information on a confidential basis, and, in the case of a record or information compiled by a criminal law enforcement authority in the course of a criminal investigation, or by an agency conducting lawful national security intelligence investigation, information furnished by a confidential source;

    (5) Would disclose techniques and procedures for law enforcement investigations or prosecutions, or would disclose guidelines for law enforcement investigations or prosecutions, if such disclosure could reasonably be expected to risk circumvention of the law; or

    (6) Could reasonably be expected to endanger the life or physical safety of any individual.

    (h) Exemption 8. Exemption 8 authorizes our agency to withhold records that are contained in or related to examination, operating, or condition reports prepared by, on behalf of, or for the use of an agency responsible for the regulation or supervision of financial institutions.

    (i) Exemption 9. Exemption 9 authorizes our agency to withhold geological and geophysical information and data, including maps, concerning wells.

    § 5.32 Records not subject to the requirements of the FOIA—law enforcement exclusions.

    Under the FOIA, there is special protection for narrow categories of law enforcement and national security records. The provisions protecting those records are known as “exclusions” and are described in 5 U.S.C. 552(c). These exclusions expressly authorize Federal law enforcement agencies, under these exceptional circumstances, to treat the records as not subject to the requirements of the FOIA.

    (a) Should an HHS OpDiv or StaffDiv maintain records which are subject to a FOIA exclusion, and consider employing an exclusion or have a question as to the implementation of an exclusion, the OpDiv or StaffDiv will consult with the Office of Information Policy, U.S. Department of Justice.

    (b) Because records falling within an exclusion are not subject to the requirements of the FOIA, should any HHS OpDiv or StaffDiv maintain such excluded records, the OpDiv or StaffDiv will limit its response to those records that are subject to the FOIA.

    Subpart D—Confidential Commercial Information
    § 5.41 How does a submitter identify records containing confidential commercial information?

    A person who submits records to the government may designate part or all of the information in such records that they may consider to be exempt from disclosure under Exemption 4 of the FOIA. The person may make this designation either at the time the records are submitted to the government or within a reasonable time thereafter. The designation must be in writing. Any such designation will expire 10 years after the records were submitted to the government.

    § 5.42 How does HHS process FOIA requests for confidential commercial information?

    (a) Predisclosure notification. The procedures in this section apply to records on which the submitter has designated information as provided in § 5.41. They also apply to records that were submitted to the government where we have substantial reason to believe that information in the records could reasonably be considered exempt under Exemption 4. Certain exceptions to these procedures are stated in paragraph (b) of this section.

    (1) When we receive a request for such records, and we determine that we may be required to disclose them, we will make reasonable efforts to notify the submitter about these facts. The notice will include a copy of the request, and it will inform the submitter about the procedures and time limits for submission and consideration of objections to disclosure. If we must notify a large number of submitters, we may do this by posting or publishing a notice in a place where the submitters are reasonably likely to become aware of it.

    (2) The submitter has 10 working days from the date of the notice to object to disclosure of any part of the records and to state all bases for its objections. FOIA Offices in HHS and its organizational components may extend this period as appropriate and necessary.

    (3) We review and consider all objections to release that we receive within the time limit. If a submitter fails to respond within the time period specified in the notice, we will consider the submitter to have no objection to disclosure of the information. If we decide to release the records, we inform the submitter in writing, along with our reasons for the decision to release. We include with the notice a description of the information to be disclosed or copies of the records as we intend to release them. We also provide the submitter with a specific date that we intend to disclose the records, which must be at least 5 working days after the date of the notice. We do not consider any information we receive after the date of a disclosure decision.

    (4) If the requester files a lawsuit under the FOIA for access to records submitted to HHS, we promptly notify the submitter.

    (5) We will notify the requester in these circumstances:

    (i) When we notify a submitter that we may be required to disclose information under the FOIA, we will also notify the requester that notice and opportunity to comment are being provided to the submitter;

    (ii) When the agency notifies a submitter of a final disclosure decision under the FOIA,

    and;

    (iii) When a submitter files a lawsuit to prevent the disclosure of the information.

    (b) Exceptions to predisclosure notification. The notice requirements in paragraph

    (a) of this section do not apply in the following situations:

    (1) We determine that we should withhold the information under a FOIA exemption;

    (2) The information has been lawfully published or made available to the public

    (3) We are required by a statute (other than the FOIA), or by a regulation issued in accordance with the requirements of Executive Order 12600, to disclose the information; or

    (4) The designation made by the submitter appears obviously frivolous. However, in such a case, the agency must provide the submitter with written notice of any final disclosure determination and intent to release, at least 5 working days prior to the specified disclosure date. We will notify the submitter as referenced in § 5.42(a)(3).

    Subpart E—Fees
    § 5.51 General information on fees for all FOIA requests.

    (a) We generally assume that when you request records you are willing to pay the fees we charge for services associated with your request. You may specify a limit on the amount you are willing to spend. We will notify you if it appears that the fees will exceed $25.00 or your specified limit and ask whether you nevertheless want us to proceed with the search.

    (b) If you have failed to pay FOIA fees in the past, we will require you to pay your past due bill and we may also require you to pay the anticipated fee before we begin processing your current request. If we estimate that your fees may be greater than $250.00, we also may require advance payment or a deposit before we begin processing your request. If you fail to make an advance payment within 20 working days after the date of our fee letter, we will close the request.

    (c) We may charge interest on unpaid bills beginning on the 31st calendar day following the day the FOIA fee invoice was sent. We may assess interest, administrative costs, and penalties for overdue FOIA fee costs.

    (d) If we determine that you (either acting alone or with a group of requesters) are breaking down a single request into a series of requests in order to avoid or reduce fees, we may aggregate all of these requests when calculating the fees. In aggregating requests, we may consider the subject matter of the requests and whether the requests were filed close in time to one another.

    (e) If, in the course of negotiating fees, you do not respond to the agency within 20 working days of our last communication, your request will be closed.

    (f) We may stop the processing of your request, if necessary, to clarify fee issues with you, and to confirm your willingness to pay applicable fees. Fee related issues may arise sequentially over the course of processing a request, and the FOIA allows agencies to stop the processing time as many times as necessary in order to clarify issues regarding fee assessment and willingness to pay fees.

    (g) We may charge search fees even if the records are exempt from disclosure, or if we do not find any responsive records during our search.

    (h) We do not send an invoice to requesters if assessable processing fees are less than $25.00.

    § 5.52 What is the FOIA fee schedule for obtaining records?

    In responding to FOIA requests for records, we charge the following fees, where applicable, unless we have given you a reduction or waiver of fees. The fees we charge for search and review are three-tiered, and the hourly charge is determined by the classification and grade level of the employee performing the search or review. When the search or review is performed by employees at grade GS-1 through GS-8 (or equivalent), an hourly rate will be charged based on the salary of a GS-5, step 7, employee; when done by a GS-9 through GS-14 (or equivalent), an hourly rate will be charged based on the salary of a GS-12, step 4,employee; and when done by a GS-15 or above (or equivalent), an hourly rate will be charged based on the salary of a GS-15, step 7, employee. In each case, the hourly rate will be computed by taking the current hourly rate listed for the specified grade and step in the General Schedule Locality Pay Table for the Locality of Washington-Baltimore-Northern Virginia, DC-MD-VA-WV-PA, adding 16% of that rate to cover benefits, and rounding to the nearest whole dollar.

    (a) Search fees—(1) Manual searches. Fees will be assessed to search agency files and records in both hardcopy and electronic format. Such fees will be at the rate or rates for the classification of the employee(s) performing the search, as established in this section.

    (2) Computer searches. We base the fees for computer searches on the actual cost to our agency of operating the computer and the salary of the operator.

    (b) Review fees. (1) We charge review fees for time we spend examining documents that are responsive to a request to determine whether we must apply any FOIA exemptions to withhold information. Review time includes processing any record for disclosure (i.e., doing all that is necessary to prepare the record for disclosure), including redacting the record and marking the appropriate FOIA exemptions. We charge review fees even if we ultimately are unable to disclose a record.

    (2) We do not charge review fees for time we spend resolving general legal or policy issues regarding the application of exemptions. However, we do charge review fees for time we spend obtaining and considering any formal objection to disclosure made by a confidential commercial information submitter.

    (c) Duplication fees—(1) Photocopying standard-sized pages. The current charge for photocopying records is $0.10 per page.

    (2) Reproduction of electronic records. We will attempt to provide records in the format you sought, if the records are reasonably and readily reproducible in the requested format. We charge you for our direct costs for staff time and to organize, convert, and format data for release, per requester instructions, and for printouts or electronic media necessary to reproduce electronic records requested under the FOIA.

    (3) Copying other media. We will charge you the direct cost of copying other media.

    (d) Mailing and special delivery fees. We release records by United States Postal Service or, when appropriate, by electronic means, such as electronic mail or web portal. If a requester seeks special delivery, such as overnight shipping, we reserve the right to pass on the actual costs of special delivery to the requester. Requesters may provide their mailing account and billing information to the agency, so that they may pay directly for special delivery options.

    (e) Certification of records. The FOIA does not require agencies to certify records as true copies. We may elect, as a matter of administrative discretion, to certify records upon request; however, such a request must be submitted in writing. Further, we will only certify as true copies records that have not left the agency's chain of custody. The charge for certification is $25.00 per record certified.

    (f) Other statutes specifically providing for fees. The fee schedule of this section does not apply to fees charged under any statute that specifically requires an OpDiv or StaffDiv to set and collect fees for particular types of records. In instances where records responsive to a request are subject to a statutorily-based fee schedule program, the OpDiv or StaffDiv must inform the requester of the contact information for that program.

    § 5.53 How does HHS calculate FOIA fees for different categories of requesters?

    (a) If you are a commercial use requester, we charge you fees for searching, reviewing, and duplicating responsive records.

    (b) If you are an educational or noncommercial scientific institution requester, or a member of the news media, you are entitled to search time, review time, and up to 100 pages of duplication (or the cost equivalent for other media) without charge. We charge duplication fees after the first 100 pages (or its cost equivalent).

    (c) If you do not fall into either of the categories in paragraphs (a) and (b) of this section (i.e. you are an “other requester”), you are entitled to two hours of free search time, up to 100 pages of duplication (or the cost equivalent of other media) without charge, and you will not be charged for review time. We may charge for search time beyond the first two hours and for duplication beyond the first 100 pages (or its cost equivalent).

    (d)(1) If we fail to comply with the FOIA's time limits in which to respond to a request, we may not charge search fees, or, in the instances of the requester categories referenced in paragraph (b) of this section, may not charge duplication fees, except as described in (d)(2)-(4).

    (2) If we have determined that unusual circumstances as defined by the FOIA apply and we provided timely written notice to the requester in accordance with the FOIA, a failure to comply with the time limit shall be excused for an additional 10 days.

    (3) If we have determined that unusual circumstances, as defined by the FOIA, apply and more than 5,000 pages are necessary to respond to the request, we may charge search fees, or, in the instances of requests from requesters described in paragraph (b) of this section, may charge duplication fees if the following steps are taken: we must have provided timely written notice to the requester in accordance with the FOIA and must have discussed with the requester via written mail, email, or telephone (or made not less than three good-faith attempts to do so) how the requester could effectively limit the scope of the request in accordance with 5. U.S.C. 552(a)(6)(B)(ii). If this exception is satisfied, we may charge all applicable fees incurred in the processing of the request.

    (4) If a court has determined that exceptional circumstances exist, as defined by the FOIA, a failure to comply with the time limits shall be excused for the length of time provided by the court order.

    § 5.54 How may I request a fee waiver?

    (a) Requesters may seek a waiver of fees by submitting a written application demonstrating how disclosure of the requested information is in the public interest because it is likely to contribute significantly to public understanding of the operations or activities of the government and is not primarily in the commercial interest of the requester.

    (b) We must furnish records responsive to a request without charge or at a reduced rate when we determine, based on all available information, that the following three factors are satisfied:

    (1) Disclosure of the requested information would shed light on the operations or activities of the government. The subject of the request must concern identifiable operations or activities of the Federal Government with a connection that is direct and clear, not remote or attenuated.

    (2) Disclosure of the requested information would be likely to contribute significantly to public understanding of those operations or activities. This factor is satisfied when the following criteria are met:

    (i) Disclosure of the requested records must be meaningfully informative about government operations or activities. The disclosure of information that already is in the public domain, in either the same or a substantially identical form, would not be meaningfully informative if nothing new would be added to the public's understanding.

    (ii) The disclosure must contribute to the understanding of a reasonably broad audience of persons interested in the subject, as opposed to the individual understanding of the requester. A requester's expertise in the subject area as well as the requester's ability and intention to effectively convey information to the public must be considered. We will presume that a representative of the news media will satisfy this consideration.

    (3) The disclosure must not be primarily in the commercial interest of the requester. To determine whether disclosure of the requested information is primarily in the commercial interest of the requester, we will consider the following criteria:

    (i) We will identify whether the requester has any commercial interest that would be furthered by the requested disclosure. A commercial interest includes any commercial, trade, or profit interest. Requesters will be given an opportunity to provide explanatory information regarding this consideration.

    (ii) If there is an identified commercial interest, we will determine whether that is the primary interest furthered by the request. A waiver or reduction of fees is justified when the requirements of paragraphs (b)(1) and (2) of this section are satisfied and any commercial interest is not the primary interest furthered by the request. We ordinarily will presume that when a news media requester has satisfied factors (b)(1) and (2) of this section, the request is not primarily in the commercial interest of the requester. Disclosure to data brokers or others who merely compile and market government information for direct economic return will not be presumed to primarily serve the public interest.

    (c) You should ask for waiver or reduction of fees when you first submit your request to HHS, and should address the criteria referenced in this section.

    Subpart F—Appeals
    § 5.61 When may I appeal HHS's FOIA determination?

    In order to fully exhaust all of your administrative remedies, you must file an appeal of an adverse agency determination in writing, and to be considered timely it must be postmarked, or in the case of electronic submissions, transmitted within 90 calendar days from the date of such determination. Any electronic transmission made after normal business hours will be considered to have been transmitted on the next calendar day. If a postmark is not legible, the timeliness of a submission will be based on the date that we receive the appeal. Adverse determinations include:

    (a) Refusal to release a record, either in whole or in part;

    (b) Determination that a record does not exist or cannot be found;

    (c) Determination that a request does not reasonably describe the records sought;

    (d) Determination that the record you sought was not subject to the FOIA;

    (e) Denial of a request for expedited processing;

    (f) Denial of a fee waiver request; or

    (g) Fee category determination.

    § 5.62 How do I file an appeal?

    (a) You have the right to appeal an adverse agency determination of your FOIA request.

    (b) You may submit your appeal via mail or electronically.

    (1) Please send your appeal to the review official at the address provided in your denial letter. If you are unsure who is the appropriate review official, please contact the FOIA Requester Service Center that processed your request to obtain that information.

    (2) The addresses to mail FOIA appeals for CMS and OS are, respectively: Centers for Medicare & Medicaid Services, Attn: Principal Deputy Administrator, Room C5-16- 03, 7500 Security Boulevard, Baltimore, MD 21244; and U.S. Department of Health and Human Services, Deputy Agency Chief FOIA Officer, Office of the Assistant Secretary for Public Affairs, Room 729H, 200 Independence Avenue SW., Washington, DC 20201. Additionally, information, including how to submit a FOIA appeal electronically, can be found at the following online locations for CMS and OS: https://www.cms.gov/Regulations-and-Guidance/Legislation/FOIA/filehow.html and https://requests.publiclink.hhs.gov/palMain.aspx.

    (3) When submitting an appeal, you should mark both your letter and envelope with the words “FOIA Appeal” or include the words “FOIA Appeal” in the subject line of your email. You should also include your FOIA request tracking number, a copy of your initial request, and a copy of our final determination letter.

    (c) Your appeal should clearly identify the agency determination that is being appealed. It would be helpful if you provide specific reasons explaining why you believe the agency's adverse determination should be reconsidered.

    § 5.63 How does HHS process appeals?

    (a) We respond to your appeal within 20 working days after the appeal official designated in your appeal letter receives it. If, however, your appeal is based on a denial of a request for expedited processing, we will act on your appeal of that decision expeditiously. Before making a decision on an appeal of an adverse determination, the designated review official will consult with the Office of the General Counsel. Also, the concurrence of the Office of the Assistant Secretary for Public Affairs is required in all appeal decisions, including those on fees. When the review official responds to an appeal, that constitutes the Department's final action on the request.

    (b) If we reverse or modify the initial decision, we will inform you in writing and, if applicable, reprocess your request. If we do not change our initial decision, we will respond in writing to you, explain the reasons for the decision, set out any FOIA exemptions that apply, and inform you of the provisions for judicial review. If a requester files a FOIA lawsuit in reference to an appeal, we will cease processing the appeal.

    § 5.64 What avenues are available to me if I disagree with HHS's appeal decision?

    (a) In our response letter, we notify you of your right to seek judicial review of an adverse determination as set forth in the FOIA at 5 U.S.C. 552(a)(4)(B). Before seeking review by a court of an adverse determination, you generally must first submit a timely administrative appeal.

    (b) We also inform you that the Office of Government Information Services (OGIS) offers mediation services to resolve disputes between FOIA requesters and Federal agencies as a non-exclusive alternative to litigation. As referenced in § 5.29(b) you may contact OGIS via mail, email, or telephone for assistance.

    Subpart G—Records Retention
    § 5.71 How does HHS retain FOIA records?

    We will preserve records created in administering the Department's Freedom of Information program until disposition is authorized under an applicable General Records Schedule or other records schedule duly approved by the Archivist of the United States.

    Dated: June 7, 2016. Sylvia M. Burwell, Secretary, Department of Health and Human Services. Note:

    This document was received for publication by the Office of the Federal Register on October 19, 2016.

    [FR Doc. 2016-25684 Filed 10-27-16; 8:45 am] BILLING CODE 4150-25-P
    81 209 Friday, October 28, 2016 Proposed Rules DEPARTMENT OF ENERGY 10 CFR Part 430 [Docket Number EERE-2011-BT-STD-0043] RIN 1904-AC51 Energy Conservation Program: Energy Conservation Standards for Miscellaneous Refrigeration Products AGENCY:

    Office of Energy Efficiency and Renewable Energy, Department of Energy.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Energy Policy and Conservation Act of 1975 (“EPCA”), as amended, established the Energy Conservation Program for Consumer Products Other Than Automobiles. Based on provisions in EPCA that enable the Secretary of Energy to classify additional types of consumer products as covered products, the U.S. Department of Energy (“DOE”) classified miscellaneous refrigeration products (“MREFs”) as covered consumer products under EPCA. In determining whether to set standards for products, DOE must evaluate whether new standards would be technologically feasible and economically justified, and would save a significant amount of energy. In this proposed rule, DOE proposes new energy conservation standards for MREFs identical to those set forth in a direct final rule published elsewhere in this Federal Register. If DOE receives adverse comment and determines that such comment may provide a reasonable basis for withdrawal, DOE will publish a notice withdrawing the final rule and will proceed with this proposed rule.

    DATES:

    DOE will accept comments, data, and information regarding the proposed standards no later than February 15, 2017.

    Comments regarding the likely competitive impact of the proposed standard should be sent to the Department of Justice contact listed in the ADDRESSES section before November 28, 2016.

    ADDRESSES:

    See section III, “Public Participation,” for details. If DOE withdraws the direct final rule published elsewhere in this Federal Register, DOE will hold a public meeting to allow for additional comment on this proposed rule. DOE will publish notice of any meeting in the Federal Register.

    Any comments submitted must identify the proposed rule for Energy Conservation Standards for Miscellaneous Refrigeration Products, and provide docket number EERE-2011-BT-STD-0043 and/or regulatory information number (RIN) number 1904-AC51. Comments may be submitted using any of the following methods:

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

    2. Email: [email protected] Include the docket number and/or RIN in the subject line of the message. Submit electronic comments in WordPerfect, Microsoft Word, PDF, or ASCII file format, and avoid the use of special characters or any form of encryption.

    3. Postal Mail: Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, Mailstop EE-5B, 1000 Independence Avenue SW., Washington, DC, 20585-0121. If possible, please submit all items on a compact disc (CD), in which case it is not necessary to include printed copies.

    4. Hand Delivery/Courier: Appliance and Equipment Standards Program, U.S. Department of Energy, Building Technologies Office, 950 L'Enfant Plaza SW., 6th Floor, Washington, DC 20024. Telephone: (202) 586-6636. If possible, please submit all items on a CD, in which case it is not necessary to include printed copies.

    No telefacsimilies (faxes) will be accepted. For detailed instructions on submitting comments and additional information on the rulemaking process, see section III of this document (“Public Participation”).

    Written comments regarding the burden-hour estimates or other aspects of the collection-of-information requirements contained in this proposed rule may be submitted to Office of Energy Efficiency and Renewable Energy through the methods listed above and by email to [email protected]

    EPCA requires the Attorney General to provide DOE a written determination of whether the proposed standard is likely to lessen competition. The U.S. Department of Justice Antitrust Division invites input from market participants and other interested persons with views on the likely competitive impact of the proposed standard. Interested persons may contact the Division at [email protected] before November 28, 2016. Please indicate in the “Subject” line of your email the title and Docket Number of this rulemaking notice.

    Docket: The docket, which includes Federal Register notices, public meeting attendee lists and transcripts, comments, and other supporting documents/materials, is available for review at www.regulations.gov. All documents in the docket are listed in the www.regulations.gov index. However, some documents listed in the index may not be publicly available, such as those containing information that is exempt from public disclosure.

    A link to the docket Web page can be found at: http://www.regulations.gov/#!docketDetail;D=EERE-2011-BT-STD-0043. This Web page contains a link to the docket for this notice on the www.regulations.gov site. The www.regulations.gov Web page contains simple instructions on how to access all documents, including public comments, in the docket. See section III, “Public Participation,” for further information on how to submit comments through www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Joseph Hagerman, U.S. Department of Energy, Office of Energy Efficiency and Renewable Energy, Building Technologies Office, EE-5B, 1000 Independence Avenue SW., Washington, DC, 20585-0121. Telephone: (202) 586-6590. Email: [email protected]

    For further information on how to submit a comment, review other public comments and the docket, or participate in the public meeting, contact the Appliance and Equipment Standards Program staff at (202) 586-6636 or by email: [email protected]

    SUPPLEMENTARY INFORMATION: Table of Contents I. Introduction and Legal Authority A. Legal Authority B. Rulemaking History II. Proposed Standards A. TSLs Considered for Coolers B. TSLs Considered for Combination Cooler Refrigeration Products C. Summary of Benefits and Costs of the Proposed Standards III. Public Participation A. Submission of Comments B. Public Meeting IV. Procedural Issues and Regulatory Review V. Approval of the Office of the Secretary I. Introduction and Legal Authority A. Legal Authority

    The Energy Policy and Conservation Act of 1975, as amended (“EPCA”) (Public Law 94-163 (December 22, 1975)) includes provisions covering the products addressed by this notice. EPCA addresses, among other things, the energy efficiency of certain types of consumer products. Relevant provisions of the Act specifically include definitions (42 U.S.C. 6291), energy conservation standards (42 U.S.C. 6295), test procedures (42 U.S.C. 6293), labeling provisions (42 U.S.C. 6294), and the authority to require information and reports from manufacturers (42 U.S.C. 6296).

    Under 42 U.S.C. 6292(a)(20), DOE may extend coverage over a particular type of consumer product provided that DOE determines that classifying products of such type as covered products is necessary or appropriate to carry out the purposes of EPCA and that the average annual per-household energy use by products of such type is likely to exceed 100 kilowatt-hours (“kWh”) or its British thermal unit (“Btu”) equivalent per year. See 42 U.S.C. 6292(b)(1). EPCA sets out the following additional requirements to establish energy conservation standards for a newly covered product: (1) The average per household domestic energy use by such products exceeded 150 kWh or its Btu equivalent for any 12-month period ending before such determination; (2) the aggregate domestic household energy use by such products exceeded 4.2 million kWh or its Btu equivalent for any such 12-month period; (3) substantial energy efficiency of the products is technologically feasible; and (4) applying a labeling rule is unlikely to be sufficient to induce manufacturers to produce, and consumers and other persons to purchase, products of such type that achieve the maximum level of energy efficiency. See 42 U.S.C. 6295(l)(1).

    Pursuant to EPCA, DOE's energy conservation program for covered products consists essentially of four parts: (1) Testing; (2) labeling; (3) the establishment of Federal energy conservation standards; and (4) certification and enforcement procedures. The Federal Trade Commission (“FTC”) is primarily responsible for labeling, and DOE implements the remainder of the program. Subject to certain criteria and conditions, DOE is required to develop test procedures to measure the energy efficiency, energy use, or estimated annual operating cost of each covered product. (42 U.S.C. 6295(o)(3)(A) and (r)) Manufacturers of covered products must use the prescribed DOE test procedure as the basis for certifying to DOE that their products comply with the applicable energy conservation standards adopted under EPCA and when making representations to the public regarding the energy use or efficiency of those products. (42 U.S.C. 6293(c) and 6295(s)) Similarly, DOE must use these test procedures to determine whether the products comply with standards adopted pursuant to EPCA. (42 U.S.C. 6295(s)) The DOE test procedure for MREFs currently appears at title 10 of the Code of Federal Regulations (“CFR”) part 430, subpart B, appendix A (appendix A).

    DOE follows specific criteria when prescribing new or amended standards for covered products. As indicated above, any new or amended standard for a covered product must be designed to achieve the maximum improvement in energy efficiency that is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A) and (3)(B)) Furthermore, DOE may not adopt any standard that would not result in the significant conservation of energy. (42 U.S.C. 6295(o)(3)) Moreover, DOE may not prescribe a standard: (1) for certain products, including MREFs, if no test procedure has been established for the product, or (2) if DOE determines by rule that the new or amended standard is not technologically feasible or economically justified. (42 U.S.C. 6295(o)(3)(A)-(B)) In deciding whether a new or amended standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens. (42 U.S.C. 6295(o)(2)(B)(i)) DOE must make this determination after receiving comments on the proposed standard and considering, to the greatest extent practicable, the following seven factors:

    1. The economic impact of the standard on manufacturers and consumers of the products subject to the standard;

    2. The savings in operating costs throughout the estimated average life of the covered products in the type (or class) compared to any increase in the price, initial charges, or maintenance expenses for the covered products that are likely to result from the imposition of the standard;

    3. The total projected amount of energy, or as applicable, water, savings likely to result directly from the imposition of the standard;

    4. Any lessening of the utility or the performance of the covered products likely to result from the imposition of the standard;

    5. The impact of any lessening of competition, as determined in writing by the Attorney General, that is likely to result from the imposition of the standard;

    6. The need for national energy and water conservation; and

    7. Other factors the Secretary of Energy (Secretary) considers relevant.

    (42 U.S.C. 6295(o)(2)(B)(i)(I)-(VII))

    Further, EPCA, as codified, establishes a rebuttable presumption that a standard is economically justified if the Secretary finds that the additional cost to the consumer of purchasing a product complying with an energy conservation standard level will be less than three times the value of the energy savings during the first year that the consumer will receive as a result of the standard, as calculated under the applicable test procedure. (42 U.S.C. 6295(o)(2)(B)(iii))

    EPCA also contains what is known as an “anti-backsliding” provision, which prevents the Secretary from prescribing any amended standard that either increases the maximum allowable energy use or decreases the minimum required energy efficiency of a covered product. (42 U.S.C. 6295(o)(1)) Also, the Secretary may not prescribe an amended or new standard if interested persons have established by a preponderance of the evidence that the standard is likely to result in the unavailability in the United States in any covered product type (or class) of performance characteristics (including reliability), features, sizes, capacities, and volumes that are substantially the same as those generally available in the United States. (42 U.S.C. 6295(o)(4))

    Additionally, DOE may set energy conservation standards for a covered product that has two or more subcategories. In those instances, DOE must specify a different standard level for a type or class of products that has the same function or intended use if DOE determines that products within such group: (A) Consume a different kind of energy from that consumed by other covered products within such type (or class); or (B) have a capacity or other performance-related feature which other products within such type (or class) do not have and such feature justifies a higher or lower standard. (42 U.S.C. 6295(q)(1)) In determining whether a performance-related feature justifies a different standard for a group of products, DOE must consider such factors as the utility to the consumer of such a feature and other factors DOE deems appropriate. Id. Any rule prescribing such a standard must include an explanation of the basis on which such higher or lower level was established. (42 U.S.C. 6295(q)(2))

    Federal energy conservation requirements generally supersede State laws or regulations concerning energy conservation testing, labeling, and standards. (42 U.S.C. 6297(a) through (c)) DOE may, however, grant waivers of Federal preemption for particular State laws or regulations, in accordance with the procedures and other provisions set forth under 42 U.S.C. 6297(d).

    DOE is also required to address standby mode and off mode energy use. (42 U.S.C. 6295(gg)(3)) Specifically, when DOE adopts a standard for a covered product after that date, it must, if justified by the criteria for the adoption of standards under EPCA (42 U.S.C. 6295(o)), incorporate standby mode and off mode energy use into a single standard, or, if that is not feasible, adopt a separate standard for such energy use for that product. (42 U.S.C. 6295(gg)(3)(A) and (B)) DOE's test procedures for MREFs address standby mode and off mode energy use, as do the new standards adopted in this notice of proposed rulemaking.

    With particular regard to direct final rules, the Energy Independence and Security Act of 2007 (“EISA 2007”), Public Law 110-140 (December 19, 2007), amended EPCA, in relevant part, to grant DOE authority to issue a type of final rule (i.e., a “direct final rule”) establishing an energy conservation standard for a product on receipt of a statement that is submitted jointly by interested persons that are fairly representative of relevant points of view (including representatives of manufacturers of covered products, States, and efficiency advocates), as determined by the Secretary, and that contains recommendations with respect to an energy or water conservation standard. In the context of consumer products, if the Secretary determines that the recommended standard contained in the statement is in accordance with 42 U.S.C. 6295(o), the Secretary may issue a final rule establishing the recommended standard. A notice of proposed rulemaking (“NOPR”) that proposes an identical energy efficiency standard is published simultaneously with the direct final rule. A public comment period of at least 110 days is provided. See 42 U.S.C. 6295(p)(4). Not later than 120 days after the date on which a direct final rule issued under this authority is published in the Federal Register, the Secretary shall withdraw the direct final rule if the Secretary receives one or more adverse public comments relating to the direct final rule or any alternative joint recommendation and based on the rulemaking record relating to the direct final rule, the Secretary determines that such adverse public comments or alternative joint recommendation may provide a reasonable basis for withdrawing the direct final rule under subsection 42 U.S.C. 6295(o) or any other applicable law. On withdrawal of a direct final rule, the Secretary shall proceed with the NOPR published simultaneously with the direct final rule and publish in the Federal Register the reasons why the direct final rule was withdrawn. This direct final rule provision applies to the products at issue in the direct final rule published simultaneously with this NOPR. See 42 U.S.C. 6295(p)(4).

    DOE also notes that it typically finalizes its test procedures for a given regulated product or equipment prior to proposing new or amended energy conservation standards for that product or equipment, see 10 CFR part 430, subpart C, Appendix A, sec. 7(c) (“Procedures, Interpretations and Policies for Consideration of New or Revised Energy Conservation Standards for Consumer Products” or “Process Rule”). In this instance, although DOE has finalized its test procedure for MREFs, rather than issue a notice of proposed rulemaking to set standards for these products, DOE is moving forward with a direct final rule. As part of the negotiated rulemaking that led to the Term Sheet setting out the standards that DOE is proposing, Working Group members recommended (with ASRAC's approval) that DOE implement the test procedure that DOE recently finalized. See 81 FR 46768 (July 18, 2016). The approach laid out in that final rule is consistent with the approach agreed upon by the various Working Group members who participated in the negotiated rulemaking. Accordingly, in accordance with section 14 of the Process Rule, DOE tentatively concludes that deviation from the Process Rule is appropriate here.

    B. Rulemaking History

    DOE has not previously established energy conservation standards for MREFs. Consistent with its statutory obligations, DOE sought to establish regulatory coverage over these products prior to establishing energy conservation standards to regulate MREF efficiency. On November 8, 2011, DOE published a notice of proposed determination of coverage (“NOPD”) to address the potential coverage of those refrigeration products that do not use a compressor-based refrigeration system. 76 FR 69147. Rather than employing a compressor/condenser-based system typically installed in the refrigerators, refrigerator-freezers, and freezers found in most U.S. homes, these “non-compressor-based” refrigeration products use a variety of other means to introduce chilled air into the interior of the storage cabinet of the product. Two systems that DOE specifically examined were thermoelectric- and absorption-based systems.1 The former of these systems is used in some wine chiller applications. With respect to the latter group of products, DOE indicated its belief that these types of products were used primarily in mobile applications and would likely fall outside of DOE's scope of coverage. See 42 U.S.C. 6292(a) (excluding from coverage “those consumer products designed solely for use in recreational vehicles and other mobile equipment”).

    1 Chapter 3 of the direct final rule technical support document provides a detailed description of each of these refrigeration technologies.

    On February 13, 2012, DOE published a notice announcing the availability of the framework document, “Energy Conservation Standards Rulemaking Framework Document for Wine Chillers and Miscellaneous Refrigeration Products,” and a public meeting to discuss the proposed analytical framework for the energy conservation standards rulemaking. 77 FR 7547. In the framework document, DOE described the procedural and analytical approaches it anticipated using to evaluate potential energy conservation standards for four types of consumer refrigeration products: Wine chillers, non-compressor refrigerators, hybrid refrigerators (i.e., a wine chiller combined with a refrigerator), and ice makers.

    DOE held a public meeting on February 22, 2012, to present the framework document, describe the analyses DOE planned to conduct during the rulemaking, seek comments from interested parties on these subjects, and inform the public about, and facilitate public participation in, the rulemaking. At the public meeting and during the comment period, DOE received multiple comments that addressed issues raised in the framework document and identified additional issues relevant to the rulemaking.

    On October 31, 2013, DOE published in the Federal Register a supplemental notice of proposed determination of coverage (the “October 2013 SNOPD”), in which it tentatively determined that the four categories of consumer products addressed in the framework document (wine chillers, non-compressor refrigeration products, hybrid refrigerators, and ice makers) satisfy the provisions of 42 U.S.C. 6292(b)(1). 78 FR 65223.

    DOE published a notice announcing a public meeting and the availability of the preliminary technical support document (“TSD”) for the MREF energy conservation standards rulemaking on December 3, 2014. 79 FR 71705. The preliminary analysis considered potential standards for the products proposed for coverage in the October 2013 SNOPD. The preliminary TSD included the results of the following DOE preliminary analyses: (1) Market and technology assessment; (2) screening analysis; (3) engineering analysis; (4) markups analysis; (5) energy use analysis; (6) LCC and PBP analyses; (7) shipments analysis; (8) national impact analysis (“NIA”); and (9) preliminary manufacturer impact analysis (“MIA”).

    DOE held a public meeting on January 9, 2015, during which it presented preliminary results for the engineering and downstream economic analyses and sought comments from interested parties on these subjects. At the public meeting and during the comment period, DOE received comments that addressed issues raised in the preliminary analysis and identified additional issues relevant to this rulemaking. After reviewing the comments received in response to both the preliminary analysis and a test procedure NOPR published on December 16, 2014 (the “December 2014 Test Procedure NOPR,” 79 FR 74894), DOE ultimately determined that the development of test procedures and potential energy conservation standards for MREFs would benefit from a negotiated rulemaking process.

    On April 1, 2015, DOE published a notice of intent to establish an Appliance Standards and Rulemaking Federal Advisory Committee (“ASRAC”) negotiated rulemaking working group for MREFs (the “MREF Working Group” or in context, the “Working Group”) to discuss and, if possible, reach consensus on a recommended scope of coverage, definitions, test procedures, and energy conservation standards. 80 FR 17355. The MREF Working Group consisted of 15 members, including two members from ASRAC and one DOE representative. The MREF Working Group met in person during six sets of meetings in 2015: May 4-5, June 11-12, July 15-16, August 11-12, September 16-17, and October 20.

    On August 11, 2015, the MREF Working Group reached consensus on a term sheet to recommend a scope of coverage, set of definitions, and test procedures for MREFs (“Term Sheet #1”).2 That document laid out the scope of products that the Working Group recommended that DOE adopt with respect to MREFs, the definitions that would apply to MREFs and certain other refrigeration products, and the test procedure that manufacturers of MREFs would need to use when evaluating the energy usage of these products. On October 20, 2015, the MREF Working Group reached consensus on a second term sheet embodying its recommended energy conservation standards for coolers and combination cooler refrigeration products (“Term Sheet #2”). ASRAC approved Term Sheet #1 during an open meeting on December 18, 2015, and Term Sheet #2 during an open meeting on January 20, 2016. ASRAC subsequently sent both term sheets to the Secretary for consideration.

    2 The MREF Working Group term sheets are available in docket ID EERE-2011-BT-STD-0043 at http://regulations.gov.

    In addition to these steps, DOE sought to ensure that it had obtained complete information and input regarding certain aspects related to manufacturers of thermoelectric refrigeration products. To this end, on December 15, 2015, DOE published a notice of data availability (the “December 2015 NODA”) in which it requested additional public feedback on the methods and information used in the development of the MREF Working Group Term Sheets. 80 FR 77589. DOE noted in particular its interest in information related to manufacturers of thermoelectric refrigeration products. Id. at 77590.

    After considering the MREF Working Group recommendations and comments received in response to the December 2015 NODA, DOE published an SNOPD and notice of proposed rulemaking (the “March 2016 SNOPD”) on March 4, 2016. 81 FR 11454. The March 2016 SNOPD proposed establishing coverage, definitions, and terminology consistent with Term Sheet #1. It also proposed to determine that coolers and combination cooler refrigeration products—as defined under the proposal—would meet the requirements under EPCA to be considered covered products. Id. at 11456-11459.

    On July 18, 2016, DOE published a final coverage determination and final rule (the “July 2016 Final Coverage Determination”) to establish coolers and combination cooler refrigeration products as covered products under EPCA. Because DOE did not receive any comments in response to the March 2016 SNOPD that would substantively alter its proposals, the findings of the final determination were unchanged from those presented in the March 2016 SNOPD. Moreover, DOE determined in the July 2016 Final Coverage Determination that MREFs, on average, consume more than 150 kWh/yr, and that the aggregate annual national energy use of these products exceeds 4.2 TWh. Accordingly, these data indicate that MREFs satisfy at least two of the four criteria required under EPCA in order for the Secretary to set standards for a product whose coverage is added pursuant to 42 U.S.C. 6292(b). See 42 U.S.C. 6295(l)(1)(A)-(D). 81 FR 46768. With respect to the remaining two criteria, as indicated in substantial detail in its accompanying direct final rule, DOE's analysis indicates that these two criteria are satisfied as well.

    In addition to establishing coverage, the July 2016 Final Coverage Determination established definitions for “miscellaneous refrigeration products,” “coolers,” and “combination cooler refrigeration products” in title 10 of the Code of Federal Regulations (“CFR”) § 430.2. The July 2016 Final Coverage Determination also amended the existing definitions for “refrigerator,” “refrigerator-freezer,” and “freezer” for consistency with the newly established MREF definitions. These definitions were generally consistent with the March 2016 SNOPD. Id.

    DOE has considered the recommended energy conservation standards from the MREF Working Group and believes that they meet the EPCA requirements for issuance of a direct final rule. As a result, DOE has published a direct final rule establishing energy conservation standards for MREFs elsewhere in this Federal Register. If DOE receives adverse comments that may provide a reasonable basis for withdrawal and withdraws the direct final rule, DOE will consider those comments and any other comments received in determining how to proceed with this proposed rule.

    For further background information on these proposed standards and the supporting analyses, please see the direct final rule published elsewhere in this Federal Register. That document includes additional discussion on the EPCA requirements for promulgation of energy conservation standards, the history of the standards rulemakings establishing such standards, as well as information on the test procedures used to measure the energy efficiency of MREFs. The document also contains an in-depth discussion of the analyses conducted in support of this rulemaking, the methodologies DOE used in conducting those analyses, and the analytical results.

    II. Proposed Standards

    When considering proposed standards, the new or amended energy conservation standard that DOE adopts for any type (or class) of covered product shall be designed to achieve the maximum improvement in energy efficiency that DOE determines is technologically feasible and economically justified. (42 U.S.C. 6295(o)(2)(A)) In determining whether a standard is economically justified, DOE must determine whether the benefits of the standard exceed its burdens, considering to the greatest extent practicable the seven statutory factors set forth in EPCA. (42 U.S.C. 6295(o)(2)(B)(i)) The new or amended standard must also result in a significant conservation of energy. (42 U.S.C. 6295(o)(3)(B))

    DOE considered the impacts of standards at each trial standard level (“TSL”) considered, beginning with maximum technologically feasible (max-tech) level, to determine whether that level was economically justified. Where the max-tech level was not economically justified, DOE then considered the next most efficient level and undertook the same evaluation until it reached the highest efficiency level that is both technologically feasible and economically justified and saves a significant amount of energy.

    To aid the reader as DOE discusses the benefits and burdens of each TSL, DOE has included tables that present a summary of the results of DOE's quantitative analysis for each TSL. In addition to the quantitative results presented in the tables, DOE also considers other burdens and benefits that affect economic justification. These include the impacts on identifiable subgroups of consumers, such as low-income households and seniors, who may be disproportionately affected by a national standard. Section V.B.1.b of the direct final rule published elsewhere in this Federal Register presents the estimated impacts of each TSL for these subgroups.

    A. TSLs Considered for Coolers

    Table II.1 and Table II.2 summarize the quantitative impacts estimated for each TSL for coolers. The national impacts are measured over the lifetime of coolers purchased in the 30-year period that begins in the anticipated year of compliance with new standards (2019-2048 for TSL 2, and 2021-2050 for the other TSLs). The energy savings, emissions reductions, and value of emissions reductions refer to full-fuel-cycle (“FFC”) results. The efficiency levels contained in each TSL are described in section V.A of the direct final rule published elsewhere in this Federal Register.

    Table II.1—Summary of Analytical Results for Coolers: National Impacts Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * Cumulative FFC National Energy Savings (quads) Quads 1.13 1.51 1.84 2.02. NPV of Consumer Costs and Benefits (2015$ billion) 3% discount rate 8.34 11.02 12.19 6.83. 7% discount rate 3.41 4.78 4.81 1.81. Cumulative FFC Emissions Reduction (Total FFC Emissions) CO2 (million metric tons) 67.91 91.76 110.61 121.30. SO2 (thousand tons) 39.38 54.04 64.13 70.26. NOX (thousand tons) 122.38 163.86 199.36 218.79. Hg (tons) 0.15 0.20 0.24 0.26. CH4 (thousand tons) 291.14 387.12 474.33 520.85. CH4 (thousand tons CO 2 eq)** 8151.79 10839.31 13281.37 14583.83. N2O (thousand tons) 0.82 1.12 1.33 1.46. N2O (thousand tons CO 2 eq)** 217.02 296.92 353.41 387.24. Value of Emissions Reduction (Total FFC Emissions) CO2 (2015$ billion) † 0.478 to 6.673 0.679 to 9.266 0.777 to 10.856 0.849 to 11.882. NOX−3% discount rate (2015$ million) 229.6 to 523.5 326.1 to743.4 373.3 to 851.2 407.9 to 929.9. NOX−7% discount rate (2015$ million) 92.5 to 208.7 141.9 to 319.9 150.2 to 338.7 163.1 to 367.8. Parentheses indicate negative (−) values. * For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the lifetime of products sold from 2021-2050. ** CO2eq is the quantity of CO2 that would have the same global warming potential (“GWP”). † Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. Table II.2—Summary of Analytical Results for Coolers: Manufacturer and Consumer Impacts Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * Manufacturer Impacts Industry NPV (2015$ million) (No-new-standards case INPV = 263.3) 244.3 to 264.0 208.5 to 253.3 168.4 to 226.5 110.5 to 283.8. Industry NPV (% change) −7.2 to 0.3 −20.8 to −3.8 −36.0 to −14.0 −58.0 to 7.8. Consumer Average LCC Savings (2015$) Freestanding Compact Coolers 279 265 288 123. Built-in Compact Coolers ** n.a. 28 60 (230). Freestanding Coolers 648 153 240 (121). Built-in Coolers n.a. 77 187 (254). Consumer Simple PBP (years) Freestanding Compact Coolers 1.1 1.4 1.6 3.5. Built-in Compact Coolers n.a. 4.6 4.4 14.8. Freestanding Coolers 1.0 1.8 1.8 4.8. Built-in Coolers n.a. 6.1 4.7 17.7. % of Consumers that Experience Net Cost Freestanding Compact Coolers 6 9 12 51. Built-in Compact Coolers 0 29 27 93. Freestanding Coolers 0 22 9 78. Built-in Coolers 0 22 7 86. Parentheses indicate negative (−) values. * For TSL 2, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the lifetime of products sold from 2021-2050. ** Calculation of savings and PBP is not applicable (n.a.) for an efficiency level that is already met or exceeded in the MREF market.

    DOE first considered TSL 4, which represents the max-tech efficiency levels. TSL 4 would save 2.02 quads of energy, an amount DOE considers significant. Under TSL 4, the net present value (“NPV”) of consumer benefit would be $1.81 billion using a discount rate of 7 percent, and $6.83 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 4 are 121.3 million metric tons (“Mt”) of CO2, 70.3 thousand tons of SO2, 218.8 thousand tons of NOX, 0.26 ton of Hg, 520.9 thousand tons of CH4, and 1.5 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 4 ranges from $849 million to $11,882 million.

    At TSL 4, the average LCC savings range from −$254 to $123. The simple payback period ranges from 3.5 years to 17.7 years. The fraction of consumers experiencing a net LCC cost ranges from 51 percent to 93 percent.

    At TSL 4, the projected change in industry net present value (“INPV”) ranges from a decrease of $152.8 million to an increase of $20.5 million, which correspond to a decrease of 58.0 percent to an increase of 7.8 percent, respectively. Manufacturer feedback during confidential interviews indicated that all cooler segments are highly price-sensitive, and therefore the lower bound of INPV impacts is more likely to occur. Additionally, at TSL 4, disproportionate impacts on low-volume manufacturers (“LVMs”) of MREFs may be severe. This could have a direct impact on domestic manufacturing capacity and production employment in the cooler industry.

    The Secretary concludes that at TSL 4 for coolers, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the economic burden on some consumers, and the impacts on manufacturers, including the conversion costs and profit margin impacts that could result in a large reduction in INPV. Consequently, the Secretary has concluded that TSL 4 is not economically justified.

    DOE then considered TSL 3, which would save an estimated 1.84 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be $4.81 billion using a discount rate of 7 percent, and $12.19 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 3 are 110.6 Mt of CO2, 64.1 thousand tons of SO2, 199.4 thousand tons of NOX, 0.24 tons of Hg, 474.3 thousand tons of CH4, and 1.33 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 3 ranges from $777 million to $10,856 million.

    At TSL 3, the average LCC savings range from $60 to $288. The simple payback period ranges from 1.6 years to 4.7 years. The fraction of consumers experiencing a net LCC cost ranges from 7 percent to 27 percent.

    At TSL 3, the projected change in INPV ranges from a decrease of $94.8 million to a decrease of $36.8 million, which correspond to decreases of 36.0 percent and 14.0 percent, respectively. Manufacturer feedback from confidential interviews indicated that all cooler segments are highly price sensitive, and therefore the lower bound of INPV impacts is more likely to occur. Again, at TSL 3, disproportionate impacts on the LVMs may be severe. This could have a direct impact on domestic manufacturing capacity and production employment in the cooler industry.

    The Secretary concludes that at TSL 3 for coolers, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the impacts on manufacturers, including the conversion costs and profit margin impacts that could result in a large reduction in INPV. Consequently, the Secretary has concluded that TSL 3 is not economically justified.

    DOE then considered TSL 2, which reflects the standard levels recommended by the MREF Working Group. TSL 2 would save an estimated 1.51 quads of energy, an amount DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $4.78 billion using a discount rate of 7 percent, and $11.02 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 2 are 91.8 Mt of CO2, 54.0 thousand tons of SO2, 163.9 thousand tons of NOX, 0.20 tons of Hg, 387.1 thousand tons of CH4, and 1.12 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 2 ranges from $679 million to $9,266 million.

    At TSL 2, the average LCC savings range from $28 to $265. The simple payback period ranges from 1.4 years to 6.1 years. The fraction of consumers experiencing a net LCC cost ranges from 9 percent to 29 percent.

    At TSL 2, the projected change in INPV ranges from a decrease of $54.8 million to a decrease of $10.0 million, which represent decreases of 20.8 percent and 3.8 percent, respectively. Feedback from the LVMs indicated that TSL 2 would not impede their ability to maintain their current MREF product offerings.

    After considering the analysis and weighing the benefits and burdens, DOE has determined that the recommended standards for coolers are in accordance with 42 U.S.C. 6295(o). Specifically, the Secretary has determined the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings would outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers. Accordingly, the Secretary has concluded that TSL 2 would offer the maximum improvement in efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy.

    Therefore, DOE proposes to adopt TSL 2 as the energy conservation standard for coolers. The proposed new energy conservation standards which are expressed as maximum annual energy use, in kWh/yr, as a function of adjusted volume (“AV”), in cubic feet (“ft3”), are shown in Table II.3.

    Table II.3—Proposed New Energy Conservation Standards for Coolers Product class Maximum
  • allowable AEU *
  • (kWh/yr)
  • Built-in Compact 7.88AV † + 155.8 Built-in Freestanding Compact Freestanding † AV = Adjusted volume, in ft3, as calculated according to title 10 CFR part 430, subpart B, appendix A.
    B. TSLs Considered for Combination Cooler Refrigeration Products.

    Table II.4 and Table II.5 summarize the quantitative impacts estimated for each TSL for combination cooler refrigeration products. The national impacts are measured over the lifetime of products purchased in the 30-year period that begins in the anticipated year of compliance with new standards (2019-2048 for TSL 1, and 2021-2050 for the other TSLs). The energy savings, emissions reductions, and value of emissions reductions refer to FFC results. The efficiency levels contained in each TSL are described in section V.A of the direct final rule published elsewhere in this Federal Register.

    Table II.4—Summary of Analytical Results for Combination Cooler Refrigeration Products TSLs: National Impacts Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * Cumulative FFC National Energy Savings (quads) Quads 0.00084 0.007 0.012 0.016. NPV of Consumer Costs and Benefits (2015$ billion) 3% discount rate 0.0045 0.035 (0.06) (0.14). 7% discount rate 0.0017 0.011 (0.04) (0.09). Cumulative FFC Emissions Reduction (Total FFC Emissions) CO2 (million metric tons) 0.05 0.44 0.73 0.96. SO2 (thousand tons) 0.03 0.25 0.42 0.55. NOX (thousand tons) 0.09 0.80 1.32 1.73. Hg (tons) 0.00 0.00 0.00 0.00. CH4 (thousand tons) 0.21 1.90 3.16 4.13. CH4 (thousand tons CO 2 eq) ** 6.02 53.24 88.46 115.75. N2O (thousand tons) 0.00 0.01 0.01 0.01. N2O (thousand tons CO 2 eq) ** 0.16 1.40 2.34 3.05. Value of Emissions Reduction (Total FFC Emissions) CO2 (2015$ billion) † 0.000 to 0.005 0.003 to 0.042 0.005 to 0.071 0.007 to 0.092. NOX − 3% discount rate (2015$ million) 0.2 to 0.4 1.4 to 3.3 2.4 to 5.5 3.1 to 7.1. NOX − 7% discount rate (2015$ million) 0.1 to 0.2 0.6 to 1.3 0.9 to 2.1 1.2 to 2.7. Parentheses indicate negative (−) values. * For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the lifetime of products sold from 2021-2050. ** CO2eq is the quantity of CO2 that would have the same global warming potential (GWP). † Range of the economic value of CO2 reductions is based on estimates of the global benefit of reduced CO2 emissions. Table II.5—Summary of Analytical Results for Combination Cooler Refrigeration Products TSLs: Manufacturer and Consumer Impacts Category TSL 1 * TSL 2 * TSL 3 * TSL 4 * Manufacturer Impacts Industry NPV (2015$ million) (No-new-standards case INPV = 108.2) 107.4 to 107.6 103.7 to 107.5 101.6 to 117.7 100.1 to 128.5. Industry NPV (% change) −0.7 to −0.5 −4.1 to −0.6 −6.0 to 8.9 −7.5 to 18.8. Consumer Average LCC Savings (2015$) C-3A n.a.** 58 53 (209). C-3A-BI n.a 66 59 (237). C-9 n.a. 89 3 (182). C-9-BI n.a. 102 4 (205). C-13A 32 17 (123) (194). C-13A-BI n.a. 8 (151) (232). Consumer Simple PBP (years) C-3A n.a. 4.1 6.8 25.3. C-3A-BI n.a. 4.1 6.8 25.4. C-9 n.a. 2.6 12.1 23.3. C-9-BI n.a. 2.6 12.0 23.2. C-13A 4.3 5.0 13.3 16.0. C-13A-BI n.a. 6.5 21.6 24.6. % of Consumers that Experience Net Cost C-3A 0 4 26 92. C-3A-BI 0 4 26 92. C-9 0 0 62 90. C-9-BI 0 0 63 90. C-13A 6 44 94 96. C-13A-BI 0 49 97 98. Parentheses indicate negative (−) values. * For TSL 1, the results are forecasted over the lifetime of products sold from 2019-2048. For the other TSLs, the results are forecasted over the lifetime of products sold from 2021-2050. ** Calculation of savings and PBP is not applicable (n.a.) for an efficiency level that is already met or exceeded in the MREF market.

    DOE first considered TSL 4, which represents the max-tech efficiency levels. TSL 4 would save 0.016 quads of energy, an amount DOE considers significant. Under TSL 4, the NPV of consumer benefit would be −$0.09 billion using a discount rate of 7 percent, and −$0.14 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 4 are 0.96 Mt of CO2, 0.55 thousand tons of SO2, 1.73 thousand tons of NOX, 0.0 ton of Hg, 4.13 thousand tons of CH4, and 0.01 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 4 ranges from $7 million to $92 million.

    At TSL 4, the average LCC savings range from −$237 to −$182. The simple payback period ranges from 16.0 years to 25.4 years. The fraction of consumers experiencing a net LCC cost ranges from 90 percent to 98 percent.

    Also at TSL 4, the projected change in INPV ranges from a decrease of $8.1 million to an increase of $20.3 million, which correspond to a decrease of 7.5 percent to an increase of 18.8 percent, respectively. Similar to coolers, detailed feedback from manufacturer interviews indicated that combination cooler refrigeration products are highly price sensitive, and therefore the lower bound of INPV impacts is more likely to occur. Additionally, in the context of new standards for coolers and other cumulative regulatory burdens, at TSL 4, disproportionate impacts on domestic LVMs of combination cooler refrigeration products may be severe. This could have a direct impact on the availability of certain niche combination cooler refrigeration products, as well as on competition, domestic manufacturing capacity, and production employment related to the combination cooler refrigeration product industry.

    The Secretary concludes that at TSL 4 for combination cooler refrigeration products, the benefits of energy savings, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the negative NPV of consumer benefits, the economic burden on some consumers, and the disproportionate impacts on the LVMs, which could directly impact the availability of certain niche combination cooler products. Consequently, the Secretary has concluded that TSL 4 is not economically justified.

    DOE then considered TSL 3, which would save an estimated 0.012 quads of energy, an amount DOE considers significant. Under TSL 3, the NPV of consumer benefit would be −$0.04 billion using a discount rate of 7 percent, and −$0.06 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 3 are 0.73 Mt of CO2, 0.42 thousand tons of SO2, 1.32 thousand tons of NOX, 0.00 tons of Hg, 3.16 thousand tons of CH4, and 0.01 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 3 ranges from $5 million to $71 million.

    At TSL 3, the average LCC savings range from −$151 to $59. The simple payback period ranges from 6.8 years to 21.6 years. The fraction of consumers experiencing a net LCC cost ranges from 26 percent to 97 percent.

    At TSL 3, the projected change in INPV ranges from a decrease of $6.5 million to an increase of $9.6 million, which represent a decrease of 6.0 percent and an increase of 8.9 percent, respectively. Again, manufacturers indicated that combination cooler refrigeration products are highly price sensitive, and therefore the lower bound of INPV impacts is more likely to occur. In the context of new standards for coolers and other cumulative regulatory burdens, at TSL 3, disproportionate impacts on domestic LVMs of combination cooler refrigeration products may be severe. This could have a direct impact on the availability of certain niche combination cooler refrigeration products, as well as on competition, domestic manufacturing capacity and production employment related to the combination cooler refrigeration product industry.

    The Secretary concludes that at TSL 3 for combination cooler refrigeration products, the benefits of energy savings, emission reductions, and the estimated monetary value of the emissions reductions would be outweighed by the negative NPV of consumer benefits and disproportionate impacts on the LVMs, which could directly impact the availability of certain niche combination cooler products. Consequently, the Secretary has concluded that TSL 3 is not economically justified.

    DOE then considered TSL 2, which reflects the efficiency levels with maximum consumer NPV at seven percent discount rate. TSL 2 would save an estimated 0.007 quads of energy, an amount DOE considers significant. Under TSL 2, the NPV of consumer benefit would be $0.011 billion using a discount rate of 7 percent, and $0.035 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 2 are 0.44 Mt of CO2, 0.25 thousand tons of SO2, 0.8 thousand tons of NOX, 0.00 tons of Hg, 1.90 thousand tons of CH4, and 0.013 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 2 ranges from $3 million to $42 million.

    At TSL 2, the average LCC savings range from $8 to $102. The simple payback period ranges from 2.6 years to 6.5 years. The fraction of consumers experiencing a net LCC cost ranges from zero percent to 49 percent.

    At TSL 2, the projected change in INPV ranges from a decrease of $4.4 million to a decrease of $0.6 million, which represent decreases of 4.1 percent and 0.6 percent, respectively. Again, in the context of new standards for coolers and other cumulative regulatory burdens, at TSL 2, disproportionate impacts on domestic LVMs may be severe. This could have a direct impact on the availability of certain niche combination cooler refrigeration products, as well as on competition, domestic manufacturing capacity and production employment related to the combination cooler refrigeration product industry.

    The Secretary concludes that at TSL 2 for combination cooler refrigeration products, the benefits of energy savings, positive NPV of consumer benefits, emission reductions, and the estimated monetary value of the emissions reductions would again be outweighed by the disproportionate impacts on the domestic LVMs, which could directly impact the availability of certain niche combination cooler products. Consequently, the Secretary has concluded that TSL 2 is not economically justified.

    DOE then considered TSL 1, which reflects the standard levels recommended by the MREF Working Group. TSL 1 would save an estimated 0.00084 quads of energy, an amount DOE considers significant. Under TSL 1, the NPV of consumer benefit would be $0.0017 billion using a discount rate of 7 percent, and $0.0045 billion using a discount rate of 3 percent.

    The cumulative emissions reductions at TSL 1 are 0.05 Mt of CO2, 0.03 thousand tons of SO2, 0.09 thousand tons of NOX, 0.00 tons of Hg, 0.21 thousand tons of CH4, and 0.00 thousand tons of N2O. The estimated monetary value of the CO2 emissions reduction at TSL 1 ranges from $0 million to $5 million.

    At TSL 1, the combination cooler refrigeration products currently available on the market already meet or exceed the corresponding efficiency levels in all product classes except for C-13A. As a result, for five of the product classes, no consumers experience a net cost, and the LCC savings and simple payback period are not applicable. For product class C-13A, the average LCC savings is $32, the simple payback period is 4.3 years, and the fraction of consumers experiencing a net LCC cost is 6 percent.

    At TSL 1, the projected change in INPV ranges from a decrease of $0.8 million to a decrease of $0.5 million, which represent decreases of 0.7 percent and 0.5 percent, respectively. DOE estimated that all combination cooler refrigeration products manufactured domestically by LVMs currently meet the standard levels corresponding to TSL 1. Therefore, at TSL 1, DOE believes that domestic manufacturers will continue to offer the same combination cooler refrigeration products as those they currently offer.

    After considering the analysis and weighing the benefits and burdens, DOE has determined that the recommended standards for combination cooler refrigeration products are in accordance with 42 U.S.C. 6295(o). Specifically, the Secretary has determined the benefits of energy savings, positive NPV of consumer benefits, emission reductions, the estimated monetary value of the emissions reductions, and positive average LCC savings would outweigh the negative impacts on some consumers and on manufacturers, including the conversion costs that could result in a reduction in INPV for manufacturers. Accordingly, the Secretary has concluded that TSL 1 would offer the maximum improvement in efficiency that is technologically feasible and economically justified, and would result in the significant conservation of energy.

    Therefore, DOE proposes to adopt TSL 1 as the energy conservation standard for combination cooler refrigeration products. The proposed new energy conservation standards, which are expressed as maximum annual energy use, in kWh/yr, as a function of AV, in ft3, are shown in Table II.6.

    Table II.6—Proposed Energy Conservation Standards for combination Cooler Refrigeration Products Product class description Product class designation Maximum
  • allowable AEU
  • (kWh/yr)
  • Cooler with all-refrigerator—automatic defrost C-3A 4.57AV † + 130.4 Built-in cooler with all-refrigerator—automatic defrost C-3A-BI 5.19AV + 147.8 Cooler with upright freezers with automatic defrost without an automatic icemaker C-9 5.58AV + 147.7 Built-in cooler with upright freezer with automatic defrost without an automatic icemaker C-9-BI 6.38AV + 168.8 Cooler with upright freezer with automatic defrost with an automatic icemaker C-9I 5.58AV + 231.7 Built-in cooler with upright freezer with automatic defrost with an automatic icemaker C-9I-BI 6.38AV + 252.8 Compact cooler with all-refrigerator—automatic defrost C-13A 5.93AV + 193.7 Built-in compact cooler with all-refrigerator—automatic defrost C-13A-BI 6.52AV + 213.1 † AV = Adjusted volume, in ft3, as calculated according to title 10 CFR part 430, subpart B, appendix A.
    C. Summary of Benefits and Costs of the Proposed Standards

    The benefits and costs of the adopted standards can also be expressed in terms of annualized values. The annualized net benefit is the sum of: (1) the annualized national economic value (expressed in 2015$) of the benefits from operating products that meet the adopted standards (consisting primarily of operating cost savings from using less energy, minus increases in product purchase costs, and (2) the annualized monetary value of the benefits of CO2 and NOX emission reductions.3

    3 To convert the time-series of costs and benefits into annualized values, DOE calculated a present value in 2016, the year used for discounting the NPV of total consumer costs and savings. For the benefits, DOE calculated a present value associated with each year's shipments in the year in which the shipments occur (2020, 2030, etc.), and then discounted the present value from each year to 2016. The calculation uses discount rates of 3 and 7 percent for all costs and benefits except for the value of CO2 reductions, for which DOE used case-specific discount rates. Using the present value, DOE then calculated the fixed annual payment over a 30-year period, starting in the compliance year that yields the same present value.

    Table II.7 shows the annualized values for MREFs under TSL 2 for coolers and TSL 1 for combination cooler refrigeration products, expressed in 2015$. The results under the primary estimate are as follows. Using a 7-percent discount rate for benefits and costs other than CO2 reduction, (for which DOE used a 3-percent discount rate along with the SCC series that has a value of $40.6/t in 2015),4 the estimated cost of the standards in this rule is $153 million per year in increased equipment costs, while the estimated annual benefits are $593 million in reduced equipment operating costs, $165 million in CO2 reductions, and $13.1 million in reduced NOX emissions. In this case, the net benefit amounts to $619 million per year.

    4 DOE used a 3-percent discount rate because the SCC values for the series used in the calculation were derived using a 3-percent discount rate (see section IV.L of the direct final rule published elsewhere in this Federal Register).

    Using a 3-percent discount rate for all benefits and costs and the SCC series has a value of $40.6/t in 2015, the estimated cost of the standards is $157 million per year in increased equipment costs, while the estimated annual benefits are $754 million in reduced operating costs, $165 million in CO2 reductions, and $17.7 million in reduced NOX emissions. In this case, the net benefit amounts to $779 million per year.

    Table II.7—Annualized Benefits and Costs of Adopted Standards for MREFs * Discount rate Primary estimate* Low net benefits estimate * High net benefits estimate * (Million 2015$/year) Benefits Consumer Operating Cost Savings 7% 593 545 649. 3% 754 686 839. CO2 Reduction Value ($12.2/t)** 5% 49 46 53. CO2 Reduction Value ($40.0/t)** 3% 165 155 179. CO2 Reduction Value ($62.3/t)** 2.5% 242 227 263. CO2 Reduction Value ($117/t)** 3% 502 471 546. NOX Reduction Value † 7% 13.1 12.4 31.6. 3% 17.7 16.6 43.6. Total Benefits †† 7% plus CO2 range 655 to 1,108 603 to 1,028 733 to 1,226. 7% 771 712 860. 3% plus CO2 range 820 to 1,273 748 to 1,173 935 to 1,428. 3% 937 857 1,062. Costs Consumer Incremental Product Costs 7%
  • 3%
  • 153
  • 157
  • 145
  • 148
  • 118.
  • 116.
  • Net Benefits Total †† 7% plus CO2 range 503 to 956 459 to 884 615 to 1,108. 7% 619 568 742. 3% plus CO2 range 663 to 1,116 601 to 1,026 819 to 1,312. 3% 779 709 946. * This table presents the annualized costs and benefits associated with MREFs shipped in 2019-2048. These results include benefits to consumers which accrue after 2048 from the MREFs purchased from 2019-2048. The results account for the incremental variable and fixed costs incurred by manufacturers due to the standard, some of which may be incurred in preparation for the rule. The Primary, Low Benefits, and High Benefits Estimates utilize projections of energy prices and housing starts from the AEO 2015 Reference case, Low Economic Growth case, and High Economic Growth case, respectively. In addition, incremental product costs reflect constant price trend the Primary Estimate and the Low Benefits Estimate, and a high decline rate in the High Benefits Estimate. The methods used to derive projected price trends are explained in section IV.F of the direct final rule published elsewhere in this Federal Register. Note that the Benefits and Costs may not sum to the Net Benefits due to rounding. ** The CO2 values represent global monetized values of the SCC, in 2015$ per metric ton (t), in 2015 under several scenarios of the updated SCC values. The first three cases use the averages of SCC distributions calculated using 5%, 3%, and 2.5% discount rates, respectively. The fourth case represents the 95th percentile of the SCC distribution calculated using a 3% discount rate. The SCC time series incorporate an escalation factor. † DOE estimated the monetized value of NOX emissions reductions associated with electricity savings using benefit per ton estimates from the “Regulatory Impact Analysis for the Clean Power Plan Final Rule,” published in August 2015 by EPA's Office of Air Quality Planning and Standards. (Available at www.epa.gov/cleanpowerplan/clean-power-plan-final-rule-regulatory-impact-analysis.) See section IV.L of the direct final rule published elsewhere in this Federal Register for further discussion. For the Primary Estimate and Low Net Benefits Estimate, DOE used a national benefit-per-ton estimate for NOX emitted from the Electric Generating Unit sector based on an estimate of premature mortality derived from the ACS study (Krewski et al. 2009). For DOE's High Net Benefits Estimate, the benefit-per-ton estimates were based on the Six Cities study (Lepuele et al. 2011), which are nearly two-and-a-half times larger than those from the ACS study. †† Total Benefits for both the 3% and 7% cases are derived using the series corresponding to the average SCC with 3-percent discount rate ($40.6/t case). In the rows labeled “7% plus CO2 range” and “3% plus CO2 range,” the operating cost and NOX benefits are calculated using the labeled discount rate, and those values are added to the full range of CO2 values. The value of consumer incremental product costs is lower in the high net benefits scenario than it is in the primary case because the high net benefits scenario uses a highly declining price trend that more than offsets the increase in shipments due to higher economic growth.
    III. Public Participation A. Submission of Comments

    DOE will accept comments, data, and information regarding this proposed rule until the date provided in the DATES section at the beginning of this proposed rule. Interested parties may submit comments, data, and other information using any of the methods described in the ADDRESSES section at the beginning of this proposed rule.

    Although DOE welcomes comments on any aspect of the proposal in this notice and the analysis as described in the direct final rule published elsewhere in this Federal Register, DOE is particularly interested in receiving comments and views of interested parties concerning the following issues:

    1. Whether the standards proposed in this notice would result in any lessening of utility for MREFs, including whether certain features would be eliminated from these products. See sections III.H.1.d and IV.2 of the direct final rule published elsewhere in this Federal Register.

    2. The incremental manufacturer production costs DOE estimated at each efficiency level. See section IV.C of the direct final rule published elsewhere in this Federal Register.

    3. DOE's method to estimate MREF shipments under the no-new-standards case and under potential energy conservation standards levels. See section IV.G of the direct final rule published elsewhere in this Federal Register.

    4. The assumption that installation, maintenance, and repair costs do not vary for MREFs at higher efficiency levels. See section IV.F of the direct final rule published elsewhere in this Federal Register.

    5. The manufacturer conversion costs (both product and capital) used in DOE's analysis. See section V.B.2.d of the direct final rule published elsewhere in this Federal Register.

    6. The cumulative regulatory burden to MREF manufacturers associated with the proposed standards and on the approach DOE used in evaluating cumulative regulatory burden, including the timeframes and regulatory dates evaluated. See section V.B.2.e of the direct final rule published elsewhere in this Federal Register.

    Submitting comments via www.regulations.gov. The www.regulations.gov Web page will require you to provide your name and contact information. Your contact information will be viewable to DOE Building Technologies staff only. Your contact information will not be publicly viewable except for your first and last names, organization name (if any), and submitter representative name (if any). If your comment is not processed properly because of technical difficulties, DOE will use this information to contact you. If DOE cannot read your comment due to technical difficulties and cannot contact you for clarification, DOE may not be able to consider your comment.

    However, your contact information will be publicly viewable if you include it in the comment itself or in any documents attached to your comment. Any information that you do not want to be publicly viewable should not be included in your comment, nor in any document attached to your comment. Otherwise, persons viewing comments will see only first and last names, organization names, correspondence containing comments, and any documents submitted with the comments.

    Do not submit to www.regulations.gov information for which disclosure is restricted by statute, such as trade secrets and commercial or financial information (hereinafter referred to as Confidential Business Information (CBI)). Comments submitted through www.regulations.gov cannot be claimed as CBI. Comments received through the Web site will waive any CBI claims for the information submitted. For information on submitting CBI, see the Confidential Business Information section below.

    DOE processes submissions made through www.regulations.gov before posting. Normally, comments will be posted within a few days of being submitted. However, if large volumes of comments are being processed simultaneously, your comment may not be viewable for up to several weeks. Please keep the comment tracking number that www.regulations.gov provides after you have successfully uploaded your comment.

    Submitting comments via email, hand delivery/courier, or mail. Comments and documents submitted via email, hand delivery/courier, or mail also will be posted to www.regulations.gov. If you do not want your personal contact information to be publicly viewable, do not include it in your comment or any accompanying documents. Instead, provide your contact information in a cover letter. Include your first and last names, email address, telephone number, and optional mailing address. The cover letter will not be publicly viewable as long as it does not include any comments.

    Include contact information each time you submit comments, data, documents, and other information to DOE. If you submit via mail or hand delivery/courier, please provide all items on a CD, if feasible, in which case it is not necessary to submit printed copies. No telefacsimiles (faxes) will be accepted.

    Comments, data, and other information submitted to DOE electronically should be provided in PDF (preferred), Microsoft Word or Excel, WordPerfect, or text (ASCII) file format. Provide documents that are not secured, that are written in English, and that are free of any defects or viruses. Documents should not contain special characters or any form of encryption and, if possible, they should carry the electronic signature of the author.

    Campaign form letters. Please submit campaign form letters by the originating organization in batches of between 50 to 500 form letters per PDF or as one form letter with a list of supporters' names compiled into one or more PDFs. This reduces comment processing and posting time.

    Confidential Business Information. Pursuant to 10 CFR 1004.11, any person submitting information that he or she believes to be confidential and exempt by law from public disclosure should submit via email, postal mail, or hand delivery/courier two well-marked copies: One copy of the document marked “confidential” including all the information believed to be confidential, and one copy of the document marked “non-confidential” with the information believed to be confidential deleted. Submit these documents via email or on a CD, if feasible. DOE will make its own determination about the confidential status of the information and treat it according to its determination.

    Factors of interest to DOE when evaluating requests to treat submitted information as confidential include: (1) A description of the items; (2) whether and why such items are customarily treated as confidential within the industry; (3) whether the information is generally known by or available from other sources; (4) whether the information has previously been made available to others without obligation concerning its confidentiality; (5) an explanation of the competitive injury to the submitting person that would result from public disclosure; (6) when such information might lose its confidential character due to the passage of time; and (7) why disclosure of the information would be contrary to the public interest.

    It is DOE's policy that all comments may be included in the public docket, without change and as received, including any personal information provided in the comments (except information deemed to be exempt from public disclosure).

    B. Public Meeting

    As stated previously, if DOE withdraws the direct final rule published elsewhere in this Federal Register pursuant to 42 U.S.C. 6295(p)(4)(C), DOE will hold a public meeting to allow for additional comment on this proposed rule. DOE will publish notice of any meeting in the Federal Register.

    IV. Procedural Issues and Regulatory Review

    The regulatory reviews conducted for this proposed rule are identical to those conducted for the direct final rule published elsewhere in this Federal Register. Please see the direct final rule for further details.

    V. Approval of the Office of the Secretary

    The Secretary of Energy has approved publication of this proposed rule.

    List of Subjects in 10 CFR Part 430

    Administrative practice and procedure, Confidential business information, Energy conservation, Household appliances, Imports, Intergovernmental relations, Reporting and recordkeeping requirements, and Small businesses.

    Issued in Washington, DC, on October 4, 2016. David J. Friedman, Acting Assistant Secretary, Energy Efficiency and Renewable Energy.

    For the reasons set forth in the preamble, DOE proposes to amend part 430 of chapter II, subchapter D, of title 10 of the Code of Federal Regulations, as set forth below:

    PART 430—ENERGY CONSERVATION PROGRAM FOR CONSUMER PRODUCTS 1. The authority citation for part 430 continues to read as follows: Authority:

    42 U.S.C. 6291-6309; 28 U.S.C. 2461 note.

    2. Amend § 430.32 by adding paragraph (aa) to read as follows:
    § 430.32 Energy and water conservation standards and their compliance dates.

    (aa) Miscellaneous refrigeration products. The energy standards as determined by the equations of the following table(s) shall be rounded off to the nearest kWh per year. If the equation calculation is halfway between the nearest two kWh per year values, the standard shall be rounded up to the higher of these values.

    (1) Coolers manufactured starting on [date three years after date of publication of the direct final rule in the federal register] shall have Annual Energy Use (AEU) no more than:

    Product class AEU (kWh/yr) 1. Built-in compact 7.88AV + 155.8 2. Built-in 3. Freestanding compact 4. Freestanding AV = Total adjusted volume, expressed in ft3, as calculated according to appendix A of subpart B of this part.

    (2) Combination cooler refrigeration products manufactured starting on [date three years after date of publication of the direct final rule in the federal register] shall have Annual Energy Use (AEU) no more than:

    Product class AEU (kWh/yr) C-3A. Cooler with all-refrigerator—automatic defrost 4.57AV + 130.4 C-3A-BI. Built-in cooler with all-refrigerator—automatic defrost. 5.19AV + 147.8 C-9. Cooler with upright freezers with automatic defrost without an automatic icemaker 5.58AV + 147.7 C-9-BI. Built-in cooler with upright freezer with automatic defrost without an automatic icemaker 6.38AV + 168.8 C-9I. Cooler with upright freezer with automatic defrost with an automatic icemaker 5.58AV + 231.7 C-9I-BI. Built-in cooler with upright freezer with automatic defrost with an automatic icemaker 6.38AV + 252.8 C-13A. Compact cooler with all-refrigerator—automatic defrost 5.93AV + 193.7 C-13A-BI. Built-in compact cooler with all-refrigerator—automatic defrost 6.52AV + 213.1 AV = Total adjusted volume, expressed in ft3, as calculated according to appendix A of subpart B of this part.
    [FR Doc. 2016-24758 Filed 10-27-16; 8:45 am] BILLING CODE 6450-01-P
    DEPARTMENT OF HEALTH AND HUMAN SERVICES Food and Drug Administration 21 CFR Parts 514 and 556 [Docket No. FDA-2012-N-1067] RIN 0910-AG17 New Animal Drugs; Updating Tolerances for Residues of New Animal Drugs in Food AGENCY:

    Food and Drug Administration, HHS.

    ACTION:

    Proposed rule; supplemental notice of proposed rulemaking.

    SUMMARY:

    The Food and Drug Administration (FDA or we) is proposing to amend our 2012 document entitled “New Animal Drugs; Updating Tolerances for Residues of New Animal Drugs in Food.” The document proposed to revise the animal drug regulations regarding tolerances for residues of approved and conditionally approved new animal drugs in food by standardizing, simplifying, and clarifying the determination standards and codification style. We also proposed to add definitions for key terms. We are taking this action to more clearly explain our current thinking about certain provisions of the 2012 document based on comments from stakeholders, and to more accurately reflect the rationale FDA relied on in the past to approve certain new animal drugs without a tolerance. We are reopening the comment period only with respect to the specific issues identified in this supplemental proposed rule.

    DATES:

    Submit either electronic or written comments on this 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 Submission

    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-2012-N-1067 for this proposed rulemaking. 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.fda.gov/regulatoryinformation/dockets/default.htm.

    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:

    Dong Yan, Center for Veterinary Medicine (HFV-151), Food and Drug Administration, 7500 Standish Pl., Rockville, MD 20855, 240-402-0825, [email protected]

    SUPPLEMENTARY INFORMATION: Table of Contents Executive Summary Purpose and Coverage of the Supplemental Notice of Proposed Rulemaking Summary of the Major Provisions of the Supplemental Notice of Proposed Rulemaking I. Background A. Introduction B. Comments to the 2012 Proposed Rule for Updating Tolerances for Residues of New Animal Drugs in Food II. Proposed Revisions to Subpart A—General Provisions A. Analytical Method B. Proposed Revisions to Definitions (Proposed § 556.3) C. Proposed Revisions to General Considerations (Proposed § 556.5) III. Proposed Conforming Change to 21 CFR Part 514 IV. Legal Authority V. Economic Analysis of Impacts VI. Paperwork Reduction Act of 1995 VII. Analysis of Environmental Impact VIII. Federalism IX. References Executive Summary Purpose and Coverage of the Supplemental Notice of Proposed Rulemaking

    We previously proposed to revise the animal drug regulations regarding tolerances for residues of approved and conditionally approved new animal drugs in food. In addition to proposing to standardize, simplify, and clarify the standards of determination and codification style for tolerances, we proposed a new definition section. In this document, we are proposing to revise or remove some of the previously proposed definitions, taking into account comments we received that have led us to clarify our current thinking, and to more accurately reflect the rationale FDA relied on in the past to approve certain new animal drugs without a tolerance.

    Summary of the Major Provisions of the Supplemental Notice of Proposed Rulemaking

    The previously proposed rule (2012 proposed rule) did not adequately explain our current view that methods other than the “regulatory method” derived from the method submitted by a sponsor as part of the new animal drug application can be used to determine the quantity of residue in edible tissues for surveillance and enforcement purposes. Therefore, we are removing the proposed definition for “regulatory method” and are reserving the term for use with carcinogenic compounds. We are also removing the use of this term from proposed § 556.5(d) (21 CFR 556.5(d)). We are proposing to revise portions of the 2012 proposed rule to better align the proposed rule with our current thinking and practice that an analytical method other than the practicable method(s) submitted by the sponsor as part of the new animal drug application can be used for surveillance and enforcement purposes for non-carcinogenic compounds, as long as the performance criteria of that method are comparable to those of the practicable method. However, as described in section II.C, we are not proposing similar changes to the regulations concerning carcinogenic compounds because our current interpretation of the relevant provisions in the Federal Food, Drug, and Cosmetic Act (the FD&C Act) is that, unlike for non-carcinogenic compounds, the regulatory method prescribed in the approval of the new animal drug must be used for surveillance and enforcement purposes for carcinogenic compounds.

    We are also revising the proposed definitions for “marker residue”, “tolerance”, “not required”, and “zero”. We are removing the definition for “acceptable single-dose intake” and adding a definition for “acute reference dose”.

    Table of Abbreviations and Acronyms Abbreviation/acronym What it means ARfD Acute reference dose. ASDI Acceptable single-dose intake. CFR Code of Federal Regulations. CVM Center for Veterinary Medicine. FDA U.S. Food and Drug Administration. FD&C Act Federal Food, Drug, and Cosmetic Act. JECFA World Health Organization/Food and Agriculture Organization of the United Nations Joint Expert Committee on Food Additives. VICH International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products. I. Background A. Introduction

    In the Federal Register of December 5, 2012 (77 FR 72254), we issued a document to revise part 556 (21 CFR part 556) by standardizing and simplifying the codification style, revising the general considerations section, adding a scope section, and adding a definition section to define key terms used in the part. The definition section was proposed to include the terms used by FDA in the determination of tolerances. Some of the terms had been used previously in part 556, but never defined, and some terminology that had been used was outdated or resulted in confusion to users of the part. We proposed a general considerations section (proposed § 556.5) to provide additional information and clarification for the tolerances listed in proposed subpart B. We are issuing this supplemental notice of proposed rulemaking to revise the proposed changes to part 556 to align with our current thinking.

    B. Comments to the 2012 Proposed Rule for Updating Tolerances for Residues of New Animal Drugs in Food

    We received several stakeholder comments to the proposed rule including a comment that requests clarification on the proposed definition for “regulatory method” and on the use of the term in proposed § 556.5(d), which stated that FDA requires that a drug sponsor develop a regulatory method to measure drug residues in edible tissues of approved target species. This comment notes that a regulatory method has historically been used to refer to the “required determinative and confirmatory procedures for regulatory surveillance of residue concentrations in meat products entering the food supply for comparison to the tolerance post-commercialization of the product.” The comment also states the context of the proposal appears to be the method(s) used to collect data to support the setting of the tolerances preapproval. The comment also asks if the proposal implies that tolerances may be established using analytical procedures other than the determinative procedure. In addition, the comment states it should be clarified if regulatory method is referring to method(s) used preapproval for setting the tolerance versus a finite method(s) used for determining post-commercialization residue to compare to the tolerance.

    We realize that the term “regulatory method” proposed in § 556.3 and used in proposed § 556.5(d) has caused some confusion. As a result of the comments, we are taking this opportunity to better explain our current thinking about analytical methods used to determine residue levels in tissues for new animal drugs intended for use in food-producing animals.

    II. Proposed Revisions to Subpart A—General Provisions A. Analytical Method

    An analytical method other than the practicable method can be used for surveillance and enforcement purposes for non-carcinogenic compounds, as long as the performance criteria (e.g., sensitivity, specificity, accuracy, and precision) of that method are comparable to those of the practicable method submitted by the sponsor as part of the new animal drug application. Such an analytical method would need to have the same capability as the practicable method to determine the quantity of the drug residues so that the tolerance, withdrawal period, or other use restrictions continue to ensure that the use of the drug will be safe. However, as described in section II.C, for carcinogenic compounds, the regulatory method prescribed in the approval of the new animal drug must be used for surveillance and enforcement purposes for carcinogenic compounds (see 21 CFR part 500, subpart E).

    FDA establishes tolerances using the practicable method submitted by a sponsor as part of the new animal drug application as required by section 512(b)(1)(G) of the FD&C Act (21 U.S.C. 360b(b)(1)(G)). The practicable method has to meet certain performance criteria, including evaluation of accuracy, precision, and sensitivity. We use the practicable method submitted by the sponsor as part of the new animal drug application to determine the quantity of the drug residues that can safely remain in edible tissues (i.e., the tolerance), the withdrawal period, and any other use restrictions necessary to ensure that the proposed use of the drug will be safe, and make these use restrictions part of the conditions of approval. These conditions of use are designed to ensure that the proposed use of the drug will be safe § 514.1(b)(7) (21 CFR 514.1(b)(7)). In the past, the practicable method was often used for determining the quantity of residue in edible tissue when monitoring the food supply. However, as technologies have evolved, many of the older methods have become obsolete. In addition, there is an increased reliance on multiresidue methods in the monitoring of the food supply (i.e., methods that analyze for a number of different drug residues at the same time). As a result, we are clarifying that an analytical method other than the practicable method can be used for surveillance and enforcement purposes for non-carcinogenic compounds, provided it meets the same performance criteria as the practicable method to determine the quantity of the relevant drug residues. Therefore, we are proposing to revise some of the definitions in proposed § 556.3 of the 2012 proposed rule as well as revise some of the language under “General Considerations” in proposed § 556.5, to more accurately reflect our current thinking.

    B. Proposed Revisions to Definitions (Proposed § 556.3)

    In the 2012 proposed rule, we included a section of definitions (proposed § 556.3). We propose to revise four of the definitions, remove two definitions, and add a new definition in proposed § 556.3.

    In the definition of “marker residue”, we propose to delete “selected for assay by the regulatory method” because we are reserving the term “regulatory method” for use with carcinogenic compounds (see part 500, subpart E). Also, we propose to delete the explanatory text that follows the first sentence of the definition because an explanation of how the tolerance is used is not needed in this definition. In addition, we are removing the term “target tissue” in the definition and replacing it with “an edible tissue”.

    In the definition of “not required”, we propose to more accurately reflect the rationale FDA relied on in the past to approve certain new animal drugs without a tolerance. Currently, our general practice is to establish a tolerance for all new animal drugs we approve.

    In the definition of “tolerance”, we propose to delete the explanatory text that follows the first sentence of the definition because an explanation of how the tolerance is used is not needed in this definition.

    In the definition of “zero”, we propose to delete “when using a method of detection prescribed or approved by FDA” because, as discussed previously, an analytical method other than the practicable method can be used for surveillance and enforcement purposes for non-carcinogenic compounds. The additional proposed revisions to this definition are intended to clarify the meaning of the term “zero” as used in part 556 so that “zero” means any residues detected in the tissue renders it unsafe.

    We propose to remove the definition of “acceptable single-dose intake (ASDI)”. See discussion for “acute reference dose (ARfD)” further in this section for the explanation.

    We propose to remove the definition of “regulatory method” because we are reserving the term “regulatory method” for use with carcinogenic compounds, consistent with our current interpretation of the FD&C Act (see part 500, subpart E).

    We propose to add the definition of “acute reference dose (ARfD)” to mean “an estimate of the amount of residues expressed on a body weight basis that can be ingested in a period of 24 hours or less without adverse effects or harm to the health of the human consumer.” ARfD would be used in place of ASDI wherever this term is currently used in the tolerances listed in subpart B of part 556.

    In the 2012 proposed rule, we explained that sometimes the concept of an ASDI was used to calculate tolerances. We proposed to define the ASDI as “the amount of total residue that may safely be consumed in a single meal. The ASDI may be used to derive the tolerance for residue of a drug at the injection site where the drug is administered according to the label.” The definition of the ASDI was based on the U.S. Environmental Protection Agency definition of ARfD and chosen, in part, to provide additional clarity for the veterinary drug health based guidance value. Since that time, the use of the term ARfD has been more broadly applied by scientific and regulatory authorities, as further discussed in this section.

    The United States is an active member of the Codex Alimentarius and the Codex Committee for Residues of Veterinary Drugs in Food, which rely on the World Health Organization/Food and Agriculture Organization of the United Nations Joint Expert Committee on Food Additives (JECFA) for scientific advice. The JECFA uses the guidance Environmental Health Criteria (EHC) 240, Principles and Methods for the Risk Assessment of Chemicals in Food in its evaluations (Ref. 1). This guidance defines and discusses the term ARfD. More importantly for FDA, the International Cooperation on Harmonisation of Technical Requirements for Registration of Veterinary Medicinal Products (VICH) has also developed guidelines that discuss the ARfD. The United States is a member of VICH and adopts finalized VICH guidelines for technical requirements for new animal drug approvals in the United States. On June 1, 2015 (80 FR 31041), we announced a draft guidance (Guidance for Industry #232 (VICH GL54)) entitled “Studies to Evaluate the Safety of Residues of Veterinary Drugs in Human Food: General Approach to Establish an Acute Reference Dose (ARfD)”, in which the term “acute reference dose (ARfD)” is used to describe the same concept as the 2012 proposed definition of ASDI (Ref. 2). There are no fundamental differences between the meaning of ASDI and ARfD.

    We consider it appropriate to propose using the VICH definition of ARfD to replace the 2012 proposed definition of ASDI. The ARfD may be used in the same manner as the ASDI, which is to derive the tolerance for residues of a drug at an injection site where the drug is administered according to the label, or to derive the tolerance for residues of a drug in other edible tissues as a result of concern for the acute toxicity of the residues of the veterinary drug.

    C. Proposed Revisions to General Considerations (Proposed § 556.5)

    We propose to revise proposed § 556.5(d) to align with our current thinking. In addition, we propose to remove the term “regulatory method” from this provision because we are reserving this term for use with carcinogenic compounds (part 500, subpart E).

    Although the proposed revisions would clarify that an analytical method other than the practicable method may be used for surveillance and enforcement purposes for residue levels of non-carcinogenic animal drugs, with regard to approved carcinogenic compounds, our current interpretation of the relevant provisions of the FD&C Act is that it requires that a regulatory method be prescribed for such a compound and used for surveillance and enforcement purposes. Under the Delaney Clause, section 512(d)(1)(I) of the FD&C Act, FDA cannot approve an application for a new animal drug if it is found to induce cancer when ingested by humans or animals. An exception to this provision, referred to as the DES (diethylstilbestrol) Proviso, allows for the approval of a carcinogenic compound if FDA finds that, under the approved conditions of use, the drug will not adversely affect treated animals and no residue of the drug will be found (by methods of examination prescribed or approved by the Secretary by regulations) (emphasis added) in any food for human consumption derived from the treated animals (see section 512(d)(1)(I)(i) and (ii) of the FD&C Act). FDA has issued regulations defining the operational definition of no residue and regulatory method for purposes of measuring carcinogenic compounds (21 CFR 500.82 and 500.88).

    III. Proposed Conforming Change to 21 CFR Part 514

    We are proposing a conforming change to the language in the introductory text of § 514.1(b)(7) by removing the term “regulatory” in the last sentence to reflect the fact that we are reserving this term for use with carcinogenic compounds. (See discussion in section II.C.)

    IV. Legal Authority

    Our authority for issuing this proposed rule is provided by sections 512(b)(1)(G) and (H), 512(d)(1)(F), 512(d)(2), 512(i), 571(a)(2)(A), and 571(b)(1) of the FD&C Act (21 U.S.C. 360b(b)(1)(G) and (H), 360b(d)(1)(F), 360(d)(2), 360b(i), 360ccc(a)(2)(A), and 360ccc(b)(1)). These provisions relate to the information new animal drug and conditional approval applicants provide with respect to proposed tolerances, withdrawal periods, and practicable methods, and the process by which FDA establishes and publishes regulations setting tolerances for residues of approved and conditionally approved new animal drugs. In addition, section 701(a) of the FD&C Act (21 U.S.C. 371(a)) gives FDA general rulemaking authority to issue regulations for the efficient enforcement of the FD&C Act.

    V. Economic Analysis of Impacts

    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 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. Because this proposed rule would not impose compliance costs on the current or future sponsors of any approved and conditionally approved new animal drugs, we proposed to certify that the proposed rule would 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.

    VI. Paperwork Reduction Act of 1995

    We tentatively conclude 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. Analysis of Environmental Impact

    The Agency has determined under 21 CFR 25.30(i) 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.

    VIII. Federalism

    We have analyzed this proposed rule in accordance with the principles set forth in Executive Order 13132. We have determined that the 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 proposed 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.

    IX. References

    The following references are 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; they are also available electronically at http://www.regulations.gov. FDA has verified the Web site addresses, as of the date this document publishes in the Federal Register, but Web sites are subject to change over time.

    1. International Programme on Chemical Safety, “Environmental Health Criteria 240, Principals and Methods for the Risk Assessment of Chemicals in Food,” 2009. (http://www.who.int/foodsafety/publications/chemical-food/en/). Accessed on February 11, 2016. 2. FDA, “Draft Guidance for Industry #232: Studies to Evaluate the Safety of Residues of Veterinary Drugs in Human Food: General Approach to Establish an Acute Reference Dose (ARfD), VICH GL54,” (http://www.fda.gov/downloads/AnimalVeterinary/GuidanceComplianceEnforcement/GuidanceforIndustry/UCM448430.pdf), June 2015. Accessed on February 11, 2016. List of Subjects 21 CFR Part 514

    Administrative practice and procedure, Animal drugs, Confidential business information, Reporting and recordkeeping requirements.

    21 CFR Part 556

    Animal drugs, Foods.

    Therefore, under the Federal Food, Drug, and Cosmetic Act and under authority delegated to the Commissioner of Food and Drugs, it is proposed that 21 CFR chapter I, subchapter E, be amended as follows:

    PART 514—NEW ANIMAL DRUG APPLICATIONS 1. The authority citation for part 514 continues to read as follows: Authority:

    21 U.S.C. 321, 331, 351, 352, 354, 356a, 360b, 360ccc, 371, 379e, 381.

    § 514.1 [Amended]
    2. In § 514.1(b)(7) introductory text, remove the word “regulatory” from the last sentence. PART 556—TOLERANCES FOR RESIDUES OF NEW ANIMAL DRUGS IN FOOD 3. The authority citation for part 556, as proposed to be revised on December 5, 2012 (77 FR 72254), continues to read as follows: Authority:

    21 U.S.C. 342, 360b, 360ccc, 371.

    4. Amend § 556.3, as proposed to be added on December 5, 2012 (77 FR 72254), as follows: a. Remove the definition of “Acceptable single-dose intake”; b. Add, in alphabetical order, a definition for “Acute reference dose”; c. Revise the definitions for “Marker residue” and “Not required”; d. Remove the definition of “Regulatory method”; and e. Revise the definitions for “Tolerance” and “Zero”.

    The revisions and additions read as follows:

    § 556.3 Definitions.

    Acute reference dose (ARfD) means an estimate of the amount of residues expressed on a body weight basis that can be ingested in a period of 24 hours or less without adverse effects or harm to the health of the human consumer.

    Marker residue means the residue whose concentration is in a known relationship to the concentration of total residue in an edible tissue.

    Not required, in reference to tolerances in this part, means that at the time of approval:

    (1) No withdrawal period was necessary for residues of the drug to deplete to or below the concentrations considered to be safe, or an adequate withdrawal period was inherent in the proposed drug use, and there was a rapid depletion of residues, so there was no concern about residues resulting from misuse or overdosing; or

    (2) No withdrawal period was necessary because the drug was poorly absorbed or metabolized rapidly so as to make selection of an analyte impractical or impossible.

    Tolerance means the maximum concentration of a marker residue, or other residue indicated for monitoring, that can legally remain in a specific edible tissue of a treated animal.

    Zero, in reference to tolerances in this part, means any residues detected in the tissue renders it unsafe.

    5. Amend § 556.5, as proposed to be added on December 5, 2012 (77 FR 72254), by revising paragraph (d) to read as follows:
    § 556.5 General considerations.

    (d) FDA requires that a drug sponsor submit a practicable method as part of their new animal drug application. FDA uses the practicable method to determine the quantity of the drug residues that can safely remain in edible tissues (i.e., the tolerance), the withdrawal period, and any other use restrictions necessary to ensure that the proposed use of the drug will be safe.

    Dated: October 21, 2016. Leslie Kux, Associate Commissioner for Policy.
    [FR Doc. 2016-26043 Filed 10-27-16; 8:45 am] BILLING CODE 4164-01-P
    DEPARTMENT OF STATE 22 CFR Part 96 [Public Notice: 9772] RIN 1400-AD91 Intercountry Adoptions AGENCY:

    Department of State.

    ACTION:

    Proposed rule; extension of comment period.

    SUMMARY:

    The Department of State (the Department) is extending the period of time by 15 days for the public to submit comments on the Proposed Intercountry Adoption rule, in order to give the public more time to respond.

    DATES:

    The new comment closing date for the September 8, 2016, NPRM (FR Doc No. 2016-20968, 81 FR 62322), is November 22, 2016.

    ADDRESSES:

    Internet: You may view this Proposed rule and submit your comments by visiting the Regulations.gov Web site at www.regulations.gov, and searching for docket number DOS-2016-0056.

    Mail or Delivery: You may send your paper, disk, or CD-ROM submissions to the following address: Comments on Proposed rule 22 CFR part 96, Office of Legal Affairs, Overseas Citizens Services, U.S. Department of State, CA/OCS/L, SA-17, Floor 10, Washington, DC 20522-1710.

    • All comments should include the commenter's name and the organization the commenter represents (if applicable). If the Department is unable to read your comment for any reason, the Department might not be able to consider your comment. Please be advised that all comments will be considered public comments and might be viewed by other commenters; therefore, do not include any information you would not wish to be made public. After the conclusion of the comment period, the Secretary will publish a Final rule as expeditiously as possible in which it will address relevant public comments.

    FOR FURTHER INFORMATION CONTACT:

    Technical Information: Trish Maskew, (202) 485-6024.

    Legal Information: Carine L. Rosalia, (202) 485-6092.

    SUPPLEMENTARY INFORMATION:

    On September 8, 2016, the Department published a notice of Proposed rulemaking (NPRM), to amend requirements for accreditation of agencies and approval of persons to provide adoption services in intercountry adoption cases. (See 81 FR 62322.) The NPRM provided a comment period of 60 days, which expires on November 7, 2016.

    In response to a request for extension, the Department extends the comment period until November 22, 2016. This will provide 75 days for the public to submit comments on this rule. Further information, including the text of the Proposed rule, can be found in the NPRM.

    Dated: October 19, 2016. Theodore R. Coley, Acting Deputy Assistant Secretary, Overseas Citizen Services, Bureau of Consular Affairs, U.S. Department of State.
    [FR Doc. 2016-26094 Filed 10-27-16; 8:45 am] BILLING CODE 4710-06-P
    DEPARTMENT OF HOUSING AND URBAN DEVELOPMENT 24 CFR Parts 50, 55, 58, and 200 [Docket No. FR-5717-P-01] RIN 2501-AD62 Floodplain Management and Protection of Wetlands; Minimum Property Standards for Flood Hazard Exposure; Building to the Federal Flood Risk Management Standard AGENCY:

    Office of the Assistant Secretary for Community Planning and Development, HUD.

    ACTION:

    Proposed rule.

    SUMMARY:

    This proposed rule would revise HUD's regulations governing floodplain management to require, as part of the decision making process established to ensure compliance with Executive orders on Floodplain Management and Federal Flood Risk Management, that a HUD assisted or financed (including mortgage insurance) project involving new construction or substantial improvement that is situated in an area subject to floods be elevated or floodproofed between 2 and 3 feet above the base flood elevation as determined by best available information.

    The proposed rule would also revise HUD's Minimum Property Standards for one-to-four unit housing under HUD mortgage insurance and low-rent public housing programs. Building to the proposed standards will, consistent with the Executive orders, increase resiliency to flooding, reduce the risk of flood loss, minimize the impact of floods on human safety, health, and welfare, and promote sound, sustainable, long-term planning informed by a more accurate evaluation of flood risk that takes into account possible sea level rise and increased development associated with population growth.

    This document also proposes to revise a categorical exclusion available when HUD performs the environmental review under the National Environmental Policy Act (NEPA) and related Federal laws by making it consistent with changes to a similar categorical exclusion that is available to HUD grantees or other responsible entities when they perform these environmental reviews. This change will make the review standard identical regardless of whether HUD or a grantee is performing the review.

    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 appointment to review the public comments must be scheduled in advance by calling the Regulations Division at 202-708-3055 (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 at 800-877-8339. Copies of all comments submitted are available for inspection and downloading at www.regulations.gov.

    FOR FURTHER INFORMATION CONTACT:

    Danielle Schopp, Director, Office of Environment and Energy, Office of Community Planning and Development, Department of Housing and Urban Development, 451 7th Street SW., Room 7250, Washington, DC 20410-8000, telephone number 202-402-4442. For inquiry by phone or email, contact Elizabeth Zepeda, Environmental Review Division, Office of Environment and Energy, Office of Community Planning and Development, at 202-402-3988 (this is not a toll-free number), or email to: [email protected] For questions regarding the Minimum Property Standards, Robert L Frazier, Housing Program Policy Specialist, Office of Housing, Home Valuation Division, 202-708-2121. Persons with hearing or speech impairments may access this number through TTY by calling the toll-free Federal Relay Service at 800-877-8339.

    SUPPLEMENTARY INFORMATION:

    I. Background

    In the United States, floods caused 4,586 deaths from 1959 to 2005.1 With climate change and associated sea-level rise, flooding risks have increased over time, and are anticipated to continue increasing. The National Climate Assessment (May 2014), for example, projects that extreme weather events, such as severe flooding, will persist throughout the 21st century. Severe flooding can cause significant damage to infrastructure, including buildings, roads, ports, industrial facilities, and even coastal military installations. With more than $260 billion in flood damages across the Nation since 1980, it is necessary to take action to responsibly use Federal funds, and HUD must ensure it does not wastefully make Federal investments in the same structures after repeated flooding events. In addition, the FFRMS will align with the thousands of communities across the country that have strengthened their local floodplain management codes and standards to ensure that buildings and infrastructure are resilient to flood risk. HUD recognizes that the need to make structures resilient also requires a flexible approach to adapt to the needs of the Federal agency, local community, and the circumstances surrounding each project or action.

    1 “Flood Fatalities in the United States,” Sharon T. Ashley and Walker S. Ashley, Journal of Applied Meteorology and Climatology. Available at: http://journals.ametsoc.org/doi/pdf/10.1175/2007JAMC1611.1.

    In response to the threats that increasing flood risks pose to life and taxpayer funded property, on January 30, 2015, the President signed Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input. Significantly, Executive Order 13690 amended Executive Order 11988, Floodplain Management, issued in 1977 2 by, among other things, revising Section 6(c) of Executive Order 11988 to provide new approaches to establish the floodplain. Executive Order 13690 provided, however, that prior to any actions implementing Executive Order 13690, additional input from stakeholders be solicited and considered. Consistent with this direction, the Federal Emergency Management Agency (FEMA), as Chair of the Mitigation Framework Leadership Group (MitFLG 3 ), published a notice in the Federal Register seeking comment on the proposed “Revised Guidelines for Implementing Executive Order 11988, Floodplain Management” to provide guidance to agencies on the implementation of Executive Orders 13690 and 11988 (80 FR 6530, February 5, 2015). On March 26, 2015 (80 FR 16018), FEMA on behalf of MitFLG published a document in the Federal Register extending the public comment period for 30 days until May 6, 2015. MitFLG held 9 public listening sessions across the country that were attended by over 700 participants from State and local governments and other stakeholder organizations to discuss the Guidelines.4 MitFLG considered stakeholder input and provided recommendations to the Water Resources Council.5

    2 E.O. 13690 was published in the Federal Register on February 4, 2015 (80 FR 6425). Throughout this document, references to E.O. 11988 as amended by E.O. 13690 will be referred to as “Executive Order 11988, as amended.” References to E.O. 11988 as published in 1977 will simply be referred to as “Executive Order 11988.”

    3 The Mitigation Framework Leadership Group (MitFLG) is a senior level group formed in 2013 to coordinate mitigation efforts across the Federal Government and to assess the effectiveness of mitigation capabilities as they are developed and deployed across the Nation. The MitFLG includes relevant local, state, tribal, and Federal organizations. The balance of non-Federal members ensures appropriate integration of Federal efforts across the whole community.” The MitFLG Charter is available at: http://www.aswm.org/pdf_lib/nffa/mitigation_framework_leadership_group_charter.pdf.

    4 A list of stakeholder listening sessions can be found at: www.fema.gov/federal-flood-risk-management-standard-ffrms.

    5 The Water Resources Council (WRC) is tasked to maintain a continuing study and prepare an assessment of the adequacy of supplies of water necessary to meet the water requirements in each water resource region in the United States and the national interest therein. The WRC is a means for the coordination of the water and related land resources policies and programs of the several Federal agencies. The WRC is composed of the Secretary of the Interior, the Secretary of Agriculture, the Secretary of the Army, the Secretary of Commerce, the Secretary of Housing and Urban Development, the Secretary of Transportation, the Administrator of the Environmental Protection Agency, and the Secretary of Energy.

    On October 8, 2015, the Water Resources Council issued updated “Guidelines for Implementing Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input” (Guidelines). The Guidelines state that although the Guidelines describe various approaches for determining the higher vertical flood elevation and corresponding horizontal floodplain for federally funded projects, they are not meant to be an elevation standard, but are a resilience standard. Accordingly, roads, parking lots, and other horizontal infrastructure do not require elevation nor do acquisitions of structures that do not require substantial improvements. However, the new Guidelines require that all future actions where federal funds are used for new construction, substantial improvement or to address substantial damage meet the level of resilience established by the Guidelines. In implementing the Guidelines and establishing the Federal Flood Risk Management Standard (FFRMS), Federal agencies were to select among the following three approaches for establishing the flood elevation and hazard area in siting, design, and construction:

    • Climate-Informed Science Approach (CISA): Utilizing best-available, actionable data and methods that integrate current and future changes in flooding based on science,

    • Freeboard 6 Value Approach (FVA): Two or three feet of elevation, depending on the criticality of the building, above the 100-year, or 1 percent-annual-chance, flood elevation, or

    6 Freeboard is defined by FEMA as “a factor of safety usually expressed in feet above a flood level for purposes of floodplain management. “Freeboard” tends to compensate for the many unknown factors that could contribute to flood heights greater than the height calculated for a selected size flood and floodway conditions, such as wave action, bridge openings, and the hydrological effect of urbanization of the watershed.” See 44 CFR 59.1. Freeboard is not required by NFIP standards, but communities are encouraged to adopt at least a one-foot freeboard to account for the one-foot rise built into the concept of designating a floodway and the encroachment requirements where floodways have not been designated. Freeboard may result in lower flood insurance rates due to lower flood risk. Available at: http://www.fema.gov/freeboard.

    • 500 Year Flood (0.2 Percent Flood) Approach: 500-year, or 0.2 percent-annual-chance, flood elevation.

    The FVA and 0.2 Percent Flood approaches result in higher elevations with correspondingly larger horizontal floodplain areas. CISA will generally have a similar result, except that agencies using CISA may find the resulting elevation to be equal to or lower than the current elevation in some areas due to the nature of the specific climate change processes and physical factors affecting flood risk at the project site. However, as a matter of policy established in the Executive Order 11988 and 13690 Implementing Guidelines, CISA can only be used if the resulting flood elevation is equal to or higher than current base flood elevation. The higher elevations result in a larger horizontal floodplain as illustrated below:

    EP28OC16.000

    Executive Order 11988, issued May 24, 1977 (published in the Federal Register on May 25, 1977 at 42 FR 26951), requires Federal agencies to avoid, to the extent possible, the long and short term adverse impacts associated with the occupancy and modification of floodplains and to avoid direct and indirect support of floodplain development wherever there is a practicable alternative. Floodplains are found both in coastal flood areas, where rising tides and storm surge are often responsible for flooding, and in riverine flood areas where moving water bodies may overrun their banks due to heavy rains or snow melt. Because flood risk can change over time, FEMA continually revises floodplain maps to incorporate new information and reflect current understanding of flood risk.

    Prior to Executive Order 13690, a floodplain for Executive Order 11988 purposes referred to the lowland and relatively flat areas adjoining inland and coastal waters including flood-prone areas of offshore islands, including at a minimum, that area subject to a one percent or greater chance of flooding in any given year (often referred to as the “100-year” flood or “base flood”). Executive Order 13690 amended Executive Order 11988, to require agencies to update the FFRMS and the original Executive Order 11988 floodplain using one (or a combination) of the three approaches listed above, which are incorporated in the FFRMS.

    Consistent with Executive Order 11988, when no practicable alternative exists to development in flood-prone areas, HUD requires the design or modification of the proposed action to minimize potential adverse impact to and from flooding. HUD has implemented Executive Order 11988 and its 8-step review process through regulations at 24 CFR part 55. HUD requires the 8-step review process for activities occurring in the floodplain such as new construction of infrastructure or substantial improvement of buildings and hospitals. HUD requires that all HUD assisted or financed construction and improvements (including mortgage insurance actions) undergo the 8-step review process unless they are subject to an exception or categorical exclusion under 24 CFR 50.19, 24 CFR 55.12, 24 CFR 58.34, or 24 CFR 58.35(b). For example, the 8-step review process in § 55.20 does not apply to non-critical7 mortgage insurance actions and other financial assistance for the purchasing, mortgaging or refinancing of existing one-to-four family properties in communities that are in the Regular Program of the National Flood Insurance Program (NFIP) and in good standing, where the property is not located in a floodway or coastal high hazard area, or to financial assistance for minor repairs or improvements on one-to-four family properties. While the 8-step review process may not apply to these activities, HUD's current Minimum Property Standards at 24 CFR 200.926d require that single-family housing newly constructed under HUD mortgage insurance and specific low-rent public housing programs have its lowest floor at or above the base flood elevation.

    7 Non-critical actions are any actions that are not critical actions as defined at 24 CFR 55.2(b)(3)(i).

    II. This Proposed Rule A. Short Summary

    The proposed revision to HUD's floodplain regulations uses the framework of Executive Order 11988 which HUD has implemented for almost 40 years and does not change which actions require elevation and floodproofing of structures. This proposed rule would require that non-critical actions be elevated 2 feet above the base flood elevation. In addition, the rule would require that critical actions be elevated above the greater of the 500-year floodplain or 3 feet above the base flood elevation. For structures subject to HUD's floodplain regulation, this proposed rule also would enlarge the horizontal area of interest commensurate with the vertical increase, but the rule does not change the scope of actions to which the floodplain review process or elevation requirements in the floodplains regulations apply. The proposed rule would also revise HUD's Minimum Property Standards for one-to-four-unit housing under HUD mortgage insurance and low-rent public housing programs to require that the lowest floor in both newly constructed and substantially improved structures located within the 100-year floodplain be built at least 2 feet above the base flood elevation as determined by best available information, but does not enlarge the horizontal area of interest.

    B. Detailed Discussion

    As communities continue to recover from the devastating effects of Hurricane Sandy and other flood disasters, HUD has determined that their lessons cannot be ignored and point to the need for mitigation and resilience standards that ensure that structures located in flood-prone areas are built or rebuilt stronger, safer, and less vulnerable to future flooding events. As a result, consistent with the FVA described above for HUD assisted or financed actions, this proposed rule would require that structures involving new construction and substantial improvements and subject to 24 CFR part 55 be built to FFRMS and elevated at least 2 feet above the base flood elevation using best available information.8 For structures that meet the definition of critical actions as described in § 55.2(b)(3)(i), this proposed rule would require that structures in the FFRMS floodplain be elevated to the greater of the 500-year floodplain or 3 feet above the base flood elevation. For new or substantially improved non-residential structures in the FFRMS floodplain that are not critical actions, HUD is proposing that the structure either be elevated to the same level as residential structures, or, alternatively, be designed and constructed such that the structure is floodproofed to at least 2 feet above the base flood elevation.

    8 Best available information, may be the latest FEMA issued data or guidance, including advisory data (such as Advisory Base Flood Elevations (ABFE)), preliminary Flood Insurance Rate Maps (FIRMs), final FIRMs, or other Federal, State or local information.

    This proposed rule would also apply a similar new elevation standard to one-to-four family residential structures, located in the 1 percent-annual-chance floodplain, that involve new construction or substantial improvement with mortgages insured by the Federal Housing Administration. This proposed rule would require elevation of these structures at least 2 feet above base flood elevation using the best available information. In order to meet the goal of improving the resilience of such properties while also aligning to the manner in which such programs already operate, the proposed rule excludes the horizontal extent of the FVA described above for such properties, as explained further in later in this preamble.

    Elevation standards for manufactured housing receiving mortgage insurance are not covered in this rule change, but HUD expects to address this issue in future rulemaking. However, 24 CFR part 55, subject to exceptions and exclusions, will continue to apply to manufactured housing that receives assistance that is not in the form of mortgage insurance. This rule does not change the scope of activities that require compliance with the 8-step process, but rather it changes the vertical and horizontal extent of the floodplain for the purposes of 24 CFR part 55.

    There are two primary purposes for this rulemaking. First, HUD's experience in the wake of Hurricane Sandy and other flood disasters is that unless structures in flood-prone areas are properly designed, constructed, and elevated, they may not withstand future severe flooding events. As recognized by MitFLG and required by the FFRMS and Executive Order 13690, requiring structures to be elevated an additional elevation above the base flood elevation will increase resiliency and reduce property damage, economic loss, and loss of life, and can also benefit homeowners by reducing flood insurance rates. These higher elevations provide an extra buffer of 2 to 3 feet above the base flood elevation based on the best available information to improve the long term resilience of communities. Second, the higher elevation standards help account for increased flood risk associated with projected sea level rise, which is not considered in current FEMA maps and flood insurance costs. As stated in “Global Sea Level Rise Scenarios for the United States National Climate Assessment” U.S. Department of Commerce, National Oceanic and Atmospheric Administration, December 2012,9 federal experts have a very high confidence (greater than a 9 in 10 chance) that global mean sea level will rise at least 0.2 meters (8 inches) and no more than 2.0 meters (6.6 feet) by the year 2100. The higher elevation standard will address the lower end of this projection, while also allowing for greater impacts to be addressed as well.

    9 Available at http://cpo.noaa.gov/Home/AllNews/TabId/315/ArtMID/668/ArticleID/80/Global-Sea-Level-Rise-Scenarios-for-the-United-States-National-Climate-Assessment.aspx.

    This proposed rule uses the framework of Executive Order 11988 which HUD has implemented for nearly forty years. The proposed rule in 24 CFR part 55 does not change the requirements and guidance specifying when elevation and floodproofing of structures is required. For instance, HUD currently requires that a single family property involving new construction or substantial improvement financed with a HUD grant and located in the 1 percent-annual-chance floodplain in the effective Flood Insurance Rate Map (FIRM) be elevated to the effective FIRM base flood elevation. This proposed rule would add two feet of additional elevation to the base flood elevation as a resilience standard. Similarly, the proposed rule would not change the requirements or guidance governing rowhomes or structures with basements except to add two feet of additional elevation. As in the past, projects involving substantial improvement to rowhomes would have several options: (1) Elevate the effected home or homes, either by raising the floor within the home or elevating the full block; (2) if the homes are possibly historic, take formal steps to have the home(s) listed on the National Register of Historical Places or on a State Inventory of Historic Places, as structures with historic status are not required to elevate; or (3) alter the design plans so that substantial improvement is not being performed, such that elevation is not required. Likewise, some structures with basements would continue to be affected under the proposed rule. In some cases, raising the floor or filling in basements altogether may be necessary. In non-residential structures, floodproofing could be an option to preserve basements. HUD does not anticipate significant impacts on basements from the proposed rule; since HUD began collecting data on single-family properties basements in 2014, no single-family property has been affected by HUD's current flood elevation requirements.

    HUD chose the FVA over the CISA and the 0.2 Percent Flood approaches for a variety of reasons. First, the FVA can be applied consistently to any area participating in the NFIP. The FVA can be calculated using existing flood maps. This is not true for the CISA standard unless HUD were to establish criteria for every community regarding the application of particular climate and greenhouse gas scenarios and associated impacts (e.g., changes in precipitation patterns or relative sea-level rise rates). Rather than requiring this level of review and analysis, HUD chose the more direct FVA. Second, the two alternative approaches to FVA require expertise that may not be available to all communities. The 0.2 Percent Flood is not mapped in all communities, reflects in most coastal areas the stillwater (without storm surge) component of flooding and this is only appropriate for determining the horizontal floodplain extent. Local wave effects associated with the 0.2 percent stillwater flood elevation would need to be determined for the data to be used in establishing first floor or floodproofing elevation or any other engineering application. The 0.2 Percent Flood also requires a significant degree of expertise to map over an area or for an individual site. The same is also true for the CISA standard, which requires not just historical analysis but a greater anticipation of trends and future conditions. Third, HUD anticipates that it will not be cost effective to establish the CISA or the 0.2 Percent Flood for all projects. HUD funds or assists tens of thousands of small projects each year. For example, repaving a road or rehabilitating a single family home may not necessitate the extra amounts of cost required by the CISA and 0.2 Percent Flood approaches. Fourth, as stated earlier, many states and communities already have success applying a higher-elevation approach to floodplains. Due to the familiarity that many communities have with higher elevation standards, the FVA was seen as a very practical approach with documented history of application. For all of these reasons, HUD chose the FVA approach.

    Requiring a higher elevation standard will also address increased risk that occurs when flood maps do not reflect the current development footprint. Additional development and impervious surface decrease floodplain capacity and increase flood risk to structures. As more of the floodplain is paved, the floodplain absorbs less water and the area subject to flooding is increased. For this reason and generalized uncertainty in flood modeling processes, two prominent building codes, the International Building Code and International Residential Code 10 both recommend the use of elevation of structures—also called “freeboard”—to mitigate flood hazards. Freeboard is defined by FEMA to mean a factor of safety usually expressed in feet above base flood elevation for purposes of floodplain management. Freeboard is currently required by 20 States (plus the District of Columbia and Puerto Rico) and 596 localities.11

    10 The IBC states: G103.1 Permit applications.

    The building official shall review all permit applications to determine whether proposed development sites will be reasonably safe from flooding. If a proposed development site is in a flood hazard area, all site development activities (including grading, filling, utility installation and drainage modification), all new construction and substantial improvements (including the placement of prefabricated buildings and manufactured homes) and certain building work exempt from permit under Section 105.2 shall be designed and constructed with methods, practices and materials that minimize flood damage and that are in accordance with this code and ASCE 24.

    ASCE 24 then states a few freeboard requirements. See: http://www.fema.gov/media-library-data/1436288616344-93e90f72a5e4ba75bac2c5bb0c92d251/ASCE24-14_Highlights_Jan2015_revise2.pdf. The IRC provides that: Buildings and structures in flood hazard areas designated as Coastal A Zones shall have the lowest floors elevated to or above the base flood elevation plus 1 foot (305 mm), or to the design flood elevation, whichever is higher. R322.2.1 Elevation requirements. http://publicecodes.cyberregs.com/icod/irc/2012/icod_irc_2012_3_sec022.htm.

    11 Association of State Floodplain Managers, States and Other Communities in FEMA CRS with Building Freeboard Requirements, (2015), available at http://www.floods.org/ace-files/documentlibrary/FloodRiskMngmtStandard/States_with_freeboard_and_CRS_Communities_with_Freeboard_in_Other_states_2-27-15.pdf.

    A recent FEMA study also estimated that the size of floodplains and demand for flood insurance coverage will continue to increase.12 The study estimated that the total number of NFIP insurance policies was projected to increase by approximately 80 percent by 2100. The number of riverine policies may increase by about 100 percent and the number of coastal policies may increase by approximately 60 percent. The increase in the number of polices is due in part to development associated with normal population growth and in part to the effect of climate change on the amount of land in the floodplain within communities.

    12 Available at: http://www.aecom.com/content/wp-content/uploads/2016/06/Climate_Change_Report_AECOM_2013-06-11.pdf

    Requiring additional elevation above the base flood elevation also produces net savings in housing costs over time. HUD's mission is to create strong, sustainable, inclusive communities and quality affordable homes for all. Flood insurance and rebuilding costs can have drastic adverse effects on the affordability of homes. By elevating additional feet above the base flood elevation, homeowners may benefit from flood insurance premium reductions that will increase long-term affordability. As stated in FEMA's “Home Builder's Guide To Coastal Construction, Designing for Flood Levels Above the BFE” Technical Bulletin No. 1.6,13 constructing or reconstructing structures 2 feet above base flood elevation at a modest cost can result in premium savings of 50 percent in V Zone structures and 48 percent in A Zones. Please see the discussion of other cost reductions and benefits of increasing elevation in the regulatory impact analysis that accompanies this rule.

    13 Available at: http://www.fema.gov/media-library-data/20130726-1537-20490-8057/fema499_1_6_rev.pdf

    1. Federal Flood Risk Management Standard Floodplain

    HUD proposes to implement FFRMS by revising § 55.20, which is HUD's current 8-step process for evaluating HUD-assisted projects for flood risk and identifying steps to mitigate that risk. The 8-step process is currently triggered whenever a proposed non-critical action falls within the 100-year floodplain, as defined in § 55.2(b)(9), and whenever a critical action falls within the 500-year floodplain, as defined in § 55.2(b)(4). This proposed rule would expand the scope of § 55.20 by applying it to all projects situated at an elevation at or below the FFRMS floodplain.

    HUD proposes to define FFRMS floodplain in § 55.2(b)(12) for non-critical actions as land that is less than two feet above the 100-year floodplain. For critical actions, the FFRMS floodplain would be defined to include land that is either within the 500-year floodplain or less than three feet above the 100-year floodplain. Section 55.20(e) of the proposed rule would provide that, in addition to the current mitigation and risk reduction requirements, all actions in the FFRMS floodplain must be elevated or, in certain cases, floodproofed above the FFRMS floodplain. If higher elevations, setbacks, or other floodplain management measures are required by state, tribal, or locally adopted code or standards, HUD would provide that those higher standards would apply.

    For non-critical actions that are non-residential structures or multifamily residential structures that have no residential dwelling units below the FFRMS floodplain, HUD is proposing that projects may, as an alternative to being designed and built above the FFRMS floodplain, be designed and constructed such that, below the FFRMS floodplain, the structure is floodproofed. HUD would, except for changing “base flood level” to “FFRMS floodplain,” as defined in § 55.2(b)(12), adopt FEMA's requirements for floodproofing as provided in FEMA's regulations at 44 CFR 60.3(c)(3)(ii), which describes “floodproofing” as requiring that structures, “together with attendant utility and sanitary facilities, be designed so that below the base flood level the structure is watertight with walls substantially impermeable to the passage of water and with structural components having the capability of resisting hydrostatic and hydrodynamic loads and effects of buoyancy.” If higher standards are required by the NFIP or state, tribal, or locally adopted codes or standards, or if FEMA revises its NFIP regulation, those higher standards or later regulation would apply; except that notwithstanding any later, less stringent general standard, HUD will continue to require floodproofing to at least the FFRMS floodplain for those projects. In summary, all new construction or substantial rehabilitation of non-residential and certain mixed-use structures within the FFRMS floodplain that are not elevated must be floodproofed consistent with the latest FEMA standards above the level of the FFRMS floodplain. This provision would permit owners of non-residential and certain mixed-use buildings to construct structures in a way that is less expensive than elevation but allows the buildings to withstand flooding, thus appropriately balancing property protection with costs and reflecting the lower risk to human life and safety in non-residential structures or parts of structures.

    In the case of multifamily buildings, HUD would provide that the term “lowest floor” must be applied consistent with FEMA's Elevation Certificate guidance or FEMA's current guidance that establishes lowest floor. Specifically, HUD would define “lowest floor” to mean the lowest floor of the lowest enclosed area (including basement), except that an unfinished or flood resistant enclosure, usable solely for parking of vehicles, building access or storage in an area other than a basement area is not considered a building's lowest floor, provided, that such enclosure is not built so as to render the structure in violation of the non-elevation design requirements of 44 CFR 60.3.

    The definition of “substantial improvement,” codified at § 55.2(b)(10), would not change but continue to include any repair, reconstruction, modernization or improvement of a structure, the cost of which equals or exceeds 50 percent of the market value of the structure either: (1) Before the improvement or repair is started; or (2) if the structure has been damaged and is being restored, before the damage occurred. The definition of substantial improvement also includes repairs, reconstruction, modernization, or improvements that increase the average peak number of customers or employees likely to be on-site at any one time or the number of dwelling units in residential projects more than 20 percent. “Substantial improvement” does not include alterations to structures listed on the National Register of Historic Places or on a State Inventory of Historic Places or improvement of a structure to comply with existing state or local code specifications that is solely necessary to assure safe living conditions.

    The provisions relating to Letters of Map Amendment (LOMAs) and Letters of Map Revision (LOMRs) at § 55.12(c)(8) as well as the provision at § 55.26 covering the adoption of other agency floodplain and wetland reviews would also be updated to reflect the FFRMS.

    2. Data Sources

    Under this proposed rule, the required data source and best available information under Executive Order 11988 remains the latest FEMA issued data or guidance, which includes advisory data (such as Advisory Base Flood Elevations (ABFE)) or preliminary and final Flood Insurance Rate Maps (FIRM). Executive Order 11988 on floodplain management requires that federal agencies use the best available information to determine the flood risk for locations of projects and activities. Section 55.2(b)(1) provides that when FEMA provides interim flood hazard data, such as ABFE or preliminary maps and studies, HUD or the responsible entity shall use the latest of these sources to establish the floodplain. If FEMA information is unavailable or insufficiently detailed, other federal, state, tribal, or local data may be used as “best available information” in accordance with Executive Order 11988. However, a base flood elevation from an interim or preliminary or non-FEMA source cannot be used if it is lower than the current FIRM and Flood Insurance Study. This proposed rule clarifies, however, that in addition to FIRMs or ABFEs, the use of sources, such as U.S. Global Change Research Program, National Oceanic and Atmospheric Administration, United States Army Corps of Engineers, U.S. Geological Survey, and other FEMA sources, regarding climate impacts and sea level rise may be considered and must be considered for Environmental Impact Statements (EIS). These agencies often offer analyses that are forward-looking and may be more robust than the data offered under NFIP, which does not currently analyze sea level rise in FIRMs. These sources cover subject areas such as estimated sea level rise or catastrophic failure of flood control projects that may lead the reviewer to determine that an elevation greater than the FFRMS floodplain is appropriate. These sources may supplement the FIRM or ABFE but cannot be used as a basis for a lower elevation than otherwise required under this part.

    3. Other Changes

    In addition to increasing the elevation requirement, the rule proposes several other changes to enhance efficiency and consistency. First, the rule would amend the public notice requirements in §§ 55.20(b)(1) and 58.43(a) to allow parties to provide the public with notice of potential actions using government Web sites in lieu of a “local printed news medium” or “newspaper of general circulation in the affected community” as required under the current regulations. Second, the proposed rule also adds the word “method” to § 55.20(c)(1) to make the sentence consistent with language that immediately follows in § 55.20(c)(1)(ii) stating that alternative flood protection method considerations are, in addition to alternative site considerations, required under this subpart. Third, the proposed rule updates the definition of Coastal High Hazard Area (V Zone) to match FEMA's more thorough definition at 44 CFR 59.1, which is used by the NFIP. The change will have no impact on the function of 24 CFR part 55, because FEMA FIRMs will remain the principal source of V Zone data. Finally, the proposed rule makes a technical correction to a citation located in table 1 in § 55.11(c).

    4. Minimum Property Standards

    This rulemaking also proposes to apply a new elevation standard to one-to-four-family residential structures with mortgages insured by the FHA. Generally, in HUD's single-family mortgage insurance programs, Direct Endorsement mortgagees submit applications for mortgage insurance to HUD, and Lender Insurance mortgagees endorse loans for insurance, after the structure has been built. Thus, there is no HUD review or approval before the completion of construction. In these instances, HUD is not undertaking, financing or assisting construction or improvements. Thus, the FHA single family mortgage insurance program is not subject to Executive Order 11988, NEPA (42 U.S.C. 4321 et seq.), or related environmental laws or authorities. However, newly constructed single-family properties in HUD's mortgage insurance programs are generally required to meet HUD's minimum property standards under 24 CFR 200.926 through 200.926e. These property standards require that when HUD insures a mortgage on a property, the property meets basic livability and safety standards and is code compliant. The section relating to construction in flood hazard areas, § 200.926d(c)(4), has long been included as a property standard.

    In alignment with the proposals in this rulemaking that address FFRMS under Executive Order 11988, HUD is also proposing to amend its Minimum Property Standards on site design, and specifically the standards addressing drainage and flood hazard exposure at § 200.926d(c)(4). The purpose of the amendment of the property standard is to decrease potential damage from floods, increase the safety and soundness of the property for residents, and provide for more resilient communities in flood hazard areas. HUD would revise the section by requiring the lowest floor of newly constructed and substantially improved structures, within the 100-year floodplain, with and without basements to be at least 2 feet above the base flood elevation as determined by best available information. For one- to four-unit housing under HUD mortgage insurance and low-rent public housing programs, HUD's Minimum Property Standards in 24 CFR part 200 currently require that a one- to four-unit property involving new construction, located in the 1 percent-annual-chance floodplain in the effective Flood Insurance Rate Map (FIRM), be elevated to the effective FIRM base flood elevation. This proposed rule would add two feet of additional elevation to the base flood elevation as a resilience standard and would apply this standard to substantial improvement as well as new construction of such properties. This rule would not require consideration of the horizontally expanded FFRMS floodplain for single-family mortgage insurance projects governed by the requirements in the Minimum Property Standards.

    5. Categorical Exclusion

    HUD also proposes to amend § 50.20(a)(2)(i) to revise the categorical exclusion from environmental review under NEPA for minor rehabilitation of one- to four-unit residential properties. Specifically, HUD would remove the qualification that the footprint of the structure may not be increased in a floodplain or wetland when HUD performs the review. HUD recently removed the footprint trigger from the categorical exclusion at § 58.35(a)(3)(i) to allow rehabilitations reviewed by HUD responsible entities this ability to utilize this exclusion. This change will make the review standard the same regardless of whether HUD or a responsible entity is performing the review. Currently, when HUD performs a review under 24 CFR part 50, four units can be constructed in a floodplain or wetland as an individual action without an environmental assessment under the categorical exclusion in § 50.20(a)(3), but rehabilitated structures in a floodplain or wetland with an increased footprint would require a full environmental assessment. It is logically inconsistent to require a greater review for minor rehabilitations than new construction and to apply a higher level of review for HUD as opposed to grantees.

    6. Specific Questions for Comment

    In addition to seeking comments on implementing FFRMS, HUD specifically seeks public comments on the impact of the proposed elevation requirement on the accessibility of covered multifamily dwellings under the Fair Housing Act, the Americans with Disabilities Act (ADA), the Architectural Barriers Act (ABA), and section 504 of the Rehabilitation Act of 1973. Elevating buildings as a flood damage mitigation strategy may have a negative impact on affected communities' disabled and elderly populations, unless those buildings are made accessible. As a result, HUD invites comments on strategies it could employ to increase the accessibility of properties so affected in the event the proposed increase in elevation is adopted. Additionally, HUD invites comment on the cost and benefits of such strategies, including data that supports the costs and benefits.

    HUD is not including as part of this proposed rule, guidance to determine the horizontal extent of the FFRMS floodplain. In this regard, HUD believes that it is imperative to preserve the option to use new methodologies to determine horizontal extent as they become available. Nevertheless, HUD is seeking public comments on potential limits to the area and horizontal extent of the floodplain beyond the 100-year floodplain when using the FFRMS. Specifically, HUD is considering whether to use HUD's current areawide compliance process described at 24 CFR 55.25 to allow HUD to enter into allow voluntary agreements with communities to limit horizontal extent beyond the 100-year floodplain where: (1) Best-available and actionable climate data shows the area and horizontal extent of the two foot freeboard (or three foot for a Critical Action) FFRMS exceeds local, relative sea-level rise rates or other climate-related projections and the 500-year floodplain including wave heights; and

    (2) There are limited or no safely or sustainably developable sites in a community outside of the two foot FVA (or three foot for a Critical Action).

    HUD also invites comment on other approaches to limit the horizontal extent of the floodplain beyond the 100-year floodplain. Information regarding the cost and benefits of adopting any proposed limit is also requested.

    Further information about best-available and actionable climate data and the Climate-Informed Science Approach of the FFRMS is available in Appendix H of the October 8, 2015 Guidelines for Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input (Guidelines).

    Finally, HUD invites comments on alternative approaches to define the FFRMS floodplain for critical actions. For structures that meet the definition of critical actions as described in § 55.2(b)(3)(i) (e.g., fire stations, police stations, and hospitals), this proposed rule would require that structures be elevated to the greater of the 500-year floodplain or 3 feet above the base flood elevation. HUD requests alternative suggestions for defining the floodplain for the purposes of these projects for which even a slight chance of flooding is too great.

    III. Findings and Certifications Regulatory Review—Executive Orders 12866 and 13563

    Under Executive Order 12866 (Regulatory Planning and Review), a determination must be made whether a regulatory action is significant and, therefore, subject to review by the Office of Management and Budget (OMB) in accordance with the requirements of the order. Executive Order 13563 (Improving Regulations and Regulatory Review) directs executive agencies to analyze regulations that are “outmoded, ineffective, insufficient, or excessively burdensome, and to modify, streamline, expand, or repeal them in accordance with what has been learned.” Executive Order 13563 also directs that, where relevant, feasible, and consistent with regulatory objectives, and to the extent permitted by law, agencies are to identify and consider regulatory approaches that reduce burdens and maintain flexibility and freedom of choice for the public. This rule was determined to be a “significant regulatory action” as defined in section 3(f) of Executive Order 12866 (although not an economically significant regulatory action, as provided under section 3(f)(1) of the Executive Order).

    As discussed in this preamble, the proposed regulatory amendments would, based on Executive Order 13690 and the Guidelines, require, as part of the decisionmaking process established to ensure compliance with Executive Order 11988 (Floodplain Management), that new construction or substantial improvement in a floodplain be elevated or floodproofed 2 feet above the base flood elevation for non-critical actions and above the greater of the 500-year floodplain or 3 feet above the base flood elevation for critical actions based on FEMA's best available data. This proposed rule would also apply a similar new elevation standard to one-to-four family residential structures, located in the 1 percent-annual-chance floodplain, that involve new construction or substantial improvement with mortgages insured by the Federal Housing Administration. This rulemaking also proposes to revise a categorical exclusion available when HUD performs the environmental review by making it consistent with changes to a similar categorical exclusion that is available to HUD grantees or other responsible entities when they perform the environmental review. The rulemaking is part of HUD's commitment under the President's Climate Action plan. Building to these standards would increase resiliency, reduce the risk of flood loss, minimize the impact of floods on human safety, health and welfare, and promote sound, sustainable, long-term planning informed by a more accurate evaluation of risk that takes into account possible sea level rise and increased development associated with population growth.

    Regulatory Impact Analysis

    Increasing the required minimum elevation of HUD-assisted structures located in and around the floodplain will prevent damage caused by flooding and avoid relocation costs to tenants associated with temporary moves when HUD-assisted structures sustain flood damage and are temporarily uninhabitable. These benefits, which are realized throughout the life of HUD-assisted structures, are offset by the one-time increase in construction costs, borne only at the time of construction. Introducing a standard that requires additional freeboard above the base flood elevation takes into consideration FEMA's history of recommending freeboard as a tool for mitigation which extends several decades and provides, in HUD's view, the best assessment of risk to protect federal investments in flood zones.

    In addition, the likelihood that floods in coastal areas will become more frequent and damaging due to rising sea levels in future decades necessitates a stricter standard than the one currently in place. As stated in “Global Sea Level Rise Scenarios for the United States National Climate Assessment” U.S. Department of Commerce, National Oceanic and Atmospheric Administration, December 2012,14 federal experts have a very high confidence (greater than a 9 in 10 chance) that global mean sea level will rise at least 0.2 meters (8 inches) and no more than 2.0 meters (6.6 feet) by the year 2100. The Intergovernmental Panel on Climate Change (2013) also confirms that the sea level will continue rising throughout the 21st century.15

    14 Available at http://cpo.noaa.gov/Home/AllNews/TabId/315/ArtMID/668/ArticleID/80/Global-Sea-Level-Rise-Scenarios-for-the-United-States-National-Climate-Assessment.aspx.

    15 IPCC, 2013: Summary for Policymakers. In: Climate Change 2013: The Physical Science Basis. Contribution of Working Group I to the Fifth Assessment Report of the Intergovernmental Panel on Climate Change [Stocker, T.F., D. Qin, G.-K. Plattner, M. Tignor, S.K. Allen, J. Boschung, A. Nauels, Y. Xia, V. Bex and P.M. Midgley (eds.)]. Cambridge University Press, Cambridge, United Kingdom and New York, NY, USA.

    As discussed in the regulatory impact analysis that accompanies this rule, HUD estimates that requiring developers to construct or floodproof HUD-funded or insured properties to two feet above base flood elevation will increase construction costs by $12.803 million to $47.525 million. These are one-time costs which occur at the time of construction. Benefits of the increased standard include avoided damage to buildings, as measured by decreased insurance premiums, and avoided costs associated with tenants being displaced. These benefits occur annually over the life of the structures. Over a 30-year period, the present value of aggregate benefits total $12.336 million to $50.657 million assuming a 3 percent discount rate and $8.192 million to $33.317 million assuming a 7 percent discount rate.

    These estimates are based on the annual production of HUD-assisted and insured structures in the floodplain and accounts for the 20 states (in addition to the District of Columbia and Puerto Rico) 16 with existing freeboard requirements. Four of these states require residential structures to be constructed with the lowest floor at least two feet above the base flood elevation (Indiana, Montana, New York and Wisconsin) and 18 states and territories require residential structures to be built with the lowest floor at least one foot above the base flood elevation. The cost of compliance would be lower in these states than it would be in states that have no minimum elevation requirements above the base flood elevation. Further increase in the sea level rise or inland and riverine flooding would increase the benefits of this proposed rule. For a complete description of HUD's analysis, please see the accompanying Regulatory Impact Analysis for this rule on regulations.gov.

    16 Arizona, Colorado, Georgia, Illinois, Iowa, Kansas, Maryland, Maine, Michigan, Minnesota, North Dakota, Nebraska, New Jersey, Oregon, Puerto Rico and Rhode Island require base flood elevation +1 foot. The District of Columbia and Pennsylvania require base flood elevation + 1.5 feet. Indiana, Montana, New York and Wisconsin require base flood elevation + 2 feet. See http://www.floods.org/ace-files/documentlibrary/FloodRiskMngmtStandard/States_with_freeboard_and_CRS_Communities_with_Freeboard_in_Other_states_2-27-15.pdf).

    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 would not have a significant economic impact on a substantial number of small entities. HUD's statistics on developers of FHA-insured properties do not precisely correlate with SBA's size standard of a small business for the category of “Real Estate Credit,” which size standard is less than $36.5 million in assets. HUD does have data on net worth and liquidity, however, and for the purposes of this discussion treats these as essentially similar to “assets” as meant in the SBA size standards.

    With respect to all entities, including small entities, it is unlikely that the economic impact would be significant. As the Regulatory Impact Analysis (RIA) explains, the benefits of reduced damage offset the construction costs before taking further sea level rise into consideration. Further, small entities may benefit more since they are less likely to endure financial hardships caused by severe flooding.

    Based on an engineering study conducted for FEMA,17 the construction cost of increasing the base of a new residential structure two additional feet of vertical elevation varies from 0.3 percent to 4.8 percent of the base building cost. This results in an increase of up to $5,074 per single family home and $70,769 per multi-family property located in states with no existing freeboard requirements. Consequently, this would not pose a significant burden to small entities in the single family housing development industry.

    17 See Federal Emergency Management Agency. 2013. “2008 Supplement to the 2006 Evaluation of the National Flood Insurance Program's Building Standards”.

    These costs are likely higher than would actually be caused by the increased standard because most HUD-assisted or insured substantial improvement projects already involve elevation to comply with the current standard, elevation to the base flood elevation (base flood elevation+0). Thus, elevating a structure an additional two feet would be marginal compared to the initial cost of elevation to the floodplain level.

    For this reason, the undersigned certifies that there is no significant economic impact on small entities. Notwithstanding HUD's determination that this rule will not have a significant economic impact on a substantial number of small entities, HUD specifically invites comments regarding any less burdensome alternatives to this rule that would meet HUD's program responsibilities.

    Environmental Impact

    A Finding of No Significant Impact (FONSI) with respect to environment has been made in accordance with HUD regulations at 24 CFR part 50, which implement section 102(2)(C) of NEPA (42 U.S.C. 4332(2)(C)). The Finding of No Significant Impact is available for public inspection on regulations.gov and between the hours of 8 a.m. and 5 p.m. weekdays in the Regulations Division, Office of General Counsel, Department of Housing and Urban Development, 451 7th Street SW., Room 10276, Washington, DC 20410. Due to security measures at the HUD Headquarters building, please schedule an appointment to review the FONSI by calling the Regulations Division at 202-708-3055 (this is not a toll-free number). Individuals with speech or hearing impairments may access this number via TTY by calling the toll-free Federal Relay Service at 800-877-8339.

    Federalism Impact

    Executive Order 13132 (entitled “Federalism”) prohibits an agency from publishing any rule that has federalism implications if the rule either imposes substantial direct compliance costs on state and local governments and is not required by statute, or preempts state law, unless the agency meets the consultation and funding requirements of section 6 of the Executive order. This rulemaking does not have federalism implications and would not impose substantial direct compliance costs on state and local governments nor preempts state law within the meaning of the Executive order.

    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 on the private sector. This proposed rule would not impose any federal mandates on any state, local, or tribal governments, or on the private sector, within the meaning of UMRA.

    Paperwork Reduction Act

    The information collection requirements contained in this rule were reviewed by OMB under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501-3520) and assigned OMB Control Number 2506-0151. An agency may not conduct or sponsor, and a person is not required to respond to, a collection of information, unless the collection displays a valid control number.

    List of Subjects 24 CFR Part 50

    Environmental impact statements.

    24 CFR Part 55

    Environmental impact statements, Floodplains, Wetlands.

    24 CFR Part 58

    Community development block grants, Environmental impact statements, Grant programs—housing and community development, Reporting and recordkeeping requirements.

    24 CFR Part 200

    Administrative practice and procedure, Claims, Equal employment opportunity, Fair housing, Housing standards, Lead poisoning, Loan programs—housing and community development, Mortgage insurance, Organization and functions (Government agencies), Penalties, Reporting and recordkeeping requirements, Social security, Unemployment compensation, Wages.

    Accordingly, for the reasons stated in the preamble above, HUD proposes to amend 24 CFR parts 50, 55, 58, and 200 as follows:

    PART 50—PROTECTION AND ENHANCEMENT OF ENVIRONMENTAL QUALITY 1. The authority citation for part 50 continues to read as follows: Authority:

    42 U.S.C. 3535(d) and 4332; and Executive Order 11991, 3 CFR, 1977 Comp., p.123.

    § 50.4 [Amended]
    2. Amend § 50.4(b)(2) by removing “(3 CFR, 1977 Comp., p. 117)” and adding in its place “as amended by Executive Order 13690, February 4, 2015 (80 FR 6423), (3 CFR, 2015 Comp., p. 6423).” 3. Revise § 50.20(a)(2)(i) to read as follows:
    § 50.20 Categorical exclusions subject to the Federal laws and authorities cited in § 50.4.

    (a) * * *

    (2) * * *

    (i) In the case of a building for residential use (with one to four units), the density is not increased beyond four units, and the land use is not changed;

    PART 55—FLOODPLAIN MANAGEMENT AND PROTECTION OF WETLANDS 4. The authority citation for part 55 is revised to read as follows: Authority:

    42 U.S.C. 3535(d), 4001-4128 and 5154a; E.O. 13690, 80 FR 6425, E.O. 11988, 42 FR 26951, 3 CFR, 1977 Comp., p. 117; E.O. 11990, 42 FR 26961, 3 CFR, 1977 Comp., p 121.

    § 55.1 [Amended]
    5. Amend § 55.1 as follows: a. In paragraph (a)(1), add “, as amended,” after “Floodplain Management”; and b. In paragraph (a)(3), add “, as amended,” after “Floodplain Management”. 6. Amend § 55.2 as follows: a. Remove “Floodplain Management Guidelines for Implementing Executive Order 11988 (43 FR 6030, February 10, 1978)” from paragraph (a) and add in its place “Guidelines for Implementing Executive Order 11988, Floodplain Management, and Executive Order 13690, Establishing a Federal Flood Risk Management Standard and a Process for Further Soliciting and Considering Stakeholder Input (80 FR 64008, October 22, 2015)”; b. Revise paragraphs (b)(1), (4) and (9); and c. Add paragraphs (b)(12) and (13);

    The revisions and additions read as follows:

    § 55.2 Terminology.

    (b) * * *

    (1) Coastal high hazard area means an area of special flood hazard extending from offshore to the inland limit of a primary frontal dune along an open coast and any other area subject to high velocity wave action from storms or seismic sources. On a Flood Insurance Rate Map (FIRM), this appears as zone V1-30, VE or V. FIRMs and Flood Insurance Studies (FISs) are relied upon for the designation of “coastal high hazard areas” as well as “100-year floodplains” (§ 55.2(b)(9)), “500-year floodplains” (§ 55.2(b)(4)), and “floodways” (§ 55.2(b)(5)).

    (i) When FEMA provides interim flood hazard data, such as Advisory Base Flood Elevations (ABFE) or preliminary maps and studies, HUD or the responsible entity shall use the latest of these sources.

    (ii) If FEMA information is unavailable or insufficiently detailed, other Federal, state, or local data may be used as “best available information” in accordance with Executive Order 11988. A base flood elevation from an interim or preliminary or non-FEMA source may not be used if it is lower than the current FIRM and FIS.

    (iii) In addition to FIRMs or ABFEs, the use of data from sources such as the U.S. Global Change Research Program, National Oceanic and Atmospheric Administration, United States Army Corps of Engineers, U.S. Geological Survey, and other FEMA sources may be considered. When performing an Environmental Impact Statement (EIS), an analysis of the best available, actionable climate science, as determined by HUD or the responsible entity, must be performed using data from these sources. These sources may supplement the FIRM or ABFE in order to better minimize impacts to projects or to elevate or floodproof structures above the risk adjusted floodplain. These sources may not be used as a basis for a lower elevation than otherwise required under this part.

    (4) 500-year floodplain means the area, including the base flood elevation, subject to inundation from a flood having a 0.2 percent chance or greater of being equaled or exceeded in any given year. (See § 55.2(b)(1) for appropriate data sources.)

    (9) 100-year floodplain means the area subject to inundation from a flood having a one percent or greater chance of being equaled or exceeded in any given year. (See § 55.2(b)(1) for appropriate data sources.)

    (12) FFRMS floodplain means area in which an action is proposed that:

    (i) If a non-critical action, is located on a site less than two feet above the 100-year floodplain; or

    (ii) If a critical action, is on a site that is either within the 500-year floodplain or less than three feet above the 100-year floodplain. The larger floodplain and higher elevation must be applied where the 500-year floodplain is mapped.

    (13) Structure means a walled or roofed building, including a manufactured home and a gas or liquid storage tank that is principally above ground.

    7. In § 55.11, revise table 1 to read as follows:
    § 55.11 Applicability of Subpart C decisionmaking process. Table 1 to Part 55 Type of proposed action (new reviewable action or an amendment) 1 Type of proposed action Floodways Coastal high hazard areas Wetlands or FFRMS floodplain outside coastal high hazard area and floodways Critical Actions as defined in § 55.2(b)(3) Critical actions not allowed Critical actions not allowed Allowed if the proposed critical action is processed under § 55.20.2 Noncritical actions not excluded under § 55.12(b) or (c) Allowed only if the proposed non-critical action is a functionally dependent use and processed under § 55.20 2 Allowed only if the proposed noncritical action is processed under § 55.20 2 and is (1) a functionally dependent use, (2) existing construction (including improvements), or (3) reconstruction following destruction caused by a disaster. If the action is not a functionally dependent use, the action must be designed for location in a Coastal High Hazard Area under § 55.1(c)(3) Allowed if proposed noncritical action is processed under § 55.20.2 1 Under E. O. 11990, the decision making process in § 55.20 only applies to Federal assistance for new construction in wetlands locations. 2 Or those paragraphs of § 55.20 that are applicable to an action listed in § 55.12(a).
    8. Revise § 55.12(c)(8) to read as follows:
    § 55.12 Inapplicability of 24 CFR part 55 to certain categories of proposed actions.

    (c) * * *

    (8) HUD's or the responsible entity's approval of financial assistance for a project on any nonwetland site in the FFRMS floodplain for which FEMA has issued:

    (i) A final Letter of Map Amendment (LOMA), final Letter of Map Revision (LOMR), or final Letter of Map Revision Based on Fill (LOMR-F) that presents information that can be used to demonstrate that the property (including ingress and egress on the property) is not located in the FFRMS floodplain; or

    (ii) A conditional LOMA, conditional LOMR, or conditional LOMR-F that presents information that can be used to demonstrate that the property (including ingress and egress on the property) will not be located in the FFRMS floodplain if HUD or the responsible entity's approval is subject to the requirements and conditions of the conditional LOMA or conditional LOMR;

    9. In § 55.20, revise paragraphs (a), (b) introductory text, (b)(1), (b)(3), (c) introductory text, (c)(1) introductory text, (c)(1)(i), (d) introductory text, (d)(1) introductory text, (e), (f), (g)(1) introductory text, and (g)(1)(i) to read as follows:
    § 55.20 Decision making process.

    (a) Step 1. (1) Determine whether the proposed action occurs in the FFRMS floodplain or results in new construction in a wetland. If the proposed action does not occur in the FFRMS floodplain or result in new construction in a wetland, then no further compliance with this part is required.

    (2) The following process shall be followed by HUD (or the responsible entity) in making wetland determinations:

    (i) Refer to § 55.28(a) where an applicant has submitted with its application to HUD (or to the recipient under programs subject to 24 CFR part 58) an individual Section 404 permit (including approval conditions and related environmental review).

    (ii) Refer to § 55.2(b)(11) for making wetland determinations under this part.

    (iii) For proposed actions occurring in both a wetland and the FFRMS floodplain, completion of the decision making process under this section is required regardless of the issuance of a Section 404 permit. In such a case, the wetland will be considered among the primary natural and beneficial functions and values of the FFRMS floodplain.

    (b) Step 2. Notify the public and agencies responsible for floodplain management or wetlands protection at the earliest possible time of a proposal to consider an action in the FFRMS floodplain or wetland and involve the affected and interested public in the decision making process.

    (1) The public notices required by paragraphs (b) and (g) of this section may be combined with other project notices wherever appropriate. Notices required under this part must be bilingual if the affected public is largely non-English speaking. In addition, all notices must be published in an appropriate local news medium or appropriate government Web site, and must be sent to Federal, state, and local public agencies, organizations, and, where not otherwise covered, individuals known to be interested in the proposed action.

    (3) A notice under this paragraph shall state: The name, proposed location and description of the activity; the total number of acres of FFRMS floodplain or wetland involved; the related natural and beneficial functions and values of the FFRMS floodplain or wetland that may be adversely affected by the proposed activity; the HUD approving official (or the certifying officer of the responsible entity authorized by 24 CFR part 58); and the phone number to call for information. The notice shall indicate the hours of HUD or the responsible entity's office, and any Web site at which a full description of the proposed action may be reviewed.

    (c) Step 3. Identify and evaluate alternatives to locating the proposed action in the FFRMS floodplain or wetland. Where possible, use natural systems, ecosystem processes, and nature-based approaches when developing alternatives for consideration.

    (1) Except as provided in paragraph (c)(3) of this section, HUD's or the responsible entity's consideration of practicable alternatives to the proposed site or method should include the following:

    (i) Locations outside the FFRMS floodplain or wetland;

    (d) Step 4. Identify the potential direct and indirect impacts associated with the occupancy or modification of the FFRMS floodplain or the wetland and the potential direct and indirect support of FFRMS floodplain and wetland development that could result from the proposed action.

    (1) FFRMS floodplain evaluation. The focus of the FFRMS floodplain evaluation should be on adverse impacts to lives and property and on natural and beneficial FFRMS floodplain values. Natural and beneficial values include:

    (e) Step 5. Design or modify the proposed action to minimize the potential adverse impacts to and from the FFRMS floodplain or the wetland and to restore and preserve its natural and beneficial functions and values. All calculations in this section of the base flood elevation and 500-year flood elevation must be made using the best available information as required by § 55.2(b)(1). For actions in the FFRMS floodplain, the required elevation described in this section must be documented on an Elevation Certificate or a Floodproofing Certificate in the Environmental Review Record prior to construction, or by such other means as HUD may from time to time direct, provided that notwithstanding any language to the contrary, the minimum elevation or floodproofing requirement shall be the FFRMS floodplain as defined in this section.

    (1) If a structure designed principally for residential use undergoing new construction or substantial improvement is located in a floodplain, the lowest floor or FEMA-approved equivalent must be designed using the FFRMS floodplain as the baseline standard for elevation, except where higher elevations are required by state, tribal, or locally adopted code or standards, in which case those higher elevations apply. Where non-elevation standards such as setbacks or other flood risk reduction standards that have been issued to identify, communicate, or reduce the risks and costs of floods are required by state, tribal, or locally adopted code or standards, those standards shall apply in addition to the FFRMS baseline elevation standard.

    (2) New construction and substantial improvement of non-residential structures, or residential structures that have no dwelling units and no residents below the FFRMS floodplain and that are not critical actions as defined at § 55.2(b)(3), shall be designed either:

    (i) With the lowest floor, including basement, elevated to or above the FFRMS floodplain; or

    (ii) With the structure floodproofed at least up to and below the FFRMS floodplain. Floodproofing standards are as stated in FEMA's regulations at 44 CFR 60.3(c)(3)(ii), or such other regulatory standard as FEMA may issue, and applicable guidance, except that where the standard refers to base flood level, elevation is required above the FFRMS floodplain, as defined in this part.

    (3) The term “lowest floor” means the lowest floor of the lowest enclosed area (including basement), except that an unfinished or flood resistant enclosure, usable solely for parking of vehicles, building access or storage in an area other than a basement area is not considered a building's lowest floor; provided, that such enclosure is not built so as to render the structure in violation of the applicable non-elevation design requirements of 44 CFR 60.3. “Lowest floor” must be applied consistent with FEMA's Elevation Certificate guidance or other applicable current FEMA guidance.

    (4) Minimization techniques for floodplain and wetlands purposes include, but are not limited to: The use of permeable surfaces; natural landscape enhancements that maintain or restore natural hydrology through infiltration, native plant species, bioswales, rain gardens, or evapotranspiration; stormwater capture and reuse; green or vegetative roofs with drainage provisions; Natural Resource Conservation Service or other conservation easements; WaterSense products; rain barrels and grey water diversion systems; and other low impact development and green infrastructure strategies, technologies, and techniques. For floodplain purposes, minimization also includes floodproofing and elevating structures above the required FFRMS floodplain. Where possible, use natural systems, ecosystem processes, and nature-based approaches when developing alternatives for consideration.

    (5) Appropriate and practicable compensatory mitigation is recommended for unavoidable adverse impacts to more than one acre of wetlands. Compensatory mitigation includes, but is not limited to: Permitee-responsible mitigation, mitigation banking, in-lieu fee mitigation, the use of preservation easements or protective covenants, and any form of mitigation promoted by state or federal agencies. The use of compensatory mitigation may not substitute for the requirement to avoid and minimize impacts to the maximum extent practicable.

    (6) All critical actions in the FFRMS floodplain must be modified to include:

    (i) Preparation of and participation in an early warning system;

    (ii) An emergency evacuation and relocation plan;

    (iii) Identification of evacuation route(s) out of the FFRMS and 500-year floodplain; and

    (iv) Identification marks of past or estimated flood levels on all structures.

    (f) Step 6. Reevaluate (or evaluate for actions under § 55.12(a)) the proposed action to determine:

    (1) Whether the action is still practicable in light of exposure to flood hazards in the FFRMS floodplain or wetland, possible adverse impacts on the FFRMS floodplain or wetland, the extent to which it will aggravate the current and future hazards to other floodplains or wetlands, and the potential to disrupt the natural and beneficial functions and values of floodplains or wetlands; and

    (2) Whether alternatives preliminarily rejected at Step 3 (paragraph (c) of this section) are practicable in light of information gained in Steps 4 and 5 (paragraphs (d) and (e) of this section).

    (i) The reevaluation of alternatives, or initial evaluation of a no action or non-floodplain alternative for actions under § 55.12(a), shall include the potential impacts avoided or caused inside and outside the FFRMS floodplain or wetlands area. The impacts should include the protection of human life, real property, and the natural and beneficial functions and values served by the floodplain or wetland.

    (ii) A reevaluation of alternatives, or initial evaluation of a no action or non-floodplain alternative for actions under § 55.12(a), under this step should include a discussion of economic costs. For floodplain areas, the cost estimates should include savings or the costs of flood insurance (where applicable); floodproofing; replacement of services or functions of critical actions that might be lost; and elevation to at least the elevation of the FFRMS floodplain, as appropriate on the applicable source under § 55.2(b)(1). For wetlands, the cost estimates should include the cost of new construction activities, including fill, impacting the wetlands, and mitigation.

    (g) * * * (1) If the reevaluation results in a determination that there is no practicable alternative to locating the proposal in the FFRMS floodplain or wetland, publish a final notice that includes:

    (i) The reasons why the proposal must be located in the FFRMS floodplain or wetland;

    10. Amend § 55.26 as follows: a. Revise the section heading; b. In paragraph (b)(2), remove the word “and”; b. In paragraph (c), remove the period at the end of the paragraph and add in its place a semicolon and the word “and”; c. Add paragraph (d).

    The addition reads as follows:

    § 55.26 Adoption of another agency's review under Executive orders.

    (d) All actions must at least be elevated or floodproofed two feet above the 100-year floodplain (or to the higher of the 500-year flood elevation or 3 feet above the 100-year floodplain for Critical Actions) unless an agreement is in place to allow for the other Federal agency's FFRMS elevation standard pursuant to 42 U.S.C. 5189g.

    11. Revise § 55.27(a)(2) to read as follows:
    § 55.27 Documentation.

    (a) * * *

    (2) Under § 55.20(e), measures to minimize the potential adverse impacts of the proposed action on the affected floodplain or wetland as identified in § 55.20(d) have been applied to the design for the proposed action. Prior to construction of a project in a floodplain, the documentation must include an elevation certificate or floodproofing certificate (or such other similar certification as HUD may from time to time direct) indicating the FFRMS floodplain elevation was used if required under § 55.20(e).

    PART 58—ENVIRONMENTAL REVIEW PROCEDURES FOR ASSUMING HUD ENVIRONMENTAL REVIEW RESPONSIBILITIES 12. The authority citation for part 58 continues to read as follows: Authority:

    12 U.S.C. 1707 note, 1715z- 13a(k); 25 U.S.C. 4115 and 4226; 42 U.S.C. 1437x, 3535(d), 3547, 4321-4335, 4852, 5304(g), 12838, and 12905(h); title II of Pub. L. 105-276; E.O. 11514 as amended by E.O. 11991, 3 CFR, 1977 Comp., p. 123.

    13. Revise § 58.5(b)(1) to read as follows:
    § 58.5 Related Federal laws and authorities.

    (b) * * *

    (1) Executive Order 11988, Floodplain Management, as amended by Executive Order 13690, February 4, 2015 (80 FR 6425), 3 CFR, 2015 Comp., p. 6425, as interpreted in HUD regulations at 24 CFR part 55.

    14. Revise § 58.43(a) to read as follows:
    § 58.43 Dissemination and/or publication of the findings of no significant impact.

    (a) If the responsible entity makes a finding of no significant impact, it must prepare a FONSI notice, using the current HUD-recommended format or an equivalent format. As a minimum, the responsible entity must send the FONSI notice to individuals and groups known to be interested in the activities, to the local news media, to the appropriate tribal, local, State and Federal agencies; to the Regional Offices of the Environmental Protection Agency having jurisdiction and to the HUD Field Office (or the State where applicable). The responsible entity may also publish the FONSI notice in a newspaper of general circulation in the affected community or on an appropriate government Web site. If the notice is not published, it must also be prominently displayed in public buildings, such as the local Post Office and within the project area or in accordance with procedures established as part of the citizen participation process.

    PART 200—INTRODUCTION TO FHA PROGRAMS 15. The authority citation for part 200 continues to read as follows: Authority:

    12 U.S.C. 1702-1715z-21; 42 U.S.C. 3535(d).

    16. In § 200.926, add paragraph (a)(3) to read as follows:
    § 200.926 Minimum property standards for one and two family dwellings.

    (a) * * *

    (3) Applicability of standards to substantial improvement. The standards in § 200.926d(c)(4)(i) through (iii) are also applicable to structures that are approved for insurance or other benefits prior to the start of substantial improvement, as defined in § 55.2(b)(10) of this title.

    17. In § 200.926d, revise paragraphs (c)(4)(i) through (iii), remove paragraph (c)(4)(iv), and redesignate paragraphs (c)(4)(v) and (c)(4)(vi) as paragraphs (c)(4)(iv) and (c)(4)(v), respectively.

    The revisions read as follows:

    § 200.926d Construction requirements.

    (c) * * *

    (4) * * *

    (i) Residential structures located in Special Flood Hazard Areas. The elevation of the lowest floor shall be at least two feet above the base flood elevation (see 24 CFR 55.2 for appropriate data sources).

    (ii) Residential structures located in FEMA-designated “coastal high hazard areas”. (A) Basements or any permanent enclosure of space below the lowest floor of a structure are prohibited.

    (B) Where FEMA has determined the base flood level without establishing stillwater elevations, the bottom of the lowest structural member of the lowest floor (excluding pilings and columns) and its horizontal supports shall be at least two feet above the base flood elevation.

    (iii) New construction or substantial improvement. (A) In all cases in which a Direct Endorsement (DE) mortgagee or a Lender Insurance (LI) mortgagee seeks to insure a mortgage on a one- to four-family dwelling that is newly constructed or which undergoes a substantial improvement, as defined in § 55.12(b)(10) of this title (including a manufactured home that is newly erected or undergoes a substantial improvement) that was processed by the DE or LI mortgagee, the DE or LI mortgagee must determine whether the property improvements (dwelling and related structures/equipment essential to the value of the property and subject to flood damage) are located on a site that is within a Special Flood Hazard Area, as designated on maps of the Federal Emergency Management Agency. If so, the DE mortgagee, before submitting the application for insurance to HUD, or the LI mortgagee, before submitting all the required data regarding the mortgage to HUD, must obtain:

    (1) A final Letter of Map Amendment (LOMA);

    (2) A final Letter of Map Revision (LOMR); or

    (3) A signed Elevation Certificate documenting that the lowest floor (including basement) of the property improvements is at least two feet above the base flood elevation as determined by FEMA's best available information.

    (B) Under the DE program, these mortgages are not eligible for insurance unless the DE mortgagee submits the LOMA, LOMR, or Elevation Certificate to HUD with the mortgagee's request for endorsement.

    Dated: September 27, 2016. Harriet Tregoning, Principal Deputy Assistant Secretary for Community Planning and Development.
    [FR Doc. 2016-25521 Filed 10-27-16; 8:45 am] BILLING CODE 4210-67-P
    DEPARTMENT OF THE TREASURY Alcohol and Tobacco Tax and Trade Bureau 27 CFR Part 9 [Docket No. TTB-2016-0009; Notice No. 163] RIN 1513-AC34 Proposed Establishment of the Petaluma Gap Viticultural Area and Modification of the North Coast Viticultural Area AGENCY:

    Alcohol and Tobacco Tax and Trade Bureau, Treasury.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Alcohol and Tobacco Tax and Trade Bureau (TTB) proposes to establish the 202,476-acre “Petaluma Gap” viticultural area in portions of Sonoma and Marin Counties in California. TTB also proposes to expand the boundary of the existing 3 million-acre North Coast viticultural area by 28,077 acres in order to include the entire proposed Petaluma Gap viticultural area within it. The proposed Petaluma Gap viticultural area would also partially extend outside of the established Sonoma Coast viticultural area, but TTB is not proposing to modify the boundary of the Sonoma Coast viticultural area. TTB designates viticultural areas to allow vintners to better describe the origin of their wines and to allow consumers to better identify wines they may purchase. TTB invites comments on these proposals.

    DATES:

    TTB must receive your comments on or before December 27, 2016.

    ADDRESSES:

    Please send your comments on this proposal to one of the following addresses:

    https://www.regulations.gov (via the online comment form for this document as posted within Docket No. TTB-2016-009 at “Regulations.gov,” the Federal e-rulemaking portal);

    U.S. mail: Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; or

    Hand delivery/courier in lieu of mail: Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Suite 400, Washington, DC 20005.

    See the Public Participation section of this document for specific instructions and requirements for submitting comments, and for information on how to request a public hearing.

    You may view copies of this document, selected supporting materials, and any comments TTB receives about this proposal at https://www.regulations.gov within Docket No. TTB-2016-0009. A link to that docket is posted on the TTB Web site at https://www.ttb.gov/wine/wine-rulemaking.shtml under Notice No. 163. You also may view copies of this document, all related petitions, maps or other supporting materials, and any comments TTB receives about this proposal by appointment at the TTB Information Resource Center, 1310 G Street NW., Washington, DC 20005. Please call 202-453-2270 to make an appointment.

    FOR FURTHER INFORMATION CONTACT:

    Karen A. Thornton, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005; phone 202-453-1039, ext. 175.

    SUPPLEMENTARY INFORMATION: Background on Viticultural Areas TTB Authority

    Section 105(e) of the Federal Alcohol Administration Act (FAA Act), 27 U.S.C. 205(e), authorizes the Secretary of the Treasury to prescribe regulations for the labeling of wine, distilled spirits, and malt beverages. The FAA Act provides that these regulations should, among other things, prohibit consumer deception and the use of misleading statements on labels, and ensure that labels provide the consumer with adequate information as to the identity and quality of the product. The Alcohol and Tobacco Tax and Trade Bureau (TTB) administers the FAA Act pursuant to section 1111(d) of the Homeland Security Act of 2002, codified at 6 U.S.C. 531(d). The Secretary has delegated various authorities through Treasury Department Order 120-01, dated December 10, 2013 (superseding Treasury Order 120-01, dated January 24, 2003), to the TTB Administrator to perform the functions and duties in the administration and enforcement of these provisions.

    Part 4 of the TTB regulations (27 CFR part 4) authorizes TTB to establish definitive viticultural areas and regulate the use of their names as appellations of origin on wine labels and in wine advertisements. Part 9 of the TTB regulations (27 CFR part 9) sets forth standards for the preparation and submission of petitions for the establishment or modification of American viticultural areas (AVAs) and lists the approved AVAs.

    Definition

    Section 4.25(e)(1)(i) of the TTB regulations (27 CFR 4.25(e)(1)(i)) defines a viticultural area for American wine as a delimited grape-growing region having distinguishing features, as described in part 9 of the regulations, and a name and a delineated boundary, as established in part 9 of the regulations. These designations allow vintners and consumers to attribute a given quality, reputation, or other characteristic of a wine made from grapes grown in an area to its geographic origin. The establishment of AVAs allows vintners to describe more accurately the origin of their wines to consumers and helps consumers to identify wines they may purchase. Establishment of an AVA is neither an approval nor an endorsement by TTB of the wine produced in that area.

    Requirements

    Section 4.25(e)(2) of the TTB regulations (27 CFR 4.25(e)(2)) outlines the procedure for proposing an AVA and provides that any interested party may petition TTB to establish a grape-growing region as an AVA. Section 9.12 of the TTB regulations (27 CFR 9.12) prescribes standards for petitions for the establishment or modification of AVAs. Petitions to establish an AVA must include the following:

    • Evidence that the area within the proposed AVA boundary is nationally or locally known by the AVA name specified in the petition;

    • An explanation of the basis for defining the boundary of the proposed AVA;

    • A narrative description of the features of the proposed AVA that affect viticulture, such as climate, geology, soils, physical features, and elevation, that make the proposed AVA distinctive and distinguish it from adjacent areas outside the proposed AVA boundary;

    • The appropriate United States Geological Survey (USGS) map(s) showing the location of the proposed AVA, with the boundary of the proposed AVA clearly drawn thereon; and

    • A detailed narrative description of the proposed AVA boundary based on USGS map markings.

    Petition to Establish the Petaluma Gap AVA and to Modify the Boundary of the North Coast AVA

    TTB received a petition from the Petaluma Gap Winegrowers Alliance, proposing to establish the “Petaluma Gap” AVA and to modify the boundary of the existing multi-county North Coast AVA (27 CFR 9.30). The proposed AVA covers portions of Sonoma and Marin Counties, in California. There are 9 bonded wineries and 80 commercial vineyards, covering a total of approximately 4,000 acres, distributed throughout the 202,476-acre proposed AVA.

    While the proposed Petaluma Gap AVA is largely located within the existing North Coast AVA, a small portion of the proposed Petaluma Gap AVA would, if established, extend outside the current southern boundary of the established North Coast AVA. To address the potential partial overlap of the two AVAs and account for viticultural similarities between the proposed Petaluma Gap AVA and the larger North Coast AVA, the petition also proposes to expand the boundary of the North Coast AVA so that the entire proposed Petaluma Gap AVA would be included within the North Coast AVA. The proposed expansion would increase the size of the 3 million-acre North Coast AVA boundary by 28,077 acres.

    The proposed Petaluma Gap AVA, if established, would also partially overlap the southwestern boundary of the established Sonoma Coast AVA (27 CFR 9.116), but the Marin County portion of the proposed AVA, consisting of approximately 68,130 acres, would extend outside of the Sonoma Coast AVA. However, the petition does not propose to modify the boundary of the Sonoma Coast AVA for reasons which will be discussed later in this document, including the lack of use of the name “Sonoma Coast” outside of Sonoma County.

    The distinguishing features of the proposed Petaluma Gap AVA are its topography and wind speeds. Unless otherwise noted, all information and data contained in the following sections are from the petition to establish the proposed AVA and its supporting exhibits.

    Proposed Petaluma Gap AVA Name Evidence

    The proposed Petaluma Gap AVA derives its name from the city of Petaluma and from the geographical feature known as the “Petaluma Gap,” both of which are located within the proposed AVA. The “Petaluma Gap” geographical feature is an area of low-lying hills which allows cool winds to flow inland from the Pacific Ocean. The Bay Area Air Quality Management District (BAAQMD) Web site states, “The region from the Estero Lowlands to the San Pablo Bay is known as the Petaluma Gap. * * * Wind patterns in the Petaluma and Cotati Valleys are strongly influenced by the Petaluma Gap.” 1 In a study on the climate of Sonoma County, Paul Vossen, a farm advisor for the University of California Cooperative Extension Service in Sonoma County, wrote that cool marine winds extend inland “through river canyons and the Petaluma gap [sic] to Sonoma Mountain.” 2

    1www.baaqmd.gov/~/media/Files/Planning%20and%20Research/CEQA/BAAQMD%20CEQA%20Guidelines%20May%202011.ashx?la=en.

    2 Vossen, Paul, Sonoma County Climatic Zones, University of California Cooperative Extension Service, Sonoma County, 1986.

    The name “Petaluma Gap” is also associated with the wine industry within the proposed AVA. The petitioner provided summaries of several wine-related articles that refer to the region of the proposed AVA as “Petaluma Gap.” In his blog “Fermentation: The Daily Wine Blog,” Tom Wark writes, “The `Petaluma Gap' might be a term you've heard of lately, particularly if you are an aficionado of Sonoma County wines.” 3 A 2007 article by Rusty Gaffney on his “The Prince of Pinot” blog says, “The Petaluma Gap possesses a very unique microclimate.” 4 A 2007 article in the magazine Wine and Spirits states, “You can practically smell the ocean, just a few miles away, in the wind that roars between the Sonoma mountains, through the hillside and valley floor vineyards, creating an inland pinot oasis called the Petaluma Gap.” 5 A 2008 article titled “Mind the (Petaluma) Gap” in the Tasting Panel magazine describes the region of the proposed AVA as follows: “Located at the lower end of the Sonoma Coast AVA and distinguished by its close proximity to the Pacific Ocean, the Petaluma Gap is influenced on a daily basis by misty fog in the mornings, warm afternoons and chilly maritime winds in the evenings.” 6 A 2012 article in Decanter magazine describes several regions in California that are “the state's most marginal sites,” including “the Petaluma Gap within the Sonoma Coast appellation * * * .” 7 A 2012 article in the Petaluma Post newspaper states, “The wind and fog are the Petaluma Gap's trademark.” 8 Finally, a 2014 article in the Santa Rosa Press Democrat newspaper states, “The Gap in Petaluma Gap is created by Pacific Ocean winds that flow between Tomales Bay and Bodega Bay through a 15-mile-wide gap in the coastal range mountains.” 9

    3http://fermentationwineblog.com/2006/05/wind_fog_wine_t/, “Wind, Fog, Wine: The Story of `The Gap',” May 8, 2006.

    4http://www.princeofpinot.com/article/281, “Petaluma Gap: Fog Noir.” January 15, 2007.

    5 Irwin, Heather. “The Wind Tunnel: Sonoma County's Best Kept Pinot Noir Secret.” Wine and Spirits, August 2007.

    6 Sawyer, Christopher. “Mind the (Petaluma) Gap.” The Tasting Panel. February 2008.

    7 Murphy, Linda. “California's Coolest Pinot.” Decanter. March 2010. http://www.decanter.com/people-and-places/wine-articles/483749/cool-climate-california-pinot.

    8 Hurson, Von. “The Gap Roars!” Petaluma Post. August 1, 2012. http://www.petalumapost.com/08Aug2012-pages/index.htm.

    9 Boone, Virginie. “Wines of Wind Country.” The Press Democrat. February 4, 2014. http://www.pressdemocrat.com/news/1855471-181/wines-of-wind-country.

    Boundary Evidence

    The proposed Petaluma Gap AVA is located in southern Sonoma County and northern Marin County. The proposed AVA has a northwest-southeast orientation and extends from the Pacific Ocean to San Pablo Bay. The proposed western boundary follows the Pacific coastline from the point where Walker Creek enters Tomales Bay northward to the point where Salmon Creek enters the ocean, just north of Bodega Bay. The proposed northern boundary follows Salmon Creek, the 400-foot elevation contour, and a series of roads and lines drawn between marked elevation points in order to separate the lower elevations and rolling hills of the proposed AVA from the steeper, higher elevations to the north. The proposed eastern boundary follows a series of lines drawn between points on the USGS map, separating the proposed AVA from the higher elevations of Sonoma Mountain and the flatter terrain along Sonoma Creek and San Pablo Bay. The proposed southern boundary follows a series of lines drawn between marked elevation points in order to separate the proposed AVA from the higher elevations to the south.

    Distinguishing Features

    According to the petition, the distinguishing features of the proposed Petaluma Gap AVA are its topography and wind speed.

    Topography

    Coastal highlands and mountain ranges are characteristic of the California coast. However, within the proposed Petaluma Gap AVA, the highlands are not as pronounced as they are north and south of the proposed AVA. Within the proposed AVA, the topography is characterized by low, rolling hills. Flat land is found along the Petaluma River, especially east of the City of Petaluma and near the mouth of San Pablo Bay. Small valleys and fluvial terraces are also present. Elevations within the proposed AVA do not exceed 600 feet, except in a few places within the ridgelines that form the proposed northern, eastern, and southern boundaries.

    According to the petition, the low elevations and gently rolling terrain of the proposed Petaluma Gap create a corridor that allows marine winds to flow relatively unhindered from the Pacific Ocean to San Pablo Bay, particularly during the mid-to-late afternoon. As a result, cool air and marine fog enter the vineyards during the time of day when temperatures would normally be at their highest, bringing heat relief to the vines. The low elevations and rolling hills of the proposed AVA also allow the marine air to enter the proposed AVA at higher speeds than found in the surrounding areas, where higher, steeper mountains disrupt the flow of air. The effects of the high wind speeds on grapes are discussed in detail later in this document.

    To the north of the proposed Petaluma Gap AVA, the elevations are much higher, with elevations over 1,000 feet not uncommon in northern Sonoma County. The broad Santa Rosa Plain is also located north of the proposed AVA and has a much flatter topography than the proposed AVA. East of the proposed AVA, the higher elevations of Sonoma Mountain prevent much of the marine airflow that enters the Petaluma Gap from travelling farther east. East of Sonoma Mountain is the Sonoma Valley, which has lower elevations and flatter terrain than the proposed AVA. To the south of the proposed AVA, the elevations can exceed 1,000 feet.

    Wind Speed

    According to the petition, marine air enters the proposed Petaluma Gap AVA at the Pacific coastline, between Bodega Bay and Tomales Bay. The air then flows southeasterly through the proposed AVA and exits at San Pablo Bay. Although marine breezes are present within the proposed AVA during most of the day, the wind speeds increase significantly in the afternoon hours. The petition states that in the mid-to-late afternoon, inland temperatures increase, causing the hot air to rise and pull the cooler, heavier marine air in from the coast and create steady winds. The following table, which was created by TTB from information included in the petition, shows the hourly average wind speed between noon and 6:00 p.m. for locations within the proposed AVA and the surrounding areas during the April-October growing season. Map 5a, included in Addendum 2 to the petition, shows the locations of the weather stations. Because the Pacific Ocean forms the western boundary of the proposed AVA, comparison data is only included from the regions to the north, east, and south of the proposed AVA. The data in the table shows that average hourly afternoon wind speeds within the proposed AVA are consistently higher than those in the surrounding regions.

    Table 1—Average Hourly Afternoon Growing Season Wind Speeds Location Average wind speed (miles per hour) 12 noon 1 p.m. 2 p.m. 3 p.m. 4 p.m. 5 p.m. 6 p.m. Within proposed AVA Valley Ford 10 13.3 14.4 14.9 14.8 14.0 12.4 10.2 Bloomfield 11 5.4 7.0 7.9 8.3 8.1 7.4 6.0 Mecham Landfill 12 7.7 9.5 12.0 13.7 14.6 14.8 13.8 Middle Two Rock 13 8.6 10.8 12.2 13.0 13.1 12.4 10.8 Azaya Vineyard 14 5.2 6.5 7.6 8.1 8.1 7.5 6.4 Petaluma Airport 15 9.5 11.1 12.1 12.2 11.5 10.3 9.0 Sun Chase Vineyard 16 5.4 6.3 6.8 6.9 6.5 5.7 4.2 Sonoma Baylands 17 10.5 11.4 12.0 12.4 12.4 12.0 10.7 Outside proposed AVA (direction) Occidental 18 (north) 2.0 2.3 2.5 2.5 2.3 2.0 1.6 Belleview Ranch 19 (north) 2.2 3.0 3.6 3.8 3.8 3.3 2.7 Sonoma Valley 20 (east) 1.7 2.0 2.4 2.6 2.5 2.1 1.6 Novato 21 (south) 1.4 1.8 2.0 2.2 2.4 2.4 4.1

    The petition also includes a table showing the frequency of hourly average afternoon wind speeds of at least 8 miles per hour for locations within the proposed Petaluma Gap AVA and the surrounding regions. The data is summarized in the following table. The period of record for each station is the same as used for Table 1.

    10 Period of record 2009-2014.

    11 Period of record 2011-2014.

    12 Period of record 2011-2014.

    13 Period of record 2011-2014.

    14 Period of record 2012-2014.

    15 Period of record 1993-1997. This station stopped collecting hourly data in 1997.

    16 Period of record 2011-2013. This station was a private weather station that experienced a mechanical failure in February 2014 and was not repaired until after the growing season.

    17 Period of record 2009-2014.

    18 Period of record 2009-2014.

    19 Period of record 2010-2014.

    20 Period of record 2012-2014.

    21 Period of record 2009, 2012-2014. The 2010 and 2011 data for this station were largely incomplete and so were not included in the analysis.

    Table 2—Frequency of Hourly Average Growing Season Wind Speeds That Are Greater Than or Equal to 8 Miles per Hour Location Frequency
  • (percent)
  • Within proposed AVA Valley Ford 89.9 Bloomfield 44.0 Mecham Landfill 81.2 Middle Two Rock 82.0 Azaya Vineyard 36.7 Petaluma Airport 79.5 Sun Chase Vineyard 30.3 Sonoma Baylands 82.8 Outside proposed AVA (direction) Occidental (north) 0.6 Novato (north) 5.3 Sonoma Valley (east) 1.8 Bellevue Ranch (south) 9.2

    The table shows that afternoon wind speeds for locations within the proposed AVA reach or exceed 8 miles per hour with greater frequency than for locations outside the proposed AVA. The petition states that when wind speeds reach 8 miles per hour, the stomata (or small pores) on the underside of the grape leaves close. When the stomata are closed, the rate of photosynthesis slows. The petition states that occasional periods of wind speeds of 8 miles per hour or higher typically have little effect on grape development. However, persistently high wind speeds, such as those found within the proposed Petaluma Gap AVA, reduce photosynthesis to the extent that the grapes have to remain on the vine longer in order to reach a given sugar level (a longer “hang time”), compared to the same grape varietal grown in a less windy location. Grapes grown in windy locations are also typically smaller and have thicker skins than the same varietal grown elsewhere. According to the petition, the smaller grape size, thicker skins, and longer hang time concentrate the flavor compounds in the fruit, allowing grapes that are harvested at lower sugar levels to still have the typical flavor characteristics of the grape varietal.

    Comparison of the Proposed Petaluma Gap AVA to the Existing North Coast AVA

    The North Coast AVA was established by T.D. ATF-145, which was published in the Federal Register on September 21, 1983 (48 FR 42973). The AVA includes all or portions of Napa, Sonoma, Mendocino, Solano, Lake, and Marin Counties in California and covers approximately 3 million acres. In the conclusion of the “Geographical Features” section of the preamble, T.D. ATF-145 states that “[d]ue to the enormous size of the North Coast viticultural area, variations exist in climatic features such as temperature, rainfall, and fog intrusion.”

    The proposed Petaluma Gap AVA shares the basic viticultural feature of the North Coast AVA—the marine influence that moderates growing season temperatures in the area. However, the proposed AVA is much more uniform in its topography and its climate, as defined by wind speeds, than the diverse, multicounty North Coast AVA. In this regard, TTB notes that in the “Overlapping Viticultural Areas” section, T.D. ATF-145 specifically states that “approval of this viticultural area does not preclude approval of additional areas, either wholly contained within the North Coast, or partially overlapping the North Coast,” and that “smaller viticultural areas tend to be more uniform in their geographical and climatic characteristics, while very large areas such as the North Coast tend to exhibit generally similar characteristics, in this case the influence of maritime air off of the Pacific Ocean and San Pablo Bay.” Thus, the proposal to establish the Petaluma Gap AVA is consistent with what was envisaged when the North Coast AVA was established.

    Proposed Modification of the North Coast AVA

    As previously noted, the petition to establish the proposed Petaluma Gap AVA also requests an expansion of the established North Coast AVA. The proposed Petaluma Gap AVA is located in the southwestern portion of the North Coast AVA, along the Sonoma-Marin County line. Most of the proposed Petaluma Gap AVA would, if established, be located within the current boundary of the North Coast AVA. However, unless the boundary of the North Coast AVA is modified, the southwestern portion of the proposed Petaluma Gap AVA in northwestern Marin County would be outside the North Coast AVA. This portion of the proposed Petaluma Gap AVA is roughly defined by the Pacific coastline on the western edge, the Sonoma-Marin County line on the northern edge, State Highway 1 on the eastern edge, and the mouth of Walker Creek on the southern edge. The proposed North Coast AVA boundary modification would increase the size of the established AVA by 28,077 acres and would result in the entire proposed Petaluma Gap AVA being within the North Coast AVA.

    According to T.D. ATF-145, the North Coast AVA is characterized by a cool climate with growing degree day (GDD) totals that range from Region I to Region III on the Winkler scale.22 T.D. ATF-145 states that the western portion of Marin County, which includes the southwestern portion of the proposed Petaluma Gap AVA, was excluded from the North Coast AVA because evidence submitted during the comment period showed that this portion of the county was significantly cooler than the rest of the North Coast AVA. The evidence included data from several Marin County weather stations, including a weather station on Point Reyes, which is southwest of both the North Coast AVA and the proposed Petaluma Gap AVA. In examining the public comment to T.D. ATF-145, TTB has found that the GDD total provided for Point Reyes was 759.

    22 In the Winkler climate classification system, annual heat accumulation during the growing season, measured in annual growing degree days (GDDs), defines climatic regions. One GDD accumulates for each degree Fahrenheit that a day's mean temperature is above 50 degrees, the minimum temperature required for grapevine growth. The Winkler scale regions are defined as follows: Region I = less than 2,500 GDDs; Region II = 2,501-3,000 GDDs; Region III = 3,001-3,500 GDDs; Region IV = 3,501-4,000 GDDs; Region V = greater than 4,000 GDDs. See Albert J. Winkler, General Viticulture (Berkeley: University of California Press, 1974), pages 61-64.

    Although the original determination to exclude western Marin County from the North Coast AVA was based on data from a Point Reyes weather station, which is southwest of the proposed Petaluma Gap AVA, TTB believes that GDD totals from that location are not an accurate basis for determining whether to include the southwestern corner of the proposed Petaluma Gap AVA within the North Coast AVA. The proposed Petaluma Gap AVA petition includes 2013 GDD data from a weather station located in Valley Ford, which is in the southwestern portion of the proposed AVA but outside of the current North Coast AVA boundary, as well as from weather stations within the proposed AVA, including one located two miles north of the town of Bodega Bay, that are within the current boundaries of the North Coast AVA.

    The 2013 GDD total for the Valley Ford station was 1,102, which falls into the Region I category on the Winkler scale. For comparison, the 2013 GDD total for the Bodega Bay station was 1,194, which also falls into the Region I category on the Winkler scale. TTB believes, therefore, that this data shows that the climate of the southwestern portion of the proposed Petaluma Gap AVA is within the range of Winkler scale regions that characterizes the current North Coast AVA.

    Additionally, in response to a question from TTB, the petitioners confirmed that there is at least one active vineyard growing Pinot Noir grapes in the southwest portion of the proposed Petaluma Gap AVA near Valley Ford, indicating that the GDD total for that region of the proposed AVA is not too low for commercial viticulture. Therefore, because the GDD total of the southwest portion of the proposed Petaluma Gap AVA is within the range of GDD totals that characterize the North Coast AVA and is high enough to support viticulture, TTB believes the petitioner's proposal to expand the North Coast AVA to include the southwest portion of the proposed Petaluma Gap AVA merits consideration and public comment.

    Comparison of the Proposed Petaluma Gap AVA to the Existing Sonoma Coast AVA

    The Sonoma Coast AVA was established by T.D. ATF-253, which was published in the Federal Register on June 11, 1987 (52 FR 22302). The Sonoma Coast AVA covers approximately 750 square miles within the western portion of Sonoma County. According to T.D. ATF-253, the AVA encompasses the portion of Sonoma County that is under “very strong marine climate influence,” including “persistent fog.” T.D. ATF-253 also states that temperatures within the AVA are classified as “Coastal Cool” under the temperature classification system developed by Robert L. Sisson. “Coastal Cool” areas are defined as having a cumulative duration of less than 1,000 hours between 70 and 90 degrees Fahrenheit during the months of April through October. Temperatures within the Sonoma Coast AVA are described as significantly cooler than temperatures in the eastern portion of Sonoma County, which are classified as “Coastal Warm.” According to T.D. ATF-253, the average maximum July temperature for the Sonoma Coast AVA is 84 degrees Fahrenheit. T.D. ATF-253 did not distinguish the climate of the Sonoma Coast AVA from that of Marin County, located south of the AVA.

    The proposed Petaluma Gap AVA is located in the southern portion of the Sonoma Coast AVA and shares the marine-influenced climate and coastal fog of the established AVA. Additionally, according to the climate data provided in the petition, the average maximum July temperature for the city of Petaluma, at the center of the proposed AVA, is 82 degrees Fahrenheit 23 , which is similar to that of the Sonoma Coast AVA. However, TTB notes that temperature is not a distinguishing feature of the proposed Petaluma Gap AVA, and that consistently high wind speeds and a topography of gently rolling hills are what distinguish the proposed AVA from the surrounding established AVA.

    23 Western Regional Climate Center, www.wrcc.dri.edu/Climsum.html, Petaluma Fire Station 3 (046826).

    As previously noted, if established, the proposed Petaluma Gap AVA would partially overlap the Sonoma Coast AVA, but also would leave the 68,130-acre Marin County portion of the proposed AVA outside of the established Sonoma Coast AVA. However, the petition requests that TTB allow the partial overlap to remain, primarily because the name “Sonoma Coast” is associated only with the coastal region of Sonoma County and does not extend into Marin County.

    Although TTB generally discourages partial overlaps of AVAs because of the potential for consumer confusion, TTB agrees with the petitioners that the Sonoma Coast AVA should not be expanded to include the Marin County portion of the proposed Petaluma Gap AVA. TTB believes that extending the Sonoma Coast AVA would likely cause consumer confusion because the name “Sonoma Coast” is associated with Sonoma County and use of the name does not extend into Marin County. TTB does not believe the potential partial overlap should be resolved by limiting the proposed Petaluma Gap AVA to Sonoma County because the evidence in the petition demonstrates that both the Sonoma County and the Marin County portions of the proposed AVA share similar topographic characteristics and similar wind speeds. TTB also does not believe the proposed AVA should be removed entirely from the Sonoma Coast AVA because the proposed AVA and the established AVA share similar marine-influenced climates. Additionally, TTB notes that removing the proposed AVA from the Sonoma Coast AVA would potentially affect current label holders who use the “Sonoma Coast” appellation on their wines because wines made primarily from grapes grown in the removed region would no longer be eligible to be labeled with that AVA as an appellation of origin. For these reasons, TTB is proposing to leave the current boundaries of the Sonoma Coast AVA unchanged and to allow the partial overlap with the proposed Petaluma Gap AVA.

    TTB Determination

    TTB concludes that the petition to establish the 202,476-acre “Petaluma Gap” AVA and to concurrently modify the boundary of the existing North Coast AVA merits consideration and public comment, as invited in this document.

    TTB is proposing the establishment of the new AVA and the modification of the existing AVA as one action. Accordingly, if TTB establishes the proposed Petaluma Gap AVA, then the proposed boundary modification of the North Coast would be approved concurrently. If TTB does not establish the proposed Petaluma Gap AVA, then the present North Coast AVA boundary would not be modified as proposed in this document.

    Boundary Description

    See the narrative boundary descriptions of the petitioned-for AVA and the boundary modification of the established AVA in the proposed regulatory text published at the end of this document.

    Maps

    The petitioner provided the required maps, and they are listed below in the proposed regulatory text.

    Impact on Current Wine Labels

    Part 4 of the TTB regulations prohibits any label reference on a wine that indicates or implies an origin other than the wine's true place of origin. For a wine to be labeled with an AVA name or with a brand name that includes an AVA name, at least 85 percent of the wine must be derived from grapes grown within the area represented by that name, and the wine must meet the other conditions listed in 27 CFR 4.25(e)(3). If the wine is not eligible for labeling with an AVA name and that name appears in the brand name, then the label is not in compliance and the bottler must change the brand name and obtain approval of a new label. Similarly, if the AVA name appears in another reference on the label in a misleading manner, the bottler would have to obtain approval of a new label. Different rules apply if a wine has a brand name containing an AVA name that was used as a brand name on a label approved before July 7, 1986. See 27 CFR 4.39(i)(2) for details.

    If this proposed regulatory text is adopted as a final rule, wine bottlers using “Petaluma Gap” in a brand name, including a trademark, or in another label reference as to the origin of the wine, would have to ensure that the product is eligible to use the viticultural area's full name “Petaluma Gap” as an appellation of origin.

    If approved, the establishment of the proposed Petaluma Gap AVA and the proposed modification of the North Coast AVA boundary would allow vintners to use “Petaluma Gap” or “North Coast” as appellations of origin for wines made from grapes grown within the Petaluma Gap AVA, if the wines meet the eligibility requirements for the appellation. Additionally, vintners would be able to use “Sonoma Coast” as an appellation of origin on wines made primarily from grapes grown within the Sonoma County portion of the Petaluma Gap AVA, if the wines meet the eligibility requirements for the appellation.

    Public Participation Comments Invited

    TTB invites comments from interested members of the public on whether TTB should establish the proposed Petaluma Gap AVA and concurrently modify the boundary of the established North Coast AVA. TTB is interested in receiving comments on the sufficiency and accuracy of the name, boundary, climate, topography, and other required information submitted in support of the Petaluma Gap AVA petition. In addition, given the proposed Petaluma Gap AVA's location within the existing North Coast AVA and Sonoma Coast AVA, TTB is interested in comments on whether the evidence submitted in the petition regarding the distinguishing features of the proposed AVA sufficiently differentiates it from the existing AVAs. TTB is also interested in comments on whether the geographic features of the proposed AVA are so distinguishable from either the North Coast AVA or the Sonoma Coast AVA that the proposed Petaluma Gap AVA should not be part of one or either established AVA. Please provide any available specific information in support of your comments.

    TTB also invites comments on the proposed expansion of the existing North Coast AVA. TTB is especially interested in comments on whether the evidence provided in the petition sufficiently demonstrates that the proposed expansion area is similar enough to the North Coast AVA to be included in the established AVA. Additionally, TTB is interested in comments on whether or not TTB should allow the Marin County portion of the proposed Petaluma Gap AVA to remain outside of the Sonoma Coast AVA. Comments should address the boundaries, climate, topography, soils, and any other pertinent information that supports or opposes the proposed North Coast AVA boundary expansion and/or the partial overlap of the proposed Petaluma Gap AVA with the Sonoma Coast AVA.

    Because of the potential impact of the establishment of the proposed Petaluma Gap AVA on wine labels that include the term “Petaluma Gap” as discussed above under Impact on Current Wine Labels, TTB is particularly interested in comments regarding whether there will be a conflict between the proposed area name and currently used brand names. If a commenter believes that a conflict will arise, the comment should describe the nature of that conflict, including any anticipated negative economic impact that approval of the proposed AVA will have on an existing viticultural enterprise. TTB is also interested in receiving suggestions for ways to avoid conflicts, for example, by adopting a modified or different name for the proposed AVA.

    Submitting Comments

    You may submit comments on this proposal by using one of the following three methods:

    Federal e-Rulemaking Portal: You may send comments via the online comment form posted with this document within Docket No. TTB-2016-0009 on “Regulations.gov,” the Federal e-rulemaking portal, at https://www.regulations.gov. A direct link to that docket is available under Notice No. 163 on the TTB Web site at https://www.ttb.gov/wine/wine-rulemaking.shtml. Supplemental files may be attached to comments submitted via Regulations.gov. For complete instructions on how to use Regulations.gov, visit the site and click on the “Help” tab at the top of the page.

    U.S. Mail: You may send comments via postal mail to the Director, Regulations and Rulings Division, Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Box 12, Washington, DC 20005.

    Hand Delivery/Courier: You may hand-carry your comments or have them hand-carried to the Alcohol and Tobacco Tax and Trade Bureau, 1310 G Street NW., Suite 400, Washington, DC 20005.

    Please submit your comments by the closing date shown above in this document. Your comments must reference Notice No. 163 and include your name and mailing address. Your comments also must be made in English, be legible, and be written in language acceptable for public disclosure. We do not acknowledge receipt of comments, and we consider all comments as originals.

    Your comment must clearly state if you are commenting on your own behalf or on behalf of an organization, business, or other entity. If you are commenting on behalf of an organization, business, or other entity, your comment must include the entity's name as well as your name and position title. If you comment via Regulations.gov, please enter the entity's name in the “Organization” blank of the online comment form. If you comment via postal mail, please submit your entity's comment on letterhead.

    You may also write to the Administrator before the comment closing date to ask for a public hearing. The Administrator reserves the right to determine whether to hold a public hearing.

    Confidentiality

    All submitted comments and attachments are part of the public record and subject to disclosure. Do not enclose any material in your comments that you consider to be confidential or inappropriate for public disclosure.

    Public Disclosure

    TTB will post, and you may view, copies of this document, selected supporting materials, and any online or mailed comments received about this proposal within Docket No. TTB-2016-0009 on the Federal e-rulemaking portal, Regulations.gov, at https://www.regulations.gov. A direct link to that docket is available on the TTB Web site at https://www.ttb.gov/wine/wine-rulemaking.shtml under Notice No. 163. You may also reach the relevant docket through the Regulations.gov search page at https://www.regulations.gov. For instructions on how to use Regulations.gov, visit the site and click on the “Help” tab at the top of the page.

    All posted comments will display the commenter's name, organization (if any), city, and State, and, in the case of mailed comments, all address information, including email addresses. TTB may omit voluminous attachments or material that it considers unsuitable for posting.

    You also may view copies of this document, all related petitions, maps and other supporting materials, and any electronic or mailed comments we receive about this proposal by appointment at the TTB Information Resource Center, 1310 G Street NW., Washington, DC 20005. You may also obtain copies at 20 cents per 8.5- x 11-inch page. Contact our information specialist at the above address or by telephone at 202-453-2265 to schedule an appointment or to request copies of comments or other materials.

    Regulatory Flexibility Act

    TTB certifies that this proposed regulation, if adopted, would not have a significant economic impact on a substantial number of small entities. The proposed regulation imposes no new reporting, recordkeeping, or other administrative requirement. Any benefit derived from the use of a viticultural area name would be the result of a proprietor's efforts and consumer acceptance of wines from that area. Therefore, no regulatory flexibility analysis is required.

    Executive Order 12866

    This proposed rule is not a significant regulatory action as defined by Executive Order 12866. Therefore, it requires no regulatory assessment.

    Drafting Information

    Karen A. Thornton of the Regulations and Rulings Division drafted this document.

    List of Subjects in 27 CFR Part 9

    Wine.

    Proposed Regulatory Amendment

    For the reasons discussed in the preamble, we propose to amend title 27, chapter I, part 9, Code of Federal Regulations, as follows:

    PART 9—AMERICAN VITICULTURAL AREAS 1. The authority citation for part 9 continues to read as follows: Authority:

    27 U.S.C. 205.

    Subpart C—Approved American Viticultural Areas 2. Section 9.30 is amended as follows: a. The introductory text of paragraph (b) is revised; b. The word “and” is removed from the end of paragraph (b)(2); c. The period is removed from the end of paragraph (b)(3) and a semicolon is added in its place; d. Paragraphs (b)(4) and (5) are added; e. Paragraphs (c)(1) and (2) are revised; f. Paragraphs (c)(3) through (24) are redesignated as paragraphs (c)(7) through (28); and g. Paragraphs (c)(3) through (6) are added.

    The revisions and additions read as follows:

    § 9.30 North Coast.

    (b) Approved maps. The appropriate maps for determining the boundaries of the North Coast viticultural area are five U.S.G.S. maps. They are entitled:

    * * *

    (4) “Tomales, CA,” scale 1:24,000, edition of 1995; and

    (5) “Point Reyes NE., CA,” scale 1:24,000, edition of 1995.

    (c) * * *

    (1) Then follow the Pacific coastline in a generally southeasterly direction for 9.4 miles, crossing onto the Tomales map, to Preston Point on Tomales Bay;

    (2) Then northeast along the shoreline of Tomales Bay approximately 1 mile to the mouth of Walker Creek opposite benchmark (BM) 10 on State Highway 1;

    (3) Then southeast in a straight line for 1.3 miles to the marked 714-foot peak;

    (4) Then southeast in a straight line for 3.1 miles, crossing onto the Point Reyes NE map, to the marked 804-foot peak;

    (5) Then southeast in a straight line 1.8 miles to the marked 935-foot peak;

    (6) Then southeast in a straight line 12.7 miles, crossing back onto the Santa Rosa map, to the marked 1,466-foot peak on Barnabe Mountain;

    3. Add § 9.___ to read as follows:
    § 9.___ Petaluma Gap.

    (a) Name. The name of the viticultural area described in this section is “Petaluma Gap”. For purposes of part 4 of this chapter, “Petaluma Gap” is a term of viticultural significance.

    (b) Approved maps. The 12 United States Geological Survey (USGS) 1:24,000 scale topographic maps used to determine the boundary of the Petaluma Gap viticultural area are titled:

    (1) Cotati, Calif., 1954; photorevised 1980;

    (2) Glen Elle, Calif., 1954; photorevised 1980;

    (3) Petaluma River, Calif., 1954; photorevised 1980;

    (4) Sears Point, Calif., 1951; photorevised 1968;

    (5) Petaluma Point, Calif., 1959; photorevised 1980;

    (6) Novato, Calif., 1954; photorevised 1980;

    (7) Petaluma, Calif., 1953; photorevised 1981;

    (8) Point Reyes NE., CA, 1995;

    (9) Tomales, CA, 1995;

    (10) Bodega Head, Calif., 1972;

    (11) Valley Ford, Calif., 1954; photorevised 1971; and

    (12) Two Rock, Calif., 1954; photorevised 1971.

    (c) Boundary. The Petaluma Gap viticultural area is located in Sonoma and Marin Counties in California. The boundary of the Petaluma Gap viticultural area is as described below:

    (1) The beginning point is on the Cotati map at the intersection of Grange Road, Crane Canyon Road, and the northern boundary of section 16, T6N/R7W. From the beginning point, proceed southeast in a straight line for 1 mile, crossing over Pressley Road, to the intersection of the 900-foot elevation contour and the eastern boundary of section 16, T6N/R7W; then

    (2) Proceed east-southeasterly in a straight line for 0.5 mile, crossing onto the Glen Ellen map, to the terminus of an unnamed, unimproved road known locally as Summit View Ranch Road, just north of the southern boundary of section 15, T6N/R7N; then

    (3) Proceed southeast in a straight line for 0.6 mile to the intersection of Crane Creek and the 1,200-foot elevation contour, section 22, T6N/R7W; then

    (4) Proceed southeast in a straight line for 2.9 miles to the marked 2,271-foot peak on Sonoma Mountain, T6N/R6W; then

    (5) Proceed southeast in a straight line for 10.5 miles, crossing over the northeastern corner of the Petaluma River map and onto the Sears Point map, to the marked 682-foot summit of Wildcat Mountain; then

    (6) Proceed south-southeasterly in a straight line for 3.3 miles to the intersection of State Highway 121 (also known locally as Arnold Drive) and State Highway 37 (also known locally as Sears Point Road); then

    (7) Proceed east-northeasterly along State Highway 37/Sears Point Road for approximately 0.1 mile to Tolay Creek; then

    (8) Proceed generally south along the meandering Tolay Creek for 3.9 miles, crossing onto the Petaluma Point map, to the mouth of the creek at San Pablo Bay; then

    (9) Proceed southwesterly along the shore of San Pablo Bay for 2.7 miles, crossing the mouth of the Petaluma River, and continuing southeasterly along the bay's shoreline to Petaluma Point; then

    (10) Proceed northwesterly in a straight line for 6.3 miles, crossing over the northeastern corner of the Novato map and onto the Petaluma River map, to the marked 1,558-foot peak of Burdell Mountain; then

    (11) Proceed northwest in a straight line for 1.3 miles to the marked 1,193-foot peak; then

    (12) Proceed west-southwesterly in a straight line for 2.2 miles, crossing onto the Petaluma map, to the marked 1,209-foot peak; then

    (13) Proceed west-southwest in a straight line for 0.8 mile to the marked 1,296-foot peak; then

    (14) Proceed west in a straight line for 1 mile to the marked 1,257-foot peak on Red Hill in section 31, T4N/R7W; then

    (15) Proceed southwest in a straight line for 2.9 miles to the marked 1,532-foot peak on Hicks Mountain; then

    (16) Proceed north-northwesterly in a straight line for 2.7 miles, crossing onto the Point Reyes NE map, to the marked 1,087-foot peak; then

    (17) Proceed north-northwesterly in a straight line for 1.5 miles to the marked 1,379-foot peak; then

    (18) Proceed west-northwesterly in a straight line for 2.9 miles to the marked 935-foot peak; then

    (19) Proceed northwest in a straight line for 1.8 miles to the marked 804-foot peak; then

    (20) Proceed west-northwesterly in a straight line for 3.1 miles, crossing onto the Tomales map, to the marked 741-foot peak; then

    (21) Proceed northwesterly in a straight line for 1.3 miles to benchmark (BM) 10 on State Highway 1, at the mouth of Walker Creek in Tomales Bay; then

    (22) Proceed southwesterly, then northwesterly along the shoreline of Tomales Bay to Sand Point, on Bodega Bay, and continuing northerly along the shoreline of Bodega Bay, crossing over the Valley Ford map and onto the Bodega Head map, circling the shoreline of Bodega Harbor to the Pacific Ocean and continuing northerly along the shoreline of the Pacific Ocean to the mouth of Salmon Creek, for a total of 19.5 miles; then

    (23) Proceed easterly along Salmon Creek for 9.6 miles, crossing onto the Valley Ford map and passing Nolan Creek, to the second intermittent stream in the Estero Americano land grant, T6N/R10W; then

    (24) Proceed east in a straight line for 1 mile to vertical angle benchmark (VABM) 724 in the Estero Americano land grant, T6N/R10W; then

    (25) Proceed south-southeasterly in a straight line for 0.8 mile to BM 61 on an unmarked light duty road known locally as Freestone Valley Ford Road in the Cañada de Pogolimi land grant, T6N/R10W; then

    (26) Proceed southeast in a straight line for 0.6 mile to the marked 448-foot peak in the Cañada de Pogolimi land grant, T6N/R10W; then

    (27) Proceed southeast in a straight line for 0.1 mile to the northern terminus of an unnamed, unimproved road in the Cañada de Pogolimi land grant, T6N/R10W; then

    (28) Proceed northeasterly, then southeasterly for 0.9 mile along the unnamed, unimproved road to the 400-foot elevation contour in the Cañada de Pogolimi land grant, T6N/R10W; then

    (29) Proceed easterly along the meandering 400-foot elevation contour for 6.7 miles, crossing onto the Two Rocks map, to Burnside Road in the Cañada de Pogolimi land grant, T6N/R10W; then

    (30) Proceed south on Burnside Road for 0.1 mile to an unnamed medium duty road known locally as Bloomfield Road in the Cañada de Pogolimi land grant,T6N/R9W; then

    (31) Proceed southeast in a straight line for 0.6 mile to the marked 610-foot peak in the Blucher land grant, T6N/R9W; then

    (32) Proceed east-southeasterly in a straight line for 0.8 mile to the marked 641-foot peak in the Blucher land grant, T6N/R9W; then

    (33) Proceed northeast in a straight line for 1.2 miles, crossing through the intersection of an intermittent stream with Canfield Road, to the common Range 8/9 boundary; then

    (34) Proceed southeast in a straight line for 0.5 mile to the marked 542-foot peak; then

    (35) Proceed southeast in a straight line for 0.8 mile to the intersection of an unnamed, unimproved road (leading to four barn-like structures) known locally as Carniglia Lane and an unnamed medium duty road known locally as Roblar Road, T6N/R8W; then

    (36) Proceed south in a straight line for 0.5 mile to the marked 678-foot peak, T6N/R8W; then

    (37) Proceed east-southeast in a straight line for 0.8 mile to the marked 599-foot peak, T5N/R8W; then

    (38) Proceed east-southeast in a straight line for 0.7 mile to the marked 604-foot peak, T5N/R8W; then

    (39) Proceed east-southeast in a straight line for 0.9 mile, crossing onto the Cotati map, to the intersection of Meacham Road and an unnamed light duty road leading to a series of barn-like structures, T5N/R8W; then

    (40) Proceed north-northeast along Meacham Road for 0.8 mile to Stony Point Road, T5N/R8W; then

    (41) Proceed southeast along Stony Point Road for 1.1 miles to the 200-foot elevation contour, T5N/R8W; then

    (42) Proceed north-northeast in a straight line for 0.5 mile to the intersection of an intermittent creek with U.S. Highway 101, T5N/R8W; then

    (43) Proceed north along U.S. Highway 101 for 1.5 miles to State Highway 116 (also known locally as Graverstein Highway), T6N/R8W; then

    (44) Proceed northeast in a straight line for 3.4 miles to the intersection of Crane Creek and Petaluma Hill Road, T6N/R7W; then

    (45) Proceed easterly along Crane Creek for 0.8 mile to the intersection of Crane Creek and the 200-foot elevation line, T6N/R7W; then

    (46) Proceed northwesterly along the 200-foot elevation contour for 1 mile to the intersection of the contour line and an intermittent stream just south of Crane Canyon Road, T6N/R7W; then

    (47) Proceed east then northeasterly along the northern branch of the intermittent stream for 0.3 mile to the intersection of the stream with Crane Canyon Road, T6N/R7W; then

    (48) Proceed northeasterly along Crane Canyon Road for 1.2 miles, returning to the beginning point.

    Signed: October 21, 2016. John J. Manfreda, Administrator.
    [FR Doc. 2016-25972 Filed 10-27-16; 8:45 am] BILLING CODE 4810-31-P
    DEPARTMENT OF LABOR Occupational Safety and Health Administration 29 CFR Chapter XVII Informal Discussion on Hazard Communication Rulemaking AGENCY:

    Occupational Safety and Health Administration (OSHA), Department of Labor.

    ACTION:

    Notice of public meeting.

    SUMMARY:

    This notice is to advise interested persons that on Wednesday, November 16, 2016, OSHA will conduct a public meeting to informally discuss potential updates to the Hazard Communication Standard. The purpose of this meeting is to invite stakeholders to identify topics or issues they would like OSHA to consider in the rulemaking.

    DATES:

    Wednesday November 16, 2016.

    ADDRESSES:

    OSHA's informal discussion on Hazard Communication rulemaking will be held Wednesday, November 16, 2016 from 9:00 a.m.-12:30 p.m.at the Mine Safety and Health Administration (MSHA) Headquarters, Suite 700, 201 12th Street South, Arlington, VA 22202.

    FOR FURTHER INFORMATION CONTACT:

    Ms. Maureen Ruskin, OSHA Directorate of Standards and Guidance, Department of Labor, Washington, DC 20210, telephone: (202) 693-1950, email: [email protected]

    SUPPLEMENTARY INFORMATION:

    Advanced Meeting Registration: OSHA requests that attendees pre-register for this meeting by completing the form at https://www.surveymonkey.com/r/CRPK2YY. Please note if you are attending in person MSHA, who is hosting this meeting, requires pre-registration seven days before the meeting. Failure to pre-register for this event will prevent your access into the MSHA Headquarters building. Additionally, if you are attending in-person, OSHA suggests you plan to arrive early to allow time for the security checks necessary to access the building. Conference call-in and WebEx capability will be provided for this meeting. Specific information on the MSHA Headquarters building access, and call-in and WebEx meeting access will be posted when available in the Highlights box on OSHA's Hazard Communication Web site at: https://www.osha.gov/dsg/hazcom/index.html. OSHA is beginning its rulemaking efforts to maintain alignment of the Hazard Communication Standard (HCS) with the most recent revision of the United Nations Globally Harmonized system of Classification and Labelling of chemicals (GHS). The purpose of this meeting is to request feedback from stakeholders and informally discuss potential topics or issues that OSHA should consider during a rulemaking to update the HCS. OSHA will also solicit suggestions about the types of publications stakeholders might find helpful in complying with the standard and which topics on which they would like OSHA to prepare additional compliance materials in the future.

    Authority and Signature: This document was prepared under the direction of David Michaels, Ph.D., MPH, Assistant Secretary of Labor for Occupational Safety and Health, U.S. Department of Labor, pursuant to sections 4, 6, and 8 of the Occupational Safety and Health Act of 1970 (29 U.S.C. 653, 655, 657), and Secretary's Order 1-2012 (77 FR 3912), (Jan. 25, 2012).

    Signed at Washington, DC, on October 24, 2016. David Michaels, Assistant Secretary of Labor for Occupational Safety and Health.
    [FR Doc. 2016-26003 Filed 10-27-16; 8:45 am] BILLING CODE 4510-26-P
    DEPARTMENT OF COMMERCE Patent and Trademark Office 37 CFR Part 1 [Docket No.: PTO-P-2011-0030] RIN 0651-AC58 Revision of the Duty To Disclose Information in Patent Applications and Reexamination Proceedings AGENCY:

    United States Patent and Trademark Office, Commerce.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The United States Patent and Trademark Office (Office or PTO) is proposing revisions to the materiality standard for the duty to disclose information in patent applications and reexamination proceedings (duty of disclosure) in light of a 2011 decision by the U.S. Court of Appeals for the Federal Circuit (Federal Circuit). The Office previously issued a notice of proposed rulemaking on July 21, 2011, and due to the passage of time since the comment period closed in 2011, the Office considers it appropriate to seek additional comments from our stakeholders before issuing a final rulemaking. In the current notice of proposed rulemaking, the Office is seeking public comments on the rules of practice, as revised in response to the comments received from our stakeholders.

    DATES:

    Comment Deadline Date: The Office is soliciting comments from the public on this proposed rule change. Written comments must be received on or before December 27, 2016 to ensure consideration. No public hearing will be held.

    ADDRESSES:

    Comments concerning this notice should be sent by electronic mail message over the Internet (email) addressed to [email protected] Comments may also be submitted by postal mail addressed to: Mail Stop Comments—Patents, Commissioner for Patents, P.O. Box 1450, Alexandria, VA 22313-1450, marked to the attention of Matthew Sked, Legal Advisor, Office of Patent Legal Administration, Office of the Associate Commissioner for Patent Examination Policy. Comments may also be sent by email via the Federal eRulemaking Portal. See the Federal eRulemaking Portal Web site (http://www.regulations.gov) for additional instructions on providing comments via the Federal eRulemaking Portal.

    Although comments may be submitted by postal mail, the Office prefers to receive comments via email to facilitate posting on the Office's Internet Web site. Plain text is preferred, but comments may also be submitted in ADOBE® portable document format or MICROSOFT WORD® format. Comments not submitted electronically should be submitted on paper in a format that facilitates convenient scanning into ADOBE® portable document format.

    The comments will be available for public inspection, upon request, at the Office of the Commissioner for Patents, located in Madison East, Tenth Floor, 600 Dulany Street, Alexandria, Virginia. Comments also will be available for viewing via the Office's Internet Web site (http://www.uspto.gov) and at http://www.regulations.gov. Because comments will be made available for public inspection, information that the submitter does not desire to make public, such as an address or phone number, should not be included in the comments.

    FOR FURTHER INFORMATION CONTACT:

    Matthew J. Sked, Legal Advisor ((571) 272-7627) or Nicole Dretar Haines, Senior Legal Advisor ((571) 272-7717), Office of Patent Legal Administration, Office of the Deputy Commissioner for Patent Examination Policy.

    SUPPLEMENTARY INFORMATION: Executive Summary:

    Purpose: This notice proposes changes to the relevant rules of practice to harmonize the materiality standard for the duty of disclosure before the Office with the but-for materiality standard for establishing inequitable conduct before the courts in light of the Federal Circuit's decision in Therasense, Inc. v. Becton, Dickinson & Co., 649 F.3d 1276 (Fed. Cir. 2011) (en banc).

    Summary of Major Provisions: The Office proposes to revise the rules of practice to adopt the but-for standard for materiality required to establish inequitable conduct set forth in the Federal Circuit's decision in Therasense as the standard for materiality for the duty to disclose information in patent applications and reexamination proceedings. The Office also proposes to revise the rules of practice to explicitly reference “affirmative egregious misconduct” as set forth in the Federal Circuit's decision in Therasense.

    Costs and Benefits: This rulemaking is not economically significant as that term is defined in Executive Order 12866 (Sept. 30, 1993).

    Background

    On May 25, 2011, the Federal Circuit issued the en banc Therasense decision, modifying the standard for materiality required to establish inequitable conduct before the courts. The Federal Circuit tightened the materiality standard to “reduce the number of inequitable conduct cases before the courts and . . . cure the problem of overdisclosure of marginally relevant prior art to the PTO.” Therasense, 649 F.3d at 1291. In Therasense, the Federal Circuit held that “the materiality required to establish inequitable conduct is but-for materiality.” Id. The Federal Circuit explained that “[w]hen an applicant fails to disclose prior art to the PTO, that prior art is but-for material if the PTO would not have allowed a claim had it been aware of the undisclosed prior art.” Id. The Federal Circuit further explained that “in assessing the materiality of a withheld reference, the court must determine whether the PTO would have allowed the claim if it had been aware of the undisclosed reference[,] . . . apply[ing] the preponderance of the evidence standard and giv[ing] claims their broadest reasonable construction.” Id. at 1291-92. Examples of where the Federal Circuit found information to be but-for material include Transweb, LLC v. 3M Innovative Properties Co., 812 F.3d 1295 (Fed. Cir. 2016), and Apotex, Inc. v. UCB Inc., 763 F.3d 1354 (Fed. Cir. 2014).

    In addition, the Federal Circuit recognized that the materiality prong of inequitable conduct may also be satisfied in cases of affirmative egregious misconduct. Id. at 1292. See also The Ohio Willow Wood Co. v. Alps South, LLC, 735 F.3d 1333, 1351 (Fed. Cir. 2013); Intellect Wireless, Inc. v. HTC Corp., 732 F.3d 1339, 1344 (Fed. Cir. 2013). The Federal Circuit explained that “[t]his exception to the general rule of requiring but-for proof incorporates elements of the early unclean hands cases before the Supreme Court, which dealt with `deliberately planned and carefully executed scheme[s]' to defraud the PTO and the courts.” Therasense, 649 F.3d at 1292. The Federal Circuit reasoned that “a patentee is unlikely to go to great lengths to deceive the PTO with a falsehood unless it believes that the falsehood will affect issuance of the patent.” Id. Further, the Federal Circuit clarified that while the filing of an unmistakably false affidavit would constitute affirmative egregious misconduct, “neither mere nondisclosure of prior art references to the PTO nor failure to mention prior art references in an affidavit constitutes affirmative egregious misconduct.” Id. at 1292-93. Rather, “claims of inequitable conduct that are based on such omissions require proof of but-for materiality.” Id. at 1293.

    A notice of proposed rulemaking was previously published in the Federal Register (76 FR 43631) on July 21, 2011. Comments were due on September 19, 2011. The Office received 24 written comments in response to the notice. In addition to considering the public comments, the Office monitored further Federal Circuit decisions regarding the application of the inequitable conduct standard. Based upon the passage of time since the end of the comment period and the significant changes to patent law as a result of the successful implementation of the Leahy-Smith America Invents Act, the Office considered it appropriate to obtain public comment on the proposed changes to the rules of practice regarding the duty of disclosure. Therefore, the Office is publishing the current notice of proposed rulemaking to provide the public with an opportunity to comment on the proposed revisions, which take into account the comments received in response to the 2011 notice of proposed rulemaking.

    Like the previously proposed rule, the currently proposed rule would harmonize the materiality standard for the duty of disclosure before the Office with the but-for materiality standard set forth in Therasense for establishing inequitable conduct before the courts. Specifically, the currently proposed rule would modify 37 CFR 1.56(a) and 37 CFR 1.555(a) to recite that the materiality standard for the duty of disclosure is but-for materiality, and would modify 37 CFR 1.56(b) and 37 CFR 1.555(b) to define the but-for materiality standard as set forth in Therasense. Further, in view of the Federal Circuit's recognition that affirmative egregious misconduct satisfies the materiality prong of inequitable conduct, the currently proposed rule would amend 37 CFR 1.56(a) and 37 CFR 1.555(a) to explicitly incorporate affirmative egregious misconduct.

    In the previous notice of proposed rulemaking, the Office proposed only to amend 37 CFR 1.56(b) and 37 CFR 1.555(b) by combining in the same provision both an explicit reference to the Therasense materiality standard and a definition of the materiality standard, which included an explicit recitation of affirmative egregious misconduct. See Revision of the Materiality to Patentability Standard for the Duty to Disclose Information in Patent Applications, 76 FR 43631, 43634 (July 21, 2011). Prior to making a final decision on whether to modify the previously proposed rule, the Office considered all public comments and monitored the petition for certiorari to the Supreme Court in 1st Media, LLC v. Electronic Arts, Inc., 694 F.3d 1367 (Fed. Cir. 2012), cert. denied, 134 S.Ct. 418 (2013) and the further developments regarding the application of the inequitable conduct standard by the Federal Circuit. Accordingly, the Office has decided to modify the previously proposed rule language to avoid potential confusion by moving the language regarding affirmative egregious misconduct from the definition of the materiality standard for disclosure of information in 37 CFR 1.56(b)(2) and 37 CFR 1.555(b)(2), as previously proposed, to 37 CFR 1.56(a) and 37 CFR 1.555(a), respectively. Therefore, in the currently proposed rule, 37 CFR 1.56(b) and 37 CFR 1.555(b) would define the but-for materiality standard as set forth in Therasense, while 37 CFR 1.56(a) and 37 CFR 1.555(a) would incorporate affirmative egregious misconduct.

    In the previous notice of proposed rulemaking, the Office also proposed to amend 37 CFR 1.56(b) and 37 CFR 1.555(b) to explicitly reference the Therasense ruling. Comments received in response to the previous notice of proposed rulemaking questioned explicitly referencing the Therasense decision directly in the rules out of concern that the rules could be affected as the Therasense ruling is interpreted and applied, or if Therasense is overruled. While the currently proposed rule removes the explicit reference to the Therasense decision, explicitly referencing the court decision is not necessary to link the materiality standard for the duty of disclosure before the Office with the but-for materiality standard set forth in Therasense for establishing inequitable conduct before the courts. The recitation of but-for materiality in 37 CFR 1.56(a) and 1.555(a) and the definition of but-for materiality in 37 CFR 1.56(b) and 1.555(b) would establish that the materiality standard for the duty of disclosure in this currently proposed rule is the same as the but-for materiality standard set forth in Therasense and its interpretations and applications.

    As discussed previously, Therasense was decided by the Federal Circuit en banc. This precedential decision can only be overturned by another en banc decision of the Federal Circuit or by a decision of the Supreme Court. See, e.g., Nobelpharma AB v. Implant Innovations, Inc., 141 F.3d 1059, 1068 n.5 (Fed. Cir. 1998) (Federal Circuit precedent may not be changed by a panel.). The Office's explicit reference to and definition of the but-for materiality standard set forth in Therasense in currently proposed 37 CFR 1.56 and 37 CFR 1.555 would avoid divergence between the Office's materiality standard for the duty of disclosure and the but-for inequitable conduct materiality standard set forth in Therasense. This approach should benefit the public by providing a consistent materiality standard without the need for continuous revisions to the rules as the Therasense standard is interpreted or applied. In the event the Supreme Court, or Federal Circuit acting en banc, chooses to revise the but-for materiality standard in Therasense, the Office will reconsider the rules at that time. Further, the Office will keep the public informed of its understanding of how the Federal Circuit interprets the standard through future revisions to the Manual of Patent Examining Procedure (MPEP).

    Historically, the Federal Circuit connected the materiality standard for inequitable conduct with the Office's materiality standard for the duty of disclosure. That is, the Federal Circuit has invoked the materiality standard for the duty of disclosure to measure materiality in cases raising claims of inequitable conduct. In doing so, the Federal Circuit has utilized both the “reasonable examiner” standard set forth in the 1977 version of 37 CFR 1.56(b) and the prima facie case of unpatentability standard set forth in the 1992 version of 37 CFR 1.56(b). See, e.g., Am. Hoist & Derrick Co. v. Sowa & Sons, Inc., 725 F.2d 1350, 1363 (Fed. Cir. 1984); Bruno Indep. Living Aids, Inc. v. Acorn Mobility Servs., Ltd., 394 F.3d 1348, 1352-53 (Fed. Cir. 2005). In Therasense, the Federal Circuit eliminated what existed of the historical connection between the two materiality standards and did not indicate that the Office must apply the but-for standard for materiality required to establish inequitable conduct under Therasense as the standard for determining materiality under 37 CFR 1.56 or 37 CFR 1.555. Thus, while Therasense does not require the Office to harmonize its materiality standard underlying the duty of disclosure and the Federal Circuit's but-for materiality standard underlying the inequitable conduct doctrine, there are important reasons to amend 37 CFR 1.56 and 37 CFR 1.555 to do so.

    A unitary materiality standard is simpler for the patent system as a whole. Under the single but-for standard of materiality, patent applicants will not be put in the position of having to meet one standard of materiality as set forth in Therasense in defending against inequitable conduct allegations and a second, different materiality standard when complying with the duty of disclosure before the Office. Also, the Office expects that by adopting the Therasense but-for standard for materiality in this currently proposed rule, the frequency with which charges of inequitable conduct are raised against applicants and practitioners for failing to disclosure material information to the Office will be reduced.

    Similarly, the Office expects that adopting the but-for materiality standard would reduce the incentive to submit marginally relevant information in information disclosure statements (IDSs). As such, this currently proposed rule would further the Office's goal of enhancing patent quality. The adoption of the but-for standard for materiality should lead to more focused prior art submissions by applicants, which in turn will assist examiners in more readily recognizing the most relevant prior art.

    At the same time, the Office also expects this currently proposed rule would continue to encourage applicants to comply with their duty of candor and good faith. The Office recognizes that it previously considered, and rejected, a but-for standard for the duty of disclosure in 1992 when it promulgated the prima facie case of unpatentability standard that would be replaced under this proposed rule. Duty of Disclosure, 57 FR 2021, 2024 (Jan. 17, 1992). The Office was concerned about the types of potential misconduct that could occur unchecked under a pure but-for standard. By including a provision for affirmative egregious misconduct in the currently proposed rule, the Office's long-standing concern would be mitigated. In Therasense, the Federal Circuit stated, “creating an exception to punish affirmative egregious acts without penalizing the failure to disclose information that would not have changed the issuance decision . . . strikes a necessary balance between encouraging honesty before the PTO and preventing unfounded accusations of inequitable conduct.” Id. at 1293.

    Discussion of Specific Rules

    The following is a description of the amendments PTO is proposing:

    Section 1.56: Section 1.56(a) as proposed to be amended would provide that the materiality standard for the duty of disclosure is but-for materiality. Further, § 1.56(a) as proposed would provide that a patent will not be granted on an application in which affirmative egregious misconduct was engaged in.

    Section 1.56(b) as proposed to be amended would replace the prima facie case of unpatentability materiality standard with the definition of the but-for materiality standard. As proposed, § 1.56(b) would provide that information is but-for material to patentability if the Office would not find a claim patentable if the Office were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction consistent with the specification.

    Previously proposed § 1.56(b) included two discrete sentences. The first sentence stated information is material to patentability if it is material under the standard set forth in Therasense, and the second sentence stated information is material to patentability under Therasense if (1) the Office would not allow a claim if it were aware of the information, or (2) the applicant engages in affirmative egregious misconduct before the Office as to the information. See Revision of the Materiality to Patentability Standard for the Duty to Disclose Information in Patent Applications, 76 FR at 43634. The explicit reference to the Therasense decision and the recitation of affirmative egregious misconduct in previously proposed § 1.56(b) have not been retained in this currently proposed rule in view of public comments received. Currently proposed § 1.56(a) now recites that the materiality standard for the duty of disclosure is but-for materiality. Currently proposed § 1.56(b) defines the but-for materiality standard as set forth in Therasense.

    As set forth above, an explicit reference to the Therasense decision is not necessary to link the materiality standard for the duty of disclosure to the but-for materiality standard for inequitable conduct set forth in Therasense. The Office has determined that reciting “but-for material[ity]” and its definition as it is recited in Therasense makes clear that the standard for materiality is the but-for standard set forth in Therasense and its interpretations and applications. Also, by moving the language regarding affirmative egregious misconduct from previously proposed § 1.56(b)(2) to § 1.56(a), the Office has separated the definition of the materiality standard for the duty to disclose information from the recitation of affirmative egregious misconduct.

    Additionally, the Office has modified the previously proposed rule language to state that a claim is given its broadest reasonable construction “consistent with the specification.” The Office did not intend the previously proposed omission of this language that is present in existing §§ 1.56(b) and 1.555(b) as an indication that claims would no longer be given their broadest reasonable construction consistent the specification. While the Federal Circuit in Therasense did not specifically state that the broadest reasonable construction is a construction that is consistent with the specification, the Federal Circuit referenced MPEP § 2111 (8th ed. 2001) (Rev. 9, Aug. 2012) in establishing that a claim is given its broadest reasonable construction. Therasense, 649 F.3d at 1292. MPEP § 2111 states that “(d)uring patent examination, the pending claims must be `given their broadest reasonable interpretation consistent with the specification.'” See also Phillips v. AWH Corp., 415 F.3d 1303, 1316 (Fed. Cir. 2005) (“The Patent and Trademark Office (`PTO') determines the scope of claims in patent applications not solely on the basis of the claim language, but upon giving claims their broadest reasonable construction `in light of the specification as it would be interpreted by one of ordinary skill in the art.' ”). In addition, the Federal Circuit has indicated that the phrases “broadest reasonable interpretation” and “broadest reasonable interpretation consistent with the specification” have the same meaning as it would be unreasonable to ignore any interpretive guidance afforded by the written description. See In re Morris, 127 F.3d 1048, 1054 (Fed. Cir. 1997). Nevertheless, in order to make clear that any construction made by the Office in the application of § 1.56 must be consistent with the specification, the currently proposed rules have been amended accordingly.

    Section 1.555: Section 1.555(a) as proposed to be amended would provide that the materiality standard for the duty of disclosure in a reexamination proceeding is but-for materiality. Further, § 1.555(a) as proposed to be amended would provide that the duties of candor, good faith, and disclosure have not been complied with if affirmative egregious misconduct was engaged in by, or on behalf of, the patent owner in the reexamination proceeding.

    Section 1.555(b) as proposed to be amended would provide that information is but-for material to patentability if, for any matter proper for consideration in reexamination, the Office would not find a claim patentable if the Office were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction consistent with the specification. The explicit reference to the Therasense decision and recitation of affirmative egregious misconduct in previously proposed § 1.555(b) have not been retained in this currently proposed rule in view of public comments received. Currently proposed § 1.555(a) now recites that the materiality standard for the duty of disclosure in a reexamination proceeding is but-for materiality. Currently proposed § 1.555(b) defines the but-for materiality standard as set forth in Therasense.

    Additionally, § 1.555(b) as proposed would provide that the but-for materiality standard covers the disclosure of information as to any matter that is proper for consideration in a reexamination proceeding. Previously proposed § 1.555(b) was silent as to the types of information that are appropriate for consideration in a reexamination proceeding, and existing § 1.555(b) limits the types of information that could be considered in reexamination to patents and printed publications. In view of public comments received, this currently proposed rule would amend § 1.555(b) to again recite the types of information that are appropriate for consideration in a reexamination proceeding but, unlike the existing rule, this currently proposed rule encompasses disclosure of information as to any matter that is appropriate for consideration in a reexamination proceeding (e.g., admissions by patent owner), as opposed to being limited to patents and printed publications.

    It is noted that § 1.933 is also directed to the duty of disclosure in inter partes reexamination proceedings; however, the statement as to materiality of information in § 1.933 incorporates § 1.555. Thus, § 1.933 has not been amended in this currently proposed rule.

    Comments and Response to Comments

    The Office published a notice on July 21, 2011, proposing to change the rules of practice to revise the standard for materiality of the duty to disclose information in patent applications and reexamination proceedings in light of the decision of the Federal Circuit in Therasense. See Revision of the Materiality to Patentability Standard for the Duty to Disclose Information in Patent Applications, 76 FR at 43631. The Office received 24 written comments (from intellectual property organizations, academic and research institutions, companies, and individuals) in response to that notice. The comments and the Office's responses to the comments follow:

    A. Previously Proposed §§ 1.56(b)(1) and 1.555(b)(1) B. Cumulative Information C. Affirmative Egregious Misconduct D. Therasense Language E. General Language Comments F. Application of Rule Standards G. General Comments A. Previously Proposed §§ 1.56(b)(1) and 1.555(b)(1)

    Comment 1: Several comments suggested amending previously proposed §§ 1.56(b)(1) and 1.555(b)(1) to add the phrase “consistent with the specification” following the phrase “broadest reasonable construction” to ensure the Office would be giving a claim its broadest reasonable construction consistent with the specification.

    Response: As discussed in the preamble, the Office has modified the previously proposed rule language to add “consistent with the specification” after “broadest reasonable construction.”

    Comment 2: One comment suggested amending previously proposed §§ 1.56(b)(1) and 1.555(b)(1) to change the perspective from the present to the time when information was withheld from the Office. In particular, this comment suggested changing the phrase “would not allow a claim if it were aware of the information” in proposed § 1.56(b)(1) to “would not have allowed a claim if it were aware of the information,” and changing the phrase “would not find a claim patentable if it were aware of the information” in proposed § 1.555(b)(1) to “would not have found a claim patentable if it were aware of the information.” Another comment requested clarification regarding whether proposed §§ 1.56(b)(1) and 1.555(b)(1) would apply to any application pending on, or applications filed after, the effective date of any final rule.

    Response: While the first comment suggested specific language found in the Therasense holding be added to the rules, the Therasense holding pertains to inequitable conduct analysis by the courts, which is applied from a different perspective than the duty of disclosure analysis by applicants. The duty of disclosure is a prospective analysis, while inequitable conduct is a retrospective analysis. In other words, an applicant determines materiality in the present, not retroactively as a court would determine inequitable conduct. Additionally, with respect to Office proceedings, §§ 1.56(b) and 1.555(b) as proposed in this rule would apply to any application or reexamination proceeding pending on, filed on, or filed after the effective date of any final rule.

    Comment 3: Several comments requested clarification regarding whether “a claim” in proposed §§ 1.56(b)(1) and 1.555(b)(1) is the finally allowed claim or any claim pending during prosecution, such as restricted claims, withdrawn claims, amended claims, etc.

    Response: Currently proposed § 1.56(a) explicitly states “[t]he duty to disclose information exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration, or the application becomes abandoned.” Similarly, § 1.555(a) states “[t]he duty to disclose the information exists with respect to each claim pending in the reexamination proceeding until the claim is cancelled.” Therefore, the duty of disclosure pertains to all claims while they are pending. The duty does not pertain to information that is only material to claims that have been cancelled or withdrawn.

    B. Cumulative Information

    Comment 4: Several comments suggested the rules maintain the language from existing §§ 1.56(b) and 1.555(b), which provide that information is material to patentability “when it is not cumulative to information already of record or being made of record.”

    Response: Sections 1.56 and 1.555 in this currently proposed rule do not include the language regarding cumulative information set forth in existing §§ 1.56 and 1.555. The Office, however, is not requesting that applicants submit cumulative information. Information that is merely cumulative to information already on the record would not be material under the but-for standard.

    Comment 5: One comment stated that non-disclosed cumulative information may meet the but-for test in the situation where the Office erred in allowing a claim over the originally cited art and the applicant is in possession of art that is cumulative to the originally cited art.

    Response: The applicant is under a duty to refrain from filing and prosecuting claims that are known to be unpatentable whether based on information already of record and not recognized by the examiner or cumulative information not submitted. See §§ 11.18, 11.301, and 11.303. In such an instance, the applicant should amend the claims accordingly.

    C. Affirmative Egregious Misconduct

    Comment 6: Several comments stated that combining the but-for test of §§ 1.56(b)(1) and 1.555(b)(1) and the affirmative egregious misconduct test of §§ 1.56(b)(2) and 1.555(b)(2) in the previously proposed rules will lead to confusion because the but-for test involves the materiality of information while the “affirmative egregious misconduct” test is related to the nature of the conduct. Several comments, in particular, suggested moving the “affirmative egregious misconduct” exception into §§ 1.56(a) and 1.555(a).

    Response: In order to alleviate any potential confusion by including affirmative egregious misconduct in §§ 1.56(b) and 1.555(b), this currently proposed rule amends §§ 1.56 and 1.555 by moving the language regarding affirmative egregious misconduct from previously proposed §§ 1.56(b)(2) and 1.555(b)(2) to §§ 1.56(a) and 1.555(a), respectively. In particular, § 1.56(a) as currently proposed would provide that a patent will not be granted on an application where any individual associated with the filing or prosecution of the application engages in affirmative egregious misconduct. Section 1.555(a) as currently proposed would provide that the duties of candor, good faith, and disclosure have not been complied with if any individual associated with the patent owner in a reexamination proceeding engages in affirmative egregious misconduct. Thus, §§ 1.56(b) and 1.555(b), as currently proposed, are limited to defining the but-for materiality standard for the duty to disclose information.

    Comment 7: Several comments stated that the phrase “affirmative egregious misconduct” in previously proposed rules §§ 1.56(b)(2) and 1.555(b)(2) is a vague and undefined term and, therefore, should not be included in the rules. In addition, several comments requested that the Office incorporate the definition of affirmative egregious misconduct from Therasense directly into the rule. Several comments requested guidance, such as examples, on what sort of conduct constitutes affirmative egregious misconduct in previously proposed §§ 1.56(b) and 1.555(b). One other comment suggested clarifying affirmative egregious misconduct to prevent affirmative egregious misconduct from “swallowing” the but-for rule and requiring affirmative egregious misconduct to have a realistic potential to impact patentability. Several comments also stated that it is unclear how affirmative egregious misconduct relates to the Office's other rules such as §§ 1.56(a) and 10.23. (While § 10.23 was in effect at the time the comment was made, it has since been removed and § 11.804 was adopted. See Changes to Representation of Others Before The United States Patent and Trademark Office, 78 FR 20188 (Apr. 3, 2013).) These comments are applicable to the currently proposed rules as well.

    Response: As discussed previously, the Office has retained and moved the recitation of affirmative egregious misconduct to currently proposed §§ 1.56(a) and 1.555(a). Affirmative egregious misconduct is recited in currently proposed § 1.56(a) in addition to the other forms of misconduct that would preclude a patent from being granted. Similarly, affirmative egregious misconduct is recited in currently proposed § 1.555(a) in addition to the other forms of misconduct engaged in by, or on behalf of, the patent owner in the reexamination proceeding that would cause a violation of the duties of candor, good faith, and disclosure. The discussion of affirmative egregious misconduct in Therasense and subsequent cases, as well as the lengthy jurisprudence of the unclean hands doctrine, offers guidance as to the boundaries of affirmative egregious misconduct. Specifically, in Therasense, the Federal Circuit likened affirmative egregious misconduct to the doctrine of unclean hands that “dealt with `deliberately planned and carefully executed scheme[s]' to defraud the PTO and the courts.” Therasense, 649 F.3d at 1292. The Federal Circuit also described several examples of behavior that would constitute affirmative egregious misconduct including “perjury, the manufacture of false evidence, and the suppression of evidence,” as well as filing an “unmistakably false affidavit.” Id. at 1287, 1292. See also The Ohio Willow Wood Co. v. Alps South, LLC, 735 F.3d at 1351 (finding that misrepresenting evidence to the Board of Patent Appeals and Interferences was “tantamount to filing an unmistakably false affidavit”); Intellect Wireless, Inc. v. HTC Corp., 732 F.3d at 1344 (stating “the materiality prong of inequitable conduct is met when an applicant files a false affidavit and fails to cure the misconduct”). The Federal Circuit clarified, however, that “neither mere nondisclosure of prior art references to the PTO nor failure to mention prior art references in an affidavit constitutes affirmative egregious misconduct.” Therasense, 649 F.3d at 1292-93. Further, the Federal Circuit has provided additional guidance on the type of activity that would not constitute affirmative egregious misconduct. See, e.g., Powell v. Home Depot U.S.A., Inc., 663 F.3d 1221, 1235 (Fed. Cir. 2011) (failing to update a Petition to Make Special “is not the type of unequivocal act, `such as filing an unmistakably false affidavit,' that would rise to the level of `affirmative egregious misconduct.' ”).

    Comment 8: Several comments suggested that acts of “affirmative egregious misconduct” in previously proposed §§ 1.56(b) and 1.555(b) should not be limited solely to “the applicant.”

    Response: The Office does not interpret the Federal Circuit's use of “patentee” in Therasense when describing affirmative egregious misconduct as limiting the misconduct to only the applicant or patent owner. All of the parties identified in §§ 1.56(c) and 1.555(a) are subject to the affirmative egregious misconduct provisions of currently proposed §§ 1.56(a) and 1.555(a), respectively.

    Comment 9: One comment suggested striking previously proposed § 1.555(b)(2), which was directed to affirmative egregious misconduct, as unnecessary. The comment asserts that the previously proposed rule invites potential third party abuse and confusion during reexamination since third parties will see the rule as a license to argue a lack of candor with respect to previous patent holder submissions to the Office.

    Response: While the currently proposed rule no longer includes § 1.555(b)(2), the recitation of affirmative egregious misconduct has been moved to currently proposed § 1.555(a). As proposed, this rule would address a patent owner's duty of candor and good faith in dealing with the Office, including the patent owner's duty of disclosure. It would not establish an opportunity in a reexamination proceeding for a third party to challenge the duty of candor and good faith of a patentee. Conduct is not grounds on which reexamination may be requested and is not appropriate to be raised during a reexamination proceeding. See MPEP § 2616. The conduct of the patent owner may be raised by the patent owner during a supplemental examination proceeding. If the conduct of the patent owner is raised by the patent owner in the supplemental examination proceeding, it may be addressed by the Office in the supplemental examination proceeding and in any reexamination proceeding resulting from that supplemental examination proceeding.

    D. Therasense Language

    Comment 10: Several comments stated that the previously proposed rules should not explicitly reference Therasense. The comments questioned whether an explicit reference would allow the rules to change as the Therasense standard changes or lock the Office into the standard set forth in the decision even if the standard is later changed. Further, the comments asserted that an explicit reference creates uncertainty in the rules since the rules will become a moving target not subject to interpretation on their face and that a rule cannot be understood on its face without need to interpret the Therasense decision. The comments also asserted that tying the rule to an evolving standard will cause currently pending applications to stand as test cases until the standard is fully articulated. Finally, the comments asserted that the incorporation by reference sets a standard based on private litigation where the Office is not a party and grants an administrative agency's rulemaking authority to the judicial branch, which has different goals than the Office.

    Response: The currently proposed rules no longer include the language addressed by the comment. Notwithstanding the removal of an explicit reference to Therasense in currently proposed §§ 1.56(b) and 1.555(b), the recitation of the but-for materiality standard for the duty to disclose information in currently proposed §§ 1.56(b) and 1.555(b) accomplishes what a reference to the court decision would accomplish in adopting the but-for standard set forth in Therasense. As discussed previously, the Office has determined that to adopt the but-for standard of materiality set forth in Therasense, § 1.56 need not incorporate a specific reference to the court decision that has created that standard. Accordingly, the reference to the Therasense court decision in § 1.56, as previously proposed, has not been retained in the currently proposed rule.

    The reference to the but-for standard should benefit the public by providing a consistent materiality standard for the duty to disclose information without the need for continuous revisions to the rules as the but-for standard in Therasense is interpreted or applied. As discussed previously, Therasense was decided by the Federal Circuit en banc and can only be overturned by another en banc decision of the Federal Circuit or by a decision of the Supreme Court. In the event that the Supreme Court, or Federal Circuit acting en banc, chooses to revise the but-for materiality standard set forth in Therasense, the Office will reconsider the rules at that time.

    Finally, the Office is not conveying its rulemaking authority to the judicial branch. Instead, the Office is exercising its rulemaking authority to adopt a standard used by the Federal Circuit. By using its rulemaking authority to adopt a common standard, the Office is providing the public with a uniform materiality standard for the duty to disclose information. If the Office should determine the uniform standard no longer provides a benefit to the public, the Office retains the ability to invoke its rulemaking authority and change the rules at any time.

    Comment 11: One comment stated that the previously proposed rules incorporate two alternative statements within the rules. Specifically, the previously proposed rules include a first sentence that states that information is material to patentability if it is material under the standard set forth in Therasense and a second sentence that states information is material to patentability under Therasense if (1) the Office would not allow a claim if it were aware of the information, or (2) the applicant engages in affirmative egregious misconduct before the Office as to the information. The comment questioned whether these two sentences were equivalent and, if they were, whether they would remain equivalent as the Therasense decision evolves in the Federal Circuit.

    Response: As discussed previously, this currently proposed rule modifies previously proposed §§ 1.56(b) and 1.555(b) to remove the sentence that explicitly references the Therasense decision. Sections 1.56(b) and 1.555(b) in this currently proposed rule would define the but-for materiality standard for the duty to disclose information as set forth in Therasense.

    E. General Language Comments

    Comment 12: One comment suggested that previously proposed rule § 1.555(b) should preserve the language that patents and printed publications are the appropriate types of information for consideration in reexamination.

    Response: As discussed previously, unlike existing § 1.555(b), which limits the types of information that could be considered in reexamination to patents and printed publications, the currently proposed rule broadly recites that it is applicable to any matter proper for consideration in a reexamination (e.g., admissions by patent owner as well as patents and printed publications).

    Comment 13: Several comments asserted the previously proposed rules are difficult for applicants to apply and interpret prospectively. Specifically, the comments assert that the proposed rules require the applicant to make legal conclusions in determining how to comply with the rule.

    Response: As stated in the previous notice of proposed rulemaking, the Office recognizes the tension in basing the disclosure requirement on unpatentability. See Revision of the Materiality to Patentability Standard for the Duty to Disclose Information in Patent Applications, 76 FR at 43633. However, since the existing provisions of §§ 1.56(b) and 1.555(b) require applicants to determine if there is a prima facie case of unpatentability, applicants are accustomed to making such determinations when complying with the duty of disclosure. Further, the but-for standard set forth in this currently proposed rule should not be any more difficult for applicants to apply during prosecution than the prima facie case of unpatentability standard that would be replaced by this currently proposed rule. Both standards require the applicant to reassess materiality as claims are amended, cancelled, and added. Lastly, the Office believes the but-for standard, as articulated by the Federal Circuit in Therasense, would also provide applicants with guidance on what information the applicant is required to submit to the Office.

    F. Application of Rule Standards

    Comment 14: Several comments addressed the scope of evidence to be considered when materiality or egregious misconduct determinations are made by the Office during application of these proposed rules, including whether the Office would take into account rebuttal evidence or whether the scope would be limited to the record before the Office.

    Response: The Office would utilize all available evidence when making determinations of materiality or affirmative egregious misconduct, including rebuttal evidence. Limiting determinations of materiality or affirmative egregious misconduct to the record before the Office might promote fraud and bad faith in practicing before the Office and may lead to erroneous decisions.

    Comment 15: Several comments requested the Office to stay Office of Enrollment and Discipline (OED) proceedings until a final court resolution regarding inequitable conduct is obtained in the courts.

    Response: This currently proposed rule would only modify the materiality standard for the duty of disclosure required in §§ 1.56 and 1.555. OED proceedings are governed by procedures outlined in 37 CFR part 11, and the timeline under which the OED must commence disciplinary proceedings is subject to 35 U.S.C. 32 as amended by the America Invents Act (AIA). See Public Law 112-29, section 3(k), 125 Stat. 340, section 3(k) (2011).

    G. General Comments

    Comment 16: One comment proposed the Office tailor the discipline for failing to comply with the duty of disclosure to sanctions other than rendering patents unenforceable.

    Response: The Office does not render a patent unenforceable for an applicant's failure to comply with the duty of disclosure. Rather, a court may hold a patent unenforceable due to inequitable conduct.

    Comment 17: Several comments suggested proposing rules for materiality for each new post-issuance proceeding under the America Invents Act (AIA), such as post grant review, inter partes review, and covered business method patents review. The comment suggested that, since each post-issuance proceeding is different, separate materiality standards may be necessary.

    Response: This comment is outside the scope of this rulemaking. The Office, however, has adopted § 42.11 to govern the duty of candor owed to the Office in the new post-issuance proceedings under the AIA. Additionally, the existing regulations at § 42.51 require a party to serve relevant information that is inconsistent with a position advanced during the proceedings.

    Comment 18: Several comments asserted the Office should not require applicants to explain or clarify the relationship of the prior art to the claimed invention as suggested by the Office in the previous notice of proposed rulemaking. See Revision of the Materiality to Patentability Standard for the Duty to Disclose Information in Patent Applications, 76 FR at 43632. In addition, several comments suggested that, if the Office requires such an explanation, applicants should be given a safe harbor so that such explanation would not be regarded as an act of affirmative egregious misconduct.

    Response: The contemplated required explanation from the previous notice of proposed rulemaking addressed by the comment is not included in this currently proposed rulemaking.

    Comment 19: Several comments stated that the proposed but-for standard for materiality will not reduce the incentive to submit marginally relevant information to the Office. In addition, one comment asserted that the stated rationale for the but-for standard does not justify the rule change since the 1992 version of the rule, which contained a prima facie case of unpatentability standard, did not contribute to the over-disclosure to the Office or the overuse of inequitable conduct in litigation. This comment stated that, as long as the penalty for inequitable conduct is the loss of enforceability of the patent, applicants will continue to submit voluminous amounts of information to the Office to avoid a finding of inequitable conduct.

    Response: The Office appreciates that a patent may be found unenforceable due to a finding of inequitable conduct. However, the Office's proposed adoption of the but-for standard of materiality articulated by the Federal Circuit in the Therasense decision, as well as the Therasense decision itself, should incentivize applicants not to submit marginally relevant information to the Office as this information would not meet the articulated standard.

    Comment 20: Several comments requested that the Office no longer require the cross-citation of prior art found in related applications. The comments also requested the Office to provide a safe harbor provision under which information from related applications is not material and need not be submitted or, in the alternative, the definition of a related application is limited to “family cases” (i.e., those cases for which there is some chain of priority claim), “similar claims cases” (i.e., those cases under a common obligation of assignment for which the claims are not patentably distinct), and “team exception cases” (i.e., those cases for which the provisions of 35 U.S.C. 102(b)(2)(c) apply (35 U.S.C. 103(c) for pre-AIA applications)).

    Response: An applicant is under a duty of disclosure to provide all known material information to the Office no matter how the applicant becomes aware of the information. An applicant is in the best position to know of any material information, especially when an applicant learns about the information from prosecution in related applications such as in applications for which priority or benefit is claimed. Having all material information in front of the examiner as early as possible will expedite prosecution and improve examination quality. But under the standard in this currently proposed rule, an applicant would be under no duty to provide information from related applications unless that information is but-for material.

    Comment 21: Several comments requested the Office provide a standard method of cross-citation for information in related cases so examiners will automatically review the information in the corresponding application without the applicant having to submit the information in an IDS.

    Response: The Office is currently exploring an initiative to provide examiners with information (e.g., prior art, search reports, etc.) from applicant's related applications as early as possible to increase patent examination quality and efficiency. In the interim, applicants must comply with the requirements of §§ 1.97 and 1.98.

    Comment 22: Several comments suggested incentivizing the filing of non-material disclosures. Essentially, the comments believed that the submission of a reference will be interpreted as an admission that it meets that materiality standard and, therefore, applicants will not submit non-material information. As an incentive to submit non-material information, the comments suggested relaxing or eliminating any burdens, such as waiving fees.

    Response: The Office does not construe any submission of information as an admission of materiality. Section 1.97(h) specifically states, “[t]he filing of an information disclosure statement shall not be construed to be an admission that the information cited in the statement is, or is considered to be, material to patentability as defined in § 1.56(b).” Therefore, the proposal to incentivize the submission of non-material information is not necessary.

    Comment 23: One comment stated that, while the Office will not regard information disclosures as admissions of unpatentability for any claims in the application under § 1.97(h), the Office does not have the authority to make this promise on behalf of the courts. The comment asserted that the courts will inevitably hold that any disclosure of prior art is an admission that some pending claim is unpatentable.

    Response: The comment did not provide any support for the asserted proposition that the courts treat the disclosure of prior art as an admission that at least one pending claim is unpatentable, and the Office is not aware of any court decision with such a holding.

    Comment 24: Several comments requested the duty of disclosure end upon payment of the issue fee rather than the patent grant.

    Response: It is in the applicant's and the public's best interest to have all material information known to the applicant considered by the examiner before a patent is granted. This will result in a stronger patent and avoid unnecessary post-grant proceedings and litigation. Section 1.97(d) thus provides for information to be submitted to the Office after a final action, notice of allowance, or action that otherwise closes prosecution is mailed, provided the IDS is filed on or before payment of the issue fee and is accompanied by the appropriate fee and statement under § 1.97(e). If the conditions of § 1.97(d) cannot be met, an applicant must file a request for continued examination (RCE) to have information considered by the examiner. Further, once the issue fee has been paid, the applicant must comply with § 1.313(c) (i.e., file a petition to withdraw from issue for consideration of an RCE) in order to have information considered by the examiner. In order to alleviate the burden on applicants in this situation, the Office has instituted the Quick Path Information Disclosure Statement (QPIDS) pilot program. The QPIDS pilot program eliminates the requirement for processing an RCE with an IDS after payment of the issue fee where the IDS is accompanied by the appropriate fee and statement under § 1.97(e) and the examiner determines that no item of information in the IDS necessitates reopening prosecution. For more information visit the QPIDS Web site at www.uspto.gov/patents/init_events/qpids.jsp.

    Comment 25: Several comments proposed giving an applicant a “safe harbor” so the duty of disclosure for the applicant ends when the applicant provides the information to counsel.

    Response: The purpose of the duty of disclosure requirement is to ensure that all material information known by the applicant is provided to the Office in the manner prescribed by §§ 1.97(b)-(d) and 1.98. Ending that duty upon the submission of the documents to counsel could potentially delay or prevent material information from being filed with the Office, resulting in, for example, a reduction in patent quality or a delay in the patent grant.

    Comment 26: Several comments requested the Office abrogate the duty of disclosure. The comments provided numerous reasons, such as harmonization with the patent offices that do not have such a duty. In the alternative, several comments suggested modifying the materiality standard to include only information that is not available to the public because most of the information submitted is readily searchable public information.

    Response: The public interest is best served, and the most effective and highest quality patent examination occurs, when the Office is aware of, and evaluates the teachings of, all information material to patentability during examination. Since the applicant is in the best position to be aware of material information in the art, it serves the public interest to require that the applicant submit this information to the Office during examination. Even if this information is publicly available, there is no guarantee that the examiner will find the information. Further, requiring the examiner to locate this information when the applicant is already aware of it unnecessarily expends government resources, increases search time, and could reduce examination quality. It is also noted that limiting materiality to information that is not available to the public would essentially abrogate the duty of disclosure because most information that is not available to the public is unlikely to meet the prior art requirements of 35 U.S.C. 102, hence preventing pertinent prior art from being seen by the examiner.

    Comment 27: One comment asked the Office to clarify whether the new rules create any duty to investigate.

    Response: Sections 1.56 and 1.555 in the currently proposed rule would not create any new or additional duty to investigate. However, practitioners and non-practitioners are reminded of the duty under § 11.18(b)(2) to make an “inquiry reasonable under the circumstances” when presenting any paper to the Office.

    Rulemaking Considerations A. Administrative Procedure Act

    This currently proposed rule would harmonize the rules of practice concerning the materiality standard for the duty of disclosure with the but-for materiality standard for inequitable conduct set forth in Therasense. The changes in this currently proposed rule would not alter the substantive criteria of patentability. Therefore, the changes in this currently proposed rule involve rules of agency practice and procedure and/or interpretive rules. See Bachow Commc'ns, Inc. v. F.C.C., 237 F.3d 683, 690 (D.C. Cir. 2001) (Rules governing an application process are procedural under the Administrative Procedure Act.); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (Rules for handling appeals were procedural where they did not change the substantive standard for reviewing claims.); Nat'l Org. of Veterans' Advocates, Inc. v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (Rule that clarifies interpretation of a statute is interpretive.).

    Accordingly, prior notice and opportunity for public comment are not required pursuant to 5 U.S.C. 553(b) or (c) (or any other law). See Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not require notice and comment rulemaking for “`interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice'” (quoting 5 U.S.C. 553(b)(3)(A))). The Office, however, is publishing the currently proposed rule for comment to seek the benefit of the public's views on the Office's proposed revision of the materiality standard for the duty to disclose information to the Office.

    B. Regulatory Flexibility Act

    For the reasons set forth herein, the Deputy General Counsel for General Law of the United States Patent and Trademark Office has certified to the Chief Counsel for Advocacy of the Small Business Administration that changes proposed in this notice will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 605(b).

    This notice proposes to harmonize the standard for materiality under §§ 1.56 and 1.555 for the duty of disclosure with the but-for materiality standard for inequitable conduct set forth in Therasense. The harmonized materiality standard should reduce the incentives to submit marginally relevant information in information disclosure statements (IDSs). The changes in this currently proposed rule involve rules of agency practice and procedure and/or interpretive rules and would not result in any additional fees or requirements on patent applicants or patentees. Therefore, the changes proposed in this rulemaking will not have a significant economic impact on a substantial number of small entities.

    C. Executive Order 12866 (Regulatory Planning and Review)

    This rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

    D. Executive Order 13563 (Improving Regulation and Regulatory Review)

    The Office has complied with Executive Order 13563. Specifically, the Office has, to the extent feasible: (1) Used the best available techniques to quantify costs and benefits and considered values such as equity, fairness, and distributive impacts; (2) involved the public in an open exchange of information and perspectives among experts in relevant disciplines, affected stakeholders in the private sector, and the public as a whole, and provided on-line access to the rulemaking docket; (3) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (4) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (5) ensured the objectivity of scientific and technological information and processes.

    E. Executive Order 13132 (Federalism)

    This rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

    F. Executive Order 13175 (Tribal Consultation)

    This rulemaking will not: (1) Have substantial direct effects on one or more Indian tribes; (2) impose substantial direct compliance costs on Indian tribal governments; or (3) preempt tribal law. Therefore, a tribal summary impact statement is not required under Executive Order 13175 (Nov. 6, 2000).

    G. Executive Order 13211 (Energy Effects)

    This rulemaking is not a significant energy action under Executive Order 13211 because this rulemaking is not likely to have a significant adverse effect on the supply, distribution, or use of energy. Therefore, a Statement of Energy Effects is not required under Executive Order 13211 (May 18, 2001).

    H. Executive Order 12988 (Civil Justice Reform)

    This rulemaking meets applicable standards to minimize litigation, eliminate ambiguity, and reduce burden as set forth in sections 3(a) and 3(b)(2) of Executive Order 12988 (Feb. 5, 1996).

    I. Executive Order 13045 (Protection of Children)

    This rulemaking does not concern an environmental risk to health or safety that may disproportionately affect children under Executive Order 13045 (Apr. 21, 1997).

    J. Executive Order 12630 (Taking of Private Property)

    This rulemaking will not effect a taking of private property or otherwise have taking implications under Executive Order 12630 (Mar. 15, 1988).

    K. Congressional Review Act

    Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the PTO will submit a report containing this final rule and other required information to the U.S. Senate, the U.S. House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this notice do not result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this notice is not expected to result in a “major rule” as defined in 5 U.S.C. 804(2).

    L. Unfunded Mandates Reform Act of 1995

    The changes in this notice do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

    M. National Environmental Policy Act

    This rulemaking will not have any effect on the quality of environment and is thus categorically excluded from review under the National Environmental Policy Act of 1969. See 42 U.S.C. 4321 et seq.

    N. National Technology Transfer and Advancement Act

    The requirements of section 12(d) of the National Technology Transfer and Advancement Act of 1995 (15 U.S.C. 272 note) are not applicable because this rulemaking does not contain provisions which involve the use of technical standards.

    O. Paperwork Reduction Act

    The changes in this rulemaking involve information collection requirements which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The collection of information involved in this final rule has been reviewed and approved by OMB under OMB control number 0651-0031. This rulemaking proposes to harmonize the standard for materiality under §§ 1.56 and 1.555 for the duty of disclosure with the but-for standard for materiality for inequitable conduct set forth in Therasense. This notice does not adopt any additional fees or information collection requirements on patent applicants or patentees.

    Notwithstanding any other provision of law, no person is required to respond to, nor shall a person be subject to a penalty for failure to comply with, a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number.

    List of Subjects in 37 CFR Part 1

    Administrative practice and procedure, Biologics, Courts, Freedom of information, Inventions and patents, Reporting and record keeping requirements, Small businesses.

    For the reasons set forth in the preamble, 37 CFR part 1 is proposed to be amended as follows:

    PART 1—RULES OF PRACTICE IN PATENT CASES 1. The authority citation for 37 CFR part 1 continues to read as follows: Authority:

    35 U.S.C. 2(b)(2), unless otherwise noted.

    2. Section 1.56 is amended by revising paragraphs (a) and (b) to read as follows:
    § 1.56 Duty to disclose information material to patentability.

    (a) A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective patent examination occurs when, at the time an application is being examined, the Office is aware of and evaluates the teachings of all information material to patentability. Each individual associated with the filing and prosecution of a patent application has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability under the but-for materiality standard as defined in paragraph (b) of this section. The duty to disclose information exists with respect to each pending claim until the claim is cancelled or withdrawn from consideration or the application becomes abandoned. Information material to the patentability of a claim that is cancelled or withdrawn from consideration need not be submitted if the information is not material to the patentability of any claim remaining under consideration in the application. There is no duty to submit information which is not material to the patentability of any existing claim. The duty to disclose all information known to be material to patentability is deemed to be satisfied if all information known to be material to patentability of any claim issued in a patent was cited by the Office or submitted to the Office in the manner prescribed by §§ 1.97(b) through (d) and 1.98. However, no patent will be granted on an application in connection with which affirmative egregious misconduct was engaged in, fraud on the Office was practiced or attempted, or the duty of disclosure was violated through bad faith or intentional misconduct. The Office encourages applicants to carefully examine:

    (1) Prior art cited in search reports of a foreign patent office in a counterpart application, and

    (2) The closest information over which individuals associated with the filing or prosecution of a patent application believe any pending claim patentably defines, to make sure that any material information contained therein is disclosed to the Office.

    (b) Information is but-for material to patentability if the Office would not allow a claim if the Office were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction consistent with the specification.

    3. Section 1.555 is amended by revising paragraphs (a) and (b) to read as follows:
    § 1.555 Information material to patentability in ex parte reexamination and inter partes reexamination proceedings.

    (a) A patent by its very nature is affected with a public interest. The public interest is best served, and the most effective reexamination occurs when, at the time a reexamination proceeding is being conducted, the Office is aware of and evaluates the teachings of all information material to patentability in a reexamination proceeding. Each individual associated with the patent owner in a reexamination proceeding has a duty of candor and good faith in dealing with the Office, which includes a duty to disclose to the Office all information known to that individual to be material to patentability in a reexamination proceeding under the but-for materiality standard as defined in paragraph (b) of this section. The individuals who have a duty to disclose to the Office all information known to them to be material to patentability in a reexamination proceeding are the patent owner, each attorney or agent who represents the patent owner, and every other individual who is substantively involved on behalf of the patent owner in a reexamination proceeding. The duty to disclose the information exists with respect to each claim pending in the reexamination proceeding until the claim is cancelled. Information material to the patentability of a cancelled claim need not be submitted if the information is not material to patentability of any claim remaining under consideration in the reexamination proceeding. The duty to disclose all information known to be material to patentability in a reexamination proceeding is deemed to be satisfied if all information known to be material to patentability of any claim in the patent after issuance of the reexamination certificate was cited by the Office or submitted to the Office in an information disclosure statement. However, the duties of candor, good faith, and disclosure have not been complied with if affirmative egregious misconduct was engaged in, any fraud on the Office was practiced or attempted, or the duty of disclosure was violated through bad faith or intentional misconduct by, or on behalf of, the patent owner in the reexamination proceeding. Any information disclosure statement must be filed with the items listed in § 1.98(a) as applied to individuals associated with the patent owner in a reexamination proceeding and should be filed within two months of the date of the order for reexamination or as soon thereafter as possible.

    (b) Information is but-for material to patentability if, for any matter proper for consideration in reexamination, the Office would not find a claim patentable if the Office were aware of the information, applying the preponderance of the evidence standard and giving the claim its broadest reasonable construction consistent with the specification.

    Dated: October 21, 2016. Michelle K. Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.
    [FR Doc. 2016-25966 Filed 10-27-16; 8:45 am] BILLING CODE 3510-16-P
    DEPARTMENT OF COMMERCE Patent and Trademark Office 37 CFR Part 2 [Docket No. PTO-T-2010-0016] RIN 0651-AC41 Revival of Abandoned Applications, Reinstatement of Abandoned Applications and Cancelled or Expired Registrations, and Petitions to the Director AGENCY:

    United States Patent and Trademark Office, Commerce.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The United States Patent and Trademark Office (Office or USPTO) proposes to amend its rules regarding petitions to revive an abandoned application and petitions to the Director of the USPTO (Director) regarding other matters, and to codify USPTO practice regarding requests for reinstatement of abandoned applications and cancelled or expired registrations. The proposed changes will permit the USPTO to provide more detailed procedures regarding the deadlines and requirements for requesting revival, reinstatement, or other action by the Director. These rules will thereby ensure that the public has notice of the deadlines and requirements for making such requests, facilitate the efficient and consistent processing of such requests, and promote the integrity of application/registration information in the trademark electronic records system as an accurate reflection of the status of applications and registrations.

    DATES:

    Comments must be received by December 27, 2016 to ensure consideration.

    ADDRESSES:

    The USPTO prefers that comments be submitted via electronic mail message to [email protected] Written comments also may be submitted by mail to the Commissioner for Trademarks, P.O. Box 1451, Alexandria, VA 22313-1451, attention Jennifer Chicoski; by hand delivery to the Trademark Assistance Center, Concourse Level, James Madison Building—East Wing, 600 Dulany Street, Alexandria, VA 22314, attention Jennifer Chicoski; or by electronic mail message via the Federal eRulemaking Portal at http://www.regulations.gov. See the Federal eRulemaking Portal Web site for additional instructions on providing comments via the Federal eRulemaking Portal. All comments submitted directly to the USPTO or provided on the Federal eRulemaking Portal should include the docket number (PTO-T-2010-0016).

    The comments will be available for public inspection on the USPTO's Web site at http://www.uspto.gov, on the Federal eRulemaking Portal, and at the Office of the Commissioner for Trademarks, Madison East, Tenth Floor, 600 Dulany Street, Alexandria, VA 22314. Because comments will be made available for public inspection, information that is not desired to be made public, such as an address or phone number, should not be included.

    FOR FURTHER INFORMATION CONTACT:

    Jennifer Chicoski, Office of the Deputy Commissioner for Trademark Examination Policy, by email at [email protected], or by telephone at (571) 272-8943.

    SUPPLEMENTARY INFORMATION:

    Purpose: The USPTO proposes to revise the rules in part 2 of title 37 of the Code of Federal Regulations to provide more detailed procedures regarding the deadlines and requirements for petitions to revive an abandoned application under 37 CFR 2.66 and petitions to the Director under 37 CFR 2.146. The proposed changes also codify USPTO practice regarding requests for reinstatement of applications that were abandoned, and registrations that were cancelled or expired, due to Office error. By providing more detailed procedures regarding requesting revival, reinstatement, or other action by the Director, the proposed rule will benefit applicants, registrants, and the public because it will promote the integrity of application/registration information in the trademark electronic records system as an accurate reflection of the status of live applications and registrations, clarify the time periods in which applications or registrations can be revived or reinstated after abandonment or cancellation as well as inform of the related filing requirements, clarify the deadline for requesting that the Director take action regarding other matters, and facilitate the efficient and consistent handling of such requests.

    The public relies on the trademark electronic records system to determine whether a chosen mark is available for use or registration. Applicants are encouraged to utilize the trademark electronic search system, which provides access to text and images of marks, to determine whether a mark in any pending application or current registration is similar to their mark and used on the same or related products or for the same or related services. The search system also indicates the status of an application or registration, that is, whether the application or registration is live or dead. A “live” status indicates the application or registration is active and may bar the registration of a similar mark in a new application. A “dead” status indicates the application has become abandoned or the registration is cancelled or expired, and does not serve as a bar to registration of a similar mark in a new application unless it is restored to a live status pursuant to a corresponding rule.

    When a party's search discloses a potentially confusingly similar mark, that party may incur a variety of resulting costs and burdens, such as those associated with investigating the actual use of the disclosed mark to assess any conflict, proceedings to cancel the registration or oppose the application of the disclosed mark, civil litigation to resolve a dispute over the mark, or changing plans to avoid use of the party's chosen mark. In order to determine whether to undertake one or more of these actions, the party would refer to the status of the conflicting application/registration and would need to consult the relevant rule to determine whether the application or registration is within the time period in which the applicant or registrant may request revival, reinstatement, or other action by the Director. Thus, the effective notice provided by the USPTO's records plays a critical role in a party's decision-making to clearly distinguish between the “dead” marks that are no longer candidates for, or protected by, a federal registration and those that are still able to be restored to active status.

    The USPTO estimates that it receives annually approximately 20,000 petitions to revive an application under § 2.66 abandoned for failure to respond to an Office action or a notice of allowance, 1,200 petitions to the Director under § 2.146, and 300 requests for reinstatement of applications and registrations. If the trademark electronic records system indicates that an application or registration is dead because it is abandoned, cancelled, or expired, and there is any doubt as to whether the application or registration might be eligible for revival, reinstatement, or other action by the Director, the costs and burdens discussed above may be incurred unnecessarily. By providing more detailed procedures as to the deadlines and requirements for requesting revival, reinstatement, or other action by the Director, the proposed rules will help the public avoid such needless costs and burdens and promote the efficient and consistent processing of such requests by the Office.

    Background

    Petition to Revive: The statutory period for responding to an examining attorney's Office action is six months from the Office action's date of issuance. 15 U.S.C. 1062(b); 37 CFR 2.62(a). If no response is received by the USPTO within the statutory period, and the Office action was sent to the correspondence address in the USPTO's records, the application is then abandoned in full or in part, as appropriate. 37 CFR 2.65(a); Trademark Manual of Examining Procedure (TMEP) § 718.06.

    The statutory period for filing a statement of use, or a request for an extension of time to file a statement of use, in response to a notice of allowance issued under section 1063(b)(2) of the Trademark Act (Act), is also six months. 15 U.S.C. 1051(d)(1), (2); 37 CFR 2.88(a), 2.89(a). Thus, an application is abandoned if the applicant fails to file a statement of use or request for an extension of time to file a statement of use within the statutory period or within a previously granted extension period. 37 CFR 2.88(k); TMEP § 718.04.

    An application is considered to be abandoned as of the day after the date on which a response to an Office action or notice of allowance is due. However, to accommodate timely mailed paper submissions and to ensure that the required response was not received and placed in the record of another application (e.g., if the applicant enters the incorrect serial number on its response), the USPTO generally waits one month after the due date to update the trademark electronic records system to reflect the abandonment. TMEP § 718.06. When the trademark electronic records system is updated, the USPTO sends a computer-generated notice of abandonment to the correspondence address listed in the application. Id. If an application becomes abandoned for failure to respond to an Office action or notice of allowance within the statutory period, and the delay in responding was unintentional, the application may be revived upon proper submission of a petition under 37 CFR 2.66. Currently, the deadlines for filing the petition are within two months after the date of issuance of the notice of abandonment or within two months of actual knowledge of the abandonment, if the applicant did not receive the notice of abandonment and the applicant was diligent in checking the status of the application every six months. 37 CFR 2.66(a).

    Request for Reinstatement: Under current practice, if an applicant has proof that an application was inadvertently abandoned due to a USPTO error, an applicant may file a request to reinstate the application, instead of a petition to revive. TMEP § 1712.01. The following is a non-exhaustive list of examples of situations in which the USPTO may reinstate an application held abandoned for failure to respond to an Office action or notice of allowance: (1) The applicant presents proof that a response to an Office action, statement of use, or request for extension of time to file a statement of use was timely filed through the Trademark Electronic Application System (TEAS); (2) there is an image of the timely filed response, statement of use, or extension request in the trademark electronic records system; or (3) the applicant supplies a copy of the document and proof that it was timely mailed to the USPTO in accordance with the requirements of 37 CFR 2.197. Id. Under current practice, a request for reinstatement must be filed within two months of the issuance date of the notice of abandonment. Id. If the applicant asserts that it did not receive a notice of abandonment, the request must be filed within two months of the date the applicant had actual knowledge that the application was abandoned, and the applicant must have been duly diligent in monitoring the status of the application every six months. Id.

    Similarly, under current practice, a registrant may file a request to reinstate a cancelled or expired registration if the registrant has proof that a required document was timely filed and that USPTO error caused the registration to be cancelled or expired. TMEP § 1712.02. The following is a non-exhaustive list of examples of situations in which the USPTO may reinstate a cancelled or expired registration: (1) The registrant presents proof that a required document was timely filed through TEAS; (2) the registrant presents proof of actual receipt of the required document in the USPTO in the form of a return postcard showing a timely USPTO date stamp or label, on which the registrant specifically refers to the document; or (3) the USPTO sent an Office action to the wrong address due to a USPTO error, i.e., the USPTO either entered the correspondence address incorrectly or failed to enter a proper notice of change of address filed before the issuance date of the action. Id. There is currently no deadline for filing a request to reinstate a cancelled/expired registration and the USPTO has generally not invoked the requirement for due diligence when there is proof that a registration was cancelled or expired solely due to USPTO error. TMEP § 1712.02(a).

    Petition to the Director Under 37 CFR 2.146: Applicants, registrants, and parties to inter partes proceedings before the Trademark Trial and Appeal Board (TTAB) who believe they have been injured by certain adverse actions of the USPTO, or who believe that they cannot comply with the requirements of the Trademark Rules of Practice (37 CFR parts 2, 3, 6, and 7) because of an extraordinary situation, may seek equitable relief by filing a petition under 37 CFR 2.146. A variety of issues may be reviewed on petition under this section. Some of the more common examples are when a party petitions the Director to: (1) Review an examining attorney's formal requirement, if the requirement is repeated or made final and the subject matter is appropriate for petition; (2) review the action of the Post Registration Unit refusing an affidavit of use or excusable nonuse under section 8 or section 71 of the Act, 15 U.S.C. 1058, 1141k, a renewal application under section 9 of the Act, 15 U.S.C. 1059, or a proposed amendment to a registration under section 7 of the Act, 15 U.S.C. 1057; or (3) review the refusal of the Madrid Processing Unit to certify an application for international registration. See TMEP § 1703. Generally, unless a specific deadline is specified elsewhere in the rules or within this section, such as the deadlines for petitions regarding actions of the TTAB under § 2.146(e), a petition must be filed within two months of the date of issuance of the action from which relief is requested and no later than two months from the date when Office records are updated to show that a registration has been cancelled or has expired under § 2.146(d). However, under current § 2.146(i), if a petitioner seeks to reactivate an application or registration that was abandoned, cancelled, or expired because documents not received by the Office were lost or mishandled, the petitioner is also required to be duly diligent in checking the status of the application or registration. The section has traditionally been invoked when papers submitted pursuant to the mailing rules in § 2.197 and § 2.198 were lost. However, the occurrence of such incidents is minimal. Further, the USPTO believes that if an applicant or registrant has proof that documents mailed in accordance with the requirements of § 2.197 or § 2.198 were lost or mishandled by the USPTO, thereby causing the abandonment of an application or cancellation/expiration of a registration, the proper recourse will be to seek relief under the proposed rule for requesting reinstatement.

    Establishing Due Diligence: As noted above, if an applicant or registrant does not receive a notice from the USPTO regarding the abandonment of its application, cancellation/expiration of its registration, or denial of some other request, but otherwise learns of the abandonment, cancellation/expiration, or denial, the applicant or registrant must have been duly diligent in tracking the status of its application or registration in order to be granted revival, reinstatement, or other action by the Director. Section 2.146(i) sets out the standard of due diligence for petitions to revive and to reactivate an application or registration that was abandoned, cancelled, or expired because documents were lost or mishandled. To be considered duly diligent, an applicant must check the status of the application at least every six months between the filing date of the application and issuance of a registration. 37 CFR 2.146(i)(1). After filing an affidavit of use or excusable nonuse under section 8 or section 71 of the Act or a renewal application under section 9 of the Act, a registrant must check the status of the registration every six months until the registrant receives notice that the affidavit or renewal application has been accepted. 37 CFR 2.146(i)(2). Section 2.146(d) sets out the standard currently followed for requests to reinstate an application abandoned due to Office error. TMEP § 1712.01. When a party seeks to revive an application that was abandoned or reinstate a registration that was cancelled or expired, either due to the failure of the applicant or registrant to file a required document or to the loss or mishandling of documents sent to or from the USPTO, or asks the Director to take some other action, the USPTO may deny the request if the petitioner was not diligent in checking the status of the application or registration, even if the petitioner can show that the USPTO actually received documents, or declares that a notice from the USPTO was never received by the petitioner. 37 CFR 2.146(i).

    The USPTO generally processes applications, responses, and other documents in the order in which they are received, and it is reasonable to expect some notice or acknowledgement from the USPTO regarding action on a pending matter within six months of the filing or receipt of a document. A party who has not received a notice or acknowledgement from the USPTO within that time frame has the burden of inquiring as to the status of action on its filing, and requesting in writing that corrective action be taken when necessary, to protect third parties who may be harmed by reliance on inaccurate information regarding the status of an application or registration in the trademark electronic records system. See TMEP § 1705.05. For example, a third party may have searched USPTO records and begun using a mark because the search showed that an earlier-filed application, or prior registration, for a conflicting mark had been abandoned or cancelled. In other cases, an examining attorney may have searched USPTO records and approved for publication a later-filed application for a conflicting mark because the earlier-filed application was shown as abandoned or a prior registration was shown as cancelled.

    The due-diligence requirement means that any petition filed more than two months after the notice of abandonment or cancellation was issued, or no later than two months after Office records are updated, is likely to be dismissed as untimely because the applicant or registrant will be unable to establish that it was duly diligent. For example, if an applicant files an application in July 1, 2016 and an Office action is issued on October 15, 2016, a response must be filed on or before April 15, 2017. If the applicant does not respond, the trademark electronic records system will be updated to show the application as abandoned and a notice of abandonment will be sent to the applicant on or about May 15, 2017. If the applicant does not receive the notice of abandonment, and only checks the trademark electronic records system in August 2017 (i.e., more than two months after the issue date of the notice of abandonment and more than a year after filing), and thereafter files a petition to revive, that petition would be denied as untimely. Even if the applicant asserts that it only became aware of the issuance of the Office action and the notice of abandonment on, for example, July 18, 2017 (actual notice), the petition would be denied as untimely because the applicant could not prove that it was duly diligent in monitoring the status of the application by checking the status every six months.

    Moreover, in some situations when an applicant or owner of a registration asserts that it did not receive a notice of abandonment or cancellation, it is often difficult for the USPTO to determine when the party had actual notice of the abandonment/cancellation and whether the party was duly diligent in prosecuting the application or maintaining the registration. By effectively mandating that applicants and registrants conduct the requisite status checks of Office records every six months from the filing of a document, whether an application or a submission requesting action by the Office, parties would be aware of the acceptance or refusal of their submission with enough notice to timely respond in the vast majority of circumstances. For example, if a document is filed on January 2, and an Office action requiring a response within six months is issued on February 2, if the submitting party is duly diligent and reviews the trademark electronic records system on July 2, it would learn of the issuance of the action, even if the party did not receive it. In that situation, the party would still have one month in which to timely respond.

    Discussion of Proposed Changes and Rulemaking Goals

    Establish Certainty Regarding Timeliness: The goals of the proposed changes are to harmonize the deadlines for requesting revival, reinstatement, or other action by the Director and remove any uncertainty for applicants, registrants, third parties, and the Office as to whether a request is timely.

    Under this proposed rule, the USPTO adds §§ 2.64(a)(1)(i) and (b)(1)(i) and amends §§ 2.66(a)(1) and 2.146(d)(1) to clarify that applicants and registrants would be on notice that if they receive an official document from the USPTO, such as a notice of abandonment or cancellation, a post-registration Office action, or a denial of certification of an international registration, they must file a petition to revive, request for reinstatement, or petition to the Director to take another action, by not later than two months after the issue date of the notice. The proposed addition of §§ 2.64(a)(1)(i) and (b)(1)(i) codifies this deadline for parties seeking reinstatement of an application or registration abandoned or cancelled due to Office error and makes it consistent with the deadline in § 2.66(a)(1). The proposed amendment to § 2.66(a) clarifies that the deadline applies to abandonments in full or in part. Finally, the proposed change to § 2.146(d)(1) deletes the requirement that a petition be filed no later than two months from the date when Office records are updated to show that a registration is cancelled or expired. As noted below, this deadline is extended to not later than six months after the date the trademark electronic records system indicates that the registration is cancelled/expired to harmonize the deadlines across the relevant sections.

    To establish certainty and ensure consistency, the proposed rule also adds §§ 2.64(a)(1)(ii) and (b)(1)(ii) to codify the deadline for all applicants and registrants who assert that they did not receive an abandonment notice from the Office and thereafter seek reinstatement. This deadline is identical to the deadlines proposed in §§ 2.66(a)(2) and 2.146(d)(2) for applicants and registrants who assert that they did not receive a notice from the Office and thereafter seek relief. Under proposed §§ 2.64(a)(1)(ii) and (b)(1)(ii), if the applicant or registrant did not receive the notice, or no notice was issued, a petition must be filed by not later than two months of actual knowledge that a notice was issued or that an action was taken by the Office, and not later than six months after the date the trademark electronic records system is updated to indicate the action taken by the Office. Thus, this proposed rule makes clear that applicants and registrants must check the status of their applications and registrations every six months and thereby remove any uncertainty in the Office's assessment of whether an applicant or registrant was duly diligent.

    Balance Duties of USPTO to Registrants and Third Parties: Under this proposed rule, the USPTO would add § 2.64(b)(2)(ii) and amend § 2.146(d)(2)(ii) to include the requirement for due diligence in tracking the status of a registration. Registrants who seek reinstatement of a registration cancelled due to Office error, but who assert that they did not receive a notice of cancellation/expiration, must file the request by not later than two months of actual knowledge of the cancellation and not later than six months after the date the trademark electronic records system indicates that the registration is cancelled/expired.

    As noted above, the USPTO has generally not invoked the requirement for due diligence when there is proof that a registration was cancelled or expired solely due to Office error. Although the USPTO has a duty to correct its errors, the USPTO has a concurrent duty toward third parties to ensure that the trademark electronic records system accurately reflects the status of applications and registrations, especially given that the USPTO encourages such third parties to search the trademark electronic records system prior to adopting or seeking to register a mark. Therefore, the USPTO must balance its duty to third parties who rely on the accuracy of the trademark electronic records system and to registrants whose registration may have been cancelled as a result of Office error. The USPTO believes that, in order to fulfill its duty to all parties, the requirement for due diligence should apply equally to registrants who did not receive a notice of cancellation/expiration and who request reinstatement of their registrations, as it does to all other applicants and registrants who do not receive notice of any other action taken by the Office. As noted above, it is reasonable to expect some notice or acknowledgement from the USPTO regarding action on a pending matter within six months of the filing of a document. A registrant who has not received a notice or acknowledgement from the USPTO regarding a post-registration maintenance, renewal, or amendment document within that time frame has the burden of inquiring as to the status of the USPTO's action on the filing, and requesting in writing that corrective action be taken when necessary, to protect third parties who may be harmed by reliance on inaccurate information regarding the status of its registration in the trademark electronic records system.

    Maintain Pendency: The USPTO proposes changes to § 2.66 to prevent applicants from utilizing the revival process to delay prosecution by repeatedly asserting non-receipt of an Office action or notice of allowance. Specifically, the regulations at § 2.66(b) are amended to clarify that a response to the outstanding Office action is required or, if the applicant asserts it did not receive the Office action, that the applicant may not assert more than once that the unintentional delay is based on non-receipt of the same Office action. The USPTO also adds § 2.66(b)(3)(i)-(ii) to clarify the requirements for requesting revival when the abandonment occurred after a final Office action.

    An application is considered to be abandoned as of the day after the date on which a response to the Office action or notice of allowance is due. However, to accommodate timely mailed paper submissions and to ensure that the required response was not received and placed in the record of another application (e.g., if the applicant enters the incorrect serial number on its response), the USPTO generally waits until one month after the due date to send the notice of abandonment and update the trademark electronic records system to indicate that the application is abandoned.

    In some situations, an application will become abandoned multiple times for failure to respond to an Office action or notice of allowance and the applicant will assert that it did not receive the same Office action or the notice of allowance each time that it petitions to revive the application. Under the proposed regulations at § 2.66(b), the Office would limit the applicant's ability to assert more than once that the unintentional delay is based on non-receipt of the same Office action. When an applicant becomes aware that its application has been abandoned, either via receipt of a notice of abandonment or after checking the status of the application, the applicant is thereby on notice that the Office has taken action on the application. If the applicant then files a petition to revive an application held abandoned for failure to respond to an Office action which states that the applicant did not receive the action, and the petition is granted, the USPTO will issue a new Office action, if there are additional issues since the original Office action was sent, and provide the applicant with a new six-month response period. If all issues previously raised remain the same, after reviving the application, the USPTO will send a notice to the applicant directing the applicant to view the previously issued Office action in the electronic file for the application available on the USPTO's Web site and provide the applicant with a new six-month response period. When a petition to revive an application for failure to respond to a notice of allowance states that the applicant did not receive the notice, and the petition is granted, the USPTO will cancel the original notice of allowance and issue a new notice, giving the applicant a new six-month period in which to file a statement of use or request for extension of time to file a statement of use.

    In either situation, the USPTO sends the new Office action or notice of allowance to the correspondence address of record. In general, under the current regulations at 37 CFR 2.18, the owner of an application has a duty to maintain a current and accurate correspondence address with the USPTO, which may be either a physical or email address. If the correspondence address changes, the USPTO must be promptly notified in writing of the new address. If the correspondence address has not changed in the USPTO records since the filing of the application, the applicant is on notice that documents regarding its application are being sent to that address by virtue of its awareness of the abandonment of the application and its subsequent filing of the petition to revive.

    Allowing an applicant who is on notice that the Office has taken action in an application to continually assert non-receipt of the same Office action or notice of allowance significantly delays prosecution of the application. It also results in uncertainty for the public, which relies on the trademark electronic records system to determine whether a chosen mark is available for use or registration. Therefore, because the applicant is on notice that documents regarding its application are being sent to the address of record, this proposed rule would limit an applicant to asserting only once that the unintentional delay is based on non-receipt of the same Office action or notice of allowance. If the correspondence address has changed since the filing of the application, the applicant is responsible for updating the address, as noted above, so that any further Office actions or notices will be sent to the correct address.

    Codify Requirements for Reinstatement: The USPTO proposes new regulations at § 2.64 to codify the requirements for seeking reinstatement of an application that was abandoned or a registration that was cancelled or expired due to Office error. The proposed regulations indicate that there is no fee for requesting reinstatement. They also set out the deadlines for submitting such requests, as discussed under the heading “Establish Certainty Regarding Timeliness,” and the nature of proof necessary to support an allegation of Office error in the abandonment of the relevant application or cancellation of the relevant registration. Further, the proposed regulation provides an avenue for requesting waiver of the requirements if the applicant or registrant is not entitled to reinstatement.

    The rationale for the proposed changes to the deadline for requesting reinstatement of a registration when the registrant did not receive a notice of cancellation is discussed above. The TMEP currently sets out the deadlines for requesting reinstatement of an application or registration that was abandoned, cancelled, or expired due to Office error. TMEP §§ 1712.01, 1712.02(a). Other requirements, such as the nature of proof required to establish Office error, are also set out in the TMEP. However, although the TMEP sets out the deadlines and guidelines for submitting and handling requests for reinstatement, it does not have the force of law. Codifying the deadlines for filing a request for reinstatement in a separate rule that also lists the types of proof necessary to warrant such remedial action would provide clear and definite standards regarding an applicant's or registrant's burden. It would also furnish the legal underpinnings of the Office's authority to grant or deny a request for reinstatement as well as provide applicants and owners of registrations with the benefit of an entitlement to relief when the standards of the rules are met.

    If an applicant or registrant is found not to be entitled to reinstatement, the proposed rule also provides a possible avenue of relief in that the request may be construed as a petition to the Director under § 2.146 or a petition to revive under § 2.66, if appropriate. In addition, if the applicant or registrant is unable to meet the timeliness requirement for filing the request, the proposed rule provides that the applicant or registrant may submit a petition to the Director under § 2.146(a)(5) to request a waiver of that requirement.

    Summary of Major Provisions: As stated above, the USPTO proposes to revise the rules in part 2 of title 37 of the Code of Federal Regulations to clarify the requirements for seeking revival of an abandoned application, reinstatement of an application or registration, or submitting a petition to the Director to take some other action.

    Discussion of Proposed Regulatory Changes

    The USPTO proposes to add § 2.64 and to amend §§ 2.66 and 2.146 to clarify the requirements for submitting petitions to revive an abandoned application and petitions to the Director regarding other matters, as described in the section-by-section analysis below.

    The USPTO proposes to add § 2.64 to codify the requirements for requests to reinstate an application that was abandoned, or a registration that was cancelled or expired, due to Office error.

    The USPTO proposes to amend the title of § 2.66 to “Revival of applications abandoned in full or in part due to unintentional delay.”

    The USPTO proposes to amend § 2.66(a) by adding the title “Deadline” and the wording “in full or in part” and “by not later than;” to amend § 2.66(a)(1) by indicating that the deadline is not later than two months after the issue date of the notice of abandonment in full or in part; and to amend § 2.66(a)(2) by revising the deadline if the applicant did not receive the notice of abandonment.

    The USPTO proposes to amend § 2.66(b) by adding the title “Petition to Revive Application Abandoned in Full or in Part for Failure to Respond to an Office Action” and rewording the paragraph for clarity and to add “in full or in part”; revising § 2.66(b)(3) to clarify that a response to the outstanding Office action is required or, if the applicant asserts it did not receive the Office action, that the applicant may not assert more than once that the unintentional delay is based on non-receipt of the same Office action; and adding § 2.66(b)(3)(i)-(ii) to set out the requirements for requesting revival when the abandonment occurs after a final Office action.

    The USPTO proposes to amend § 2.66(c) by adding the title “Petition to Revive Application Abandoned for Failure to Respond to a Notice of Allowance;” adding § 2.66(c)(2)(i)-(iv) to incorporate and further clarify requirements in current §§ 2.66(c)(4) and (5); deleting current § 2.66(c)(3)-(4); and redesignating current § 2.66(c)(5) as § 2.66(c)(3) and deleting the wording prior to “the applicant must file.”

    The USPTO proposes to amend § 2.66(d) by adding the title “Statement of Use or Petition to Substitute a Basis May Not Be Filed More Than 36 Months After Issuance of the Notice of Allowance” and rewording the paragraph for clarity.

    The USPTO proposes to delete current § 2.66(e).

    The USPTO proposes to redesignate current § 2.66(f) as § 2.66(e), add the title “Request for Reconsideration,” reword the paragraph for clarity, and revise paragraphs (1) and (2) to clarify the requirements for requesting reconsideration of a petition to revive that has been denied.

    The USPTO proposes to amend § 2.146(b) by deleting the wording “considered to be.”

    The USPTO proposes to amend § 2.146(d) by deleting the current paragraph and adding a sentence introducing new § 2.146(d)(1)-(2)(iii), which sets out the deadlines for filing a petition.

    The USPTO proposes to amend § 2.146(e)(1) by changing the wording “within fifteen days from the date of issuance” and “within fifteen days from the date of service” to “by not later than fifteen days after the issue date” and ” by not later than fifteen days after the date of service.” The USPTO proposes to amend § 2.146(e)(2) by changing the wording “within thirty days after the date of issuance” and “within fifteen days from the date of service” to “by not later than thirty days after the issue date” and “by not later than fifteen days after the date of service.”

    The USPTO proposes to delete current § 2.146(i).

    The USPTO proposes to redesignate current § 2.146(j) as new § 2.146(i), to delete the wording “the petitioner,” and to revise paragraphs (1) and (2) to clarify the requirements for requesting reconsideration of a petition to revive that has been denied.

    Rulemaking Considerations

    Administrative Procedure Act: The changes in this proposed rulemaking involve rules of agency practice and procedure, and/or interpretive rules. See Perez v. Mortg. Bankers Ass'n, 135 S. Ct. 1199, 1204 (2015) (interpretive rules “advise the public of the agency's construction of the statutes and rules which it administers”) (citation and internal quotation marks omitted); Nat'l Org. of Veterans' Advocates v. Sec'y of Veterans Affairs, 260 F.3d 1365, 1375 (Fed. Cir. 2001) (rule that clarifies interpretation of a statute is interpretive); Bachow Commc'ns Inc. v. FCC, 237 F.3d 683, 690 (D.C. Cir. 2001) (rules governing an application process are procedural under the Administrative Procedure Act); Inova Alexandria Hosp. v. Shalala, 244 F.3d 342, 350 (4th Cir. 2001) (rules for handling appeals were procedural where they did not change the substantive standard for reviewing claims).

    Accordingly, prior notice and opportunity for public comment for the changes in this proposed rulemaking are not required pursuant to 5 U.S.C. 553(b) or (c), or any other law. See Perez, 135 S. Ct. at 1206 (notice-and-comment procedures are required neither when an agency “issue[s] an initial interpretive rule” nor “when it amends or repeals that interpretive rule”); Cooper Techs. Co. v. Dudas, 536 F.3d 1330, 1336-37 (Fed. Cir. 2008) (stating that 5 U.S.C. 553, and thus 35 U.S.C. 2(b)(2)(B), does not require notice and comment rulemaking for “interpretative rules, general statements of policy, or rules of agency organization, procedure, or practice,” quoting 5 U.S.C. 553(b)(A)).

    Regulatory Flexibility Act: Under the Regulatory Flexibility Act (RFA) (5 U.S.C. 601 et seq.), whenever an agency is required by 5 U.S.C. 553 (or any other law) to publish a notice of proposed rulemaking (NPRM), the agency must prepare and make available for public comment an Initial Regulatory Flexibility Analysis, unless the agency certifies under 5 U.S.C. 605(b) that the proposed rule, if implemented, will not have a significant economic impact on a substantial number of small entities. 5 U.S.C. 603, 605.

    For the reasons set forth herein, the Deputy General Counsel for General Law of the United States Patent and Trademark Office has certified to the Chief Counsel for Advocacy of the Small Business Administration that this rule will not have a significant economic impact on a substantial number of small entities. See 5 U.S.C. 605(b).

    This proposed rule would amend the regulations to provide detailed deadlines and requirements for petitions to revive an abandoned application and petitions to the Director regarding other matters, and to codify USPTO practice regarding requests for reinstatement of abandoned applications and cancelled or expired registrations. The proposed rule will apply to all persons seeking a revival or reinstatement of an abandoned trademark application or registration, or other equitable action by the Director. Applicants for a trademark are not industry specific and may consist of individuals, small businesses, non-profit organizations, and large corporations. The USPTO does not collect or maintain statistics on small- versus large-entity applicants, and this information would be required in order to determine the number of small entities that would be affected by the proposed rule.

    The burdens to all entities, including small entities, imposed by these rule changes will be minor procedural requirements on parties submitting petitions to revive an abandoned application and petitions to the Director regarding other matters, and those submitting requests for reinstatement of abandoned applications and cancelled or expired registrations. The proposed changes do not impose any additional economic burden in connection with the proposed changes as they merely clarify existing requirements or codify existing procedures.

    Executive Order 12866 (Regulatory Planning and Review): This proposed rulemaking has been determined to be not significant for purposes of Executive Order 12866 (Sept. 30, 1993).

    Executive Order 13563 (Improving Regulation and Regulatory Review): The USPTO has complied with Executive Order 13563 (Jan. 18, 2011). Specifically, the USPTO has, to the extent feasible and applicable: (1) Made a reasoned determination that the benefits justify the costs of the rule changes; (2) tailored the rules to impose the least burden on society consistent with obtaining the regulatory objectives; (3) selected a regulatory approach that maximizes net benefits; (4) specified performance objectives; (5) identified and assessed available alternatives; (6) provided the public with a meaningful opportunity to participate in the regulatory process, including soliciting the views of those likely affected prior to issuing a notice of proposed rulemaking, and provided online access to the rulemaking docket; (7) attempted to promote coordination, simplification, and harmonization across government agencies and identified goals designed to promote innovation; (8) considered approaches that reduce burdens and maintain flexibility and freedom of choice for the public; and (9) ensured the objectivity of scientific and technological information and processes, to the extent applicable.

    Executive Order 13132 (Federalism): This proposed rulemaking does not contain policies with federalism implications sufficient to warrant preparation of a Federalism Assessment under Executive Order 13132 (Aug. 4, 1999).

    Congressional Review Act: Under the Congressional Review Act provisions of the Small Business Regulatory Enforcement Fairness Act of 1996 (5 U.S.C. 801 et seq.), prior to issuing any final rule, the USPTO will submit a report containing the final rule and other required information to the United States Senate, the United States House of Representatives, and the Comptroller General of the Government Accountability Office. The changes in this notice are not expected to result in an annual effect on the economy of 100 million dollars or more, a major increase in costs or prices, or significant adverse effects on competition, employment, investment, productivity, innovation, or the ability of United States-based enterprises to compete with foreign-based enterprises in domestic and export markets. Therefore, this notice is not expected to result in a “major rule” as defined in 5 U.S.C. 804(2).

    Unfunded Mandates Reform Act of 1995: The changes in this proposed rulemaking do not involve a Federal intergovernmental mandate that will result in the expenditure by State, local, and tribal governments, in the aggregate, of 100 million dollars (as adjusted) or more in any one year, or a Federal private sector mandate that will result in the expenditure by the private sector of 100 million dollars (as adjusted) or more in any one year, and will not significantly or uniquely affect small governments. Therefore, no actions are necessary under the provisions of the Unfunded Mandates Reform Act of 1995. See 2 U.S.C. 1501 et seq.

    Paperwork Reduction Act: This rulemaking involves information collection requirements which are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (44 U.S.C. 3501 et seq.). The collection of information involved in this rule has been reviewed and previously approved by OMB under control numbers 0651-0051, 0651-0054, and 0651-0061.

    You may send comments regarding the collections of information associated with this rule, including suggestions for reducing the burden, to (1) The Office of Information and Regulatory Affairs, Office of Management and Budget, New Executive Office Building, Room 10202, 725 17th Street NW., Washington, DC 20503, Attention: Nicholas A. Fraser, the Desk Officer for the United States Patent and Trademark Office; and (2) The Commissioner for Trademarks, by mail to P.O. Box 1451, Alexandria, VA 22313-1451, attention Catherine Cain; by hand delivery to the Trademark Assistance Center, Concourse Level, James Madison Building—East Wing, 600 Dulany Street, Alexandria, VA 22314, attention Catherine Cain; or by electronic mail message via the Federal eRulemaking Portal. All comments submitted directly to the USPTO or provided on the Federal eRulemaking Portal should include the docket number (PTO-T-2010-0016).

    Notwithstanding any other provision of law, no person is required to respond to nor shall a person be subject to a penalty for failure to comply with a collection of information subject to the requirements of the Paperwork Reduction Act unless that collection of information displays a currently valid OMB control number.

    List of Subjects in 37 CFR Part 2

    Administrative practice and procedure, Trademarks.

    For the reasons stated in the preamble and under the authority contained in 15 U.S.C. 1123 and 35 U.S.C. 2, as amended, the Office proposes to amend part 2 of title 37 as follows:

    PART 2—RULES OF PRACTICE IN TRADEMARK CASES 1. The authority citation for 37 CFR Part 2 continues to read as follows: Authority:

    15 U.S.C. 1113, 15 U.S.C. 1123, 35 U.S.C. 2, Section 10(c) of Pub. L. 112-29, unless otherwise noted.

    2. Add § 2.64 to read as follows:
    § 2.64 Reinstatement of applications and registrations abandoned, cancelled, or expired due to Office error.

    (a) Request for Reinstatement of an Abandoned Application. The applicant may file a written request to reinstate an application abandoned due to Office error. There is no fee for a request for reinstatement.

    (1) Deadline. The applicant must file the request by not later than:

    (i) Two months after the issue date of the notice of abandonment; or

    (ii) Two months after the date of actual knowledge of the abandonment and not later than six months after the date the trademark electronic records system indicates that the application is abandoned, where the applicant declares under § 2.20 or 28 U.S.C. 1746 that it did not receive the notice of abandonment.

    (2) Requirements. A request to reinstate an application abandoned due to Office error must include:

    (i) Proof that a response to an Office action, a statement of use, or a request for extension of time to file a statement of use was timely filed and a copy of the relevant document;

    (ii) Proof of actual receipt by the Office of a response to an Office action, a statement of use, or a request for extension of time to file a statement of use and a copy of the relevant document;

    (iii) Proof that the Office processed a fee in connection with the filing at issue and a copy of the relevant document;

    (iv) Proof that the Office sent the Office action or notice of allowance to an address different than that designated by the applicant as the correspondence address; or

    (v) Other evidence, or factual information supported by a declaration under § 2.20 or 28 U.S.C. 1746, demonstrating Office error in abandoning the application.

    (b) Request for Reinstatement of Cancelled or Expired Registration. The registrant may file a written request to reinstate a registration cancelled or expired due to Office error. There is no fee for the request for reinstatement.

    (1) Deadline. The registrant must file the request by not later than:

    (i) Two months after the issue date of the notice of cancellation/expiration; or

    (ii) Two months after the date of actual knowledge of the cancellation/expiration and not later than six months after the date the trademark electronic records system indicates that the registration is cancelled/expired, where the registrant declares under § 2.20 or 28 U.S.C. 1746 that it did not receive the notice of cancellation/expiration or the Office did not issue a notice.

    (2) Requirements. A request to reinstate a registration cancelled/expired due to Office error must include:

    (i) Proof that an affidavit or declaration of use or excusable nonuse, a renewal application, or a response to an Office action was timely filed and a copy of the relevant document;

    (ii) Proof of actual receipt by the Office of an affidavit or declaration of use or excusable nonuse, a renewal application, or a response to an Office action and a copy of the relevant document;

    (iii) Proof that the Office processed a fee in connection with the filing at issue and a copy of the relevant document;

    (iv) Proof that the Office sent the Office action to an address different than that designated by the registrant as the correspondence address; or

    (v) Other evidence, or factual information supported by a declaration under § 2.20 or 28 U.S.C. 1746, demonstrating Office error in cancelling/expiring the registration.

    (c) Request for Reinstatement May be Construed as Petition. If an applicant or registrant is not entitled to reinstatement, a request for reinstatement may be construed as a petition to the Director under § 2.146 or a petition to revive under § 2.66, if appropriate. If the applicant or registrant is unable to meet the timeliness requirement under paragraphs (a)(ii) or (b)(ii) for filing the request, the applicant or registrant may submit a petition to the Director under § 2.146(a)(5) to request a waiver of the rule.

    3. Revise § 2.66 to read as follows:
    § 2.66 Revival of applications abandoned in full or in part due to unintentional delay.

    (a) Deadline. The applicant may file a petition to revive an application abandoned in full or in part because the applicant did not timely respond to an Office action or notice of allowance, if the delay was unintentional. The applicant must file the petition by not later than:

    (1) Two months after the issue date of the notice of abandonment in full or in part; or

    (2) Two months after the date of actual knowledge of the abandonment and not later than six months after the date the trademark electronic records system indicates that the application is abandoned in full or in part, where the applicant declares under § 2.20 or 28 U.S.C. 1746 that it did not receive the notice of abandonment.

    (b) Petition to Revive Application Abandoned in Full or in Part for Failure to Respond to an Office Action. A petition to revive an application abandoned in full or in part because the applicant did not timely respond to an Office action must include:

    (1) The petition fee required by § 2.6;

    (2) A statement, signed by someone with firsthand knowledge of the facts, that the delay in filing the response on or before the due date was unintentional; and

    (3) A response to the Office action, signed pursuant to § 2.193(e)(2), or a statement that the applicant did not receive the Office action. The applicant may only assert once that the unintentional delay is based on non-receipt of the same Office action. When the abandonment is after a final Office action, the response is treated as a request for reconsideration under § 2.63(b)(3) and the applicant must also file:

    (i) A notice of appeal to the Trademark Trial and Appeal Board under § 2.141 or a petition to the Director under § 2.146, if permitted by § 2.63(b)(2)(iii); or

    (ii) A statement that no appeal or petition is being filed from the final refusal(s) or requirement(s).

    (c) Petition to Revive Application Abandoned for Failure to Respond to a Notice of Allowance. A petition to revive an application abandoned because the applicant did not timely respond to a notice of allowance must include:

    (1) The petition fee required by § 2.6;

    (2) A statement, signed by someone with firsthand knowledge of the facts, that the delay in filing the statement of use (or request for extension of time to file a statement of use) on or before the due date was unintentional; and one of the following:

    (i) A statement of use under § 2.88, signed pursuant to § 2.193(e)(1), and the required fees for the number of requests for extensions of time to file a statement of use that the applicant should have filed under § 2.89 if the application had never been abandoned;

    (ii) A request for an extension of time to file a statement of use under § 2.89, signed pursuant to § 2.193(e)(1), and the required fees for the number of requests for extensions of time to file a statement of use that the applicant should have filed under § 2.89 if the application had never been abandoned;

    (iii) A statement that the applicant did not receive the notice of allowance and a request to cancel said notice and issue a new notice. The applicant may only assert once that the unintentional delay is based on non-receipt of the notice of allowance; or

    (iv) In a multiple-basis application, an amendment, signed pursuant to § 2.193(e)(2), deleting the section 1(b) basis and seeking registration based on section 1(a) and/or section 44(e) of the Act.

    (3) The applicant must file any further requests for extensions of time to file a statement of use under § 2.89 that become due while the petition is pending, or file a statement of use under § 2.88.

    (d) Statement of Use or Petition to Substitute a Basis May Not Be Filed More Than 36 Months After Issuance of the Notice of Allowance. In an application under section 1(b) of the Act, the Director will not grant a petition under this section if doing so would permit an applicant to file a statement of use, or a petition under § 2.35(b) to substitute a basis, more than 36 months after the issue date of the notice of allowance under section 13(b)(2) of the Act.

    (e) Request for Reconsideration. If the Director denies a petition to revive under this section, the applicant may request reconsideration, if:

    (1) The applicant files the request by not later than:

    (i) Two months after the issue date of the decision denying the petition; or

    (ii) Two months after the date of actual knowledge of the decision denying the petition and not later than six months after the issue date of the decision where the applicant declares under § 2.20 or 28 U.S.C. 1746 that it did not receive the decision; and

    (2) The applicant pays a second petition fee under § 2.6.

    4. Revise § 2.146 to read as follows:
    § 2.146 Petitions to the Director.

    (a) Petition may be taken to the Director:

    (1) From any repeated or final formal requirement of the examiner in the ex parte prosecution of an application if permitted by § 2.63(a) and (b);

    (2) In any case for which the Act of 1946, or Title 35 of the United States Code, or this Part of Title 37 of the Code of Federal Regulations specifies that the matter is to be determined directly or reviewed by the Director;

    (3) To invoke the supervisory authority of the Director in appropriate circumstances;

    (4) In any case not specifically defined and provided for by this Part of Title 37 of the Code of Federal Regulations; or

    (5) In an extraordinary situation, when justice requires and no other party is injured thereby, to request a suspension or waiver of any requirement of the rules not being a requirement of the Act of 1946.

    (b) Questions of substance arising during the ex parte prosecution of applications, including, but not limited to, questions arising under sections 2, 3, 4, 5, 6, and 23 of the Act of 1946, are not appropriate subject matter for petitions to the Director.

    (c) Every petition to the Director shall include a statement of the facts relevant to the petition, the points to be reviewed, the action or relief requested, and the fee required by § 2.6. Any brief in support of the petition shall be embodied in or accompany the petition. The petition must be signed by the petitioner, someone with legal authority to bind the petitioner (e.g., a corporate officer or general partner of a partnership), or a practitioner qualified to practice under § 11.14 of this chapter, in accordance with the requirements of § 2.193(e)(5). When facts are to be proved on petition, the petitioner must submit proof in the form of verified statements signed by someone with firsthand knowledge of the facts to be proved, and any exhibits.

    (d) Unless a different deadline is specified elsewhere in this chapter, a petition under this section must be filed by not later than:

    (1) Two months after the issue date of the action, or date of receipt of the filing, from which relief is requested; or

    (2) Where the applicant or registrant declares under § 2.20 or 28 U.S.C. 1746 that it did not receive the action or no action was issued, the petition must be filed by not later than:

    (i) Two months of actual knowledge of the abandonment of an application and not later than six months after the date the trademark electronic records system indicates that the application is abandoned in full or in part;

    (ii) Two months after the date of actual knowledge of the cancellation/expiration of a registration and not later than six months after the date the trademark electronic records system indicates that the registration is cancelled/expired; or

    (iii) Two months after the date of actual knowledge of the denial of certification of an international application under § 7.13(b) and not later than six months after the trademark electronic records system indicates that certification is denied.

    (e)(1) A petition from the grant or denial of a request for an extension of time to file a notice of opposition must be filed by not later than fifteen days after the issue date of the grant or denial of the request. A petition from the grant of a request must be served on the attorney or other authorized representative of the potential opposer, if any, or on the potential opposer. A petition from the denial of a request must be served on the attorney or other authorized representative of the applicant, if any, or on the applicant. Proof of service of the petition must be made as provided by § 2.119. The potential opposer or the applicant, as the case may be, may file a response by not later than fifteen days after the date of service of the petition and must serve a copy of the response on the petitioner, with proof of service as provided by § 2.119. No further document relating to the petition may be filed.

    (2) A petition from an interlocutory order of the Trademark Trial and Appeal Board must be filed by not later than thirty days after the issue date of the order from which relief is requested. Any brief in response to the petition must be filed, with any supporting exhibits, by not later than fifteen days after the date of service of the petition. Petitions and responses to petitions, and any documents accompanying a petition or response under this subsection, must be served on every adverse party pursuant to § 2.119.

    (f) An oral hearing will not be held on a petition except when considered necessary by the Director.

    (g) The mere filing of a petition to the Director will not act as a stay in any appeal or inter partes proceeding that is pending before the Trademark Trial and Appeal Board, nor stay the period for replying to an Office action in an application, except when a stay is specifically requested and is granted or when §§ 2.63(a) and (b) and 2.65(a) are applicable to an ex parte application.

    (h) Authority to act on petitions, or on any petition, may be delegated by the Director.

    (i) If the Director denies a petition, the petitioner may request reconsideration, if:

    (1) The petitioner files the request by not later than:

    (i) Two months after the issue date of the decision denying the petition; or

    (ii) Two months after the date of actual knowledge of the decision denying the petition and not later than six months after the issue date of the decision where the petitioner declares under § 2.20 or 28 U.S.C. 1746 that it did not receive the decision; and

    (2) The petitioner pays a second petition fee under § 2.6.

    Dated: October 21, 2016. Michelle K. Lee, Under Secretary of Commerce for Intellectual Property and Director of the United States Patent and Trademark Office.
    [FR Doc. 2016-26035 Filed 10-27-16; 8:45 am] BILLING CODE 3510-16-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 52 [EPA-R06-OAR-2016-0450; FRL-9953-95-Region 6] Approval and Promulgation of Implementation Plans; Louisiana; Prevention of Significant Deterioration Significant Monitoring Concentration for Fine Particulates AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    The Environmental Protection Agency (EPA) is proposing to approve two revisions to the Louisiana State Implementation Plan (SIP) that revise the Louisiana Prevention of Significant Deterioration (PSD) permitting program to establish the significant monitoring concentration (SMC) for fine particles (PM2.5) at a zero microgram per cubic meter (0 μg/m3) threshold level consistent with federal permitting requirements. The EPA is proposing this action under section 110 and part C of the Clean Air Act (CAA or Act).

    DATES:

    Written comments should be received on or before November 28, 2016.

    ADDRESSES:

    Submit your comments, identified by EPA-R06-OAR-2016-0450, at http://www.regulations.gov or via email to [email protected] For additional information on how to submit comments see the detailed instructions in the ADDRESSES section of the direct final rule located in the rules section of this Federal Register.

    FOR FURTHER INFORMATION CONTACT:

    Adina Wiley, (214) 665-2115, [email protected]

    SUPPLEMENTARY INFORMATION:

    In the Rules and Regulations section of this issue of the Federal Register, the EPA is approving the State's SIP submittal as a direct rule without prior proposal because the Agency views this as noncontroversial submittal and anticipates no adverse comments. A detailed rationale for the approval is set forth in the direct final rule. If no relevant adverse comments are received in response to this action no further activity is contemplated. If the EPA receives relevant adverse comments, the direct final rule will be withdrawn and all public comments received will be addressed in a subsequent final rule based on this proposed rule. The EPA will not institute a second comment period. Any parties interested in commenting on this action should do so at this time.

    For additional information, see the direct final rule which is located in the Rules and Regulations section of this Federal Register.

    Dated: October 21, 2016. Ron Curry, Regional Administrator, Region 6.
    [FR Doc. 2016-25991 Filed 10-27-16; 8:45 am] BILLING CODE 6560-50-P
    ENVIRONMENTAL PROTECTION AGENCY 40 CFR Part 147 [EPA-HQ-OW-2015-0372; FRL 9953-36-OW] Commonwealth of Kentucky Underground Injection Control (UIC) Class II Program; Primacy Approval AGENCY:

    Environmental Protection Agency (EPA).

    ACTION:

    Proposed rule.

    SUMMARY:

    The U.S. Environmental Protection Agency (EPA) proposes to approve the Commonwealth of Kentucky Underground Injection Control (UIC) Class II Program for primacy. The EPA determined that the state's program is consistent with the provisions of the Safe Drinking Water Act (SDWA) at section 1425 to prevent underground injection activities that endanger underground sources of drinking water. The agency's approval allows the state to implement and enforce state regulations for UIC Class II injection wells only located within the state. The Commonwealth's authority excludes the regulation of injection well Classes I, III, IV, V and VI and all wells on Indian lands, as required by rule under the SDWA. The agency requests public comment on this proposed rule and supporting documentation. In the “Rules and Regulations” section of this Federal Register, the agency published EPA's approval of the state's program as a direct final rule without a prior proposed rule. If the agency receives no adverse comment, EPA will not take further action on this proposed rule.

    DATES:

    Written comments must be received by November 28, 2016.

    ADDRESSES:

    Submit your comments, identified by Docket ID No. EPA-HQ-OW-2015-0372, at http://www.regulations.gov. Follow the online instructions for submitting comments. Once submitted, comments cannot be edited or removed from Regulations.gov. The EPA may publish any comment received to its public docket. Do not submit electronically any information you consider to be Confidential Business Information (CBI) or other information whose disclosure is restricted by statute. Multimedia submissions (audio, video, etc.) must be accompanied by a written comment. The written comment is considered the official comment and should include discussion of all points you wish to make. The EPA will generally not consider comments or comment contents located outside of the primary submission (i.e., on the web, cloud, or other file sharing system). For additional submission methods, the full EPA public comment policy, information about CBI or multimedia submissions, and general guidance on making effective comments, please visit http://www2.epa.gov/dockets/commenting-epa-dockets.

    FOR FURTHER INFORMATION CONTACT:

    Holly S. Green, Drinking Water Protection Division, Office of Ground Water and Drinking Water (4606M), U.S. Environmental Protection Agency, 1200 Pennsylvania Ave. NW., Washington, DC 20460; telephone number: (202) 566-0651; fax number: (202) 564-3754; email address: [email protected]; or Nancy H. Marsh, Safe Drinking Water Branch, U.S. Environmental Protection Agency, Region 4, 61 Forsyth Street SW., Atlanta, Georgia 30303; telephone number (404) 562-9450; fax number: (404) 562-9439; email address: [email protected]

    SUPPLEMENTARY INFORMATION:

    Why is EPA issuing this proposed rule?

    The EPA proposes to approve the Commonwealth of Kentucky's UIC Program primacy application for Class II injection wells located within the state (except all wells on Indian lands), as required by rule under the SDWA. The proposed rule grants Kentucky primary enforcement authority to prevent Class II (oil and gas-related) underground injection activities that endanger underground sources of drinking water. Accordingly, the agency proposes to codify the state's program in the Code of Federal Regulations (CFR) at 40 CFR part 147. EPA will continue to administer the UIC Program for injection well Classes I, III, IV, V and VI and wells on Indian lands, if any such lands exist in the state in the future. The agency has published a direct final rule in the “Rules and Regulations” section of today's Federal Register, approving the state's program because EPA views this approval as noncontroversial and anticipates no adverse comment. The agency provided reasons for the approval and additional supplementary information in the preamble to the direct final rule. If EPA receives no adverse comment, the agency will not take further action on this proposed rule. If EPA receives adverse comment, the agency will withdraw the direct final rule and it will not take effect. The agency would then address all public comments in any subsequent final rule based on this proposed rule. The agency does not intend to institute a second comment period on this action. Any parties interested in commenting must do so at this time. For further information, please contact the persons listed in the FOR FURTHER INFORMATION CONTACT section.

    Dated: October 19, 2016. Gina McCarthy, Administrator.
    [FR Doc. 2016-25929 Filed 10-27-16; 8:45 am] BILLING CODE 6560-50-P
    LEGAL SERVICES CORPORATION 45 CFR Parts 1600, 1630, and 1631 Definitions; Cost Standards and Procedures; Purchasing and Property Management AGENCY:

    Legal Services Corporation.

    ACTION:

    Notice of proposed rulemaking.

    SUMMARY:

    The Legal Services Corporation (LSC or Corporation) is issuing this notice of proposed rulemaking to request comment on the Corporation's proposed revisions to its Definitions and Cost Standards and Procedures rules and the creation of a new part from LSC's Property Acquisition and Management Manual (PAMM).

    DATES:

    Comments must be submitted by December 27, 2016.

    ADDRESSES:

    You may submit comments by any of the following methods:

    Email: [email protected]. Include “Parts 1630/1631 Rulemaking” in the subject line of the message.

    Fax: (202) 337-6519.

    Mail: Stefanie K. Davis, Assistant General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007, ATTN: Parts 1630/1631 Rulemaking.

    Hand Delivery/Courier: Stefanie K. Davis, Assistant General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007, ATTN: Parts 1630/1631 Rulemaking.

    LSC prefers electronic submissions via email with attachments in Acrobat PDF format. LSC may not consider written comments sent via any other method or received after the end of the comment period.

    FOR FURTHER INFORMATION, CONTACT:

    Stefanie K. Davis, Assistant General Counsel, Legal Services Corporation, 3333 K Street NW., Washington, DC 20007, (202) 295-1563 (phone), (202) 337-6519 (fax), [email protected].

    SUPPLEMENTARY INFORMATION: I. Regulatory Background of Part 1630 and the PAMM

    The purpose of 45 CFR part 1630 is “to provide uniform standards for allowability of costs and to provide a comprehensive, fair, timely, and flexible process for the resolution of questioned costs.” 45 CFR 1630.1. LSC last revised part 1630 in 1997, when it published a final rule intended to “bring the Corporation's cost standards and procedures into conformance with applicable provisions of the Inspector General Act, the Corporation's appropriations [acts], and relevant Office of Management and Budget (OMB) Circulars.” 62 FR 68219, Dec. 31, 1997. Although the OMB Circulars are not binding on LSC because LSC is not a federal agency, LSC adopted relevant provisions from the OMB Circulars pertaining to non-profit grants, audits, and cost principles into the final rule for part 1630. Id. at 68219-20 (citing OMB Circulars A-50, A-110, A-122, and A-133).

    LSC published the PAMM in 2001 “to provide recipients with a single complete and consolidated set of policies and procedures related to property acquisition, use and disposal.” 66 FR 47688, Sept. 13, 2001. Prior to the PAMM's issuance, such policies and procedures were “incomplete, outdated and dispersed among several different LSC documents.” Id. The PAMM contains policies and procedures that govern both real and non-expendable personal property, but, with the exception of contract services for capital improvements, the PAMM does not apply to contracts for services. Id. at 47695. The PAMM's policies and procedures were developed with guidance from the Federal Acquisition Regulation at 48 CFR parts 1-52, federal property management regulations, and OMB Circular A-110. Id. at 47688. The PAMM also incorporates several references to provisions of part 1630 pertaining to costs that require LSC's prior approval and the proper allocation of derivative income. Id. at 47696-98 (containing references to 45 CFR 1630.5(b)(2)-(4), 1630.5(c), and 1630.12, respectively).

    II. Impetus for This Rulemaking

    Part 1630 and the PAMM have not been revised since 1997 and 2001, respectively. Since then, procurement practices and cost-allocation principles applicable to awards of federal funds have changed significantly. For instance, in 2013, OMB revised and consolidated several Circulars, including the Circulars LSC relied upon to develop part 1630, into a single Uniform Guidance. 78 FR 78589, Dec. 26, 2013; 2 CFR part 200. OMB consolidated and simplified its guidance to “reduce administrative burden for non-Federal entities receiving Federal awards while reducing the risk of waste, fraud and abuse.” 78 FR 78590, Dec. 26, 2013.

    LSC has determined that it should undertake regulatory action at this time for three reasons. The first reason is to account, where appropriate for LSC, for changes in Federal grants policy. The second reason is to address the difficulties that LSC and its grantees experience in applying ambiguous provisions of Part 1630 and the PAMM. Finally, LSC believes rulemaking is appropriate at this time to address the limitations that certain provisions of both documents place on LSC's ability to ensure clarity, efficiency, and accountability in its grant-making and grants oversight practices.

    III. Procedural History of This Rulemaking

    In July 2014, the Operations and Regulations Committee (Committee) of LSC's Board of Directors (Board) approved Management's proposed 2014-2015 rulemaking agenda, which included revising Part 1630 and the PAMM as a priority item. On July 7, 2015, Management presented the Committee with a Justification Memorandum recommending publication of an Advance Notice of Proposed Rulemaking (ANPRM) to seek public comment on possible revisions to Part 1630 and the PAMM. Management stated that collecting input from the regulated community through an ANPRM would significantly aid LSC in determining the scope of this rulemaking and in developing a more accurate understanding of the potential costs and benefits that certain revisions may entail. On July 18, 2015, the LSC Board authorized rulemaking and approved the preparation of an ANPRM to revise Part 1630 and the PAMM.

    Pursuant to LSC's Rulemaking Protocol, on October 4, 2015, the Committee voted to authorize publication of this ANPRM in the Federal Register for notice and comment. The ANPRM was published on October 9, 2015, with a 45-day comment period closing on December 8, 2015. 80 FR 61142, Oct. 9, 2015. After receiving comments on the ANPRM, LSC sought authorization from the Committee to conduct a series of rulemaking workshops to obtain additional stakeholder input on the questions asked in the ANPRM. The Committee authorized the workshops and publication of a Federal Register notice announcing the topics to be discussed and soliciting participants for the workshops. 81 FR 9410, Feb. 25, 2016.

    LSC held workshops on April 20, May 18, and June 15, 2016, at its headquarters in Washington, DC. The three topics discussed were:

    Topic 1: Requirements of Other Funders—How do LSC's proposed changes to its cost standards and procedures and property acquisition and disposition requirements interact with the requirements imposed by recipients' other funders, including the requirements governing intellectual property created using various sources of funding?

    Topic 2: LSC's Proposals—In the ANPRM, LSC proposed to regulate services contracts. LSC also proposed to require recipients to seek prior approval of aggregate purchases of personal property, acquisitions of personal and real property purchased or leased using LSC funds, and disposal of real or personal property purchased or leased using LSC funds.

    Topic 3: Establishing Standards Based on the Office of Management and Budget's (OMB) Uniform Guidance. LSC proposed to establish minimum standards for recipients' procurement policies based on the OMB Uniform Guidance. LSC also proposed to revise part 1630 for consistency with the Uniform Guidance, where appropriate.

    81 FR 9410, 9411, Feb. 25, 2016. The participants in the workshops were:

    • Steve Pelletier, Northwest Justice Project.

    • George Elliott, Legal Aid of Northwest Texas.

    • Dilip Shah, Legal Aid of Northwest Texas.

    • Steve Ogilvie, Inland Counties Legal Services.

    • AnnaMarie Johnson, Nevada Legal Services.

    • Shamim Huq, Legal Aid Society of Northeastern New York.

    • Patrick McClintock, Iowa Legal Aid Foundation.

    • Jonathan Asher, Colorado Legal Services.

    • Michael Maher, Legal Action of Wisconsin, Inc.

    • Frank Bittner, California Rural Legal Assistance, Inc.

    • Jose Padilla, California Rural Legal Assistance, Inc.

    • Diana White, Legal Aid Foundation of Metropolitan Chicago.

    • Nikole Nelson, Alaska Legal Services Corporation.

    • Tracey Janssen, Alaska Legal Services Corporation.

    • Robin Murphy, National Legal Aid and Defender Association.

    All materials related to the workshops, including agendas, audio recordings, and transcripts, are available at the rulemaking page for part 1630 on LSC's Web site, http://www.lsc.gov/rulemaking-cost-standards-and-property-management-acquisition-and-disposal.

    IV. Discussion of Proposed Changes A. Part 1600

    LSC proposes to add or revise several definitions to Chapter XVI. First, LSC proposes to add a new definition for the terms Corporation funds and LSC funds. LSC currently uses these terms interchangeably throughout Chapter XVI, but does not define either term. LSC does define the term financial assistance as “annualized funding from the Corporation granted under section 1006(a)(1)(A) for the direct delivery of legal assistance to eligible clients.” 45 CFR 1600.1. LSC uses this term in very few places in Chapter XVI.

    LSC believes that new definitions are necessary for three reasons. The first is to account for the widespread use of the terms Corporation funds and LSC funds throughout its regulations. The second is to distinguish between appropriated funds granted by LSC, which generally are governed by LSC's regulations, and private funds granted by LSC, which must be used consistent with 45 CFR part 1610. The third reason is to formalize LSC's longstanding policy that its regulations apply to all grant awards that LSC makes to carry out the purposes of the Legal Services Corporation Act, not just those grants described in the definition of financial assistance.

    In recent years, LSC has begun receiving funds from private sources to make grants for specified purposes, not all of which are for the delivery of legal assistance to eligible clients. For example, LSC receives funding from the Arnold & Porter Foundation to make grants to LSC recipients to support leadership development training. Grants made through the G. Duane Vieth Leadership Development Program may be used to pay for individuals in leadership positions at LSC grantees to receive training, coaching, or other professional development in nonprofit leadership skills. Because the funding for this program is provided by a private foundation, it is not subject to LSC's regulations, which govern only those grants made with funds that Congress appropriated for the purpose of carrying out activities authorized by the LSC Act.

    Since 1996, Congress has placed restrictions on how funds it appropriates to LSC may be used. In its annual directive, Congress does not distinguish between funds appropriated to make grants to provide legal assistance to eligible clients—Basic Field Grants—and funds that LSC may use to make other types of grants authorized by the LSC Act. At the current time, LSC uses the funds that Congress appropriates to carry out the purposes of the LSC Act to make awards in the following programs: (1) Basic Field Grants, (2) Technology Initiative Grants, and (3) the Pro Bono Innovation Fund. In addition to these grant programs, LSC uses recovered funds to award emergency relief grants to grantees in areas with government-declared emergencies on an as-needed basis. LSC historically has considered its regulations applicable to all three grant programs and grants made with recovered funds, as well as to any other funds that Congress occasionally appropriates to LSC for the purposes of carrying out the LSC Act. An example of the latter would be the 2013 supplemental appropriation to “carry out the purposes of the Legal Services Corporation Act by providing for necessary expenses related to the consequences of Hurricane Sandy[.]” Public Law 113-2, Div. A, Title X, Chap. 2, 127 Stat. 4, Jan. 29, 2013.

    Against this background, LSC believes that it is necessary to define the terms Corporation funds and LSC funds, rather than to revise the regulations to replace those terms with the more limited term financial assistance. LSC proposes to define these terms to mean “any funds appropriated by Congress to carry out the purposes of the Legal Services Corporation Act of 1974, 42 U.S.C. 2996 et seq., as amended.” LSC believes that the proposed definition accurately describes the funds implicated by the use of these terms throughout Chapter XVI.

    Second, LSC proposes to define the term non-LSC funds. LSC proposes to define the term in reference to the new definition of Corporation funds or LSC funds. LSC proposes this definition to make clear that the term non-LSC funds has the same meaning throughout LSC's regulations.

    B. Part 1630

    Organizational note. LSC proposes to reorganize part 1630 into four subparts. Subpart A will contain provisions generally applicable to all of part 1630. These provisions include the purpose and definitions. Subpart B will contain the sections governing the allocability and allowability of costs charged to LSC grants. It will also set forth the process that recipients should use to request prior approval for certain classes of costs. Subpart C will contain the sections governing questioned cost proceedings. In Subpart D, LSC will establish the rules governing the closeout of an LSC grant when a recipient stops receiving LSC funds. LSC believes that restructuring part 1630 in this way will improve the organization and coherence of the rule.

    Subpart A—General Provisions

    § 1630.1 Purpose. LSC proposes to make no changes to this section.

    § 1630.2 Definitions. LSC proposes several revisions to this section. LSC proposes to remove the definition of the term allowed cost from § 1630.2(a) as that term is not used in part 1630. LSC also proposes to delete the definition of the term final action and remove references to final action throughout part 1630 because the term does not appear to have legal significance in this part. The remaining definitions will be redesignated as appropriate.

    LSC proposes to revise definitions that are currently taken from the Inspector General Act, 5 U.S.C. Appx., as amended, to track the Uniform Guidance issued by the Office of Management and Budget (OMB), 2 CFR part 200. LSC believes that the OMB-defined terms are more appropriate in the context of LSC's cost standards and disallowance procedures, which are more similar to an agency's standards and procedures than to an inspector general's operations.

    § 1630.2(c) Disallowed cost. In addition to renumbering this definition, LSC proposes to revise the definition to substantially mirror the definition of disallowed cost contained in the Uniform Guidance, 2 CFR 200.31.

    § 1630.2(d) Final written decision. LSC proposes to replace the term management decision with the term final written decision. Management decision was adopted from section 5(f)(5) of the Inspector General Act, as the decision of an agency head “concerning its response to such findings and recommendations” made in an audit report issued by the agency's inspector general. For LSC's purposes, the decision described is not a final decision made by LSC management. Rather, the decision that this term refers to is made by an officer of LSC below the President after reviewing the evidentiary record supporting a staff determination that certain costs should be disallowed. In addition to replacing the term, LSC proposes to redefine the term to mean (1) the decision issued by the Vice President for Grants Management after reviewing a recipient's response to a questioned cost notice, or (2) that the notice of questioned costs will become the final written decision after 30 days if the recipient does not file a response.

    § 1630.2(e) Membership fees or dues. LSC proposes to adopt the definition of this term from part 1627 in substantial part. As noted in the April 20, 2015 NPRM, LSC proposed to relocate this section of part 1627 to part 1630 in order to limit the scope of part 1627 to the oversight of subgrants. 80 FR 21692, 21698, Apr. 20, 2015. LSC proposes to add a nonexclusive description of the types of fees or dues that recipients may use LSC funds to pay. Such fees or dues include those that an attorney must pay to the highest court of a state or a bar organization acting on behalf of the court or in another governmental capacity in order to practice law in the jurisdiction.

    § 1630.2(f) Questioned cost. LSC proposes to revise this definition to make clear that a questioned cost is one that LSC itself is questioning. This definition was adopted from section 5(f)(1) of the Inspector General Act. As currently drafted, the term indicates that the Office of Inspector General, the General Accounting Office (now the Government Accountability Office), and other authorized auditors may also question costs. While it is true that any of those entities may question costs, it is ultimately LSC's decision whether to issue a notice of questioned costs. Additionally, LSC may question costs based on information developed through its own oversight and program quality activities or as a result of information received from the public or whistleblowers. Finally, the text of existing § 1630.5(a) provides that LSC may question costs based on findings issued by the entities listed in the existing definition of questioned costs. For these reasons, LSC proposes to revise the definition of questioned costs.

    § 1630.3 Time. As part of the proposed reorganization of part 1630, LSC proposes to relocate existing § 1630.13 to § 1630.3 without change. This section prescribes the method for computing time periods under part 1630.

    § 1630.4 Burden of proof. LSC proposes no changes to this section.

    Subpart B—Cost Standards and Prior Approval

    § 1630.5 Standards governing allowability of costs under LSC grants or contracts. LSC proposes to redesignate existing § 1630.3 as § 1630.5 within Subpart B as part of the restructuring of part 1630. Except as described below, LSC proposes to make only technical edits to this section.

    LSC proposes to delete paragraph (a)(8) from this section. The preamble to the 1986 final rule for part 1630 describes paragraph (a)(8) as “a standard federal provision to ensure that [matching funds for federal grants] must be raised from a source other than the federal treasury and taxpayer.” 51 FR 29076, 29077, Aug. 13, 1986. Under existing § 1630.3(a)(8), recipients may use LSC funds to satisfy the matching requirement of a federal grant program only if “the agency whose funds are being matched determines in writing that Corporation funds may be used for federal matching purposes[.]” LSC introduced this language in response to comments expressing concern that because LSC makes grants from appropriated funds, those grants could not be used to match, for example, grants awarded by the Administration on Aging within the U.S. Department of Health and Human Services. Id. LSC's approach is unique in requiring recipients to obtain a written determination from the agency whose grant the LSC funds are intended to match that the LSC funds may be used to satisfy the match. It is not clear from the regulatory history of the 1986 final rule why LSC believed it was appropriate for a different agency to find that LSC's funds could be used to match the agency's funds in order for the recipient to use LSC funds in that manner.

    The 1986 preamble was correct that federal funds cannot be used to satisfy the matching requirement of another federal grant unless specifically authorized by law. See U.S. Government Accountability Office, “Principles of Federal Appropriations Law,” 3rd Ed., Vol. II, at 10-97 (Feb. 2006). But section 1005 of the Legal Services Corporation Act states that, “[e]xcept as otherwise specifically provided in [the Act],” LSC is not “considered a department, agency, or instrumentality, of the Federal Government.” 42 U.S.C. 2996d(e)(1). Therefore, LSC funds are not “federal funds” for matching purposes. Several federal agencies, including the Department of the Treasury, the Department of Justice, and the General Accountability Office, have reached the same conclusion and do not consider LSC funds to be “federal funds” subject to federal grant policy. See, e.g., Department of Treasury Memorandum GLS-107648 (Mar. 26, 2011); U.S. Gen. Accounting Office, Legal Services Corporation: Governance and Accountability Practices Need to Be Modernized and Strengthened (2007).

    Based on this language, LSC is reversing its prior policy with respect to the use of LSC funds to match grants awarded by federal agencies. LSC believes that recipients may use LSC grant funds to satisfy cost-sharing or matching requirements of federal awards as long as the funds are used consistent with LSC's governing statutes and regulations. LSC is considering other mechanisms for communicating its position on the use of LSC funds to satisfy cost-sharing or cost-matching requirements to federal agency funders.

    § 1630.6 Prior approval. LSC proposes to redesignate existing § 1630.5, which lists costs requiring LSC's prior approval, as § 1630.6 with substantive changes. LSC proposes no changes to paragraph (a) (Advance understandings.) or (c) (Duration.).

    LSC proposes to simplify paragraph (b) and relocate all provisions pertaining to prior approval for purchases and leases of personal property, contracts for services, purchases of real estate, contracts for capital improvements, and use of LSC funds to pay costs after the cessation of an LSC grant. LSC proposes to relocate the provisions governing prior approval of purchases and contracts to proposed part 1631. LSC also proposes to create a new Subpart D in part 1630 that will establish the procedures for closing out an LSC grant, including the use of LSC funds to complete the closeout process. Because LSC does not permit applicants for funding to charge costs incurred prior to the start date of the grant to LSC funds, LSC proposes to eliminate pre-award costs from the list of costs for which recipients must seek prior approval.

    Consistent with the proposal to relocate the prior approval provisions, LSC also proposes to eliminate existing § 1630.6—Timetable and basis for granting prior approval.

    Finally, LSC proposes to redesignate newly transferred §§ 1630.14 (Membership fees or dues), 1630.15 (Contributions), and 1630.16 (Tax-sheltered annuities, retirement accounts, and penalties) as §§ 1630.7-1630.9, respectively, with no changes.

    Subpart C—Questioned Cost Proceedings

    For readability and ease of reference, LSC proposes to split existing § 1630.7 into two discrete sections. Proposed § 1630.10 will govern only LSC's initial decision to question costs, and proposed § 1630.11 will describe the process by which a recipient may appeal a disallowed cost of $2,500 or more to the LSC President. Finally, LSC proposes to redesignate existing §§ 1630.8-1630.12 as §§ 1630.12-1630.16 with only minor technical changes.

    § 1630.10 Review of questioned costs. LSC proposes to redesignate § 1630.7(a)-(d) as § 1630.10(a)-(b) and (e)-(f), respectively. In order to locate all provisions governing questioned costs in one section, LSC proposes to move the second sentence of existing § 1630.4(b) to paragraph (c) of this section. In that paragraph, LSC states that when it disallows a cost solely because the cost is excessive, LSC will disallow only the amount that LSC has determined is excessive.

    LSC is proposing to eliminate the five-year lookback period within which LSC may recover questioned costs. The LSC Act does not place any temporal limitation on LSC's ability to recover costs inappropriately charged by a recipient to its LSC grant. LSC adopted the five-year period when it revised part 1630 in 1997. 62 FR 68219, 68226, Dec. 31, 1997. This requirement is located currently at 45 CFR 1630.7(b) and states that LSC must provide a recipient with notice when LSC “determines that there is a basis for disallowing a questioned cost, and if not more than five years have elapsed since the recipient incurred the cost[.]”

    Since LSC first promulgated part 1630 in 1986, it has chosen to limit the amount of time for which it may recover questioned costs from a recipient. LSC adopted a six-year period in the original version of § 1630.7(b), which it shortened to five years in 1997. 51 FR 29076, 29083, Aug. 13, 1986 (1986 final rule); 62 FR 68219, 68226, Dec. 31, 1997 (1997 final rule). The preamble to the 1997 final rule contains the most substantive discussion about LSC's intent regarding the limitation. Initially, the Board proposed a three-year limitation period on the recovery of questioned costs. 62 FR 68223. LSC Management and the Office of Inspector General recommended that the Board adopt a five-year period

    on the grounds that a three-year time period might be too short to enable the Corporation to fulfill its statutory obligation to follow up on questioned costs which might arise during the course of a GAO or OIG audit, or during a complaint investigation by Corporation management. Such an audit or investigation might occur at the end of the three-year period, and the time limitation in the proposed rule would prevent the Corporation from following up on a questioned cost finding.

    Id. The Board accepted the recommendation and adopted a five-year lookback period.

    Based on its oversight experience in the intervening years, LSC has come to the conclusion that limiting its ability to recover misspent costs is not consistent with its duty to responsibly administer appropriated funds. In LSC's experience, some misuses of funds are not discovered within the five-year period, even though LSC conscientiously reviews the reports and other documentation it requires recipients to provide. In some cases, recipients have failed to represent uses of LSC funds accurately, and those misrepresentations have come to LSC's attention only through complaints to LSC itself or via the Office of Inspector General. LSC also proposes to streamline the questioned costs review procedure. In the current version of § 1630.7, a recipient has 30 days from the date it receives a questioned cost notice from LSC to respond with evidence and an argument for why LSC should not disallow the cost. 45 CFR 1630.7(c). If the recipient does not respond within 30 days, LSC management must issue a second decision. LSC believes that this second step is redundant. It places an unnecessary administrative burden on LSC to confirm its own action in the absence of a challenge by the recipient. LSC proposes to replace this step with a new paragraph (d)(2), which states that if the recipient does not respond within 30 days, the notice of questioned costs automatically converts to LSC's final written decision.

    § 1630.11 Appeals to the President. LSC proposes to move existing § 1630.7(e)-(g) to § 1630.11 with one substantive change. LSC proposes to introduce paragraph (a)(2), which prohibits a recipient from appealing a final written decision to the LSC President when the recipient did not seek review of the initial notice of questioned costs. In LSC's view, a senior manager with direct oversight of the office that issues a notice of questioned costs should have the first opportunity to review the evidence relating to the decision to question costs for two reasons. First, reviews of questioned cost notices may involve consultations with several offices within LSC, as well as several rounds of engagement with the recipient to obtain all of the information necessary to fairly consider the recipient's request for review. Second, an intermediate level of review may provide the recipient with the relief sought, reduce the amount of the costs LSC proposes to disallow, or narrow the issues in dispute. The effort needed to fully evaluate the recipient's defenses and narrow down the amount and issues in dispute is better invested at an earlier, lengthier stage in the process than during review by the President, who is the ultimate decision-maker for the Corporation. The President has only 30 days to make a decision on the recipient's appeal under § 1630.11(c), compared to the 60 days provided for review at the senior management stage in § 1630.10(e).

    § 1630.12 Recovery of disallowed costs and other corrective action. LSC proposes to redesignate existing § 1630.8 to § 1630.12 with only minor technical changes to reflect the removal of final action from the rule.

    § 1630.13 Other remedies; effect on other parts. LSC proposes to redesignate existing § 1630.9 as § 1630.13 with only minor technical edits. LSC proposes to remove the references to denials of refunding under part 1625 as obsolete. In paragraph (b), which describes types of sanctions that are not equivalent to a disallowed cost proceeding, LSC proposes to include limited reductions of funding under part 1606. LSC added limited reductions of funding as an enforcement mechanism in 2013. 78 FR 10085, Feb. 13, 2013.

    LSC proposes to redesignate existing §§ 1630.10 (Applicability to subgrants.); 1630.11 (Applicability to non-LSC funds.); and 1630.12 (Applicability to derivative income.) to §§ 1630.13-16 without change.

    Subpart D—Closeout Procedures

    LSC proposes to create Subpart D to formalize its procedures to close out grants whenever a recipient ceases to receive LSC funding. LSC's closeout procedures are currently located on its Web site at http://www.lsc.gov/orderly-conclusion-role-responsibilities-recipient-lsc-funds. LSC proposes to promulgate the procedures as rules in the interest of formalizing and consolidating its grant requirements. The procedures established in Subpart D reflect LSC's current process for closing out grants.

    § 1630.17 Applicability. In this section, LSC proposes to describe when the procedures of Subpart D apply. Cessation of LSC funding may occur either voluntarily or involuntarily and may take different forms. Changes requiring closeout of the LSC grant include merger or termination with another LSC funding recipient, changes to the recipient's current identity or status as a legal entity, or the recipient's decision to stop receiving LSC grants. Involuntary termination occurs when LSC decides to stop funding a recipient. Terminations may occur during or at the end of a grant period.

    § 1630.18 Closeout plan; Timing. LSC proposes to require recipients who stop receiving funding to provide LSC with a plan for the orderly closeout of the grant. Recipients who are merging or consolidating with another LSC recipient, changing legal status, or opting out of further LSC grants must provide LSC with notice and the closeout plan no less than 60 days prior to the change ending the grant. If LSC involuntarily terminates a recipient's funding, the recipient must provide LSC with the closeout plan no more than 15 business days after receiving the notice of termination from LSC.

    LSC proposes to maintain the required elements of a closeout plan on its Web site and to provide recipients with a link to the relevant page in the grant award documents. Currently, LSC provides the link in the annual grant assurances that recipients must sign. LSC proposes to continue this practice, which is similar to the approach that LSC has taken in other rules that require compliance with statutes or policies that may be updated without needing to go through the regulatory process. For example, when LSC updated 45 CFR part 1640—Application of Federal Law to LSC Recipients in 2015, it undertook an obligation to post and maintain the list of applicable federal laws on its Web site. 80 FR 21654, 21655, Apr. 20, 2015. LSC believes this approach is desirable because it allows LSC the flexibility to change the information it needs to ensure that grants are closed out properly without having to engage in rulemaking.

    § 1630.19 Closeout costs. In this section, LSC proposes to formalize its policies for approving the use of LSC funds to complete closeout activities. Recipients must submit a detailed budget and timeline for completing the activities described in the closeout plan. LSC must approve both the budget and the proposed timeline before closeout activities may begin. In paragraphs (b) and (c) LSC proposes to restate its policy of withholding any unreleased funds until the recipient has satisfactorily completed all closeout activities.

    § 1630.20 Returning funds to LSC. In new § 1630.20, LSC proposes to formalize the procedures for recipients to return to LSC excess fund balances and derivative income received after the end of the LSC grant period. The procedure for returning derivative income described in paragraph (b) applies only to derivative income attributable to work performed by the recipient during the term of and attributable to work funded by the LSC grant.

    C. Part 1631

    In the ANPRM, LSC asked for comments on whether the PAMM should remain a separate manual or be incorporated into Chapter XVI of the Code of Federal Regulations as an official rule. Only the National Legal Aid and Defender Association (NLADA) responded to this item, recommending against codifying the PAMM as a rule. NLADA stated that making the PAMM into a rule would “deprive LSC of flexibility and impose rigid rules on LSC and the programs in an ever-evolving delivery system where modifications will need to be made.” Instead, NLADA advocated that LSC publish a regulation that provides “a very general description of the overall guidelines with references to a resource that consolidates the LSC Accounting Guide, Property Management Guide and other LSC documents with fiscal, property and accounting policies.”

    As indicated in the ANPRM, LSC believes that incorporating the PAMM into Chapter XVI of the Code of Federal Regulations will “promote and preserve the effectiveness and consistency of LSC's property acquisition, use, and disposal policies and procedures.” 80 FR 61142, 61142, Oct. 9, 2015. The LSC Act requires LSC to publish all rules, regulations, and guidelines for public comment, and to publish all rules, regulations, guidelines, and instructions in the Federal Register for 30 days prior to their effective date, which deprives LSC of flexibility to make changes quickly to even informal grants administration guidelines and instructions. In fact, the PAMM itself was published after a notice and comment process, even though it is not a formal rule. 66 FR 47688, Sept. 13, 2001.

    LSC thus proposes to introduce a new procurement and property management rule at 45 CFR part 1631. The new part 1631 will draw substantially from the existing PAMM, but will differ from the PAMM in three significant respects. First, LSC proposes to require that recipients adopt policies for making purchases with LSC funds. Second, LSC proposes to expand the rule to include contracts for services made with LSC funds. Lastly, LSC proposes to restructure the PAMM into five discrete subparts: Subpart A—General Provisions; Subpart B—Procurement Policies and Procedures; Subpart C—Personal Property Management; Subpart D—Real Estate Acquisition and Capital Improvements; and Subpart E—Real Estate Management. LSC proposes this restructuring to improve the coherence and usability of the rule.

    Subpart A—General Provisions

    § 1631.1 Purpose. LSC proposes to describe the purpose of part 1631 as twofold: (1) Setting standards for policies governing the purchase of property, including real estate, or contracts for services with LSC funds; and (2) establishing the requirements governing the use and disposition of property purchased with LSC funds.

    § 1631.2 Definitions. LSC proposes to adopt several definitions from the PAMM into part 1631. LSC also proposes to add new definitions.

    § 1631.2(a) Capital improvements. LSC proposes to adopt the definition of this term from the PAMM with technical changes for ease of readability.

    § 1631.2(b) LSC property interest agreement. LSC proposes to adopt the PAMM definition of this term with only technical changes.

    § 1631.2(c) Personal property. LSC proposes to simplify the PAMM definition of this term to mean any property other than real estate. LSC intends the revised definition to include both expendable property (e.g., supplies) and non-expendable property (e.g., equipment, furniture, law books). LSC believes this change is appropriate for several reasons. First, LSC is proposing to require recipients to establish procurement policies that apply to all purchases of property, so that continuing to exclude supplies (expendable property) from the definition no longer makes sense. Second, and similarly, LSC is proposing to require recipients to seek prior approval for all purchases of personal property that exceed a specific dollar threshold. LSC does not believe it is appropriate to distinguish between expendable and non-expendable personal property under this proposal.

    § 1631.2(d) Purchase. LSC proposes to revise this definition for simplicity and to include contracts for services.

    § 1631.2(3) Quote. LSC proposes to adopt the PAMM definition of this term with only minor technical changes.

    § 1631.2(f) Real estate. LSC proposes to revise the PAMM definition of the term real property for clarity. LSC does not intend the change from “land, buildings, and appurtenances, including capital improvements thereto, but not including moveable personal property” in the existing PAMM to limit, narrow, or expand the scope of property captured by the revised definition.

    § 1631.2(g) Services. Because LSC is proposing to expand the scope of the PAMM to include contracts for services, LSC believes it is necessary to define the types of services it intends to regulate. LSC proposes to adopt a definition of services that reflects how the term is used in the Uniform Guidance, particularly 2 CFR 200.431 and 200.459.

    LSC proposes to define services as those professional and consultant services provided to a recipient by members of a particular profession or individuals having a specific skill who are not employees of the recipient. Such individuals would include, but are not limited to, management consultants, payroll administrators, custodians, plumbers, and computer maintenance personnel. LSC does not, however, propose to include fringe benefits, such as health insurance, pensions, and unemployment benefits, within the scope of services regulated by part 1631.

    During the rulemaking workshops, several commenters identified an issue that LSC had not considered when drafting the NPRM. Those commenters noted that their largest contracts for services were contracts with their employee insurance providers or insurance brokers. They expressed concerns that (1) the process of obtaining bids and negotiating terms with health insurance providers is a time-sensitive process that would be complicated by having to simultaneously engage in a prior approval process with LSC; (2) their health insurance was provided by the county in which their offices were located and it was not possible for them to negotiate terms with the government agency providing the benefits; (3) there is only one provider in the area, so it is not possible to obtain multiple quotes for insurance; and (4) they use a healthcare administrator to handle employee claims for benefits. See, e.g., Transcript of April 20, 2016 Rulemaking Workshop, at 67-68 (comments of Steve Pelletier), 69 (comments of AnnaMarie Johnson); Transcript of May 18, 2015 Rulemaking Workshop, at 55-56 (comments of Steve Pelletier), 63-64 (comments of Diana White). When LSC proposed to regulate services contracts, it did not consider whether employee benefits were services that should be subject to part 1631. After the commenters raised the concern that employee benefits could be covered by the proposed rule, LSC considered the issue and determined that employee benefits are not the type of services over which LSC intended to increase its oversight. Consequently, LSC proposes to exclude contracts for employee benefits from the definition of services. LSC notes that contracts for employee benefits are subject to the reasonable and necessary standard of part 1630 for costs charged to the LSC grant.

    § 1631.2(h) Source. LSC proposes to adopt the PAMM definition of this term with technical changes to reflect the inclusion of contracts for services within part 1631.

    § 1631.3 Prior approval process. LSC proposes to relocate the provisions governing the timetable and basis for granting prior approval from existing § 1630.6 to new § 1631.3. LSC proposes to require recipients to obtain prior approval for (1) all purchases and leases of personal property, (2) contracts for services, and (3) capital improvements when the cost of any of those transactions exceeds $25,000 of LSC funds. LSC also proposes to increase the prior approval threshold. Currently, the prior approval threshold in the PAMM is $10,000. LSC established this threshold when it revised part 1630 in 1986. 51 FR 29076, 29082, Aug. 13, 1986. In its comments on the ANPRM, Northwest Justice Project (NJP) encouraged LSC to increase this threshold to $25,000 to account for inflation in the intervening years. LSC agrees that an increase in the threshold is appropriate. Consistent with NJP's recommendation and reasoning, LSC proposes to increase the prior approval threshold to $25,000.

    LSC proposes to expand the prior approval process to include contracts for services and all purchases of personal property, whether the purchase is for a single item or multiple items, exceeding the $25,000 threshold. Throughout the initial stages of this rulemaking, commenters opposed the potential application of the prior approval requirement to contracts for services. In its response to the ANPRM, NLADA stated that its members “strongly oppose prior approval of service contracts.” NLADA observed that recipients need the flexibility to make rapid decisions about how to address, for example, a computer system crash. NLADA also asserted that whatever policy LSC adopted should allow recipients to enter into sole-source contracts for reasons other than exigent circumstances. As examples, NLADA discussed the situations where a recipient purchases hardware or software form a vendor that includes routine maintenance, or the service is a specialty service for which only one vendor is available in the recipient's area. NLADA concluded that “[s]ound fiscal policies and internal controls will promote clarity, efficiency, and accountability while not unduly burdening the recipient.”

    Workshop panelists discussed the problems with expanding the prior approval requirement to both contracts for services and aggregate purchases of property. Like NLADA, panelists discussed the need to react quickly in emergency situations, which generally makes prior approval impractical as well as impossible. See, e.g., Transcript of April 20, 2016 Workshop at 72-73 (statement of AnnaMarie Johnson); May 18, 2016 Workshop at 57-58 (statement of Jonathan Asher), 69-71 (statement of Jose Padilla). Panelists also observed that some situations in which they must contract for services, such as labor-management negotiations or mediating employment issues, are sensitive situations in which is it inappropriate for LSC to weigh in on the recipient's choice of contractor. See Transcript of May 18, 2016 Workshop at 57 (statement of Jonathan Asher), 59-63 (statement of Jose Padilla), 67-69 (statement of Jonathan Asher), 69-72 (statement of Jose Padilla).

    Panelists opined as well on the issue of prior approval of aggregate purchases. Several panelists expressed concern that the concept of aggregate purchases was ambiguous, with respect to both timing—did LSC mean a purchase of multiple items occurring at one time, or several purchases of the same type of item over a certain period?—and nature—do all items in the purchase have to be the same, or would aggregate purchase include a copier and all of the accessories needed to operate it?—of the purchase. See, e.g., Transcript of April 20, 2016 Workshop at 53-54 (statements of Steve Pelletier and George Elliott), 62-65 (statement of Jonathan Asher), 70-71 (statement of George Elliott), 72-73 (statement of Michael Maher); Transcript of May 18, 2016 Workshop at 13-14 (statement of Jonathan Asher). Panelists discussed and questioned the value of obtaining prior approval for regular purchases of supplies throughout the course of the year, in contrast to obtaining prior approval for major purchases that they have planned for. See Transcript of May 18, 2016 Workshop at 20-22 (statements of Shamim Huq and Steve Pelletier). One panelist calculated the amount of time that would be required of his staff if LSC were to implement a prior approval requirement for all purchases of personal property at the current threshold of $10,000. He stated that based on his organization's purchasing patterns, his staff would need to put in an additional 105 work hours to comply with such a requirement. See Transcript of April 20, 2016 Workshop at 59 (statement of Shamim Huq).

    LSC understands recipients' need to react quickly to prevent or mitigate damage caused by unexpected crises. To address that concern, LSC proposes to allow recipients to purchase personal property or contract for services without first seeking prior approval in limited emergency circumstances. Proposed § 1631.3(d)(1) permits a recipient to use more than $25,000 in LSC funds to obtain personal property or services when the purchase is necessary to avoid imminent harm to, remediate, or mitigate damage to the recipient's personnel, physical facilities, or systems. Under proposed § 1631.3(d)(2), the recipient would have to provide LSC with the information it normally would submit as a request for prior approval within a reasonable time after the situation requiring the emergency purchase or contract has ended.

    Regarding contracts for labor counsel, mediators, or other services needed to address sensitive personnel issues, LSC observes that recipients do not need to disclose in the prior approval request the nature of the problems they are attempting to address. LSC proposes to require only that recipients describe how the services will further their legal service delivery. In these circumstances, a statement that the service is necessary to ensure the efficient functioning of the office may satisfy that requirement. Additionally, LSC notes that at the current time, contracts for services are subject to 45 CFR part 1630. Part 1630 requires that recipients document that any costs charged to the LSC grant are incurred in the performance of the grant, reasonable and necessary for the performance of the grant, and allocable to the grant. 45 CFR 1630.3(a)(1)-(3). Requiring prior approval for service contracts does nothing more than give LSC the ability to oversee costs recipients intend to use LSC funds to pay prior to the costs being incurred, rather than after. Prior approval may prevent the funds from being misspent, whereas an after-the-fact review of the cost could lead to sanctions, disallowed costs, suspension, or termination, depending on the magnitude of the wrongdoing. All of these after-the-fact proceedings are time consuming for both LSC and the recipient and do not prevent the misuse of funds. LSC believes that for large purchases or contracts, regardless of the nature of the property or service involved, prior approval is a more effective tool for preventing fraud, waste, and abuse than post hoc review.

    Finally, with respect to aggregate purchases of property, LSC believes that the proposals to require recipients to adopt procurement policies and to seek prior approval for purchases and contracts using $25,000 or more of LSC funds will eliminate the ambiguities and burdens identified by commenters. The proposed rule makes clear that recipients must seek prior approval for any single purchase whose cost exceeds $25,000 in LSC funds, regardless of whether that purchase is of a single item of personal property, several unrelated items of personal property, or a combination of personal property and services. Additionally, the proposed increase of the threshold to $25,000 will relieve recipients of the burden of seeking prior approval for relatively small purchases of personal property.

    LSC specifically requests comment on the number of purchases recipients have made in the preceding five years for which they would have had to seek prior approval under the new threshold, including purchases of services. LSC believes that the proposed $25,000 threshold is appropriate as it corresponds to inflation over the 30-year period since LSC adopted the current $10,000 threshold. Recipients, however, are in the best position to provide information regarding the impact that LSC's proposals to both increase the prior approval threshold and require recipients to seek prior approval of all purchases exceeding the proposed threshold are likely to have.

    LSC proposes to simplify the procedure described in current § 1630.7 by committing to make a decision or inform the requester of the date by which LSC expects to make a decision within a specific time frame. For purchases or leases of personal property, contracts for services, or capital improvements, LSC will make a decision or give notice of the date by which it expects to make a decision within 30 days of receiving the request. For purchases of real estate, the time frame for decision or notice is 60 days.

    Finally, as LSC did in the revisions to part 1627, LSC is eliminating language that suggests recipients may incur costs without receiving prior approval if LSC has not made a decision within the regulatory time frame. LSC does not believe that responsible grants administration practices should permit the expenditure of large amounts of LSC funds without LSC's prior approval. At the same time, LSC commits itself to making a decision or communicating the anticipated decision date to the requester within the time frames specified in § 1631.3(b).

    § 1631.4 Effective date and governing regulations. In this section, LSC proposes to require that the provisions of part 1631 apply to all purchases of real estate, purchases and leases of personal property, and contracts for services occurring after the effective date of part 1631. LSC also proposes to make Subparts A (General Provisions), C (Personal Property Management), and E (Real Estate Management) applicable to all personal property leased or purchased with LSC funds and real estate leased or owned by recipients on the effective date of part 1631. LSC recognizes that recipients will need time to develop procurement policies and procedures, obtain insurance for real property, and ensure that real estate leased or purchased with LSC funds meets the new maintenance standards. LSC therefore proposes to require that recipients comply no later than 90 days after the effective date of part 1631. LSC specifically seeks comment on whether 90 days is the appropriate transition period to come into compliance.

    § 1631.5 Use of funds. Sections 6 and 7 of the PAMM require recipients and former recipients of LSC funds to repay LSC for its contributions to purchases of personal property or real estate in certain circumstances. Both sections have paragraphs stating that LSC will use funds repaid upon disposition of property purchased in whole or in part with LSC funds to make emergency and special grants. Because the provisions have the exact same language, LSC proposes to consolidate them in § 1631.5 with only minor changes to reflect the consolidation.

    § 1631.6 Recipient policies, procedures, and recordkeeping. LSC proposes to require recipients to adopt written policies and procedures implementing part 1631. LSC also proposes to require that recipients maintain documentation sufficient to demonstrate compliance with this part. The documentation described in this section includes documentation showing that the procedures followed for each lease or purchase of personal property, purchase of real estate, or contract for services complied with the recipients' policies.

    Subpart B—Procurement Policies and Procedures

    § 1631.7 Characteristics of procurements. Concurrent with this NPRM, LSC issued a final rule implementing revisions to 45 CFR part 1627 regarding subgrants. The primary purpose of that rulemaking was to distinguish between awards from recipients to third parties to help recipients carry out the delivery of legal assistance and awards to provide property or services, such as janitorial services, to recipients. In part 1627, LSC adopted the characteristics of subgrants from the Office of Management and Budget's (OMB) Uniform Guidance, 2 CFR 200.330(a), to help recipients determine when their proposed awards of LSC funds to third parties constitute subgrants that must comply with LSC's governing statutes and regulations. LSC now proposes to adopt a parallel list of characteristics of procurement contracts in part 1631.

    Like the characteristics of subgrants, the characteristics of procurement contracts originated in OMB's Uniform Guidance, 2 CFR 200.330. The characteristics describe awards that recipients make to obtain goods or services necessary to administer their programs, rather than those that recipients give to other legal aid providers or bar associations to help them achieve the goals of their grant awards. LSC proposes to make only minor revisions to the characteristics to reflect their use in the LSC grant context. As with the characteristics of a subgrant in part 1627, not all of the characteristics of a contract need be present for an award to be considered a contract, and recipients must use judgment in evaluating whether a particular award should be considered a subgrant under part 1627 or a contract under part 1631.

    § 1631.8 Procurement policies and procedures. In the ANPRM, LSC proposed to revise part 1630 and the PAMM “to incorporate minimum standards for recipient procurement policies.” 80 FR 61142, 61146, Oct. 9, 2015. LSC noted that unlike the Uniform Guidance, part 1630 and the PAMM do not require LSC funding recipients to have procurement policies and procedures. LSC sought comment on whether LSC should revise part 1630 and the PAMM to incorporate contracting provisions similar to those contained in the Uniform Guidance or to be consistent with the policies and procedures required by recipients' other funders. LSC also sought comment about whether the same or different standards should apply to contracts for services.

    NLADA recommended that LSC refrain from adopting the contracting standards in the Uniform Guidance. They described the procurement standards in the Uniform Guidance as “one-size-fits-all” and stated that they “would be quite burdensome for grantees and unnecessary for recipients to be accountable for following reasonable and responsible procurement standards.” NLADA described the procurement requirements and guidelines currently in the PAMM and LSC's Accounting Guide for Recipients as “procedures [that] maintain accountability, while allowing programs necessary flexibility to meet their programs' needs effectively and efficiently.” NLADA continued to describe the unique needs faced by some of LSC's statewide and rural recipients:

    In many circumstances, it is simply not feasible or practical for programs to obtain competitive bids, let alone use sealed bidding processes referenced in the Uniform Guidance. For example, programs that cover large rural and/or are located in remote areas, have difficulty locating one vendor, let alone three. In these situations, there is no one financial threshold or type of service that would address when a bidding process should be used versus sole source procurement. Sole source procurement is appropriate and necessary for a service where a program needs unique expertise and/or time is of the essence.

    With respect to the proposal to regulate contracts for services, NLADA stated that their members recommended that LSC “not go beyond requiring that grantees have policies and procedures covering service contracts in place approved by their board.” They observed that recipients need the flexibility to make rapid decisions about how to address, for example, a computer system crash. They also asserted that whatever policy LSC adopted should allow recipients to enter into sole-source contracts for reasons other than exigent circumstances, such as when the vendor that a recipient purchased software or hardware from offers maintenance coverage or when the service is a specialty service for which only one vendor is available in the area. NLADA concluded that “[s]ound fiscal policies and internal controls will promote clarity, efficiency, and accountability while not unduly burdening the recipient.”

    CLS provided similar comments in its response. Like NLADA, CLS opined that recipients must have the ability to enter into contracts for services quickly when they experience emergencies. CLS also observed that all contracts for services must be reasonable and necessary for carrying out the LSC grant if LSC funds are to be expended on the contracts.

    In December, 2015, LSC's Office of Inspector General issued a compendium report of its audit findings regarding recipients' internal controls over a two-year period. See Compendium of Internal Control Audit Findings & Recommendations from Reports Issued October 1, 2013 through September 30, 2015, available at https://oig.lsc.gov/images/Final_Compendium_Report_-_ISSUED.pdf (“Compendium Report”). In the report, the OIG stated that it had issued 18 internal control audit reports containing a total of 166 recommendations for improvement. Of those recommendations, 67 pertained to weaknesses in recipients' written policies and procedures and 24 pertained to contracting. See Compendium Report at 3. Of the 67 recommendations for improvement of written policies and procedures, 13 pertained to weaknesses in recipients' procurement policies. Id. All 18 reports contained recommendations to improve recipients' written policies and procedures.

    With respect to written policies and procedures, OIG found that several recipients' policies lacked terms that complied with LSC's Accounting Guide for Recipients. Specifically, OIG identified “procedures for securing various types of contracts, competition requirements, approval authorities, dollar thresholds for approvals, documentation requirement to support contracting decisions and contract oversight responsibilities [and documentation of] deviations from approved contracting processes” as missing from many procurement policies. See Compendium Report at 6.

    OIG grouped the findings of weaknesses in recipients' contracting practices into six categories: Inadequate supporting documentation; failure to ensure that a contract was valid and formalized; poor adherence to written policies; failure to maintain a centralized filing system for procurement-related documents; failure to periodically evaluate long-term contracts and put them out for bids when appropriate; and failure to cross-train employees on contracting procedures. See Compendium Report at 7-12. Notably, OIG found that “[i]n certain cases, the contracting process and payments made to vendors conformed to LSC regulations and guidelines; however, supporting documentation justifying the process used to obtain the contracts, some of which were sole-sourced, did not exist or was not adequate.” Id. at 8. OIG also found that some recipients' “current practices were not in accordance with their current contracting policy or LSC's Fundamental Criteria.Id. at 9.

    In response to the Compendium Report, LSC issued Program Letter 16-3, “Procurement Policy Drafting Guidance for LSC Recipients.” The letter was accompanied by a document explaining in detail the elements of an effective procurement policy and factors that recipients should consider when developing their own policies. In the guidance document, LSC identified four areas that it believes are critical to an effective procurement policy:

    1. Competition—How to identify, evaluate, and select vendors;

    2. Negotiating terms—Identification of rights and responsibilities of each party to the contract;

    3. Documentation—How to verify best value in purchasing; and

    4. Internal controls—How to increase opportunity for vendors and reduce opportunities for fraud, waste, and abuse of LSC funds.

    “Procurement Policy Drafting 101: Guidance for LSC Grantees” at 1; available at http://www.lsc.gov/procurement-policy-drafting-101-guidance-lsc-grantees.

    Based on the feedback received in the comments to the ANPRM and the rulemaking workshops and on the findings in OIG's Compendium Report, LSC proposes a rule requiring recipients to develop policies and procedures governing purchases of personal property and contracts for services made with LSC funds. Rather than adopting the procurement rules in OMB's Uniform Guidance, LSC proposes to create a rule based substantially on the guidance provided in Program Letter 16-3 and the accompanying guidance documents. The rule will identify generally the elements that a recipient's policy must have, but it will not prescribe the specific procedures that recipients must follow when making purchases with LSC funds. The proposed rule will replace the specific requirements currently contained in Sections 3(a) and 3(d) (personal property) and 4(f) (capital expenditures) of the PAMM. LSC is also proposing to revise the parts of Section 4 of the PAMM that govern the use of LSC funds to acquire real property. Those changes will be discussed in more detail below.

    In § 1631.8, LSC proposes to require that recipients develop procurement policies that have the following elements:

    • Identification of competition thresholds that establish the basis for the level of competition required at each threshold. LSC expects recipients to consider the types of purchases and contracts for services that they make using LSC funds and to develop procedures for making each type of purchase. For example, a recipient may determine that its purchasing patterns require different levels of competition based on the type of purchase, such as a lease of a copier or a contract for a management consultant, while another may decide that the level of competition depends on the amount that it intends to spend regardless of the type of purchase.

    • Establish the grounds for sole-source purchases. During the workshops, several panelists discussed various justifiable reasons why LSC recipients may award contracts or make purchases on a non-competitive basis. One reason was that in remote or rural areas, there may be only one vendor for a particular service or type of property. Another reason was that recipients sometimes require experts or professionals with a particular skill type, such as handwriting analysis, and award contracts for such services based on recommendations from trusted colleagues rather than through competition. LSC generally believes that competition among vendors is the best way to ensure that recipients are getting best value in their purchases. LSC understands, however, that there are times outside of emergency situations when recipients may need to make contracts on a non-competitive basis. LSC does not propose to limit the situations in which recipients can make sole-source contracts to exigent circumstances, but LSC does expect recipients to develop procurement policies that establish standards for making sole-source purchases and procedures for justifying the purchase, selecting the vendor, and documenting the transaction.

    • Establish the level of documentation necessary to justify procurements. Like the first element, this requirement anticipates that recipients may tie the level of documentation needed to justify a purchase to the nature of the purchase or to the competition thresholds. LSC does not propose to require recipients to maintain a particular form or type of documentation, but expects recipients to determine a level of documentation that is appropriate to the type of purchase and that will support a showing that the purchase was reasonable and necessary for the purposes of the LSC grant.

    • Establish internal controls that, at a minimum, provide for segregation of duties in the procurement process; identify which employees, officers, or directors have authority to make purchases for the recipient; and identify procedures for approving purchases. In its most recent annual compliance guidance, LSC identified weaknesses in segregation of duties and approval of financial transactions by an “appropriate level of management” as two of the most common compliance issues identified through Office of Compliance and Enforcement oversight visits to grantees. See Program Letter 16-7, Compliance Guidance, Aug. 19, 2016; available at http://www.lsc.gov/program-letter-16-7. The Accounting Guide for LSC Recipients currently requires recipients to have internal controls to safeguard program resources that should include the authority given to recipient employees to make and approve financial transactions, including purchases. Accounting Guide for LSC Recipients, § 3-5.1, p. 28. LSC proposes to formalize this requirement and expand upon it in part 1631. LSC does not propose to prescribe the assignment of procurement responsibilities among recipient staff, nor does it propose to require recipients to follow certain procedures when making purchases. LSC simply proposes to require that recipients establish procurement policies that address each of these elements.

    • Establish procedures to ensure quality and cost control in purchasing. LSC intends to address two issues through this requirement: Evaluating purchases in the first instance, and review and evaluation of existing contracts. In order to ensure best value for all purchases, recipients should develop fair and objective criteria for evaluating sources and procedures for selecting among sources. The rigor of the selection procedures at each competition threshold should be commensurate with the level of competition and documentation required. During the workshops, several panelists stated that they had longstanding, non-competitive contracts with service providers. LSC has also learned of this practice through its regular oversight activities. LSC believes that the efficient, responsible administration of appropriated funds requires recipients to evaluate their long-term and multi-year contracts regularly for continued quality of services or products and for best price. LSC does not propose to require recipients to evaluate their longstanding contracts or open them up for bids on a prescribed schedule. LSC expects recipients to establish policies for regularly evaluating the value and quality of each of their contracts and for establishing standards to determine when continuing versus recompeting each contract is appropriate.

    • Establish procedures for identifying and preventing conflicts of interest in the purchasing process. For several years, LSC has required recipients of TIG and Pro Bono Innovation Fund grants to adhere to an LSC-created “Policy on Disclosure of Interests for Determination of Conflicts.” LSC did not require recipients of Basic Field Grants to develop or follow conflicts of interest policies until grant year 2016. Beginning in 2016, the grant assurances for the Basic Field Grant program required recipients to develop conflicts of interest policies, to distribute the policies to their staff, and to train all covered staff on the policies. LSC now proposes to formalize in a rule the requirement to develop conflicts of interest policies applicable to the purchasing process. As with all of the other elements proposed in this section, LSC does not propose to dictate the terms of recipients' conflicts of interest policies. LSC merely expects recipients to adopt, comply with, and document compliance with the policies they develop.

    LSC strongly encourages recipients to look to Program Letter 16-3 and its accompanying documents, as well as the Accounting Guide, for guidance when drafting their procurement policies. In particular, LSC recommends that recipients consider establishing annual purchasing plans and contract management procedures if they have not done so already. In addition to thoughtful procurement policies, well-considered purchasing plans and effective contract management procedures can reduce the risk of fraud, waste, and abuse of LSC funds.

    § 1631.9 Prior approval. In this section, LSC proposes to prescribe the contents of a request for prior approval. A request must include a statement explaining how the personal property or services will further the delivery of legal services to eligible clients and documentation showing that the recipient followed the procurement policy and procedures it developed under § 1631.8. This language is adopted from §§ 3(d) and 4(f) of the PAMM, but has been revised to reflect LSC's proposal to require general procurement policies, rather than to incorporate the current purchase-specific procedures.

    § 1631.10 Applicability of part 1630. Because LSC is proposing to limit the prior approval requirement to all purchases of real property, purchases and leases of personal property costing more than $25,000 in LSC funds, and contracts for services exceeding $25,000 in LSC funds, LSC also proposes to include a section restating the applicability of part 1630 to all leases, purchases, and contracts made using LSC funds.

    Subpart C—Personal Property Management

    § 1631.11 Use of property in compliance with LSC's statutes and regulations. LSC proposes to adopt § 5(a), (d), and (e) of the PAMM in this section with only minor technical changes.

    § 1631.12 Intellectual property. In this section, LSC proposes to adopt § 5(g) of the PAMM without change.

    § 1631.13 Disposing of personal property purchased with LSC funds. In this section, LSC proposes to adopt § 6(d), (e), (f), and (g) of the PAMM with one substantive change. In proposed paragraph (a)(2), LSC proposes to explicitly authorize recipients to determine the appropriate method to dispose of personal property that has little or no fair market value at the time of disposal. The recipient does not have to notify LSC of its intent to dispose of such property, nor does it have to compensate LSC out of the proceeds from any sale of the property. LSC proposes to include this provision in response to feedback it received from panelists during the rulemaking workshops that prior approval to dispose of personal property with nominal or no monetary value is unnecessary. See, e.g., Transcript of April 20, 2016 Rulemaking Workshop at 94 (Statement of Jonathan Asher); Transcript of May 18, 2016 Rulemaking Workshop at 101 (Statements of Steve Pelletier and Diana White). Additionally, LSC proposes to reorganize the paragraphs taken from the PAMM for ease of reference.

    § 1631.14 Use of derivative income from sale of personal property purchased with LSC funds. In § 1631.14(a), LSC proposes to adopt § 6(e) of the PAMM without change. LSC also proposes to include paragraph (b), which requires recipients to account for income earned from the sale, rent, or lease of personal property purchased with LSC funds as required by § 1630.16—Applicability to derivative income.

    Subpart D—Real Estate Acquisition and Capital Improvements

    § 1631.15 Purchasing real property with LSC funds. LSC proposes to adopt in significant part the requirements of § 4 of the PAMM. In paragraph (a), LSC proposes to consolidate and restructure existing paragraphs (a)-(c) of § 4 of the PAMM. LSC also proposes to introduce paragraph (a)(3), which allows a recipient who cannot evaluate three properties to explain why such an evaluation is not possible. For example, a recipient may not be able to compare three properties if the inventory of commercial properties suitable for the recipient's activities is extremely limited.

    LSC proposes to adopt § 4(d) of the PAMM in significant part in paragraph (b). LSC proposes to revise two specific provisions to allow recipients additional flexibility when purchasing real property. In § 1631.15(b)(6), LSC proposes to allow a recipient to provide documentation that the recipient's governing body approves of the purchase, even if the governing body's approval is contingent upon LSC's approval. LSC understands that some recipient governing bodies may be reluctant to authorize a real estate purchase if they are not assured that one of the proposed funding sources consents to the purchase. As a funder, LSC similarly wants to know that a recipient's governing body has been informed about a proposed purchase and agrees that the purchase is in the recipient's interest. Consequently, LSC proposes to revise existing § 4(d)(4) of the PAMM to allow for contingent approvals.

    Additionally, LSC proposes to revise existing § 4(d)(5) of the PAMM and promulgate it as § 1631.15(b)(8). Currently, § 4(d)(5) requires a recipient to include in its request for prior approval a “statement of handicapped accessibility sufficient to meet the requirements of 45 CFR 1624.5(c)[.]” On several occasions, LSC has received simultaneous requests to purchase real estate and to make capital improvements to the property for the purpose of making it accessible to persons with disabilities. For this reason, LSC proposes to revise this requirement to allow the recipient to provide a statement that the property will be accessible once the requested capital improvements have been completed. LSC expects the recipient to act expeditiously to make the requested improvements if LSC approves both the purchase and the capital expenditures. Consequently, LSC proposes to require that any capital improvements authorized under this section be completed within 60 days of the date the real estate purchase is completed.

    LSC proposes to add three additional elements to the list of requested information currently contained in § 4(d) of the PAMM and proposed for inclusion in § 1631.15(b). First, LSC proposes to require that recipients provide the information described in paragraph (a) as part of the prior approval request. Second, LSC proposes to require recipients to provide a breakdown of the sources of funds it intends to use toward the purchase. In other words, recipients would provide an estimate of the amount of LSC funds and non-LSC funds, respectively, that it intends to put toward the acquisition costs of the building and subsequent mortgage payments for the life of the financing arrangement. Third, LSC proposes to require recipients to provide a comparison of available loan terms considered by the recipient. LSC proposes this requirement to encourage recipients to investigate various options for financing a building purchase to obtain the best value.

    In § 1631.15(c), LSC proposes to adopt § 4(e) of the PAMM with only a minor conforming change. LSC does, however, propose to add subparagraph (c)(4), which will require a recipient to agree not to dispose of real estate purchased with LSC funds without prior approval.

    § 1631.16 Capital improvements. In this section, LSC proposes to adopt § 4(f) of the PAMM in substantial part. LSC proposes to replace existing § 4(1)(ii) of the PAMM, which requires a recipient to provide a description of the contractor selection process, with a requirement to provide documentation showing that the recipient complied with the procurement process it developed under § 1631.8. LSC also proposes to add language requiring a recipient to maintain adequate supporting documentation to identify and account for any LSC funds used to make capital improvements.

    Subpart E—Real Estate Management

    § 1631.17 Using real estate purchased with LSC funds. LSC proposes to adopt § 5(a), (d), and (f) of the PAMM with only minor technical changes.

    § 1631.18 Maintenance. LSC proposes to introduce a section requiring recipients to maintain real estate purchased with LSC funds in efficient operating condition and in compliance with state and local property standards and building codes. From previous requests to dispose of real estate, LSC has learned of recipient facilities falling into disrepair. LSC believes that it is essential that recipients maintain assets purchased with appropriated funds in compliance with state and local standards and building codes. LSC also believes it is critical to the delivery of legal services for recipients to provide services in space that is clean, in good repair, and welcoming to clients. For these reasons, LSC proposes to prescribe the facilities standards that recipients must meet if they use LSC funds to purchase real estate.

    § 1631.19 Insurance. LSC proposes to introduce minimum standards for the insurance of real estate acquired or improved with LSC funds. Similar to the rationale for prescribing minimum maintenance standards, LSC believes it is essential for recipients to provide the same level of insurance for real estate acquired or improved with appropriated funds as they do for non-LSC funded real estate and in a manner that protects LSC's interest in the event of a title failure or physical destruction of the property. LSC proposes to adopt the insurance standard from the regulations governing facilities purchases under the Head Start program, 45 CFR 1309.23.

    § 1631.20 Accounting and reporting to LSC. LSC proposes to require recipients to maintain records showing, for each piece of real estate purchased in whole or in part with LSC funds, the amount of LSC funds it spends each year on the property. Costs that recipients should account for include, but are not limited to, acquisition costs in the year of purchase; mortgage payments; insurance, maintenance, and taxes; and costs associated with capital improvements made using LSC funds. LSC also proposes to require recipients to provide LSC with the accounting in one of two ways. The first is by submitting the accounting to LSC no later than April 30 of the calendar year following the calendar year in which the recipient incurred the costs. In other words, if a recipient uses LSC funds to purchase a new office building in March, 2017, it must provide LSC with an accounting of all LSC funds used in 2017 to support the purchase and maintenance for the building by April 30, 2018. The second method is to provide LSC with the required accounting in the audited financial statements that recipients must submit to LSC annually.

    § 1631.21 Disposing of real estate purchased with LSC funds. In this section, LSC proposes to adopt § 7 of the PAMM in substantial part. In a change from the PAMM, LSC proposes to require that all proposed dispositions of real estate acquired using LSC funds be subject to LSC's prior approval. This approach is consistent with the federal government's policy regarding grantee disposal of property purchased with federal funds. See 2 CFR 200.311(c). LSC believes that the federal government's policy on the disposition of real property purchased with federal funds is more appropriate to its oversight role than the policy that currently exists in the PAMM. Under the PAMM, organizations must seek LSC's approval prior to disposing of property purchased with LSC funds only when they are no longer receiving LSC funds. In LSC's experience, it is far more common for LSC recipients to sell real estate acquired with LSC funds while they are still receiving LSC funds. At the present time, the PAMM does not require recipients to seek LSC's approval before selling such property, although LSC's property interest agreements generally contain terms requiring recipients to seek approval before encumbering or selling the property. LSC believes it is appropriate for the requirement to be formalized in a rule.

    LSC proposes to establish the prior approval process for disposition of real estate in § 1631.21(c). LSC proposes to require a recipient or former recipient to seek prior approval at least 60 days before the recipient proposes to dispose of the property. In its request, the recipient or former recipient should tell LSC how it proposes to dispose of the property and why; provide documentation of the fair market value of the property; if selling, describe its process for advertising the property and receiving offers; account for all LSC funds used in the acquisition and capital improvement of the property; and identify the proposed transferee. The requester should also provide a document describing the terms of transfer or sale. LSC also proposes to clarify that LSC's percentage interest in the proceeds of a real estate sale is equal to the percentage of the costs of the original acquisition and any capital improvements made to the real estate over the life of the property that were paid using LSC funds.

    § 1631.22 Retaining income from sale of real property purchased with LSC funds. LSC proposes to consolidate §§ 6(e) and 8(c) of the PAMM in this section. LSC proposes to make only technical edits to reflect the redesignation of § 1630.12 as § 1630.16.

    List of Subjects 45 CFR Part 1600

    Legal services.

    45 CFR Part 1630

    Accounting, Government contracts, Grant programs—law, Hearing and appeal procedures, Legal services, Questioned costs.

    45 CFR Part 1631

    Legal services, Government contracts, Grant programs—law, Real property acquisition.

    For the reasons stated in the preamble, the Legal Services Corporation proposes to amend 45 CFR Chapter XVI as follows:

    PART 1600—DEFINITIONS 1. The authority citation for part 1600 is revised to read as follows: Authority:

    42 U.S.C. 2996g(e).

    2. Amend § 1600.1by adding, in alphabetical order, the definitions for “Corporation funds” and “Non-LSC funds” to read as follows:
    § 1600.1 Definitions.

    Corporation funds or LSC funds means any funds appropriated by Congress to carry out the purposes of the Legal Services Corporation Act of 1974, 42 U.S.C. 2996 et seq., as amended.

    Non-LSC funds means any funds that are not Corporation funds or LSC funds.

    3. Revise part 1630 to read as follows: PART 1630—COST STANDARDS AND PROCEDURES Subpart A—General Provisions Sec. 1630.1 Purpose. 1630.2 Definitions. 1630.3 Time. 1630.4 Burden of proof. Subpart B—Cost Standards and Prior Approval 1630.5 Standards governing allowability of costs under LSC grants or contracts. 1630.6 Prior approval. 1630.7 Membership fees or dues. 1630.8 Contributions. 1630.9 Tax-sheltered annuities, retirement accounts, and penalties. Subpart C—Questioned Cost Proceedings 1630.10 Review of questioned costs. 1630.11 Appeals to the president. 1630.12 Recovery of disallowed costs and other corrective action. 1630.13 Other remedies; effect on other parts. 1630.14 Applicability to subgrants. 1630.15 Applicability to non-LSC funds. 1630.16 Applicability to derivative income. Subpart D—Closeout Procedures 1630.17 Applicability. 1630.18 Closeout plan; Timing. 1630.19 Closeout costs. 1630.20 Returning funds to LSC. Authority:

    42 U.S.C. 2996g(e).

    Subpart A—General Provisions
    § 1630.1 Purpose.

    This part is intended to provide uniform standards for allowability of costs and to provide a comprehensive, fair, timely, and flexible process for the resolution of questioned costs.

    § 1630.2 Definitions.

    (a) Corrective action means action taken by a recipient that:

    (1) Corrects identified deficiencies;

    (2) Produces recommended improvements; or

    (3) Demonstrates that audit or other findings are either invalid or do not warrant recipient action.

    (b) Derivative income means income earned by a recipient from LSC-supported activities during the term of an LSC grant or contract, and includes, but is not limited to, income from fees for services (including attorney fee awards and reimbursed costs), sales and rentals of real or personal property, and interest earned on LSC grant or contract advances.

    (c) Disallowed cost means those charges to an LSC award that LSC determines to be unallowable, in accordance with the applicable statutes, regulations, or terms and conditions of the grant award.

    (d) Final written decision means either:

    (1) The decision issued by the Vice President for Grants Management after reviewing all information provided by a recipient in response to a notice of questioned costs; or

    (2) the notice of questioned costs if a recipient does not respond to the notice within 30 days of receipt.

    (e) Membership fees or dues means payments to an organization on behalf of a program or individual to be a member thereof, or to acquire voting or participatory rights therein. Membership fees or dues include, but are not limited to, fees or dues paid to a state supreme court or to a bar organization acting as an administrative arm of the court or in some other governmental capacity if such fees or dues are required for an attorney to practice law in that jurisdiction.

    (f) Questioned cost means a cost that LSC has questioned because of an audit or other finding that:

    (1) There may have been a violation of a provision of a law, regulation, contract, grant, or other agreement or document governing the use of LSC funds;

    (2) The cost is not supported by adequate documentation; or

    (3) The cost incurred appears unnecessary or unreasonable and does not reflect the actions a prudent person would take in the circumstances.

    § 1630.3 Time.

    (a) Computation. Time limits specified in this part shall be computed in accordance with Rules 6(a) and 6(e) of the Federal Rules of Civil Procedure.

    (b) Extensions. LSC may, on a recipient's written request for good cause, grant an extension of time and shall so notify the recipient in writing.

    § 1630.4 Burden of proof.

    The recipient shall have the burden of proof under this part.

    Subpart B—Cost Standards and Prior Approval
    § 1630.5 Standards governing allowability of costs under LSC grants or contracts.

    (a) General criteria. Expenditures are allowable under an LSC grant or contract only if the recipient can demonstrate that the cost was:

    (1) Actually incurred in the performance of the grant or contract and the recipient was liable for payment;

    (2) Reasonable and necessary for the performance of the grant or contract as approved by LSC;

    (3) Allocable to the grant or contract;

    (4) In compliance with the Act, applicable appropriations law, LSC rules, regulations, guidelines, and instructions, the Accounting Guide for LSC Recipients, the terms and conditions of the grant or contract, and other applicable law;

    (5) Consistent with accounting policies and procedures that apply uniformly to both LSC-funded and non-LSC-funded activities;

    (6) Accorded consistent treatment over time;

    (7) Determined in accordance with generally accepted accounting principles; and

    (8) Adequately and contemporaneously documented in business records accessible during normal business hours to LSC management, the Office of Inspector General, the General Accounting Office, and independent auditors or other audit organizations authorized to conduct audits of recipients.

    (b) Reasonable costs. A cost is reasonable if, in its nature or amount, it does not exceed that which would be incurred by a prudent person under the same or similar circumstances prevailing at the time the decision was made to incur the cost. In determining the reasonableness of a given cost, consideration shall be given to:

    (1) Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the recipient or the performance of the grant or contract;

    (2) The restraints or requirements imposed by such factors as generally accepted sound business practices, arms-length bargaining, Federal and State laws and regulations, and the terms and conditions of the grant or contract;

    (3) Whether the recipient acted with prudence under the circumstances, considering its responsibilities to its clients and employees, the public at large, the Corporation, and the Federal government; and

    (4) Significant deviations from the recipient's established practices, which may unjustifiably increase the grant or contract costs.

    (c) Allocable costs. (1) A cost is allocable to a particular cost objective, such as a grant, project, service, or other activity, in accordance with the relative benefits received. Costs may be allocated to LSC funds either as direct or indirect costs according to the provisions of this section.

    (2) A cost is allocable to an LSC grant or contract if it is treated consistently with other costs incurred for the same purpose in like circumstances and if it:

    (i) Is incurred specifically for the grant or contract;

    (ii) Benefits both the grant or contract and other work and can be distributed in reasonable proportion to the benefits received; or

    (iii) Is necessary to the recipient's overall operation, although a direct relationship to any particular cost objective cannot be shown.

    (3) Recipients must maintain accounting systems sufficient to demonstrate the proper allocation of costs to each of their funding sources.

    (d) Direct costs. Direct costs are those that can be identified specifically with a particular grant award, project, service, or other direct activity of an organization. Costs identified specifically with grant awards are direct costs of the awards and are to be assigned directly thereto. Direct costs include, but are not limited to, the salaries and wages of recipient staff who are working on cases or matters that are identified with specific grants or contracts. Salary and wages charged directly to LSC grants and contracts must be supported by personnel activity reports.

    (e) Indirect costs. Indirect costs are those that have been incurred for common or joint objectives and cannot be readily identified with a particular final cost objective. A recipient may treat any direct cost of a minor amount as an indirect cost for reasons of practicality where the accounting treatment for such cost is consistently applied to all final cost objectives. Indirect costs include, but are not limited to, the costs of operating and maintaining facilities, and the costs of general program administration, such as the salaries and wages of program staff whose time is not directly attributable to a particular grant or contract. Such staff may include, but are not limited to, executive officers and personnel, accounting, secretarial and clerical staff.

    (f) Allocation of indirect costs. Where a recipient has only one major function, i.e., the delivery of legal services to low-income clients, allocation of indirect costs may be by a simplified allocation method, whereby total allowable indirect costs (net of applicable credits) are divided by an equitable distribution base and distributed to individual grant awards accordingly. The distribution base may be total direct costs, direct salaries and wages, attorney hours, numbers of cases, numbers of employees, or another base which results in an equitable distribution of indirect costs among funding sources.

    (g) Exception for certain indirect costs. Some funding sources may refuse to allow the allocation of certain indirect costs to an award. In such instances, a recipient may allocate a proportional share of another funding source's share of an indirect cost to LSC funds, provided that the activity associated with the indirect cost is permissible under the LSC Act, LSC appropriations statutes, and regulations.

    (h) Applicable credits. Applicable credits are those receipts or reductions of expenditures which operate to offset or reduce expense items that are allocable to grant awards as direct or indirect costs. Applicable credits include, but are not limited to, purchase discounts, rebates or allowances, recoveries or indemnities on losses, insurance refunds, and adjustments of overpayments or erroneous charges. To the extent that such credits relate to allowable costs, they shall be credited as a cost reduction or cash refund in the same fund to which the related costs are charged.

    (i) Guidance. The regulations and circulars of the Office of Management and Budget shall provide guidance for all allowable cost questions arising under this part when relevant policies or criteria therein are not inconsistent with the provisions of the Act, applicable appropriations law, this part, the Accounting Guide for LSC Recipients, LSC rules, regulations, guidelines, instructions, and other applicable law.

    § 1630.6 Prior approval.

    (a) Advance understandings. Under any given grant award, the reasonableness and allocability of certain cost items may be difficult to determine. In order to avoid subsequent disallowance or dispute based on unreasonableness or nonallocability, a recipient may seek a written understanding from LSC in advance of incurring special or unusual costs. If a recipient elects not to seek an advance understanding from LSC, the absence of an advance understanding on any element of a cost will not affect the reasonableness or allocability of the cost.

    (b) Costs requiring prior approval. (1) A recipient must obtain LSC's prior approval before charging costs attributable to any of the transactions below to its LSC grant when the cost of the transaction exceeds $25,000 of LSC funds:

    (i) Purchases or leases of personal property;

    (ii) Contracts for services;

    (iii) Purchases of real estate; and

    (iv) Capital improvements.

    (2) The process and substantive requirements for requests for prior approval are located in 45 CFR part 1631—Purchasing and Property Management.

    (c) Duration. LSC's advance understanding or approval shall be valid for one year, or for a greater period of time which LSC may specify in its approval or advance understanding.

    § 1630.7 Membership fees or dues.

    (a) LSC funds may not be used to pay membership fees or dues to any private or nonprofit organization, whether on behalf of the recipient or an individual.

    (b) Paragraph (a) of this section does not apply to the payment of membership fees or dues mandated by a governmental organization to engage in a profession, or to the payment of membership fees or dues from non-LSC funds.

    § 1630.8 Contributions.

    Any contributions or gifts of LSC funds to another organization or to an individual are prohibited.

    § 1630.9 Tax-sheltered annuities, retirement accounts, and penalties.

    No provision contained in this part shall be construed to affect any payment by a recipient on behalf of its employees for the purpose of contributing to or funding a tax-sheltered annuity, retirement account, or pension fund.

    Subpart C—Questioned Cost Proceedings
    § 1630.10 Review of questioned costs.

    (a) LSC may identify questioned costs:

    (1) When the Office of Inspector General, the General Accounting Office, or an independent auditor or other audit organization authorized to conduct an audit of a recipient has identified and referred a questioned cost to LSC;

    (2) In the course of its oversight of recipients; or

    (3) As a result of complaints filed with LSC.

    (b) If LSC determines that there is a basis for disallowing a questioned cost, LSC must provide the recipient with written notice of its intent to disallow the cost. The notice of questioned costs must state the amount of the cost and the factual and legal basis for disallowing it.

    (c) If a questioned cost is disallowed solely on the ground that it is excessive, only the amount that is larger than reasonable shall be disallowed.

    (d)(1) Within 30 days of receiving the notice of questioned costs, the recipient may respond with written evidence and argument to show that the cost was allowable, or that LSC, for equitable, practical, or other reasons, should not recover all or part of the amount, or that the recovery should be made in installments.

    (2) If the recipient does not respond to LSC's written notice within 30 days, the written notice shall become LSC's final written decision.

    (e) Within 60 days of receiving the recipient's written response to the notice of questioned costs, LSC management must issue a final written decision stating whether or not the cost has been disallowed and the reasons for the decision.

    (f) If LSC has determined that the questioned cost should be disallowed, the final written decision must:

    (1) State that the recipient may appeal the decision as provided in § 1630.11 and describe the process for seeking an appeal;

    (2) Describe how it expects the recipient to repay the cost, including the method and schedule for collection of the amount of the cost;

    (3) State whether LSC is requiring the recipient to make financial adjustments or take other corrective action to prevent a recurrence of the circumstances giving rise to the disallowed cost.

    § 1630.11 Appeals to the president.

    (a)(1) If the amount of a disallowed cost exceeds $2,500, the recipient may appeal in writing to LSC's President within 30 days of receiving LSC's final written decision to disallow the cost. The recipient should state in detail the reasons why LSC should not disallow part or all of the questioned cost.

    (2) If the recipient did not respond to LSC's notice of questioned costs and the notice became LSC's final written decision pursuant to § 1630.11(d)(2), the recipient may not appeal the final written decision.

    (b) If the President has had prior involvement in the consideration of the disallowed cost, the President shall designate another senior LSC employee who has not had prior involvement to review the recipient's appeal. In circumstances where the President has not had prior involvement in the disallowed cost proceeding, the President has discretion to designate another senior LSC employee who also has not had prior involvement in the proceeding to review the appeal.

    (c) Within 30 days of receiving the recipient's written appeal, the President or designee will adopt, modify, or reverse LSC's final written decision.

    (d) The decision of the President or designee shall be final and shall be based on the written record, consisting of LSC's notice of questioned costs, the recipient's response, LSC's final written decision, the recipient's written appeal, any additional response or analysis provided to the President or designee by LSC staff, and the relevant findings, if any, of the Office of Inspector General, General Accounting Office, or other authorized auditor or audit organization. Upon request, LSC shall provide the recipient with a copy of the written record.

    § 1630.12 Recovery of disallowed costs and other corrective action.

    (a) LSC will recover any disallowed costs from the recipient within the time limits and conditions set forth in either LSC's final written decision or the President's decision on an appeal. Recovery of the disallowed costs may be in the form of a reduction in the amount of future grant checks or in the form of direct payment from you to LSC.

    (b) LSC shall ensure that a recipient who has incurred a disallowed cost takes any additional necessary corrective action within the time limits and conditions set forth in LSC's final written decision or the President's decision.

    § 1630.13 Other remedies; effect on other parts.

    (a) In cases of serious financial mismanagement, fraud, or defalcation of funds, LSC shall refer the matter to the Office of Inspector General and may take appropriate action pursuant to parts 1606, 1623, and 1640 of this chapter.

    (b) The recovery of a disallowed cost according to the procedures of this part does not constitute a permanent reduction in a recipient's annualized funding level, nor does it constitute a limited reduction of funding or termination of financial assistance under part 1606, or a suspension of funding under part 1623.

    § 1630.14 Applicability to subgrants.

    When disallowed costs arise from expenditures incurred under a subgrant of LSC funds, the recipient and the subrecipient will be jointly and severally responsible for the actions of the subrecipient, as provided by 45 CFR part 1627, and will be subject to all remedies available under this part. Both the recipient and the subrecipient shall have access to the review and appeal procedures of this part.

    § 1630.15 Applicability to non-LSC funds.

    (a) No costs attributable to a purpose prohibited by the LSC Act, as defined by 45 CFR 1610.2(a), may be charged to private funds, except for tribal funds used for the specific purposes for which they were provided.

    (b) No cost attributable to an activity prohibited by or inconsistent with Public Law 103-134, tit. V, § 504, as defined by § 1610.2(b), may be charged to non-LSC funds, except for tribal funds used for the specific purposes for which they were provided.

    (c) LSC may recover from a recipient's LSC funds an amount not to exceed the amount improperly charged to non-LSC funds. A decision to recover under this paragraph is subject to the review and appeal procedures of §§ 1630.11 and 1630.12.

    § 1630.16 Applicability to derivative income.

    (a) Derivative income resulting from an activity supported in whole or in part with LSC funds shall be allocated to the fund in which the recipient's LSC grant is recorded in the same proportion that the amount of LSC funds expended bears to the total amount expended by the recipient to support the activity.

    (b) Derivative income allocated to the LSC fund in accordance with paragraph (a) of this section is subject to the requirements of this part.

    Subpart D—Closeout Procedures
    § 1630.17 Applicability.

    This subpart applies when a recipient of LSC funds:

    (a) Merges or consolidates functions with another LSC recipient;

    (b) Changes its current identity or status as a legal entity; or

    (c) Otherwise ceases to receive funds directly from LSC. This may include voluntary termination by the recipient or involuntary termination by LSC of the recipient's LSC grant, and may occur at the end of a grant term or during the grant term.

    § 1630.18 Closeout plan; timing.

    (a) A recipient must provide LSC with a plan for the orderly conclusion of the recipient's role and responsibilities. LSC will maintain a list of the required elements for the closeout plan on its Web site. LSC will provide recipients with a link to the list in the grant award documents.

    (b)(1) A recipient must notify LSC no less than 60 days prior to any of the above events, except for an involuntary termination of its LSC grant by LSC. The recipient must submit the closeout plan described in § 1630.19 at the same time.

    (2) If LSC terminates a recipient's grant, the recipient must submit the closeout plan described in § 1630.19 within 15 days of being notified by LSC that it is terminating the recipient's grant.

    § 1630.19 Closeout costs.

    (a) The recipient must submit to LSC a detailed budget and timeline for all closeout procedures described in the closeout plan. LSC must approve the budget, either as presented or after negotiations with the recipient, before the recipient may proceed with implementing the budget, timeline, and plan.

    (b) LSC will withhold funds for all closeout expenditures, including costs for the closing audit, all staff and consultant services needed to perform closeout activities, and file storage and retention.

    (c) LSC will release any funding installments that the recipient has not received as of the date it notified LSC of a merger, change in status, or voluntary termination or that LSC notified the recipient of an involuntary termination of funding only upon the recipient's satisfactory completion of all closeout obligations.

    § 1630.20 Returning funds to LSC.

    (a) Excess fund balance. If the recipient has an LSC fund balance after the termination of funding and closeout, the recipient must return the full amount of the fund balance to LSC at the time it submits the closing audit to LSC.

    (b) Derivative income. Any attorneys' fees claimed or collected and retained by the recipient after funding ceases that result from LSC-funded work performed during the grant term are derivative income attributable to the LSC grant. Such derivative income must be returned to LSC within 15 days of the date on which the recipient receives the income.

    4. Add part 1631 to read as follows: PART 1631—PURCHASING AND PROPERTY MANAGEMENT Subpart A—General Provisions Sec 1631.1 Purpose. 1631.2 Definitions. 1631.3 Prior approval process. 1631.4 Effective dates. 1631.5 Use of funds. 1631.6 Recipient policies, procedures, and recordkeeping. Subpart B—Procurement Policies and Procedures 1631.7 Characteristics of procurements. 1631.8 Procurement policies and procedures. 1631.9 Requests for prior approval. 1631.10 Applicability of part 1630. Subpart C—Personal Property Management 1631.11 Use of property in compliance with LSC's statutes and regulations. 1631.12 Intellectual property. 1631.13 Disposing of personal property purchased with LSC funds. 1631.14 Use of derivative income from sale of personal property purchased with LSC funds. Subpart D—Real Estate Acquisition and Capital Improvements 1631.15 Purchasing real property with LSC funds. 1631.16 Capital improvements. Subpart E—Real Estate Management 1631.17 Using real estate purchased with LSC funds. 1631.18 Maintenance. 1631.19 Insurance. 1631.20 Accounting and reporting to LSC. 1631.21 Disposing of real estate purchased with LSC funds. 1631.22 Retaining income from sale of real property purchased with LSC funds. Authority:

    42 U.S.C. 2996g(e).

    Subpart A—General Provisions
    § 1631.1 Purpose.

    The purpose of this part is to set standards for purchasing, leasing, using, and disposing of LSC-funded personal property and real estate and using LSC funds to contract for services.

    § 1631.2 Definitions.

    (a) Capital improvement means spending more than $25,000 of LSC funds to improve real estate through construction or the addition of fixtures that become an integral part of real estate.

    (b) LSC property interest agreement means a formal written agreement between the recipient and LSC establishing the terms of LSC's legal interest in real estate purchased with LSC funds.

    (c) Personal property means property other than real estate.

    (d) Purchase means buying personal property or real estate or contracting for services with LSC funds.

    (e) Quote means a quotation or bid from a potential source interested in selling or leasing property or providing services to a recipient.

    (f) Real estate means land, buildings (including capital improvements), and property interests in land and buildings (e.g., tenancies, life estates, remainders, reversions, easements), excluding moveable personal property.

    (g) Services means professional and consultant services rendered by persons who are members of a particular profession or possess a special skill and who are not officers or employees of an LSC recipient. Services includes, but is not limited to intangible products such as accounting, banking, cleaning, consultants, training, expert services, maintenance of equipment, and transportation. For purposes of this section, services do not include services provided by recipients to their employees as compensation in addition to regular salaries and wages, including but not limited to employee insurance, pensions, and unemployment benefit plans.

    (h) Source means a seller, supplier, vendor, or contractor who has agreed:

    (1) To sell or lease property to the recipient through a purchase or lease agreement; or

    (2) to provide services to the recipient through a contract.

    § 1631.3 Prior approval process.

    (a) LSC shall grant prior approval of a cost listed in § 1630.6(b) if the recipient has provided sufficient written information to demonstrate that the cost would be consistent with the standards and policies of this part. LSC may request additional information if necessary to make a decision on the recipient's request.

    (b)(1) For purchases or leases of personal property, contracts for services, and capital improvements, LSC will make a decision to approve or deny a request for prior approval within 30 days of receiving the request.

    (2) For purchases of real estate, LSC will make a decision within 60 days of receiving the request.

    (3) If LSC cannot make a decision whether to approve the request within the allotted time, it will provide the requester with a date by which it expects to make a decision.

    (c) If LSC denies a request for prior approval, LSC shall provide the recipient with a written explanation of the grounds for denying the request.

    (d) Exigent circumstances. (1) A recipient may use more than $25,000 of LSC funds to purchase personal property or award a contract for services without seeking LSC's prior approval if the purchase or contract is necessary;

    (i) to avoid imminent harm to the recipient's personnel, physical facilities, or systems; or

    (ii) to remediate or mitigate damage to the recipient's personnel, physical facilities or systems.

    (2) The recipient must provide LSC with a description of the exigent circumstances and the information described in paragraph (b) within a reasonable time after the circumstances necessitating the purchase or contract have ended.

    § 1631.4 Effective dates.

    (a) All provisions of this part apply to purchases and leases of personal property, contracts for services, and purchases of real estate made 90 days after the effective date of this rule.

    (b) Subparts A, C, and E become effective 90 days after the effective date for all personal property and real property leased or purchased by recipients using LSC funds prior to the effective date of this part.

    § 1631.5 Use of funds.

    When LSC receives funds from a disposition of property under this section, LSC will use those funds to make emergency and other special grants to recipients. LSC generally will make such grants to the same service area as the returned funds originally supported.

    § 1631.6 Recipient policies, procedures, and recordkeeping.

    Each recipient shall adopt written policies and procedures to guide its staff in complying with this part and shall maintain records sufficient to document the recipient's compliance with this part.

    Subpart B—Procurement Policies and Procedures
    § 1631.7 Characteristics of procurements.

    (a) Characteristics indicative of a procurement relationship between a recipient and another entity are when the other entity:

    (1) Provides the goods and services within its normal business operations;

    (2) Provides similar goods or services to many different purchasers;

    (3) Normally operates in a competitive environment;

    (4) Provides goods or services that are ancillary to the operation of the LSC grant; and

    (5) Is not subject to LSC's compliance requirements as a result of the agreement, though similar requirements may apply for other reasons.

    (b) In determining whether an agreement between a recipient and another entity constitutes a contract under this part or a subgrant under part 1627, the substance of the relationship is more important than the form of the agreement. All of the characteristics above may not be present in all cases, and a recipient must use judgment in classifying each agreement as a subgrant or a contract.

    § 1631.8 Procurement policies and procedures.

    Recipients must have written procurement policies and procedures. These policies must:

    (a) Identify competition thresholds that establish the basis (for example, price, risk level, or type of purchase) for the level of competition required at each threshold (for example, certification that a purchase reflects the best value to the recipient; a price comparison for alternatives that the recipient considered; or requests for information, quotes, or proposals);

    (b) Establish the grounds for non-competitive purchases;

    (c) Establish the level of documentation necessary to justify procurements. The level of documentation needed may be proportional to the nature of the purchase or tied to competition thresholds;

    (d) Establish internal controls that, at a minimum, provide for segregation of duties in the procurement process, identify which employees, officers, or directors who have authority to make purchases for the recipient, and identify procedures for approving purchases;

    (e) Establish procedures to ensure quality and cost control in purchasing, including procedures for selecting sources, fair and objective criteria for selecting sources; and

    (f) Establish procedures for identifying and preventing conflicts of interest in the purchasing process.

    § 1631.9 Requests for prior approval.

    (a) As required by § 1630.6 of this chapter and § 1631.3, a recipient using more than $25,000 of LSC funds to purchase or lease personal property or contract for services must request and receive LSC's prior approval.

    (b) A request for prior approval must include:

    (1) A statement explaining how the personal property or services will further the delivery of legal services to eligible clients; and

    (2) Documentation showing that the recipient followed its procurement policies and procedures in soliciting, reviewing, and approving the purchase, lease, or contract for services.

    § 1631.10 Applicability of part 1630.

    All purchases and leases of personal property and contracts for services made with LSC funds must comply with the provisions of 45 CFR part 1630 (Cost Standards and Procedures).

    Subpart C—Personal Property Management
    § 1631.11 Use of property in compliance with LSC's statutes and regulations.

    (a) A recipient may use personal property purchased or leased, in whole or in part, with LSC funds primarily to deliver legal services to eligible clients under the requirements of the LSC Act, applicable appropriations acts, and LSC regulations.

    (b) A recipient may use personal property purchased or leased, in whole or in part, with LSC funds for the performance of an LSC grant or contract for other activities, if such other activities do not interfere with the performance of the LSC grant or contract.

    (c) If a recipient uses personal property purchased or leased, in whole or in part, with LSC funds to provide services to an organization that engages in activity restricted by the LSC Act, LSC regulations, or other applicable law, the recipient must charge the organization a fee no less than that which private nonprofit organizations in the same area charge for the same services under similar conditions.

    § 1631.12 Intellectual property.

    Recipients may copyright any work that is subject to copyright and was developed, or for which ownership was obtained, under an LSC grant or contract, provided that LSC reserves a royalty-free, nonexclusive, and irrevocable license to reproduce, publish, or otherwise use work copyrighted by recipients, when the work is obtained in whole or in part with LSC funds.

    § 1631.13 Disposing of personal property purchased with LSC funds.

    (a) Disposal by LSC recipients. During the term of an LSC grant or contract, a recipient may dispose of personal property purchased with LSC funds by:

    (1) Trading in the personal property when it acquires replacement property;

    (2) Selling or otherwise disposing of the personal property with no further obligation to LSC when the fair market value of the personal property is negligible;

    (3) Selling the property at a reasonable negotiated price, without advertising for quotes, where the current fair market value of the personal property is $15,000 or less;

    (4) Selling the property after having advertised for and received quotes, where the current fair market value of the personal property exceeds $15,000;

    (5) Transferring the property to another recipient of LSC funds; or

    (6) With the approval of LSC, transferring the personal property to another nonprofit organization serving the poor in the same service area.

    (b) Disposal when no longer a recipient. When a recipient stops receiving LSC funds, it must obtain LSC's approval to dispose of personal property purchased with LSC funds in one of the following ways:

    (1) Transferring the property to another recipient of LSC funds, in which case the former recipient will be entitled to compensation in the amount of the percentage of the property's current fair market value that is equal to the percentage of the property's purchase cost borne by non-LSC funds;

    (2) Transferring the property to another nonprofit organization serving the poor in the same service area, in which case LSC will be entitled to compensation from the recipient for the percentage of the property's current fair market value that is equal to the percentage of the property's purchase cost borne by LSC funds;

    (3) Selling the property and retaining the proceeds from the sale after compensating LSC for the percentage of the property's current fair market value that is equal to the percentage of the property's purchase cost borne by LSC funds; or

    (4) Retaining the property, in which case LSC will be entitled to compensation from the recipient for the percentage of the property's current fair market value that is equal to that percentage of the property's purchase cost borne by LSC funds.

    (c) Disposal upon merger with or succession by another LSC recipient. When a recipient stops receiving LSC funds because it merged with or is succeeded by another grantee, the recipient may transfer the property to the new recipient, if the two entities execute an LSC-approved successor in interest agreement that requires the new recipient to use the property primarily to provide legal services to eligible clients under the requirements of the LSC Act, applicable appropriations acts, and LSC regulations.

    (d) Prohibition. A recipient may not dispose of personal property by sale, donation, or other transfer of the property to its board members or employees.

    § 1631.14 Use of derivative income from sale of personal property purchased with LSC funds.

    (a) During the term of an LSC grant or contract, a recipient may retain and use income from any sale of personal property purchased with LSC funds according to 45 CFR 1630.16 (Cost Standards and Procedures: Applicability to derivative income.) and 45 CFR 1628.3 (Recipient Fund Balances: Policy.).

    (b) The recipient must account for income earned from the sale, rent, or lease of personal property purchased with LSC funds according to the requirements of 45 CFR 1630.16.

    Subpart D—Real Estate Acquisition and Capital Improvements
    § 1631.15 Purchasing real property with LSC funds.

    (a) Pre-purchase planning requirements. (1) Before purchasing real property with LSC funds, a recipient must conduct an informal market survey and evaluate at least three potential equivalent properties.

    (2) When a recipient evaluates potential properties, it must consider:

    (i) The average annual cost of the purchase, including the costs of a down payment, interest and principal payments on a mortgage financing the purchase; closing costs; renovation costs; and the costs of utilities, maintenance, and taxes, if any;

    (ii) The estimated total costs of buying and using the property throughout the mortgage term compared to the estimated total costs of leasing and using a similar property over the same period of time;

    (iii) The property's quality; and

    (iv) Whether the property is conducive to delivering legal services (e.g. property is accessible to the client population (ADA compliant) and near public transportation, courts, and other government or social services agencies).

    (3) If a recipient cannot evaluate three potential properties, it must be able to explain why such evaluation was not possible.

    (b) Prior approval. Before a recipient may purchase real property with LSC funds, LSC must approve the purchase as required by 45 CFR 1630.6 and 1631.3. The request for approval must be in writing and include:

    (1) A statement of need explaining how the purchase will further the delivery of legal services to eligible clients, including:

    (i) The information obtained and considered in paragraph (a);

    (ii) Trends in funding and program staffing levels in relation to space needs;

    (iii) Why the recipient needs to purchase real property; and

    (iv) Why purchasing real estate is reasonable and necessary to performing the LSC grant.

    (2) A brief analysis comparing:

    (i) The estimated average annual cost of the purchase including the costs of a down payment, interest and principal payments on a mortgage financing the purchase; closing costs; renovation costs; and the costs of utilities, maintenance, and taxes, if any; and

    (ii) The estimated average annual cost of leasing or purchasing similar property over the same period of time;

    (3) Anticipated financing of the purchase, including:

    (i) The estimated total acquisition costs, including capital improvements, taxes, recordation fees, maintenance costs, insurance costs, and closing costs;

    (ii) The anticipated breakdown of LSC funds and non-LSC funds to be applied toward the total costs of the purchase;

    (iii) The monthly amount of principal and interest payments on debt secured to finance the purchase, if any;

    (4) A current, independent appraisal sufficient to secure a mortgage;

    (5) A comparison of available loan terms considered by the recipient before selecting the chosen financing method;

    (6) Board approval of the purchase in either a board resolution or board minutes, including Board approvals that are contingent on LSC's approval;

    (7) Whether the property will replace or supplement existing program offices;

    (8) A statement of handicapped accessibility for the disabled sufficient to meet the requirements of 45 CFR 1624.5 or a statement that the property will be accessible upon the completion of any necessary capital improvements. Such improvements must be completed within 60 days of the date of purchase; and

    (9) A copy of a purchase agreement, contract, or other document containing a description of the property and the terms of the purchase.

    (c) Property interest agreement. Once LSC approves the purchase, the recipient must enter into a written property interest agreement with LSC. The agreement must include:

    (1) The recipient's agreement to use the property consistent with § 1631.16;

    (2) The recipient's agreement to record, under appropriate state law, LSC's interest in the property;

    (3) The recipient's agreement not to encumber the property without prior LSC approval; and

    (4) The recipient's agreement not to dispose of the property without prior LSC approval.

    § 1631.16 Capital improvements.

    (a) As required by § 1630.6 of this chapter and § 1631.3, a recipient must obtain LSC's prior written approval before using more than $25,000 LSC funds to make capital improvements to real estate.

    (b) The written request must include:

    (1) A statement of need explaining how the improvement will further the delivery of legal services to eligible clients;

    (2) A brief description of the nature of the work to be done, the name of the sources performing the work, and the total expected cost of the improvement; and

    (3) Documentation showing that the recipient followed its procurement policies and procedures in competing, selecting, and awarding contracts to perform the work.

    (c) A recipient must maintain supporting documentation to accurately identify and account for any use of LSC funds to make capital improvements to real estate owned by the recipient.

    Subpart E—Real Estate Management
    § 1631.17 Using real estate purchased with LSC funds.

    (a) A recipient must use real estate purchased or leased, in whole or part, with LSC funds primarily to deliver legal services to eligible clients consistent with the requirements of the LSC Act, applicable appropriations acts, and LSC regulations.

    (b) A recipient may use real estate purchased or leased, in whole or part, with LSC funds for the performance of an LSC grant or contract for other activities, if they do not interfere with the performance of the LSC grant or contract.

    (c) If a recipient uses real estate purchased or leased, in whole or part, with LSC funds to provide space to an organization that engages in activity restricted by the LSC Act, applicable appropriations acts, LSC regulations, or other applicable law, the recipient must charge the organization rent no less than that which private nonprofit organizations in the same area charge for the same amount of space under similar conditions.

    § 1631.18 Maintenance.

    A recipient must maintain real estate acquired with LSC funds:

    (a) In an efficient operating condition; and

    (b) In compliance with state and local government property standards and building codes.

    § 1631.19 Insurance.

    At the time of purchase, a recipient must obtain insurance coverage for real estate purchased with LSC funds which is not lower in value than coverage it has obtained for other real property it owns and which provides at least the following coverage:

    (a) Title insurance that:

    (1) Insures the fee interest in the property for an amount not less than the full appraised value as approved by LSC, or the amount of the purchase price, whichever is greater; and

    (2) Contains an endorsement identifying LSC as a loss payee to be reimbursed if the title fails.

    (3) If no endorsement naming LSC as loss payee is made, the recipient must pay LSC the title insurance proceeds it receives in the event of a failure.

    (b) A physical destruction insurance policy, including flood insurance where appropriate, which insures the full replacement value of the facility from risk of partial and total physical destructions. The recipient must maintain this policy for the period of time that the recipient owns the real estate.

    § 1631.20 Accounting and reporting to LSC.

    A recipient must maintain an accounting of the amount of LSC funds relating to the purchase or maintenance of real estate purchased with LSC funds. The accounting must include the amount of LSC funds used to pay for acquisition costs, financing, and capital improvements. The recipient must provide the accounting for each year to LSC no later than April 30 of the following year or in its annual audited financial statements submitted to LSC.

    § 1631.21 Disposing of real estate purchased with LSC funds.

    (a) Disposal by LSC recipients. During the term of an LSC grant or contract, a recipient must seek LSC's prior written approval to dispose of real estate purchased with LSC funds by:

    (1) Selling the property after having advertised for and received offers; or

    (2) Transferring the property to another recipient of LSC funds, in which case the recipient may be compensated by the recipient receiving the property for the percentage of the property's current fair market value that is equal to the percentage of the costs of the original acquisition and costs of any capital improvements borne by non-LSC funds.

    (b) Disposal after a recipient no longer receives LSC funding. When a recipient who owns real estate purchased with LSC funds stops receiving LSC funds, it must seek LSC's prior written approval to dispose of the property in one of the following ways:

    (1) Transfer the property title to another grantee of LSC funds, in which case the recipient may be compensated the percentage of the property's current fair market value that is equal to the percentage of the costs of the original acquisition and costs of any capital improvements by non-LSC funds;

    (2) Buyout LSC's interest in the property (i.e., pay LSC the percentage of the property's current fair market value proportional to its percent interest in the property); or

    (3) Sell the property to a third party and pay LSC a share of the sale proceeds proportional to its interest in the property, after deducting actual and reasonable closing costs, if any.

    (4) When a recipient stops receiving LSC funds because it merged with or is succeeded by another recipient, it may transfer the property to the new recipient. The two entities must execute an LSC-approved successor in interest agreement that requires the transferee to use the property primarily to provide legal services to eligible clients under the requirements of the LSC Act, applicable appropriations acts, and LSC regulations.

    (c) Prior approval process. No later than 60 days before a recipient or former recipient proposes to dispose of real estate purchased with LSC funds, the recipient or former recipients must submit a written request for prior approval to dispose of the property to LSC. The request must include:

    (1) The proposed method of disposition and an explanation of why the proposed method is in the best interests of LSC and the recipient;

    (2) Documentation showing the fair market value of the property at the time of transfer or sale, including, but not limited to, an independent appraisal of the property and competing bona fide offers to purchase the property;

    (3) A description of the recipient's process for advertising the property for sale and receiving offers;

    (4) An accounting of all LSC funds used in the acquisition and any capital improvements of the property. The accounting must include the amount of LSC funds used to pay for acquisition costs, financing, and capital improvements; and

    (5) Information on the proposed transferee or buyer of the property and a document evidencing the terms of transfer or sale.

    § 1631.22 Retaining income from sale of real property purchased with LSC funds.

    (a) During the term of an LSC grant or contract, a recipient may retain and use income from any sale of real property purchased with LSC funds according to §§ 1630.16 and 1628.3 of this chapter.

    (b) The recipient must account for income earned from the sale, rent, or lease of real or personal property purchased with LSC funds according to the requirements of § 1630.16 of this chapter.

    Dated: October 20, 2016. Stefanie K. Davis, Assistant General Counsel.
    [FR Doc. 2016-25831 Filed 10-27-16; 8:45 am] BILLING CODE 7050-01-P
    FEDERAL COMMUNICATIONS COMMISSION 47 CFR Part 73 [GN Docket No. 12-268; MB Docket No. 16-306; DA 16-1164] Media Bureau Seeks Comment on Updates to Catalog of Reimbursement Expenses AGENCY:

    Federal Communications Commission.

    ACTION:

    Proposed rule; request for comment.

    SUMMARY:

    In this document the Media Bureau of the Federal Communications Commission (Commission) seeks comment on updates to the catalog of eligible reimbursement expenses (Catalog) which contains costs for equipment and services that broadcasters and multichannel-video-programming-distributors (MVPDs) may incur as a result of the post-incentive auction repack and channel reassignment. In order to disburse money from the $1.75 billion TV Broadcaster Relocation Fund in accordance with the Spectrum Act and the Incentive Auction Report and Order, the Media Bureau seeks comment on changes to the Catalog, which include: Increases to the baseline costs previously proposed, the addition of new categories of reimbursement expenses, and the removal of other categories of expenses due to discontinuance or technological advancements. The Media Bureau also seeks comment on a proposed economic methodology for adjusting the baseline costs listed in the Catalog annually throughout the three-year reimbursement period.

    DATES:

    Comments are due on November 14, 2016. Reply Comments are due on November 29, 2016.

    ADDRESSES:

    All filings must be addressed to the Commission's Secretary, Office of the Secretary, Federal Communications Commission, 445 12th Street SW., Washington, DC 20554. Commercial overnight mail (other than U.S. Postal Service Express Mail and Priority Mail) must be sent to 9300 East Hampton Drive, Capitol Heights, MD 20743. U.S. Postal Service first-class, Express, and Priority mail must be addressed to 445 12th Street SW., Washington DC 20554.

    FOR FURTHER INFORMATION CONTACT:

    Pamela Gallant, 202-418-0614, or Raphael Sznajder, 202-418-1648, of the Media Bureau, Video Division.

    SUPPLEMENTARY INFORMATION:

    With the assistance of a third-party contractor, Widelity, Inc., and based on the record to date, the Media Bureau has developed and now updated the catalog of eligible reimbursement expenses (Catalog) for reimbursement-eligible entities to use as a guide. The Catalog is not intended to be a definitive list of all reimbursable expenses, but, rather, as a means of facilitating the process for reimbursement-eligible entities to claim reimbursement during the post-incentive auction repacking. This Public Notice (available at: http://transition.fcc.gov/Daily_Releases/Daily_Business/2016/db1013/DA-16-1164A1.pdf), seeks comment not only on the updated categories and prices for the reimbursement expenses listed, but also on the proposed economic methodology that the Media Bureau will employ to update the prices in the Catalog throughout the three-year reimbursement period. The Media Bureau proposes to modify the baseline costs contained in the Catalog annually based upon the Producer Price Indexes (PPI) annual average, specifically the WPUFD4 series, as calculated by the Bureau of Labor Statistics, and seeks comment on its proposal to do so. After considering the comments received, the Catalog the Media Bureau adopts will be embedded in the on-line Reimbursement Form, FCC Form 2100, Schedule 399, which will be used by entities seeking reimbursement to file estimated costs and reimbursement claims for actual costs incurred. The record obtained in response to this Public Notice will allow the Media Bureau to adopt an updated Catalog, reflecting current baseline costs for listed reimbursement expenses, and to determine the methodology it will use to adjust the listed expenses in the Catalog during throughout the reimbursement period. After considering the comments filed in connection with the updated Catalog and our proposed economic methodology for adjusting the baseline costs, we will finalize the Catalog and the Reimbursement Form. Thereafter, we will resubmit the Reimbursement Form to the Office of Management and Budget (OMB) for approval under the Paperwork Reduction Act (PRA) of the changes resulting from the modifications to the Catalog, as well as other minor modifications to the Reimbursement Form that are designed to assist filers in describing their claims. The public will have an opportunity to comment on the incremental data collections contained in the finalized Reimbursement Form, as required by the PRA, after we receive comments in response to the updated Catalog, and the finalized Reimbursement Form is submitted to OMB for approval under the PRA. This is a summary of the FCC's document GN Docket No. 12-268; MB Docket No. 16-306; DA 16-1164 (released October 13, 2016). The full text of this document is available for inspection and copying during normal business hours in the FCC Reference Center (Room CY-A257), 445 12th Street SW., Washington, DC 20554.

    Federal Communications Commission. Barbara A. Kreisman, Chief, Video Division, Media Bureau.
    [FR Doc. 2016-26059 Filed 10-27-16; 8:45 am] BILLING CODE 6712-01-P
    81 209 Friday, October 28, 2016 Notices DEPARTMENT OF AGRICULTURE Submission for OMB Review; Comment Request October 25, 2016.

    The Department of Agriculture has submitted the following information collection requirement(s) to OMB for review and clearance under the Paperwork Reduction Act of 1995, Public Law 104-13. Comments are requested regarding (1) whether the collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility; (2) the accuracy of the agency's estimate of burden including the validity of the methodology and assumptions used; (3) ways to enhance the quality, utility and clarity of the information to be collected; and (4) ways to minimize the burden of the collection of information on those who are to respond, including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques or other forms of information technology.

    Comments regarding this information collection received by November 28, 2016 will be considered. Written comments should be addressed to: Desk Officer for Agriculture, Office of Information and Regulatory Affairs, Office of Management and Budget (OMB), New Executive Office Building, 725 17th Street NW., Washington, DC 20502. Commenters are encouraged to submit their comments to OMB via email to: [email protected] or fax (202) 395-5806 and to Departmental Clearance Office, USDA, OCIO, Mail Stop 7602, Washington, DC 20250-7602. Copies of the submission(s) may be obtained by calling (202) 720-8958.

    An agency may not conduct or sponsor a collection of information unless the collection of information displays a currently valid OMB control number and the agency informs potential persons who are to respond to the collection of information that such persons are not required to respond to the collection of information unless it displays a currently valid OMB control number.

    Office of Advocacy and Outreach

    Title: USDA Minority Farm Register.

    OMB Control Number: 0508-0005.

    Summary of Collection: The Minority Farm Register is a voluntary register of minority farm and ranch operators, landowners, tenants, and others with an interest in farming or agriculture. The Register will promote equity among minority farmers. The collected information is a tool to promote equal access to USDA Farm programs and services for minority farmers and ranchers with agricultural interests. The authority for the collection of this information can be found in Section 10707 of the Farm Security and Rural Investment Act of 2002 (Pub. L. 107-171) (7 U.S.C. 2279(a) (4) (b)).

    Need and Use of the Information: The Office of Advocacy and Outreach (OAO) will collect the name, address, phone number, farm location, race, ethnicity, gender and signature on the Minority Farm Register permission form, AD-2035. The OAO uses the collected information to better inform minority farmers about U.S. Department of Agriculture programs and services.

    Description of Respondents: Individuals or households.

    Number of Respondents: 5,000.

    Frequency of Responses: Reporting: Other (once).

    Total Burden Hours: 4,667.

    Ruth Brown, Departmental Information Collection Clearance Officer.
    [FR Doc. 2016-26076 Filed 10-27-16; 8:45 am] BILLING CODE 3412-88-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-523-812] Circular Welded Carbon-Quality Steel Pipe From the Sultanate of Oman: Final Determination of Sales at Less Than Fair Value AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the Department) determines that circular welded carbon-quality steel pipe (CWP) from the Sultanate of Oman (Oman) is being, or is likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is October 1, 2014, through September 30, 2015. The final weighted-average dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Katherine Johnson or Aqmar Rahman, AD/CVD Operations, Office VIII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-4929 and (202) 482-0768, respectively.

    SUPPLEMENTARY INFORMATION: Background

    On June 8, 2016, the Department published the Preliminary Determination. 1 A summary of the events that occurred since the Department published the Preliminary Determination, as well as a full discussion of the issues raised by parties for this final determination, may be found in the Issues and Decision Memorandum, which is incorporated by reference and hereby adopted by this notice.2

    1See Circular Welded Carbon-Quality Steel Pipe From the Sultanate of Oman: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 FR 36871 (June 8, 2016) (Preliminary Determination).

    2See Memorandum to Ronald K. Lorentzen, “Issues and Decision Memorandum for the Final Affirmative Determination in the Less-Than-Fair-Value Investigation of Circular Welded Carbon-Quality Steel Pipe From the Sultanate of Oman,” dated concurrently with this notice (Issues and Decision Memorandum).

    Scope of the Investigation

    The scope of the investigation covers CWP from Oman. For a complete description of the scope of the investigation, see Appendix I.

    Scope Comments

    In the Preliminary Determination, the Department set aside a period of time for parties to address scope issues in case briefs or other written comments on scope issues. No interested parties submitted scope comments in case or rebuttal briefs; therefore, for this final determination, the scope of this investigation remains unchanged from that published in the Preliminary Determination.

    Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Issues and Decision Memorandum. A list of the issues raised is attached to this notice as Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov and it is available to all parties in the Central Records Unit, Room B-8024 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 and electronic versions of the Issues and Decision Memorandum are identical in content.

    Verification

    As provided in section 782(i) of the the Tariff Act of 1930, as amended (the Act), in July and August 2016, we conducted verification of the sales and cost information submitted by Al Jazeera Steel Products Co. SAOG (Al Jazeera) for use in our final determination. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by Al Jazeera.3

    3 For discussion of our verification findings, see the following memoranda: Memorandum to the File from Katherine Johnson, Aqmar Rahman and Jesus Saenz, “Verification of the Sales Responses of Al Jazeera Steel Products Co. SAOG in the Antidumping Duty Investigation of Circular Welded Carbon-Quality Steel Pipe from the Sultanate of Oman,” dated August 31, 2016; and Memorandum to the File from Robert B. Greger, “Verification of Al Jazeera Steel Products Co. SAOG in the Antidumping Duty Investigation of Circular Welded Carbon-Quality Steel Pipe from the Sultanate of Oman,” dated August 22, 2016.

    Changes Since the Preliminary Determination

    Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for Al Jazeera since the Preliminary Determination. For a discussion of these changes, see the Issues and Decision Memorandum.

    Final Determination

    The final weighted-average dumping margins are as follows:

    Exporter/Manufacturer Weighted-average dumping margin
  • (percent)
  • Al Jazeera Steel Products Co. SAOG 7.24 All-Others 7.24
    All-Others Rate

    Consistent with section 735(c)(5) of the Act, the Department also calculated an estimated all-others rate. Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins determined entirely under section 776 of the Act. In this investigation, the “All-Others” rate is based on the weighted-average dumping margin calculated for Al Jazeera, the only company individually examined and for which the Department calculated a rate.4

    4See section 735(c)(5)(A) of the Act.

    Disclosure

    We will disclose the calculations performed to interested parties in this proceeding within five days of the public announcement of this final determination in accordance with 19 CFR 351.224(b).

    Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all appropriate entries of CWP from Oman, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after June 8, 2016, the date of publication of the Preliminary Determination of this investigation in the Federal Register.

    International Trade Commission (ITC) Notification

    In accordance with section 735(d) of the Act, we will notify the ITC of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of CWP from Oman no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

    Notification Regarding Administrative Protective Orders (APO)

    This notice serves as a reminder to parties subject to APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely 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 the terms of an APO is a sanctionable violation.

    This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I Scope of the Investigation

    This investigation covers welded carbon-quality steel pipes and tube, of circular cross-section, with an outside diameter (O.D.) not more than nominal 16 inches (406.4 mm), regardless of wall thickness, surface finish (e.g., black, galvanized, or painted), end finish (plain end, beveled end, grooved, threaded, or threaded and coupled), or industry specification (e.g., American Society for Testing and Materials International (ASTM), proprietary, or other), generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe (although subject product may also be referred to as mechanical tubing). Specifically, the term “carbon quality” includes products in which:

    (a) Iron predominates, by weight, over each of the other contained elements;

    (b) the carbon content is 2 percent or less, by weight; and

    (c) none of the elements listed below exceeds the quantity, by weight, as indicated:

    (i) 1.80 percent of manganese;

    (ii) 2.25 percent of silicon;

    (iii) 1.00 percent of copper;

    (iv) 0.50 percent of aluminum;

    (v) 1.25 percent of chromium;

    (vi) 0.30 percent of cobalt;

    (vii) 0.40 percent of lead;

    (viii) 1.25 percent of nickel;

    (ix) 0.30 percent of tungsten;

    (x) 0.15 percent of molybdenum;

    (xi) 0.10 percent of niobium;

    (xii) 0.41 percent of titanium;

    (xiii) 0.15 percent of vanadium; or

    (xiv) 0.15 percent of zirconium.

    Covered products are generally made to standard O.D. and wall thickness combinations. Pipe multi-stenciled to a standard and/or structural specification and to other specifications, such as American Petroleum Institute (API) API-5L specification, may also be covered by the scope of these investigations. In particular, such multi-stenciled merchandise is covered when it meets the physical description set forth above, and also has one or more of the following characteristics: Is 32 feet in length or less; is less than 2.0 inches (50 mm) in outside diameter; has a galvanized and/or painted (e.g., polyester coated) surface finish; or has a threaded and/or coupled end finish.

    Standard pipe is ordinarily made to ASTM specifications A53, A135, and A795, but can also be made to other specifications. Structural pipe is made primarily to ASTM specifications A252 and A500. Standard and structural pipe may also be produced to proprietary specifications rather than to industry specifications.

    Sprinkler pipe is designed for sprinkler fire suppression systems and may be made to industry specifications such as ASTM A53 or to proprietary specifications.

    Fence tubing is included in the scope regardless of certification to a specification listed in the exclusions below, and can also be made to the ASTM A513 specification. Products that meet the physical description set forth above but are made to the following nominal outside diameter and wall thickness combinations, which are recognized by the industry as typical for fence tubing, are included despite being certified to ASTM mechanical tubing specifications:

    O.D. in
  • inches
  • (nominal)
  • Wall
  • thickness
  • in inches
  • (nominal)
  • Gage
    1.315 0.035 20 1.315 0.047 18 1.315 0.055 17 1.315 0.065 16 1.315 0.072 15 1.315 0.083 14 1.315 0.095 13 1.660 0.055 17 1.660 0.065 16 1.660 0.083 14 1.660 0.095 13 1.660 0.109 12 1.900 0.047 18 1.900 0.055 17 1.900 0.065 16 1.900 0.072 15 1.900 0.095 13 1.900 0.109 12 2.375 0.047 18 2.375 0.055 17 2.375 0.065 16 2.375 0.072 15 2.375 0.095 13 2.375 0.109 12 2.375 0.120 11 2.875 0.109 12 2.875 0.165 8 3.500 0.109 12 3.500 0.165 8 4.000 0.148 9 4.000 0.165 8 4.500 0.203 7

    The scope of this investigation does not include:

    (a) Pipe suitable for use in boilers, superheaters, heat exchangers, refining furnaces and feedwater heaters, whether or not cold drawn, which are defined by standards such as ASTM A178 or ASTM A192;

    (b) finished electrical conduit, i.e., Electrical Rigid Steel Conduit (also known as Electrical Rigid Metal Conduit and Electrical Rigid Metal Steel Conduit), Finished Electrical Metallic Tubing, and Electrical Intermediate Metal Conduit, which are defined by specifications such as American National Standard (ANSI) C80.1-2005, ANSI C80.3-2005, or ANSI C80.6-2005, and Underwriters Laboratories Inc. (UL) UL-6, UL-797, or UL-1242;

    (c) finished scaffolding, i.e., component parts of final, finished scaffolding that enter the United States unassembled as a “kit.” A kit is understood to mean a packaged combination of component parts that contains, at the time of importation, all of the necessary component parts to fully assemble final, finished scaffolding;

    (d) tube and pipe hollows for redrawing;

    (e) oil country tubular goods produced to API specifications;

    (f) line pipe produced to only API specifications, such as API 5L, and not multi-stenciled; and

    (g) mechanical tubing, whether or not cold-drawn, other than what is included in the above paragraphs.

    The products subject to this investigation are currently classifiable in Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting numbers 7306.19.1010, 7306.19.1050, 7306.19.5110, 7306.19.5150, 7306.30.1000, 7306.30.5015, 7306.30.5020, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, 7306.30.5090, 7306.50.1000, 7306.50.5030, 7306.50.5050, and 7306.50.5070. The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.

    Appendix II List of Topics Discussed in the Issues and Decision Memorandum I. Summary II. Background III. Scope of the Investigation IV. Margin Calculations V. Discussion of Issues 1. Al Jazeera's Reported System Weights 2. Al Jazeera's Pipe Coating Reporting 3. Returned Sales in the Home Market Sales Database 4. Reported Production Quantities 5. Weighted-Average Costs 6. General & Administrative Expense Ratio
    [FR Doc. 2016-26108 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-535-903] Circular Welded Carbon-Quality Steel Pipe From Pakistan: Final Affirmative Determination of Sales at Less Than Fair Value AGENCY:

    Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce.

    SUMMARY:

    The U.S. Department of Commerce (the Department) determines that circular welded carbon-quality steel pipe (circular welded pipe) from Pakistan is being, or is likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is October 1, 2014, through September 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    David Lindgren, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-3870.

    SUPPLEMENTARY INFORMATION:

    Background

    On June 8, 2016, the Department published the Preliminary Determination. 1 We invited interested parties to submit comments on the Preliminary Determination, but we received no comments. Additionally, no party requested a hearing.

    1See Circular Welded Carbon-Quality Steel Pipe From Pakistan: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination and Extension of Provisional Measures, 81 FR 36867 (June 8, 2016) (Preliminary Determination).

    Scope of the Investigation

    The scope of the investigation covers circular welded pipe from Pakistan. For a complete description of the scope of this investigation, see Appendix I.

    Analysis of Comments Received

    As noted above, we received no comments since the publication of the Preliminary Determination.

    Changes Since the Preliminary Determination and Use of Adverse Facts Available

    As stated in the Preliminary Determination, we found that the sole mandatory respondent, International Industries Limited (IIL) did not cooperate to the best of its ability and, accordingly we determined it appropriate to apply facts otherwise available with adverse inferences in accordance with section 776(a)-(b) of the Tariff Act of 1930, as amended (the Act). For the purposes of this final determination, the Department has made no changes to the Preliminary Determination.

    All-Others Rate

    As discussed in the Preliminary Determination, in accordance with section 735(c)(5)(B) of the Act, the Department based the selection of the “All-Others” rate on the petition rate of 11.80 percent. We have made no changes to the selection of this rate for this final determination.

    Final Determination

    The final weighted-average dumping margins are as follows:

    Exporter/
  • Producer
  • Weighted-
  • average
  • margin (percent)
  • International Industries Limited 11.80. All-Others 11.80.
    Disclosure

    The weighted-average dumping margin assigned to IIL in the Preliminary Determination was based on adverse facts available. As we have made no changes to the margin since the Preliminary Determination, no disclosure of calculations is necessary for this final determination.

    Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all appropriate entries of circular welded pipe from Pakistan, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after June 8, 2016, the date of publication of the Preliminary Determination.

    Further, CBP will instruct CBP to require a cash deposit equal to the estimated amount by which the normal value exceeds the U.S. price as shown above. Where the subject merchandise under investigation is also subject to a concurrent countervailing duty (CVD) investigation, we normally instruct CBP to require a cash deposit less the amount of any countervailing duties determined to be export subsidies.2 In the concurrent CVD investigation in this case, the Department did not determine any of the countervailable subsidies to be export subsidies. Accordingly, in the event that a CVD order is issued and suspension of liquidation is resumed in the companion CVD investigation, the Department will make no adjustment to the cash deposit rate to account for export subsidies.

    2See, e.g., Notice of Final Determination of Sales at Less Than Fair Value: Carbazole Violet Pigment 23 From India, 69 FR 67306, 67307 (November 17, 2004); and Notice of Final Determination of Sales at Less Than Fair Value and Negative Critical Circumstances Determination: Bottom Mount Combination Refrigerator-Freezers From the Republic of Korea, 77 FR 17413 (March 26, 2012).

    International Trade Commission Notification

    In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury by reason of imports of circular welded pipe from Pakistan no later than 45 days after this final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

    Notification Regarding Administrative Protective Orders

    This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely notification of the return of destruction of APO materials, or conversion to judicial protective order, is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

    This determination is issued and published in accordance with sections 735(d) and 777(i)(1) of the Act.

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I Scope of the Investigation

    This investigation covers welded carbon-quality steel pipes and tube, of circular cross-section, with an outside diameter (O.D.) not more than nominal 16 inches (406.4 mm), regardless of wall thickness, surface finish (e.g., black, galvanized, or painted), end finish (plain end, beveled end, grooved, threaded, or threaded and coupled), or industry specification (e.g., American Society for Testing and Materials International (ASTM), proprietary, or other), generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe (although subject product may also be referred to as mechanical tubing). Specifically, the term “carbon quality” includes products in which:

    (a) Iron predominates, by weight, over each of the other contained elements;

    (b) the carbon content is 2 percent or less, by weight; and

    (c) none of the elements listed below exceeds the quantity, by weight, as indicated:

    (i) 1.80 percent of manganese;

    (ii) 2.25 percent of silicon;

    (iii) 1.00 percent of copper;

    (iv) 0.50 percent of aluminum;

    (v) 1.25 percent of chromium;

    (vi) 0.30 percent of cobalt;

    (vii) 0.40 percent of lead;

    (viii) 1.25 percent of nickel;

    (ix) 0.30 percent of tungsten;

    (x) 0.15 percent of molybdenum;

    (xi) 0.10 percent of niobium;

    (xii) 0.41 percent of titanium;

    (xiii) 0.15 percent of vanadium; or

    (xiv) 0.15 percent of zirconium.

    Covered products are generally made to standard O.D. and wall thickness combinations. Pipe multi-stenciled to a standard and/or structural specification and to other specifications, such as American Petroleum Institute (API) API-5L specification, may also be covered by the scope of these investigations. In particular, such multi-stenciled merchandise is covered when it meets the physical description set forth above, and also has one or more of the following characteristics: Is 32 feet in length or less; is less than 2.0 inches (50 mm) in outside diameter; has a galvanized and/or painted (e.g., polyester coated) surface finish; or has a threaded and/or coupled end finish.

    Standard pipe is ordinarily made to ASTM specifications A53, A135, and A795, but can also be made to other specifications. Structural pipe is made primarily to ASTM specifications A252 and A500. Standard and structural pipe may also be produced to proprietary specifications rather than to industry specifications.

    Sprinkler pipe is designed for sprinkler fire suppression systems and may be made to industry specifications such as ASTM A53 or to proprietary specifications.

    Fence tubing is included in the scope regardless of certification to a specification listed in the exclusions below, and can also be made to the ASTM A513 specification. Products that meet the physical description set forth above but are made to the following nominal outside diameter and wall thickness combinations, which are recognized by the industry as typical for fence tubing, are included despite being certified to ASTM mechanical tubing specifications:

    O.D. in
  • inches
  • (nominal)
  • Wall
  • thickness
  • in inches
  • (nominal)
  • Gage
    1.315 0.035 20 1.315 0.047 18 1.315 0.055 17 1.315 0.065 16 1.315 0.072 15 1.315 0.083 14 1.315 0.095 13 1.660 0.055 17 1.660 0.065 16 1.660 0.083 14 1.660 0.095 13 1.660 0.109 12 1.900 0.047 18 1.900 0.055 17 1.900 0.065 16 1.900 0.072 15 1.900 0.095 13 1.900 0.109 12 2.375 0.047 18 2.375 0.055 17 2.375 0.065 16 2.375 0.072 15 2.375 0.095 13 2.375 0.109 12 2.375 0.120 11 2.875 0.109 12 2.875 0.165 8 3.500 0.109 12 3.500 0.165 8 4.000 0.148 9 4.000 0.165 8 4.500 0.203 7

    The scope of this investigation does not include:

    (a) Pipe suitable for use in boilers, superheaters, heat exchangers, refining furnaces and feedwater heaters, whether or not cold drawn, which are defined by standards such as ASTM A178 or ASTM A192;

    (b) finished electrical conduit, i.e., Electrical Rigid Steel Conduit (also known as Electrical Rigid Metal Conduit and Electrical Rigid Metal Steel Conduit), Finished Electrical Metallic Tubing, and Electrical Intermediate Metal Conduit, which are defined by specifications such as American National Standard (ANSI) C80.1-2005, ANSI C80.3-2005, or ANSI C80.6-2005, and Underwriters Laboratories Inc. (UL) UL-6, UL-797, or UL-1242;

    (c) finished scaffolding, i.e., component parts of final, finished scaffolding that enter the United States unassembled as a “kit.” A kit is understood to mean a packaged combination of component parts that contains, at the time of importation, all of the necessary component parts to fully assemble final, finished scaffolding;

    (d) tube and pipe hollows for redrawing;

    (e) oil country tubular goods produced to API specifications;

    (f) line pipe produced to only API specifications, such as API 5L, and not multi-stenciled; and

    (g) mechanical tubing, whether or not cold-drawn, other than what is included in the above paragraphs.

    The products subject to this investigation are currently classifiable in Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting numbers 7306.19.1010, 7306.19.1050, 7306.19.5110, 7306.19.5150, 7306.30.1000, 7306.30.5015, 7306.30.5020, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, 7306.30.5090, 7306.50.1000, 7306.50.5030, 7306.50.5050, and 7306.50.5070. The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.

    [FR Doc. 2016-26113 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-520-807] Circular Welded Carbon-Quality Steel Pipe From the United Arab Emirates: Final Determination of Sales at Less Than Fair Value AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce

    SUMMARY:

    The Department of Commerce (the Department) determines that circular welded carbon-quality steel pipe (CWP) from the United Arab Emirates (UAE) is being, or is likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is October 1, 2014, through September 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Blaine Wiltse or Manuel Rey, AD/CVD Operations, Office II, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-6345 and (202) 482-5518, respectively.

    SUPPLEMENTARY INFORMATION:

    Background

    On June 8, 2016, the Department published the Preliminary Determination.1 A summary of the events that occurred since the Department published the Preliminary Determination, as well as a full discussion of the issues raised by parties for this final determination, may be found in the Issues and Decision Memorandum, which is hereby adopted by this notice.2

    1See Circular Welded Carbon-Quality Steel Pipe From the United Arab Emirates: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 FR 36881 (June 8, 2016) (Preliminary Determination).

    2See Memorandum to Ronald K. Lorentzen, “Issues and Decision Memorandum for the Final Affirmative Determination in the Less-Than-Fair-Value Investigation of Circular Welded Carbon-Quality Steel Pipe From the United Arab Emirates,” dated concurrently with this notice (Issues and Decision Memorandum).

    Scope of the Investigation

    The scope of the investigation covers CWP from the UAE. For a complete description of the scope of the investigation, see Appendix I.

    Scope Comments

    In the Preliminary Determination, the Department set aside a period of time for parties to address scope issues in case briefs or other written comments on scope issues. No interested parties submitted scope comments in case or rebuttal briefs; therefore, for this final determination, the scope of this investigation remains unchanged from that published in the Preliminary Determination.

    Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Issues and Decision Memorandum. A list of the issues raised is attached to this notice as Appendix II. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov and it is available to all parties in the Central Records Unit, room B-8024 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 and electronic versions of the Issues and Decision Memorandum are identical in content.

    Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in June, July, and August 2016, we conducted verification of the sales and cost information submitted by Ajmal Steel Tubes & Pipes Ind. L.L.C. (Ajmal Steel) and Universal Tube and Plastic Industries, LLC—Jebel Ali Branch, Universal Tube and Pipe Industries, and KHK Scaffolding and Framework LLC (collectively, Universal) for use in our final determination. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by Ajmal Steel and Universal.3

    3 For discussion of our verification findings, see the following memoranda: Memorandum to the File from Blaine Wiltse and Whitley Herndon, entitled “Verification of UTP Pipe USA Corp. and Prime Metal Corp. in the Antidumping Duty Investigation of Circular Welded Carbon-Quality Steel Pipe from the United Arab Emirates,” dated August 17, 2016; see also Memorandum to the File from Blaine Wiltse and E. Whitley Herndon, entitled “Verification of the Sales Response of Universal Tube and Plastic Industries, Ltd.—Jebel Ali Branch in the Antidumping Investigation of Circular Welded Carbon Steel Pipe from United Arab Emirates,” dated August 16, 2016; Memorandum to the File from Blaine Wiltse and E. Whitley Herndon, entitled “Verification of the Sales Response of Dayal Steel Suppliers LLC in the Antidumping Investigation of Circular Welded Carbon Steel Pipe from the United Arab Emirates,” dated August 22, 2016; Memorandum to the File from Dennis McClure and Manuel Rey, entitled “Verification of the Sales Response of Ajmal Steel Tubes & Pipes Ind. L.L.C. in the Antidumping Investigation of Circular Welded Carbon-Quality Steel Pipe from the United Arab Emirates,” dated August 22, 2016; Memorandum to the File from Michael Martin and Christopher Zimpo, entitled “Verification of the Cost Response of Universal in the Antidumping Duty Investigation of Circular Welded Carbon-Quality Steel Pipe from the United Arab Emirates,” dated August 24, 2016; and Memorandum to the File from Christopher J. Zimpo, entitled “Verification of the Cost Response of Ajmal Steel Tubes & Pipes Ind. L.L.C. in the Antidumping Duty Investigation of Circular Welded Carbon Steel Pipe from the United Arab Emirates,” dated August 25, 2016.

    Changes Since the Preliminary Determination

    Based on our analysis of the comments received and our findings at verification, we made certain changes to the margin calculations for Ajmal Steel and Universal. For a discussion of these changes, see the Issues and Decision Memorandum.

    All-Others Rate

    Section 735(c)(5)(A) of the Act provides that the estimated all-others rate shall be an amount equal to the weighted-average of the estimated weighted-average dumping margins established for exporters and producers individually investigated excluding any zero or de minimis margins, and margins determined entirely under section 776 of the Act. For the final determination, the Department calculated the “all others” rate based on a weighted average of Ajmal Steel's and Universal's margins using publicly-ranged quantities of their sales of subject merchandise.4

    4See Memorandum to the File from Whitley Herndon, Analyst, entitled, “Circular Welded Carbon-Quality Steel Pipe From the United Arab Emirates: Calculation of the Final Margin for All Other Companies,” dated July 14, 2016. With two respondents, we normally calculate (A) a weighted-average of the dumping margins calculated for the mandatory respondents; (B) a simple average of the dumping margins calculated for the mandatory respondents; and (C) a weighted-average of the dumping margins calculated for the mandatory respondents using each company's publicly-ranged values for the merchandise under consideration. We compare (B) and (C) to (A) and select the rate closest to (A) as the most appropriate rate for all other companies. See Ball Bearings and Parts Thereof From France, Germany, Italy, Japan, and the United Kingdom: Final Results of Antidumping Duty Administrative Reviews, Final Results of Changed-Circumstances Review, and Revocation of an Order in Part, 75 FR 53661, 53663 (September 1, 2010).

    Final Determination

    The final weighted-average dumping margins are as follows:

    Exporter/Manufacturer Weighted-
  • average
  • dumping
  • margin
  • (percent)
  • Ajmal Steel Tubes & Pipes Ind. L.L.C. 6.43 Universal Tube and Plastic Industries, LLC—Jebel Ali Branch, Universal Tube and Pipe Industries, and KHK Scaffolding and Framework LLC 5.58 All Others 5.95
    Disclosure

    We will disclose the calculations performed within five days of the date of publication of this notice to parties in this proceeding in accordance with 19 CFR 351.224(b).

    Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all appropriate entries of CWP from UAE, as described in Appendix I of this notice, which were entered, or withdrawn from warehouse, for consumption on or after June 8, 2016, the date of publication of the preliminary determination of this investigation in the Federal Register.

    Further, the Department will instruct CBP to require a cash deposit equal to the estimated amount by which the normal value exceeds the U.S. price as shown above.

    International Trade Comission (ITC) Notification

    In accordance with section 735(d) of the Act, we will notify the ITC of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of CWP from UAE no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

    Notification Regarding Administrative Protective Orders (APO)

    This notice serves as a reminder to parties subject to APO of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely 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 the terms of an APO is a sanctionable violation.

    This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I Scope of the Investigation

    This investigation covers welded carbon-quality steel pipes and tube, of circular cross-section, with an outside diameter (O.D.) not more than nominal 16 inches (406.4 mm), regardless of wall thickness, surface finish (e.g., black, galvanized, or painted), end finish (plain end, beveled end, grooved, threaded, or threaded and coupled), or industry specification (e.g., American Society for Testing and Materials International (ASTM), proprietary, or other), generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe (although subject product may also be referred to as mechanical tubing). Specifically, the term “carbon quality” includes products in which:

    (a) iron predominates, by weight, over each of the other contained elements;

    (b) the carbon content is 2 percent or less, by weight; and

    (c) none of the elements listed below exceeds the quantity, by weight, as indicated:

    (i) 1.80 percent of manganese;

    (ii) 2.25 percent of silicon;

    (iii) 1.00 percent of copper;

    (iv) 0.50 percent of aluminum;

    (v) 1.25 percent of chromium;

    (vi) 0.30 percent of cobalt;

    (vii) 0.40 percent of lead;

    (viii) 1.25 percent of nickel;

    (ix) 0.30 percent of tungsten;

    (x) 0.15 percent of molybdenum;

    (xi) 0.10 percent of niobium;

    (xii) 0.41 percent of titanium;

    (xiii) 0.15 percent of vanadium; or

    (xiv) 0.15 percent of zirconium.

    Covered products are generally made to standard O.D. and wall thickness combinations. Pipe multi-stenciled to a standard and/or structural specification and to other specifications, such as American Petroleum Institute (API) API-5L specification, may also be covered by the scope of these investigations. In particular, such multi-stenciled merchandise is covered when it meets the physical description set forth above, and also has one or more of the following characteristics: Is 32 feet in length or less; is less than 2.0 inches (50 mm) in outside diameter; has a galvanized and/or painted (e.g., polyester coated) surface finish; or has a threaded and/or coupled end finish.

    Standard pipe is ordinarily made to ASTM specifications A53, A135, and A795, but can also be made to other specifications. Structural pipe is made primarily to ASTM specifications A252 and A500. Standard and structural pipe may also be produced to proprietary specifications rather than to industry specifications.

    Sprinkler pipe is designed for sprinkler fire suppression systems and may be made to industry specifications such as ASTM A53 or to proprietary specifications.

    Fence tubing is included in the scope regardless of certification to a specification listed in the exclusions below, and can also be made to the ASTM A513 specification. Products that meet the physical description set forth above but are made to the following nominal outside diameter and wall thickness combinations, which are recognized by the industry as typical for fence tubing, are included despite being certified to ASTM mechanical tubing specifications:

    O.D. in inches
  • (nominal)
  • Wall
  • thickness
  • in inches
  • (nominal)
  • Gauge
    1.315 0.035 20 1.315 0.047 18 1.315 0.055 17 1.315 0.065 16 1.315 0.072 15 1.315 0.083 14 1.315 0.095 13 1.660 0.055 17 1.660 0.065 16 1.660 0.083 14 1.660 0.095 13 1.660 0.109 12 1.900 0.047 18 1.900 0.055 17 1.900 0.065 16 1.900 0.072 15 1.900 0.095 13 1.900 0.109 12 2.375 0.047 18 2.375 0.055 17 2.375 0.065 16 2.375 0.072 15 2.375 0.095 13 2.375 0.109 12 2.375 0.120 11 2.875 0.109 12 2.875 0.165 8 3.500 0.109 12 3.500 0.165 8 4.000 0.148 9 4.000 0.165 8 4.500 0.203 7

    The scope of this investigation does not include:

    (a) pipe suitable for use in boilers, superheaters, heat exchangers, refining furnaces and feedwater heaters, whether or not cold drawn, which are defined by standards such as ASTM A178 or ASTM A192;

    (b) finished electrical conduit, i.e., Electrical Rigid Steel Conduit (also known as Electrical Rigid Metal Conduit and Electrical Rigid Metal Steel Conduit), Finished Electrical Metallic Tubing, and Electrical Intermediate Metal Conduit, which are defined by specifications such as American National Standard (ANSI) C80.1-2005, ANSI C80.3-2005, or ANSI C80.6-2005, and Underwriters Laboratories Inc. (UL) UL-6, UL-797, or UL-1242;

    (c) finished scaffolding, i.e., component parts of final, finished scaffolding that enter the United States unassembled as a “kit.” A kit is understood to mean a packaged combination of component parts that contains, at the time of importation, all of the necessary component parts to fully assemble final, finished scaffolding;

    (d) tube and pipe hollows for redrawing;

    (e) oil country tubular goods produced to API specifications;

    (f) line pipe produced to only API specifications, such as API 5L, and not multi-stenciled; and

    (g) mechanical tubing, whether or not cold-drawn, other than what is included in the above paragraphs.

    The products subject to this investigation are currently classifiable in Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting numbers 7306.19.1010, 7306.19.1050, 7306.19.5110, 7306.19.5150, 7306.30.1000, 7306.30.5015, 7306.30.5020, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, 7306.30.5090, 7306.50.1000, 7306.50.5030, 7306.50.5050, and 7306.50.5070. The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.

    Appendix II List of Topics Discussed in the Issues and Decision Memorandum I. Summary II. Background III. Scope of the Investigation IV. Margin Calculations V. Discussion of the Issues 1. Management Fees 2. Weight Basis for Ajmal Steel 3. Ajmal Steel's Rebate Adjustment 4. Depreciation on Revalued Assets for Ajmal Steel 5. General and Administrative and Financial Expenses for Ajmal Steel 6. Revision of Ajmal Steel's POI Depreciation Analysis 7. Universal's Level of Trade Adjustment 8. Credit Expenses for one of Universal's U.S. Customers 9. U.S. Packing Costs for Universal 10. Sales to Universal's Affiliated Reseller Al Zaher Building Materials LLC VI. Recommendation
    [FR Doc. 2016-26107 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-570-032] Certain Iron Mechanical Transfer Drive Components From the People's Republic of China: Final Affirmative Determination of Sales at Less Than Fair Value AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the “Department”) determines that certain iron mechanical transfer drive components (“IMTDC”) from the People's Republic of China (“PRC”) are being, or are likely to be, sold in the United States at less than fair value (“LTFV”). The period of investigation (“POI”) is April 1, 2015 through September 30, 2015. The final weighted-average dumping margins of sales at LTFV are listed in the “Final Determination Dumping Margins” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Krisha Hill or Jonathan Hill, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-4037 or (202) 482-3518, respectively.

    SUPPLEMENTARY INFORMATION: Background

    On June 8, 2016, the Department published in the Federal Register its preliminary affirmative determination in the LTFV investigation of IMTDC from the PRC.1

    1See Certain Iron Mechanical Transfer Drive Components From the People's Republic of China: Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 FR 36876 (June 8, 2016) (Preliminary Determination) and accompanying Preliminary Decision Memorandum.

    A summary of the events that occurred since the Department published the Preliminary Determination, as well as a full discussion of the issues raised by parties for this final determination, may be found in 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 and Countervailing Duty Centralized Electronic Service System (“ACCESS”). ACCESS is available to registered users at http://access.trade.gov, and is available to all parties 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/. The signed Issues and Decision Memorandum and the electronic version are identical in content.

    2See Memorandum from Gary Taverman, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to Ronald Lorentzen, Acting Assistant Secretary for Enforcement and Compliance, “Antidumping Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China: Issues and Decision Memorandum for the Final Determination of Sales at Less-Than-Fair-Value,” (“Issues and Decision Memorandum”), dated concurrently with this determination and hereby adopted by this notice.

    Period of Investigation

    The period of investigation (“POI”) is April 1, 2015, through September 30, 2015.

    Scope of the Investigation

    The products covered by this investigation are iron mechanical transfer drive components. These products are properly classified under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 8483.30.8090, 8483.50.6000, 8483.50.9040, 8483.50.9080, 8483.90.3000, 8483.90.8080. Covered merchandise may also enter under the following HTSUS subheadings: 7325.10.0080, 7325.99.1000, 7326.19.0010, 7326.19.0080, 8431.31.0040, 8431.31.0060, 8431.39.0010, 8431.39.0050, 8431.39.0070, 8431.39.0080, and 8483.50.4000. Although the HTSUS subheading is provided for convenience and customs purposes, the written description of the merchandise under investigation is dispositive. For a complete description of the scope of the investigation, see Appendix I to this notice.

    Scope Comments

    Since the Preliminary Determination, Petitioner, as well as interested parties Caterpillar Inc., Carrier Corporation, Dahua Machine Manufacturing Co. Ltd., General Motors Corporation, Kohler Co., Mercury Marine, Otis Elevator Company, Speed Solutions International Inc., ZF Services, LLC, and Vibracoustic North America LP, commented on the scope of this investigation as well as the companion IMTDCs LTFV investigation from the Canada and IMTDCs countervailing duty investigation from the PRC. The Department reviewed these comments and has incorporated into the scope of these investigations Petitioner's exclusion for certain flywheels with a permanently attached outer ring gear and for certain parts of torsional vibration dampers. For further discussion, see the “Final Scope Decision Memorandum.” 3 The scope in Appendix I reflects the final modified scope language.

    3See Memorandum from Abdelali Elouaradia, Director, Office IV, Antidumping and Countervailing Duty Operations, to Gary Taverman, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, regarding “Antidumping Duty Investigations of Certain Iron Mechanical Transfer Drive Components from Canada and the People's Republic of China and Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China: Scope Decision Memorandum for the Final Determinations,” (“Final Scope Decision Memorandum”) dated concurrently with this final determination.

    Analysis of Comments Received

    All issues raised in the case and rebuttal briefs that were submitted by parties in this investigation are addressed in either the Final Determination Scope Decision Memorandum or the Issues and Decision Memorandum accompanying this notice, which is hereby adopted by this notice. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice at Appendix II.

    Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended (“the Act”), in June 2016, we verified the sales and factors of production information submitted by Powermach Import & Export Co., Ltd. (“Powermach”),4 the sole participating individually examined respondent. We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by Powermach.5

    4 We have continued to treat Powermach Import & Export Co., Ltd., Sichuan Dawn Precision Technology Co., Ltd., Sichuan Dawn Foundry Co., Ltd., and Powermach Co., Ltd. as a single entity based upon consideration of the factors in 19 CFR 351.401(f). See Memorandum from Krisha Hill, International Trade Analyst, AD/CVD Operations, Office IV through Howard Smith, Program Manager, AD/CVD Operations, Office IV to Abdelali Elouaradia, Office Director, AD/CVD Operations, Office IV, regarding “Certain Iron Mechanical Transfer Drive Components from The People's Republic of China: Preliminary Affiliation and Collapsing Memorandum” (May 31, 2016).

    5See Memorandum from Krisha Hill, International Trade Compliance Analyst, Office IV, Enforcement and Compliance and Jonathan Hill, International Trade Compliance Analyst, Office IV, Enforcement and Compliance through Howard Smith, Program Manager, Office IV Enforcement and Compliance to The File “Verification Report of the Sales and Factors Responses of Powermach Import & Export Co., Ltd. (Sichuan), Sichuan Dawn Precision Technology Co., Ltd., Sichuan Dawn Foundry Co., Ltd., and Powermach Co., Ltd. in the Antidumping Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China,” dated August 3, 2016.

    Separate Rates

    In the Preliminary Determination, the Department granted separate-rate status to all of the companies which provided separate rates information, except NOK (Wuxi) Vibration Control China Co. Ltd. (“NVCC”), which withdrew from participation as a mandatory respondent in this investigation, and Baldor Electric Canada (“Baldor”) and Yueqing Bethel Shaft Collar Manufacturing Co., Ltd. (“Yueqing Bethel”), which failed to respond to the Department's request for supplemental information. In this final determination, the Department has continued to treat these three companies as part of the PRC-wide entity and is also treating Zhejiang Dongxing Auto Parts Co., Ltd. (“Dongxing”) as part of the PRC-wide entity. For a full discussion of the Department's separate rates determinations with respect to Baldor, Yueqing Bethel, and Dongxing (no parties commented on the Department's separate rate determination with respect to NVCC) see the Issues and Decision Memorandum.

    Changes to the Dumping Margin Calculations Since the Preliminary Determination

    Based on the Department's analysis of the comments received and findings at verification, we made certain changes to our dumping margin calculations. For a discussion of these changes, see the Issues and Decision Memorandum.

    Dumping Margins for Non-Individually Examined Respondents

    Under section 735(c)(5)(A) of the Act, the estimated rate for all companies that have not been individually examined is normally equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually examined, excluding any zero and de minimis dumping margins, and any dumping margins determined entirely on the basis of facts available. In this final determination, we calculated a weighted-average dumping margin for Powermach (the only cooperating mandatory respondent) which is not zero, de minimis, or based entirely on facts available. Accordingly, we assigned Powermach's weighted-average dumping margin to non-individually examined PRC exporters qualifying for a separate rate.

    PRC-Wide Rate

    In our Preliminary Determination, we found that the PRC-wide entity, which includes certain PRC exporters and/or producers that did not respond to the Department's requests for information, failed to provide necessary information, failed to provide information in a timely manner, and significantly impeded this proceeding by not submitting the requested information. We also find that they failed to cooperate. As a result, we preliminarily determined to calculate the PRC-wide dumping margin on the basis of adverse facts available (“AFA”) pursuant to section 776(b) of the Act. We compared the petition dumping margins to the dumping margins that we calculated for Powermach, the participating individually examined respondent, in order to determine the probative value of the dumping margins in the petition for use as AFA. We continue to find that the highest petition dumping margin, 401.68 percent, is reliable and relevant because it is within the range of the transaction-specific dumping margins on the record for Powermach. Therefore, we assigned this dumping margin (i.e., 401.68 percent) to the PRC-wide entity.

    Combination Rates

    In the Initiation Notice, the Department stated that it would calculate combination rates for the respondents that are eligible for a separate rate in this investigation.6 Policy Bulletin 05.1 describes this practice.7

    6See Initiation Notice, 81 FR at 9438-39.

    7See Enforcement and Compliance's Policy Bulletin No. 05.1, regarding, “Separate-Rates Practice and Application of Combination Rates in Antidumping Investigations involving Non-Market Economy Countries,” dated April 5, 2005 (Policy Bulletin 05.1), available on the Department's Web site at http://enforcement.trade.gov/policy/bull05-1.pdf.

    Final Determination Dumping Margins

    For this final determination, the Department determines that IMTDC are being or likely to be sold in the United States at LTFV, as provided in section 735 of the Act. The Department determines that the following weighted-average dumping margins exist during the period April 1, 2015, through September 30, 2015:

    Exporter Producer Weighted-
  • average
  • dumping
  • margin
  • (percent)
  • Powermach Import & Export Co., Ltd. (Sichuan)/Sichuan Dawn Precision Technology Co., Ltd./Sichuan Dawn Foundry Co., Ltd./Powermach Co., Ltd Powermach Import & Export Co., Ltd. (Sichuan)/Sichuan Dawn Precision Technology Co., Ltd./Sichuan Dawn Foundry Co., Ltd./Powermach Co., Ltd 13.64 Fuqing Jiacheng Trading Corporation Limited Fuzhou Min Yue Mechanical & Electrical Co., Ltd 13.64 Haiyang Jingweida Gearing Co., Ltd Haiyang Jingweida Gearing Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Shijiazhuang CAPT Power Transmission Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Shanghai CPT Machinery Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Yueqing Bethel Shaft Collar Manufacturing Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Kezheng (Fuzhou) Mechanical & Electrical Manufacture Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Handan Hengfa Transmission Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Shijiazhuang Lihua Mechanical Manufacturing Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Xingtai Shengjia Machinery and Equipment Factory 13.64 Hangzhou Powertrans Co., Ltd Shanghai Keli Machinery Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Jiangsu Zhengya Technology Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Taizhou Feiyang Metal Spinning Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Taizhou Pengxun Machinery Manufacturing Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Guangde Ronghua Machinery Manufacturing Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Qiuxian Hengxin Machinery Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Reach Machinery Enterprise 13.64 Hangzhou Powertrans Co., Ltd Chengdu Novo Machinery Co., Ltd 13.64 Hangzhou Powertrans Co., Ltd Chengdu Leno Machinery Co., Ltd 13.64 Shijiazhuang CAPT Power Transmission Co., Ltd Shijiazhuang CAPT Power Transmission Co., Ltd 13.64 Xinguang Technology Co. Ltd of Sichuan Province Sichuan Dawn Precision Technology Co., Ltd 13.64 PRC-Wide Entity 401.68
    Continuation of Suspension of Liquidation

    Pursuant to section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (“CBP”) to continue to suspend liquidation of all entries of IMTDC from the PRC, which were entered, or withdrawn from warehouse, for consumption on or after June 8, 2016, the date of publication in the Federal Register of the affirmative Preliminary Determination. Further, pursuant to section 735(c)(1)(B)(ii) of the Act, the Department will instruct CBP to require a cash deposit equal to the amount by which the normal value exceeds U.S. price, adjusted where appropriate for export subsidies and estimated domestic subsidy pass-through,8 as follows: (1) For the exporter/producer combinations listed in the table above, the cash deposit rate is the weighted-average dumping margin listed for that combination in the table; (2) for all combinations of PRC exporters/producers of merchandise under consideration not listed in the table above, the cash deposit rate is the weighted average dumping margin listed for the PRC-wide entity in the table above; and (3) for all non-PRC exporters of merchandise under consideration not listed in the table above, the cash deposit rate is the cash deposit rate applicable to the PRC exporter/producer combination that supplied that non-PRC exporter. The suspension of liquidation instructions will remain in effect until further notice.

    8See sections 772(c)(1)(C) and 777A(f) of the Act, respectively.

    In a LTFV investigation with a companion countervailing duty (“CVD”) investigation, we normally adjust antidumping duty cash deposit rates by the amount of export subsidies, where appropriate. In the companion CVD investigation, we found that Powermach did not receive export subsidies. The countervailing duty rate for all-others companies in the CVD case is based on Powermach's countervailing duty rate, and thus all-others companies were not assigned an export subsidy rate. Therefore, no offset to Powermach's or the separate rate entities' antidumping duty cash deposit rates for export subsidies is necessary. Additionally, we likewise are not adjusting the antidumping duty cash deposit rate applicable to the PRC-wide entity for export subsidies.

    Pursuant to 777A(f) of the Act, we are not adjusting the antidumping duty cash deposit rates for estimated domestic subsidy pass-through. Based on the data on the record of this investigation, the Department continues to find that there was not a general decrease in the U.S. average import price during the relevant period. Thus, the Department continues to find that the requirement under section 777A(f)(1)(B) of the Act has not been met, and has not made an adjustment to the antidumping duty cash deposit rates under section 777A(f) of the Act.

    Disclosure

    We intend to disclose to parties in this proceeding the calculations performed for this final determination within five days of the date of public announcement of our final determination, in accordance with 19 CFR 351.224(b).

    International Trade Commission (“ITC”) Notification

    In accordance with section 735(d) of the Act, we will notify the ITC of our final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of IMTDC from the PRC no later than 45 days after our final determination. If the ITC determines that such injury does not exist, this proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

    Notification Regarding Administrative Protective Orders

    This notice will serve as a reminder to the parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305. Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of an APO is a sanctionable violation.

    We are issuing and publishing this determination in accordance with sections 735(d) and 777(i)(1) of the Act and 19 CFR 351.210(c).

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I Scope of the Investigation

    The products covered by this investigation are iron mechanical transfer drive components, whether finished or unfinished (i.e., blanks or castings). Subject iron mechanical transfer drive components are in the form of wheels or cylinders with a center bore hole that may have one or more grooves or teeth in their outer circumference that guide or mesh with a flat or ribbed belt or like device and are often referred to as sheaves, pulleys, flywheels, flat pulleys, idlers, conveyer pulleys, synchronous sheaves, and timing pulleys. The products covered by this investigation also include bushings, which are iron mechanical transfer drive components in the form of a cylinder and which fit into the bore holes of other mechanical transfer drive components to lock them into drive shafts by means of elements such as teeth, bolts, or screws.

    Iron mechanical transfer drive components subject to this investigation are those not less than 4.00 inches (101 mm) in the maximum nominal outer diameter.

    Unfinished iron mechanical transfer drive components (i.e., blanks or castings) possess the approximate shape of the finished iron mechanical transfer drive component and have not yet been machined to final specification after the initial casting, forging or like operations. These machining processes may include cutting, punching, notching, boring, threading, mitering, or chamfering.

    Subject merchandise includes iron mechanical transfer drive components as defined above that have been finished or machined in a third country, including but not limited to finishing/machining processes such as cutting, punching, notching, boring, threading, mitering, or chamfering, or any other processing that would not otherwise remove the merchandise from the scope of the investigation if performed in the country of manufacture of the iron mechanical transfer drive components.

    Subject iron mechanical transfer drive components are covered by the scope of the investigation regardless of width, design, or iron type (e.g., gray, white, or ductile iron). Subject iron mechanical transfer drive components are covered by the scope of the investigation regardless of whether they have non-iron attachments or parts and regardless of whether they are entered with other mechanical transfer drive components or as part of a mechanical transfer drive assembly (which typically includes one or more of the iron mechanical transfer drive components identified above, and which may also include other parts such as a belt, coupling and/or shaft). When entered as a mechanical transfer drive assembly, only the iron components that meet the physical description of covered merchandise are covered merchandise, not the other components in the mechanical transfer drive assembly (e.g., belt, coupling, shaft). However, the scope excludes flywheels with a ring gear permanently attached onto the outer diameter. A ring gear is a steel ring with convex external teeth cut or machined into the outer diameter, and where the diameter of the ring exceeds 200 mm and doesn't exceed 2,244.3 mm.

    For purposes of this investigation, a covered product is of “iron” where the article has a carbon content of 1.7 percent by weight or above, regardless of the presence and amount of additional alloying elements.

    Excluded from the scope are finished torsional vibration dampers (TVDs). A finished TVD is an engine component composed of three separate components: an inner ring, a rubber ring and an outer ring. The inner ring is an iron wheel or cylinder with a bore hole to fit a crank shaft which forms a seal to prevent leakage of oil from the engine. The rubber ring is a dampening medium between the inner and outer rings that effectively reduces the torsional vibration. The outer ring, which may be made of materials other than iron, may or may not have grooves in its outer circumference. To constitute a finished excluded TVD, the product must be composed of each of the three parts identified above and the three parts must be permanently affixed to one another such that both the inner ring and the outer ring are permanently affixed to the rubber ring. A finished TVD is excluded only if it meets the physical description provided above; merchandise that otherwise meets the description of the scope and does not satisfy the physical description of excluded finished TVDs above is still covered by the scope of the investigation regardless of end use or identification as a TVD.

    Also excluded from the scope are certain TVD inner rings. To constitute an excluded TVD inner ring, the product must have each of the following characteristics: (1) A single continuous curve forming a protrusion or indentation on outer surface, also known as a sine lock, with a height or depth not less than 1.5 millimeters and not exceeding 4.0 millimeters and with a width of at least 10 millimeters as measured across the sine lock from one edge of the curve to the other; 9 (2) a face width of the outer diameter of greater than or equal to 20 millimeters but less than or equal to 80 millimeters; (3) an outside diameter greater than or equal to 101 millimeters but less than or equal to 300 millimeters; and (4) a weight not exceeding 7 kilograms. A TVD inner ring is excluded only if it meets the physical description provided above; merchandise that otherwise meets the description of the scope and does not satisfy the physical description of excluded TVD inner rings is still covered by the scope of this investigation regardless of end use or identification as a TVD inner ring.

    9 The edges of the sine lock curve are defined as the points where the surface of the inner ring is no longer parallel to the plane formed by the inner surface of the bore hole that attaches the ring to the crankshaft.

    The scope also excludes light-duty, fixed-pitch, non-synchronous sheaves (“excludable LDFPN sheaves”) with each of the following characteristics: made from grey iron designated as ASTM (North American specification) Grade 30 or lower, GB/T (Chinese specification) Grade HT200 or lower, DIN (German specification) GG 20 or lower, or EN (European specification) EN-GJL 200 or lower; having no more than two grooves; having a maximum face width of no more than 1.75 inches, where the face width is the width of the part at its outside diameter; having a maximum outside diameter of not more than 18.75 inches; and having no teeth on the outside or datum diameter. Excludable LDFPN sheaves must also either have a maximum straight bore size of 1.6875 inches with a maximum hub diameter of 2.875 inches; or else have a tapered bore measuring 1.625 inches at the large end, a maximum hub diameter of 3.50 inches, a length through tapered bore of 1.0 inches, exactly two tapped holes that are 180 degrees apart, and a 2.0- inch bolt circle on the face of the hub. Excludable LDFPN sheaves more than 6.75 inches in outside diameter must also have an arm or spoke construction.10 Further, excludable LDFPN sheaves must have a groove profile as indicated in the table below:

    10 An arm or spoke construction is where arms or spokes (typically 3 to 6) connect the outside diameter of the sheave with the hub of the sheave. This is in contrast to a block construction (in which the material between the hub and the outside diameter is solid with a uniform thickness that is the same thickness as the hub of the sheave) or a web construction (in which the material between the hub and the outside diameter is solid but is thinner than at the hub of the sheave).

    Size (belt profile) Outside diameter Top width range of each groove
  • (inches)
  • Maximum height
  • (inches)
  • Angle
  • (°)
  • MA/AK (A, 3L, 4L) ≤5.45 in 0.484-0.499 0.531 34 MA/AK (A, 3L, 4L) >5.45 in. but ≤18.75 in 0.499-0.509 0.531 38 MB/BK (A, B, 4L, 5L) ≤7.40 in 0.607-0.618 0.632 34 MB/BK (A, B, 4L, 5L) >7.40 in. but ≤18.75 in 0.620-0.631 0.635 38

    In addition to the above characteristics, excludable LDFPN sheaves must also have a maximum weight (pounds-per-piece) as follows: for excludable LDFPN sheaves with one groove and an outside diameter of greater than 4.0 inches but less than or equal to 8.0 inches, the maximum weight is 4.7 pounds; for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 4.0 inches but less than or equal to 8.0 inches, the maximum weight is 8.5 pounds; for excludable LDFPN sheaves with one groove and an outside diameter of greater than 8.0 inches but less than or equal to 12.0 inches, the maximum weight is 8.5 pounds; for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 8.0 inches but less than or equal to 12.0 inches, the maximum weight is 15.0 pounds; for excludable LDFPN sheaves with one groove and an outside diameter of greater than 12.0 inches but less than or equal to 15.0 inches, the maximum weight is 13.3 pounds; for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 12.0 inches but less than or equal to 15.0 inches, the maximum weight is 17.5 pounds; for excludable LDFPN sheaves with one groove and an outside diameter of greater than 15.0 inches but less than or equal to 18.75 inches, the maximum weight is 16.5 pounds; and for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 15.0 inches but less than or equal to 18.75 inches, the maximum weight is 26.5 pounds.

    The scope also excludes light-duty, variable-pitch, non-synchronous sheaves with each of the following characteristics: made from grey iron designated as ASTM (North American specification) Grade 30 or lower, GB/T (Chinese specification) Grade HT200 or lower, DIN (German specification) GG 20 or lower, or EN (European specification) EN-GJL 200 or lower; having no more than 2 grooves; having a maximum overall width of less than 2.25 inches with a single groove, or of 3.25 inches or less with two grooves; having a maximum outside diameter of not more than 7.5 inches; having a maximum bore size of 1.625 inches; having either one or two identical, internally-threaded (i.e., with threads on the inside diameter), adjustable (rotating) flange(s) on an externally-threaded hub (i.e., with threads on the outside diameter) that enable(s) the width (opening) of the groove to be changed; and having no teeth on the outside or datum diameter.

    The scope also excludes certain IMTDC bushings. An IMTDC bushing is excluded only if it has a tapered angle of greater than or equal to 10 degrees, where the angle is measured between one outside tapered surface and the directly opposing outside tapered surface.

    The merchandise covered by this investigation is currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 8483.30.8090, 8483.50.6000, 8483.50.9040, 8483.50.9080, 8483.90.3000, 8483.90.8080. Covered merchandise may also enter under the following HTSUS subheadings: 7325.10.0080, 7325.99.1000, 7326.19.0010, 7326.19.0080, 8431.31.0040, 8431.31.0060, 8431.39.0010, 8431.39.0050, 8431.39.0070, 8431.39.0080, and 8483.50.4000. These HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of the investigation is dispositive.

    Appendix II List of Topics in the Issues and Decision Memorandum I. Summary II. Background III. Scope Comments IV. Scope of the Investigation V. Discussion of the Issues: Comment 1: Treatment of Input Comment 2: Per-Unit Consumption Comment 3: Generated Iron Scrap Comment 4: By-Product Offset Comment 5: Underreported Consumption Comment 6: Mold Workshop Labor Comment 7: Separate Rate Status for Baldor Electric Company Canada Comment 8: Separate Rate Status for Zhejiang Damon Industrial Equipment Co., Ltd. Comment 9: Separate Rate Status for Zhejiang Dongxing Auto Parts Co., Ltd. Comment 10: Separate Rate Status for Yueqing Bethel Shaft Collar Manufacturing Co., Ltd. Comment 11: Surrogate Value for Labor Comment 12: Surrogate Value for Baking Coal Comment 13: Surrogate Value for Anti-tarnish Paper Comment 14: Surrogate Value for Spheroidizing Agent Comment 15: Surrogate Value for Rail Freight Comment 16: Selection of Financial Statements Comment 17: SG&A Expense Calculation in Thai Ductile Inductory Co. Ltd.'s Financial Statements VI. Recommendation
    [FR Doc. 2016-26104 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [C-570-031] Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components From the People's Republic of China: Final Affirmative Determination AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the “Department”) determines that countervailable subsidies are being provided to producers and exporters of certain iron mechanical transfer drive components (“IMTDCs”) from the People's Republic of China (the “PRC”). For information on the estimated subsidy rates, see the “Final Determination and Suspension of Liquidation” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Robert Galantucci, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone (202) 482-2923.

    SUPPLEMENTARY INFORMATION:

    Background

    The Department published the Preliminary Determination on April 11, 2016.1 A summary of the events that occurred since the Department published the Preliminary Determination, as well as a full discussion of the issues raised by parties for this final determination, may be found in the Issues and Decision Memorandum 2 issued concurrently with this notice. The Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (“ACCESS”). ACCESS is available to registered users at http://access.trade.gov, and is available to all parties 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/. The signed Issues and Decision Memorandum and the electronic version are identical in content.

    1See Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components From the People's Republic of China: Preliminary Affirmative Determination and Alignment of Final Determination With Final Antidumping Duty Determination, 81 FR 21316 (April 11, 2016) (“Preliminary Determination”) and accompanying Issues and Decision Memorandum (“Preliminary Decision Memorandum”).

    2See Memorandum, “Issues and Decision Memorandum for the Final Determination in the Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China,” dated concurrently with this determination and hereby adopted by this notice (“Issues and Decision Memorandum”).

    Period of Investigation

    The period of investigation for which we are measuring subsidies is January 1, 2014 through December 31, 2014.

    Scope Comments

    The Department set aside a period of time for parties to address scope issues.3 For a summary of the product coverage comments submitted to the record of this final determination, and the Department's discussion and analysis of all comments timely received, see the Final Scope Decision Memorandum.4 The Final Scope Decision Memorandum is incorporated by, and hereby adopted by, this notice.

    3See Memorandum, “Certain Iron Mechanical Transfer Drive Components from Canada and the People's Republic of China: Deadline for Scope Comments,” July 19, 2016.

    4See Memorandum, “Antidumping Duty Investigations of Certain Iron Mechanical Transfer Drive Components from Canada and the People's Republic of China and Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China: Scope Decision Memorandum for the Final Determinations,” (“Final Scope Decision Memorandum”) dated concurrently with this final determination; see also Memorandum, “Certain Iron Mechanical Transfer Drive Components from Canada and the People's Republic of China: Scope Comments Decision Memorandum for the Preliminary Determinations,” dated May 31, 2016.

    Scope of the Investigation

    The products covered by this investigation are IMTDCs from the PRC. For a complete description of the scope of this investigation, see the “Scope of the Investigation,” in Appendix II of this notice.

    Analysis of Subsidy Programs and Comments Received

    The subsidy programs under investigation, and the issues raised in the case and rebuttal briefs submitted by the parties, are discussed in the Issues and Decision Memorandum. A list of the issues that parties raised, and to which we responded in the Issues and Decision Memorandum, is attached to this notice at Appendix I.

    Use of Adverse Facts Available (“AFA”)

    In making its findings, the Department relied, in part, on facts available. For mandatory respondent NOK (Wuxi) Vibration Control China Co. Ltd. (“NOK Wuxi”), we are basing the countervailing duty (“CVD”) rate on facts otherwise available, pursuant to sections 776(a)(2)(C) and (D) of the Tariff Act of 1930, as amended (the “Act”). Further, because NOK Wuxi did not cooperate to the best of its ability in this investigation, we determine that an adverse inference is warranted, pursuant to section 776(b) of the Act. The Department has applied a total AFA rate to NOK Wuxi. Similarly, the Department has applied a total AFA rate to 30 companies that failed to respond to the Department's quantity and value questionnaire.5

    5See Preliminary Determination at 81 FR 21317-21318.

    Additionally, in several instances the Department has applied partial AFA to calculate subsidy rates for the other mandatory respondent Powermach Import & Export Co., Ltd. (Sichuan) (“Powermach I&E”). For further information, see the section titled “Use of Facts Otherwise Available and Adverse Inferences,” in the Issues and Decision Memorandum.

    Changes Since the Preliminary Determination

    Based on our review and analysis of the comments received from parties, and minor corrections presented at verification, we made certain changes to Powermach I&E's subsidy rate calculations since the Preliminary Determination. For a discussion of these changes, see the Issues and Decision Memorandum and the Final Analysis Memorandum.6

    6See Issues and Decision Memorandum; see also Memorandum, “Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China: Powermach Final Analysis Memorandum,” dated October 21, 2016 (“Final Analysis Memorandum”).

    Final Determination and Suspension of Liquidation

    In accordance with section 705(c)(1)(B)(i)(I) of the Act, we established rates for Powermach I&E (the only individually investigated exporter/producer of the subject merchandise that participated in this investigation), and for NOK Wuxi (which was assigned a rate based on AFA).

    In accordance with sections 705(c)(1)(B)(i)(I) and 705(c)(5)(A)(i) of the Act, for companies not individually investigated, we apply an “all-others” rate. The all-others rate is normally calculated by weight averaging the subsidy rates of the individual companies selected for individual examination with those companies' export sales of the subject merchandise to the United States, excluding any zero and de minimis rates calculated for the exporters and producers individually investigated, and any rates determined entirely under section 776 of the Act. Consistent with section 705(c)(5)(A)(i) of the Act, we therefore have excluded the AFA rate assigned to NOK Wuxi from our calculation of the all-others rate.

    Because the only individually calculated rate that is not zero, de minimis, or based on facts otherwise available is the rate calculated for Powermach I&E, in accordance with section 705(c)(5)(A)(i) of the Act, the rate calculated for Powermach I&E is assigned as the all-others rate. The estimated countervailable subsidy rates are summarized in the table below.

    Company Subsidy rate
  • (percent)
  • Powermach Import & Export Co., Ltd. (Sichuan), Sichuan Dawn Precision Technology Co., Ltd., Sichuan Dawn Foundry Co. Ltd., and Powermach Machinery Co., Ltd 33.26 NOK (Wuxi) Vibration Control China Co., Ltd., and Wuxi NOK—Freudenberg Oil Seal Co., Ltd.* 163.46 Changzhou Baoxin Metallurgy Equipment Manufacturing Co. Ltd.* 163.46 Changzhou Changjiang Gear Co., Ltd.* 163.46 Changzhou Gangyou Lifting Equipment Co., Ltd.* 163.46 Changzhou Juling Foundry Co., Ltd.* 163.46 Changzhou Liangjiu Mechanical Manufacturing Co Ltd.* 163.46 Changzhou New Century Sprocket Group Company * 163.46 Changzhou Xiangjin Precision Machinery Co., Ltd.* 163.46 FIT Bearings * 163.46 Fuzhou Minyue Mechanical & Electrical Co., Ltd.* 163.46 Hangzhou Chinabase Machinery Co., Ltd.* 163.46 Hangzhou Ever Power Transmission Group * 163.46 Hangzhou Vision Chain Transmission Co., Ltd.* 163.46 Hangzhou Xingda Machinery Co., Ltd.* 163.46 Henan Xinda International Trading Co., Ltd.* 163.46 Henan Zhiyuan Machinery Sprocket Co. Ltd.* 163.46 Jiangsu Songlin Automobile Parts Co., Ltd * 163.46 Martin Sprocket & Gear (Changzhou) Co., Ltd.* 163.46 Ningbo Blue Machines Co., Ltd.* 163.46 Ningbo Fulong Synchronous Belt Co., Ltd.* 163.46 Ningbo Royu Machinery Co., Ltd.* 163.46 Praxair Surface Technologies * 163.46 Qingdao Dazheng Jin Hao International Trade Co., Ltd.* 163.46 Quanzhou Licheng Xintang Automobile Parts Co., Ltd. (“XTP Auto Parts”) * 163.46 Shangyu Shengtai Machinery Co., Ltd.* 163.46 Shenzhen Derui Sourcing Co., Ltd.* 163.46 Shengzhou Shuangdong Machinery Co., Ltd.* 163.46 Shengzhou Xinglong Machinery * 163.46 Sichuan Reach Jiayuan Machinery Co. Ltd.* 163.46 Tran-Auto Industries Co. Ltd.* 163.46 Ubet Machinery * 163.46 All-Others 33.26 * Non-cooperative company to which an AFA rate is being applied. See Issues and Decision Memorandum and Preliminary Decision Memorandum for additional information.

    As a result of our Preliminary Determination, and pursuant to sections 703(d)(1)(B) and (2) of the Act, we instructed U.S. Customs and Border Protection (“CBP”) to suspend liquidation of all entries of merchandise under consideration from the PRC that were entered or withdrawn from warehouse, for consumption, on or after April 11, 2016, the date of publication of the Preliminary Determination in the Federal Register.

    In accordance with section 703(d) of the Act, we later issued instructions to CBP to discontinue the suspension of liquidation for CVD purposes for subject merchandise entered, or withdrawn from warehouse, on or after August 9, 2016, but to continue the suspension of liquidation of all entries between April 11, 2016 and August 8, 2016.

    If the U.S. International Trade Commission (the “ITC”) issues a final affirmative injury determination, we will issue a CVD order and will reinstate the suspension of liquidation under section 706(a) of the Act and will require a cash deposit of estimated CVDs for such entries of subject merchandise in the amounts indicated above. If the ITC determines that material injury, or threat of material injury, does not exist, this proceeding will be terminated and all estimated duties deposited or securities posted as a result of the suspension of liquidation will be refunded or canceled.

    ITC Notification

    In accordance with section 705(d) of the Act, we will notify the ITC of our determination. In addition, we are making available to the ITC all non-privileged and non-proprietary information related to this investigation. We will allow the ITC access to all privileged and business proprietary information in our files, provided the ITC confirms that it will not disclose such information, either publicly or under an administrative protective order (“APO”), without the written consent of the Assistant Secretary for Enforcement and Compliance.

    Return or Destruction of Proprietary Information

    In the event the ITC issues a final negative injury determination, this notice serves as the only reminder to parties subject to an APO of their responsibility concerning the 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 subject to sanction.

    This determination is issued and published pursuant to sections 705(d) and 777(i) of the Act.

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I List of Topics Discussed in the Issues and Decision Memorandum I. Summary II. Background III. Scope of the Investigation IV. Scope Comments V. Application of the Countervailing Duty Law to Imports From the PRC VI. Subsidies Valuation Information VII. Benchmarks and Discount Rates VIII. Use of Facts Otherwise Available and Adverse Inferences IX. Analysis of Programs X. Analysis of Comments Comment 1: Whether to Apply AFA With Respect to NOK Wuxi Comment 2: Whether to Apply AFA With Respect to the Powermach Companies Comment 3: Whether to Apply AFA or FA to Purchases of Pig Iron and Ferrous Scrap Comment 4: Whether to Apply AFA With Respect to the Program titled “VAT and Import Tariff Exemptions for Imported Equipment” Comment 5: Whether To Revise the Total AFA Rate Calculated in the Preliminary Determination Comment 6: Whether To Recalculate the Neutral Facts Available Rate Applied to Cenfit Comment 7: Whether To Revise the Benchmark for Pig Iron and Ferrous Scrap Comment 8: Whether To Exclude VAT From the LTAR Benchmark Prices Comment 9: Whether To Revise the Calculation of Benefits From the Land for LTAR Program Comment 10: Whether To Revise the Inland Freight Costs Included in Input Benchmarks Comment 11: Whether To Correct Ministerial Errors Comment 12: Whether Producers of Pig Iron and Ferrous Scrap Are “Authorities” Comment 13: Whether Inputs for LTAR Are Specific Comment 14: Whether to Use a Tier One Benchmark for LTAR Programs Comment 15: Whether the Provision of Electricity for LTAR is Countervailable Comment 16: Whether the GOC Provided Policy Loans During the POI Comment 17: Whether the Department Properly Investigated Uninitiated Programs Comment 18: Whether the Department Should Find That the Program Titled “Income Tax Credits for Domestically-Owned Companies Purchasing Domestically Produced Equipment” Has Been Terminated Comment 19: Whether Baldor Electric Company (Canada) Should Receive the All-Others Rate XI. Recommendation
    [FR Doc. 2016-26105 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-122-856] Certain Iron Mechanical Transfer Drive Components From Canada: Final Affirmative Determination of Sales at Less Than Fair Value AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the “Department”) determines that certain iron mechanical transfer drive components (“IMTDCs”) from Canada are being, or likely to be, sold in the United States at less than fair value (“LTFV”). Baldor Electric Company Canada (“Baldor”) is the sole mandatory respondent in this investigation. The period of investigation (“POI”) is October 1, 2014, through September 30, 2015. The final estimated dumping margins of sales at LTFV are shown in the “Final Determination” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Stephen Bailey or Robert Bolling, AD/CVD Operations, Office IV, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-0193 or (202) 482-3434, respectively.

    SUPPLEMENTARY INFORMATION: Background

    On June 8, 2016, the Department published its preliminary affirmative determination of sales at LTFV in the investigation of IMTDCs from Canada.1 We invited interested parties to comment on our preliminary determination. We received comments from TB Wood's Inc. (“Petitioner”) and did not receive rebuttal comments or a request for a hearing. Additionally, we received scope comments for this investigation (see Scope Comments below).

    1See Certain Iron Mechanical Transfer Drive Components from Canada: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 FR 36887 (June 8, 2016) (“Preliminary Determination”).

    A full discussion of the issues raised by parties for this final determination may be found in 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 and Countervailing Duty Centralized Electronic Service System (“ACCESS”). ACCESS is available to registered users at http://access.trade.gov and is available to all parties 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. The signed and electronic versions of the Issues and Decision Memorandum are identical in content.

    2See Memorandum from Gary Taverman, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance, regarding “Certain Iron Mechanical Transfer Drive Components from Canada: Issues and Decision Memorandum for the Final Determination of Sales at Less-Than-Fair-Value,” dated concurrently with this notice (“Issues and Decision Memorandum”).

    Scope of the Investigation

    The merchandise covered by this investigation are iron mechanical transfer drive components. For a complete description of the scope of the investigation, see Appendix I to this notice.

    Scope Comments

    Since the Preliminary Determination, Petitioner, as well as interested parties Caterpillar Inc., Carrier Corporation, Dahua Machine Manufacturing Co. Ltd., General Motors Corporation, Kohler Co., Mercury Marine, Otis Elevator Company, Speed Solutions International Inc., ZF Services, LLC, and Vibracoustic North America LP, commented on the scope of this investigation, as well as the companion IMTDCs LTFV investigation from the People's Republic of China (the “PRC”) and IMTDCs countervailing duty investigation from the PRC. The Department reviewed these comments and has accepted and incorporated into the scope of these investigations Petitioner's exclusion for certain flywheels with a permanently attached outer ring gear and for certain parts of torsional vibration dampers. For further discussion, see the “Final Scope Decision Memorandum.” 3 The scope in Appendix I reflects the final modified scope language.

    3See Memorandum from Abdelali Elouaradia, Director, Office IV, Antidumping and Countervailing Duty Operations, to Gary Taverman, Associate Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, regarding “Antidumping Duty Investigations of Certain Iron Mechanical Transfer Drive Components from Canada and the People's Republic of China and Countervailing Duty Investigation of Certain Iron Mechanical Transfer Drive Components from the People's Republic of China: Scope Decision Memorandum for the Final Determinations,” (“Final Scope Decision Memorandum”) dated concurrently with this final determination.

    Analysis of Comments Received

    All issues raised in the case brief that was submitted by Petitioner in this investigation are addressed in the Issues and Decision Memorandum accompanying this notice, and which is hereby adopted by this notice. A list of the issues addressed in the Issues and Decision Memorandum is attached to this notice at Appendix II.

    Final Determination

    As discussed in the Issues and Decision Memorandum, we made no changes to our preliminary affirmative LTFV determination. Therefore, for the final determination, we continue to determine that the following estimated dumping margins exist for the following producers or exporters for the period October 1, 2014, through September 30, 2015.

    Exporter/producer Dumping
  • margin
  • (percent)
  • Baldor Electric Company Canada 191.34 All-Others 100.47
    All-Others Rate

    Section 735(c)(5)(A) of the Tariff Act of 1930, as amended (“the Act”), provides that the estimated “all-others” rate shall be an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero or de minimis margins, and any margins determined entirely under section 776 of the Act. In cases in which no weighted-average dumping margins besides zero, de minimis, or those determined entirely under section 776 of the Act have been established for individually investigated entities, in accordance with section 735(c)(5)(B) of the Act, the Department may use “any reasonable method” to determine the “all-others” rate. Because the margin for Baldor, the sole mandatory respondent, is calculated entirely under section 776 of the Act, we continue to rely on a simple average of the margins in the Petition, upon which the Department initiated this investigation, in determining the “all-others” rate.

    Continuation of Suspension of Liquidation

    In accordance with section 735(c)(1)(B) of the Act, we will instruct U.S. Customs and Border Protection (“CBP”) to continue the suspension of liquidation of all entries of IMTDCs from Canada, as described in the “Scope of the Investigation” section, which were entered, or withdrawn from warehouse, for consumption on or after June 8, 2016, the date of publication of the Preliminary Determination. CBP shall require a cash deposit equal to the estimated amount by which the normal value exceeds the U.S. price as shown above. These instructions suspending liquidation will remain in effect until further notice.

    Disclosure

    We described the calculations used to determine the estimated dumping margins based on adverse facts available, in the Preliminary Determination. We made no changes to our calculations since the Preliminary Determination. Thus, no additional disclosure of calculations is necessary for this final determination.

    International Trade Commission Notification

    In accordance with section 735(d) of the Act, we will notify the International Trade Commission (“ITC”) of our final affirmative determination of sales at LTFV. Because the final determination in the proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of IMTDCs from Canada no later than 45 days after our final determination. If the ITC determines that such injury does not exist, this proceeding will be terminated and all securities posted will be refunded or canceled. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on appropriate imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation.

    Notification Regarding Administrative Protective Orders

    This notice serves as a reminder to the parties subject to administrative protective order (“APO”) of their responsibility concerning the disposition of proprietary information disclosed under APOs in accordance with 19 CFR 351.305. Timely written notification of return or destruction of APO materials or conversion to judicial protective order is hereby requested. Failure to comply with the regulations and the terms of APOs is a sanctionable violation.

    We are issuing and publishing this determination in accordance with sections 735(d) and 777(i)(1) of the Act and 19 CFR 351.210(c).

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I Scope of the Investigation

    The products covered by this investigation are iron mechanical transfer drive components, whether finished or unfinished (i.e., blanks or castings). Subject iron mechanical transfer drive components are in the form of wheels or cylinders with a center bore hole that may have one or more grooves or teeth in their outer circumference that guide or mesh with a flat or ribbed belt or like device and are often referred to as sheaves, pulleys, flywheels, flat pulleys, idlers, conveyer pulleys, synchronous sheaves, and timing pulleys. The products covered by this investigation also include bushings, which are iron mechanical transfer drive components in the form of a cylinder and which fit into the bore holes of other mechanical transfer drive components to lock them into drive shafts by means of elements such as teeth, bolts, or screws.

    Iron mechanical transfer drive components subject to this investigation are those not less than 4.00 inches (101 mm) in the maximum nominal outer diameter.

    Unfinished iron mechanical transfer drive components (i.e., blanks or castings) possess the approximate shape of the finished iron mechanical transfer drive component and have not yet been machined to final specification after the initial casting, forging or like operations. These machining processes may include cutting, punching, notching, boring, threading, mitering, or chamfering.

    Subject merchandise includes iron mechanical transfer drive components as defined above that have been finished or machined in a third country, including but not limited to finishing/machining processes such as cutting, punching, notching, boring, threading, mitering, or chamfering, or any other processing that would not otherwise remove the merchandise from the scope of this investigation if performed in the country of manufacture of the iron mechanical transfer drive components.

    Subject iron mechanical transfer drive components are covered by the scope of this investigation regardless of width, design, or iron type (e.g., gray, white, or ductile iron). Subject iron mechanical transfer drive components are covered by the scope of this investigation regardless of whether they have non-iron attachments or parts and regardless of whether they are entered with other mechanical transfer drive components or as part of a mechanical transfer drive assembly (which typically includes one or more of the iron mechanical transfer drive components identified above, and which may also include other parts such as a belt, coupling and/or shaft). When entered as a mechanical transfer drive assembly, only the iron components that meet the physical description of covered merchandise are covered merchandise, not the other components in the mechanical transfer drive assembly (e.g., belt, coupling, shaft). However, the scope excludes flywheels with a ring gear permanently attached onto the outer diameter. A ring gear is a steel ring with convex external teeth cut or machined into the outer diameter, and where the diameter of the ring exceeds 200 mm and does not exceed 2,244.3 mm.

    For purposes of this investigation, a covered product is of “iron” where the article has a carbon content of 1.7 percent by weight or above, regardless of the presence and amount of additional alloying elements.

    Excluded from the scope are finished torsional vibration dampers (TVDs). A finished TVD is an engine component composed of three separate components: An inner ring, a rubber ring and an outer ring. The inner ring is an iron wheel or cylinder with a bore hole to fit a crank shaft which forms a seal to prevent leakage of oil from the engine. The rubber ring is a dampening medium between the inner and outer rings that effectively reduces the torsional vibration. The outer ring, which may be made of materials other than iron, may or may not have grooves in its outer circumference. To constitute a finished excluded TVD, the product must be composed of each of the three parts identified above and the three parts must be permanently affixed to one another such that both the inner ring and the outer ring are permanently affixed to the rubber ring. A finished TVD is excluded only if it meets the physical description provided above; merchandise that otherwise meets the description of the scope and does not satisfy the physical description of excluded finished TVDs above is still covered by the scope of this investigation regardless of end use or identification as a TVD.

    Also excluded from the scope are certain TVD inner rings. To constitute an excluded TVD inner ring, the product must have each of the following characteristics: (1) A single continuous curve forming a protrusion or indentation on outer surface, also known as a sine lock, with a height or depth not less than 1.5 millimeters and not exceeding 4.0 millimeters and with a width of at least 10 millimeters as measured across the sine lock from one edge of the curve to the other; 4 (2) a face width of the outer diameter of greater than or equal to 20 millimeters but less than or equal to 80 millimeters; (3) an outside diameter greater than or equal to 101 millimeters but less than or equal to 300 millimeters; and (4) a weight not exceeding 7 kilograms. A TVD inner ring is excluded only if it meets the physical description provided above; merchandise that otherwise meets the description of the scope and does not satisfy the physical description of excluded TVD inner rings is still covered by the scope of this investigation regardless of end use or identification as a TVD inner ring.

    4 The edges of the sine lock curve are defined as the points where the surface of the inner ring is no longer parallel to the plane formed by the inner surface of the bore hole that attaches the ring to the crankshaft.

    The scope also excludes light-duty, fixed-pitch, non-synchronous sheaves (“excludable LDFPN sheaves”) with each of the following characteristics: Made from grey iron designated as ASTM (North American specification) Grade 30 or lower, GB/T (Chinese specification) Grade HT200 or lower, DIN (German specification) GG 20 or lower, or EN (European specification) EN-GJL 200 or lower; having no more than two grooves; having a maximum face width of no more than 1.75 inches, where the face width is the width of the part at its outside diameter; having a maximum outside diameter of not more than 18.75 inches; and having no teeth on the outside or datum diameter. Excludable LDFPN sheaves must also either have a maximum straight bore size of 1.6875 inches with a maximum hub diameter of 2.875 inches; or else have a tapered bore measuring 1.625 inches at the large end, a maximum hub diameter of 3.50 inches, a length through tapered bore of 1.0 inches, exactly two tapped holes that are 180 degrees apart, and a 2.0- inch bolt circle on the face of the hub. Excludable LDFPN sheaves more than 6.75 inches in outside diameter must also have an arm or spoke construction.5 Further, excludable LDFPN sheaves must have a groove profile as indicated in the table below:

    5 An arm or spoke construction is where arms or spokes (typically 3 to 6) connect the outside diameter of the sheave with the hub of the sheave. This is in contrast to a block construction (in which the material between the hub and the outside diameter is solid with a uniform thickness that is the same thickness as the hub of the sheave) or a web construction (in which the material between the hub and the outside diameter is solid but is thinner than at the hub of the sheave).

    Size (belt profile) Outside diameter Top width range of each groove
  • (inches)
  • Maximum height
  • (inches)
  • Angle
  • (°)
  • MA/AK (A, 3L, 4L) ≤5.45 in 0.484-0.499 0.531 34 MA/AK (A, 3L, 4L) >5.45 in. but ≤18.75 in 0.499-0.509 0.531 38 MB/BK (A, B, 4L, 5L) ≤7.40 in 0.607-0.618 0.632 34 MB/BK (A, B, 4L, 5L) >7.40 in. but ≤18.75 in 0.620-0.631 0.635 38

    In addition to the above characteristics, excludable LDFPN sheaves must also have a maximum weight (pounds-per-piece) as follows: For excludable LDFPN sheaves with one groove and an outside diameter of greater than 4.0 inches but less than or equal to 8.0 inches, the maximum weight is 4.7 pounds; for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 4.0 inches but less than or equal to 8.0 inches, the maximum weight is 8.5 pounds; for excludable LDFPN sheaves with one groove and an outside diameter of greater than 8.0 inches but less than or equal to 12.0 inches, the maximum weight is 8.5 pounds; for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 8.0 inches but less than or equal to 12.0 inches, the maximum weight is 15.0 pounds; for excludable LDFPN sheaves with one groove and an outside diameter of greater than 12.0 inches but less than or equal to 15.0 inches, the maximum weight is 13.3 pounds; for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 12.0 inches but less than or equal to 15.0 inches, the maximum weight is 17.5 pounds; for excludable LDFPN sheaves with one groove and an outside diameter of greater than 15.0 inches but less than or equal to 18.75 inches, the maximum weight is 16.5 pounds; and for excludable LDFPN sheaves with two grooves and an outside diameter of greater than 15.0 inches but less than or equal to 18.75 inches, the maximum weight is 26.5 pounds.

    The scope also excludes light-duty, variable-pitch, non-synchronous sheaves with each of the following characteristics: Made from grey iron designated as ASTM (North American specification) Grade 30 or lower, GB/T (Chinese specification) Grade HT200 or lower, DIN (German specification) GG 20 or lower, or EN (European specification) EN-GJL 200 or lower; having no more than 2 grooves; having a maximum overall width of less than 2.25 inches with a single groove, or of 3.25 inches or less with two grooves; having a maximum outside diameter of not more than 7.5 inches; having a maximum bore size of 1.625 inches; having either one or two identical, internally-threaded (i.e., with threads on the inside diameter), adjustable (rotating) flange(s) on an externally-threaded hub (i.e., with threads on the outside diameter) that enable(s) the width (opening) of the groove to be changed; and having no teeth on the outside or datum diameter.

    The scope also excludes certain IMTDC bushings. An IMTDC bushing is excluded only if it has a tapered angle of greater than or equal to 10 degrees, where the angle is measured between one outside tapered surface and the directly opposing outside tapered surface.

    The merchandise covered by this investigation is currently classifiable under Harmonized Tariff Schedule of the United States (“HTSUS”) subheadings 8483.30.8090, 8483.50.6000, 8483.50.9040, 8483.50.9080, 8483.90.3000, 8483.90.8080. Covered merchandise may also enter under the following HTSUS subheadings: 7325.10.0080, 7325.99.1000, 7326.19.0010, 7326.19.0080, 8431.31.0040, 8431.31.0060, 8431.39.0010, 8431.39.0050, 8431.39.0070, 8431.39.0080, and 8483.50.4000. These HTSUS subheadings are provided for convenience and customs purposes. The written description of the scope of this investigation is dispositive.

    Appendix II List of Topics in the Issues and Decision Memorandum I. Summary II. Background III. Scope of the Investigation IV. Discussion of the Issues: Comment 1: Adverse Facts Available Comment 2: All-Others Rate V. Recommendation
    [FR Doc. 2016-26106 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [A-552-820] Circular Welded Carbon-Quality Steel Pipe From the Socialist Republic of Vietnam: Final Determination of Sales at Less Than Fair Value AGENCY:

    Enforcement and Compliance, International Trade Administration, Department of Commerce.

    SUMMARY:

    The Department of Commerce (the Department) determines that imports of circular welded carbon-quality steel pipe (CWP) from the Socialist Republic of Vietnam (Vietnam) are being, or are likely to be, sold in the United States at less than fair value (LTFV). The period of investigation (POI) is April 1, 2015, through September 30, 2015. The final dumping margins of sales at LTFV are listed below in the “Final Determination” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Andrew Huston or Nancy Decker, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 1401 Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-4261 or (202) 482-0196, respectively.

    SUPPLEMENTARY INFORMATION: Background

    On June 8, 2016, the Department published the Preliminary Determination of this antidumping duty (AD) investigation.1 On July 15, 2016, the Department published an Amended Preliminary Determination in this investigation.2 A summary of the events that occurred since the Department published the Amended Preliminary Determination, as well as a full discussion of the issues raised by parties for this final determination, may be found in the Final Issues and Decision Memorandum.3 The Final Issues and Decision Memorandum is a public document and is on file electronically via Enforcement and Compliance's Antidumping and Countervailing Duty Centralized Electronic Service System (ACCESS). ACCESS is available to registered users at https://access.trade.gov and it is available to all parties in the Central Records Unit, room B-8024 of the main Department of Commerce building. In addition, a complete version of the Final Issues and Decision Memorandum can be accessed directly at http://enforcement.trade.gov/frn/index.html. The signed and electronic versions of the Final Issues and Decision Memorandum are identical in content.

    1See Circular Welded Carbon-Quality Steel Pipe From the Socialist Republic of Vietnam: Affirmative Preliminary Determination of Sales at Less Than Fair Value and Postponement of Final Determination, 81 FR 36884 (June 8, 2016) (Preliminary Determination) and accompanying Preliminary Decision Memorandum.

    2See Antidumping Duty Investigation of Circular Welded Carbon-Quality Steel Pipe From the Socialist Republic of Vietnam: Amended Affirmative Preliminary Determination, 81 FR 46048 (July 15, 2016) (Amended Preliminary Determination).

    3See Memorandum from Christian Marsh, Deputy Assistant Secretary for Antidumping and Countervailing Duty Operations, to Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance, “Issues and Decision Memorandum for the Final Affirmative Determination in the Antidumping Duty Investigation of Circular Welded Carbon-Quality Steel Pipe from the Socialist Republic of Vietnam,” (Final Issues and Decision Memorandum), dated concurrently with this determination and hereby adopted by this notice.

    Scope of the Investigation

    The products covered by this investigation are CWP from Vietnam. For a full description of the scope of this investigation, see the “Scope of the Investigation,” in Appendix I of this notice.

    Scope Comments

    In the Preliminary Determination, the Department set aside a period of time for parties to address scope issues in case briefs or other written comments on scope issues.

    No interested parties submitted scope comments in case or rebuttal briefs; therefore, for this final determination, the scope of this investigation remains unchanged from that published in the Preliminary Determination.

    Analysis of Comments Received

    All issues raised in the case and rebuttal briefs by parties in this investigation are addressed in the Final Issues and Decision Memorandum. A list of the issues raised is attached to this notice as Appendix II.

    Verification

    As provided in section 782(i) of the Tariff Act of 1930, as amended (the Act), in June and July 2016, the Department verified the sales and factors of production data reported by the mandatory respondents SeAH Steel VINA Corporation (SeAH) and Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd. (Hongyuan). We used standard verification procedures, including an examination of relevant accounting and production records, and original source documents provided by respondents.4

    4See Memorandum to the File, “Verification of the Questionnaire Responses of SeAH Steel VINA Corp.” (August 31, 2016); Memorandum to the File, “Verification of the Questionnaire Responses of SeAH Steel America” (August 31, 2016); Memorandum to the File, “Verification of the Questionnaire Responses of State Pipe & Supply Co.” (August 31, 2016); Memorandum to the File, “Verification of the Questionnaire Responses of Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd.” (August 30, 2016); and Memorandum to the File, “Verification of the Questionnaire Responses of Midwest Air Technologies” (August 30, 2016).

    Changes Since the Preliminary Determination and Amended Preliminary Determination

    Based on the Department's analysis of the comments received and our findings at verification, we made certain changes to our margin calculations. For a discussion of these changes, see the Final Issues and Decision Memorandum.

    Combination Rates

    As stated in the Initiation Notice, 5 the Department calculates combination rates for the respondents that are eligible for a separate rate in this investigation. Policy Bulletin 05.1 describes this practice.6

    5See Certain Corrosion-Resistant Steel Products From Italy, India, the People's Republic of China, the Republic of Korea, and Taiwan: Initiation of Less-Than-Fair-Value Investigations, 80 FR 37228 (June 30, 2015) (Initiation Notice).

    6See Enforcement and Compliance's Policy Bulletin No. 05.1, regarding, “Separate-Rates Practice and Application of Combination Rates in Antidumping Investigations involving Non-Market Economy Countries,” (April 5, 2005) (Policy Bulletin 05.1), available on the Department's Web site at http://enforcement.trade.gov/policy/bull05-1.pdf.

    Separate Rate

    Under section 735(c)(5)(A) of the Act, the rate for all other companies that have not been individually examined is normally an amount equal to the weighted average of the estimated weighted-average dumping margins established for exporters and producers individually investigated, excluding any zero and de minimis margins, and any margins determined entirely on the basis of facts available. In this final determination, we calculated a weighted-average dumping margin for Hongyuan which is not zero, de minimis, or based entirely on facts available. We calculated a zero margin for SeAH. Accordingly, we determine to use Hongyuan's weighted-average dumping margin as the margin for the separate rate company.

    Vietnam-Wide Rate

    In our Preliminary Determination, we found that the Vietnam-wide entity, which includes one Vietnam exporter and/or producer that did not respond to the Department's requests for information, failed to provide necessary information, withheld information requested by the Department, failed to provide information in a timely manner, and significantly impeded this proceeding by not submitting the requested information, pursuant to sections 776(a)(1) and (a)(2)(A)-(C) of the Act. We also concluded that the Vietnam-wide entity failed to cooperate to the best of its ability, pursuant to section 776(b) of the Act. As a result, we preliminarily determined to calculate the Vietnam-wide rate on the basis of adverse facts available (AFA). We first examined whether the highest petition margin was less than or equal to the highest calculated margin, and determined that the highest petition margin of 113.18 percent was the higher of the two. Next, in order to corroborate 113.18 percent as the potential Vietnam-wide rate, we first compared it to the highest product matching control number (CONNUM)-specific margin calculated for the mandatory respondents.7 Neither respondent had a CONNUM-specific margin higher than the petition rate. We next compared the normal values (NVs) and U.S. prices in the petition with the NVs and U.S. prices calculated for the respondents. We determined the petition values were within the range of the values calculated for the respondents. Therefore, we determine that the petition rate is corroborated by the actual experience of the mandatory respondents. The changes made to the calculations since the Preliminary Determination do not change this analysis. Therefore, we continue to assign the petition rate to the Vietnam-wide entity for this final determination.

    7See Memorandum to the File, “Preliminary Analysis of SeAH Steel Vina Corp. (SeAH),” (SeAH Preliminary Analysis Memorandum) dated May 31, 2016, and Memorandum to Mark Hoadley “Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd. Preliminary Analysis Memorandum” (Hongyuan Preliminary Analysis Memorandum), dated May 31, 2016.

    Final Determination

    The Department determines that the final weighted-average dumping margins are as follows:

    Exporter Producer Weighted-
  • average
  • dumping
  • margin
  • (percent)
  • Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd Vietnam Haiphong Hongyuan Machinery Manufactory Co., Ltd 6.27 Hoa Phat Steel Pipe Co Hoa Phat Steel Pipe Co 6.27 SeAH Steel VINA Corporation SeAH Steel VINA Corporation 0.00 Vietnam-Wide Entity 113.18
    Disclosure

    We intend to disclose the calculations performed to interested parties within five days of the public announcement of this final determination in accordance with 19 CFR 351.224(b).

    Continuation of Suspension of Liquidation

    Pursuant to section 735(c)(1)(B) of the Act, the Department will instruct U.S. Customs and Border Protection (CBP) to continue to suspend liquidation of all entries of CWP from Vietnam, except for those produced and exported by SeAH, the rate for which is zero, which were entered, or withdrawn from warehouse, for consumption on or after: (1) June 8, 2016 (the date of publication of the Preliminary Determination of this investigation in the Federal Register) for the Vietnam-wide entity; and (2) July 15, 2016 (the date of publication of the Amended Preliminary Determination) for Hongyuan and Hoa Phat Steel Pipe Co. Further, pursuant to section 735(c)(1)(B)(ii) of the Act, the Department will instruct CBP to require a cash deposit,8 as detailed below, on all imports of the subject merchandise from Vietnam, other than those produced and exported by SeAH, that are entered, or withdrawn from warehouse, for consumption on or after the date of publication of this notice in the Federal Register. The cash deposit will be equal to the weighted-average amount by which the normal value exceeds U.S. price as follows: (1) For the exporter/producer combinations listed in the table above, the cash deposit rate will be equal to the dumping margin which the Department determined in this final determination; (2) for all combinations of Vietnamese exporters/producers of merchandise under consideration which have not received their own separate rate above, the cash deposit rate will be equal to the dumping margin established for the Vietnam-wide entity; and (3) for all non-Vietnamese exporters of merchandise under consideration which have not received their own separate rate above, the cash deposit rate will be equal to the cash deposit rate applicable to the Vietnam exporter/producer combination that supplied that non-Vietnamese exporter. The suspension of liquidation instructions will remain in effect until further notice.

    8See Modification of Regulations Regarding the Practice of Accepting Bonds During the Provisional Measures Period in Antidumping and Countervailing Duty Investigations, 76 FR 61042 (October 3, 2011).

    U.S. International Trade Commission Notification

    In accordance with section 735(d) of the Act, we will notify the U.S. International Trade Commission (ITC) of the final affirmative determination of sales at LTFV. Because the final determination in this proceeding is affirmative, in accordance with section 735(b)(2) of the Act, the ITC will make its final determination as to whether the domestic industry in the United States is materially injured, or threatened with material injury, by reason of imports of CWP from Vietnam no later than 45 days after our final determination. If the ITC determines that material injury or threat of material injury does not exist, the proceeding will be terminated and all cash deposits will be refunded. If the ITC determines that such injury does exist, the Department will issue an antidumping duty order directing CBP to assess, upon further instruction by the Department, antidumping duties on all imports of the subject merchandise entered, or withdrawn from warehouse, for consumption on or after the effective date of the suspension of liquidation as discussed in the “Continuation of Suspension of Liquidation” section.

    Notification Regarding Record Keeping

    In the event we issue a final antidumping duty order, in future proceedings we expect Hongyuan's U.S. affiliate Midwest Air Technologies to modify its recordkeeping system to be able to track the country of origin of U.S. sales of subject merchandise.9

    9See Final Issues and Decision Memorandum at Comment 15.

    Notification Regarding Administrative Protective Orders

    This notice serves as a reminder to parties subject to an administrative protective order (APO) of their responsibility concerning the disposition of proprietary information disclosed under APO in accordance with 19 CFR 351.305(a)(3). Timely 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 the terms of an APO is a violation subject to sanction.

    This determination and this notice are issued and published pursuant to sections 735(d) and 777(i)(1) of the Act.

    Dated: October 21, 2016. Ronald K. Lorentzen, Acting Assistant Secretary for Enforcement and Compliance. Appendix I Scope of the Investigation

    This investigation covers welded carbon-quality steel pipes and tube, of circular cross-section, with an outside diameter (O.D.) not more than nominal 16 inches (406.4 mm), regardless of wall thickness, surface finish (e.g., black, galvanized, or painted), end finish (plain end, beveled end, grooved, threaded, or threaded and coupled), or industry specification (e.g., American Society for Testing and Materials International (ASTM), proprietary, or other), generally known as standard pipe, fence pipe and tube, sprinkler pipe, and structural pipe (although subject product may also be referred to as mechanical tubing). Specifically, the term “carbon quality” includes products in which:

    (a) Iron predominates, by weight, over each of the other contained elements;

    (b) the carbon content is 2 percent or less, by weight; and

    (c) none of the elements listed below exceeds the quantity, by weight, as indicated:

    (i) 1.80 percent of manganese;

    (ii) 2.25 percent of silicon;

    (iii) 1.00 percent of copper;

    (iv) 0.50 percent of aluminum;

    (v) 1.25 percent of chromium;

    (vi) 0.30 percent of cobalt;

    (vii) 0.40 percent of lead;

    (viii) 1.25 percent of nickel;

    (ix) 0.30 percent of tungsten;

    (x) 0.15 percent of molybdenum;

    (xi) 0.10 percent of niobium;

    (xii) 0.41 percent of titanium;

    (xiii) 0.15 percent of vanadium; or

    (xiv) 0.15 percent of zirconium.

    Covered products are generally made to standard O.D. and wall thickness combinations. Pipe multi-stenciled to a standard and/or structural specification and to other specifications, such as American Petroleum Institute (API) API-5L specification, may also be covered by the scope of these investigations. In particular, such multi-stenciled merchandise is covered when it meets the physical description set forth above, and also has one or more of the following characteristics: Is 32 feet in length or less; is less than 2.0 inches (50 mm) in outside diameter; has a galvanized and/or painted (e.g., polyester coated) surface finish; or has a threaded and/or coupled end finish.

    Standard pipe is ordinarily made to ASTM specifications A53, A135, and A795, but can also be made to other specifications. Structural pipe is made primarily to ASTM specifications A252 and A500. Standard and structural pipe may also be produced to proprietary specifications rather than to industry specifications.

    Sprinkler pipe is designed for sprinkler fire suppression systems and may be made to industry specifications such as ASTM A53 or to proprietary specifications.

    Fence tubing is included in the scope regardless of certification to a specification listed in the exclusions below, and can also be made to the ASTM A513 specification. Products that meet the physical description set forth above but are made to the following nominal outside diameter and wall thickness combinations, which are recognized by the industry as typical for fence tubing, are included despite being certified to ASTM mechanical tubing specifications:

    O.D. in inches (nominal) Wall
  • thickness
  • in inches
  • (nominal)
  • Gage
    1.315 0.035 20 1.315 0.047 18 1.315 0.055 17 1.315 0.065 16 1.315 0.072 15 1.315 0.083 14 1.315 0.095 13 1.660 0.055 17 1.660 0.065 16 1.660 0.083 14 1.660 0.095 13 1.660 0.109 12 1.900 0.047 18 1.900 0.055 17 1.900 0.065 16 1.900 0.072 15 1.900 0.095 13 1.900 0.109 12 2.375 0.047 18 2.375 0.055 17 2.375 0.065 16 2.375 0.072 15 2.375 0.095 13 2.375 0.109 12 2.375 0.120 11 2.875 0.109 12 2.875 0.165 8 3.500 0.109 12 3.500 0.165 8 4.000 0.148 9 4.000 0.165 8 4.500 0.203 7

    The scope of this investigation does not include:

    (a) Pipe suitable for use in boilers, superheaters, heat exchangers, refining furnaces and feedwater heaters, whether or not cold drawn, which are defined by standards such as ASTM A178 or ASTM A192;

    (b) finished electrical conduit, i.e., Electrical Rigid Steel Conduit (also known as Electrical Rigid Metal Conduit and Electrical Rigid Metal Steel Conduit), Finished Electrical Metallic Tubing, and Electrical Intermediate Metal Conduit, which are defined by specifications such as American National Standard (ANSI) C80.1-2005, ANSI C80.3-2005, or ANSI C80.6-2005, and Underwriters Laboratories Inc. (UL) UL-6, UL-797, or UL-1242;

    (c) finished scaffolding, i.e., component parts of final, finished scaffolding that enter the United States unassembled as a “kit.” A kit is understood to mean a packaged combination of component parts that contains, at the time of importation, all of the necessary component parts to fully assemble final, finished scaffolding;

    (d) tube and pipe hollows for redrawing;

    (e) oil country tubular goods produced to API specifications;

    (f) line pipe produced to only API specifications, such as API 5L, and not multi-stenciled; and

    (g) mechanical tubing, whether or not cold-drawn, other than what is included in the above paragraphs.

    The products subject to this investigation are currently classifiable in Harmonized Tariff Schedule of the United States (HTSUS) statistical reporting numbers 7306.19.1010, 7306.19.1050, 7306.19.5110, 7306.19.5150, 7306.30.1000, 7306.30.5015, 7306.30.5020, 7306.30.5025, 7306.30.5032, 7306.30.5040, 7306.30.5055, 7306.30.5085, 7306.30.5090, 7306.50.1000, 7306.50.5030, 7306.50.5050, and 7306.50.5070. The HTSUS subheadings above are provided for convenience and U.S. Customs purposes only. The written description of the scope of the investigation is dispositive.

    Appendix II List of Topics Discussed in the Final Issues and Decision Memorandum I. Summary II. Background III. Changes Since the Preliminary Determination IV. Use of Adverse Facts Available V. Discussion of the Issues General Issues Comment 1: Financial Statements to Use for Financial Ratios Comment 2: Water Surrogate Value Comment 3: Verification Findings Company-Specific Issues SeAH Issues Comment 4: Misreported U.S. Sales Destinations Comment 5: SeAH's Sodium Hydroxide and UniCoat Surrogate Values Comment 6: Brokerage and Handling Related to Hot-Rolled Coil Surrogate Values Comment 7: Cap on Freight Revenue Comment 8: Surrogate Value for SeAH's Hot-Rolled Coils Comment 9: Conversion of Surrogate Value for Vietnamese Inland Freight Comment 10: U.S. Credit Expenses Comment 11: Differential Pricing Analysis Hongyuan Issues Comment 12: Hongyuan's Hot-Rolled Strip Value Comment 13: U.S. Indirect Selling Expenses Comment 14: Treatment of Strengthening Tubes Used For Packing Comment 15: Record-keeping of Hongyuan's U.S. Affiliate VI. Recommendation
    [FR Doc. 2016-26112 Filed 10-27-16; 8:45 am] BILLING CODE 3510-DS-P
    DEPARTMENT OF COMMERCE International Trade Administration [C-535-904] Circular Welded Carbon-Quality Steel Pipe From Pakistan: Final Affirmative Countervailing Duty Determination AGENCY:

    Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce.

    SUMMARY:

    The U.S. Department of Commerce (the Department) determines that countervailable subsidies are being provided to exporters and producers of circular welded carbon-quality steel pipe (circular welded pipe) from Pakistan. For information on the estimated subsidy rates, see the “Suspension of Liquidation” section of this notice.

    DATES:

    Effective October 28, 2016.

    FOR FURTHER INFORMATION CONTACT:

    Kaitlin Wojnar, AD/CVD Operations, Office VII, Enforcement and Compliance, International Trade Administration, U.S. Department of Commerce, 14th Street and Constitution Avenue NW., Washington, DC 20230; telephone: (202) 482-3857.