Federal Register Vol. 81, No.229,

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 to supersede AD 2014-12-06, Amendment 39-17867 (79 FR 34403, June 17, 2014) (“AD 2014-12-06”). AD 2014-12-06 applied to certain Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Airbus Model A310 series airplanes. AD 2014-12-06 required repetitive ultrasonic or detailed inspections of the external area of the aft cargo door sill beam for cracking, and repair if necessary. AD 2014-12-16 also provided an optional one-time HFEC inspection that would terminate the repetitive inspections. The NPRM published in the Federal Register on April 27, 2016 (81 FR 24745). The NPRM was prompted by findings of multiple fatigue cracks in the aft cargo door that indicated the need for repetitive HFEC inspections. The NPRM proposed to continue to require repetitive ultrasonic or detailed inspections of the external area of the aft cargo door sill beam for cracking, and repair if necessary. The NPRM also proposed to require the previously optional terminating HFEC inspection, and to require that it be done repetitively. We are issuing this AD to detect and correct fatigue cracking of the cargo door sill beam, lock fitting, and torsion box plate. Failure of one or more of these components could result in the loss of the door locking function and, subsequently, complete loss of the cargo door in flight with the risk of rapid decompression.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0150, dated July 23, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Airbus Model A300 B4-600, B4-600R, and F4-600R series airplanes, and Model A300 C4-605R Variant F airplanes (collectively called Model A300-600 series airplanes); and Airbus Model A310 series airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-5596.

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

The Air Line Pilots Association, International stated that it supports the NPRM.

One commenter, Mark Hilborn, requested that we revise the structure of paragraph (i) of the proposed AD for clarity and to change the location where the reports should be sent. He stated that we could rewrite paragraph (i) of the proposed AD to remove the subparagraphs.

We partially agree with the request. We have updated the contact information for submitting the reports. We do not find it necessary, however, to change the remainder of the paragraph since it is restated from AD 2014-12-06, and the compliance times are correct.

Mark Hilborn requested we revise paragraph (m) of the proposed AD for clarity and to add new subparagraphs to aid in that.

We agree with the request and have changed paragraph (m) of this AD accordingly.

We have revised this AD to require the current version of the service information identified for the terminating action specified in this AD. This service information was revised to make a small tooling change; no additional work is necessary for airplanes on which the original version of this service information was accomplished. We have also added credit for airplanes on which the original version of this service information was accomplished, and made related changes accordingly.

We reviewed the available data, including the comments received, and determined that air safety and the public interest require adopting this AD with the changes described previously and minor editorial changes. We have determined that these changes:

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

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

Airbus has issued the following service information, which describes procedures for repetitive HFEC inspections of the cargo door sill beam, lock fitting, and torsion box plate. These service bulletins are distinct since they apply to different airplane models.

• Airbus Service Bulletin A300-53-6179, dated December 12, 2014.

• Airbus Service Bulletin A310-53-2139, dated December 12, 2014.

Airbus has also issued AOT A53W005-14, Revision 01, dated April 29, 2014, which describes procedures for doing an ultrasonic inspection or detailed inspection of the aft cargo door sill beam external area for cracking.

Additionally, Airbus has issued the following service information, which describes procedures for reinforcing the aft cargo door sill beam are between FR 60 and FR 63. These service bulletins are distinct since they apply to different airplane models.

• Airbus Service Bulletin A310-53-2141, Revision 01, dated July 2, 2015.

• Airbus Service Bulletin A300-53-6181, Revision 01, dated July 2, 2015.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 75 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to 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 current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

Discussion

We issued a notice of proposed rulemaking (NPRM) to amend 14 CFR part 39 by adding an AD that would apply to certain Fokker Services B.V. Model F28 airplanes. The NPRM published in the Federal Register on June 1, 2016 (81 FR 34929) (“the NPRM”). The NPRM was prompted by reports indicating that the MLG could not be extended and locked down during approach. The NPRM proposed to require a detailed inspection of the restrictor check valve filter screens to detect any degraded or failed filter screens, and installation of serviceable parts. We are issuing this AD to detect and correct any degraded or failed filter screens. This condition, if not corrected, could prevent MLG extension and lock-down and result in an emergency landing with consequent injury to occupants and damage to the airplane.

The European Aviation Safety Agency (EASA), which is the Technical Agent for the Member States of the European Union, has issued EASA Airworthiness Directive 2015-0077, dated May 6, 2015 (referred to after this as the Mandatory Continuing Airworthiness Information, or “the MCAI”), to correct an unsafe condition for certain Fokker Services B.V. Model F28 airplanes. The MCAI states:

You may examine the MCAI in the AD docket on the Internet at http://www.regulations.gov by searching for and locating Docket No. FAA-2016-6895.

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

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

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

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

Fokker Services B.V. has issued the following service information, which describes procedures for the replacement of hydraulic hose assemblies. These service bulletins are distinct because they apply to different airplane models.

• Fokker Service Bulletin SBF28-32-164, dated January 14, 2015.

• Fokker Service Bulletin SBF100-32-166, dated January 14, 2015.

This service information is reasonably available because the interested parties have access to it through their normal course of business or by the means identified in the ADDRESSES section.

We estimate that this AD affects 8 airplanes of U.S. registry.

We estimate the following costs to comply with this AD:

A federal agency may not conduct or sponsor, and a person is not required to respond to, nor shall a person be subject to 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 current valid OMB control number. The control number for the collection of information required by this AD is 2120-0056. The paperwork cost associated with this AD has been detailed in the Costs of Compliance section of this document and includes time for reviewing instructions, as well as completing and reviewing the collection of information. Therefore, all reporting associated with this AD is mandatory. Comments concerning the accuracy of this burden and suggestions for reducing the burden should be directed to the FAA at 800 Independence Ave. SW., Washington, DC 20591, ATTN: Information Collection Clearance Officer, AES-200.

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

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

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

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

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

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

3. Will not affect intrastate aviation in Alaska; and

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

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

On August 28, 2015, the FAA published the notice of proposed rulemaking (NPRM), Update of Overflight Fee Rates (80 FR 52217). This rulemaking updates the existing overflight fees (last updated in a 2011 Final Rule) using more current FAA cost accounting and air traffic activity data.

The FAA is increasing the rates for enroute and oceanic overflights over three 12-month intervals to bring cost recovery from FY 2008 to FY 2013 recovery. The following table shows the increases:

Each fee rate will be effective for a 12-month period. However, the FAA will not make fee adjustments based on fiscal year or calendar year, but rather in 12-month intervals based on the effective date of this final rule.

The FAA received 74 comments to the NPRM. The Aircraft Owners and Pilots Association (AOPA) and 37 individuals (25 of whom were part of a form letter campaign) raised the issue that the $250 overflight fee billing threshold has not been raised while the fee rate has been raised. As a result, flights that were not getting billed in previous years because they were below the $250 threshold amount are now receiving a bill. Based on the comments received and subsequent analysis, the FAA is increasing the overflight fee billing threshold from $250 to $400.

The FAA also finalizes several organizational and content revisions to part 187 to clarify the overflight fees requirements.

The higher overflight rates based on FY 2013 unit costs will allow the FAA to move closer to full cost recovery of air traffic control services already being provided to operators. The present value of the fee increases through the third 12-month interval—when the full increase in rates will have taken place—is $9,560,692 for foreign operators and $141,888 for domestic operators. The increased fees provide greater incentives for foreign and domestic operators to economize on U.S. air traffic control facilities and U.S.-controlled airspace, thus increasing the efficient allocation of resources.

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

This rulemaking is promulgated under the authority described in Chapter 453, Section 45301, et seq. Under that Chapter, the FAA is charged with prescribing regulations for the collection of fees for air traffic control and related services provided to aircraft, other than military and civilian aircraft of the United States Government or a foreign government, that transit U.S.-controlled airspace, but neither take off from nor land in the United States (“overflights”). This final rule is within the scope of that authority.

The FAA's overflight fees were initially authorized in section 273 of the Federal Aviation Reauthorization Act of 1996. After a series of legal challenges and refinements, overflight fee rates were implemented in their current form in 2001. Since that time the fee rates have been based on cost data from the FAA's Cost Accounting System and air traffic data from the FAA's Traffic Flow Management System (TFMS). They were last updated in 2011. The 2011 final rule updated the existing rates by using cost and activity data for FY 2008. Because the rates had not been updated for 9 years, and the total enroute and oceanic rate increases were significant, the FAA decided to phase in the increases. The 2011 final rule phased in the increases over a 4-year period, with rate increases occurring on October 1 of 2011, 2012, 2013, and 2014. Thus, on October 1, 2014, the FAA was recovering the amounts that would have produced full cost recovery in FY 2008.

The FAA established and chartered an Overflight Fees Aviation Rulemaking Committee (ARC) consisting of foreign air carriers (and trade associations of those carriers) that are subject to the FAA's overflight fees. The ARC was chartered on May 1, 2013, with the task to provide the FAA a report detailing recommendations for tasks moving forward with the process of updating the overflight fee rates.

The ARC met with the FAA on June 12, 2013, and on January 23, 2014. On February 14, 2014, the ARC submitted several recommendations on future overflight rate updates. For a full discussion of the ARC's recommendations and FAA's responses, see the NPRM published at 80 FR 52218-52219.

The FAA received 74 comments to the FAA's notice of proposed rulemaking to update the fee rates. Sixty-eight comments were received from individuals. Of the 68 individual comments received, there were 25 commenters who commented as part of a form letter campaign that focused on the interests of general aviation pilots flying from the U.S. to the Caribbean who make one or more intermediate stops enroute due to the aircraft's limited range or human physiological needs.1 The FAA also received comments from three carriers and three associations: Carriers included British Airways, Lufthansa Airlines and Air Canada, and associations included National Airlines Council of Canada (NACC), International Air Transport Association (IATA) and Aircraft Owners and Pilots Association (AOPA).

Commenters raised a total of 17 issues. These issues, as well as FAA's responses, are discussed below.

AOPA and 37 individuals (25 of whom were part of the form letter campaign) raised the issue that the $250 overflight fee billing threshold should be raised. Their concern was that while the overflight fee rate has increased, the billing threshold has not increased. As a result, flights that were not being billed in previous years because they were below the threshold are now receiving a bill. Commenters also asked that the threshold be increased to $450 and that the amendment should provide for automatic adjustments to correspond with future increases in overflight fees rates.

FAA concurs that the overflight fee billing threshold should be increased. In consideration of the comments, the FAA has analyzed the minimum threshold for overflight billings and has decided to increase this minimum threshold from $250 to $400 as part of this rulemaking. Overflight fee rates (per 100 nautical miles) in the August 2001 final rule were $33.72 for enroute and $18.94 for oceanic and the rule included a minimum billing threshold of $250. The NPRM proposed the following rates over a 3 year period:

This final rule adopts the rates as proposed. The rates under this final rule are 83% higher for enroute and 40% higher for oceanic as compared with the rates in the 2001 final rule ($33.72 for enroute and $18.94 for oceanic). The minimum billing threshold of $250 has been updated to account for the percentage growth in the fee rates, resulting in a threshold of $457.81 for enroute and $349.92 for oceanic. A weighted average of the two rates is then calculated using actual FY 2014 enroute and oceanic miles to calculate the updated billing threshold of $400.

AOPA and 67 individuals (25 of whom were part of a form letter campaign) commented that U.S. general aviation should be exempt from paying overflight fees. These commenters stated that Congress did not intend to impose overflight fees on general aviation when it granted FAA authority to establish overflight fees.

Commenters also stated that charging general aviation traffic does little to recover air traffic control costs and general aviation traffic should not be burdened with overflight fees since they are an existing active consumer of fuel and other taxes which fund FAA and aviation services.

Further, commenters stated their view that because the FAA excluded enroute Guam and San Juan costs from total costs in the NPRM, that FAA therefore acknowledged that these fees should not apply to U.S. general aviation traffic.

The FAA notes that Congress did not differentiate between general aviation and commercial aviation in the overflight fees statute. Title 49 U.S.C. 45301 (a) states that “[t]he Administrator shall establish a schedule of new fees, and a collection process for such fees, for . . . [a]ir traffic control and related services provided to aircraft other than military and civilian aircraft of the United States government or of a foreign government that neither take off from, nor land in, the United States.” Similarly, under the FAA's Fee Regulation, 14 CFR part 187, App. B, any person who conducts a flight through U.S.-controlled airspace that does not include a landing or takeoff in the United States must pay a fee for the FAA's rendering or providing certain services, including but not limited to the following: Air traffic management; communications; navigation; radar surveillance, including separation services; flight information services; procedural control; and emergency services and training.

Consistent with the statutory and regulatory requirements, the FAA is required to collect overflight fees from any person who transits US airspace and neither takes off or lands in the United States. Neither the statute nor the regulation permit the FAA to exclude general aviation operators or to consider whether one aviation user group utilizes air traffic control services more than another. Additionally, there is no statutory or regulatory exception to the overflight fee requirement when persons covered by the requirement pay fuel or other related aviation taxes.

With regard to enroute Guam and San Juan costs and miles being excluded, the FAA has determined that the NPRM incorrectly stated that the combined enroute Guam and San Juan control facilities “may handle a mix of general and commercial aviation traffic.” The FAA had intended to state that these control facilities “may handle a mix of terminal and enroute aviation traffic.” This correction does not impact the underlying analysis.

Overflight fees are assessed on all traffic types with the exceptions noted in the August 28, 2015 NPRM, which stated that “The FAA's costs used for this fee calculation are total costs because the services provided benefit all system users, including overflight users”. 80 FR at 52218. While combined control facilities may handle a mix of Terminal and Enroute aviation traffic, this is not an issue because 49 U.S.C. 45301, as noted above, does not distinguish or exempt general aviation users from the fees.

AOPA and 32 individuals (25 of whom were part of a form letter campaign) stated that the FAA's proposal would impose overflight fees on U.S. registered general aviation operations that land in or depart from the United States but also make intermediate stops enroute due to the aircraft's limited range or human physiological needs. AOPA provided an example as follows:

The commenters also noted that when general aviation is charged for same-day fuel stops, a significant amount of time is wasted in working with the FAA to get these charges reversed.

The FAA emphasizes that overflight fees are assessed based on an evaluation of each flight. During the evaluation process, each flight is reviewed to consider whether an intermediate stop for fuel has occurred. A flight is not considered to be an overflight (i.e., triggering an overflight fee) if it departs or lands in the United States and the FAA can determine that an intermediate stop for fuel occurred. In that case, no fee is assessed. The amount of time on the ground at an intermediary location is considered when making the determination.

AOPA and 6 individuals stated that by failing to recognize the limitations of most general aviation aircraft, the proposed rule may encourage non-stop flights to or from U.S. airports in order to avoid overflight fees, even though an intermediate fuel stop would increase the safety of the operation or is otherwise physiologically necessary. Commenters argued that this is not in the best interest of safety. One commenter stated that to avoid the fees “[t]he pilots will not use air traffic services. They will not travel, or travel unsafely, perhaps to the point of turning off transponders. And with this will cause preventable accidents.”

As previously stated, overflight fees are assessed based on an evaluation of each flight. A flight is not considered to be an overflight if it departs or lands in the United States. This can include intermediate stops for fuel.

Additionally, as discussed previously, the FAA is raising the minimum billing threshold from $250 to $400 as part of this rulemaking action. This will provide for air traffic control services in many instances without the pilot necessarily incurring any cost.

Discussion of turning off transponders is an unlikely scenario and an unnecessary action. Use of a transponder in and of itself will not generate user fees. User fees are based on the filing of a flight plan and receiving air traffic control services such as flight following or instrument flight rules separation services. A discrete transponder code would also need to be assigned to the aircraft. One could continue to use the transponder without incurring any cost, such as squawking 1200, indicating a Visual Flight Rules (VFR) operation without necessarily receiving air traffic control services.

A desire to reduce or minimize the dollar cost associated with any flight does not alleviate a pilot from the duties and responsibilities associated with acting as pilot in command. The pilot in command is the final authority and ultimately responsible for the operational safety of that flight. Pilots avoiding necessary fuel stops and/or turning off transponders to avoid air traffic control services and fees will likely jeopardize the safety of that flight and create unnecessary risk. The overflight fee must be considered part of the planning and associated cost of any flight, where a pilot does not take off or land from an airport located in the United States. Again, intermediate fuel stops that are of a short duration can be considered part of an overall flight that originates or departs from a United States location.

In the NPRM, the FAA asked for comments on whether it should expedite the increase of overflight fee rates to achieve full cost recovery. IATA, NACC, Lufthansa, Air Canada and British Airways opposed an expedited increase to enable cost recovery and suggested that the overflight fee rates be frozen at their present level until the ARC is re-convened and a new proposal for the rate increases is discussed and agreed upon. Air Canada noted that the Air Transport Agreement between Canada and the United States states that user charges must be “just, reasonable, and not unjustly discriminatory.”

The FAA has reviewed the feedback on expediting the increase in overflight fee rates for cost recovery and has decided to proceed with the rate increases proposed in the NPRM without expediting them. Congress has directed the FAA to establish and maintain overflight fees “reasonably related to the Administration's costs.” To retain the cost-based relationship, that means the FAA must periodically review and revise its overflight fee rates, and that is why the FAA is now proceeding to the final rule to impose the fee rates proposed in the NPRM. The FAA believes that fees “reasonably related to the Administration's costs” would necessarily be “just, reasonable, and not unjustly discriminatory,” under the Transport Agreement. In addition, the overflight fees are not unjustly discriminatory because they are assessed only on aircraft flights that transit U.S.-controlled airspace, but neither land in nor depart from the United States. Both foreign and domestic operators are charged in the same manner. Those aircraft that do not transit U.S.-controlled airspace pay no fee.

Lufthansa, Air Canada, and IATA commented on the issue of the cost base used for the fee calculation and stated two concerns:

The first comment on marginal cost allocation stated generally is that costs for services neither used nor required by overflights should be removed from the cost base. The commenters also expressed concern that the level of overflight fees goes beyond that which is reasonably related to costs for providing air traffic control and related services to these operations. Commenters pointed out that the ARC noted that the amount recovered for non-overflight 2 services has remained unchanged, while overflight fees have continued to rise at a steady pace over the same period. IATA stated that insufficient data has been provided to justify FAA's claim that under the ARC proposal, “the FAA would have recovered slightly less than 60% for enroute and 50% for oceanic of the total increase between FY 2015 rates (based on FY 2008 costs) and rates using FY 2013 data.”

Second, these commenters asserted that it is difficult to allocate overhead costs in a fair and justifiable manner to the air navigation cost base, specifically to the cost base of overflight charges. They asserted that this is because, contrary to most other air navigation service providers around the world, the FAA does not exclusively provide air traffic control services and hence, according to Air Canada, there is a fundamental problem with the FAA's “organizational structure and complexity and the size of the overhead cost.”

The FAA notes the cost base concerns raised by Lufthansa, Air Canada, and IATA are not accurate. The methodology for estimating the fee is the same one used in the FY 2011 Final Rule to which the ARC had agreed.

Since the original issuance of the Final Rule relating to overflight fees in August 2001, the statutory standard for the fees was relaxed by Congress to provide that the fees need to be “reasonably related” to costs. This is in contrast to the previous standard in effect at the time of the issuance of the original Interim Final Rule in August 2000. That standard provided that the fees needed to be “directly” related to the FAA's costs of providing the air traffic control and related services.

The FAA continues to use the same methodology for calculating the fee rates as was used in the 2011 update. The overflight fee rate is calculated by dividing total ATO costs by the total flight miles. The rate calculation methodology is used separately for both enroute and oceanic cost and mile data to derive the overflight fee rate for enroute and oceanic. ATO costs and flight miles used in this calculation are system totals and not related only to overflights. Therefore, there is no need to exclude any costs from the cost base. The FAA and ARC proposals are both based on FY 13 actual rates. The difference in methodology is that the FAA proposed a 3 year compounded annual growth rate (CAGR) phased-in over 3 years. The ARC proposal is based on a 5 year CAGR that only includes 3 years of phase-in. After year 3 the ARC recommended that a new ARC be re-convened to determine the need for updates after that period. Under the ARC's proposal therefore, the FAA would recover less than the FY13 levels.

In response to IATA's statement that the FAA has not provided the data to support its claim that “the FAA would have recovered slightly less than 60% for enroute and 50% for oceanic of the total increase between FY 2015 rates (based on FY 2008 costs) and rates using FY 2013 data,” the FAA provides the following details (per 100 nautical miles):

Inclusion of overhead is a commonly accepted practice in fee setting, is consistent with generally accepted accounting principles, and is a specifically allowable element of cost under Office of Management and Budget (OMB) Circular No. A-25 on User Charges as well as International Civil Aviation Organization's (ICAO'S) Policies on Charges for Airports and Air Navigation Services. In addition, the same Act of Congress that changed the above fee setting standard from “directly” to “reasonably related” also gave the Administrator sole and final discretion in the determination of FAA costs. 49 U.S.C. 45301(b)(1). Again, the methodology used for determining overhead also remains unchanged from the FY2011 Final Rule and is based on FAA's Cost Accounting System.

Lufthansa, Air Canada, NACC and IATA commented on the issue of increasing FAA costs. They expressed concern over the steady pace at which FAA operational costs continue to rise and their impact on overflight fees. Industry partners are expected to embark on cost control and cost reduction efforts and the FAA is urged to commit to a cost efficiency target that remains below inflation. Also, IATA expressed disagreement with the NPRM stating that the FAA “believes forecasting based on projected traffic is more appropriate than using arbitrary cost targets” and stated that it has found that unanticipated and untimely economic occurrences can significantly impact forecast-based traffic projections, resulting in inaccurate accounting of traffic demand, business plans, required resources, and funding streams. As an example, over the past several years, the FAA forecast has consistently overestimated the growth projections for operations in the National Airspace System. Lufthansa suggested freezing the overflight fee rates at their current level and “reconsider the whole question of overflight fees.”

The issue of FAA's operational costs, and the rate at which they may increase, is outside the scope of this rulemaking. Under the statutory requirement, overflight fees must be “reasonably related to the Administration's costs, as determined by the Administrator, of providing the services rendered.” 49 U.S.C. 45301(b)(1). Neither the FAA traffic forecast nor cost targets are used in the fee calculation, but rather fees are calculated based on actual cost and miles.

Lufthansa, IATA and Air Canada commented on the cost base used for the overflight fee rate calculation. Lufthansa and Air Canada both asserted that Air Route Traffic Control Center's (ARTCC's) have staff dedicated to manage, organize and optimize traffic approaching major airports in metropolitan areas. These working positions and all associated costs are included in the cost base for enroute, as the traffic concerned is still hundreds of miles away from the respective TRACON. As part of the enroute cost base, the costs are partly paid for by overflight fees. However, according to the commenters, overflying traffic does not require those services and hence, these costs should be excluded from the cost base used for the rate calculation. IATA also reiterated that the ARC recommended that the costs for services not used by overflights (e.g., flow control into major airports and approach services at airports and airfields not served by a TRACON) be removed from the cost base.

Lufthansa also commented that it is unacceptable for the FAA to simply qualify services as “de minimis” without providing any details and justification. According to Lufthansa, “[t]he NPRM on overflight fees is about facts and data and transparency of these. The term[] “de minimis” is a qualification, but not a quantification, and is not appropriate or acceptable in this context.”

The FAA does not agree that costs relating to flow control should be removed from the enroute cost base. The Traffic Management Unit personnel at the enroute centers are responsible for the safe and efficient flow of all traffic, including overflights, in their airspace, and it would be neither reasonable nor practicable for the FAA to attempt to sort out and exclude the portion of such costs solely attributed to overflights.

Moreover, air traffic flow management is a specifically allowable item for cost recovery under ICAO's Policies on Charges for Airports and Air Navigation Services (ICAO Document 9082).

While it is true that there are low activity airports and airfields that are not served by a TRACON or an air traffic control tower, and that in these instances the air traffic control services are provided by enroute controllers, the level of such activity is sufficiently low that it does not require increased staffing. See 76 FR 43114-43115 (July 20, 2011).

British Airways, Air Canada, Lufthansa, IATA and NACC expressed disappointment that the FAA has chosen to dismiss the ARC's recommendations and stated that they viewed the ARC process as failed. They stated concern that the FAA's proposed rule included several new methodologies for which there had not been any consultation with industry and for which prior indication and relevant information required to accurately determine the cost-based charges had not been provided. Had any prior indication or concerns been raised, these ARC members stated that they could have provided guidance to the Agency. Additionally, these ARC members stated that the FAA released its NPRM one month prior to the current rate expiration date, leaving no time for the ARC members to react to it and develop an alternative that could be supported by all parties.

Under the ARC's May 1, 2013 Charter, the objective of the ARC was to provide “advice and recommendations on the appropriate amounts for future overflight fees.” However, the FAA has no obligation to accept the advice and recommendations; it takes the ARC's report under advisement. The agency also is not required to coordinate with the ARC after the ARC has issued its report. In most cases, the ARC would be terminated after its business has concluded.

While the FAA considered the ARC's recommendations, it declined to implement the recommendations. Also, FY 2015 enroute and oceanic overflight fee rates do not have a set expiration date and remain in effect until notice of new rates is published and the new rates are effective. Consequently, the NPRM was not released one month prior to the expiration date of these fee rates.

Lufthansa, British Airways and IATA commented that the ARC was not provided with relevant information such as staffing levels, labor costs, actual and projected traffic growth, and efficiency measures, to be able to accurately determine the cost-based user fee. They stated that without this information it is impossible to accurately determine cost based charges.

The FAA does not concur that information relevant to overflight fees was kept from the ARC. The FAA provided detailed responses to ARC questions in 2013. Moreover, during the ARC meetings, the FAA provided the following relevant information to ARC members:

The data stated above as well as responses to the ARC's questions include the details to accurately determine cost based fee charges.

Lufthansa noted FAA's proposal in the NPRM to exclude enroute Guam and San Juan costs from total FAA costs. Lufthansa noted that while it did not disagree with the exclusion in principle, it did not see in the NPRM how the exclusion would impact cost base, traffic, and fees. Lufthansa then questioned why this change and others in the NPRM had not been brought to the attention of the ARC.

The FAA response is as follows:

As an initial matter, the ARC concluded business on February 14, 2014, when it issued its recommendations. It was not until August 28, 2015, however, that FAA announced in the NPRM that it was proposing to exclude Guam and San Juan costs from total FAA costs. As a result, this change could not have been brought before the ARC, which was terminated 18 months prior to the time that the NPRM was issued.

Costs:

Guam and San Juan facilities are being excluded from the enroute costs to be consistent with Honolulu. This determination was made after reviewing the ARC recommendations. As a result, the FAA enroute costs have decreased.

Traffic Mileage:

The enroute miles associated with Honolulu and oceanic miles for Guam were double-counted when presented to the ARC as they are also counted as part of the Oakland oceanic airspace. It was determined that the mileage was to be removed for these facilities. As a result, the total flight miles (GCD-nm) for enroute and oceanic were lower.

Net Impact:

With the decrease in costs and flight miles for enroute, the per 100nm fee decreased. On the oceanic side, the costs remained un-changed while the flight miles decreased, resulting in an increased per 100 nm fee.

This change was not brought to the attention of the ARC before the publication of the NPRM because, at the time of the change, the FAA had already received the ARC's recommendations.

Enroute fees are $61.75 per 100 nautical miles (based on FY13 cost recovery) and oceanic fees are $26.51/100 nautical miles (based on FY13 cost recovery).

Thirteen individuals stated that it is not fair that small planes are charged the same fee rate as large commercial planes. They suggested that a tiered rate be charged on only U.S.-registered aircraft with a not-to-exceed amount depending upon the aircraft total gross weight similar to landing fees at larger airports or that the rate be based on the number of seats on the plane.

The FAA does not concur that the fee rates should be charged based on weight or the number of seats on the aircraft. As noted above, the FAA is required to collect overflight fees from any person who transits US airspace and neither takes off or lands. 49 U.S.C. 45301(a); 14 CFR part 187, App. B. The statutory requirement is that the overflight fees be “reasonably related to the Administration's costs, as determined by the Administrator, of providing the services rendered.” 49 U.S.C. 45301(b). No distinction is made in the law between types of aircraft, aircraft weight, or number of seats. In addition, VFR aircraft utilizing flight following services are provided similar service as IFR traffic. They are both charged overflight fees.

One individual stated that general aviation was not represented in the ARC, which was established to examine overflight fees and provide the FAA recommendations on future overflight fee rates.

The 2013 ARC inadvertently did not include representatives from general aviation because historically, members of this ARC and its predecessors were primarily composed of the parties from the extensive 1997-2003 overflight fees litigation—the Air Transport Association of Canada and seven international air carriers. Representatives from general aviation were not parties to the litigation. Membership of the 2013 ARC appears to have been an outgrowth of the 2008 overflight fees ARC, which appears to have been an outgrowth of the 2004 ARC on overflight fees. According to the August 26, 2009 ARC Report, “[a]s part of the settlement with the litigating carriers, the FAA agreed to the creation of the ARC, which was to consist of FAA and industry representatives working to examine in depth the FAA's methodology for overflight fees and to recommend whether it should be modified.”

Despite the fact that general aviation was not represented on the ARC, general aviation was provided an opportunity to review and comment on the final rule. Twenty-five of the 74 comments that the FAA received in response to the NPRM were filed by advocates of general aviation. As noted above, the general aviation commenters raised the issue that the $250 overflight fee billing threshold had not been raised while the fee rate had been raised. As a result, flights that were not getting billed in previous years because they were below the $250 threshold amount were now receiving a bill. As noted, the FAA concurred with the general aviation commenters that billing threshold should be increased. In consideration of the comments, the FAA will be increasing the minimum threshold from $250 to $400 as part of this rulemaking.

Lufthansa, Air Canada, NACC and IATA asked for further clarification on the timeline of VFR flights being included in the calculation of overflight fees. Additionally, three individuals stated that because VFR traffic neither requires nor receives the same level of service as IFR traffic, VFR traffic should be charged less or excluded from the overflight fees requirement.

VFR traffic utilizing flight following services are already included in the total mileage. Hence, there is no need for a timeline. In order to provide VFR flight following services, air traffic control generates a “flight plan” within FAA systems that is captured in the TFMS. This allows the aircraft call-sign (typically tail number for VFR flights) to be displayed and tracked against the discrete beacon code assigned by air traffic control. Non-discrete beacon codes (e.g., 1200) are not provided by TFMS and therefore not captured in the overflights data. These VFR flights would not be assessed an overflight fee. This is consistent with the recommendation.

Air traffic control actively monitors and controls VFR flight following aircraft providing them with updates and guidance when necessary. VFR aircraft utilizing flight following are provided similar service as IFR traffic.

Lufthansa, Air Canada, IATA and NACC commented on the use of great circle distance for calculating the nautical mile distance used in the overflight fee rate calculation. They stated that great circle distance was not part of the ARC agenda, nor was it discussed in terms of calculating overflight fees and stress the importance of ensuring the adoption of great circle distance be revenue neutral to the FAA. Further, they ask that a clearly defined GCD catalogue be published and consulted with airline users before it takes effect and that the FAA provide examples of same-route cost comparisons between great circle distance, as proposed, versus cost data (via the Cost Accounting System) and air traffic data (from TFMS).

The FAA has not changed the application of great circle distance within overflights. The great circle distance methodology is the same as used in the previous rulemaking (2011 Final Rule) with no change to the way the fees are generated. The formula in the rule was rewritten to enhance clarity and transparency concerning how the fees are assessed. Since the great circle distance use and methodology remains the same, FAA has determined there is not a need to consult with the airline users before taking effect (since it has already been in effect), nor is there a need for a great circle distance catalogue to be published.

According to IATA, the NPRM indicates that there were 469 domestic operators (mostly small entities) that overflew U.S. controlled airspace in FY 2013. The NPRM provided assurances that the rulemaking would not have a significant economic impact on small entities (estimated at an average increase of $36.50 per operation). In its comments, IATA asked for further detail as to the air traffic control services rendered to these domestic operators: “how much they cost and (most importantly) who is covering those costs.” IATA stated that its members should not be required to cover the costs incurred by these domestic operators.

The FAA concurs that IATA members are not and will not be assessed costs incurred by domestic operators. Any aircraft that overflies U.S. controlled airspace will be charged the same overflight fee, calculated based on systemwide cost and traffic, regardless if it is a domestic US or foreign operator. Regardless of the level of exception, which is applied to both domestic and foreign carriers, operator origin does not affect overflight fee billings.

One individual commented that the NPRM's “wording of Section 187.55(b) changes the wording in the current rules from a prohibition on the FAA sending an invoice when monthly fees are below the threshold to a statement that the FAA will send an invoice when monthly fees are above the threshold.” The commenter further stated that, if strictly interpreted, this would allow the FAA “to send invoices when fees are below the threshold at its discretion” and would require invoices “when fees are above the threshold.” The commenter advised that this would be “opposite to the original meaning,” and recommended that “the prohibition on below-threshold invoices should be restored as this appears unintentional. If intentional, the FAA has offered no justification for the change as would be required by the rulemaking process.”

The current regulatory provision addressing invoicing of overflight fees includes billing and states that the FAA will send an invoice to each user that is covered by this appendix when fees are owed to the FAA. If the FAA cannot identify the user, then an invoice will be sent to the registered owner. No invoice will be sent unless the monthly (based on Greenwich Mean Time) fees for service equal or exceed $250. Users will be billed at the address of record in the country where the aircraft is registered, unless a billing address is otherwise provided. (14 CFR part 187, appendix B, paragraph (f)(1).)

Under this provision, if the overflight fee amount owed is less than $250, no invoice will be sent and no billing results. Overflight fees are only assessed when the invoice amount is $250 or more.

In the NPRM, FAA suggested regulatory text that would replace the language in appendix B relating to invoicing. (The NPRM proposed to remove and reserve appendix B). (80 FR 52217, 52224 (Aug. 28, 2015).)

The FAA does not agree that the change in wording would permit the agency to issue invoices for fees when the fee amount is below the $250 threshold. The FAA also does not agree with the comment that the change would be “opposite to the original meaning.” As adopted in this final rule, the proposed language in section 187.55 makes no substantive change. It does nothing different than the existing appendix B provision. In both cases, the FAA will send an invoice if fees are owed. In both cases, if the fees equal or exceed $400, as adjusted from $250 based on the comments received, the FAA will send an invoice. If the fees are less than $400, as adjusted from $250 based on the comments received, then the FAA will not send an invoice and no fees will be owed for the services rendered. As indicated in the NPRM, the FAA proposed this change and others as “organizational changes to part 187 to clarify the overflight fee requirements.” 80 FR 52220. The NPRM proposed no substantive changes to the current regulatory provision addressing invoicing of overflight fees found in appendix B, paragraph (f)(1). “The proposed billing and payment procedures in new § 187.55 are unchanged from those in existing Appendix B.” 80 FR 52220.

The changes to the existing regulatory text made pursuant to this final rule generally reflect “organizational changes to part 187 to clarify the overflight fee requirements.” 80 FR 52220.

The FAA has revised the authority citation for part 187 to reflect current law.

In § 187.1, “Scope,” the FAA has removed the duplicate reference to Appendix A, removed the reference to Appendix B because Appendix B is being removed, and added a reference to Appendix C that inadvertently had not been added when Appendix C (computation of fees for production certification-related services performed outside the United States) was added.

The FAA has added a new § 187.3, “Definitions,” section to the rule, which revises four existing definitions from former Appendix B and adds a new definition for “great circle distance” consistent with the FAA's method used for calculating overflight fees.

The FAA has added a new § 187.51, “Applicability of overflight fees,” in which subparagraph (a) specifies who must pay an overflight fee. The FAA has added a new subparagraph (d) to address fees for flights through U.S.-controlled airspace covered by an FAA agreement or other binding arrangement. The FAA periodically enters into agreements with foreign states, regional groups of states, or foreign air navigation services providers to set the terms for the FAA's management or control of foreign airspace among other air navigation services provided by the FAA.

The FAA has added a new § 187.53, “Calculation of overflight fees,” which in subparagraph (a) retains the formula for calculating overflight fees from the former Appendix B but also clarifies the explanation of calculating that fee. Subparagraph (b) addresses how miles flown through each segment of airspace will be calculated, using great circle distance (GCD), from the point of entry into U.S.-controlled airspace to the point of exit from U.S.-controlled airspace. Subparagraph (c) includes a table providing the rate for each 100 nautical miles flown through enroute or oceanic airspace. Subparagraph (d) provides the mathematical formula for the total overflight fee. Subparagraph (e) states that the FAA will review the rates described in this section at least once every 2 years and will adjust them to reflect current costs and volume of services provided.

In § 187.55, “Overflight fees billing and payment procedures,” are unchanged from those in former Appendix B.

Changes to Federal regulations must undergo several economic analyses. First, Executive Orders 12866 and 13563 direct that each Federal agency shall propose or adopt a regulation only upon a reasoned determination that the benefits of the intended regulation justify its costs. Second, the Regulatory Flexibility Act of 1980 (Pub. L. 96-354) requires agencies to analyze the economic impact of regulatory changes on small entities. Third, the Trade Agreements Act (Pub. L. 96-39) prohibits agencies from setting standards that create unnecessary obstacles to the foreign commerce of the United States. In developing U.S. standards, this Trade Act requires agencies to consider international standards and, where appropriate, that they be the basis of U.S. standards. Fourth, the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires agencies to prepare a written assessment of the costs, benefits, and other effects of proposed or final rules that include a Federal mandate likely to result in the expenditure by State, local, or tribal governments, in the aggregate, or by the private sector, of $100 million or more annually (adjusted for inflation with base year of 1995). This portion of the preamble summarizes the FAA's analysis of the economic impacts of this final rule.

In conducting these analyses, FAA has determined that this final rule: (1) Has benefits that justify its costs, (2) is not an economically “significant regulatory action” as defined in section 3(f) of Executive Order 12866, (3) is not “significant” as defined in DOT's Regulatory Policies and Procedures; (4) will not have a significant economic impact on a substantial number of small entities; (5) will not create unnecessary obstacles to the foreign commerce of the United States; and (6) will not impose an unfunded mandate on state, local, or tribal governments, or on the private sector by exceeding the threshold identified above. These analyses are summarized below.

DOT Order 2100.5 prescribes policies and procedures for simplification, analysis, and review of regulations. If the expected cost impact is so minimal that a proposed or final rule does not warrant a full evaluation, this order permits that a statement to that effect and the basis for it to be included in the preamble if a full regulatory evaluation of the costs and benefits is not prepared. Such a determination has been made for this final rule. The reasoning for this determination follows.

This rule will institute a 3-year phase-in of rate increases for oceanic and enroute overflights, with rates per 100 nautical miles increasing in three 12-month intervals to $23.15, $24.77, and $26.51 for oceanic flights, and to $58.45, $60.07, and $61.75 for enroute flights. The final rate of $26.51 for oceanic services, reached at the end of the third 12-month interval, is derived from the FAA's FY 2013 total cost of providing these services ($184,391,603) divided by the total nautical miles (695,620,413 nm) flown by operators (overflights and non-overflights) in oceanic airspace. An analogous calculation is made to obtain the third 12-month interval rate of $61.75 for enroute services ($4,597,808,058/7,445,668,883 nm). These higher rates based on FY 2013 unit costs will allow the FAA to move closer to full cost recovery of air traffic control services already being provided to operators.

Tables 5 and 6 show estimates of the increase in overflight fees for domestic operators and foreign operators for the three 12-month intervals, using FY 2013 overflight mileage totals, thus assuming no annual growth. As the tables show, the present value (at a 7 percent discount rate) in 2013 dollars of the projected fee increases through the third 12-month interval—when the full increase in rates will have taken place—is $141,888 for domestic operators and $9,560,692 for foreign operators. The updated fee rates will provide greater incentives for foreign and domestic operators to economize on U.S. air traffic control facilities and U.S.-controlled airspace, thus increasing the efficient allocation of resources.

The Regulatory Flexibility Act of 1980 (Pub. L. 96-354, subsection (b)) (RFA) establishes “as a principle of regulatory issuance that agencies shall endeavor, consistent with the objectives of the rule and of applicable statutes, to fit regulatory and informational requirements to the scale of the businesses, organizations, and governmental jurisdictions subject to regulation. To achieve this principle, agencies are required to solicit and consider flexible regulatory proposals and to explain the rationale for their actions to assure that such proposals are given serious consideration.” The RFA covers a wide-range of small entities, including small businesses, not-for-profit organizations, and small governmental jurisdictions.

Agencies must perform a review to determine whether a rule will have a significant economic impact on a substantial number of small entities. If the agency determines that it will, the agency must prepare a regulatory flexibility analysis as described in the RFA.

However, if an agency determines that a rule is not expected to have a significant economic impact on a substantial number of small entities, section 605(b) of the RFA provides that the head of the agency may so certify and a regulatory flexibility analysis is not required. The certification must include a statement providing the factual basis for this determination, and the reasoning should be clear.

While the FAA did not receive comments on the regulatory flexibility analysis, the FAA did receive comments from 25 individuals and from AOPA, an industry group representing small entities. They commented that the overflight fees should not be applied to general aviation aircraft and that the fees went up but the $250 threshold was not changed. The FAA notes that Congress did not differentiate between general aviation and commercial aviation in the overflight fee statute. AOPA commented that with the fee increase users were now paying fees when they exceeded the $250 threshold. In response, the FAA has raised the threshold to $400 in this final rule.

We ranked in descending order all 469 domestic operators based on their overflight fees for fiscal year 2013 and found that the 14 top ranked operators accounted for more than 40% of that year's total domestic overflight fees. Of these 14 operators we identified 4 as small entities (using a size standard of 1,500 or fewer employees) and found all of them to have an increase in overflight fees as a percentage of annual revenues to be less than 1 percent. 4 5 We believe this rule does not impose a significant economic impact on those small entities.

Therefore, as provided in section 605(b), the head of the FAA certifies that this rulemaking will not result in a significant economic impact on a substantial number of small entities.

The Trade Agreements Act of 1979 (Pub. L. 96-39), as amended by the Uruguay Round Agreements Act (Pub. L. 103-465), prohibits Federal agencies from establishing standards or engaging in related activities that create unnecessary obstacles to the foreign commerce of the United States. Pursuant to these Acts, the establishment of standards is not considered an unnecessary obstacle to the foreign commerce of the United States, so long as the standard has a legitimate domestic objective, such as the protection of safety, and does not operate in a manner that excludes imports that meet this objective. The statute also requires consideration of international standards and, where appropriate, that they be the basis for U.S. standards. ICAO standards allow providers of navigation services to require users of these services to pay their share of the related costs. The FAA has determined that this rule primarily affects foreign commercial operators. The recovery of costs of providing air navigation services is consistent with ICAO standards and international practice. Foreign operators will be charged a fee only if they use U.S.-controlled airspace without taking off or landing in the U.S., and U.S. operators will be charged in the same manner. Accordingly, the FAA does not believe this rule will create an unnecessary obstacle to the foreign commerce of the United States.

Title II of the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4) requires each Federal agency to prepare a written statement assessing the effects of any Federal mandate in a proposed or final agency rule that may result in an expenditure of $100 million or more (in 1995 dollars) in any one year by State, local, and tribal governments, in the aggregate, or by the private sector; such a mandate is deemed to be a “significant regulatory action.” The FAA currently uses an inflation-adjusted value of $155.0 million in lieu of $100 million.

This rule does not contain such a mandate. Therefore, the requirements of Title II of the Act do not apply.

The Paperwork Reduction Act of 1995 (44 U.S.C. 3507(d)) requires that the FAA consider the impact of paperwork and other information collection burdens imposed on the public. The FAA has determined that there is no new requirement for information collection associated with this rule. The information used to track overflights (including the information collection necessary to implement this rule) can be accessed from flight plans filed with the FAA. The collection of information from the Domestic and International Flight Plans is approved under OMB information collection 2120-0026.

In keeping with U.S. obligations under the Convention on International Civil Aviation, it is FAA policy to conform to International Civil Aviation Organization Standards and Recommended Practices to the maximum extent practicable. The FAA has reviewed the corresponding ICAO Standards and Recommended Practices and has identified no differences with these regulations.

The ICAO guidance document on aviation fees and charges, ICAO Document 9082 (Ninth Edition—2012), ICAO's Policies on Charges for Airports and Air Navigation Services, recommends consultations before imposing fees. In addition, Article 12 of the Air Transport Agreement between the United States of America and the European Union and its Member States (April 30, 2007, as amended June 24, 2010) encourages consultation.

By convening an ARC, presenting updated cost and traffic data to the ARC, and considering the ARC's recommendations, the FAA consulted with system users prior to proposing the overflight fee update. 80 FR 52217 (August 28, 2015). Additionally, the FAA invited comments on the proposal as part of its rulemaking process, which permitted participation by all interested parties.

FAA Order 1050.1F identifies FAA actions that are categorically excluded from preparation of an environmental assessment or environmental impact statement under the National Environmental Policy Act in the absence of extraordinary circumstances. The FAA has determined this rulemaking action qualifies for the categorical exclusion identified in paragraph 5-6.6f and involves no extraordinary circumstances.

The FAA has analyzed this final rule under the principles and criteria of Executive Order 13132, Federalism. The agency has determined that this action will not have a substantial direct effect on the States, or the relationship between the Federal Government and the States, or on the distribution of power and responsibilities among the various levels of government, and, therefore, will not have Federalism implications.

The FAA analyzed this final rule under Executive Order 13211, Actions Concerning Regulations that Significantly Affect Energy Supply, Distribution, or Use (May 18, 2001). The agency has determined that it will not be a “significant energy action” under the executive order and will not be likely to have a significant adverse effect on the supply, distribution, or use of energy.

Executive Order 13609, Promoting International Regulatory Cooperation, (77 FR 26413, May 4, 2012) promotes international regulatory cooperation to meet shared challenges involving health, safety, labor, security, environmental, and other issues and to reduce, eliminate, or prevent unnecessary differences in regulatory requirements. The FAA has analyzed this action under the policies and agency responsibilities of Executive Order 13609, and has determined that this action will have no effect on international regulatory cooperation.

An electronic copy of rulemaking documents may be obtained from the Internet by—

• Searching the Federal eRulemaking Portal (http://www.regulations.gov);

• Visiting the FAA's Regulations and Policies Web page at http://www.faa.gov/regulations_policies or

• Accessing the Government Publishing Office's Web page at http://www.fdsys.gov

Copies may also be obtained by sending a request to the Federal Aviation Administration, Office of Rulemaking, ARM-1, 800 Independence Avenue SW., Washington, DC 20591, or by calling (202) 267-9677. Commenters must identify the docket, notice, or amendment number of this rulemaking.

All documents the FAA considered in developing this final rule, including economic analyses and technical reports, may be accessed from the Internet through the Federal eRulemaking Portal referenced above.

Comments received may be viewed by going to http://www.regulations.gov and following the online instructions to search the docket number for this action. Anyone is able to search the electronic form of all comments received into any of the FAA's dockets by the name of the individual submitting the comment (or signing the comment, if submitted on behalf of an association, business, labor union, etc.).

The Small Business Regulatory Enforcement Fairness Act of 1996 (SBREFA) requires FAA to comply with small entity requests for information or advice about compliance with statutes and regulations within its jurisdiction. A small entity with questions regarding this document may contact its local FAA official, or the person listed under the FOR FURTHER INFORMATION CONTACT heading at the beginning of the preamble. To find out more about SBREFA on the Internet, visit http://www.faa.gov/regulations_policies/rulemaking/sbre_act/.

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

The rule requires that certain data elements material to our import admissibility review be submitted in ACE or any other CBP-authorized EDI system, at the time of entry. This action will facilitate automated “May Proceed” determinations by us for low-risk FDA-regulated products which, in turn, will allow the Agency to focus our limited resources on products that may be associated with a greater public health risk. We also made technical revisions to certain sections of FDA regulations to make updates and provide clarifications.

This rule adds subpart D to part 1 of 21 CFR chapter I (21 CFR part 1) to require that certain data elements be submitted in ACE or any other CBP-authorized EDI system, at the time of entry in order to facilitate admissibility review by the Agency of FDA-regulated products being imported or offered for import into the United States. Submission of these data elements in ACE will help us to more effectively and efficiently make admissibility determinations for FDA-regulated products by increasing the opportunity for automated review by FDA's Operational and Administrative System for Import Support (OASIS). We also added § 1.81 to the final rule to clarify that FDA may reject an import filing for failure to provide the complete and accurate information required in the rule.

We made technical revisions to certain sections of 21 CFR chapter I to update them. We revised 21 CFR 1.83 and 1005.2 to update the definition of owner or consignee in order to make that definition consistent with Title 19 of the U.S. Code. We also revised § 1.90 to allow FDA to provide notice of sampling directly to an owner or consignee. Additionally, we revised § 1.94 to clarify that written notice can be provided electronically by FDA to owners or consignees of FDA actions to refuse and/or subject certain products to administrative destruction. Under § 1.94, owners or consignees receive notice that FDA intends to take a certain action against an FDA-regulated product that is being imported or offered for import and the owner or consignee will have an opportunity to introduce testimony to the Agency in opposition to such action. We also amended 21 CFR 1271.420 to make clear that, unless otherwise exempt, importers of record of human cells, tissues or cellular or tissue-based products (HCT/Ps) that are regulated solely under section 361 of the Public Health Service Act (PHS Act) (42 U.S.C. 264) and part 1271 (21 CFR part 1271) would be required to submit the applicable data elements included in this rule in ACE.

The final rule does not include certain aspects of the proposed rule that were opposed by many who submitted comments. For example, the final rule no longer includes FDA Value, FDA Quantity, Entity Contact Information other than for the importer of record, name and address of the ACE filer for tobacco products, and the Investigational New Drug Application Number for device-drug combination products as data elements that must be submitted in ACE at the time of entry. We have also removed, at our own initiative, the Drug Listing Number requirement for those human drugs that are regulated by FDA's Center for Biologics Evaluation and Research (CBER).

The legal authority for this rule includes sections 536, 701, and 801 of the Federal Food, Drug, and Cosmetic Act (FD&C Act) (21 U.S.C. 360mm, 371, and 381, respectively), and sections 351, 361, and 368 of the PHS Act (42 U.S.C. 262, 264, and 271, respectively).

The costs of complying with this regulation are between $27 million and $69 million per year (using 3 and 7 percent discount rates). The annualized cost savings to the entire industry cannot be fully quantified because of the lack of certain data currently available to the Agency. Partially quantifiable cost savings are estimated to range from $2.6 million to $43.4 million (using 3 and 7 percent discount rates).

In the Federal Register of July 1, 2016 (81 FR 43155), FDA proposed a rule to require that certain data elements material to our import admissibility review be submitted in ACE at the time of entry. We also proposed to make technical revisions to certain sections of FDA regulations to make updates and provide clarifications. Interested parties were given 60 days to submit comments on the proposed rule to the public docket.

We received 13 comment letters on the proposed rule by the close of the comment period, each containing one or more comments on one or more issues. These comments were submitted to the public docket by trade organizations, the trade industry, and the public. The final rule has been revised in response to comments received on the proposed rule. Our responses are discussed in section V. As discussed earlier in this document, we also decided, on our own initiative, to not include one required data element in the final rule. Additionally, the final rule includes several minor editorial revisions. Substantive changes from the proposed rule to the final rule are summarized in table 1.

We have the legal authority under the FD&C Act and the PHS Act to regulate foods, cosmetics, drugs, biological products, medical devices, and tobacco products being imported or offered for import into the United States (sections 701 and 801 of the FD&C Act; section 351 of the PHS Act). We also have the legal authority to regulate the importation of radiation-emitting electronic products (section 536 of the FD&C Act).

Additionally, section 361 of the PHS Act authorizes FDA to make and enforce such regulations as it judges necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries into the United States or from State to State. FDA has issued regulations in part 1271 to regulate HCT/Ps. HCT/Ps that do not meet the criteria listed in § 1271.10(a) for them to be regulated solely under section 361 of the PHS Act and the regulations in part 1271 are regulated as drugs, devices, and/or biological products under the FD&C Act and/or section 351 of the PHS Act and must follow applicable regulations, including the applicable regulations in part 1271. FDA has determined that improving the efficiency of admissibility determinations for HCT/Ps, thus improving the allocation of Agency resources, is necessary to prevent the introduction, transmission, or spread of communicable diseases from foreign countries. We are therefore relying on the authority of section 361 of the PHS Act in the amendments to § 1271.420. Authority for enforcement of section 361 of the PHS Act is provided by section 368 of the PHS Act.

We are also issuing this rule under authority granted to FDA by section 801(r) of the FD&C Act, added by section 713 of the Food and Drug Administration Safety and Innovation Act (Pub. L. 112-144) (FDASIA). Title VII of FDASIA provides FDA with important new authorities to help the Agency better protect the integrity of the drug supply chain. Section 801(r) of the FD&C Act authorizes FDA to require, as a condition of granting admission to a drug imported or offered for import into the United States, that the importer of record electronically submit information demonstrating that the drug complies with the applicable requirements of the FD&C Act. This information may include:

• Information demonstrating the regulatory status of the drug, such as the new drug application, the abbreviated new drug application, investigational new drug, or drug master file number;

• facility information, such as proof of registration and the unique facility identifier; and

• any other information deemed necessary and appropriate by FDA to assess compliance of the article being offered for import.

Section 701(a) of the FD&C Act authorizes the Agency to issue regulations for the efficient enforcement of the FD&C Act, while section 701(b) of the FD&C Act authorizes FDA and the Department of the Treasury to jointly prescribe regulations for the efficient enforcement of section 801 of the FD&C Act. This rule is being jointly prescribed by FDA and the Department of the Treasury, with the exception of the provisions of the rule related to the importation of HCT/Ps which are regulated solely under section 361 of the PHS Act and part 1271 and the importation of radiation-emitting electronic products which are regulated under section 536 of the FD&C Act; neither of these provisions will be issued for the efficient enforcement of section 801 of the FD&C Act.

Sections V.B and V.C contain summaries of the relevant portions of the responsive comments and the Agency's responses to those comments. We have numbered each comment to help distinguish between different comments. We have grouped similar comments together under the same number, and, in some cases, we have separated different issues discussed in the same comment and designated them as distinct comments for purposes of our responses. The number assigned to each comment or comment topic is purely for organizational purposes and does not signify the comment's value or importance or the order in which comments were received.

The Agency also received a number of comments that were not responsive to the content of the proposed rule and therefore were not considered in its final development.

A number of comments made general remarks supporting or opposing the proposed rule without focusing on a particular proposed provision. In the following paragraphs, we discuss and respond to such general comments.

(Comment 1) We received a comment expressing concern that several of the data elements in the proposed rule appear to require information that is already being provided in ACE pursuant to CBP requirements. We also received comments that many of the required data elements represent information that is already available to the Agency.

(Response 1) FDA acknowledges that some of the required data elements in this rule may appear similar to CBP data requirements in ACE. The rule, however, only contains those data elements that provide additional information that is material to FDA's initial admissibility review of an FDA-regulated article that is being imported or offered for import. Where information is already being collected by CBP and is acceptable for FDA admissibility review purposes, we did not include those data elements in the rule. For example, CBP collected FDA manufacturer and shipper, and ultimate consignee information in the Automated Commercial System (ACS), the predecessor CBP-authorized EDI system to ACE, to assist FDA in admissibility review of FDA-regulated products. We determined that the information CBP collects in ACE for manufacturer and shipper and Deliver to Party is sufficient for our purposes so we did not include those data elements in this rule.

We acknowledge that FDA may have access to some of the information which is required by the rule to be submitted by ACE filers at the time of entry. However, ACE filers and importers are in a better position to know the identity and characteristics of the particular article being imported or offered for import. For example, the importer should be aware of what Drug Listing Number is applicable to a particular drug article, what the applicable Food Canning Establishment Registration (FCE) number, Submission Identifier (SID), or can dimensions or volume are applicable to a particular low-acid canned food, or what the brand name is of a particular tobacco product.

In addition, submission of the required data elements in the final rule will assist FDA in expediting the initial screening and further review of an entry, and can significantly increase the likelihood that an entry line will receive an automated “May Proceed.” Historically, when these data fields are inaccurate or incomplete, these entries must be manually reviewed for an admissibility determination by FDA. Entries are delayed, sometimes significantly, while an FDA-reviewer either searches for that information in our data systems or requests followup documentation from the importer of record. An automated review to determine whether an article “May Proceed” is much faster and less resource intensive for both FDA and the importer.

(Comment 2) Several commenters requested that FDA make some or all of the required data elements in the proposed rule optional or, in the alternative, allow ACE filers to submit “UNK” representing “unknown” in ACE for those data elements. These commenters stated that the data elements are not always known or available to the ACE filer at the time entry is electronically filed in ACE. They expressed concern that CBP would not process the entry filing in ACE if all the required data elements are not submitted at time of entry. But, if the data is optional or if “UNK” is allowed to be submitted for a required data element, they asserted, CBP would process the entry and transmit the entry data to FDA's OASIS system. These commenters recognized that an FDA “May Proceed” would not issue until the missing data was provided by the ACE filer but that CBP may issue a delivery authorization to allow the goods to move from the port to the importer's premises in the interim. This would, they believe, avoid a backlog of cargo at the port and the cost of storage and demurrage as an ACE filer waited to receive the information from the importer.

(Response 2) As discussed in Response 6 in this document, we are requiring submission of intended use codes in ACE in the final rule but are allowing ACE filers to submit “UNK” as the intended use code in ACE at the time of entry. We decline, however, to accept “UNK” for any other required data element in the final rule. As stated in the proposed rule, the number of import lines that include FDA-regulated articles continues to grow steadily every year and this is posing challenges to the Agency in enforcing sections 536 and 801 of the FD&C Act and sections 351, 361, and 368 of the PHS Act. The number of import lines in 2015 that included an FDA-regulated article exceeded 35 million. In ACS, where submission of data elements was optional, the number of submissions varied depending on commodity. As stated previously in this document, where certain data was missing or inaccurate, entries had to be manually reviewed for an admissibility determination by FDA and entries were sometimes significantly delayed. In the final rule, we are requiring only certain data elements that we have determined to be material to our import admissibility review be submitted in ACE at the time of entry. The purpose of the rule is to facilitate automated “May Proceed” determinations by us for low-risk FDA-regulated products which, in turn, will allow the Agency to focus our limited resources on products that may be associated with a greater public health risk. An automated review to determine whether an article “May Proceed” is much faster and less resource intensive for FDA and the importer than a manual review. As expected, we have seen a decrease in the FDA processing time for both automated and manual “May Proceed” determinations since ACE became the sole CBP-authorized EDI system in July 2016. The average time for the OASIS system to process an import entry submitted in ACS from August 27 to October 22, 2015, and issue an automated “May Proceed” determination was approximately 7.1 minutes which has been reduced to approximately 2 minutes in ACE from August 27 to October 22, 2016. The average time for an FDA-reviewer to manually review and issue a “May Proceed” determination in ACS from August 27 to October 22, 2015, was about 28 hours and that has been reduced to under 2 hours in ACE from August 27 to October 22, 2016. As a result of a more streamlined import process, the rule is expected to lead to a more effective use of FDA and importer resources, and more efficient enforcement of the FD&C Act and the PHS Act for imported products.

In addition, we expect that, after the initial adjustment phase, submission of the data elements required by the rule will become incorporated into the business practices of importers and customs brokers. Persons wishing to import FDA-regulated products into the United States are required to file the entry documentation or data required by CBP and FDA at the time of entry in ACE in order to secure the release of an FDA-regulated article from CBP custody (19 CFR 142.3). Entry and entry summary documentation that is filed electronically in ACE must be certified by the importer of record or his/her duly authorized customs broker as being true and correct to the best of his/her knowledge. A certified electronic transmission is binding in the same manner and to the same extent as a signed document (19 CFR 141.61(a)(2)).

Approximately 98 percent of importers use customs brokers to file their entries containing FDA-regulated products subject to the final rule. Customs brokers are required to exercise due diligence in preparing or assisting in the preparation of records for import entries (19 CFR 111.29). We expect that importers and customs brokers will adapt their business practices to provide the required data elements in ACE at the time of entry in order to secure the release of an FDA-regulated article from CBP custody and submission of these data elements will become routine.

(Comment 3) Some commenters requested that we use the term “transmission of data elements in ACE” instead of “submission of data elements in ACE” by ACE filers suggesting that FDA distinguish between the importer (as the provider of information) and the customs broker/filer (as the transmitter of the information provided by the importer). One comment suggested that we adopt the distinction between “submitter” and “transmitter” that appears in the Prior Notice of Imported Food regulation (21 CFR part 1, subpart I).

(Response 3) We decline to make that change. “Submission” is the term used in CBP regulations to characterize the electronic submission to ACE of the entry summary documentation or data for preliminary review or of entry documentation or data for other purposes (19 CFR 141.0a(c)). Further, as stated previously, approximately 98 percent of importers use customs brokers to file their entries containing FDA-regulated products subject to the rule; the other 2 percent file these entries themselves. The obligations of customs brokers extend beyond the mere electronic transmission of data received for transmission to CBP (see definition of “customs business” in 19 CFR 111.1).

It should also be noted that this rule does not address or impact the current import entry review process for food articles requiring prior notice which has been operationally transitioned from ACS to ACE. The prior notice information required under § 1.281 is currently submitted in ACE or the FDA Prior Notice System Interface (PNSI) before the arrival of a food article in the United States. The different roles of transmitter and submitter for prior notice are tied to the existence of two systems for filing prior notice and the particular roles of filers in that process. We do not see a benefit in applying those concepts to the process of filing entry for FDA-regulated products that are not subject to prior notice.

(Comment 4) Some commenters expressed doubts that submission of additional data in ACE for FDA-regulated products will result in increased efficiencies in FDA admissibility review particularly an increase in automated “May Proceed” determinations by the Agency.

(Response 4) Although we do not at this time have statistics on the numbers of automated “May Proceed” determinations that will result from implementation of the rule, we have already seen a substantial decrease in average FDA processing times for both automated and manual “May Proceed” determinations since ACE became the sole CBP-authorized EDI system in July 2016. As we and the trade industry continue to adjust to the new system and various technological issues with ACE that have arisen during the transition to ACE are addressed, we expect these processing times to continue to improve.

For some of the proposed data elements and other requirements, FDA either did not receive comments or the comments were generally supportive. Unless otherwise noted, FDA has kept these requirements in the final rule for the reasons given in the proposal.

In the Notice of Proposed Rulemaking, we invited comments on the advantages, disadvantages, and feasibility of requiring the submission of data elements related to the approval or clearance status of FDA-regulated medical products. We proposed to require the submission at the time of entry of application numbers for those articles that are the subject of such applications. In particular, we invited comment on whether the submission of these data elements would help us achieve our goals of facilitating admissibility review and focusing our resources on those products that may be associated with a serious public health risk to consumers.

We received several comments supportive of our position and none of the comments suggested revising the provisions in the proposed rule related to the submission of application numbers. We are finalizing those provisions without change.

We also invited comments on the advantages, disadvantages, and feasibility of requiring what are now optional active pharmaceutical ingredient (API) data elements for finished human and animal drugs contained in the PGA Message Set (e.g., name of the API, the amount and unit of measure of the API, and the name of the manufacturer of the API in the finished drug) to be submitted in ACE at the time of entry.

(Comment 5) Several comments asserted that requiring submission of these API data elements in ACE at the time of filing entry would create a significant burden on industry. These commenters urged FDA to leave the API data elements as optional submissions in ACE, so that an ACE filer could choose to transmit the information if available at time of entry. The comments noted that by keeping the API data elements optional, CBP would be able to process the entry for a drug product, even if the API information were not transmitted in ACE at the time of entry. If, however, FDA determines further evaluation is necessary, FDA could then request API information during our review of the entry for admissibility.

(Response 5) In response to these comments, we have decided to keep the API data elements as optional submissions in ACE at the time of entry. Although these data elements will remain optional, FDA strongly encourages ACE filers to submit the API data elements at the time of entry to facilitate FDA's admissibility review. These API data elements provide us with information that may be material to our admissibility review for drug products. For example, submission of these API data elements would help FDA assess whether a finished dosage form drug that is being imported or offered for import appears to be adulterated and may be subject to refusal of admission under section 801(a) of the FD&C Act. If an API has not been manufactured in compliance with Current Good Manufacturing Practices (CGMP), it is deemed adulterated within the meaning of section 501(a)(2)(B) of the FD&C Act because the methods used in, or the facilities or controls used for, the drug's manufacture, processing, packing or holding did not conform to, or were not operated or administered in conformity with, CGMP requirements. A finished dosage form drug is deemed adulterated if it contains an API that is adulterated. Drugs that appear to be adulterated are subject to detention and refusal under section 801(a) of the FD&C Act. FDA has placed a number of foreign API suppliers on Import Alert 66-40, which may subject their APIs to detention without physical examination, because the firms have not met CGMPs. As a consequence, FDA has refused admission of drug products that have been manufactured using APIs on Import Alert 66-40, under section 801(a)(3) of the FD&C Act.

In addition, if a foreign-manufactured API was used in a drug product that is the subject of an approved application under section 505 or 512 of the FD&C Act (21 U.S.C. 355 or 360b), the API manufacturer must be an acceptable source listed in the approved NDA or ANDA for human drugs (see, e.g., 21 CFR 314.50(d)(1)(i)) or in the approved NADA or ANADA for animal drugs (see, e.g., 21 CFR 514.1(b)(5)(i)). Submitting the API data elements in ACE for a drug product that is the subject of an approved application would facilitate FDA's assessment of whether the finished dosage form drug complies with section 505 or 512.

If ACE filers submit the optional API data elements in ACE, it likely will increase the likelihood that the import entry will receive an automated “May Proceed” determination from the Agency. If the API data elements are not submitted in ACE, the entry may receive a manual review and the FDA reviewer may request that the importer provide API information for the finished dosage product.

FDA invited comments on the advantages, disadvantages, and feasibility of the Agency requiring the submission of the following data elements in ACE at the time of entry: (1) An intended use code for the FDA-regulated article being imported or offered for import and (2) a disclaimer indicating that that the article is not currently regulated by FDA or that FDA does not currently have any requirements for submission of data for importation of that article per Agency guidance.

a. Intended use code. We received several comments supporting inclusion of intended use codes in the final rule. Historically, FDA derived intended use information for the purposes of FDA's admissibility review from the free text information submitted in the CBP-required product description field in ACS. Intended use codes were developed for ACE in the PGA message set to provide a consistent, systematic approach to collection of certain intended use information about articles that are being imported or offered for import into the United States. These codes standardize the data input for computer processing in ACE. If FDA needs a particular intended use code (IUC) for the ACE system to identify what FDA data elements are needed for a particular FDA-regulated product, the proposed IUC is submitted to CBP for inclusion in Appendix R to the Customs and Border Protection and Trade Automated Interface Requirements (CATAIR).

We added § 1.72(a)(3) to the final rule to require that a full IUC be submitted in ACE at the time of entry for each FDA-regulated article that is being imported or offered for import into the United States. Appendix R defines a full IUC as consisting of a base code that designates the general use intended for the article and a subcode, if applicable, that designates the specific use intended for the article.

(Comment 6) One commenter supported mandatory intended use codes and several commenters requested that IUCs be optional data submissions at the time of entry in ACE or, in the alternative, that FDA continue to allow ACE filers to submit “UNK” as the IUC in ACE at the time of entry. These commenters assert that the intended use of an article is often not known at the time of entry and that if FDA needs this information, it can be provided at a later date.

(Response 6) Because IUCs are such an integral part of the ACE system regarding the identification of those required data elements in the rule applicable to a particular article that must be submitted in ACE at the time of entry, we decline to make IUCs optional. After considering the comments, we have decided, however, to continue to allow submission of the intended use code “UNK” for FDA-regulated articles. “UNK” is currently listed as an IUC in Appendix R of the CATAIR. Operationally, submission of “UNK” will not trigger the ACE system to identify all of the FDA data elements that are required to be submitted for a particular FDA-regulated article whereas submission of the specific IUC applicable to that article will trigger the ACE system to identify the required data fields and reject the filing if the required data is not submitted.

If “UNK” is submitted as the IUC for the article, the ACE filer is still responsible for submitting the other required data elements in this rule that are applicable to that article, in ACE at the time of entry. If those other data elements are not submitted in ACE at the time of entry, the entry may be transmitted by ACE to OASIS for FDA's admissibility review but FDA may decide to not perform an admissibility review until those data elements have been submitted. We have added § 1.81 to the final rule to make clear that FDA may reject any entry filing that does not contain the complete and accurate information required by the rule without performing an admissibility review. If FDA rejects an entry filing under § 1.81, the ACE filer will need to withdraw the entry in ACE and resubmit the entry with the complete and accurate information required under the rule in order to have FDA perform an admissibility review of that entry. ACE filers also need to be aware that submitting “UNK” as the intended use code will, in most cases, subject the entry to a manual review for admissibility provided the entry filing is not rejected by FDA.

b. Disclaimer. By submitting a disclaimer in ACE at the time of entry, an ACE filer indicates that the article being imported or offered for import is not currently regulated by FDA or that FDA does not currently have any requirements for submission of data for importation of that article per Agency guidance.

(Comment 7) Several commenters expressed the opinion that the current disclaimer procedures in ACE should not be changed.

(Response 7) After consideration of the comments received, we have decided not to include FDA-required disclaimer data elements in the final rule. ACE filers can continue to submit disclaimers in ACE at the time of entry following current procedures.

a. FDA country of production. The FDA Country of Production identifies the country where an FDA-regulated article last underwent any manufacturing or processing but only if such manufacturing or processing was of more than a minor, negligible, or insignificant nature. This differs from the CBP country of origin which uses a substantial transformation test. When an article has undergone a “substantial transformation” in a different country, CBP requires that the country of origin be changed to the country where the substantial transformation has taken place. Substantial transformation occurs in the country where the article acquired the name, character or intended use that matches the article identified in the entry.

CBP collected FDA Country of Production in ACS to assist FDA in making admissibility decisions for FDA-regulated products.

(Comment 8) Some commenters requested additional guidance on what FDA considers to be manufacturing or processing of more than a minor, negligible, or insignificant nature. One commenter suggested that FDA consider issuing a “positive” list of manufacturing activities or processes that definitively impart “FDA Country of Production” status or alternatively issue a list of manufacturing or processing activities that are considered by the Agency to be minor, negligible or insignificant.

(Response 8) Whether the manufacturing or processing of a particular FDA-regulated article is of more than a minor, negligible or insignificant nature is dependent on the facts of each particular case which include the specific manufacturing or processing activities involved as well as the type of commodity that is being affected by those activities. We have provided below some examples to illustrate activities FDA would consider to be more than minor, negligible, or insignificant which would impact the FDA Country of Production.

For example:

• If an FDA-regulated article undergoes further manufacturing/processing at a facility, such as encapsulating a drug, the country where the facility that performed the additional manufacturing/processing is located is considered to be the FDA Country of Production.

• Conversely if an article was not further manufactured/processed by a facility, such as repacking retail packages into a different master carton for shipping, the country where the facility that performed this repacking is located would not be considered to be the FDA Country of Production.

We will also consider the issuance of additional guidance in the future as resources allow.

(Comment 9) One comment requested clarification regarding the application of FDA Country of Production to Foreign Trade Zone (FTZ) operations. The Commenter suggested revising the FDA Country of Production data element by adding this sentence: “For articles imported from foreign-trade zones, if the article has undergone manufacturing in the foreign-trade zone, the FDA Country of Production is the United States for FDA import purposes.”

(Response 9) FDA recognizes that the FDA Country of Production will be the United States if more than minimal, negligible, or insignificant manufacture or processing occurs in an FTZ but we decline to make the suggested revision because it is unnecessary.

b. The complete FDA product code. CBP also collected the Complete FDA Product Code in ACS to assist FDA in making admissibility decisions for FDA-regulated products.

(Comment 10) Some commenters supported the requirement for submission of the Complete FDA Product Code but requested clarification regarding the requirement that the code “ . . . must agree with the invoice description of the product. ” They expressed concern that “agreement” could be interpreted in various ways by both FDA-reviewers and industry resulting in unintended and unnecessary detentions or delays for completion of admissibility determinations. For example, “agreement” with the invoice description could be understood as requiring a partial or complete verbatim match between the invoice description and the product code.

(Response 10) FDA does not intend for the invoice description and the Complete FDA Product Code to be identical. In order to clarify this requirement, we have revised the language in the rule to require that the Complete FDA Product Code be “consistent” with the invoice description.

c. FDA value. We proposed to require that the total value of an entry as required by CBP or the total value of the article(s) in each import line be submitted at the time of entry in ACE and invited comments on the advantages, disadvantages, and feasibility of allowing the ACE filer to submit the total value of the entry or the total value apportioned to the article(s) in each import line. In particular, we invited comment on whether the submission by an ACE filer of the value apportioned to the article(s) in an import line in ACE at the time of entry would help us achieve our goals of facilitating admissibility review and focusing our resources on those products that may be associated with a serious public health risk to consumers.

(Comment 11) We received several comments that expressed confusion over the products that would be subject to the proposed FDA Value requirement, as well as the “value” that was required to be submitted in ACE for an entry that includes an FDA-regulated article. The commenters suggested that the Agency accept the total value of an entry required by CBP without the need to break-out the value of each import line. Pro-rating the value to each import line, they assert, can be a cumbersome, time intensive process with no practical value to FDA for typical entries containing FDA-regulated products which may have many separate lines.

(Response 11) FDA will accept the total value of an entry required by CBP and, therefore, we have decided not to finalize § 1.72(a)(3) in the proposed rule. ACE filers, however, will continue to have the option to submit the total value of the article(s) in each import line.

d. FDA quantity. FDA proposed to require submission of the quantity of the FDA-regulated article(s) in each import line at the time of entry in ACE. FDA Quantity would include the quantity of each layer/level of packaging of the article(s), the unit of measure which is the description of each type of package, and the volume and/or weight of each of the smallest of the packaging units. The quantity would be required to be submitted in decreasing size of packing unit (starting with the outermost/largest package to the innermost/smallest package). We invited comments on the advantages, disadvantages, and feasibility of requiring an ACE filer to submit the FDA quantity of the article(s) in each import line in ACE at the time of entry. In particular, we invited comment on whether the submission by an ACE filer of the FDA quantity of the article(s) in an import line would help us achieve our goals of facilitating admissibility review and focusing our resources on those products that may be associated with a serious public health risk to consumers.

(Comment 12) We received several comments that this level of detail for quantity as an “across-the-board” data requirement would entail significant data input on the part of ACE filers and would not enhance admissibility review by FDA.

(Response 12) In response to the comments we received we have decided not to finalize § 1.72(a)(4) of the proposed rule which would have required FDA Quantity to be submitted in ACE at the time of entry. ACE filers, however, will still have the option of submitting this information.

e. Entity contact information. In the proposed rule, we proposed to require that the name, telephone, and email address of any one of the persons related to the importation of the article(s) in the entry, which may include the manufacturer, shipper, importer of record, or Deliver to Party, be submitted in ACE at the time of entry. We invited comments on the advantages, disadvantages, and feasibility of requiring an ACE filer to submit the name, telephone, and email address of any one of the persons related to the importation of the article(s) in the entry, in ACE at the time of entry. In particular, we invited comment on whether the submission by an ACE filer of this information would help us achieve our goals of facilitating admissibility review and focusing our resources on those products that may be associated with a serious public health risk to consumers.

(Comment 13) We received several comments opposing this provision in the proposed rule. One commenter expressed concern that the proposed entity contact information was unnecessarily duplicative of the contact information the Agency was proposing to require for the importer of record. In addition, the commenter suggested that the email and phone of the importer of record should only be required at the header level, not for each import line.

(Response 13) After review of the comments we have decided to require email address and phone for the importer of record only. The contact information for other parties to the shipment, which may expedite the entry review process, can be provided to the Agency at the option of the ACE filer.

However, FDA does not determine what information is submitted at the header level, CBP makes those determinations. In addition, the burden to input the same data repeatedly on the same entry may be ameliorated through software programming.

Low-acid canned food. We proposed that the Food Canning Establishment (FCE) Number, the Submission Identifier (SID), and the can dimensions or volume (e.g., pouches and bottles) be required submissions in ACE at the time of entry.

(Comment 14) One comment asked us to clarify whether the FCE number, SID, and can dimensions or volume information will be required for LACF products that are imported for research and testing at laboratories, but that are not sold or marketed in the United States and are not intended for consumption in the United States.

(Response 14) We do not believe we will generally need the FCE number, SID, and can dimensions or volume to effectively identify LACF products that are being imported or offered for import for laboratory analysis only, when such foods will not be consumed by humans or animals. Consequently, we have revised § 1.73(b). Under the final rule, § 1.73(b) provides that for an article of food that is a low-acid canned food, the ACE filer must transmit at the time of filing entry the FCE number, SID, and can dimensions or volume, except that the ACE filer does not need to submit this information if the LACF product is for laboratory analysis only and will not be taste tested or otherwise ingested. Because we also do not believe we will generally need this information to effectively identify acidified food products in similar circumstances, we have made similar revisions to § 1.73(c). Specifically, we have revised § 1.73(c) to provide that for an article of food that is an acidified food, the ACE filer must submit at the time of filing entry the FCE number, SID, and can dimensions or volume, except that the ACE filer does not need to submit this information if the acidified food product is for laboratory analysis only and will not be taste tested or otherwise ingested. We consider LACF and acidified food products to be for laboratory analysis only and not taste tested or otherwise ingested only if the entire article will be used completely in the laboratory analysis, destroyed by the laboratory analysis, or destroyed following a reasonable retention period after the laboratory analysis. No portions of the article can be taste tested or otherwise consumed by humans or animals. Consequently, if an LACF or acidified food product being imported or offered for import will be used for product promotional tasting or other types of research in which the food will be ingested, ACE filers are required to submit the FCE number, SID, and can dimensions or volume information in ACE at the time of entry. In order to allow ACE filers to identify in ACE any LACF or acidified foods that are for laboratory analysis which do not require submission of the FCE number, SID, and can dimension or volume, we intend to create an FDA product code that can be used to identify such foods. When ACE filers use this product code, they will not be required to submit the FCE number, SID, and can dimension or volume information in ACE at the time of entry. ACE filers should be aware that entries submitted in ACE that include this new product code will be subject to manual review for an admissibility determination by FDA.

Drug registration number. We proposed to require the submission of the Drug Registration Number in ACE at the time of entry. For purposes of this rule, the Drug Registration Number that would be submitted in ACE is the unique facility identifier (UFI) of the foreign establishment where the drug was manufactured, prepared, propagated, compounded, or processed before being imported or offered for import into the United States.

(Comment 15) One commenter requested clarification regarding what number was required to be submitted for the Drug Registration Number.

(Response 15) We published a final rule on August 31, 2016, regarding the requirements for Drug Registration and Listing (81 FR 60170). FDA also provides guidance and instruction on establishment registration on our Web site (see, e.g., http://www.fda.gov/Drugs/GuidanceComplianceRegulatoryInformation/DrugRegistrationandListing/ucm078801.htm)

One comment supported inclusion of all of the proposed data elements to be submitted in ACE for importation of animal drugs, noting that all clearly impact admissibility. We are finalizing these provisions without change.

a. Registration and Listing. We proposed to require that the applicable Registration and Listing Numbers of the Domestic Manufacturer, Foreign Manufacturer, and/or Foreign Exporter for each medical device identified in the entry, be submitted in ACE at the time of entry.

(Comment 16) One commenter stated that if there are different medical device registrants involved in the same entry, for example a foreign manufacturer and a foreign exporter, only one medical device registration and listing number should be required and this would be sufficient for FDA to make an admissibility decision.

(Response 16) As explained in the preamble of the proposed rule, we have determined that the registration numbers of certain parties involved in the importation of a medical device (as well as the device listing number) may be material to our admissibility review. Submission of one party's registration number does not convey the registration information for another party involved in the importation of a medical device. Device foreign exporters can and do vary for medical devices manufactured at a particular firm and thus the information for all parties involved is needed at the time of entry. In addition, the time needed for an FDA reviewer to attempt to ascertain that information from our records or to request that information from the ACE filer or importer during a manual review can result in a lengthy delay in our admissibility determination. As such, we are not amending this requirement.

b. Device listing number. We proposed to require that the Device Listing Number (LST) required under section 510 of the FD&C Act (21 U.S.C. 360) and part 807 (21 CFR part 807) for each medical device identified in the entry, be submitted in ACE at the time of entry. Providing the LST will allow FDA to review important information during our initial admissibility review as the information for each listed medical device, as enumerated in § 807.25(g), includes the proprietary or brand name(s) under which each medical device is marketed and the activities or processes that are conducted on or done to the medical device at each establishment (e.g., manufacturing, repacking, relabeling, developing specifications, remanufacturing, single-use device reprocessing, contract manufacturing, or contract sterilizing). When the listing process is complete, FDA issues an LST for each medical device associated with a particular registration.

(Comment 17) Some commenters, while recognizing that the LST is a critical component of our admissibility review, felt that the LST should be made publicly available by FDA to ensure that ACE filers have this information to submit in ACE at the time of entry. The commenters asserted that, if LSTs are not publicly available (and thus potentially not readily available to ACE filers), this will cause unnecessary disruptions and additional caged shipments. They suggest that an alternative to making the LST publicly available is to continue to allow “UNK” to be submitted for the LST.

(Response 17) We do not agree that FDA should make LSTs publicly available, and decline to make the requested revisions to the requirement to submit the LST (i.e., permit the use of “UNK” instead of the LST).

As explained in the preamble to the proposed rule, in the device registration and listing process, FDA issues a registration number to the registrant that is publicly available and an LST for each device associated with the registration. Under section 510(f) of the FD&C Act, device listing information “shall be exempt from such inspection unless the Secretary finds that such an exemption would be inconsistent with protection of the public health.” Under § 807.37(b)(2), FDA-assigned LSTs are expressly excluded from public inspection or posting on the FDA Web site. In the Federal Register, FDA provided the following brief explanation for that exclusion: “Listing numbers serve important governmental functions that may be harmed if they were made public” (77 FR 45927 at 45930 (Aug. 2, 2012)).

The confidentiality of LSTs serves important public health interests and helps to prevent the importation of substandard, mislabeled, and counterfeit medical devices. Some imports, e.g., counterfeit devices, may not be as safe and effective as devices approved or cleared for the U.S. market, may have been inadequately stored or maintained according to standards applicable outside the United States, or may be labeled or bear inadequate instructions for use in foreign markets. All of these issues can impact patient safety. FDA, therefore, will not be making LSTs publicly available as requested by commenters. Moreover, FDA will not be allowing “UNK” to be entered for LST as doing so would also increase the likelihood that counterfeit devices could enter the U.S. market and harm consumers. Although “UNK” cannot be used in lieu of an LST, “UNK” is an option for the intended use code.

ACE filers and importers in an established transactional or commercial relationship with the registrant will have access to the proprietary LST to submit in ACE at the time of entry.

c. Investigational devices. We proposed to require that an ACE filer submit in ACE at the time of entry, in the data field for the investigational device exemption (IDE) number in ACE, for an investigational device that is being imported or offered for import: (1) The IDE number for a medical device granted an exemption under section 520(g) of the FD&C Act (21 U.S.C. 360j(g)) or (2) “NSR” for a medical device to be used in a nonsignificant risk or in an exempt study (§ 1.76(b)).

One comment supportive of this provision in the proposed rule was received and we are finalizing this provision without change.

d. Impact resistant lens. We proposed to require for impact resistant lenses in eyeglasses and sunglasses an Affirmation of Compliance with the applicable requirements of § 801.410 (21 CFR 801.410) at the time of entry in ACE. This regulation states that importers may have the tests required by § 801.410(d) conducted in the country of origin but they must make the results of the testing available, upon request, to FDA, as soon as practicable (§ 801.410(g)). The current Affirmation of Compliance Code is “IRC.”

(Comment 18) Two commenters requested that FDA clarify whether impact-resistant lenses imported for personal use require submission of the IRC Affirmation of Compliance Code at the time of entry in ACE and whether an ACE filer must possess or submit the results of the “drop fall” test under § 801.410 in order to submit that Affirmation of Compliance when applicable.

(Response 18) For further relevant information on the importation of impact-resistant lenses for personal use, please see FDA's Supplemental Guide to the CATAIR (available at https://www.cbp.gov/document/guidance/fda-supplemental-guide-release-16), Chapter 9 of FDA's Regulatory Procedures Manual (available at http://www.fda.gov/downloads/ICECI/ComplianceManuals/RegulatoryProceduresManual/UCM074300.pdf), and FDA's Impact-Resistant Lenses: Questions and Answers Guidance (available at http://www.fda.gov/downloads/MedicalDevices/DeviceRegulationandGuidance/GuidanceDocuments/ucm070755.pdf).

As in the past, an ACE filer submitting “IRC” in ACE at the time of entry may rely on a drop-fall test certificate from the manufacturer or from a third party confirming to the ACE filer that the import satisfies the applicable requirements of § 801.410.

e. Investigational new drug application number. Proposed § 1.76(h), as explained in section V.C.5.h of the preamble of the Proposed Rule, would require the ACE filer, in the case of a combination product consisting of at least one medical device and one drug intended for human use and subject to an investigational new drug application (IND), to submit in ACE at the time of entry the IND number if FDA has designated the Center for Devices and Radiological Health (CDRH) as the center with primary jurisdiction for the premarket review and regulation of the combination product.

(Comment 19) We received a comment asserting that a combination product consisting of at least one medical device and one investigational new drug where FDAs CDRH has been designated as the center with primary jurisdiction would rightfully be conducted under an IDE rather than an IND. The commenter expressed the opinion that the final rule should distinguish between a combination product approved under an IDE and a combination product approved under an IND.

The commenter also observed that the proposed rule only addressed the importation of stand-alone medical devices not associated with a combination product and not the importation of devices that are included in combination products. Although medical device components of combination products may be integrated directly with a drug or biologic (21 CFR 3.2(e)(1)) or co-packaged with a drug or biologic (21 CFR 3.2(e)(2)), the commenter stated, the proposed rule did not appear to discuss the importation of medical device components of drug- or biologic-primary mode of action combination products regulated by CDER or CBER and approved for marketing under a new drug application or a biologics license application.

(Response 19) In light of this comment and based on further FDA review, FDA is not finalizing proposed § 1.76(h). FDA believes that the other requirements in §§ 1.74, 1.76, and 1.78 of the final rule, regarding products subject to the various types of applications, including investigational use applications, will suffice for combination products. If warranted, FDA will provide additional information on submitting this information for imported combination products in future guidance or other published materials.

f. Convenience kit. We proposed to require that a medical device that is a convenience kit or part of a convenience kit and is a re-import of a medical device manufactured in the United States or is an import of a medical device manufactured outside the United States be identified as such in ACE at the time of entry using the current Affirmation of Compliance Code “KIT.”

(Comment 20) One commenter was not sure that this data element will aid FDA in making admissibility decisions.

(Response 20) The purpose of the convenience kit data element is to facilitate our admissibility review of medical device products approved or cleared for marketing as a kit by FDA, and to identify convenience kits that include recalled or unapproved medical devices. As explained in the preamble to the proposed rule, convenience kits imported or offered for import have been found at times to contain recalled or unapproved medical devices.

We received no comments regarding this proposed provision, and we are finalizing it without change.

HCT/P Registration Number and Affirmation of Compliance. Human cells, tissues, or cellular or tissue-based products are articles containing or consisting of human cells or tissues intended for implantation, transplantation, infusion or transfer into a human recipient (§ 1271.3(d)). For HCT/Ps manufactured by establishments required to register under part 1271 and regulated solely under section 361 of the PHS Act and the regulations in part 1271, we proposed to require the submission of that registration number in ACE at the time of entry. The current Affirmation of Compliance Code for the HCT/P Registration Number is “HRN”.

We also proposed to require for HCT/Ps regulated solely under section 361 of the PHS Act and the regulations in part 1271 being imported or offered for import that are not otherwise exempt, that an Affirmation of Compliance with all applicable requirements of part 1271 be submitted in ACE at the time of entry. The current Affirmation of Compliance Code for HCT/Ps to affirm compliance with part 1271 is “HCT”.

(Comment 21) One comment agreed with most of the proposed requirements specific to biological products, HCT/Ps, and related drugs and medical devices, because the data clearly impacts admissibility. However, the comment questioned the need for the submission of HCT/P registration number and Affirmation of Compliance, and expressed a belief that this information is not applicable to admissibility.

(Response 21) We acknowledge and appreciate the supportive comments. We disagree that the HCT/P registration number and Affirmation of Compliance are not applicable to our admissibility review. As noted in the proposed rule, establishments that manufacture HCT/Ps are required to register and list their HCT/Ps in accordance with part 1271, subpart B, unless they are subject to an exception under 21 CFR 1271.15. When an establishment successfully completes the required registration process, CBER assigns a unique registration number to that firm. FDA established these registration requirements, as well as other requirements in part 1271 (e.g., donor eligibility and current good tissue practice requirements) to prevent the introduction, transmission, or spread of communicable diseases by HCT/Ps. Requiring submission of the HCT/P registration number and Affirmation of Compliance helps to ensure compliance with the part 1271 requirements and is necessary to prevent the introduction, transmission, or spread of communicable diseases by HCT/Ps. Accordingly, we have finalized these requirements as proposed.

a. Brand name. We proposed to require that the brand name for a tobacco product be submitted in ACE at the time of entry.

(Comment 22) Several comments expressed concern that not all tobacco products have brand names.

(Response 22) FDA recognizes that not all tobacco products have specific brand names. One key example is tobacco products for further manufacturing; another example is rolling papers that may not have a specific brand name, and only bear the manufacturer name. Thus, the final rule allows the ACE filer to submit the commercial name for the brand name in ACE if the product is unbranded. Further, in the final rule, this data element does not apply to products solely intended for further manufacturing or to investigational tobacco products.

We note that, for purposes of this rule, brand name includes brand and sub-brand, for example: “Acme Silver Box 100s,” or “Acme Little Cigars.”

b. Name and address of the ACE filer. We proposed to require that the name and address of the ACE filer for import entries that include a tobacco product be submitted in ACE at the time of entry. We invited comments on the advantages, disadvantages, and feasibility of requiring an ACE filer to submit this information in ACE at the time of entry. In particular, we invited comment on whether the submission by an ACE filer of the name and address of the ACE filer for import entries that include a tobacco product would help us achieve our goals of facilitating admissibility review and focusing our resources on those products that may be associated with a serious public health risk to consumers and whether this could be sufficiently accomplished through proposed § 1.72(b) or other means.

We received a number of comments in opposition to this provision and after consideration of those comments we have decided not to finalize this provision.

We received no comment regarding proposed § 1.80, other than the comments regarding § 1.72 which are addressed previously in this document. Under proposed § 1.80, we proposed to require that an ACE filer must submit the data specified in § 1.72 at the time of filing entry in ACE. We are finalizing this provision without change.

a. Revisions to §§ 1.83 and 1005.2. We proposed to revise §§ 1.83 and 1005.2 to update the legal references in those sections in order to bring the definition of “owner and consignee” in section 801 of the FD&C Act back in line with the customs terminology and to make clear that “owner or consignee” continues to mean the person authorized to make entry, now designated under customs law as the “importer of record.”

(Comment 23) Several comments stated that redefining “owner or consignee” in § 1.83 as “the person eligible to make entry” under the relevant provisions of the Tariff Act of 1930 was confusing because several persons are in fact eligible to become the “importer of record” and therefore to make entry. The commenters suggested that FDA define “owner or consignee” as the “person who makes entry.”

(Response 23) We agree and have revised the final rule to provide that the “owner or consignee” is defined as the “person who makes entry” under section 484 of the Tariff Act of 1930 (19 U.S.C. 1484). We removed the reference to section 485 of the Tariff Act of 1930 and 19 U.S.C. 1485 as that section relates to the filing of a declaration by the importer of record. We made the same change to § 1005.2.

(Comment 24) One commenter suggested that we should adopt a definition of “owner or consignee” that is more consistent with the definition of “importer” adopted by FDA in other areas, for example, in our proposed rule on Foreign Supplier Verification Programs (FSVP).

(Response 24) We decline to revise the rule as suggested in this comment. FDA adopted a definition of “importer” (§ 1.500) in our final FSVP rule published on November 27, 2015, that best serves the specific purposes of the FSVP requirements for importers of food for humans and animals, consistent with the statutory provisions the FSVP regulation must implement (80 FR 74226 at 74239). The purpose of the technical amendments to 21 CFR 1.83 and 1005.2 is to update the definition of “owner or consignee” to take into account revisions to the provisions of the Tariff Act of 1930 that were referenced in those regulations. Since the relevant person for these purposes is the “importer of record,” FDA is defining “owner or consignee” as the “importer of record” as that term is used in the Tariff Act of 1930.

b. Electronic notification in §§ 1.90 and 1.94. We proposed to revise § 1.90 to allow FDA to provide notice of sampling directly rather than through the “collector of customs” which will normally happen through a secure electronic system. We also proposed to revise § 1.94 to clarify that FDA can provide either written or electronic notification to an owner or consignee when FDA has determined that an article being imported or offered for import may be subject to refusal of admission and/or administrative destruction.

(Comment 25) One commenter requested clarification regarding whether electronic notification will completely replace written or facsimile communication for these purposes.

(Response 25) While our intent is to move to an automated, electronic process to expedite the notification process for both the Agency and the trade, FDA will still consider providing a written or facsimile notification if, under the circumstances, that is the most efficient and effective means to provide any such notification.

(Comment 26) Several commenters supported FDA providing electronic notification of FDA actions but also requested that, in addition to providing notification to the owner or consignee, FDA provide electronic notification to other parties to the import.

(Response 26) We decline to require that the Agency provide electronic notification under § 1.94 to a person other than the owner or consignee which, pursuant to the revision to § 1.83 in the final rule, is the importer of record. The purpose of § 1.94 is to provide the importer of record of an FDA-regulated article being imported or offered for import into the United States with notice and opportunity to present testimony to the Agency prior to refusal of admission of an FDA-regulated article or prior to administrative destruction of certain refused drugs. There is only one importer of record and only that person has the right to notification and a hearing under § 1.94.

FDA proposed that the effective date of the final rule would be 30 days after its publication in the Federal Register.

(Comment 27) FDA received comments expressing concern about an effective date of 30 days after publication of the final rule, stating that this does not provide enough time for the necessary programming integration between ACE, FDA's OASIS system, the ACE filers' and the importers' systems. One comment suggested that the trade industry will resort to manual data entry while the data feeds are being developed. The comments suggested effective dates that ranged from 60 days to 180 days after publication of the final rule. One comment suggested that FDA adopt a gradual and incremental approach to requiring submission of the data elements in the final rule.

(Response 27) We decline to change the effective date of the final rule. As of July 23, 2016, ACE became the sole CBP-authorized EDI system for electronic entry and entry summary filings for importation of FDA-regulated products. The trade community has already transitioned to ACE and software is available in the marketplace that conforms with the requirements in FDA's Supplemental Guide to the CATAIR. FDA acknowledges that software vendors and the trade community may need to make a small number of alterations to their current programming to be consistent with the requirements in the final rule but 30 days should be sufficient for that purpose. FDA will shortly issue an updated FDA Supplemental Guide to assist software vendors and the trade industry with their programming needs.

(Comment 28) Several commenters emphasized that each additional data element that will be mandated by this FDA rulemaking represents real cost added to the entry process.

(Response 28) We understand that each additional data element that firms will be required to submit in ACE at the time of entry represents added cost to the entry process. FDA has removed some of data elements from the final rule, which should lessen the burden.

While FDA is requiring ACE filers to submit more data upfront, we believe that this may not necessarily end up being burdensome to the industry over time. The Agency believes that, after the initial adjustment stage, submission of the required data will result in faster processing time and cost savings to the industry and FDA.

(Comment 29) Some commenters opined that FDA underestimated transition costs.

(Response 29) In the Preliminary Regulatory Impact Analysis (PRIA) we recognized the uncertainty surrounding our cost estimates for scenario 1, including transition cost estimates in the first year. We requested comments to provide additional data and information to improve these cost estimates. We did not receive any additional information that would help improve our transition cost estimates.

(Comment 30) Several commenters complained that the PGA message set in ACE often experiences system outages, failures to perform necessary functions, and that the time that FDA takes to process entries has already doubled for some ACE filers. They assert that this causes “down time” and significant added costs to the trade industry.

(Response 30) System outages and failures to perform necessary functions should be in part attributed to ACE implementation by CBP. In order to address these comments and also Comment 27 about alleging underestimated transition costs, we have revised our ranges for first year estimates and doubled the time necessary for filing entries in ACE for FDA-regulated products during the initial adjustment period.

(Comment 31) Some commenters said that FDA dismissed additional costs of reprogramming caused by further changes to the CATAIR.

(Response 31) In the PRIA (page 22), we stated that because the costs of updating the existing software or purchasing a new one would fall under the cost of CBP action of implementing ACE, we do not include these transition costs in our economic impact analysis. FDA expects that software updates occur regularly as a part of ongoing business practice and the price of new off-the-shelf software would incorporate all ACE requirements, including FDA PGA message set requirements. The commenters did not provide any new information that can be used to estimate the share of reprogramming costs that should be attributed only to FDA rulemaking and not the entire CBP action of implementing ACE.

(Comment 32) One commenter stated that only importers with large budgets can generate, maintain, and provide data electronically.

(Response 32) FDA acknowledges this viewpoint, but because most importers including small businesses typically hire customs brokers to electronically file entries for them in ACE, FDA expects that reprogramming costs would fall on customs brokers as a part of costs of doing business related to imports. As stated previously, approximately 98 percent of importers use customs brokers to file their entries of FDA-regulated products impacted by the final rule.

(Comment 33) Some commenters stated that the cost to file FDA entries in ACE increased by 8 minutes (by over 50 percent) and that 40 percent more staffing is required because, compared to ACS, FDA data requirements are different in ACE.

(Response 33) We incorporated this new information from the industry into our ranges of cost and time estimates for the final rule. That being said, the 50 percent time increase to process an FDA entry in ACE and the estimated 40 percent labor cost increase asserted by commenters could be caused by: (1) The overall switch from ACS to ACE (which should be attributed to the cost of ACE implementation by CBP) and (2) the additional time required for filing FDA data elements that are required in the final rule (which should be attributed to the cost of the FDA rulemaking; that is unless a filer already voluntarily provided these data elements to FDA in ACS on a regular basis). Only the costs caused by (2) should be attributed to FDA rulemaking (see scenario 1 in the PRIA).

Furthermore, it is not clear from the comment whether the 50 percent time increase and the 40 percent staffing cost increase are the same across the entire industry. In the PRIA, FDA estimated that for each FDA-regulated unique product-manufacturer import line, it would take up to 8 additional minutes to prepare and look up information mandated by the proposed rule and up to 4 additional minutes (5 minutes in the first year) to file that information in ACE, for a total of up to 12 minutes per unique import line (up to 13 minutes in the first year). Therefore, an 8 minute increase (= 24 minutes minus 16 minutes) per import line described by these comments is a possible outcome, especially in the initial adjustment stage, that is consistent with our analysis in the PRIA.

We made three technical changes to the proposed rule due to our issuance of a final rule on August 31, 2016, regarding the requirements for drug registration and listing (81 FR 60170) that was published after our Notice of Proposed Rulemaking for this rule (published on July 1, 2016 (81 FR 43155)).

Under §§ 1.74(a), 1.75(a) and 1.78(d) of our proposed rule, an ACE filer would be required to submit the Drug Registration Number and Drug Listing Number in ACE at the time of entry for an article which is a drug if it is from a foreign establishment where the drug was manufactured, prepared, propagated, compounded, or processed before being imported or offered for import into the United States that is required to be registered and the drug to be listed under section 510 of the FD&C Act. The final drug registration and listing rule amended 21 CFR parts 207 and 607 which provide the regulatory requirements for drug registration and listing including who must register their establishments and list their drugs annually with the FDA.

In this final rule, we have not changed the requirement that ACE filers submit a Drug Registration Number and a Drug Listing Number in ACE at the time of entry except that, as discussed earlier in this document, we have removed the requirement for submission of a drug listing number from § 1.78(d) for CBER-regulated drugs. For purposes of clarity regarding the underlying requirement of who must register and list their drugs with FDA, we have added a reference to part 207 in § 1.74(a) for human drugs, § 1.75(a) for animal drugs, and § 1.78(d) for those drugs regulated by CBER. Because the drugs regulated by CBER include blood and blood products we have also added a reference in § 1.78(d) to part 607, which contains the registration and listing requirements for blood and blood products.

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

The Regulatory Flexibility Act requires us to analyze regulatory options that would minimize any significant impact of a rule on small entities. By requiring import entry filers to submit data elements mandated by this final rule into ACE and updating certain sections of 21 CFR Chapter I, we intend to streamline our import entry admissibility review and reduce ambiguity about the import process. Small businesses will be affected by this final rule in the same way as non-small businesses. Because the burden of switching from ACS to ACE is already covered by CBP's ACE regulation, for those small business filers that choose to continue filing electronically (and, therefore, must use ACE), we believe that providing several additional data elements to FDA via ACE in exchange for a more streamlined process and potentially receiving an import admissibility decision faster would not cause a significant impact. These small businesses would bear the costs of this rule, but would also enjoy most of the benefits. We therefore certify that the final rule will not have a significant economic impact on a substantial number of small entities.

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

FDA is issuing a final rule to establish requirements for the electronic filing of import entries in ACE. The final rule will require that certain data elements material to our admissibility review be submitted to the FDA via ACE as part of an electronic import entry. This final regulation will help streamline FDA's existing admissibility procedures for FDA-regulated commodities imported or offered for import into the United States. For import entries submitted electronically, FDA will require that certain key data be submitted as a part of the import entry filing in ACE. The final regulation also provides further clarifications to the import process by revising sections of 21 CFR Chapter I relating to the definition of owner or consignee; the notice of sampling; and notices of FDA actions related to FDA-regulated products being imported or offered for import into the United States, such as notices of hearing on refusal of admission or administrative destruction, to allow for electronic notification by FDA. The rule also clarifies that importers of record of human cells, tissues, or cellular or tissue-based products (HCT/Ps) that are regulated solely under section 361 of the PHS Act and part 1271, unless exempted, will be required to submit the applicable data elements included in the final rule in ACE at the time of entry.

The estimated costs of the final rule—and the cost savings—stem from the mandatory information that will be submitted and collected under the ACE system. In the baseline scenario for our estimates of these costs, we assumed that without this final regulation the information would be collected by ACE only if and to the extent that it is voluntarily provided by filers like under the former ACS system (table 2). Annualized over a 20-year horizon, the costs of complying with this final regulation are between $27.7 million and $69.1 million per year with a 3 percent discount rate; these costs are between $26.8 million and $66.7 million per year with a 7 percent discount rate (table 2). The total annualized cost savings to the entire society cannot be fully quantified because of the lack of certain data currently available to the Agency. Partially quantifiable cost savings are estimated to range from $2.6 million to $43.4 million with a 3 percent discount rate; these partially quantifiable benefits are estimated to range from $2.6 million to $43.4 million with a 7 percent discount rate (table 2). These benefits, in terms of cost savings, to both FDA and the industry that we are able to quantify will arise from FDA simplifying the notification process on certain FDA actions taken by the Agency under section 801 of the FD&C Act by allowing electronic notification of the owner or consignee.

Cost savings to both the industry and FDA that we are unable to quantify will potentially arise from the reduced time of import entry processing and fewer imported products being held, and a shorter timeframe between the time of entry submission and a final admissibility decision by FDA as a result of increased efficiency in FDA's imports admissibility process. Other potential benefits of this final rule that we are unable to quantify will result from compliant FDA-regulated imports reaching U.S. consumers faster and a reduction in the number of non-compliant imports reaching U.S. consumers, thereby making the overall supply of FDA-regulated products on the U.S. market safer. Other potential benefits in the form of cost savings that we are similarly unable to quantify will arise because by revising certain sections of 21 CFR Chapter I the Agency would provide more clarity to the industry about certain aspects of the overall process of import admissibility for FDA-regulated products.

The Economic Analysis of Impacts of the final rule performed in accordance with Executive Order 12866, Executive Order 13563, the Regulatory Flexibility Act, and the Unfunded Mandates Reform Act of 1995 is available to the public in the docket for this final rule (Docket No. FDA-2016-N-1487) at https://www.regulations.gov and is also available on FDA's Web site at http://www.fda.gov/AboutFDA/ReportsManualsForms/Reports/EconomicAnalyses/default.htm (Ref. 1).

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

This final rule contains information collection provisions that are subject to review by the Office of Management and Budget (OMB) under the Paperwork Reduction Act of 1995 (PRA) (44 U.S.C. 3501-3520). The title, description, and respondent description of the information collection provisions are shown in the following paragraphs with an estimate of the annual reporting burden. Included in the estimate is the time for reviewing instructions, searching existing data sources, gathering the data needed, and completing and reviewing each collection of information.

Title: Importer's Entry Notice.

Description: We are issuing a regulation that requires ACE filers to submit certain information in ACE or any other CBP-authorized EDI system related to FDA-regulated products they are importing or offering for import into the United States. The information collection provisions of the rule, specifically the amendment of 21 CFR part 1 by adding §§ 1.70 through 1.81, will allow us to require ACE filers to submit in ACE at the time of entry important and useful information about FDA-regulated products being imported or offered for import into the United States, beyond the information that was submitted previously. The information collection provisions of this rule will facilitate an effective and efficient admissibility review of FDA-regulated products being imported or offered for import into the United States, and protect public health by allowing us to focus our limited resources on those FDA-regulated products being imported or offered for import that may be associated with a greater public health risk.

The authority to issue this regulation and to conduct the associated information collection is found in sections 801, 701, and 536 of the FD&C Act, sections 351, 361, and 368 of the PHS Act, and section 713 of FDASIA (which added section 801(r) to the FD&C Act).

To account for the information collection provisions of the rule, we are amending the information collection currently approved under OMB control number 0910-0046. The information collection approved under OMB control number 0910-0046 has historically accounted for the collection of information from entry filers for FDA-regulated products being imported or offered for import into the United States. The vast majority of this information was submitted by entry filers electronically in ACS. On July 23, 2016, ACE replaced ACS as the sole EDI system authorized by CBP for submission of electronic entry and entry summary information for FDA-regulated products being imported, or offered for import, into the United States. Although much of the information collection pursuant to this rule was previously collected from entry filers for FDA-regulated products being imported or offered for import into the United States, and was approved for collection under OMB control number 0910-0046, this rule requires ACE filers to submit certain information in addition to what entry filers were previously submitting.

The annual recordkeeping requirements for this collection are accounted for by the “Customs Modernization Act Recordkeeping Requirements” information collection approved by OMB under OMB control number 1651-0076.

Of note, in addition to accounting for the information collection pursuant to the rule, we are also adjusting the existing estimated burden approved under OMB control number 0910-0046 upwards to account for an increase in FDA-regulated import lines, to account for the submission of intended use information, which had previously been submitted by entry filers but not accounted for under an approved FDA information collection, and to correct for our previous underestimates of the number of FDA-regulated entries. Accordingly, we are adjusting upward the estimated existing burden under OMB control number 0910-0046 (without yet accounting for the information collection of the rule) to 1,186,464 hours.

The information collection provisions of this rule are in §§ 1.72, 1.73, 1.74, 1.75, 1.76, 1.77, 1.78, 1.79, and 1.80. Section 1.72 requires certain product identifying data elements and certain entity identifying data elements to be submitted in ACE at the time of entry for food contact substances, drugs, biological products, HCT/Ps, medical devices, radiation-emitting electronic products, cosmetics, and tobacco products. Sections 1.73 through 1.80 require certain data elements to be submitted in ACE depending on the type of FDA-regulated article being imported or offered for import into the United States. Sections 1.73, 1.74, 1.75, 1.76, 1.77, 1.78, 1.79, and 1.80 apply, respectively, to certain food products (food contact substances, low-acid canned food, and acidified food); human drugs; animal drugs; medical devices; radiation-emitting electronic products; biological products, HCT/Ps, and related drugs and medical devices regulated by CBER; tobacco products; and cosmetics.

Although we did not receive any comments specifically relating to the information collection burden pursuant to the information collection provisions of the rule, we did receive comments relating to the rule and the Regulatory Impact Analysis (RIA). We have revised our information collection burden estimates as appropriate to reflect those revisions we made to the rule and the RIA.

Description of Respondents: The primary respondents to this collection of information are domestic and foreign importers of FDA-regulated articles being imported or offered for import into the United States and ACE filers. An importer of record may be the owner or purchaser of the article being imported or offered for import, or a customs broker licensed by CBP under 19 U.S.C. 1641 who has been designated by the owner, purchaser, or consignee to file the import entry. There is only one importer of record per entry.

Using the estimates in the RIA for the rule, we estimate there are about 41,703 owners or purchasers of FDA-regulated commodities who seek to import FDA-regulated articles (“importers”) into the United States on an annual basis. We have estimated that 97.7 percent of these importers will use customs brokers to file their import entries in ACE, and the other 2.3 percent will file their import entries themselves. We thereby estimate that there are a total of 3,667 entry filers, which includes the 959 owners or purchasers of the article who will file their own import entry in ACE (= 41,703 importers × (100 − 97.7) percent).

Reporting Burden: We have used the relevant assumptions and estimates in Option 1 of the RIA for this rule to estimate the annual information collection burden pursuant to the rule. Option 1 of the RIA is the option which reflects the rule.

Of the data elements that the rule requires ACE filers to submit in ACE at the time of entry, all except for four, were previously collected from entry filers (as either required or optional submissions, depending on the data element) and have been accounted for by the previously approved information collection under OMB control number 0910-0046. One of those four data elements, intended use information, had been collected from entry filers but not accounted for under an OMB approved information collection. Under the rule, intended use information is collected in ACE in the form of an IUC, instead of in the form of a text input into the CBP-required product description field, as it had been collected previously in ACS. The rule provides for the collection of three data elements to be collected in ACE that are new, i.e., we have not previously collected the information from entry filers. One of the three new data elements is required by § 1.72 which applies to food contact substances, drugs, biological products, HCT/Ps, medical devices, radiation-emitting electronic products, cosmetics, and tobacco products, and is the telephone and email address for the importer of record, which will help to facilitate electronic notices provided by FDA under § 1.94 for certain FDA actions. One of the other two new data elements is required by § 1.78, which applies only to biological products, HCT/Ps, and related drugs and medical devices, and is the product name, and the other is required by § 1.79, which applies only to tobacco products, and is the brand name of the tobacco product.

Although just three data elements collected pursuant to the rule are new, we expect that filers who were not submitting certain previously optional data elements in ACS that the rule now requires ACE filers to submit in ACE will begin submitting those data elements in order to comply with the rule. We expect this to be the primary cause of the increased reporting burden pursuant to the rule. Notably, however, the submission rates of many of these data elements in ACS were quite high, although their submission varied by commodity. For example, in 2015 approximately 98 percent of medical device lines were submitted in ACS with at least one Affirmation of Compliance. Based on 2014 and 2015 data, we estimate that medical device lines will make up approximately seventy percent of all import lines that will be impacted by the rule. On the other hand, for example, in 2015 only 24 percent of animal drug import lines were submitted in ACS with at least one Affirmation of Compliance, although, based on 2014 and 2015 data, we estimate that animal drugs will make up less than 0.5 percent of all import lines that will be affected by the rule.

Using the estimates in the RIA for the rule, we have estimated that the rule will impact 23,119,465 import lines in the first year. The rule will not impact import lines of foods other than acidified foods, low-acid canned foods, and food contact substances. We have also estimated that 504,768 of affected import lines in the first year represent unique product-manufacturer combinations. We have estimated that the number of impacted import lines will grow at an average rate of about 3.3 percent per year. For the purposes of calculating the additional annual recurring reporting burden of the rule, we have annualized those 3.3 percent per year increases for 3 years.

Other key assumptions in the RIA (Option 1) for the rule that affect our estimate of the additional annual reporting burden are:

• Respondents (ACE filers) will have to become aware of the rule's requirements, which will include activities related to reading the rule, understanding the reporting requirements, consulting with specialists if necessary, determining how to best meet these requirements, and communicating these requirements to workers; and this is a one-time event that will require an average of 30 minutes.

• Respondents (owners or purchasers) will require an administrative worker to locate, gather, and prepare the additional information required by this rule for each unique product-manufacturer import line; and this will require on average about 2.333 minutes (0.03889 hours) per line.

• Respondents (ACE filers) will require an administrative worker to submit the applicable data elements required in the final rule and Respondents (ACE filers) may also require an owner or manager to check if the information is correct, or alternatively, the administrative worker to quality check their submission using software that is connected to ACE and this will require about 1.166667 minutes (approximately 0.01944 hours) per line on average.

• It will take respondents about 25 percent more time in the first year for an administrative worker to complete each import line and quality check the information, because the respondent will have to adjust to the new system and data elements.

We expect the annual recurring reporting burden for the information collection pursuant to this rule to be as follows:

We expect the additional one-time (i.e., occurring only in the first year) reporting burden for the information collection that will result from this rule to be as follows:

Accordingly, we estimate that the additional annual reporting burden under the rule will be 599,048 hours in the first year (484,828 recurring hours + 114,220 one-time hours) and 484,828 hours recurring after the first year.

Pursuant to our revision of the information collection under OMB control number 0910-0046, which includes adjustment of the existing burden and amendment to account for the information collection provisions of the rule, the total reporting burden is 1,785,712 hours in the first year (= 1,186,464 adjusted existing burden hours + 484,828 recurring hours pursuant to the rule + 114,220 one-time hours pursuant to the rule) and 1,671,292 hours annually after the first year (= 1,186,464 adjusted existing burden hours + 484,828 recurring hours pursuant to the rule).

The information collection provisions in this final rule have been submitted to OMB for review as required by section 3507(d) of the Paperwork Reduction Act of 1995. FDA will publish a subsequent notice in the Federal Register announcing OMB's decision to approve, modify, or disapprove the information collection provisions in this final rule. An Agency may not conduct or sponsor, and a person is not required to respond to, a collection of information unless it displays a currently valid OMB control number.

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

The following reference is on display in the Division of Dockets Management (see ADDRESSES) and is available for viewing by interested persons between 9 a.m. and 4 p.m., Monday through Friday; it is also available electronically at https://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.

Therefore, under the Federal Food, Drug, and Cosmetic Act and the Public Health Service Act, and under authority delegated to the Commissioner of Food and Drugs, 21 CFR parts 1, 1005, and 1271 are amended as follows:

In the Federal Register of August 24, 2016 (81 FR 57796), FDA solicited comments concerning the direct final rule for a 75-day period ending November 7, 2016. FDA stated that the effective date of the direct final rule would be on December 1, 2016, unless any significant adverse comment was submitted to FDA during the comment period. FDA did not receive any significant adverse comments.

The Drug Enforcement Administration (DEA) implements and enforces titles II and III of the Comprehensive Drug Abuse Prevention and Control Act of 1970, as amended. 21 U.S.C. 801-971. Titles II and III are referred to as the “Controlled Substances Act” and the “Controlled Substances Import and Export Act,” respectively, and are collectively referred to as the “Controlled Substances Act” or the “CSA” for the purpose of this action. The DEA publishes the implementing regulations for these statutes in title 21 of the Code of Federal Regulations (CFR), chapter II. The CSA and its implementing regulations are designed to prevent, detect, and eliminate the diversion of controlled substances and listed chemicals into the illicit market while ensuring an adequate supply is available for the legitimate medical, scientific, research, and industrial needs of the United States. Controlled substances have the potential for abuse and dependence and are controlled to protect the public health and safety.

Under the CSA, every controlled substance is classified into one of five schedules based upon its potential for abuse, its currently accepted medical use in treatment in the United States, and the degree of dependence the drug or other substance may cause. 21 U.S.C. 812. The initial schedules of controlled substances established by Congress are found at 21 U.S.C. 812(c), and the current list of all scheduled substances is published at 21 CFR part 1308.

Section 201 of the CSA, 21 U.S.C. 811, provides the Attorney General with the authority to temporarily place a substance into schedule I of the CSA for two years without regard to the requirements of 21 U.S.C. 811(b) if she finds that such action is necessary to avoid an imminent hazard to the public safety. 21 U.S.C. 811(h)(1). In addition, if proceedings to control a substance are initiated under 21 U.S.C. 811(a)(1), the Attorney General may extend the temporary scheduling for up to one year. 21 U.S.C. 811(h)(2).

Where the necessary findings are made, a substance may be temporarily scheduled if it is not listed in any other schedule under section 202 of the CSA, 21 U.S.C. 812, or if there is no exemption or approval in effect for the substance under section 505 of the Federal Food, Drug, and Cosmetic Act (FDCA), 21 U.S.C. 355. 21 U.S.C. 811(h)(1). The Attorney General has delegated her scheduling authority under 21 U.S.C. 811 to the Administrator of the DEA. 28 CFR 0.100.

Section 201(h)(4) of the CSA, 21 U.S.C. 811(h)(4), requires the Administrator to notify the Secretary of the Department of Health and Human Services (HHS) of his intention to temporarily place a substance into schedule I of the CSA.1 The Administrator transmitted the notice of intent to place furanyl fentanyl into schedule I on a temporary basis to the Assistant Secretary by letter dated June 22, 2016. The Assistant Secretary responded to this notice by letter dated July 8, 2016, and advised that based on review by the Food and Drug Administration (FDA), there are currently no investigational new drug applications or approved new drug applications for furanyl fentanyl. The Assistant Secretary also stated that the HHS has no objection to the temporary placement of furanyl fentanyl into schedule I of the CSA. The DEA has taken into consideration the Assistant Secretary's comments as required by 21 U.S.C. 811(h)(4). Furanyl fentanyl is not currently listed in any schedule under the CSA, and no exemptions or approvals are in effect for furanyl fentanyl under section 505 of the FDCA, 21 U.S.C. 355. The DEA has found that the control of furanyl fentanyl in schedule I on a temporary basis is necessary to avoid an imminent hazard to the public safety, and as required by 21 U.S.C. 811(h)(1)(A), a notice of intent to temporarily schedule furanyl fentanyl was published in the Federal Register on September 27, 2016. 81 FR 66224.

To find that placing a substance temporarily into schedule I of the CSA is necessary to avoid an imminent hazard to the public safety, the Administrator is required to consider three of the eight factors set forth in section 201(c) of the CSA, 21 U.S.C. 811(c): The substance's history and current pattern of abuse; the scope, duration and significance of abuse; and what, if any, risk there is to the public health. 21 U.S.C. 811(h)(3). Consideration of these factors includes actual abuse, diversion from legitimate channels, and clandestine importation, manufacture, or distribution. 21 U.S.C. 811(h)(3).

A substance meeting the statutory requirements for temporary scheduling may only be placed into schedule I. 21 U.S.C. 811(h)(1). Substances in schedule I are those that have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. 21 U.S.C. 812(b)(1). Available data and information for furanyl fentanyl, summarized below, indicate that this synthetic opioid has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. The DEA's updated three-factor analysis, and the Assistant Secretary's July 8, 2016, letter, are available in their entirety under the tab “Supporting Documents” of the public docket of this action at www.regulations.gov under FDMS Docket ID: DEA-2016-0018 (Docket Number DEA-448).

The recreational abuse of fentanyl-like substances continues to be a significant concern. These substances are distributed to users with often unpredictable outcomes. Furanyl fentanyl has recently been encountered by law enforcement and public health officials and the adverse health effects and outcomes are documented in the scientific literature. The documented negative effects of furanyl fentanyl are consistent with those of other opioids. On October 1, 2014, the DEA implemented STARLiMS (a Web-based, commercial laboratory information management system) to replace the System to Retrieve Information from Drug Evidence (STRIDE) as its laboratory drug evidence data system of record. DEA laboratory data submitted after September 30, 2014, are reposited in STARLiMS; data from STRIDE and STARLiMS were queried on November 2, 2016. STARLiMS registered 113 reports containing furanyl fentanyl, all reported in 2016, from Alabama, California, Connecticut, Delaware, Florida, Georgia, Illinois, Maryland, Mississippi, Missouri, Montana, New Jersey, New York, North Carolina, North Dakota, Rhode Island, Tennessee, Texas, Utah, Virginia, Wisconsin, West Virginia, and the District of Columbia.

The National Forensic Laboratory Information System (NFLIS) is a national drug forensic laboratory reporting system that systematically collects results from drug chemistry analyses conducted by participating Federal, State and local forensic laboratories across the country. According to NFLIS, the first report of furanyl fentanyl was recorded in December 2015 in Oregon. From December 2015 through September 2016, a total of 494 submissions to state and local forensic laboratories identifying furanyl fentanyl were reported in NFLIS as a result of law enforcement encounters in California, Connecticut, Florida, Iowa, Kentucky, Massachusetts, Minnesota, Missouri, New Jersey, North Dakota, Ohio, Oklahoma, Oregon, Pennsylvania, Virginia, and Wisconsin (query date: November 2, 2016). The DEA is not aware of any laboratory identifications of furanyl fentanyl prior to 2015.

Evidence suggests that the pattern of abuse of fentanyl analogues, including furanyl fentanyl, parallels that of heroin and prescription opioid analgesics. Seizures of furanyl fentanyl have been encountered in powder form. Furanyl fentanyl has also been encountered in drug paraphernalia commonly associated with heroin or other opioid abuse including glassine bags, and as a residue on spoons and bottle caps. Furanyl fentanyl has been encountered as a single substance as well as in combination with other substances of abuse, including heroin, fentanyl, butyryl fentanyl, and U-47700. Furanyl fentanyl has been connected to fatal overdoses, in which intravenous routes of administration are documented.

The scientific literature and reports collected by the DEA demonstrate furanyl fentanyl is being abused for its opioid properties. This abuse of furanyl fentanyl has resulted in morbidity and mortality (see updated DEA 3-Factor Analysis for full discussion). The DEA has received reports for at least 128 confirmed fatalities associated with furanyl fentanyl. The information on these deaths occurring in 2015 and 2016 was collected from email communications or toxicology and medical examiner reports received by the DEA. These deaths were reported from five states—Illinois (36), Maryland (41), New Jersey (1), North Carolina (49), and Ohio (1). The scientific literature notes additional fatal overdoses connected to furanyl fentanyl. STARLiMS and NFLIS have a total of 607 drug reports in which furanyl fentanyl was identified in drug exhibits submitted to forensic laboratories from December 2015 through September 2016 from law enforcement encounters. It is likely that the prevalence of furanyl fentanyl in opioid analgesic-related emergency room admissions and deaths is underreported as standard immunoassays may not differentiate this substance from fentanyl.

The population likely to abuse furanyl fentanyl overlaps with the population abusing prescription opioid analgesics and heroin. This is evidenced by the routes of drug administration and drug use history documented in furanyl fentanyl fatal overdose cases. Because abusers of furanyl fentanyl are likely to obtain this substance through unregulated sources (i.e. on-line purchases or drug dealers), the identity, purity, and quantity are uncertain and inconsistent, thus posing significant adverse health risks to the end user. Individuals who initiate (i.e. use a drug for the first time) furanyl fentanyl abuse are likely to be at risk of developing substance use disorder, overdose, and death similar to that of other opioid analgesics (e.g., fentanyl, morphine, etc.).

Furanyl fentanyl exhibits pharmacological profiles similar to that of fentanyl and other µ-opioid receptor agonists. The toxic effects of furanyl fentanyl in humans are demonstrated by overdose fatalities involving this substance. Abusers of furanyl fentanyl may not know the origin, identity, or purity of this substance, thus posing significant adverse health risks when compared to abuse of pharmaceutical preparations of opioid analgesics, such as morphine and oxycodone.

Based on reports in the scientific literature and information received by the DEA, the abuse of furanyl fentanyl leads to the same qualitative public health risks as heroin, fentanyl and other opioid analgesic substances. As with any non-medically approved opioid, the health and safety risks for users are great. The public health risks attendant to the abuse of heroin and opioid analgesics are well established and have resulted in large numbers of drug treatment admissions, emergency department visits, and fatal overdoses.

Furanyl fentanyl has been associated with a number of fatalities and non-fatal overdoses as detailed in the scientific literature. The DEA has received information connecting furanyl fentanyl to at least 128 confirmed overdose deaths occurring in 2015 and 2016 in Illinois (36), Maryland (41), New Jersey (1), North Carolina (49), and Ohio (1).

In accordance with 21 U.S.C. 811(h)(3), based on the data and information summarized above, the continued uncontrolled manufacture, distribution, importation, exportation, and abuse of furanyl fentanyl pose an imminent hazard to the public safety. The DEA is not aware of any currently accepted medical uses for this substance in treatment in the United States. A substance meeting the statutory requirements for temporary scheduling, 21 U.S.C. 811(h)(1), may only be placed into schedule I. Substances in schedule I are those that have a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. Available data and information for furanyl fentanyl indicate that this substance has a high potential for abuse, no currently accepted medical use in treatment in the United States, and a lack of accepted safety for use under medical supervision. As required by section 201(h)(4) of the CSA, 21 U.S.C. 811(h)(4), the Administrator, through a letter dated June 22, 2016, notified the Assistant Secretary of the DEA's intention to temporarily place this substance into schedule I.

In accordance with the provisions of section 201(h) of the CSA, 21 U.S.C. 811(h), the Administrator considered available data and information, herein sets forth the grounds for his determination that it is necessary to temporarily schedule furanyl fentanyl into schedule I of the CSA, and finds that placement of this synthetic opioid into schedule I of the CSA is necessary to avoid an imminent hazard to the public safety. Because the Administrator hereby finds it necessary to temporarily place this synthetic opioid into schedule I to avoid an imminent hazard to the public safety, this final order temporarily scheduling furanyl fentanyl will be effective on the date of publication in the Federal Register, and will be in effect for a period of two years, with a possible extension of one additional year, pending completion of the regular (permanent) scheduling process. 21 U.S.C. 811(h) (1) and (2).

The CSA sets forth specific criteria for scheduling a drug or other substance. Permanent scheduling actions in accordance with 21 U.S.C. 811(a) are subject to formal rulemaking procedures done “on the record after opportunity for a hearing” conducted pursuant to the provisions of 5 U.S.C. 556 and 557. 21 U.S.C. 811. The permanent scheduling process of formal rulemaking affords interested parties with appropriate process and the government with any additional relevant information needed to make a determination. Final decisions that conclude the permanent scheduling process of formal rulemaking are subject to judicial review. 21 U.S.C. 877. Temporary scheduling orders are not subject to judicial review. 21 U.S.C. 811(h)(6).

Upon the effective date of this final order, furanyl fentanyl will become subject to the regulatory controls and administrative, civil, and criminal sanctions applicable to the manufacture, distribution, reverse distribution, importation, exportation, engagement in research, and conduct of instructional activities or chemical analysis with, and possession of schedule I controlled substances including the following:

1. Registration. Any person who handles (manufactures, distributes, reverse distributes, imports, exports, engages in research, or conducts instructional activities or chemical analysis with, or possesses), or who desires to handle, furanyl fentanyl must be registered with the DEA to conduct such activities pursuant to 21 U.S.C. 822, 823, 957, and 958 and in accordance with 21 CFR parts 1301 and 1312, as of November 29, 2016. Any person who currently handles furanyl fentanyl, and is not registered with the DEA, must submit an application for registration and may not continue to handle furanyl fentanyl as of November 29, 2016, unless the DEA has approved that application for registration pursuant to 21 U.S.C. 822, 823, 957, 958, and in accordance with 21 CFR parts 1301 and 1312. Retail sales of schedule I controlled substances to the general public are not allowed under the CSA. Possession of any quantity of this substance in a manner not authorized by the CSA on or after November 29, 2016 is unlawful and those in possession of any quantity of this substance may be subject to prosecution pursuant to the CSA.

2. Disposal of stocks. Any person who does not desire or is not able to obtain a schedule I registration to handle furanyl fentanyl, must surrender all quantities of currently held furanyl fentanyl.

3. Security. Furanyl fentanyl is subject to schedule I security requirements and must be handled and stored pursuant to 21 U.S.C. 821, 823, 871(b), and in accordance with 21 CFR 1301.71-1301.93, as of November 29, 2016.

4. Labeling and packaging. All labels, labeling, and packaging for commercial containers of furanyl fentanyl must be in compliance with 21 U.S.C. 825, 958(e), and be in accordance with 21 CFR part 1302. Current DEA registrants shall have 30 calendar days from November 29, 2016, to comply with all labeling and packaging requirements.

5. Inventory. Every DEA registrant who possesses any quantity of furanyl fentanyl on the effective date of this order must take an inventory of all stocks of this substance on hand, pursuant to 21 U.S.C. 827 and 958, and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11. Current DEA registrants shall have 30 calendar days from the effective date of this order to be in compliance with all inventory requirements. After the initial inventory, every DEA registrant must take an inventory of all controlled substances (including furanyl fentanyl) on hand on a biennial basis, pursuant to 21 U.S.C. 827 and 958, and in accordance with 21 CFR 1304.03, 1304.04, and 1304.11.

6. Records. All DEA registrants must maintain records with respect to furanyl fentanyl pursuant to 21 U.S.C. 827 and 958, and in accordance with 21 CFR parts 1304, and 1312, 1317 and § 1307.11. Current DEA registrants shall have 30 calendar days from the effective date of this order to be in compliance with all recordkeeping requirements.

7. Reports. All DEA registrants who manufacture or distribute furanyl fentanyl must submit reports pursuant to 21 U.S.C. 827 and in accordance with 21 CFR parts 1304, and 1312 as of November 29, 2016.

8. Order Forms. All DEA registrants who distribute furanyl fentanyl must comply with order form requirements pursuant to 21 U.S.C. 828 and in accordance with 21 CFR part 1305 as of November 29, 2016.

9. Importation and Exportation. All importation and exportation of furanyl fentanyl must be in compliance with 21 U.S.C. 952, 953, 957, 958, and in accordance with 21 CFR part 1312 as of November 29, 2016.

10. Quota. Only DEA registered manufacturers may manufacture furanyl fentanyl in accordance with a quota assigned pursuant to 21 U.S.C. 826 and in accordance with 21 CFR part 1303 as of November 29, 2016.

11. Liability. Any activity involving furanyl fentanyl not authorized by, or in violation of the CSA, occurring as of November 29, 2016, is unlawful, and may subject the person to administrative, civil, and/or criminal sanctions.

Section 201(h) of the CSA, 21 U.S.C. 811(h), provides for a temporary scheduling action where such action is necessary to avoid an imminent hazard to the public safety. As provided in this subsection, the Attorney General may, by order, schedule a substance in schedule I on a temporary basis. Such an order may not be issued before the expiration of 30 days from (1) the publication of a notice in the Federal Register of the intention to issue such order and the grounds upon which such order is to be issued, and (2) the date that notice of the proposed temporary scheduling order is transmitted to the Assistant Secretary. 21 U.S.C. 811(h)(1).

Inasmuch as section 201(h) of the CSA directs that temporary scheduling actions be issued by order and sets forth the procedures by which such orders are to be issued, the DEA believes that the notice and comment requirements of the Administrative Procedure Act (APA) at 5 U.S.C. 553, do not apply to this temporary scheduling action. In the alternative, even assuming that this action might be subject to 5 U.S.C. 553, the Administrator finds that there is good cause to forgo the notice and comment requirements of 5 U.S.C. 553, as any further delays in the process for issuance of temporary scheduling orders would be impracticable and contrary to the public interest in view of the manifest urgency to avoid an imminent hazard to the public safety.

Further, the DEA believes that this temporary scheduling action is not a “rule” as defined by 5 U.S.C. 601(2), and, accordingly, is not subject to the requirements of the Regulatory Flexibility Act. The requirements for the preparation of an initial regulatory flexibility analysis in 5 U.S.C. 603(a) are not applicable where, as here, the DEA is not required by the APA or any other law to publish a general notice of proposed rulemaking.

Additionally, this action is not a significant regulatory action as defined by Executive Order 12866 (Regulatory Planning and Review), section 3(f), and, accordingly, this action has not been reviewed by the Office of Management and Budget (OMB).

This action will not have substantial direct effects on the States, on the relationship between the national government and the States, or on the distribution of power and responsibilities among the various levels of government. Therefore, in accordance with Executive Order 13132 (Federalism) it is determined that this action does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

As noted above, this action is an order, not a rule. Accordingly, the Congressional Review Act (CRA) is inapplicable, as it applies only to rules. However, if this were a rule, pursuant to the Congressional Review Act, “any rule for which an agency for good cause finds that notice and public procedure thereon are impracticable, unnecessary, or contrary to the public interest, shall take effect at such time as the federal agency promulgating the rule determines.” 5 U.S.C. 808(2). It is in the public interest to schedule this substance immediately to avoid an imminent hazard to the public safety. This temporary scheduling action is taken pursuant to 21 U.S.C. 811(h), which is specifically designed to enable the DEA to act in an expeditious manner to avoid an imminent hazard to the public safety. 21 U.S.C. 811(h) exempts the temporary scheduling order from standard notice and comment rulemaking procedures to ensure that the process moves swiftly. For the same reasons that underlie 21 U.S.C. 811(h), that is, the DEA's need to move quickly to place this substance into schedule I because it poses an imminent hazard to the public safety, it would be contrary to the public interest to delay implementation of the temporary scheduling order. Therefore, this order shall take effect immediately upon its publication. The DEA has submitted a copy of this final order to both Houses of Congress and to the Comptroller General, although such filing is not required under the Small Business Regulatory Enforcement Fairness Act of 1996 (Congressional Review Act), 5 U.S.C. 801-808 because, as noted above, this action is an order, not a rule.

I. Executive Summary

The Violence Against Women Act (VAWA) was enacted on September 13, 1994, by title IV of the Violent Crime Control and Law Enforcement Act of 1994, Public Law 103-322, 108 Stat. 1796. The STOP Program is codified at 42 U.S.C. 3796gg through 3796gg-5 and 3796gg-8. The final rule for this program, found at 28 CFR part 90, subpart B, was promulgated on April 18, 1995. General provisions affecting all OVW grant programs are found at 28 CFR part 90, subpart A.

This rule amends the general provisions applicable to all OVW grant programs and the regulations governing the STOP Program to comply with the amendments to these programs enacted by the Violence Against Women Act of 2000 (VAWA 2000), Division B of the Victims of Trafficking and Violence Protection Act of 2000, Public Law 106-386, 114 Stat. 1464 (Oct. 28, 2000), the Violence Against Women and Department of Justice Reauthorization Act of 2005 (VAWA 2005), Public Law 109-162, 119 Stat. 2960 (Jan. 5, 2006), and the Violence Against Women Reauthorization Act of 2013 (VAWA 2013), Public Law 113-4, 127 Stat. 54 (Mar. 7, 2013). These changes to the regulations incorporate the statutory changes, make minor technical corrections, implement enhanced administrative and planning practices for formula grantees, and streamline existing regulations to reduce repetition of statutory language.

In addition, this rule amends an existing regulatory provision, § 90.2, that sets forth certain definitions that apply to all OVW grant programs. Furthermore, the rule adds a new regulatory provision, § 90.4, that is applicable to all OVW grant programs to implement statutory amendments requiring nondisclosure of confidential or private information pertaining to victims of domestic violence, dating violence, sexual assault and stalking.

In 1994, Congress passed the Violence Against Women Act (VAWA), a comprehensive legislative package aimed at ending violence against women. VAWA was enacted on September 13, 1994, as title IV of the Violent Crime Control and Law Enforcement Act of 1994, Public Law 103-322, 108 Stat. 1796. VAWA was designed to improve criminal justice system responses to domestic violence, sexual assault, and stalking, and to increase the availability of services for victims of these crimes. VAWA was reauthorized and amended in 2000, 2005, and 2013, with each new reauthorization making improvements to the law and adding new programs and provisions.

VAWA recognized the need for specialized responses to violence against women given the unique barriers that impede victims from accessing assistance from the justice system. To help communities develop these specialized responses, VAWA authorized the STOP Program, among others. See 42 U.S.C. 3796gg through 3796gg-5 and 3796gg-8; 28 CFR part 90, subpart B.

VAWA requires a coordinated community response to domestic violence, dating violence, sexual assault and stalking crimes and encourages jurisdictions to bring together stakeholders from multiple disciplines to share information and to improve community responses. These often include victim advocates, police officers, prosecutors, judges, probation and corrections officials, health care professionals, and survivors. In some communities, these multidisciplinary teams also include teachers, leaders within faith communities, public officials, civil legal attorneys, health care providers, advocates from population-specific community-based organizations representing underserved populations, and others.

VAWA's legislative history indicates that Congress passed VAWA to improve justice system responses to violence against women. For example, Congress wanted to encourage jurisdictions to treat domestic violence as a serious crime, by instituting comprehensive reforms in their arrest, prosecution, and judicial policies. Congress was further interested in giving law enforcement and prosecutors the tools to pursue domestic violence and sexual assault cases without blaming victims for behavior that is irrelevant in determining whether a crime occurred, while discouraging judges from issuing lower sentences for sexual assault crimes than for other violent crimes. VAWA was intended to bring an end to archaic prejudices throughout the justice system, provide support for victims and assurance that their attackers will be prosecuted, and focus criminal proceedings on the conduct of attackers rather than the conduct of victims.1

VAWA added a part T to the Omnibus Crime Control and Safe Streets Act of 1968, Public Law 90-351, codified at 42 U.S.C. 3711 et seq., titled Grants to Combat Violent Crimes Against Women, which authorizes four OVW-administered grant programs, including the STOP Program. STOP Program grants are awarded by population-based formula to states to develop and strengthen the justice system's response to violence against women and to support and enhance services for victims.

On October 28, 2000, Congress enacted the Violence Against Women Act of 2000 (VAWA 2000), Division B of the Victims of Trafficking and Violence Protection Act of 2000, Public Law 106-386, 114 Stat. 1464. VAWA 2000 continued and strengthened the federal government's commitment to helping communities change the way they respond to violence against women. VAWA 2000 reauthorized critical grant programs, established new programs, and strengthened federal law. It had an emphasis on increasing responses to victims of dating violence and expanding options and services for immigrant and other vulnerable victims.

VAWA 2000 made several changes relevant to the STOP Program. First, it amended the statutory purposes for which grant funds may be used. Second, it clarified the eligibility of courts as subgrantees. Third, it modified the requirement under the STOP Program that, to be eligible for funding, states must certify that victims not bear the costs for certain filing fees related to domestic violence cases. Finally, it added a new provision applicable to all OVW grant programs requiring grantees to report on the effectiveness of activities carried out with program funds.

On January 5, 2006, Congress enacted the Violence Against Women and Department of Justice Reauthorization Act (VAWA 2005), Public Law 109-162, 119 Stat. 2960. VAWA 2005 strengthened provisions of the previous Acts, including revising the STOP Program, and created a number of new grant programs. It also created a set of universal definitions and grant conditions, including a confidentiality provision, that apply to all programs authorized by VAWA and subsequent legislation. VAWA 2005 had an emphasis on enhancing responses to sexual assault, youth victims, and victims in Indian country. Its provisions included new sexual-assault-focused programs, the addition of sexual assault to a number of OVW grant programs, new youth-focused programs, and the creation of a comprehensive violence against women program for tribal governments.

The revisions to the STOP Program made by VAWA 2005 included adding new purpose areas to the program and modifying the requirements for the development of state implementation plans, the allocation of funds to subgrantees, and documentation of consultation with victim service programs. VAWA 2005 also required that the regulations governing the program ensure that states would recognize and meaningfully respond to the needs of underserved populations and distribute funds intended for culturally specific services—for which the Act created a new set-aside—equitably among culturally specific populations. It further amended the certification requirement under the program related to payment for forensic medical exams for victims of sexual assault and added new certifications related to prohibiting the use of polygraph examinations in sexual assault cases and to judicial notification to domestic violence offenders of laws prohibiting their possession of a firearm.

On March 7, 2013, Congress enacted the Violence Against Women Reauthorization Act of 2013 (VAWA 2013), Public Law 113-4, 127 Stat. 54. VAWA 2013 made further improvements to the OVW grant programs, including several new requirements for the STOP Program. It also included two new historic provisions, one extending civil rights protections based on gender identity and sexual orientation and another recognizing the inherent jurisdiction of Indian tribes to prosecute non-Indians who commit certain domestic violence offenses in Indian country.2

VAWA 2013 amended the universal definitions and grant conditions established by VAWA 2005 for all OVW grant programs and amended and added to the STOP Program purpose areas. It also amended the requirements under the STOP Program that states develop and submit with their applications and implementation plan—including documentation of planning committee members' participation in the development of the plan—and consult and coordinate with a variety of entities and stakeholders. VAWA 2013 modified the allocation requirements governing STOP subgrants, creating a set-aside for projects addressing sexual assault, and made changes to the statute's requirement that states provide matching funds for their grant awards. It also made several changes to provisions governing payment for forensic medical exams for sexual assault victims and certain filing costs related to cases of domestic violence, dating violence, sexual assault, and stalking.

The STOP Program regulations and general provisions were originally promulgated in April, 1995. On December 30, 2003, OVW published a proposed rule to clarify the match requirement for the STOP Program, which was never finalized and subsequently was superseded by changes to the statute made by VAWA 2005. On January 21, 2004, section 90.3, regarding participation by faith based organizations was added to the general provisions. OVW published the Notice of Proposed Rulemaking for the current update on May 11, 2016 at 81 Federal Register 29215. In developing the proposed rule, OVW held a series of listening sessions with relevant constituencies to solicit input on updating the STOP Program regulations and general provisions. The specific sessions were focused on state STOP Program administrators, state coalitions, culturally specific and underserved populations, tribes and tribal coalitions, nonprofit organizations, and the justice system. Comments on the proposed rule were due by July 11, 2016.

As discussed in more detail under Executive Orders 12866 and 13563 (in the Regulatory Review discussion below), the rule clarifies the statutory requirements, but does not alter the existing program structure. Updating the existing regulations to clearly and accurately reflect the statutory parameters will facilitate state compliance with VAWA, and thus avoid potentially costly non-compliance findings.

As discussed above, this rule updates the regulations for the STOP Program and the general provisions governing OVW grant programs, including definitions and requirements for nondisclosure of confidential victim information, to comply with statutory changes and reduce repetition of statutory language. The structure and section numbering of the proposed rule has not been changed in the final rule, but some of the specific provisions have, as described below.

OVW received 12 comments from state STOP grant administrators, national organizations focusing on violence against women, one state domestic violence coalition, individuals, and one creator of a cloud-based database for domestic violence and sexual assault service providers. Comments generally fell into six categories: (1) Reducing administrative burdens on state administering agencies, (2) encouraging victim-centered best practices, (3) clarifying requirements about the states' STOP implementation planning processes, (4) clarifying other STOP Program requirements, particularly those related to underserved and culturally specific populations, (5) clarifying the statutory confidentiality provision that restricts the release of victim identifying information, and (6) enhancing language access. The most significant changes in response to the comments are as follows:

1. Changed the definition of “prevention” to clarify the difference between primary and secondary prevention (90.2(d)).

2. Provided additional detail and clarification regarding the confidentiality provision (90.4(b)).

3. Provided additional guidance to states on assessing qualifications of applicants for the culturally specific set aside of funds and clarified that they are encouraged to exceed the minimum statutory set aside of three percent (90.11(c)(3)).

4. Increased the time period covered by state implementation plans from three years to four (90.12(a)).

5. Clarified the requirement to consult with various entities in the process of developing and updating implementation plans and the documentation required regarding such consultation (90.12(b) and (c)).

6. Clarified that, if the Prison Rape Elimination Act (PREA) requirements no longer apply to the STOP Program, then states will not need to address PREA compliance in their implementation plans and that only states that submitted assurances under PREA need to submit information on how they will spend the funds toward coming into compliance with PREA (90.12(g)(7)).

7. Clarified when states may reallocate returned STOP funds and funds from allocations for which the state did not receive sufficient applications (90.25).

OVW received one comment expressing overall support for the proposed rule. OVW also received an overarching comment stating that the commenter would like to see more flexibility in categories within the STOP Program to better meet victim needs, such as more flexibility in emergency victim assistance. As long as a particular cost is related to victim safety and allowable under the cost principles in 2 CFR part 200, states have flexibility regarding how to use victim service funds. For example, states may use STOP funds to support emergency transportation, medical expenses, and other necessities where needed for victim safety. Because states already have considerable discretion to direct funding to emergency victim assistance, no change was made in the final rule. The other comments all pertained to specific sections of the proposed rule.

VAWA 2005 established universal definitions and grant conditions for OVW grant programs, and VAWA 2013 amended these provisions. One of these grant conditions protects the confidentiality and privacy of persons receiving victim services for the purpose of ensuring victim safety. This section discusses the comments received on Subpart A, the definitions and grant conditions sections of the proposed rule, including provisions dealing with confidentiality, and any changes made to this subpart in the final rule.

Section 90.1 provides general information, including specification of which statutes are implemented by the rule and an explanation of the different subparts of the rule. In the final rule OVW also has added language to clarify to which grants and subgrants this updated rule will apply. Specifically, it will take effect with grants issued by OVW after the effective date of the rule (30 days from publication in the Federal Register). For subgrants, it will take effect with subgrants issued by states under the STOP and Sexual Assault Services Formula Grant Programs after that date, even if such subgrants are made with grant funds awarded by OVW prior to that date.

The universal definitions added by VAWA 2005, codified at 42 U.S.C. 13925(a), superseded previous program-specific definitions originally enacted in 1994. The rule revises the definitions section of part 90, 28 CFR 90.2, by removing definitions from the existing regulations that are codified in statute, adding definitions for terms that are used in statute but not defined, and clarifying statutory definitions that, based on OVW's experience managing its grant programs, require further explanation.

Section 90.2 currently contains definitions for the following terms: Domestic violence, forensic medical examination, Indian tribe, law enforcement, prosecution, sexual assault, state, unit of local government, and victim services. This rule removes the definitions for domestic violence, Indian tribe, law enforcement, sexual assault, state, and victim services, as they all appear in the statute and do not need further clarification.

The rule revises the definition of “forensic medical examination,” a term that is used but not defined in a statutory provision directing that states, Indian tribal governments, and units of local government may not receive STOP Program funds unless they incur the full out-of-pocket cost of forensic medical exams for victims of sexual assault. See 42 U.S.C. 3796gg-4(a)(1). The rule changes the list of minimum elements that the exam should include to bring the definition in line with best practices for these exams as they have developed since part 90 was implemented in 1995, and, in particular, with the Department of Justice's national protocol for sexual assault medical forensic examinations (SAFE Protocol), which was updated in April 2013.3 OVW received several comments on this definition. Three commenters recommended adding “obtaining informed consent” to the definition and two of them also suggested adding an assessment of the patient's state of mind. Although these are best practices as discussed in the SAFE Protocol, they are not appropriate for inclusion here, because this definition applies to the specific context of meeting the certification requirement for the STOP Program that states must ensure victims do not incur “out of pocket” costs for forensic medical examinations. The definition is not intended to be a comprehensive description of best practices for conducting the examination but rather a list of elements for which victims should not incur “out of pocket” costs.

One commenter also suggested adding “medical care and treatment” to the definition of “forensic medical examination.” Again, although this does represent best practice as exemplified in the SAFE Protocol, it is not appropriate for inclusion in this context because it would impose an increased cost to states not mandated by the STOP Program statute. The current rule allows states flexibility in determining whether to cover medical costs that are not within the definition of forensic medical examination, such as testing and treatment for sexually transmitted diseases. Many states do cover such expenses, but not all do. Payment for such expenses is often available through programs funded through the Victims of Crime Act (VOCA). OVW also notes that the definition does include “head-to-toe examination of the patient,” which is for both medical and forensic purposes. This examination is used to identify injuries for treatment purposes and provide documentation that could potentially be used by the criminal justice system. This commenter also suggested changing “sexual assault victim” to “victim of sexual assault” to clarify that the provision also applies to domestic violence survivors who are sexually assaulted. OVW agrees and has made this change to paragraph 90.2(c).

The rule's definition of “prosecution” contains minor technical changes from the definition in the existing regulation. These changes implement the VAWA 2005 provision making the definitions applicable to all OVW grant programs and conform the definition to the statute. The definition retains the existing regulation's clarification of the statutory definition, which explains that prosecution support services fall within the meaning of the term for funding purposes. This clarification continues to be important because allocating prosecution grant funds to activities such as training and community coordination helps to achieve the statutory goal of improving prosecution response to domestic violence, dating violence, sexual assault, and stalking. OVW received one comment on this definition, noting that it included participation in domestic violence task forces and enforcing domestic violence restraining orders, but did not include task forces and restraining orders focused on sexual assault, dating violence, or stalking. OVW has added dating violence, sexual assault, and stalking to paragraph 90.2(e) to correct this oversight.

In addition, the statutory definition for “prosecution” uses, but does not define, the term “public agency,” which the rule defines using the definition for this term in the Omnibus Crime Control and Safe Streets Act. See 42 U.S.C. 3791.

The rule revises the definition of “unit of local government,” which did not have a statutory definition specific to all OVW grant programs until the enactment of VAWA 2013, to make it consistent with the statutory language. In addition, it includes in the definition a list of entities and organizations that do not qualify as units of local government for funding purposes and would need a unit of local government to apply on their behalf for those programs where “unit of local government” is an eligible entity but other types of public or private entities are not eligible. The list reflects OVW's long-standing interpretation of the term “unit of local government” and is consistent with OVW's practice of excluding these entities and organizations from eligibility to apply for OVW funding as units of local government. The one comment on this definition was a recommendation for OVW to consult with tribes on the impact of the change. OVW declines to take this suggestion for two reasons. First, the change eliminating tribes from the definition of “unit of local government” is dictated by the definition in VAWA 2013 and cannot be changed by regulation. By excluding tribes from the definition of “unit of local government,” VAWA 2013 excluded tribes from a provision in the authorizing statute for the Grants to Encourage Arrest Policies and Enforcement of Protection Orders Program that reduces the award amount to states and units of local government by five percent if the jurisdiction does not have certain laws, regulations, or policies regarding HIV testing of sex offenders. Second, even if the regulation could alter the statutory definition, OVW notes that this statutory change has no impact on tribal eligibility for OVW grants. “Tribal government” is an eligible entity for every OVW grant program that includes “unit of local government” as an eligible entity.

The rule also adds definitions to the regulation for terms that are used in OVW grant program statutes but are undefined and that OVW believes would be helpful to applicants and grantees. The term “community-based organization” is defined in 42 U.S.C. 13925(a), but the term “community-based program,” which also appears in OVW grant program statutes, is not. To preserve consistency across OVW programs and minimize confusion, OVW is proposing to use the statutory definition for both terms.

The rule provides a definition of “prevention” that distinguishes the term from “outreach” both because OVW has observed that some grant applicants propose outreach activities to implement prevention programming under OVW programs and because funding for “prevention” is more limited than funding for “outreach.” The proposed rule defined “prevention program” as “a program that has a goal of stopping domestic violence, dating violence, sexual assault, or stalking from happening in the first place. Prevention is distinguished from `outreach,' which has the goal of informing victims and potential victims about available services.” OVW received three different comments on this definition. The first recommends that the definition describe the distinction between “primary” and “secondary” prevention so that programs that interrupt and prevent future domestic violence, dating violence, sexual assault, and stalking after it has taken place can be distinguished from programs that focus on these crimes in a context where they have not yet taken place. This commenter specifically recommended using language from the Family Violence Prevention and Services Office within the Department of Health and Human Services. The second commenter recommended changing “programs” in the definition to “activities and strategies.” The third commenter recommended deleting “in the first place” from the definition. OVW agrees with all the comments and the definition in paragraph 90.2(d) has been revised to make clear that ”prevention” includes both primary and secondary prevention efforts and to define the terms primary and secondary prevention. The final sentence from the proposed rule, which distinguishes “prevention” from “outreach” is retained in the final rule.

Finally, the rule adds a definition for “victim services division or component of an organization, agency, or government” because the rule uses this term in implementing the confidentiality provision enacted by VAWA 2005 and amended by VAWA 2013, which is discussed in more detail in the next section.

VAWA 2005 added grant conditions for all OVW grant programs, including a provision on confidentiality and privacy of victim information and these provisions were amended by VAWA 2013. See 42 U.S.C. 13925(b). Section 90.4(a) provides that the grant conditions in 42 U.S.C. 13925(b) apply to all grants awarded by OVW and all subgrants under such awards. One commenter requested that OVW also specify that grantees and subgrantees are required to comply with Title VI of the Civil Rights Act of 1964 and section 504 of the Rehabilitation Act. The commenter correctly notes that all grantees and subgrantees must comply with these laws. The grantmaking process, however, already requires grantees and subgrantees to comply with these and other civil rights statutes through standard assurances that the grantee signs. These are available on the OVW Web site at www.usdoj.gov/OVW. Because compliance with all applicable civil rights laws is already addressed through these assurances, it is not necessary to include compliance with two of these laws in this regulation.

The statutory confidentiality provision recognizes the critical importance to victim safety of protecting victims' personally identifying information. It generally requires grantees and subgrantees to protect victim confidentiality and privacy to ensure the safety of victims and their families and prohibits the disclosure of victims' information without their informed, written, and reasonably time-limited consent. These requirements, implemented in section 90.4(b), apply to all OVW grant programs, not just STOP grants. In administering this confidentiality provision, OVW has received numerous inquiries regarding what kinds of disclosures require written consent, and OVW is attempting to answer these questions in this rule.

In the Notice of Proposed Rulemaking, OVW requested comments about the propriety of placing victim information on third-party (or “cloud”) servers. Seven commenters responded to this request. Commenters were generally concerned about the privacy of information on such third-party servers, but also noted the need for flexibility in access to client information as service provision models expand from just office-based services. Commenters raised specific questions related to the use of third-party servers, such as who owns the data, who has access to the data, what security measures are in place to prevent unauthorized release of information, and what happens if the provider receives a subpoena for release of client information. Some commenters recommended specifying the answers to the above questions in the agreement between the victim service provider and the cloud storage provider. Some commenters also recommended the use of encryption to protect the client information. Two commenters specifically recommended the use of “zero knowledge” encryption, where the encryption key is stored on the victim service provider's server so the storage provider only has access to encrypted (and therefore unreadable) information. Two commenters recommended the use of background checks of the employees of the storage providers. One commenter noted that, while they felt that cloud storage should be acceptable, it should not include sharing of client information in regional or statewide databases such as Homeless Management Information Systems. Based on these comments, OVW added a new paragraph (b)(5) to § 90.4: “Inadvertent release. Grantees and subgrantees are responsible for taking reasonable efforts to prevent inadvertent releases of personally identifying information or individual information that is collected as described in paragraph (b)(2).” The reasonable efforts mentioned here apply not just to third-party electronic storage, but also protections for paper copies of information or information stored on internet-connected computers at the victim service provider. As suggested by one commenter, the use of third-party storage is not, by itself, a release, but can lead to release without sufficient precautions. “Reasonable efforts” in the case of third-party storage include, but are not limited to, ensuring that the contract with the storage provider specifies that the service provider owns the information and ensuring that there are sufficient security protocols to protect the information.

Section 90.4(b)(2)(iii) provides that the confidentiality provision applies to disclosures from victim service divisions or components of an organization, agency, or government to other non-victim services divisions or components and to the leadership of such organization, agency, or government. It also provides that the leadership shall have access without releases only in “extraordinary and rare” circumstances. OVW requested comments on this provision and received three comments. Two commenters were concerned that the phrase “extraordinary and rare circumstances” is too vague and asked OVW to provide additional guidance. In response, OVW has added a statement clarifying that “Such [extraordinary and rare] circumstances do not include routine monitoring and supervision[]” to the end of paragraph (b)(2)(iii). OVW decided against including a list of circumstances that justify disclosure because such determinations will be fact-based. OVW notes, however, that one example of such an extraordinary and rare circumstance justifying release to an organization's leadership would be where there are allegations of fraud against the victim service division or one of its staff members. One commenter was concerned that this provision could be read to include victim-witness programs at prosecution or law enforcement offices. By statute (42 U.S.C. 13925(b)(2)(D)(i)(III)), the confidentiality provision does not apply to “law enforcement-generated and prosecution-generated information necessary for law enforcement and prosecution purposes.” In addition, § 90.2(h) of this rule defines “victim services division or component of an organization, agency, or government” as a “division within a larger organization, agency, or government, where the agency has as its primary purpose to assist or advocate for victims of domestic violence, dating violence, sexual assault, or stalking and has a documented history of work concerning such victims.” Victim-witness programs in prosecution or law enforcement offices would generally be for law enforcement or prosecution purposes, even if they are also assisting victims.

Section 90.4(b)(3) governs releases of personally identifying information or individual information collected in connection with services. One commenter requested that OVW add language providing that releases must be accessible to all victims, including those with limited literacy and/or English language proficiency. OVW declines to make this change because it is not necessary. Both the statute and the regulation require informed releases; if the victim does not understand the release, it cannot be truly “informed.” Section 90.4(b)(3)(ii), as revised, requires that the grantee or subgrantee engage in a conversation with the victim regarding the purpose for and limits on the release, and the grantee or subgrantee should record the agreement as to the scope of the release. This conversation should ensure that the victim understands the release. In addition, with regard to language access, there are already civil rights laws and regulations requiring that grantees and subgrantees take reasonable steps to provide meaningful access to their programs and activities for persons with limited English proficiency. Grantees and subgrantees explicitly agree to comply with these laws by signing relevant assurances and certifications when applying for OVW grants and upon the receipt of OVW financial assistance. For more information on language access requirements, the Office of Justice Programs, Office for Civil Rights (OCR) has information on its Web page at http://ojp.gov/about/ocr/lep.htm.

Section 90.4(b)(3)(i) addresses the circumstances under which identifying information about victims served by OVW grantees and subgrantees may be released, one of which is when the release is compelled by a court mandate (§ 90.4(b)(3)(i)(C)). One commenter requested that OVW clarify that “court mandates” include case law mandates, such as those imposing a “duty to warn” when there is a specified threat of harm. OVW accepts this comment. It is consistent with guidance that OVW has provided to grantees. Section 90.4(b)(3)(i)(C) has been revised to read “release is compelled by court mandate, which includes a legal mandate created by case law, such as a common-law duty to warn.”

Section 90.4(b)(3)(ii) addresses criteria for victim releases. One commenter recommended that, within the context of signing a release of information, grantees and subgrantees must reach agreement with the victim about what information the victim wants shared and record that agreement as part of the release. Another commenter recommended that the victim specify to whom and what specific information is to be shared. OVW agrees and has rewritten the third sentence of this paragraph to specify that grantees and subgrantees must discuss with the victim why the information might be shared, who would have access to the information, and what information could be shared under the release. They must also reach agreement with the victim about what information would be shared and with whom and record the agreement about the scope of the release.

Section 90.4(b)(3)(ii)(C) and (D) address releases for minors and legally incapacitated persons with court-appointed guardians. With regard to minor children, the rule provides that both the minor and the parent or guardian sign the release. One commenter noted that the rule should account for situations where the child is too young to sign the release. OVW agrees and has added language to clarify that, if a minor is incapable of knowingly consenting, the parent or guardian of that minor may provide consent. The rule also provides that, if a parent or guardian consents for a minor, the service provider should attempt to notify the minor as appropriate. Another commenter requested that OVW include language that consent for release may not be given by the abuser of the minor or the abuser of the other parent of the minor. Such language already was included in section 90.4(b)(3)(ii)(C) of the proposed rule.

Section 90.4(b)(4) addresses release of information about deceased victims for fatality reviews. OVW solicited comments on this provision and received four responses. The proposed rule provided that the prohibition on sharing information did not apply to information about deceased victims being sought for fatality reviews if the review met certain criteria. All commenters were concerned about the impact on victims if, prior to their deaths, they were aware of the possibility of release and recommended not allowing release without consent. Four commenters noted that such consent could be provided by a personal representative of the victim, if available. OVW is seeking to balance these concerns with the important work that is done by fatality reviews. In a fatality review, community responders examine homicides and suicides resulting from domestic violence to identify gaps in services, responses, and prevention efforts. These reviews can lead to systemic improvements that can prevent future deaths. The final rule requires grantees to make a reasonable effort to gain consent from a personal representative, but, if they are not able to do so after such efforts, it does not preclude their full participation in the fatality review. Also, the final rule permits sharing identifying victim information only when the fatality review has an underlying objective to prevent future deaths, enhance victim safety, and increase offender accountability, and includes both policies and protocols to protect against the release of information outside the fatality review team and limits release to information that is necessary for the purposes of the fatality review. OVW notes that many states or tribes have specific confidentiality and privilege laws that apply to victim service providers and other OVW grantees and subgrantees. This provision would allow release for VAWA purposes but would not override state or tribal laws that do not allow for release. Some laws, however, specifically authorize victim service providers to release information for fatality reviews. The language of the final rule is an attempt to ensure that the VAWA confidentiality provision is implemented in a manner that is compatible with such state or tribal laws, including both where those laws are more protective of victim confidentiality and where they authorize release.

Section 90.4(b)(6) (renumbered from (5) in the proposed rule) requires grantees and subgrantees to document their compliance with the confidentiality requirement by submitting an acknowledgement form indicating that they have notice of the requirement and that they will create and maintain documentation of compliance. OVW received one comment on this provision. The commenter recommended that OVW also require grantees and subgrantees to document their compliance with Title VI of the Civil Rights Act of 1964 and section 504 of the Rehabilitation Act. The standard assurances (available at https://www.justice.gov/ovw/how-apply) contain a provision that requires STOP Program grantees and subgrantees to comply with applicable civil rights laws, including the Civil Rights Act, the Rehabilitation Act, and VAWA. Title VI requires grantees and subgrantees to provide appropriate language-access services to limited English proficient (LEP) beneficiaries. See 28 CFR 42.405(d). The U.S. Department of Justice has issued guidance for recipients on their responsibility under Title VI to provide language-access services. See Department of Justice, Guidance to Federal Financial Assistance Recipients Regarding Title VI Prohibition Against National Origin Discrimination Affecting Limited English Proficient Persons, 67 FR 41,455 (June 18, 2002). OVW, through the Office of Justice Programs, Office on Civil Rights (OCR), conducts compliance reviews to ensure that recipients are serving LEP beneficiaries and LEP service populations. State administering agencies that subgrant STOP Program funds to other organizations must have “Methods of Administration” (28 CFR 42.105(d)(2)) that monitor whether their subrecipients have a language assistance plan. OCR provides technical assistance to recipients about their obligation to provide language-access services through an online training program (http://ojp.gov/about/ocr/ocr-training-videos/video-ocr-training.htm (last visited July 21, 2016)), in-person presentations, and telephone consultations. In addition, aggrieved parties (and third parties) may file an administrative complaint with the OCR alleging a recipient's failure to provide appropriate language-access services in violation of Title VI (28 CFR. 42.107(b)) and VAWA (28 CFR 42.205). OCR will investigate the complaint, and, if the complaint has merit, OCR will seek appropriate remedies. The enforcement scheme that is already in place holds recipients accountable for providing appropriate language-access services to LEP beneficiaries in accordance with Title VI and VAWA. Therefore there is no need for additional documentation under this rule.

An additional comment on this paragraph recommended the language, which was already included in the proposed rule, that requires grantees and subgrantees to document compliance with the confidentiality requirement.

OVW also has added a new section 90.4(c) to specify that victim eligibility for direct services is not dependent on the victim's immigration status, for consistency with the Office for Victims of Crime Victims of Crime Act (VOCA) Assistance Program Final Rule, which was issued after the OVW proposed rule. This is also consistent with the Attorney General Order on Specification of Community Programs Necessary for Protection of Life or Safety under Welfare Reform Legislation (Attorney General Order No. 2353-2001, 66 F. R. 3616 (Jan. 16, 2001)). In addition, on August 5, 2016, Attorney General Loretta E. Lynch, Secretary Sylvia Mathews Burwell of the U.S. Department of Health and Human Services (HHS) and Secretary Julián Castro of the U.S. Department of Housing and Urban Development (HUD) released a letter 4 to recipients of federal funding to provide more information on access to services for immigrant victims. The letter explains that immigrants cannot be denied access to certain services necessary to protect life or safety on the basis of their immigration status.

OVW proposed significant changes in the proposed rule to the organization of Subpart B, the STOP Program regulations, and is retaining these changes, without further alteration, in the final rule. The following chart shows the changes from the current rule to both the proposed and final rules.

OVW is removing much of the existing regulation to avoid duplication with the statute. Specifically, OVW is removing the following sections and paragraphs of the current regulation for this reason: §§ 90.10; 90.11(a); 90.12; 90.16(a); and 90.18. Other sections have been streamlined by referencing the statutory provision rather than repeating the statutory language.

As discussed above, VAWA of 2000, VAWA 2005, and VAWA 2013 have amended and enhanced the STOP Program. Specific changes are as follows:

This section describes each provision of the regulatory text, any comments received, and any changes made to the final rule.

Section 90.10 lists the eligible applicants for the program and specifies that the purposes, criteria, and requirements for the program are established by 42 U.S.C. 3796gg et seq. The only comments on this section expressed support.

Section 90.11 describes the role of the state office, which is to be designated by the chief executive of the state. As detailed in § 90.11(a) and (b), the state office is responsible for submitting the application, including certifications, developing the implementation plan, and administering the funds. Three commenters felt that paragraph (b) was too burdensome in that it required the state administering agencies for various programs to coordinate on disbursement of funds (rather than implementation planning). The requirement to coordinate on disbursement is in the current rule, but, since the issuance of that rule, VAWA 2013 added the requirement to coordinate on implementation planning. OVW agrees that the existing requirement to coordinate with other state administering agencies on disbursement of funds is no longer necessary in light of the VAWA 2013 amendment and is removing it from the final rule. The requirement to coordinate on implementation planning is at § 90.12(b)(6).

Section 90.11(c) is intended to ensure that statutorily allocated funds are meaningfully targeted to the appropriate entities and activities. Paragraph (c)(3) discusses the allocation for culturally specific services. One commenter recommended changing the second sentence to clarify that recipients should have expertise specifically on services to address the demonstrated needs of the targeted racial and ethnic minority group. OVW agrees and has changed the second sentence accordingly. This commenter also requested that the rule make clear that the set aside of ten percent (out of the thirty percent for victim services) is a minimum and not a cap. OVW agrees and has added language to § 90.11(c)(3) to encourage states to provide funding above the three percent minimum to address the needs of racial and ethnic minority groups.

Another commenter expressed support for the paragraph's language clarifying eligibility for the culturally specific set aside and recommended that OVW go further in delineating an assessment approach for subgrant applications under this category. OVW accepts this recommendation and is adding a new sentence to paragraph (c)(3) that provides that states should tailor their subgrant application process to meaningfully assess the qualifications of applicants for the culturally specific set aside.

One additional commenter noted that the definition of “culturally specific” is not the same as the definition of “underserved” and that therefore some populations of victims (such as Deaf and lesbian, gay, bisexual, and transgender (LGBT)) are excluded. OVW cannot alter the definition to include additional underserved populations because of a statutory change in VAWA 2013. Prior to VAWA 2013, states could use the culturally specific set aside to provide culturally specific services to any underserved population. VAWA 2013 changed the definition of culturally specific so that it now means “primarily directed toward racial and ethnic minority groups.” 42 U.S.C. 13925(b)(6). As a result, the STOP Program's set aside for culturally specific community-based organizations may only fund subgrantees that target racial and ethnic minority groups. 42 U.S.C. 3796gg-1(c)(4)(C). States are still required to consider the full range of underserved populations in the state and ensure that funds are equitably distributed toward the needs of such populations, 42 U.S.C. 3796gg-1(e)(2)(D).

Section 90.11(c)(4) provides guidance with regard to the twenty-percent sexual assault set aside. One commenter supported language directing how states evaluate whether projects qualify for the sexual assault set aside generally, but objected to allowing states to assess the percentage of a project that addresses sexual assault and count that percentage toward the set aside. The commenter noted that projects that primarily address other crimes should not count toward the sexual assault set aside. OVW agrees that only projects that truly address sexual assault should be counted and has removed the sentence that would permit states to aggregate percentages from projects that do not primarily address sexual assault. Projects that qualify for the set aside may include, but are not limited to, sexual assault victim advocacy services, sexual assault forensic examiner programs, Sexual Assault Response Teams, law enforcement or prosecution training on or specialized units for sexual assault, projects addressing rape kit backlogs, and projects that involve implementation of the Prison Rape Elimination Act of 2012 (PREA) standards in working with incarcerated victims.

OVW also has added a new paragraph (d) on pass-through administration, based on the Office for Victims of Crime's VOCA Victim Assistance Program Final Rule, which was issued after the OVW proposed rule. Under both the STOP and Victim Assistance Programs, some states administer the program by awarding the funds to an organization such as a state domestic violence or sexual assault coalition and permitting that organization to identify and monitor subgrantees. OVW wishes to be consistent with OVC's regulations regarding this practice.

Section 90.12 implements new requirements for the state planning process added by VAWA 2013. One commenter had an overarching recommendation that this section refer to the statute without any additional detail. The commenter opined that such detail is more appropriate for guidance and “frequently asked questions” issued by OVW, rather than regulations. Finally, the commenter maintained that the requirements spelled out in this section are too burdensome for states and not consistent with existing state processes. OVW disagrees. The procedures in this rule are consistent with guidance that OVW previously provided to states and therefore state processes should already align with the rule's requirements. Although the rule does require certain documentation, OVW has determined that this documentation is necessary for OVW to ensure compliance with the detailed statutory requirements that Congress put in place in VAWA 2013. The provisions of this section balance the needs of the state with the complexity of the statute. As discussed below, however, state plans will be due on a four-year cycle instead of a three-year one.

The proposed rule included language in section 90.12(a) incorporating a long-standing OVW practice of allowing states to submit a full implementation plan every three years and then submit updates to the plan in the other two years. Several commenters requested that the plan extend for five years, to cover the period between VAWA reauthorizations, rather than three, to reduce the burden on states. OVW is partially accepting this recommendation by making the plan due every four years, starting with the FY 2017 application. Accordingly, the plan submitted in FY 2017 must cover the years 2017-2020. This will give the states more time to develop their plans each cycle and reduce the burden on states, while ensuring that the plans are updated with reasonable frequency. OVW declines to align the plan cycle with VAWA reauthorizations because OVW cannot know if or when Congress will reauthorize VAWA. Depending on the changes made to the STOP Program statute in a reauthorization, however, a new state plan may not be required due to a reauthorization. For example, if purpose areas are added or changed, the state could develop an update noting whether or not it plans to use the new purpose areas. Because of the longer plan period, the final rule provides in paragraph (b) that consultation is required for updating a plan as well as for developing the full plan. If there are no updates, or only minor changes, then the consultation may be brief.

Paragraphs (b) and (c) of section 90.12 are new to the regulation, but incorporate provisions from 42 U.S.C. 3796gg-1(c)(2) and (i) regarding consultation and coordination. The statute, as amended by VAWA 2013, provides a list of entities that states must consult with during the implementation planning process and requires documentation from members of the planning committee as to their participation in the planning process. OVW must ensure that states consult with all the required entities and fully document such consultation. The final rule strikes a balance between requiring sufficient documentation within the implementation plan and minimizing the burdens on state administrators inherent in providing such documentation.

Section 90.12(b) addresses consultation and coordination with the entities specified in 42 U.S.C. 3796gg-1(c)(2). Paragraph (b)(2) addresses population-specific organizations, representatives from underserved populations, and culturally specific organizations. Two commenters noted that the proposed rule required the inclusion of “significant underserved or culturally specific populations in the state” but did not define “significant.” OVW declines to define “significant” because what significant means will be different for every state. Instead, OVW has inserted language in paragraph (c) that requires states to explain in their implementation plans how they determined which underserved and culturally specific populations to include. OVW also has amended paragraph (b)(2) to provide that states consider, in addition to demographics, barriers to service, including historical lack of access to services, for each population. These commenters noted a similar concern with paragraph (b)(7), which is addressed in the final rule through these change to paragraphs (b)(2) and (c).

Two commenters requested that OVW add language to paragraph (b)(2) with specific recommendations on how states should engage in meaningful outreach, such as having a mailing list with organizations in specific areas, including nonprofit and faith-based organizations, and conducting information sessions beyond regular business hours and in local communities. Although OVW agrees in principle with these suggestions, OVW believes they are too detailed and specific for inclusion in the regulations and more appropriate for technical assistance.

Section 90.12(b)(3) requires consultation with all state and federally recognized tribes in the planning process. One commenter agreed but also noted that there is a need for states to have mechanisms for tribes to participate meaningfully and recommended that OVW require states to document their attempts to reduce barriers to participation by tribes. OVW agrees and has added this to paragraph (c)(2)(iii). Examples of ways that states have successfully reached tribes include tours of the reservations in the state and regional meetings with tribal leaders.

Section 90.12(b)(4) provides that, if possible, states should include survivors of domestic violence, dating violence, sexual assault, and stalking in the planning process. One commenter noted the value and importance of including survivors in the planning process. Another recommended changing the provision to reflect that states are “encouraged” to include survivors, but also noted concerns that states could recruit and solicit input from survivors in ways that violate survivor confidentiality and autonomy. As a result, OVW has changed the provision to remind states that include survivors in their consultation process that they should address safety and confidentiality concerns. OVW recommends that state STOP administrators work with organizations within their states, such as state coalitions, victim service providers, and culturally and population specific organizations, that may have survivor advisory panels or may be able to assist with recruiting survivors who are interested in providing input regarding the state plan. Survivors do not need to participate in person and their input may be obtained through means such as online or paper surveys, conference calls, or web meetings.

Section 90.12(b)(6) implements the statutory requirement at 42 U.S.C. 3796gg-1(c)(3) that the state coordinate the plan with the plans for the Family Violence Prevention and Services Act (42 U.S.C. 10407), the State Victim Assistance Formula Grants under the Victims of Crime Act (42 U.S.C. 10603), and the Rape Prevention and Education Program (42 U.S.C. 280b-1b). Two commenters noted that this coordination can be difficult if the STOP Program administrator does not control the other funding streams. They also noted that the VOCA Assistance state administrator may be better positioned to lead this coordination, as that program disburses substantially more funding. Because each state is structured differently, OVW will give states discretion how to handle this statutory requirement. Some examples include a single meeting with the various state administrators to discuss plan priorities, having a shared planning process, having the different administrators serve on the STOP planning committee, and sharing a draft plan with the other administrators for feedback. If a state chooses to have another administrator, such as the VOCA administrator, lead the processes, it may do that at its discretion.

Section 90.12(c) provides information on how states must document their consultation with the various required entities. The rule requires states to submit to OVW documentation of the extent of each partner's participation, a summary of any significant concerns that were raised during the planning process, and a description of how those concerns were resolved. Paragraph (c) is intended to ensure meaningful collaboration with partners, while minimizing the administrative burden on states. One commenter noted that the term “checklist” can be confusing because OVW also uses a checklist of the required plan elements. The commenter recommended changing “checklist” to “documentation of collaboration.” OVW agrees and has made this change.

OVW received several comments on this section, both expressing support and expressing concerns about the burden on STOP administrators. Some commenters recommended using a certification of compliance with collaboration instead of requiring the documentation. One commenter recommended removing some of the specific details regarding what to retain and instead provide a general requirement for states to document and keep on file a description of the planning process. One commenter noted that the requirement to provide a summary of major concerns is duplicative. However, another commenter specifically supported the level of documentation and the focus on documenting major issues and how they are resolved. After consideration of these diverging views, OVW has determined that the level of documentation required by the rule is necessary for management of the program and is consistent with current practices and OVW guidance. OVW, however, has rewritten this section to clarify what documentation must be retained and what must be submitted as part of the implementation plan. OVW may review the retained documentation as part of monitoring, such as a site visit or where there is a suspicion of noncompliance with the collaboration requirements. Furthermore, by amending section 90.12(a) to require a new plan every four years instead of every three years, OVW has reduced the burden of retaining or submitting this documentation. Also, one commenter noted that requiring participants to fax or email proof of their attendance on calls and webinars is not necessary. OVW agrees and has modified that paragraph accordingly.

Section 90.12(d) implements 42 U.S.C. 3796gg-1(e)(2), which requires states to describe in the implementation plan how they will provide for equitable distribution of funds with certain considerations, such as geographic diversity and meeting the needs of underserved populations. One commenter noted that states must ensure that eligible underserved and culturally specific entities are aware of the funding opportunity. OVW agrees but recognizes that this kind of outreach is needed not just for underserved populations, but for other categories in this paragraph such as different types of geographic areas. Therefore, OVW has added a new paragraph (d)(5) to require that states take steps to ensure that eligible applicants are aware of the STOP Program funding opportunity, including applicants serving different geographic areas and culturally specific and other underserved populations. Another commenter expressed a concern with paragraph (d)(4), which specifies that states must recognize and meaningfully respond to the needs of underserved populations and ensure that monies set aside to fund linguistically and culturally specific services and activities for underserved populations are distributed equitably among “those populations.” This commenter was concerned that the term “those populations” will be seen as limiting the equitable distribution to culturally specific populations under the ten-percent set aside. OVW agrees and has amended paragraph (d)(4) to clarify that it applies to both culturally specific populations and the broader range of underserved populations.

Section 90.12(e) implements 42 U.S.C. 3796gg-1(i)(2)(E). The paragraph allows states the flexibility to identify underserved populations, while requiring a description of why the specific populations were selected. One commenter noted in response to both this paragraph and paragraph (d) that the states must address statewide needs and that the ten-percent set aside is a minimum and not a cap. As discussed above, OVW has made changes to section 90.12(c)(3) that address these concerns. This commenter also requested that OVW include a reminder that states must develop language access plans to ensure that, in distribution of funding, they provide “meaningful access” for persons with limited English proficiency. This specific reminder is not needed because it is already required and addressed through other mechanisms, as discussed above in response to a similar comment regarding § 90.4(b)(6). OVW does include language in all its solicitations about language access and use of funds for this purpose. OVW encourages states to use the same or similar language in their solicitations. The 2016 STOP Program solicitation includes the following:

Section 90.12(f) implements 42 U.S.C. 3796gg-1(i)(2)(G), which requires state implementation plans to include goals and objectives for reducing domestic violence-related homicide. This paragraph requires states to include statistics on domestic violence homicide within the state, consult with relevant entities such as law enforcement and victim service providers, and establish specific goals and objectives to reduce homicide, including addressing challenges specific to the state and how the plan can overcome them.

Section 90.12(g) outlines additional content that implementation plans must include. These required elements are designed to help OVW ensure that states meet statutory requirements for the program and to provide a better understanding of how the state plans to allocate its STOP Program funds. One commenter requested that OVW remind states to provide outreach to targeted community groups, which should be translated or interpreted to other languages and broadcast in ethnic media. The need for outreach has been addressed in paragraph (d)(5) as discussed above. Also, as discussed above, the specific reminder about interpretation is unnecessary because it is covered by other laws, regulations, guidance, and resources for grantees.

Paragraph (g)(7), regarding the Prison Rape Elimination Act (PREA), is designed to ensure that states that submit assurances under PREA that they will spend five percent of “covered funds” towards compliance with PREA are including such funds in their planning. One commenter noted that there is pending legislation that could separate PREA from STOP. To address this possibility, OVW has added the phrase, “if applicable” to paragraph (g)(7). If the legislation passes, it will no longer be applicable, and states will not need to address it. Another commenter opined that, because the decision whether to submit a certification, assurance, or neither under PREA is the responsibility of the governor, it should only be included in the implementation plan if the grantee is using PREA set-aside funds for victim services and has control through direct contracting. OVW agrees in part and disagrees in part. Although it is true that the state STOP administrator does not have control over PREA certification and assurance decisions, the administrator should be aware of the governor's decisions and should be able to report on the use of STOP funds if the state submitted an assurance that it would use five percent of covered funds under STOP towards coming into compliance with PREA. Therefore, OVW has changed the paragraph to note that the state needs to specify whether it submitted a certification, assurance, or neither under PREA, and, if an assurance, how it plans to spend the STOP funds set aside for PREA compliance.

Section 90.12(h) implements a change in VAWA 2013 that makes the implementation plans due at the time of application rather than 180 days after award. One commenter complained that this does not give states enough time to complete the plan and requested 90 days after the award to complete the plan. OVW disagrees because states do not need to wait for the solicitation to write the plan. Since the previous plan was due in 2014, OVW has been encouraging states to work on their 2017 plans. States may use the 2014 solicitation, guidance on the OVW Web page, and this rule to help develop their plans. In addition, if a state is not able to complete their plan by the application deadline, they may submit information on what is needed to complete the plan. If they have not completed the plan by the time the award is issued, the state will still receive the award, but with a condition withholding all the funds until the plan is submitted and approved.

Section 3796gg-4 of Title 42 requires states to ensure that the state or another governmental entity bears the “full out-of-pocket” costs of sexual assault medical forensic examinations. Section 90.13(b) provides a definition of “full out-of-pocket costs.” Paragraph (d) clarifies that, if states use victims' personal health insurance to pay for the exams, they must ensure that any expenses not covered by insurance are not billed to the victims, as these would constitute “out-of-pocket” costs. Paragraph (e) implements a new provision from VAWA 2013, 42 U.S.C. 3796gg-4(a)(1)(B), which requires states to coordinate with health care providers in the region to notify victims of the availability of forensic examinations.

Two commenters expressed that the victim's insurance should never be billed. In some cases, insurance billing can present a hardship for victims. For example, a victim of spousal rape may not want her husband to find out that she sought a forensic exam. If the victim is forced to submit the claim to her insurance company and she is covered by her husband's insurance, he may receive a statement from the insurance indicating that she received the exam. OVW agrees and strongly discourages the practice of billing a victim's insurance. The statute, however, clearly permits it. See 42 U.S.C. 3796gg-4(c) (specifying that states may only use grant funds to pay for forensic examinations if the examinations are performed by a trained examiner and victims are not required to seek reimbursement from their insurance). OVW, however, has added language to section 90.13(d) to discourage the practice. Another commenter wrote in response to this section as well as sections 90.15 (the provision prohibiting polygraph testing) and 90.16 (regarding fees and costs for criminal charges and protection orders) to request that states be required to provide notice to victims of their rights in relevant languages. Section 90.13(e) (implementing 42 U.S.C. 3796gg-4(1)(B)) already contains a notice requirement regarding rape examination payment. Additional reminders with regard to language access are not needed in this rule because it is covered by the relevant federal civil rights laws and regulations. Finally, although OVW encourages states to inform victims about the prohibition on polygraph testing and the provisions relating to costs for criminal charges and protection orders, OVW declines to impose a notice requirement, because Congress included it in the rape examination payment certification but did not in the certifications regarding polygraph testing and costs for criminal charges and protection orders.

Section 90.14 implements the requirements of 42 U.S.C. 3796gg-4(e), which provides that states and units of local government are not entitled to funds unless they certify that their judicial administrative policies and practices include notification to domestic violence offenders of relevant federal, state, and local firearms prohibitions that might affect them. This requirement was added by VAWA 2005. One commenter stated that the judicial notice should be in the language of the offender and that funding should be reduced if it is not. OVW declines to make this change because, as discussed above, language access is addressed by existing civil rights laws and regulations.

Section 90.15 implements the requirements of 42 U.S.C. 3796gg-5, which provides that states, tribes, and units of local government are not entitled to funds unless they certify that victims of domestic violence, dating violence, sexual assault, or stalking are not charged certain costs associated with criminal prosecution or protection orders. These requirements were amended by VAWA 2000 and VAWA 2013. No comments were received on this section other than the comment regarding notice discussed above under § 90.13.

Section 90.16 implements 42 U.S.C. 3796gg-8, which provides that, to be eligible for STOP Program funding, states, tribes, and units of local government must certify that their laws, policies, and practices ensure that law enforcement officers, prosecutors, and other government officials do not ask or require sexual assault victims to submit to a polygraph examination or other truth telling device as a condition for investigating the offense. These requirements were added by VAWA 2005. OVW received two comments on this section, in addition to the comment regarding notice discussed above under § 90.13. The first recommended language to clarify that state-level police and prosecutors must comply with this requirement. OVW has not accepted this suggestion, because although it is correct that the state must comply, OVW believes the language of the proposed rule is clear. The second commenter recommended that polygraphing be prohibited outright. OVW lacks the authority to do this because the statute (and therefore the regulation) only prohibits polygraphing as a condition of proceeding with the investigation of the offense. OVW, however, has changed “restricting” in paragraph (a) to “prohibiting” to track the language of the statute. OVW also agrees that polygraphing of victims should not be done as a routine matter. The Attorney General Guidelines for Victim and Witness Assistance (2011 Edition, https://www.justice.gov/sites/default/files/olp/docs/ag_guidelines2012.pdf) provides that investigating agents may request victims to take a polygraph only in extraordinary circumstances and only with the concurrence of the Special Agent in Charge or the Supervisory Assistant United States Attorney. The guidelines further provide that all reasonable alternative investigatory methods should be exhausted before requesting or administering a sexual assault victim polygraph examination. OVW recommends that states and local jurisdictions adopt similar guidelines to limit the improper use of polygraph tests on sexual assault victims.

Section 90.17(a) describes the type of entities that may receive subgrants from the state (state agencies and offices, courts, local governments, public agencies, tribal governments, victim service providers, community-based organizations, and legal services programs).

Section 90.17(b) allows states to use up to ten percent of each allocation category (law enforcement, prosecution, victim services, courts, and discretionary) to support the state's administrative costs. Examples of such costs include the salary and benefits of staff who administer the program and costs of conducting peer review. This paragraph codifies a long-standing OVW policy regarding state administrative costs. OVW added language from the OVC VOCA Assistance Program Rule regarding the use of funds for administrative costs. The programs often have the same administrators, so it is important that the regulations governing the two programs are consistent.

Section 90.18 implements the match provisions of 42 U.S.C. 3796gg-1(f) and 13925(b)(1). VAWA 2005 provided that match could not be required for subgrants to tribes, territories, or victim service providers. It also authorized a waiver of match for states that have “adequately demonstrated [their] financial need.” 42 U.S.C. 13925(b)(1). VAWA 2013 further specified that the costs of subgrants for victim services or tribes would not count toward the total amount of the STOP award in calculating match. 42 U.S.C. 3796gg-1(f).

Section 90.18(a) states the match requirement in general and reflects that the match requirement does not apply to territories.

Section 90.18(b) allows for in-kind match, consistent with 2 CFR 200.306, and provides information on calculating the value of in-kind match.

Section 90.18(c) provides that states may not require match for subgrants for Indian tribes or victim service providers. This is consistent with 42 U.S.C. 13925(b)(1), as added by VAWA 2005.

Section 90.18(d) implements the waiver provisions of 42 U.S.C. 13925(b)(1), as added by VAWA 2005. In developing the criteria for waiver, OVW balanced the importance of state and local support for the efforts funded under the STOP Program with the need for waiver where there is demonstrated financial need. The paragraph ensures that the financial need identified by the state is specifically tied to funding for violence against women programs. For example, if a state has had across-the-board budget cuts, it would need to show how those cuts have impacted state funding for violence against women programs (and hence, its ability to provide matching funds). In most cases, a state would receive a partial waiver based on the specific impact of the cuts. For example, if the state had a 20 percent reduction in violence against women funding, then it would receive a 20 percent waiver. The 20 percent cut should leave the state with 80 percent of funds that could still be used toward match. In most cases, the states pass the match on to subgrantees, except for Indian tribes and victim service providers. In cases of awards to Indian tribes or awards to victim service providers for victim services purposes, as opposed to another purpose, such as law enforcement training, the state is exempted from the match requirement.

Section 90.18(e) provides that matching funds must be used for the same purposes as the federal funds and must be tracked for accountability purposes.

OVW received one comment on section 90.18. The commenter was seeking clarification that subgrants to victim service providers that are either awarded from the discretionary allocation or from funds that were returned from subgrantees under other allocations are exempt from match. OVW agrees and has amended paragraph (a) in the final rule to clarify that funds awarded under these two scenarios are excluded from the total award amount for purposes of calculating match.

Section 90.19 provides that states must apply for STOP Program funding using an annual solicitation issued by OVW. VAWA 2013 streamlined the application process by including most information and documentation in the implementation plan, but also requiring the plan to be submitted at the time of application. No comments were received on this section.

Section 90.21 encourages states to have plans for evaluating the impact and effectiveness of their projects and requires them to cooperate with federally-sponsored evaluations of their projects. No comments were received on this section.

Section 90.22 provides the statutory basis for review of state applications and implements the Single Point of Contact requirement of Executive Order 12372 (Intergovernmental Review of Federal Programs). No comments were received on this section.

Section 90.23 describes the annual reporting requirement for the program. Subgrantees submit annual progress reports to the state, which then forwards them to OVW, or as otherwise directed by OVW. States also must submit an annual progress report. Information on progress reports, along with the forms and instructions, are available at http://muskie.usm.maine.edu/vawamei/stopformulamain.htm. OVW received one comment on this section. The commenter was concerned that the current annual reports are time consuming, expensive, and intrusive to survivors and recommended that OVW consider whether the reporting process can be simplified. OVW is considering ways to improve the progress reporting process. Under the current process, it is expected that grantees and subgrantees will determine in some cases that, under the circumstances, it is not appropriate to ask a victim for certain information. The grantee or subgrantee only needs to report demographic information to the extent that it can be obtained in the course of providing victim-centered services, and there is generally an “unknown” category they can use, if needed. The information generated from the progress reports is used for a report to Congress, which highlights the accomplishments of the program, and also has other valuable uses. For example, progress reports are used by both OVW and states for monitoring purposes, and data from the progress reports may be used at the state and national level for identifying trends, promising practices, and areas of need.

Section 90.24 provides that grant funds may not be used to support activities that compromise victim safety and recovery. This section is based on the overall purpose of VAWA to enhance victim safety. Specific examples of such activities are included in the STOP Program solicitation each year and in special conditions attached to each OVW grant award. For example, past solicitations explained that such unsafe activities include procedures or policies that exclude victims from receiving safe shelter, advocacy services, counseling, and other assistance based on their actual or perceived age, immigration status, race, religion, sexual orientation, gender identity, mental health condition, physical health condition, criminal record, work in the sex industry, or the age and/or gender of their children. No comments were received on this section.

Section 90.25 implements a new provision from VAWA 2013, 42 U.S.C. 3796gg-1(j), which allows states to reallocate funds in the law enforcement, prosecution, courts, and victim services (including culturally specific services) allocation categories if they did not receive “sufficient eligible applications.” The section defines an “eligible” application and provides the information that states must maintain on file to document a lack of sufficient eligible applications. The section ensures that states conduct sufficient outreach to the eligible category of subgrantees before reallocating the funds. One commenter noted that, while they generally agree with the provision, they request more detail on what is needed for a state to be allowed to reallocate funds to another category. Another commenter specifically stated that, if there have been insufficient applications in the culturally specific category, the state should also provide documentation as to whether there were applicants that applied but failed to qualify and if the state reached out to any applicants that failed to apply. OVW agrees with these suggestions but has concluded that they apply not just to the culturally specific category, but to all of the categories. OVW has added a requirement regarding additional documentation on applications that were unfunded for all of the categories (i.e., law enforcement, courts, victim services, prosecution, and culturally-specific) and reorganized the section for better clarity.

This regulation has been drafted and reviewed in accordance with Executive Order 12866, “Regulatory Planning and Review,” section 1(b), Principles of Regulation, and in accordance with Executive Order 13563, “Improving Regulation and Regulatory Review,” section 1(b). General Principles of Regulation.

The Department of Justice has determined that this rule is not a “significant regulatory action” under Executive Order 12866, section 3(f) because it is not likely to: (1) Have an annual effect on the economy of $100 million or more; (2) create a serious inconsistency or otherwise interfere with an action taken or planned by another agency; (3) materially alter the budgetary impact of entitlements, grants, user fees, or loan programs or the rights and obligations of recipients thereof; or (4) raise novel legal or policy issues.

(1) The rule's impact is limited to OVW grant funds. It does not change the economic impact of the grant funds and will impose very few economic costs as discussed below.

(2) The Department of Health and Human Services (HHS) has a similar program under the Family Violence Prevention and Services Act (FVPSA), which uses some of the same definitions and a similar confidentiality provision. OVW and the HHS FVPSA office coordinate to ensure consistency in implementation of programs.

(3) The requirements in the rule are statutory and apply only to OVW grantees. In some cases, OVW has added some additional specificity to clarify the statutory requirements. The rule provides details on what information the states must provide as “documentation,” but does not impose new requirements.

(4) This rule does not raise any novel legal or policy issues.

Further, both Executive Orders 12866 and 13563 direct agencies to assess all costs and benefits of available regulatory alternatives and to select regulatory approaches that maximize net benefits. The Department has assessed the costs and benefits of this regulation and believes that the regulatory approach selected maximizes net benefits. In most cases, the rule simply clarifies the statutory requirements, such as providing definitions, which would not have any cost or might reduce costs by providing administrators with clear guidance.

OVW provides the following analysis of the most noteworthy costs, benefits, and alternative choices.

Subpart A. In general, most of this subpart comes from the statute. OVW developed all of these provisions to answer questions received regularly from grantees and provide greater clarity for grantees and save them the time and effort of analyzing the requirements and seeking further guidance from OVW staff. Under this final rule, a victim service component of a larger organization, agency, or government will need a victim release to share identifying victim information with other divisions or leadership of the organization, agency or government. The use of the release will increase the degree of control that the victim has over his/her information, which is widely considered a best practice in the violence against women field. The cost of the rule is the time and administrative burden in executing and tracking the release. This cost cannot be quantified, however, because the discussion of release with the victim would take place in the context of a larger conversation between the victim and the service provider about options for the victim and next steps. OVW considered whether to prevent the release of information about deceased victims in the context of fatality reviews, out of consideration for surviving family members. OVW found a balance that allows for release but also requires the fatality review to attempt to get permission from an authorized representative and surviving minor children (and/or guardians of such) and limits the release to information necessary for the fatality review.

Subpart B. In general, changes to subpart B reflect a balance between the burden on the state administrators and the need to ensure compliance with the statute. The relevant statute requires state implementation plans that must identify how the state will use STOP funds and meet certain statutory requirements. OVW opted to require full plans only every four years to reduce the burden on states in developing these plans. In the other years, states only submit updates to their plans.

This regulation will not have substantial direct effects 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 Executive Order 13132, it is determined that this rule does not have sufficient federalism implications to warrant the preparation of a Federalism Assessment.

The OVW, in accordance with the Regulatory Flexibility Act (5 U.S.C. 605(b)), has reviewed this regulation and, by approving it, certifies that this regulation will not have a significant economic impact upon a substantial number of small entities for the following reason: Except for the match provisions in § 90.18, the direct economic impact is limited to the OVW's appropriated funds. For more information on economic impact, please see above.

This regulation meets the applicable standards set forth in sections 3(a) and 3(b)(2) of Executive Order 12988.

This rule will not result in substantial direct increased costs to Indian tribal governments. The definitions and confidentiality provisions of the rule will impact grantees that are tribes. OVW currently has 351 active awards to 226 tribes and tribal organizations, for a total of over $182 million. As discussed above, any financial costs imposed by the rule are minimal.

In addition, although a small number of tribes are subgrantees of the STOP Program, discussed in subpart B, the requirements of the rule are imposed on grantees, not subgrantees. The one provision in subpart B that will have a direct effect on tribes is § 90.12(b)(3), which implements the statutory requirement that states consult with “tribal governments in those States with State or federally recognized Indian tribes.” 42 U.S.C. 3796gg-1(c)(2)(F). The rule requires states to invite all state or federally recognized tribes in the state to participate in the planning process. This approach was recommended by tribal participants in the tribal listening session and at OVW's annual government-to-government tribal consultations in 2013 and 2014.

As discussed above, OVW included regulatory implementation of statutory changes to the STOP Program as a topic at its annual tribal consultations in 2013 and 2014. At the 2013 consultation, tribal leaders were asked for testimony on terms that should be defined in the regulations, additional entities that states should consult with in developing their implementation plans, how states should document the participation of planning committee members, and how states should consult with tribes, among other specific questions. The questions presented at the 2014 consultation included how states might better consult with tribes during STOP implementation planning, and how states should include tribes in the equitable distribution of funds for underserved populations and culturally specific services. At both consultations, tribal leaders emphasized the importance of states engaging in meaningful consultation with all tribes in their state. Tribal leaders noted that such consultation should involve a cooperative decision-making process designed to reach consensus before a decision is made or action is taken, and that effective consultation leads to an implementation plan that takes into account the needs of tribes. Tribal leaders also pointed out that a state's failure to consult with tribes can prevent tribes from accessing STOP funds or even being aware that they are available. Finally, testimony at the tribal consultations raised concerns about states asking tribal shelters to volunteer to provide matching funds in order to receive STOP subgrant funding.

This rule will not result in the expenditure by state, local, and tribal governments, in the aggregate, or by the private sector, of $100,000,000 or more in any one year, and it will not uniquely affect small governments. Therefore, no actions were deemed necessary under the provisions of the Unfunded Mandates Reform Act of 1995.

This rule is not a major rule as defined by section 804 of the Small Business Regulatory Enforcement Fairness Act of 1996. This rule will not result in an annual effect on the economy of $100,000,000 or more; a major increase in cost or prices; or significant adverse effects on competition, employment, investment, productivity, innovation, or on the ability of United States-based companies to compete in domestic and export markets.

For the reasons set forth in the preamble, the Office on Violence Against Women amends 28 CFR part 90 as follows:

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

Organization of this document. The following outline is provided to aid in locating information in this preamble.

On March 9, 2016 (81 FR 12440), EPA published a Notice of Proposed Rulemaking (NPR) for the Commonwealth of Massachusetts. The NPR proposed approval of Massachusetts' revised regulations 310 Code of Massachusetts Regulations (CMR) 7.00, Air Pollution Control: Definitions, 310 CMR 7.24(3), Distribution of Motor Vehicle Fuel, 310 CMR 7.24(4), Motor Vehicle Fuel Tank Trucks, and 310 CMR 7.24(6), Dispensing of Motor Vehicle Fuel. These regulations had been amended to allow the decommissioning of Stage II vapor recovery systems and to strengthen Stage I vapor recovery requirements. The SIP revision was submitted by the MassDEP on May 5, 2015 and also included a demonstration that the decommissioning of Stage II vapor recovery systems at gasoline dispensing facilities is consistent with the Clean Air Act and EPA guidance.

A detailed discussion of Massachusetts' May 5, 2015 SIP revision and EPA's rationale for proposing approval of the SIP revision were provided in the NPR and will not be restated in this notice, except to the extent relevant to our responses to public comments we received on our proposal.

EPA received one comment on the NPR from the Vapor Recovery Association. That comment is summarized below with EPA's response.

Comment: The commenter opposes EPA's proposed approval of Massachusetts' revised Stage II vapor recovery regulation. The commenter believes that eliminating Stage II vapor recovery systems at GDFs and relying solely on Onboard Refueling Vapor Recovery (ORVR) systems located within the vehicles to mitigate refueling emissions will have a negative impact on air quality; cause adverse health impacts to motorists, GDF employees, and members of the community; and result in a severe negative burden in Environmental Justice (EJ) areas in Massachusetts.

Furthermore, the commenter asserts that MassDEP's rationale for decommissioning Stage II vapor recovery systems is not based in science and that it can be mathematically shown that emissions will be increased rather than decreased as a result of the elimination of the Stage II vapor recovery program. However, the commenter did not submit any calculations in support of its claims of the increased emissions, health impacts, and the impacts on EJ areas that the commenter alleges would result from decommissioning Stage II vapor recovery systems at GDFs in Massachusetts. Nor did the commenter specify what specific aspects of the technical analyses conducted by the MassDEP in support of its SIP revision were scientifically unsupportable.

Finally, the commenter believes that in terminating the Massachusetts Stage II vapor recovery program, the MassDEP is not adhering to its mission statement. The commenter also believes that the technical details of fuel storage tank evaporative losses and the alleged significant increase in refueling emissions impacts caused by Massachusetts' removal of Stage II vapor recovery, should have received more thought, analysis and quantification. Again, however, the commenter did not provide specific criticism of the analyses conducted by MassDEP, did not identify any specific aspects of those analyses that the commenter believes are incorrect, and did not assert any alternative specific results or conclusions that the commenter believes would result if the issues were evaluated according to the commenter's unspecified preferred alternative methodology.

Response: EPA disagrees with the Vapor Recovery Association's assertion that there will be significant increased emissions from this action. Massachusetts' May 5, 2015 SIP revision contains a Clean Air Act (CAA) section 110(l) demonstration which was performed in accordance with EPA's final rule determining that ORVR is now in widespread use in the national motor vehicle fleet (77 FR 28770, May 16, 2012) and with EPA's “Guidance on Removing Stage II Gasoline Vapor Control Programs from State Implementation Plans and Assessing Comparable Measures” (EPA-457/B-12-001, August 7, 2012), hereafter, EPA's August 7, 2012 Guidance (a copy of this guidance has been placed in the public docket for this action).

The Massachusetts rule allows GDFs to decommission Stage II systems as of January 2, 2015, and requires all GDFs equipped with Stage II vapor recovery systems to decommission their Stage II systems by January 2, 2017 (by the end of 2016). As discussed in the NPR, Appendix Table A-1 of EPA's August 7, 2012 Guidance illustrates that by the end of 2016, approximately 85% of the vehicles in the national motor vehicle fleet will be equipped with ORVR. The number of ORVR-equipped vehicles in Massachusetts will likely be even higher due to Massachusetts having a more accelerated motor vehicle fleet turnover when compared to the national motor vehicle fleet.1 Appendix Table A-1 also illustrates that by the end of 2016, about 89% of the gasoline dispensed nationally will be to ORVR-equipped vehicles, which is also likely to be higher in Massachusetts due to a newer motor vehicle fleet. At that point in time, since a vast majority of Massachusetts vehicles being refueled at gasoline dispensing facilities will be equipped with ORVR systems, the ORVR systems will be controlling the volatile organic compound (VOC) emissions, making Stage II vapor recovery systems a redundant, and potentially incompatible, emissions control technology in Massachusetts. Therefore, removing the Stage II systems is not expected to result in a significant emissions increase, and is actually expected to avoid emissions increases resulting from the incompatibility of some Stage II systems with ORVR controls.

EPA also disagrees with the commenter's assertion that the alleged increase in emissions resulting from the removal of Stage II controls will result in a large increase in adverse health impacts to motorists, GDF employees, and members of the community. EPA's August 7, 2012 Guidance states that “EPA believes it is reasonable to conclude that the incremental emissions control that Stage II achieves beyond ORVR is de minimis if it is less than 10 percent of the area-wide emissions inventory associated with refueling highway motor vehicles.” As noted in the NPR, Massachusetts appropriately calculated the increase in refueling-associated emissions from the decommissioning of Stage II systems in 2013 as 5.2 percent of that inventory, thus meeting this de minimis threshold. As also noted in the NPR, the increase in emissions from Stage II system decommissioning calculated by Massachusetts for 2013 (463 tons of VOC) is only about 0.3 percent of the total anthropogenic VOC emissions in Massachusetts (see EPA's 2011 National Emissions Inventory database Version 2 at www.epa.gov/ttn/chief/net/2011inventory.html). Also, as explained in EPA's ORVR rulemaking and in EPA's August 7, 2012 Guidance, these foregone emissions reductions in the near term continue to diminish rapidly over time as ORVR phase-in continues. Therefore, since the de minimis criteria discussed in EPA's August 7, 2012 Guidance have been met, EPA is approving Massachusetts' SIP revision.

Furthermore, we note that Massachusetts' revised 310 CMR 7.24(3) regulation also includes new Stage I vapor recovery requirements that will lead to additional emission reductions. Specifically, the regulation requires GDFs to upgrade their Stage I vapor recovery systems to Stage I Enhanced Vapor Recovery (EVR) systems certified by the California Air Resources Board (CARB) or a Stage I vapor recovery system composed of EVR system components (Stage I EVR component systems). The upgrade to Stage I EVR systems or Stage I EVR component systems is required upon facility start-up for facilities beginning operation or installing a fuel storage tank as of January 2, 2015. In addition, as of January 2, 2015, any component of a pre-existing Stage I vapor recovery system that is replaced is required to be replaced with a CARB-certified Stage I EVR component. The Massachusetts regulation further requires that all Stage I systems be CARB-certified Stage I EVR systems or Stage I EVR component systems by January 2, 2022. CARB-certified Stage I EVR systems have been certified to achieve a 98 percent reduction in VOC emissions, as compared to 95 percent for pre-EVR Stage I systems. Thus, when pre-EVR Stage I systems in Massachusetts are replaced with CARB-certified Stage I EVR systems, a greater emission reduction will be achieved. Also, when a component of a pre-EVR Stage I system is replaced with a CARB-certified Stage I EVR component, a somewhat greater reduction is expected to be achieved. These additional reductions will further mitigate any temporary declining emissions increases, which are already de minimis, resulting from the removal of Stage II equipment.

Although the commenter generally asserted that MassDEP's analyses and demonstrations were not scientifically supported and that emissions increases could be mathematically shown to result from the removal of Stage II equipment, the commenter provided no information, data, or analytical critiques to support these allegations. The commenter has therefore not raised with reasonable specificity any objections to the underlying analyses and demonstrations supporting EPA's proposed approval of Massachusetts' SIP revision. Consequently, it is not possible for EPA to respond to any specific criticisms that the commenter may have had of the MassDEP's analyses, other than to reiterate that EPA concludes that Massachusetts has conducted its demonstration consistently with EPA's applicable regulations and guidance under the Clean Air Act, as described and evaluated in detail in the NPR. See, 81 FR at 12442-43.

Finally, EPA disagrees with the comment that MassDEP is not adhering to its mission statement and that an insufficient amount of thought, analysis, and quantification was provided by MassDEP regarding the impacts of decommissioning Stage II vapor recovery systems in Massachusetts. MassDEP's analysis was conducted in accordance with EPA's ORVR rulemaking and EPA's August 7, 2012 Guidance. In fact, prior to the issuance of EPA's August 7, 2012 Guidance, MassDEP hired independent consultants to conduct an analysis on the emissions impacts of the proposed changes to the Massachusetts Stage I and Stage II vapor recovery programs.2 One of the noteworthy results presented in the consultant's report was the analysis of whether removal of Stage II controls would result in disproportionate air quality impacts in EJ communities. The consultant's analysis determined that, previous to the April 2012 point at which EPA determined ORVR to have become in widespread use, EJ communities had a slightly lower proportion of ORVR-equipped vehicles (73% of the motor vehicle fleet) than non-EJ communities (77% of the motor vehicle fleet), based on 2011 data in Massachusetts. Although this shows that continuing to operate Stage II systems in Massachusetts EJ communities would not as quickly become redundant and potentially incompatible with ORVR controls as in non-EJ Massachusetts communities, Appendix Table A-1 of EPA's August 7, 2012 Guidance illustrates that only about 67% of the national motor vehicle fleet consisted of ORVR-equipped vehicles in 2011, which is still less than the 73% rate for EJ communities in Massachusetts. The commenter has provided no information indicating that the rate of fleet turnover and the rate at which gasoline is dispensed to ORVR equipped vehicles in Massachusetts EJ communities has subsequently fallen behind the corresponding national rates they were exceeding in 2011. Therefore, in response to the comment, EPA has no reason to believe that the emissions impact of decommissioning Stage II vapor recovery systems in EJ communities in Massachusetts is more significant than that discussed in EPA guidance as an acceptable national average impact.

EPA is approving Massachusetts' May 5, 2015 SIP revision. Specifically, EPA is approving, and incorporating into the Massachusetts SIP, the following amended Massachusetts regulations: 310 CMR 7.00, “Air Pollution Control: Definitions;” 310 CMR 7.24(3), “Distribution of Motor Vehicle Fuel;” 310 CMR 7.24(4), “Motor Vehicle Fuel Tank Trucks;” and 310 CMR 7.24(6), “Dispensing of Motor Vehicle Fuel.” EPA is approving this SIP revision because it meets all applicable requirements of the Clean Air Act and EPA guidance, and it will not interfere with any applicable requirement concerning National Ambient Air Quality Standards attainment and reasonable further progress or with any other applicable requirement of the Clean Air Act.

Massachusetts' May 5, 2015 SIP revision satisfies the “comparable measures” requirement of CAA section 184(b)(2), because as stated in EPA's August 7, 2012 Guidance, “the comparable measures requirement is satisfied if phasing out a Stage II control program in a particular area is estimated to have no, or a de minimis, incremental loss of area-wide emissions control.” As noted in the NPR, Massachusetts' SIP revision meets the de minimis criteria outlined in EPA's August 7, 2012 Guidance. In addition, since emissions are de minimis, the anti-back sliding requirements of CAA section 110(l) have also been satisfied.

In this rule, the EPA is finalizing regulatory text that includes incorporation by reference. In accordance with requirements of 1 CFR 51.5, the EPA is finalizing the incorporation by reference of the Massachusetts regulations described in the amendments to 40 CFR part 52 set forth below. The EPA has made, and will continue to make, these documents generally available through http://www.regulations.gov.

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

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

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

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

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

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

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

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

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

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

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

Under section 307(b)(1) of the Clean Air Act, petitions for judicial review of this action must be filed in the United States Court of Appeals for the appropriate circuit by January 30, 2017. Filing a petition for reconsideration by the Administrator of this final rule does not affect the finality of this action for the purposes of judicial review nor does it extend the time within which a petition for judicial review may be filed, and shall not postpone the effectiveness of such rule or action. This action may not be challenged later in proceedings to enforce its requirements. (See section 307(b)(2).)

Part 52 of chapter I, title 40 of the Code of Federal Regulations is amended as follows:

Title XI of the FAST Act,1 entitled “Passenger Rail Reform and Investment Act of 2015,” adds to the Board's existing passenger rail adjudicatory responsibilities related to the National Railroad Passenger Corporation (Amtrak). Among other things, Title XI includes new provisions involving cost recovery by Amtrak for Amtrak's operation of “state-supported routes” and for the costs allocated to states (including state entities) using the Northeast Corridor rail facilities for their commuter rail operations. As relevant here, Title XI gives the Board jurisdiction to resolve cost allocation and access disputes between Amtrak, the states, and potential non-Amtrak operators of intercity passenger rail service.2 The FAST Act directs the Board to establish procedures for the resolution of certain of these disputes, “which may include the provision of professional mediation services.” 49 U.S.C. 24712(c)(2) and 24905(c)(4).

On July 28, 2016, the Board issued a notice of proposed rulemaking (NPR) (81 FR 51147), seeking comment on proposed rules pursuant to the FAST Act. In the NPR, the Board noted that because it does not have in place a general set of procedural rules to govern the presentation and conduct of proceedings involving passenger rail matters under 49 U.S.C. 24101-24910,3 which would include contested matters arising under Title XI of the FAST Act, parties seeking to bring contested matters before the Board should be guided by the Board's existing Rules of Practice (49 CFR parts 1100-1129), as applicable. However, the potential to offer “professional mediation services” is unique to the authority granted under the FAST Act, and the Board's existing Rules of Practice contain no applicable provisions. Therefore, the Board proposed new regulations to address requests from one or more parties for informal assistance in securing outside professional mediation services pursuant to the FAST Act.

Specifically, the NPR provided that, under a new 49 CFR 1109.5, parties to a dispute involving the State-Sponsored Route Committee or the Northeast Corridor Commission would be permitted to request the Board's assistance in securing outside professional mediation services by submitting a letter to the Board's Office of Public Assistance, Governmental Affairs, and Compliance (OPAGAC). OPAGAC would then contact the requesting party or parties in response to such requests within 14 days of receipt of the request to assist in arranging for professional mediation services.

After careful consideration of the comments received, the Board is promulgating a set of procedural rules that adopt and clarify the provisions of the NPR regarding professional mediation services with respect to certain passenger rail matters under Title XI of the FAST Act.

The State-Supported Route Committee. Section 11204 of the FAST Act adds a new section to the United States Code: 49 U.S.C. 24712, “State supported routes operated by Amtrak.” State-supported routes are intercity rail passenger routes for which operating and capital costs are established and allocated among the states and Amtrak under section 209 of the Passenger Rail Investment and Improvement Act of 2008 (PRIIA).4 Under these agreements, Amtrak currently receives funding from states and state-related entities to operate routes under 750 miles in length. New section 24712 establishes a State-Supported Route Committee comprised of Amtrak, the U.S. Department of Transportation/Federal Railroad Administration, and states that subsidize state-supported routes, to implement the cost-allocation methodology previously developed under section 209 of PRIIA through negotiation between Amtrak and the affected states and approved by the Board. See Amtrak's Pet. for Determination of PRIIA Sec. 209 Cost Methodology, FD 35571 (STB served Mar. 15, 2012). The Committee may also amend that cost-allocation methodology. Section 24712(c)(1) gives the Board jurisdiction to “conduct dispute resolution” pertaining to (1) the Committee's rules and procedures, (2) the invoices to be produced by Amtrak or reports to be produced by Amtrak or the states as described in section 24712(b), and (3) the implementation of or compliance with the cost allocation methodology. Section 24712(c)(2) requires the Board to establish procedures for resolving such disputes, which procedures “may include provision of professional mediation services.”

The Northeast Corridor Commission. Section 11305 of the FAST Act, which amends 49 U.S.C. 24905, involves the powers and obligations of the Northeast Corridor Commission (NEC Commission), created by Congress in 2008 as part of PRIIA.5 The NEC Commission is responsible for developing and implementing a standardized policy for determining and allocating costs, revenues, and compensation between Amtrak and the providers of commuter rail passenger transportation on the Northeast Corridor. The FAST Act amends 49 U.S.C. 24905 with respect to the Board's role in resolving disputes between Amtrak and the states in determining compensation for use of the Northeast Corridor in light of the policy approved by the NEC Commission. Under the new subsection, 49 U.S.C. 24905(c)(4), the FAST Act permits the NEC Commission, Amtrak, or public authorities providing commuter rail passenger transportation on the Northeast Corridor to request that the Board conduct dispute resolution if a dispute arises over implementation of, or compliance with, the NEC Commission's cost allocation policy. The new subsection requires the Board to establish procedures for resolving such disputes and provides that those procedures “may include the provision of professional mediation services.”

The Board sought comments on the proposed regulations by August 31, 2016, and replies by September 30, 2016. The Board received comments from six parties: California Department of Transportation (Caltrans), Los Angeles-San Diego-San Luis Obispo Rail Corridor Agency (LOSSAN Agency), Amtrak, U.S. Department of Transportation (DOT), San Joaquin Joint Powers Authority (SJJPA), and Capitol Corridor Joint Powers Authority (CCJPA). Amtrak filed a reply.

Caltrans, LOSSAN Agency, SJJPA, and CCJPA (California Entities) all assert that the NPR did not meet the intent and requirement of the FAST Act. They state that the proposed mediation regulation is non-binding and that in order to efficiently resolve disputes, parties should have recourse to a binding mechanism for resolving such disputes. The California Entities suggest that the Board adopt binding arbitration, either before the Board or a third-party arbitrator, as the dispute resolution procedures required under section 24712. They further propose that arbitration be mandatory and that the Board compel arbitration upon request from a State or Amtrak. Lastly, the California Entities suggest that the Board clarify the proposed mediation regulation to address whether the Board will: (1) Maintain a list of mediators; (2) intervene if parties cannot agree to a mediator; (3) establish terms for payment of mediation services; and (4) require parties to participate in mediation.

In its initial comments, Amtrak supports the proposed rule and suggest two clarifications. First, Amtrak asserts that the proposed 49 CFR 1109.5 is ambiguous as to whether the Board's existing mediation rules apply to formally contested matters involving the State-Supported Route Committee (section 209 of PRIIA) or the Northeast Corridor Commission (section 212 of PRIIA). Amtrak suggests adding language which explicitly states, “mediation procedures under [49 CFR] 1109.1, 1109.2, and 1109.3 are applicable” to disputes arising under sections 209 or 212 of PRIIA. Second, Amtrak proposes that the Board clarify and expand the procedures following the filing of a request with OPAGAC for securing professional mediation assistance.

In its reply comments, Amtrak responded to the California Entities' requests for the Board to adopt binding arbitration. Amtrak states that arbitration is a voluntary alternate dispute mechanism and that nothing in the FAST Act suggests that the Board should impose arbitration on unwilling parties. Amtrak also argues that the FAST Act does not authorize the Board to delegate its decision-making power to a third-party arbitrator. Lastly, Amtrak argues that binding arbitration is not the best tool for resolving recurring issues in which uniformity among multiple parties is needed.

After considering the comments received, the Board is adopting final rules, as set forth in the Appendix, for the mediation of passenger rail disputes involving the State-Sponsored Route Committee or the Northeast Corridor Commission. Formal disputes under 49 U.S.C. 24712 and 24905 would be conducted using the Board's existing Rules of Practice as a guide. Parties interested in professional mediation services could seek the Board's informal assistance in securing such services by submitting a letter to OPAGAC. Such informal assistance may be sought even if no party has filed a formal complaint with the Board.

The Board does not agree with the California Entities that section 11204 of the FAST Act authorizes or requires the Board to resolve PRIIA section 209 disputes through binding arbitration. (Neither does any such authorization or requirement appear in FAST Act section 11305, with regard to PRIIA section 212.) While the FAST Act specifically mentions professional mediation services, it does not state or otherwise suggest the use of arbitration as a potential dispute resolution procedure. Further, as Amtrak points out, parties have to agree on arbitration as the method to resolve their disputes. Therefore, provisions for binding arbitration will not be included as part of the regulations adopted here.

CCJPA argues that the plain language of the FAST Act contemplates a more significant role for the Board than providing informal assistance in securing outside professional mediation services—specifically, that the statute contemplates “dispute resolution” by the Board itself. (CCJPA Comments 2.) To the extent that CCJPA is arguing that the Board should be involved in “dispute resolution” by issuing decisions on disputes arising under the FAST Act, as noted above, parties may bring contested matters under section 11204 or section 11305 of the FAST Act before the Board, guided by the Board's existing Rules of Practice. See, e.g., Pet. of the Nat'l R.R. Passenger Corp. for Relief Pursuant to 49 U.S.C. 24905, FD 36048 (STB served Oct. 3, 2016). Alternatively, if CCJPA believes that the Board should engage in dispute resolution by conducting mediation itself and not simply relying on outside professional mediators, as discussed further below, the new rules provide that in cases where a formal complaint is brought under sections 209 or 212 of PRIIA, the Board's existing rules under part 1109 for mediation in Board proceedings would apply.

The California Entities have asked that the Board clarify the proposed rule to address questions about choosing professional mediators, payment of mediation services, and whether participation in mediation would be mandatory. (Caltrans Comments 1; CCJPA Comments 3; SJJPA Comments 2; LOSSAN Agency Comments 2.) Similarly, Amtrak proposes expanding 49 CFR 1109.5 to include specifics such as timing and means of service of the requesting letter on all affected parties, whether parties must consent, the purpose for which OPAGAC will contact the requesting party, and whether and how OPAGAC will contact other affected parties. However, as these rules are intended to provide guidance for informal requests, in which parties and OPAGAC retain maximal flexibility in arranging for professional mediation, the Board believes that these issues should not be codified in regulations but left in the first instance to discussions between OPAGAC and the requesting party or parties, following receipt of a request. Accordingly, the Board will not adopt commenters' suggestions to address such specifics.

Amtrak also asks that the rules clarify whether the Board's existing mediation rules apply to contested matters under section 209 or 212 of PRIIA. The Board's proposed rule contemplated that the existing, applicable mediation procedures under 49 CFR part 1109 6 would be available in formal complaint cases brought under sections 209 or 212 of PRIIA. See § 1109.5(a) and (b) (noting that requests for assistance in securing professional mediation services are “[i]n addition to the mediation procedures under this Part 1109 that are available following the filing of a complaint . . .”) (emphasis added). We reiterate here that, in cases where a formal complaint is brought under sections 209 or 212 of PRIIA, the preexisting mediation rules under part 1109 shall apply.

In asking for this last clarification, Amtrak states that there may be ambiguity with respect to whether the current provisions of part 1109 apply in a contested matter under PRIIA because part 1109 deals with mediation after the filing of a complaint. It is the Board's intention that an informal request for assistance in securing professional mediation services be available not only in instances where there has not been a formal complaint filed, but also during the pendency of a formal complaint case—as long as a motion is filed in that formal proceeding requesting that it be held in abeyance in light of the request for informal assistance. Thus, we have modified the rules proposed in the NPR to include this clarification. See § 1109.5(a) and (b).

In the NPR, the Board sought comments under the Paperwork Reduction Act (PRA), 44 U.S.C. 3501-3549, and Office of Management and Budget (OMB) regulations at 5 CFR 1320.8(d)(3). No comments addressing PRA issues were received. Due to a technical omission in the NPR under the PRA, the Board will continue to seek OMB approval for this collection in a separate notice. Any comments received by the Board from that notice will be forwarded to OMB for its review and will be posted under this docket.

The Regulatory Flexibility Act of 1980 (RFA), 5 U.S.C. 601-612, generally requires a description and analysis of new rules that would have a significant economic impact on a substantial number of small entities. In drafting a rule, an agency is required to: (1) Assess the effect that its regulation will have on small entities; (2) analyze effective alternatives that may minimize a regulation's impact; and (3) make the analysis available for public comment. 5 U.S.C. 601-604. In its notice of proposed rulemaking, the agency must either include an initial regulatory flexibility analysis, section 603(a), or certify that the proposed rule would not have a “significant impact on a substantial number of small entities.” section 605(b). The impact must be a direct impact on small entities “whose conduct is circumscribed or mandated” by the proposed rule. White Eagle Coop. v. Conner, 553 F.3d 467, 480 (7th Cir. 2009).

In the NPR, the Board certified under 5 U.S.C. 605(b) that the proposed rules would not have a significant economic impact on a substantial number of small entities within the meaning of the RFA.7 The Board explained that the proposed regulations would specify procedures related to dispute resolution of certain passenger rail transportation matters by the Board and do not mandate or circumscribe the conduct of small entities. The Board further noted that if a party wishing to utilize the proposed procedures files a complaint, petition, application, or request for dispute resolution, that entity will not encounter any additional burden and that, rather, the procedures are being updated and clarified by the regulations. The NPR was served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration.

The final rules adopted here make slight modifications to the proposed rule, but the same basis for the Board's certification of the proposed rule applies to the final rules adopted here. The modification adopted in the final rule refines the proposed rule by clarifying the circumstances under which the informal process for seeking Board assistance in pursuing professional mediation services will be available. Therefore, the Board certifies under 5 U.S.C. 605(b) that this rule will not have a significant economic impact on a substantial number of small entities as defined by the RFA. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416.

It is ordered:

1. The Board adopts the final rules as set forth in this decision. Notice of the adopted rules will be published in the Federal Register.

2. A copy of this decision will be served upon the Chief Counsel for Advocacy, Office of Advocacy, U.S. Small Business Administration, Washington, DC 20416.

3. This decision is effective December 29, 2016.

For the reasons set forth in the preamble, the Surface Transportation Board amends part 1109 of title 49, chapter X, of the Code of Federal Regulations as follows: